Professional Documents
Culture Documents
08
Offers the firm more than it can achieve on its own through the
intermediaries contacts, experience, specialization, and scale of
operation.
Channel intermediaries offer contacts, experience, specialization, and
economies of scale to organizations that cannot offer these attributes on
their own.
– Selecting intermediates that are retail stores that want exclusive or selective
distribution involves evaluating
• Store’s customers
• Store locations
• Growth potential
Describe Channel Management Decisions
• Managing and Motivating Channel Members
• Partner relationship management (PRM) and supply chain management (SCM) software
are used to
• Forge long-term partnerships with channel members
• Recruit, train, organize, manage, motivate, and evaluate channel members
• The company must sell not only through the intermediaries but also to/with them
• Methods to motivate channel partners are:
• Develop a cooperative/collaborative and balanced relationship with the partner
• Understand the partner’s customers – their needs, wants, and demands
• Understand the partner’s business – operationally and financially and what’s really
important to them
• Look at the partner’s needs in terms of customer support, technical support, and
training
• Establish clear and agreed upon expectations and goals
• Develop recognition programs focusing on the partner’s contributions
• Build internal support systems and dedicate resources to the partner
• Evaluating Channel Members
• Produces must evaluate intermediaries performance against such standards as:
• Sales quota attainment
• Average inventory levels
• Customer delivery time
• Treatment of damaged and lost goods
• Cooperation in promotional and training programs.
Channel Design Decisions
• Analyzing consumer needs
• Retailers
• Can be classified by:
• Type of goods being sold( e.g. clothes, grocery, furniture)
• Type of service (e.g. self-service, counter-service)
• Size (e.g. corner shop; superstore)
• Ownership (e.g. privately-owned independent; public-quoted retail
group)
• Location (e.g. rural, city-centre, out-of-town)
• Brand (e.g. nationwide retail brands; local one-shop name)
• Wholesalers
• Franchises
• Agents
What is the importance of middlemen in
channel of distribution?
Agent
Retailer
Retailer
Channels Consumer
for Consumer
consumer
goods Consumer
and
services
Producer Producer Producer Producer
Buyer
Buyer Distributor
Buyer
Channels for
industrial
goods and
services
Illegal Channel Management Activities
Tying Agreements
Full-Line Forcing
Closed Territories
Laws that Govern Channel Management
Activities
• Political theory supported a body of law that promoted equality and fair play
among businesses--interests of the entrepreneur are paramount, even if the end
result is economic inefficiency, which essentially puts the entrepreneur's interests
ahead of that of the consumer.
• Price Discrimination - Most price discrimination issues arise under the Robinson-Patman Act
when a seller offers its otherwise uniform products at different prices due to size or geographic
location of the buyer.
• Tying is an arrangement by which the sale or lease of Product X, which the buyer wants, is
conditioned on the buyer also purchasing Product Y, which the buyer does not necessarily want.
• Exclusive dealing involves a situation in which a buyer contracts to purchase all of its
requirements for a given product exclusively from a particular seller.
Impact of Regulation on Channel Management
Activities continued
• Territorial and Customer Restrictions usually involve attempts by sellers
to divide the targeted market into distinct territorial segments and grant
geographic or customer exclusivity to a given buyer.
• The penalties for failure to obey the federal antitrust laws can be severe, and in
the past have included criminal sanctions, injunctive relief, damages for lost
profits, and in certain cases triple damages.
Gray Market
• A gray market is a market created through the sale or
resale of branded products through unauthorized
dealers or distributors. These are real products showing
up in places in which the firm never expected them to
be sold – and it happens all the time.
• Can and do cause problems for firms. Their existence
can damage channel relationships, foster free-riding,
dilute brands, undermine segmented pricing schemes
and impact the firm’s reputation and legal liability.
Gray Market…continued
• The existence of gray markets can, counter-intuitively,
be somewhat beneficial to the firm.
• There is an opportunity for firms to learn from gray
market activity.
• In order to do so, firms must ask a specific set of questions, such
as:
• Why is it occurring?
• Who is behind this activity?
• Who is buying on the gray market?
• What is being sold?
• When is it being sold?
• How is it being sold?
Explain how Customer Service Facilitates
Order Processing
• In retail selling, bag the merchandise with care. Products
such as glassware may require individual wrapping before
bagging.
• Work quickly to bag your customer’s merchandise and
complete the payment process.
• In business-to-business sales, complete the paperwork
quickly and leave a business card.
Call Customer Online
Center Order
Warehouse
Actions to
Facilitate
Order Inventory
Processing Check
Item Shipped
Customer Service Role in Following Up on
Orders
• Following up with your customers after the sale is an
important part of providing good customer service.
• Should customer have questions or problems it is your duty
to make sure they have a positive experience with your
company.
Ways Technology Impacts the Channel
o Each channel typically has its own software and computer system
o More information is available to all the channel levels and will they use
it correctly?
o Financial records may be viewed by employees/channel members
who do not need that information
Barriers to use of Technology in Channel
Management (continued)
o Channel member employees have to change the way they
used to keep records AND do their job (no change-large
barrier)