Rosenbloom - Revised CH 7

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					                    Chapter 7

Selecting the Channel Members
            Channel Member Selection

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
  Selection & Distribution Intensity

The greater the intensity of distribution

               The less the emphasis on selection
            The Selection Process

                          2. Applying
                                             3. Securing the
                       selection criteria
1. Finding prospective to determine the       prospective
   channel members                          channel members
                         suitability of
                                                as actual
                                            channel members
                       channel members
       Finding Members

                   1. Field sales

   7. Other sources          2. Trade sources

  6. Trade shows              3. Reseller inquiries

5. Advertising                         4. Customers
           Field Sales Organization

 Salespeople are the
  best positioned to              BUT:
 know about potential

• They are often able to   • The manufacturer must
  pick up information        adequately reward
  about likely               salespeople for their
  intermediaries.            time & effort
• They may have lined up     establishing connections.
                    Trade Sources

                                For Example:
                           • Industrial Distribution
• Trade associations         magazine
• Trade publications       • The Verified Directory
• Directories                of Manufacturers’
• Trade shows                Representatives
• Firms selling similar    • The National Association
  products                   of Wholesaler-
• The “grapevine”            Distributors
                           • The National Retail
                           • The Encyclopedia of
            Reseller Inquiries

               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.

                    Firms receiving the highest number
                         of inquiries are the more
                       prestigious in their industry.

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.

       Trade magazine advertising
      can generate a large number
      of inquiries from prospective

  It therefore can provide a large
 pool from which to make selections.
             Trade Shows

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.
               Other Sources

1.   Chambers of commerce, banks, & local real
     estate dealers
2.   Classified telephone directories or the yellow
3.   Direct-mail solicitations
4.   Contacts from previous applications
5.   Independent consultations
6.   List brokers that sell lists of names of
7.   Business databases
8.   The Internet
               Selection Criteria

• Credit & Financial     •   Sales Performance
  Condition              •   Management Succession
• Sales Strength         •   Management Ability
• Product Lines          •   Attitude
• Reputation             •   Size
• Market Coverage
   Adapting Selection Criteria

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

the channel manager should be flexible when
          using selection criteria.
  Who Selects New Members?

Producers & Manufacturers

                        Wholesale Intermediaries

Retail Intermediaries
  Securing Channel Members
• Manufacturers ask:
  – Why should this
    company carry my
• Intermediaries ask:
  – Why should they
    want to distribute
    products through us?
    Offering Inducements

Good, profitable product line

   Advertising & promotional support

                Management assistance

                        Fair dealing policies &
                        Friendly relationships
                 Product Line

             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
      Advertising & Promotion

           Advertising & promotion inducements

                    Consumer Market:
Gain immediate credibility by using a strong program
              of national advertising.

                           Business Market:
         Gain recognition by using a strong program of
                   trade paper advertising.
     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
                    Fair Dealing &
                 Friendly Relationship

        Channel Leader’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

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