2. Objective 1: 77
CChhaannnneell MMeemmbbeerr SSeelleeccttiioonn
• While developing a channel’s structure is
quite complicated…
– It’s equally, if not more, important to select the
right channel members.
– Why?
3. CChhaannnneell MMeemmbbeerr SSeelleeccttiioonn
77
• This is the last phase of channel design
• However,
– It’s most often not the result of channel design
• Instead,
– Occurs more often to
1. Account for additional growth needed
2. Replace members that have left (voluntarily or
involuntarily)
4. RReellaattiioonnsshhiipp wwiitthh
CChhaannnneell DDeessiiggnn
Objective 2: 77
• Firms with direct channels need not worry
(as much*)
• Regarding Intensity…
– The greater (lesser) the intensity of distribution,
the lesser (greater) the emphasis placed on
member selection
– Again, comes back to cost and control
5. 33 SStteepp SSeelleeccttiioonn PPrroocceessss
77
1. Finding prospective channel members
2. Applying selection criteria to determine
the suitability of prospective members
3. Securing the prospective channel members
as actual channel members
6. Objective 3: 77
FFiinnddiinngg PPoossssiibbllee MMeemmbbeerrss
• In order of likely importance to the channel
manager…
1. Field sales organization
2. Trade sources
3. Reseller inquires
4. Customers
5. Advertising and promotion
6. Trade shows
7. Other sources
7. FFiieelldd SSaalleess OOrrggaanniizzaattiioonn
• Salespeople are the best positioned to:
– Pick up information about available or likely
intermediaries
– Know more management & salespeople of
major intermediaries in a territory who are not
currently members
– Have lined up prospective intermediaries
because of existing relationships (even if not
members)
77
8. RReewwaarrddss aarree CCrriittiiccaall ffoorr OOnnee’’ss
FFiieelldd SSaalleess OOrrggaanniizzaattiioonn
• Possible problems include:
– Manufacturers may not adequately reward their
salespeople for their time and effort in
establishing these connections
• Rewards are often sales volume focused
– Rewards push salespeople to work outside their
existing, or formalized, roles
– Remember Bucklin’s Payoff & Tolerance Functions?
77
9. TTrraaddee SSoouurrcceess
• Often the most specific information regarding
an industry come from these sources
– Include
• Trade associations
• Trade publications
• Directories
• Trade shows
• Firms selling similar products
• The “grapevine”
77
10. RReesseelllleerr IInnqquuiirreess
77
• Occurs when a channel manager learns about
possible future members through direct
inquires from those interested in handling their
products or selling through their firms (e.g.,
retailers & wholesalers)
• Often the main source of information about
possible future members
• However, firms receiving the highest number
of inquires are often the more prestigious &
thus less likely in need because of their success
11. CCuussttoommeerr SSoouurrcceess
77
• Customers are often willing to give frank
opinions about the intermediaries who source
them.
– Can be…
• Business customers, or
• End users
• One of the best ways to gain information about
potential members is through formal or
informal surveying
12. TTrraaddee PPuubblliiccaattiioonn AAddvveerrttiissiinngg
77
• Can generate a large number of inquires
(from both up & down the channel)
– Often leads to a large pool from which to select
– But,
– Has great potential to generate a large pool of
ill-fitted applicants too. Why?*
13. TTrraaddee SShhoowwss && CCoonnvveennttiioonnss
77
• Attending annual conventions gives the
channel manager access to a wide variety of
potential channel members at one place an
time
• Extremely beneficial to small manufacturers &
retailers to meet with firms who might be
interested in their market strategy to provide a
unique advantage only available from a small
firm (e.g., less power, better info, etc.)
14. OOtthheerr PPoossssiibbllee SSoouurrcceess
77
1. Chambers of commerce, banks, & local real estate
dealers
2. Classified telephone directories or the yellow
pages
3. Direct-mail solicitations
4. Contacts from previous applications
5. Independent consultations
6. List brokers that sell lists of names of businesses
7. Business databases
8. The Internet
16. Objective 5: 77
AAddaappttiinngg SSeelleeccttiioonn CCrriitteerriiaa
• Just like no heuristic is always true because
of the interconnectedness of the 4Ps…
• No list of criteria is adequate for a firm in
all conditions
– Channel managers must be flexible when using
selection criteria and account for factors that
are likely to be firm- or industry-specific
17. Objective 6: 77
SSeeccuurriinngg CChhaannnneell MMeemmbbeerrss
• Often a 2-way street
– Size & prestige will change extent of 2-way
• An effective selling job is necessary to
secure good intermediaries
– A function of:
• Channel positioning
• Inducements used
– Must highlight manager’s commitment to support channel
& be mutually beneficial to both parties
18. Objective 7: 77
OOffffeerriinngg IInndduucceemmeennttss
• Often the more explicit in spelling out kinds
of support, the better
– Members want to know “what’s in it for them”
• While many types of possible inducements
exist, most will fit into one of four areas
1. Product line
2. Advertising & promotion
3. Management assistance
4. Fair dealing & friendly relationships
19. PPrroodduucctt LLiinnee IInndduucceemmeennttss
77
• Product line inducements…
1. Include manufacturers offering good product
lines with strong sales figures and profit
potentials
2. Should stress value of a good product line
from the channel member’s perspective
20. AAddvveerrttiissiinngg && PPrroommoottiioonn
IInndduucceemmeennttss
77
• Advertising and promotions inducements…
– In the consumer market
• Should gain immediate creditability by using a
strong program of national advertising
– In the industrial market
• Should gain recognition by using a strong program
of trade paper advertising
21. MMaannaaggeemmeenntt AAssssiissttaannccee
aass aann IInndduucceemmeenntt
77
• Management assistance inducements…
– Should highlight to prospective members where
the channel manager will help with the
following:
1. Training
2. Financial analysis & planning
3. Market analysis
4. Inventory control
5. Effective promotion (both methods & support)
22. FFaaiirr DDeeaalliinngg &&
Objective 8: 77
FFrriieennddllyy RReellaattiioonnsshhiippss
• It’s the channel manager’s responsibility
to…
1. Convey they s/he is genuinely interested in
establishing a good relationship based on trust
2. Demonstrate concern for the well-being of all
members both as business entities and as
people in general
