CHAPTER 9

Motivating the Channel Members

Part 3: Managing the Marketing Channel

Objective Channel Management versus

Channel Design

“Setting up” the channel

Channel Design Channel Management

“Running” the channel

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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.

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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?

Objective

Channel Member Needs & Problems

• Research studies of channel members (internal)

• Research studies by outside parties (why outside parties?)

• Marketing channel audits

• Distributor advisory councils

4 Approaches for learning about member needs & problems:

Less than 1 percent of manufacturers’ research budgets are spent on channel

member research!

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:

Effective Marketing Channel Audits?

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

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?

Objective Supporting Channel Members5

3 Types Of Programs

1. Cooperative – often more short term in nature and needs to convey a clear

sense of benefit to both parties.

3. Distribution programming – often manufacturer initiated – must consider benefits to channel member partners.

2. Partnership or Strategic alliance – ongoing dependence on long term

strategies for both parties.

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

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

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 thechannel relationship

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