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