Selecting the Channel Members

1
Chapter 7

• Selecting the Channel Members

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Channel Member Selection
7
Objective 1
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
The greater the intensity of distribution
The less the emphasis on selection
4
The Selection Process
7
2. Applying selection criteria to determine the
suitability of prospective channel members

• Finding prospective
• channel members

3. Securing the prospective channel members as
actual channel members


5
Finding Members

Objective 3
7

• Field sales
• organization

7. Other sources
2. Trade sources
6. Trade shows
3. Reseller inquiries
5. Advertising
4. Customers
6
Field Sales Organization
7
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-Distributor
  s
• 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.
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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.
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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
Objective 4

• Credit Financial Condition
• Sales Strength
• Product Lines
• Reputation
• Market Coverage

• Sales Performance
• Management Succession
• Management Ability
• Attitude
• Size

14
Adapting Selection Criteria
7
Objective 5
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?
7
Objective 6
Who does the selecting?
Producers Manufacturers
Wholesale Intermediaries
Retail Intermediaries
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Securing Channel Members
7
. . . 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

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Offering Inducements
7
Objective 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 Promotion
7
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 Assistance
7
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
7
Objective 8
Manufacturers 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