1. Motivating the Channel Members
Part 3: Managing the Marketing Channel
Motivating the Channel Members

2. Channel Management versus Channel Design2
Channel Design
Channel Management
“Setting up”
the channel
“Running”
the channel

3. Motivating Channel Members3
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.

4. 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?

5. Channel Member Needs & Problems4
Approaches for learning about member
needs & problems:
Research studies of channel members (internal)
Research studies by outside parties (why outside parties?)
Marketing channel audits
Distributor advisory councils
Less than 1 percent of manufacturers’ research budgets are spent on channel member research!

6. 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.

7. Effective Marketing Channel Audits?
It must be conducted
periodically so
as to capture
trends &
patterns.
Issues chosen for
the audit should be cross-referenced to any relevant variables.
It should identify and define
in detail the issues relevant to the
Manufacturer-wholesaler and/or
Manufacturer-retailer relationship.

8. 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

9. 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?

10. 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.
Partnership or Strategic alliance – ongoing dependence on long term strategies for both parties.
Distribution programming – often manufacturer initiated – must consider benefits to channel member partners.

11. 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

12. Partnerships & Strategic Alliances
Manufacturer should make explicit statement of
policies in areas such as product availability,
technical support, pricing, etc.
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

13. Distribution Programming
Steps for developing a program:
Manufacturer develops analysis of marketing
objectives & the kinds of levels of support needed
from channel members
• Ascertains channel members’ needs &
problem areas
Formulate specific channel policies that offer:
• Price concessions to channel members
• Financial advice
• Some kind of protection for channel members

14. Relationship Differences6
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