7 Selecting the Channel
Members
Channel Member Selection and
Channel Design
• The channel member selection is the last phase
of channel design (phase 7).
• Selection decisions can also be made
independently of channel design decisions when
new channel members are added to the channel
or when those who have left are replaced.
• Only those manufacturers who sell directly to
users are not faced with the selection of channel
members.
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
The Selection Process
1.
Finding prospective
channel members
(Search)
2. Applying
selection criteria
to determine the
suitability of
prospective
channel members
(Qualification/Screening)
3. Securing the
prospective
channel members
as actual
channel members
(Choice)
1. Finding a prospective channel
members
Variety of sources:
• Field sales organization
• Trade sources
• Reseller inquiries
• Customers
• Advertising
• Trade shows
• Other sources
1. Finding a prospective channel
members
• 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.
1. Finding a prospective channel
members
• Trade sources
•
•
•
•
•
Trade associations
Trade publications
Directories
Trade shows
Firms selling similar products
•
•
•
•
•
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
1. Finding a prospective channel
members
• Reseller inquiries
Many firms learn about direct
inquiries from intermediaries
interested in handling their product.
Firms receiving the highest number
of inquiries are the more
prestigious in their industry.
1. Finding a prospective channel
members
• Customers
Customers are willing to give frank opinions
about the intermediaries who call on them.
Manufacturer conducts formal or informal surveys of
customers’ views of various distributors.
=
Manufacturer obtains information about
potential intermediaries.
1. Finding a prospective channel
members
• 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.
1. Finding a prospective channel
members
• 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.
1. Finding a prospective channel
members
• 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
2 Applying selection criteria
• Channel Member Selection Criteria by
Pegram
• Credit & Financial
Condition
• Sales Strength
• Product Lines
• Reputation
• Market Coverage
• Sales Performance
• Management
Succession
• Management Ability
• Attitude
• Size
2 Applying selection criteria
Distributor Selection Criteria Used by
Manufacturers (Descending Order)
• U. K. Firms
–
–
–
–
Knowledge of market
Market coverage
Enthusiasm for the product
Number and quality of sales
personnel
– Knowledge of the product
• U.S. Firms
–
–
–
–
Knowledge of the market
Market coverage
Previous success
Number and quality of sales
personnel
– Enthusiasm for the product
Ex) Two Types of Channel Member Qualification:
a) Qualification of Reseller’s Ability and Motivation
b) Qualification using general criteria and qualification using special criteria
2 Applying selection criteria
• Screening Channel Member Candidates
Guidelines:
– Think about your target market segments.
– Level & type of support required by the channel member.
– Pick your distributor carefully – weighing all factors;
product, size, service, capability.
– Remember selling & distribution requirements change
over time.
3 Securing the channel members
• Offering Inducements
1. Good, profitable product line
2. Advertising & promotional support
3. Management assistance
4. Fair dealing policies &
Friendly relationships
3 Securing the channel members
1. Good, profitable 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
3 Securing the channel members
2. 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 advertising.
3 Securing the channel members
3. 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
3 Securing the channel members
4. Fair Dealing & Friendly Relationship
Manufacturer’s Responsibility:
• To establish a good relationship based on trust
and concern for their welfare as both business
entities and as people