chapter 7 selecting the channel members. channel member selection 7 objective 1: s election may or...
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Chapter 7Chapter 7
Selecting the Channel Members
Channel Member SelectionChannel Member Selection 77Objective 1:
Selection may or may not be the result of channel design.
The last phase of channel design
Firm may need additional outlets to allow for growth
To replace channel members that have left
77Selection & Distribution Selection & Distribution IntensityIntensity
Objective 2:
The greater the intensity of distribution
The less the emphasis on selection
77The Selection ProcessThe Selection Process
1. Finding prospective channel members
1. Finding prospective channel members
3. Securing theprospective
channel membersas actual
channel members
3. Securing theprospective
channel membersas actual
channel members
2. Applying selection criteriato determine the
suitability of prospective
channel members
2. Applying selection criteriato determine the
suitability of prospective
channel members
77Finding MembersFinding Members
1. Field salesorganization
1. Field salesorganization
7. Other sources7. Other sources
5. Advertising5. Advertising
6. Trade shows6. Trade shows
2. Trade sources2. Trade sources
3. Reseller inquiries3. Reseller inquiries
4. Customers4. Customers
Objective 3:
77Field Sales OrganizationField Sales Organization
• They are often able to pick up information about likely intermediaries.
• They may have lined up prospective intermediaries.
• The manufacturer must adequately reward salespeople for their time & effort establishing connections.
Salespeople are the best positioned to
know about potentialintermediaries
Salespeople are the best positioned to
know about potentialintermediaries
BUT: BUT:
77Trade SourcesTrade Sources
• Trade associations• Trade publications• Directories• Trade shows• Firms selling similar
products• The “grapevine”
For Example:• Industrial Distribution
magazine• The Verified Directory of
Manufacturers’ Representatives
• The National Association of Wholesaler-Distributors
• The National Retail Federation
• The Encyclopedia of Associations
77Reseller InquiriesReseller Inquiries
Many firms learn about directinquiries from intermediaries
interested in handling their product.
This is the main source of information about potential new channel
members for some manufacturers.
Firms receiving the highest numberof inquiries are the more
prestigious in their industry.
ResellerInquiries
ResellerInquiries
CustomersCustomers77
Customers are willing to give frank opinionsabout the intermediaries who call on them.
Manufacturer conducts formal or informal surveys ofcustomers’ views of various distributors.
Manufacturer obtains information aboutpotential intermediaries.
=
77AdvertisingAdvertising
Trade magazine advertisingcan generate a large numberof inquiries from prospective
Members.
It therefore can provide a largepool from which to make selections.
77Trade ShowsTrade Shows
Wholesale and retail trade associations hold annual conventions.
Attending manufacturers have access to awide variety of potential channel members.
** Small manufacturers meet face-to-face withwholesalers & retailers.
77Other SourcesOther Sources
1. Chambers of commerce, banks, & local real estate dealers
2. Classified telephone directories or the yellow pages3. Direct-mail solicitations4. Contacts from previous applications5. Independent consultations6. List brokers that sell lists of names of businesses7. Business databases8. The Internet
1. Chambers of commerce, banks, & local real estate dealers
2. Classified telephone directories or the yellow pages3. Direct-mail solicitations4. Contacts from previous applications5. Independent consultations6. List brokers that sell lists of names of businesses7. Business databases8. The Internet
77Selection CriteriaSelection Criteria
Objective 4:
• Credit & Financial Condition
• Sales Strength• Product Lines• Reputation• Market Coverage
• Credit & Financial Condition
• Sales Strength• Product Lines• Reputation• Market Coverage
• Sales Performance• Management
Succession• Management Ability• Attitude• Size
• Sales Performance• Management
Succession• Management Ability• Attitude• Size
77Adapting Selection CriteriaAdapting Selection Criteria
Objective 5:
Because no list of criteria is adequatefor a firm under all conditions,
the channel manager should be flexible when using selection criteria.
77
Who Selects?Who Selects?
Who does the selecting?Who does the selecting?
Producers & Manufacturers
Wholesale Intermediaries
Retail Intermediaries
Objective 6:
Securing Channel MembersSecuring Channel Members 77
. . . The supplier produces, the distributorsells, and each is dependent upon the other.Together they form a team, and teamwork
is essential if the association is to provemutually beneficial.
— Pegram
. . . The supplier produces, the distributorsells, and each is dependent upon the other.Together they form a team, and teamwork
is essential if the association is to provemutually beneficial.
— Pegram
Offering InducementsOffering Inducements 77Objective 7:
Good, profitable product line
Advertising & promotional support
Management assistance
Fair dealing policies & Friendly relationships
Product LineProduct Line 77
Product line inducements:
1. Manufacturer offers good product line withstrong sales & profit potential
2. Stress value of good product line fromchannel members’ perspective
77Advertising & PromotionAdvertising & Promotion
Consumer Market:Gain immediate credibility by using a strong program
of national advertising.
Advertising & promotion inducements
Industrial Market:Gain recognition by using a strong program of
trade paper advertising.
Management AssistanceManagement Assistance77
Prospective members want to know whether the Manufacturer will help with the following:
• training programs• financial analysis & planning
• market analysis• inventory control procedures
• promotional methods
Management assistance inducements:
Fair Dealing & Fair Dealing & Friendly RelationshipFriendly Relationship
77Objective 8:
Manufacturer’s Responsibility:
To convey to prospective channel members thathe or she is genuinely interested in
establishing a good relationship based on trustand concern for their welfare as both business
Entities and as people