1. Chapter 7
Selecting the Channel Members

2. 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

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

4. 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

5. 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

6. Field Sales Organization7
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.

7. 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”

8. 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.

9. = 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.

10. 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.

11. ** 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.

12. 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

13. 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

14. 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.

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

16. Securing Channel Members7
. . . 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

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

18. 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

19. Advertising & Promotion7
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.

20. Management Assistance7
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

21. 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