Presentation on theme: "Motivating the Channel Members"— Presentation transcript:
1 Motivating the Channel Members Part 3: Managing the Marketing ChannelMotivating the Channel Members
2 Channel managementChannel management versus channel designMotivating channel membersChannel member needs and problemsSupporting channel membersRelationship differencesThe selective use of powerLimited control
3 Channel Management1The administration of existing channels to secure the cooperation of channel members in achieving the firm’s distribution objectives.
4 Motivation Management The actions taken by the manufacturers tofoster channel member cooperation inimplementing the manufacturer’sdistribution objectives.
6 Motivating Channel Members 3Basic 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.
7 Channel Member Needs & Problems 4Approaches for learning about memberneeds & problems:Research studies of channel membersResearch studies by outside partiesMarketing channel auditsDistributor advisory councils
8 Research Studies of Channel Members Less than 1 percent of manufacturers’research budgets is spent on channelmember research!BUT,…manufacturer-initiated research can be usefulbecause certain types of needs or problems may not be at all obvious.
9 Research Studies by Outside Parties Why use outside parties to conduct research?They provide a higherassurance of objectivity.They provide a levelof expertise that themanufacturer may notPossess.
10 Marketing Channel Audits Focus of Channel Manager’s Approach:• Gather data on how channel membersperceive the manufacturer’s marketingprogram and its component parts.• Locate the strengths and weaknessesin the relationships.• Learn what is expected of manufacturersto make the channel relationship viableand optimal.
11 Marketing Channel Audits What makes marketing channel audits most effective?Issues chosen forthe audit should be cross-referenced to any relevant variables.It must be conductedperiodically soas to capturetrends &patterns.It should identify and definein detail the issuesrelevant to theManufacturer-wholesalerand/orManufacturer-retailerrelationship.
12 Distributor Advisory Councils Who is involved?Top management representatives from themanufacturer and from the channel membersWhat are the benefits?• Provides recognition for the channel members• Provides a vehicle for identifying and discussingmutual needs and problems• Results in an overall improvement of channelcommunications
13 Supporting Channel Members 53 TypesOfPrograms1. CooperativePartnership orStrategic allianceDistributionprogramming
14 Cooperative Arrangements Focuses on channel member needs & problemsSimple and straightforwardConveys a clear sense of mutual benefit
15 Cooperative Arrangements Typical types of cooperative programsprovided by manufacturers to channel membersCooperative advertising allowancesPayments for interior displaysContests for buyers, salespeople, etc.Allowances for warehousing functionsPayments for window display spaceDetail men who check inventoryDemonstratorsCoupon-handling allowanceFree goods
16 Partnerships & Strategic Alliances Focus on a continuing and mutuallysupportive relationship between themanufacturer and its channel membersin an effort to provide a more highlymotivated team, network, or alliance ofchannel members
17 Partnerships & Strategic Alliances Manufacturer should make explicit statement ofpolicies in areas such as product availability,technical support, pricing, etc.Manufacturer should assess all existing distributorsas to their capabilities for fulfilling their roles3. Manufacturer should continually appraise theappropriateness of the policies guiding hisor her relationship with the channel members
18 Distribution Programming A comprehensive set of policies for thepromotion of a product through thechannelDeveloped as a joint effort between themanufacturer and the channel membersto incorporate the needs of both
19 Distribution Programming Steps for developing a program:Manufacturer develops analysis of marketingobjectives & the kinds of levels of support neededfrom channel members• Ascertains channel members’ needs &problem areasFormulate specific channel policies that offer:• Price concessions to channel members• Financial advice• Some kind of protection for channel members
20 Relationship Differences 6Cooperative Arrangements:Intermittent interactions between manufacturer& channel membersPartnerships & Strategic Alliances:Continuing & mutually supportive relationshipDistribution Programming:Deals with virtually all aspects of thechannel relationship
21 The Selective Use of Power 7The channel managermust exercise effective leadership on acontinuing basis to attain a well-motivatedteam of members.
22 Limited Control 8 Interorganizational System Loosely arranged firms = fewadvantages from central directionReward & penalty system not preciseInterorganizational SystemOverall planning uncoordinatedDiffused perspective necessary to maximizetotal system effort
23 Discussion Question #2The 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?
24 Discussion Question #7FilmDistrict, 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?