SELECTION OF CHANNEL MEMBERS

DEFINITION: CHANNEL SELECTION is the Process by which distributors or members are selected, who will be
part of this Value Transfer Network.

The company must define, based on the OBJECTIVES and the ENVIRONMENTAL CONDITIONS , that channel
alternative that allows the established Strategies to be achieved.

A Distribution Channel constitutes an ASSET for the company because of the following:

a- The importance of your SCOPE

b- Its ECONOMIC - FINANCIAL concept
c- Your ADAPTABILITY to changes

CRITERIA FOR CHANNEL SELECTION.

THE CRITERIA constitute:

 The Legal Framework based on which the Distributor must work.
 It is the set of Rules or path that the Manufacturer delimits with the Distributor
 It is the Point where the Manufacturer has NO loss of Control in the Channel since it is this who establishes
the conditions.

Selection Criteria that the Manufacturer takes into account:

1) OBJECTIVITY
2) UPDATE
3) MARKET ORIENTATION
OAORS
4) COST EFFECTIVENESS
5) MARKETING SERVICES AND FUNCTIONS

The Criteria are further classified into:

A. QUANTITATIVE

 Number of clients to serve

 Stock Maintenance
 Sales Financing
 Marginal Contribution
 Product Lines to Distribute

B. QUALITATIVE

 Nature of the Products

 Shopping habits
 Competitive Strategies
CONDITIONS TO TAKE INTO ACCOUNT FOR CHANNELS SELECTION
1- KIND OF PRODUCT

 PRODUCT CLASS : perishable, industrial consumption, specific

 TARGET OR TARGET MARKET: if it covers the entire population, only adolescents, children, women, etc.

 TARGET CHARACTERISTICS : Purchasing habits, place consumers prefer to shop, frequency of purchase.
Etc.

2- THE COMPETITION

 DIRECT : if there are similar products on the market that satisfy the same need of the consumer that the
company serves

 INDIRECT: NO EXISTENCE of similar products on the market, but there are Substitute Products that satisfy
the same needs

 NO COMPETITION : It is an ABSOLUTE MONOPOLY

3- COMPANY STRUCTURE (MANUFACTURER)

 HUMAN RESOURCES : Sufficient or training required

 FINANCIAL CAPACITY : adequate or external credits are needed

 DEPOSITS : are they owned or must be rented, and if the geographic location is correct.

 TECHNOLOGY: if it is Current or Obsolete

 SERVICE:
1- Direct: Own company
2- Indirect : personnel who work exclusively for the company but become part of
it
3- Hired : External to the company
4- EXPERIENCE

 It refers to the experience that the Intermediaries have to bring the product to the Point of Sale.
 In general, the Intermediary usually handles the Channel, unless the Manufacturer is a very strong brand.

MANAGEMENT AND MOTIVATION OF CHANNEL MEMBERS

After selecting Channel members, they must be continuously motivated to ensure that they give their best
effort.

MOTIVATION STRATEGIES

POSITIVE MOTIVATORS (+)

 Incentives: if the intermediary sells x amount of product, he or she obtains a commission or prize. For
example: of the 10,000 liters of oil that the manufacturer gives to the intermediary to sell, he only charges
them for 8,000 liters.
 Wider margins
 Special offers
 Bonuses
 Complements for corporate advertising
 Accessories for exhibition and sales contests

NEGATIVE MOTIVATORS (-)

 They are forced to sell to an intermediary, under pressure that if they do not do so, another
intermediary will be replaced.
 Threats of reducing margins
 Slow down delivery
 End the relationship

TRAINING OF CHANNEL MEMBERS

The company must plan and implement training programs for its distributors:

Training Forms

Take courses and take certification exams

Conference meeting where the instructor explains the procedures
Use customer surveys to evaluate performance.

EVALUATION OF THE PERFORMANCE OF CHANNEL MEMBERS

The performance of Channel members must be evaluated with respect to:

o Sales quota
o Average level of Intermediaries
o Delivery time to customer
o Dealing with damaged or lost Goods
o Cooperation in Promotion
o Cooperation in Company training programs
o Client services.