7 Selecting the Channel

Members
 Channel Member Selection and Channel
Design
• The channel member selection is the last phase of
channel design (phase 7).

• Selection decisions can also be made independently

of channel design decisions when new channel
members are added to the channel or when those
who have left are replaced.
• Only those manufacturers who sell directly to users
are not faced with the selection of channel members.
 The Selection Process
1. Finding prospective channel members

2. Applying selection criteria to determine the

suitability of prospective channel members

3. Securing the prospective channel members

as actual channel members
 The Selection Process

2. Applying 3. Securing the

1. Finding prospective selection criteria prospective
channel members to determine the channel members
(Search) suitability of as actual
prospective channel members
channel members (Choice)
(Qualification/Screening)
1. Finding a prospective channel members

Variety of sources:
• Field sales organization
• Trade sources
• Reseller inquiries
• Customers
• Advertising
• Trade shows
• Other sources
 1. Finding a prospective channel members

• Field sales organization

Salespeople are the

best positioned to
know about potential BUT:
intermediaries

• They are often able to pick up • The manufacturer must adequately

information about likely reward salespeople for their time &
intermediaries. effort establishing connections.
• They may have lined up
prospective intermediaries.
 1. Finding a prospective channel members
• Trade sources
• Trade associations
• Trade publications
• Directories
• Trade shows
• Firms selling similar products
For Example:
• Industrial Distribution magazine
• The Verified Directory of
Manufacturers’ Representatives
• The National Association of
Wholesaler-Distributors
• The National Retail Federation
• The Encyclopedia of
Associations
1. Finding a prospective channel members

• Reseller inquiries

Many firms learn about direct

inquiries from intermediaries
interested in handling their product.

Firms receiving the highest number

of inquiries are the more
prestigious in their industry.
1. Finding a prospective channel members

• Customers
Customers are willing to give frank opinions
about the intermediaries who call on them.

Manufacturer conducts formal or informal surveys of

customers’ views of various distributors.

=
Manufacturer obtains information about
potential intermediaries.
1. Finding a prospective channel members

• Advertising
Trade magazine advertising
can generate a large number
of inquiries from prospective
Members.

It therefore can provide a large

pool from which to make selections.
1. Finding a prospective channel members

• Trade shows

Wholesale and retail trade associations

hold annual conventions.

Attending manufacturers have access to a

wide variety of potential channel members.

** Small manufacturers meet face-to-face with

wholesalers & retailers.
1. Finding a prospective channel members

• Other sources

1. Chambers of commerce, banks, & local real estate

dealers
2. Classified telephone directories or the yellow pages
3. Direct-mail solicitations
4. Contacts from previous applications
5. Independent consultations
6. List brokers that sell lists of names of businesses
7. Business databases
8. The Internet
 2 Applying selection criteria
• Channel Member Selection Criteria by
Pegram

• Credit & Financial • Sales Performance

Condition • Management Succession
• Sales Strength • Management Ability
• Product Lines • Attitude
• Reputation • Size
• Market Coverage
 2 Applying selection criteria
Distributor Selection Criteria Used by
Manufacturers (Descending Order)
• U. K. Firms • U.S. Firms
– Knowledge of market – Knowledge of the market
– Market coverage – Market coverage
– Enthusiasm for the product – Previous success
– Number and quality of sales – Number and quality of sales
personnel personnel
– Knowledge of the product – Enthusiasm for the product

Ex) Two Types of Channel Member Qualification:

a) Qualification of Reseller’s Ability and Motivation
b) Qualification using general criteria and qualification using special criteria
 2 Applying selection criteria
• Screening Channel Member Candidates

Guidelines:
– Think about your target market segments.
– Level & type of support required by the channel member.
– Pick your distributor carefully – weighing all factors;
product, size, service, capability.
– Remember selling & distribution requirements change
over time.
 3 Securing the channel members
• Offering Inducements

1. Good, profitable product line

2. Advertising & promotional support

3. Management assistance

4. Fair dealing policies &

Friendly relationships
 3 Securing the channel members
1. Good, profitable Product Line

Product line inducements:

1. Manufacturer offers good product line with strong
sales & profit potential
2. Stress value of good product line from channel
members’ perspective
 3 Securing the channel members
2. Advertising & Promotion

Advertising & promotion inducements:

• Consumer Market: Gain immediate credibility
by using a strong program of national
advertising.
• Industrial Market: Gain recognition by using a
strong program of trade advertising.
 3 Securing the channel members
3. Management Assistance

Management assistance inducements:

Prospective members want to know whether the
manufacturer will help with the following:
• training programs
• financial analysis & planning
• market analysis
• inventory control procedures
• promotional methods
 3 Securing the channel members
4. Fair Dealing & Friendly Relationship

Manufacturer’s Responsibility:

• To establish a good relationship based on trust

and concern for their welfare as both business
entities and as people