Channel Management Decisions
Once the company has reviewed its channel alternatives and decided on the greatest channel design, it has to implement and manage the selected channel. Channel management calls for choosing and motivating specific channel members and evaluating their performance over time.
a. Selecting Channel Members
Producers differ in their ability to drawn qualified marketing intermediaries. Some manufacture has no trouble signing up channel members. In some of cases, the promise of exclusive or selective distribution for a wanted product will draw plenty of applicants.
At the other extreme are manufacturers who have to work hard to line up sufficient qualified intermediaries.
When choosing intermediaries, the company should find out what characteristics distinguish the better ones. It will desire to evaluate each channel member's years in business, other lines carried, cooperativeness, growth and profit record and reputation. If the intermediaries are sales agents, the company will desire to evaluate the number and character of other lines carried and the quality and size of the sales force. If the intermediary is a retail store that desire selective or exclusive distribution, the company will desire to evaluate the store's location, customers and future growth potential.
b. Motivating Channel Members
Once certain, channel members ought to be motivated constantly to do their best. The company ought to sell not only through the intermediaries but to them. Most of the companies see their intermediaries like first-line customers. Some utilized the carrot-and-stick approach: At times they offer positive motivators like special deals, higher margins premiums, display allowances, cooperative advertising allowances and sales contests. At other times they utilized negative motivators, like threatening to decrease margins, to slow down delivery, or to terminate the relationship altogether. A producer by using this approach typically has not done a fine job of studying the problems, need, strengths, and weaknesses of its distributors.
More advanced companies attempt to forge long-term partnerships by their distributors to make a marketing system that meets the requirement of both the manufacturer and the distributors. A company must convince distributors that they may make their money by being part of an advanced marketing system, in managing its channels.
c. Evaluating Channel Members
The producer has to regularly verify the channel member's performance against standards like average inventory levels, sales quotas, customer delivery time, and treatment of damaged, and services to the customer and lost goods, cooperation in company promotion and training programs. The company should identifying and reward intermediaries who are performing well. Those who are performing weakly should be assisted or, as a final resort, replaced. A company can periodically "requalify" its intermediaries and prune the poorer ones.
At last, manufacturers have to be sensitive to their dealers. Those who treat their dealers carelessly risk not only losing their support but also take place some legal problems.