Chapter 7
Selecting the Channel Members
Objective 1:
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Channel Member Selection
The last phase of channel design
Selection may or may not be the result of channel design.
Firm may need additional
outlets to allow for growth
To replace channel
members that have left
Objective 2:
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Selection & Distribution Intensity
The greater the intensity of distribution
The less the emphasis on selection
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The Selection Process
1. Finding prospective
channel members
2. Applying
selection criteria
to determine the
suitability of
prospective
channel members
3. Securing the
prospective
channel members
as actual
channel members
Objective 3:
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Finding Members
1. Field sales
organization
7. Other sources
6. Trade shows
5. Advertising
2. Trade sources
3. Reseller inquiries
4. Customers
Field Sales Organization
Salespeople are the
best positioned to
know about potential
intermediaries
• They are often able to
pick up information
about likely
intermediaries.
• They may have lined up
prospective
intermediaries.
BUT:
• The manufacturer must
adequately reward
salespeople for their time
& effort establishing
connections.
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Trade 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
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Reseller Inquiries
Many firms learn about direct
inquiries 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 number
of inquiries are the more
prestigious in their industry.
Reseller
Inquiries
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Advertising
Trade magazine advertising
can generate a large number
of inquiries from prospective
Members.
It therefore can provide a large
pool from which to make selections.
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Trade Shows
Wholesale and retail trade associations
hold annual conventions.
Attending manufacturers have access to a
wide variety of potential channel members.
** Small manufacturers meet face-to-face with
wholesalers & retailers.
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Other Sources
1.
2.
3.
4.
5.
6.
7.
8.
Chambers of commerce, banks, & local real estate
dealers
Classified telephone directories or the yellow pages
Direct-mail solicitations
Contacts from previous applications
Independent consultations
List brokers that sell lists of names of businesses
Business databases
The Internet
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Objective 4:
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Selection Criteria
• Credit & Financial
Condition
• Sales Strength
• Product Lines
• Reputation
• Market Coverage
• Sales Performance
• Management
Succession
• Management Ability
• Attitude
• Size
Objective 5:
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Adapting Selection Criteria
Because no list of criteria is adequate
for a firm under all conditions,
the channel manager should be flexible when
using selection criteria.
Objective 6:
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Who Selects?
Who does the selecting?
Producers & Manufacturers
Wholesale Intermediaries
Retail Intermediaries
Securing Channel Members
. . . The supplier produces, the distributor
sells, and each is dependent upon the other.
Together they form a team, and teamwork
is essential if the association is to prove
mutually beneficial.
— Pegram
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Objective 7:
Offering Inducements
Good, profitable product line
Advertising & promotional support
Management assistance
Fair dealing policies &
Friendly relationships
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Product Line
Product line inducements:
1.
Manufacturer offers good product line with
strong sales & profit potential
2.
Stress value of good product line from
channel members’ perspective
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Advertising & Promotion
Advertising & promotion inducements
Consumer Market:
Gain immediate credibility by using a strong program
of national advertising.
Industrial Market:
Gain recognition by using a strong program of
trade paper advertising.
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Management Assistance
Management assistance inducements:
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
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Objective 8:
Fair Dealing &
Friendly Relationship
Manufacturer’s Responsibility:
To convey to prospective channel members that
he or she is genuinely interested in
establishing a good relationship based on trust
and concern for their welfare as both business
Entities and as people
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