Motivating channel members

Channel management: “The administration of existing channels to secure the cooperation of channel
members in achieving the firm’s distribution objectives.”
Motivation: Refers to the actions taken by the manufacturer to foster channel member cooperation in
implementing the manufacturer’s distribution objectives.

There are three basic facets involved in motivation management:

1. Finding out the needs and problems of channel members
2. Offering support to the channel members that is consistent with their needs and problems
3. Providing leadership through the effective use of power

Types of channel programs:

Cooperative Arrangements - Intermittent(irregular) interactions between manufacturer &

channel members
Partnerships & Strategic Alliances - Continuing & mutually supportive relationship
Distribution Programming - “A comprehensive set of policies for the promotion of a product
through the channel.” Deals with virtually all aspects of the channel relationship

Product life cycle (PLC): A model for describing the stages through which a product passes.
Trading down: Refers to the addition of lower-priced products or a product line to a product mix than had
typically been offered in the past.
Trading up: Essentially the opposite – adding products or a product line that are
substantially more expensive than other products in the line or mix.
Price points: Specific prices, usually at the retail level, to which consumers have become accustomed.
Forward buying: Channel members load up on the discounted products featured in the promotion by
passing on the lower price to the consumer for just a portion of time. The rest of the product is held in
inventory by the wholesaler or retailer for sale at the regular price after the promotional period has ended.
Gray market: Refers to the sale, usually at very low prices, of brand-name products by unauthorized
distributors or dealers.
Free riding: A term used to describe the behavior of distributors and dealers who offer extremely low
prices but little if any service to customers.

Product life cycle stages

Introductory stage - Ensure that a sufficient member of channel members are available for
adequate market coverage.
Growth stage - Reinforce the adequacy of channel member coverage and monitor the effects of
competitive products on channel member support
Maturity stage - Motivate channel members to mitigate competitive impacts and investigate
possibility for changes in channel structure
Decline stage - Phase out marginal channel members and investigate impact of product deletion
on channel members
Quiz;
1. Among the bases power of leader which do you think is the least effective to use in
motivating channel members? Support your answer
2. Discuss the significance of motivating the channel members
3. True or False. Distribution channels do not have an impact on getting the right product to
the customer at the right place.
4. True or false. Retailers are finding that developing a partnership or long term relationship
with their vendors (channel members) results in more successful placement of their
products.
5. True. Channel design decisions concerned with setting up the channel while channel mgt
deals with running what has already been set up.