7 Selecting the Channel Members. Channel Member Selection and Channel Design The channel member selection is the last phase of channel design (phase 7).

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)

3. Securing theprospective

channel membersas actual

channel members(Choice)

2. Applying selection criteriato determine the

suitability of prospective

channel members(Qualification/Screening)

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

• 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.

Salespeople are the best positioned to

know about potentialintermediaries

BUT:

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 directinquiries from intermediaries

interested in handling their product.

Firms receiving the highest numberof inquiries are the more

prestigious in their industry.

1. Finding a prospective channel members

• Customers

Customers are willing to give frank opinionsabout the intermediaries who call on them.

Manufacturer conducts formal or informal surveys ofcustomers’ views of various distributors.

Manufacturer obtains information aboutpotential intermediaries.

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1. Finding a prospective channel members

• Advertising

Trade magazine advertisingcan generate a large numberof inquiries from prospective

Members.

It therefore can provide a largepool 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 awide variety of potential channel members.

** Small manufacturers meet face-to-face withwholesalers & retailers.

1. Finding a prospective channel members

• Other sources

1. Chambers of commerce, banks, & local real estate dealers

2. Classified telephone directories or the yellow pages3. Direct-mail solicitations4. Contacts from previous applications5. Independent consultations6. List brokers that sell lists of names of businesses7. Business databases8. 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 criteriaDistributor 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 Motivationb) 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 potential2. 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