Guc 1951 53 7183 2021-04-06T11 16 54

Marketing Channels
Lecture Four
Noha El-Bassiouny
Page 1
Course Outline
Lecture 1: Lecture 2: Lecture 3:
Defined Channels Process of Channel Service Output
(Design + MNGT) Design Demands
Lecture 4: Lecture 5: Lecture 6:

Channel Channel Selection Competitive Analysis
Management Criteria and Strategy
Lecture 8:
Lecture 7: Lecture 9:
Marketing Channel
Channel Strategies Electronic Marketing
Macroinfluences and
(Cont’d) Channels
Internal Variables
Noha El-Bassiouny Page 2

Channel Management
• “You do not own your channel. Your

distributors do. Therefore, you can not
control your channel. The best you can do is
manage it – and that is a full-time job!”
– (Rolnicki, 1998: 125-6)
Page 3
•
Excerpts from Previous Unilever Lecture
• Direct Interaction with

Shoppers
• Self Service
• Always Promotes Value for
Money
• Sell almost at listing cost
• Category Management &
Visibility
• Wide range of local and
imported products in
different categories

Ramping Up a New Distributor
1. Declare a Ramp-Up period of 3-6 months.
2. Assign a mentor to the new distributor (customer support
person?)
3. Look for a champion on the distributor’s employees list.
4. Introduce the new distributor to your customers – press
releases?
5. Help the distributor take over existing accounts (from the
old distributor?)
6. Provide enough product samples and info to all the new
distributor’s sales staff.
7. Give plenty of positive feedback.
8. Regard the relationship as a strategic alliance.
Reversing Channel Decisions is Costly
Page 8
Golden Rules
1. Be honest and accurate consistently - even if it’s painful.
Bad News should be heard directly from the Channelmaster
Page 9
Golden Rules
2. Communicate with every level of personnel to ensure the most
accurate and complete transmission of your channel information
flows.
Network with different positions in the distributor’s personnel chart
Page 10
Golden Rules
3. Consider the needs of your channel before you implement new
policies.
Forecasting sales/price increase/product development -> Consult

with your channels.
Page 11
Golden Rules
4. Use the Channel Telegraph Judiciously
Distributors do network! Reputation counts… Actions

should take consequences into account.
Page 12
Golden Rules
5. Communicate with other friendly channel MRKT managers
in your industry or marketplace
Avoid the “Ivory Tower” approach! Intra-channel lines of

communication affect performance metrics…
Page 13
Two Main Reasons for Channel Conflict
1. Oversaturation/
Overdistribution
Noha El-Bassiouny Page 14 (Rolnicki, 1998)

Two Main Reasons for Channel Conflict
2. The Phantom Channel
Occurs when an unauthorized distributor unethically

acquires the product from one of your authorized channel
members, and then resells it to its customers…
Page 15
Effective Channel Communications Mechanisms
FOUR Communication Tools to Nurture Relationship:
1. Field Visits by Manufacturer Personnel:

• Reflect commitment and professionalism.
• Provide insight into the business situation of the channel
members.
• Make company expertise available to distributor
(improving materials handling, cutting costs, and other
performance metrics)
• Line up field visits during: New product developments,
regional sales meetings, sales and product trainings,
major policy changes, etc.
• With some eagle partners, companies even swap
employees for a short while!
Page 16
2. Joint Sales Calls:

• Lead and then support…
• Take care: Pricing is the responsibility of the distributor
salesperson – don’t meddle with that…

3. Channel Advisory Councils:

• Message: “I value your input and excellent performance”
• Serves the communication.
• Make joining the advisory council like a privilege by giving
it a name like President’s Club, Eagle Distributors’ Club,
etc..
Page 18
4. A Media Communications Program:

• National space advertising in leading trade and market
magazines
• Direct mail campaigns
• Telemarketing efforts
• PR News Releases
• National exhibits
• Product literature

Five Channel Management Mechanisms
1. A business policy statement that clearly states how

manufacturer and distributor will do business together –
Role Conflicts!
2. A mutually agreed-upon contract that legally formalizes
the business relationship – Misinterpretation of
policies!
3. Compensation – Cost-Based vs. Value-Based
Compensation…
4. Sales Force Management – Have both direct sales force
and indirect COD report to the SAME manager!
5. 5- A mini-marketing plan.
Page 20
Sample Mini-Marketing Plan (MANF & DISTR.)

