Effective Working with

Channel Members
By- Group-5
Objectives
 What is channel and who are the
channel members?
 Why companies use distribution
channels and understand the
functions that these channels
perform.
 How Channels can be used
effectively.
 Learn how channel members
interact and how they organize to
perform the work of the channel. 2

 How companies select, motivate,

What Channel is ?
 Distribution (or place) is one of the four elements of
marketing mix. An organization or set of organizations
(go-betweens) involved in the process of making a
product or service available for use or consumption by
a consumer or business user.
The other three parts of the marketing mix are product,
pricing, and promotion.
 Chain of intermediaries, each passing the product down
the chain to the next organization, before it finally
reaches the consumer or end-user. This process is
known as the 'distribution chain' or the 'channel.' Each
of the elements in these chains will have their own
specific needs, which the producer must take into
account, along with those of the all-important end-user.
Channel
 The network made up of the company,
suppliers, distributors, and ultimately
customers who “partner” with each other to
improve the performance of the entire system.
 Different members of Channels :

1.Wholseller
2.Distributor
3.Retailer
4.Consumer
Distribution channel
 A number of alternate 'channels' of
distribution may be available:

Distribution channels may not be restricted

to physical products alone. They may be just
as important for moving a service from
producer to consumer in certain sectors, since
both direct and indirect channels may be
used. Hotels, for example, may sell their
services (typically rooms) directly or through
travel agents, tour operators, airlines, tourist
boards, centralized reservation systems, etc.
Channel structure
Nature & Importance of Marketing
Channels
 Number of Channel Levels

The number of intermediary levels

indicates the length of a marketing
channel.
 Direct Channels
 Indirect Channels

Producers lose more control and face

greater channel complexity as 7
additional channel levels are added.
Nature & ImportancePerformed
Key Functions of Marketing by
Channels
Channel Members
 Information
 Promotion
 Contact
 Matching
 Negotiation
 Physical Distribution
 Financing
 Risk taking

8
Channel Management Decisions

 Selecting Channel Members

 Identify
characteristics that distinguish the
best channel members
 Managing and Motivating Channel
Members
 Partner relationship management (PRM) is
key
 Evaluating Channel Members
 Performance should be checked against
9
standards
 Channel members should be rewarded or
Managerial concerns:
Effective use of channel members
 Channel membership.

 Channel motivation.

 Channel design.

 Monitoring and Managing channels.

Channel membership
 Intensive distribution - Where the majority of
resellers stock the 'product' (with convenience
products, for example, and particularly the brand
leaders in consumer goods markets) price competition
may be evident.
 Selective distribution - This is the normal pattern
(in both consumer and industrial markets) where
'suitable' resellers stock the product.
 Exclusive distribution - Only specially selected
resellers or authorized dealers (typically only one per
geographical area) are allowed to sell the 'product'.
Channel motivation.

 There are many devices for achieving such

motivation. Perhaps the most usual is
`incentive':

 The supplier offers a better margin, to tempt the

owners in the channel to push the product rather than
its competitors; or a competition is offered to the
distributors' sales personnel, so that they are tempted
to push the product
 Different Forms of Incentive/Reward
1.Margin
2.Gifts
3.Tour Packages
4.Certificates
Channel Design Decisions

 Step 1: Analyzing Consumer Needs

Cost and feasibility of meeting needs
must be considered
 Step 2: Setting Channel Objectives
Set channel objectives in terms of
targeted level of customer service
Many factors influence channel
objectives

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Channel Design Decisions

 Step3: Identifying Major

Alternatives
Types of intermediaries
 Company sales force, manufacturer’s
agency, industrial distributors
Number of marketing intermediaries
 Intensive, selective, and exclusive
distribution
Responsibilities of channel members
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Channel Design Decisions

 Step 4: Evaluating Major

Alternatives
Economic criteria
Control issues
Adaptive criteria

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Channel Design Decisions

 Designing International Distribution

Channels
Global marketers usually adapt their
channel strategies to structures that
exist within foreign countries
Key challenges:
 May be complex or hard to penetrate
 May be scattered, inefficient, or totally

lacking
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Monitoring and Managing channels.

 Organization's own sales and distribution

activities need to be monitored and managed,
so will those of the distribution chain.
 In practice, many organizations use a mix of
different channels; in particular, they may
complement
1. Direct sales force, calling on the larger
accounts.
2. Agents, covering the smaller customers and
prospects.
Monitoring Channels/Channel
Members
 Once the Channel is in its place and started
working, it needs to be monitored for effective
working/ Optimum utilization.
 Channel Monitoring Devices/Techniques.

1. Recording Sales Data from all channel

members.
2. Analyzing Performance of channel
members.