Chapter 7

Chapter 7Chapter 7

Selecting the Channel Members

Channel Member SelectionChannel Member Selection

Selection may or may not be the result of channel design.

The last phase of channel design

Firm may need additional outlets to allow for growth

To replace channel members that have left

Selection & Distribution Selection & Distribution IntensityIntensity

The greater the intensity of distribution

The less the emphasis on selection

The Selection ProcessThe Selection Process

1. Finding prospective channel members

3. Securing theprospective

channel membersas actual

channel members

2. Applying selection criteriato determine the

suitability of prospective

channel members

Finding MembersFinding Members

1. Field salesorganization

7. Other sources

5. Advertising

6. Trade shows

2. Trade sources

3. Reseller inquiries

4. Customers

Field Sales OrganizationField 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:

Trade SourcesTrade Sources

• Trade associations• Trade publications• Directories• Trade shows• Firms selling similar

products• The “grapevine”

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

Reseller InquiriesReseller Inquiries

Many firms learn about directinquiries from intermediaries

interested in handling their product.

This is the main source of information about potential new channel

members for some manufacturers.

Firms receiving the highest numberof inquiries are the more

prestigious in their industry.ResellerInquiries

CustomersCustomers

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.

AdvertisingAdvertising

Trade magazine advertisingcan generate a large numberof inquiries from prospective

Members.

It therefore can provide a largepool from which to make selections.

Trade ShowsTrade 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.

Other SourcesOther Sources

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

2. Classified telephone directories or the yellow pages

3. Direct-mail solicitations4. Contacts from previous applications5. Independent consultations6. List brokers that sell lists of names of

businesses7. Business databases8. The Internet

Selection CriteriaSelection Criteria

• Credit & Financial Condition

• Sales Strength• Product Lines• Reputation• Market Coverage

• Sales Performance• Management

Succession• Management Ability• Attitude• Size

Adapting Selection CriteriaAdapting Selection Criteria

Because no list of criteria is adequatefor a firm under all conditions,

the channel manager should be flexible when using selection criteria.

Who Selects New Members?Who Selects New Members?

Producers & Manufacturers

Wholesale Intermediaries

Retail Intermediaries

Securing Channel Members• Manufacturers ask:– Why should this

company carry my products?

• Intermediaries ask:– Why should they

want to distribute products through us?

Offering InducementsOffering Inducements

Good, profitable product line

Advertising & promotional support

Management assistance

Fair dealing policies & Friendly relationships

Product LineProduct Line

Product line inducements:

1. Manufacturer offers good product line withstrong sales & profit potential

2. Stress value of good product line fromchannel members’ perspective

Advertising & PromotionAdvertising & Promotion

Consumer Market:Gain immediate credibility by using a strong program

of national advertising.

Advertising & promotion inducements

Business Market:Gain recognition by using a strong program of

trade paper advertising.

Management AssistanceManagement Assistance

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

Management assistance inducements:

Fair Dealing & Fair Dealing & Friendly RelationshipFriendly Relationship

Channel Leader’s Responsibility:

To convey to prospective channel members thathe or she is genuinely interested in

establishing a good relationship based on trustand concern for their welfare as both business

Entities and as people