Critical Event Chart – Channel Efficiency

Channel Evaluation - Audit
“A quarterly audit is a check-and-balance vehicle that lets you
and your distributor probe the health of your business
relationship and take corrective action to improve it”
Covers:
• Overall policies and procedures
• Sales force performance
• New product performance
• Existing product performance
• Senior management contract/relationship
• Competitive activity
• New emerging markets
• Other complaints or compliments!

Channel Evaluation - Audit
After auditing comes EVALUATION (V.I. for PROJECT):
1. Historical Sales Performance.

2. Performance against other channel members.
3. Performance compared to quota.
4. Specific market sales.
5. Specific product sales.
6. Specific product mix sales.
7. Profit Contribution (Equity Principle!)
8. International Sales.
9. Selling Capabilities.
10. Inventory Management.
11. Future Growth Potential.
12. Repair/Service.
13. Extraordinary Cooperation.
14. COOP Advertising?
15. Account Size?
16. Revenue per Salesperson?

Channel Power
Manufacturers have power when their
product is important to the distributor
(& the Market)
Reward Power
Coercive Power
Bases of Power
Channel Control Legitimate Power
Referent Power
Expert Power
Noha El-Bassiouny Page 25 (Rosenbloom, 2004)

Channel Power
Make the product easier to sell …
Use rewards/motivation system …
Page 26
The 80/20 Rule
Important to keep the 20% of distributors that

generate 80% of profits without conflict!
Page 27
Homework for next class
Read:
• Ch. 9 in Rolnicki (1998)
• Ch. 4 in Rosenbloom (2004: pp. 127-
132) – Power Types.
Note: Complete citations for

references used in this course are in
course outline.

Thank you !

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Marketing Channels

Lecture 4: Lecture 5: Lecture 6:

Noha El-Bassiouny Page 2

• “You do not own your channel. Your

– (Rolnicki, 1998: 125-6)

• Direct Interaction with

Noha El-Bassiouny Page 7

Reversing Channel Decisions is Costly

Bad News should be heard directly from the Channelmaster

Network with different positions in the distributor’s personnel chart

Forecasting sales/price increase/product development -> Consult

Distributors do network! Reputation counts… Actions

Avoid the “Ivory Tower” approach! Intra-channel lines of

Noha El-Bassiouny Page 14 (Rolnicki, 1998)

2. The Phantom Channel

Occurs when an unauthorized distributor unethically

FOUR Communication Tools to Nurture Relationship:

1. Field Visits by Manufacturer Personnel:

FOUR Communication Tools to Nurture Relationship:

2. Joint Sales Calls:

Noha El-Bassiouny Page 17

FOUR Communication Tools to Nurture Relationship:

3. Channel Advisory Councils:

FOUR Communication Tools to Nurture Relationship:

4. A Media Communications Program:

Noha El-Bassiouny Page 19

1. A business policy statement that clearly states how

Noha El-Bassiouny Page 21 (Rolnicki, 1998)

Noha El-Bassiouny Page 22 (Rolnicki, 1998)

Noha El-Bassiouny Page 23

1. Historical Sales Performance.

Noha El-Bassiouny Page 24

Noha El-Bassiouny Page 25 (Rosenbloom, 2004)

Make the product easier to sell …

Use rewards/motivation system …

Important to keep the 20% of distributors that

Note: Complete citations for

Noha El-Bassiouny Page 28

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