Motivating Channel Members

Channel members must be continuously motivated to do their best. The company must sell not only through the intermediaries, but to them. Most producers see gaining intermediary co-operation as the primary problem. They can use the 'carrot-arid-stick1 approach. At times, they offer positive motivators such as higher margins, special deals, premiums, co-operative advertising allowances, display allowances and sales contests. At other times they use negative motivators, such as threatening to reduce margins, to slow down delivery or to end the relationship altogether. A producer using this approach has usually failed to do a good job of studying the needs, problems, strengths and weaknesses of its channel members.

More advanced companies try to forge long-term partnerships with their distributors. This involves building a planned, professionally managed, vertical marketing system that meets the needs of both the manufacturer and the distributors.11 Thus, manufacturers such as P & G are working together with grocery retailers to create superior value for final consumers. They jointly plan merchandising goals and strategies, inventory levels and advertising and promotion plans. By working closely, as opposed to coercively, with these outlets, branded goods manufacturers can increase their chances of successfully selling their company's products. The challenge for companies lies in their ability to convince distributors that they can make their money by being part of an advanced vertical marketing system.

Continue reading here: Evaluating and Controlling Channel Members

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