Channel - management decisions: after a company has chosen alternative, individual intermediaries' must be selected trained, motivated, and evaluated. Channel arrangements must be modified over time.
Selecting channel members: producers very in their ability to attract qualified intermediaries'. Whether producers find it easy or difficult to recruit intermediaries', they should at least determine what characteristics distinguish the better intermediaries'. They will want to evaluate number of years in the business, other lines carried, growth and profit record, solvency, cooperatives and reputation. If the intermediaries' are sales agents, producers the producer will want to evaluate locations, future growth potential, and type of clientele.
Motivating channel members: a company needs to view its intermediaries' in the same way that it views its end users. The company needs to determine intermediaries' needs and construct a channel positioning such that its channel offering is tailored to provide superior value to these intermediaries'. The company should provide training programms, market research programs, and other capability - building programs to improve intermediaries' performance. The company must constantly communicate its view that the intermediaries' are partners in the joint efforts to satisfy end - using consumers. Producers very greatly in skill in the managing distributions. They can draw on the following types of power to elict cooperation:
1. Coercive power: Coercive power occurs when a manufacturer threatends to withdraw a resource or terminate a relationship if the intermediaries' fail to cooperate. This power can be quite effective if the intermediaries' are highly dependent upon the manufacturer. But the exercise of coercive power produces resentment and can lead the intermediaries' to organize power.
2. Reward power: reward power occurs when the manufacturer offers intermediaries' an extra benefit for performing specific acts or functions. Reward power typically produces better results than coercive power but can be overrated.
3. Expert power: expert power can be applied when the manufacturer has special knowledge that the intermediaries' value.
4. Lagitmate power: lagitmate power is wielded when the manufacturer requires a behaviour that is warranted under the contact. The manufacturer feels it has into this right and the intermediaries' have this obligation. As long as the intermediaries' view the manufacturer as a lagitmate leader, lagitmate power works.
5. Referent point: referent point occurs when the manufacturer is so highly respected that intermediaries' are proud to be asocitated. Companies such as IBM, caterpillar, and Hewlettpackard have high referent power. Intermediaries' can aim for a relationship based on cooperation, partnership, or distribution programming. Most producers see the main challange as gaining intermediaries' cooperation. They often use positive motivations, such as higher margins, special deals, premiums, cooperative advertising allowences, display allowance, and sales contests. At times they will apply negative sections, such as threating to reduce the margins, slow down delivery, or terminate the relationship. The weakness of this approach is that the producer is using crude stimulus - response thinking.
6. Evaluating channel members: the evaluation of the channel members has an important bearing on distributor retention training and motivation decisions. Evaluation provides the information necessary to deside these channel members to retain and which to drop. Short falls in distributor skills and competences may be identified through evalution and appropriate training programes organized by producers. It needs to be understood, however, that the scope and frequency of the evolution may be defined limited where power lies with the channel member. Where manufacturer power is high through having strong brands, and many distributions from which to choose, evaluation may be more frequent and wider in scope. Evaluation criteria include sales volume and value, profatibility, levels of the stocks, quality and position of display, new accounts opened, selling and the marketing capabilities, quality of the services provided to the customers, market information feedback, ability and willingness to keep communities, attitudes and personal capability.