Part 3: Managing the Marketing Channel

CHAPTER 9
Motivating the
Channel Members

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 ① Channel management
Learning Objectives

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
2

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Objective
Channel Management
1

The administration of existing

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

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 Motivation Management

The actions taken by the

manufacturers to
foster channel member cooperation in
implementing the manufacturer’s
distribution objectives.

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Objective
Channel Management versus
2 Channel Design

Channel Design Channel Management

“Setting up” “Running”

the channel the channel

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Objective
Motivating Channel Members
3

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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Objective
Channel Member
4 Needs & Problems
Approaches for learning about
member
needs & problems:

• Research studies of channel members

• Research studies by outside parties
• Marketing channel audits
• Distributor advisory councils

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 Research Studies of Channel
Members

Less than 1 percent of manufacturers’

research budgets is spent on channel
member research!
BUT,

…manufacturer-initiated research can be useful

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

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 Research Studies by Outside Parties

Why use outside parties to conduct research?

They provide a higher They provide a level

assurance of of expertise that the
objectivity. manufacturer may not
Possess.

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 Marketing Channel Audits

Focus of Channel Manager’s

Approach:

• 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.

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 Marketing Channel Audits
What makes marketing channel audits most effective?

Issues chosen for It must be

the audit should be conducted
cross-referenced to periodically so
any relevant as to capture
variables. trends &
patterns.

It should identify and define

in detail the issues
relevant to the
Manufacturer-wholesaler
and/or
Manufacturer-retailer
relationship.
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 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

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 Supporting Channel Members
Objective

5
3 Types
Of
Programs

1. Cooperative

2. Partnership or
Strategic alliance

3. Distribution
programming
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 Cooperative Arrangements
Focuses on channel
member needs &
problems

Simple and
straightforward

Conveys a clear
sense of mutual
benefit

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 Cooperative Arrangements
Typical types of cooperative programs
provided by manufacturers to channel
members

• 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
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 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

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 Partnerships & Strategic Alliances

1. Manufacturer should make explicit statement of

policies 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

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 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

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 Distribution Programming
Steps for developing a program:
1. Manufacturer develops analysis of marketing
objectives & the kinds of levels of support needed
from 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

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 Relationship Differences
Objective

6
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

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Objective
The Selective Use of Power
7

The channel manager

must exercise effective leadership on a
continuing basis to attain a well-motivated
team of members.

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Objective
Limited Control
8
Loosely arranged firms = few
advantages from central direction

Reward & penalty system not precise

Interorganizational System

Overall planning uncoordinated

Diffused perspective necessary to maximize

total system effort

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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?

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 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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