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Channel-Management Decisions

After a company has chosen a channel system, it must select, train, motivate, and evaluate intermediaries for each channel. It must also modify channel design and arrangements over time.

Selecting Channel Members

To customers, the channels are the company. Consider the negative impression customers would get if a Mercedes-Benz dealer appeared dirty, inefficient, or unpleasant. Producers should determine what characteristics distinguish the better intermediaries—number of years in business, other lines carried, growth and profit record, financial strength, cooperativeness, and service reputation. If the intermediaries are sales agents, producers should evaluate the number and character of other lines carried and the size and quality of the sales force. If the intermediaries want exclusive distribution, consider their locations, future growth potential, and type of clientele.

Training and Motivating Channel Members

A company needs to view its intermediaries the same way it views its end users—determining their needs and wants and tailoring its channel offering to provide them with superior value. Carefully implemented training, market research, and other capability-building programs can motivate and improve intermediaries’ performance. The company must constantly communicate that intermediaries are crucial partners in a joint effort to satisfy end users of the product.

Producers vary greatly in their channel power, the ability to alter channel members’ behavior so they take actions they would not have taken otherwise.18 Most producers see gaining intermediaries’ cooperation as a huge challenge. In many cases, retailers hold the power, so manufacturers need to know the acceptance criteria used by retail buyers and store managers. More sophisticated companies try to forge a long-term partnership with distributors. The manufacturer clearly communicates what it wants from its distributors in the way of market coverage, inventory levels, and other channel issues, and it may introduce a compensation plan for adhering to the policies.

 
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