SELECTING CHANNEL MEMBERS
Producers vary in their ability to attract qualified marketing intermediaries. Some producers have no trouble signing up channel members. For example, when Toyota first introduced its Lexus line in the United States, it had no trouble attracting new dealers. In fact, it had to turn down many would-be resellers. In some cases, the promise of exclusive or selective distribution for a desirable product will draw plenty of applicants.
At the other extreme are producers who have to work hard to line up enough qualified intermediaries. When Polaroid started, for example, it could not get photography stores to carry its new cameras, and it had to go to mass-merchandising outlets. Similarly, when the U.S. Time Company first tried to sell its inexpensive Timex watches through regular jewelry stores, most jewelry stores refused to carry them. The company then managed to get its watches into mass-merchandise outlets. This turned out to be a wise decision because of the rapid growth of mass merchandising.
When selecting intermediaries, the company should determine what characteristics distinguish the better ones. It will want to evaluate each channel member's years in business, other lines carried, growth and profit record, cooperativeness, and reputation. If the intermediaries are sales agents, the company will want to evaluate the number and character of other lines carried and the size and quality of the sales force. If the intermediary is a retail store that wants exclusive or selective distribution, the company will want to evaluate the store's customers, location, and future growth potential.
MANAGING AND MOTIVATING CHANNEL MEMBERS
Once selected, channel members must be continuously managed and motivated to do their best. The company must sell not only through the intermediaries but to and with them. Most companies see their intermediaries as first-line customers and partners. They practice strong partner relationship management (PRM) to forge long-term partnerships with channel members. This creates a marketing system that meets the needs of both the company and its partners.
In managing its channels, a company must convince distributors that they can succeed better by working together as a part of a cohesive value delivery system.10 Thus, Procter & Gamble and Wal-Mart work together to create superior value for final consumers. They jointly plan merchandising goals and strategies, inventory levels, and advertising and promotion plans. Similarly, GE Appliances has created an alternative distribution system called CustomerNet to coordinate, support, and motivate its dealers.