©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to...

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

CHAPTER 9

Motivating the Channel Members

Part 3: Managing the Marketing Channel


2


Learn

ing

Obje

ctiv

es

① Channel management

② Channel management versus channel design

③ Motivating channel members

④ Channel member needs and problems

⑤ Supporting channel members

⑥ Relationship differences

⑦ The selective use of power

⑧ Limited control



Objective Channel Management 1

The administration of existing

channels to secure the

cooperation of channel

members in achieving the firm’s

distribution objectives.



Motivation Management

The actions taken by the

manufacturers to

foster channel member

cooperation in

implementing the manufacturer’s

distribution objectives.



Objective Channel Management versus

Channel Design

“Setting up” the channel

Channel Design Channel Management

“Running” the channel

2



Objective

Motivating Channel Members

Basic Framework:

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.

3



Objective Channel Member

Needs & Problems

• Research studies of channel members

• Research studies by outside parties

• Marketing channel audits

• Distributor advisory councils

4

Approaches for learning about member

needs & problems:



Research Studies of Channel Members

BUT,

…manufacturer-initiated research can be useful

because certain types of needs or problems may not be at all obvious.

Less than 1 percent of manufacturers’

research budgets is spent on channel

member research!



Research Studies by Outside Parties

Why use outside parties to conduct research?

They provide a higher

assurance of objectivity.

They provide a level

of expertise that the

manufacturer may not

Possess.



Marketing Channel Audits

• Gather data on how channel members

perceive the manufacturer’s marketing

program and its component parts.

• Locate the strengths and weaknesses

in the relationships.

• Learn what is expected of manufacturers

to make the channel relationship viable

and optimal.

Focus of Channel Manager’s Approach:



Marketing Channel Audits

What makes marketing channel audits most effective?

It should identify and definein detail the issues

relevant to the Manufacturer-wholesaler

and/or Manufacturer-retailer

relationship.

Issues chosen for

the audit should be cross-

referenced to any relevant

variables.

It must be conducted

periodically soas to capture

trends &patterns.



Distributor Advisory Councils

Who is involved?

Top management representatives from the manufacturer and from the channel members

What are the benefits?

• Provides recognition for the channel members

• Provides a vehicle for identifying and discussing mutual needs and problems

• Results in an overall improvement of channel communications



Objective Supporting Channel Members5

3 TypesOf

Programs

1. Cooperative

3. Distributionprogramming

2. Partnership or Strategic alliance



Cooperative Arrangements

Focuses on channel member needs &

problems

Simple and straightforwar

d

Conveys a clear sense of

mutual benefit



Cooperative Arrangements

• Cooperative advertising allowances• Payments for interior displays• Contests for buyers, salespeople,

etc.• Allowances for warehousing

functions• Payments for window display space• Detail men who check inventory• Demonstrators• Coupon-handling allowance• Free goods

Typical types of cooperative programsprovided by manufacturers to channel

members



Partnerships & Strategic Alliances

Focus on a continuing and mutually

supportive relationship between the

manufacturer and its channel members

in an effort to provide a more highly

motivated team, network, or alliance of

channel members



Partnerships & Strategic Alliances

1. Manufacturer should make explicit statement ofpolicies in areas such as product availability,technical support, pricing, etc.

2. Manufacturer should assess all existing distributors as to their capabilities for fulfilling their roles

3. Manufacturer should continually appraise the appropriateness of the policies guiding his or her relationship with the channel members



Distribution Programming

A comprehensive set of policies for the

promotion of a product through the

channel

Developed as a joint effort between the

manufacturer and the channel members

to incorporate the needs of both



Distribution Programming

Steps for developing a program:

1. Manufacturer develops analysis of marketingobjectives & the kinds of levels of support neededfrom channel members

• Ascertains channel members’ needs & problem areas

2. Formulate specific channel policies that offer:

• Price concessions to channel members

• Financial advice

• Some kind of protection for channel members



Objective Relationship Differences

Cooperative Arrangements:

Intermittent interactions between manufacturer

& channel members

Partnerships & Strategic Alliances:

Continuing & mutually supportive relationship

Distribution Programming:

Deals with virtually all aspects of the

channel relationship

6



Objective The Selective Use of Power

The channel manager

must exercise effective leadership on a

continuing basis to attain a well-motivated

team of members.

7



Objective

Interorganizational System

Loosely arranged firms = few advantages from central direction

Reward & penalty system not precise

Overall planning uncoordinated

Diffused perspective necessary to maximize total system effort

Limited Control8



Discussion Question #2

The ubiquitous Bic razors, cigarette lighters, and, of course, ballpoint pens are sold by more than 100,000 supermarkets, drugstores, and other mass merchandisers in the United States. Bic Corporation has traditionally relied on large numbers of mass marketers to sell these products.

Can Bic Corporation be “partners” with each of the 100,000 retailers selling these products? Explain why or why not?



Discussion Question #7

FilmDistrict, a newly-formed film studio and distributor worked out a deal with Netflix, Inc. to stream new movies over the Internet just a few months after they are released on DVDs. Under the terms of the agreement, new movies from FilmDistrict will be licensed exclusively to Netflix instead of appearing on premium cable channels. Industry observers believe this deal reflects the new realities of changing channels for movies from theaters, home videos, and cable pay TV to online streaming. Netflix also has a similar deal with Relativity Media, the movie company that financed the highly-acclaimed boxing movie, The Fighter.

Given the rapid and dramatic changes occurring in film distribution channels, how might partnerships or alliances such as that between Netflix and FilmDistrict be helpful to either firm in managing their distribution channels?

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