Chapter 9Chapter 9

Motivating Channel Members

• Channel Management:– Refers to the administration of existing channels to

secure the cooperation of channel members in achieving the firm’s distribution objectives.

99Channel ManagementChannel Management

Objectives 1 & 2:

• Channel Management:– Refers to the administration of existing channels to

secure the cooperation of channel members in achieving the firm’s distribution objectives.

• 3 main points1. It deals only with existing channels

2. Administrative actions are necessary as members do not automatically cooperate

3. The role distribution plays in achieving success is equally important in managing as it was in design.

99Channel ManagementChannel Management

Objectives 1 & 2:

• A fundamental aspect of channel management is the motivation of members.

• Motivation:– Refers to the actions taken by the channel manager*

to foster channel member cooperation in implementing the channel manager’s* distribution objectives.

• Note:– “Channel manager” was substituted for “manufacturer”

99Motivation ManagementMotivation Management

• 3 Basic Tasks of Motivation Management:

1. Find out the needs and problems of channel members.

2. Offer support to the channel members that is consistent with their needs and problems.

3. Provide leadership through the effective use of power.

99Motivating Channel MembersMotivating Channel Members

Objective 3:

• Members may perceive needs & face problems quite different from channel manager (e.g., manufacturer).

99Channel Members’Channel Members’

Needs and ProblemsNeeds and Problems

Objective 4:

• Members may perceive needs & face problems quite different from channel manager (e.g., manufacturer).– For example…

• Member may not view itself as a “hired” member but only an outlet.

• Member may act first on behalf of its customer not the channel manager who’s seen as second (at best).

• Member may view channel manager’s product as only one in an assortment of many that comprise the member’s overall value proposition.

99Channel Members’Channel Members’

Needs and ProblemsNeeds and Problems

Objective 4:

• Approaches for learning about members’ needs and problems include:

– Research studies by channel members

– Research studies by outside parties

– Marketing channel audits

– Distributor advisory councils

99Channel Members’Channel Members’

Needs and ProblemsNeeds and Problems

• Less than 1% of manufacturers’ research budgets are spent on channel member research

But…

• Manufacturer-initiated research can be useful because certain types of needs or problems may not be obvious without investigation.

99Research Studies by Channel Research Studies by Channel

ManagersManagers

• Why use outside parties to conduct channel research?

1. They tend to provide a higher level of objectivity.

2. They provide a level of expertise that the channel manager may not possess in conducting this type of research.

3. The channel manager may not have a market research function or it may be too small.

99Research Studies by Outside Research Studies by Outside

PartiesParties

• 3 General Tasks Involved:– Gather data on how channel members perceive the

channel manager’s marketing programs as facilitating the performance of distribution.

– Locate the strengths and weaknesses in the individual relationships.

– Learn what is expected of the channel manager to make the channel relationship viable and optimal.

99Marketing Channel AuditsMarketing Channel Audits

• How does one insure that an audit is effective?1. It must identify & define, in detail, the issues

relevant to each dyad within the channel.

2. Issues chosen for the audit should be cross-referenced with any relevant variables (e.g., firm size, geographic location, etc.)

3. It must be conducted periodically so as to capture possible trends/patterns.

99Marketing Channel AuditsMarketing Channel Audits

• Who’s involved?– Top management representatives from a

representative sample of channel member firms.

• What are the benefits?– Provides recognition for the channel members

– Provides a vehicle for identifying and discussing mutual needs & problems

– Results in a overall improvement in channel communication

99Distributor Advisory CouncilsDistributor Advisory Councils

• 3 General Types of Programs:

1. Cooperative Arrangements

2. Partnership or Strategic Alliance

3. Distribution Programming

99Supporting Channel MembersSupporting Channel Members

Objective 5:

• Typical types of cooperative arrangement programs provided by manufacturers:– Cooperative advertising allowances– Contests for buyers, salespeople, etc.– Storage allowances– In-store promotional displays & “monies”– Category managers to assist in managing inventories

& display– Free merchandise

99Cooperative ArrangementsCooperative Arrangements

• 3 General Benefits:

1. Focus on channel members’ needs and problems

2. Simple and straightforward

3. Convey a clear sense of mutual benefit

99Cooperative ArrangementsCooperative Arrangements

• Focus on a continuing and mutually beneficial relationship between the channel members in an effort to provide a more highly motivated team, network, or alliance of channel members.

99Partnerships & Strategic Partnerships & Strategic

AlliancesAlliances

• Channel managers should…1. Make an explicit statement of policies in areas such

as product availability, technical support, pricing, etc.

2. Assess all existing channel members as to their capabilities for fulfilling their roles.

3. Appraise the appropriateness of the policies guiding one’s relationship(s) with the channel members.

99Partnerships & Strategic Partnerships & Strategic

AlliancesAlliances

• Distribution programming:– Refers to a comprehensive set of policies for

the promotion of a product through the channel.

– Is developed as a joint effort between the manufacturer and the other channel member(s) in order to incorporate the needs of all parties involved.

99Distribution ProgrammingDistribution Programming

• Steps performed by the channel manager:– Develop marketing objectives & determine the kinds

of support needed from channel members• Ascertain channel members’ needs & problem areas

– Formulate specific channel policies that determine the overall level of:

• Price concessions to/from channel members• Financial advice or assistance for/from channel members• Protection for/from channel members

99Distribution ProgrammingDistribution Programming

• Cooperative Arrangements– Intermittent interactions between members

• Partnerships or Strategic Alliances– Continuing & mutually supportive relationships

• Distribution Programming– Deals with virtually all aspects of the channel

arrangement

99Relationship DifferencesRelationship Differences

Objective 6:

• Channels are not superior/subordinate systems like intraorganizational systems

– They’re loosely aligned even in V-M channels

– Reward/penalty system is less effective

– Diffused perspective on goals & direction limits overall efficiency even in well-planned channels

• Remember the goal of every channel is to what?

99Selective Use of PowerSelective Use of Power

Objective 7 & 8: