Motivating And Compensating Channel Members

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  • Amity Business School
  • Motivating And Compensating Channel Members

    1. 1. Amity Business School MBA Class of 2010, Semester II Distribution & Logistics Management Ms.Vandana Gupta
    2. 2. MOTIVATION <ul><li>Financial rewards </li></ul><ul><li>Non Financial rewards </li></ul>
    3. 3. Financial Rewards include <ul><li>Higher Margins </li></ul><ul><li>Extended credit time </li></ul><ul><li>Bonuses </li></ul><ul><li>Reimbursement of expenses </li></ul>
    4. 4. <ul><li>The problem with most financial rewards, particularly higher margins and bonus, is that the wholesalers use them to reduce their prices for their customers. </li></ul>
    5. 5. Non Financial rewards include <ul><li>Contests </li></ul><ul><li>Public recognition for higher performance through momentos </li></ul><ul><li>paid holidays at company expense </li></ul><ul><li>Trainings </li></ul>
    6. 6. COMPENSATING CHANNEL MEMBERS <ul><li>According to Stern and Ansary , Compensation to intermediaries should be paid only for what they actually do with in the system. </li></ul>
    7. 7. Forms of compensating intermediaries <ul><li>Quantity Discount </li></ul><ul><li>Trade Discount </li></ul><ul><li>Commission </li></ul>
    8. 8. Quantity Discount <ul><li>A form of compensation given to an intermediary, whether agent or merchant, in respect of the quantum of sale. </li></ul>
    9. 9. Trade Discount <ul><li>A form of compensation usually adopted to compensate a merchant middlemen who is appointed as a distributor or dealer and agrees to various forms of channel controls exercised by a manufacturer for whom they work. </li></ul>
    10. 10. Commission <ul><li>It is paid to agent intermediaries for the services rendered by them which usually include assisting in ownership transfer, negotiation, order booking, financing, promotion, debt recovery etc. </li></ul><ul><li>It is calculated as a percent of the total amount or volume of sales generated by them. </li></ul>

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