Chapter 7 Selecting the Channel Members

Channel Member Selection Objective 1: Channel Member Selection 7 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

Selection & Distribution Intensity Objective 2: 7 Selection & Distribution Intensity The greater the intensity of distribution The less the emphasis on selection

The Selection Process 7 2. Applying 3. Securing the selection criteria to determine the suitability of prospective channel members Finding prospective channel members 3. Securing the prospective channel members as actual

Finding Members 7 Field sales organization 7. Other sources Objective 3: Finding Members 7 Field sales organization 7. Other sources 2. Trade sources 6. Trade shows 3. Reseller inquiries 5. Advertising 4. Customers

Field Sales Organization 7 Salespeople are the best positioned to know about potential intermediaries BUT: 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.

Trade Sources 7 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 Trade associations Trade publications Directories Trade shows Firms selling similar products The “grapevine”

Reseller Inquiries 7 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. Reseller Inquiries Firms receiving the highest number of inquiries are the more prestigious in their industry.

= Customers 7 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.

Advertising 7 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.

** Small manufacturers meet face-to-face with Trade Shows 7 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.

Other Sources 7 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

Selection Criteria 7 Credit & Financial Condition Sales Strength Objective 4: Selection Criteria 7 Credit & Financial Condition Sales Strength Product Lines Reputation Market Coverage Sales Performance Management Succession Management Ability Attitude Size

Adapting Selection Criteria Objective 5: Adapting Selection Criteria 7 Because no list of criteria is adequate for a firm under all conditions, the channel manager should be flexible when using selection criteria.

Who Selects? Who does the selecting? 7 Producers & Manufacturers Objective 6: 7 Who Selects? Who does the selecting? Producers & Manufacturers Wholesale Intermediaries Retail Intermediaries

Securing Channel Members 7 . . . 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

Offering Inducements 7 Good, profitable product line Objective 7: 7 Good, profitable product line Advertising & promotional support Management assistance Fair dealing policies & Friendly relationships

Product Line 7 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

Advertising & Promotion 7 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.

Management Assistance 7 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

Fair Dealing & Friendly Relationship Objective 8: 7 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