Chapter 9Major Topics for Ch. 9: Motivating Channel MembersMotivation ManagementThis is a Serious Problem!Motivating Channel MembersII. Finding Out Channel Member Needs & Problems1. Research Studies of Channel Members2. Research Studies by Outside Parties3. Marketing Channel Audits*Marketing Channel Audits4. Distributor Advisory CouncilsIII. Means to Motivate Channel Members*Relationship Differences1. Cooperative ArrangementsCooperative Arrangements2. Partnerships & Strategic Alliances*Partnerships & Strategic AlliancesStrategic Distribution AllianceSlide 193. Distribution Programming*Distribution ProgrammingIV. Another Approach on Motivating Channel*Another Approach on Motivating Channel (Cont’d)Chapter 9Chapter 9 Motivating the Channel Members99Major Topics for Ch. 9:Major Topics for Ch. 9:Motivating Channel MembersMotivating Channel Members 1. General Discussion2. Finding out Channel Member Needs 3. Three Types of Programs that Motivate Channel Members*4. Another Approach on Managing Channel Members* (Econ-based Approach)Motivation Management:99Motivation ManagementMotivation ManagementThe actions taken by the manufacturers tofoster channel member cooperation inimplementing the manufacturer’s distribution objectives  Compliance + Active Representation99This is a Serious Problem!1. Manufacturers spend more than $70B for trade promotion2. 85% of the manufacturers believe that the money given to retailers is ineffectively spent3. Retailers say that 40% of all manufacturer-supplied POP displays are never used.99Motivating Channel MembersMotivating Channel Members Basic Framework1.Find out the needs and problems of channel members.2.Offer support to the channel members that matches with their needs and problems.3.Provide leadership through the effective use of power.99II. Finding Out Channel Member II. Finding Out Channel Member Needs & ProblemsNeeds & Problems1. Research studies of channel members2. Research studies by outside parties3. Marketing channel audits4. Distributor advisory councils + Feedback from Your Salesforce1. Research studies of channel members2. Research studies by outside parties3. Marketing channel audits4. Distributor advisory councils + Feedback from Your SalesforceApproaches for learning about member needs & problems*:991. Research Studies of Channel 1. Research Studies of Channel MembersMembersLess than 1 percent of manufacturers’ researchbudgets is spent on channel member research!BUT:Manufacturer-initiated research can be useful because certain types of needs or problems may not be at all obvious.BUT:Manufacturer-initiated research can be useful because certain types of needs or problems may not be at all obvious.* My experience992. Research Studies by Outside Parties2. Research Studies by Outside PartiesWhy use outside parties to conduct research?They provide a higher assurance of objectivity.They provide a level of expertise that the manufacturer may notpossess.3. Marketing Channel Audits*3. Marketing Channel Audits*99Focus of channel manager’s approach:• Gather data on how channel membersperceive the manufacturer’s marketingprogram and its component parts.• Locate the strengths and weaknessesin the relationships.• Learn what is expected of manufacturersto make the channel relationship viable and optimal.* Issue of Using a “Right” Metric • Gather data on how channel membersperceive the manufacturer’s marketingprogram and its component parts.• Locate the strengths and weaknessesin the relationships.• Learn what is expected of manufacturersto make the channel relationship viable and optimal.* Issue of Using a “Right” Metric99Marketing Channel AuditsMarketing Channel AuditsWhat makes marketing channel audits most effective?It should identify and definein detail the issuesrelevant to the manufacturer-reseller relationship.Issues chosen forthe audit should be cross-referenced to any relevant variables.It mustbe conductedperiodically soas to capture trends &patterns.994. Distributor Advisory Councils4. Distributor Advisory CouncilsWho is involved?Top management representatives from the manufacturer and from the channel membersWhat are the benefits?• Provides recognition for the channel members• Provides a vehicle for identifying and discussingmutual needs and problems• Results in an overall improvement of channelcommunicationsIII. Means to Motivate Channel Members*III. Means to Motivate Channel Members*993 Types of ChannelPrograms2. Partnership or strategic alliance3. Distribution programming1. Cooperative ArrangementsRelationship DifferencesRelationship Differences99Cooperative ArrangementsIntermittent interactions between manufacturer& channel membersPartnerships & Strategic AlliancesContinuing & mutually supportive relationshipDistribution ProgrammingDeals with virtually all aspects of the channel relationship991. Cooperative Arrangements1. Cooperative Arrangements- Focuses on channel member needs & problems- Simple & straightforward- Conveys a clear sense of mutual benefitEx) Coop program between P&G and Kroger99Cooperative ArrangementsCooperative ArrangementsTypical types of cooperative programsprovided by Manufacturers to channel members•Cooperative advertising allowances•Payments for interior displays•Contests for buyers, salespeople, etc.•Allowances for warehousing functions•Payments for window display space•Detail men who check inventory•Demonstrators•Coupon-handling allowance•Free goods A Common Element of all the above elements?992. Partnerships & Strategic Alliances*2. Partnerships & Strategic Alliances*Focus on a continuing and mutuallysupportive relationship between themanufacturer and its channel members* For An Elite Group of DistributorsPartnerships & Strategic AlliancesPartnerships & Strategic Alliances99Three basic phases1. Manufacturer should make explicit statement of policies in areas such as product availability,technical support, pricing, etc.2. Manufacturer should assess all existing distributors as to their capabilities for fulfilling their roles3. Manufacturer should continually appraise the appropriateness of the policies guiding his or her relationship with the channel members18Strategic Distribution Alliance • Characteristics–Enduring connections–Substantial connections•What sets SDA apart from others– Trust– Commitment Norm-based Motivation (Solidarity, Mutuality, Continuity)•Building Commitment–Expectation of continuity–Bilateral