Motivating the Channel Members Part 3: Managing the Marketing Channel Motivating the Channel Members

Channel Management versus Channel Design 2 Channel Design Channel Management “Setting up” the channel “Running” the channel

Motivating Channel Members 3 Basic Framework: 1. Find out the needs and problems of channel members. 2. Offer support to the channel members that is consistent with their needs and problems. 3. Provide leadership through the effective use of power.

Discussion Question #2 The ubiquitous Bic razors, cigarette lighters, and, of course, ballpoint pens are sold by more than 100,000 supermarkets, drugstores, and other mass merchandisers in the United States. Bic Corporation has traditionally relied on large numbers of mass marketers to sell these products. Can Bic Corporation be “partners” with each of the 100,000 retailers selling these products? Explain why or why not?

Channel Member Needs & Problems 4 Approaches for learning about member needs & problems: Research studies of channel members (internal) Research studies by outside parties (why outside parties?) Marketing channel audits Distributor advisory councils Less than 1 percent of manufacturers’ research budgets are spent on channel member research!

Marketing Channel Audits Focus of Channel Manager’s Approach: • Gather data on how channel members perceive the manufacturer’s marketing program and its component parts. • Locate the strengths and weaknesses in the relationships. • Learn what is expected of manufacturers to make the channel relationship viable and optimal.

Effective Marketing Channel Audits? It must be conducted periodically so as to capture trends & patterns. Issues chosen for the audit should be cross-referenced to any relevant variables. It should identify and define in detail the issues relevant to the Manufacturer-wholesaler and/or Manufacturer-retailer relationship.

Distributor Advisory Councils Who is involved? Top management representatives from the manufacturer and from the channel members What are the benefits? • Provides recognition for the channel members • Provides a vehicle for identifying and discussing mutual needs and problems • Results in an overall improvement of channel communications

Discussion Question #7 FilmDistrict, a newly-formed film studio and distributor worked out a deal with Netflix, Inc. to stream new movies over the Internet just a few months after they are released on DVDs. Under the terms of the agreement, new movies from FilmDistrict will be licensed exclusively to Netflix instead of appearing on premium cable channels. Industry observers believe this deal reflects the new realities of changing channels for movies from theaters, home videos, and cable pay TV to online streaming. Netflix also has a similar deal with Relativity Media, the movie company that financed the highly-acclaimed boxing movie, The Fighter. Given the rapid and dramatic changes occurring in film distribution channels, how might partnerships or alliances such as that between Netflix and FilmDistrict be helpful to either firm in managing their distribution channels?

Supporting Channel Members 5 3 Types Of Programs 1. Cooperative – often more short term in nature and needs to convey a clear sense of benefit to both parties. Partnership or Strategic alliance – ongoing dependence on long term strategies for both parties. Distribution programming – often manufacturer initiated – must consider benefits to channel member partners.

Cooperative Arrangements Typical types of cooperative programs provided by manufacturers to channel members Cooperative advertising allowances Payments for interior displays Contests for buyers, salespeople, etc. Allowances for warehousing functions Payments for window display space Detail men who check inventory Demonstrators Coupon-handling allowance Free goods

Partnerships & Strategic Alliances Manufacturer should make explicit statement of policies in areas such as product availability, technical support, pricing, etc. Manufacturer should assess all existing distributors as to their capabilities for fulfilling their roles 3. Manufacturer should continually appraise the appropriateness of the policies guiding his or her relationship with the channel members

Distribution Programming Steps for developing a program: Manufacturer develops analysis of marketing objectives & the kinds of levels of support needed from channel members • Ascertains channel members’ needs & problem areas Formulate specific channel policies that offer: • Price concessions to channel members • Financial advice • Some kind of protection for channel members

Relationship Differences 6 Cooperative Arrangements: Intermittent interactions between manufacturer & channel members Partnerships & Strategic Alliances: Continuing & mutually supportive relationship Distribution Programming: Deals with virtually all aspects of the channel relationship