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Chapter 9
MOTIVATING THE CHANNEL MEMBERS
Teaching Notes
The focus of this chapter begins with the premise that channel structure(s) with channel
members have already been developed.
Chapter Objectives
Channel management is necessary, and a fundamental part of channel management is that
of motivating the channel members. The three facets of motivation management in the
operate effectively and viably.
Learning objectives
1) Understand the definitions of channel management and motivation management
in marketing channels.
2) Recognize the distinction between channel management decisions and channel
design decisions.
Chapter Topics
1) Finding Out the Needs and Problems of Channel Members
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Chapter Outline
The channel manager needs to stress the realization of the potential to serve his target
markets effectively and efficiently.
Key Term and Definition
▪ Channel management: “The administration of existing channels to secure the
cooperation of channel members in achieving the firm’s distribution objectives.”
First, channel management deals with existing channels. Channel design decisions are
therefore viewed as separate from channel management decisions.
Key Term and Definition
▪ Motivation: Refers to the actions taken by the manufacturer to foster channel member
cooperation in implementing the manufacturer’s distribution objectives.
There are three basic facets involved in motivation management:
1. Finding out the needs and problems of channel members
Finding Out the Needs and Problems of Channel Members
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A) Approaches for Learning about Channel Member Needs and Problems
All marketing channels have a flow of information running through them as part of the
formal and informal communications systems that exist in the channel.
Consequently, the channel manager should not rely solely on the regular flow of
information coming from the existing channel communication system for accurate and
timely information on channel member needs and problems.
There is a need to go beyond the regular system and make use of one or all of the
following four additional approaches.
1) Research Studies of Channel Members
2) Research Studies by Outside Parties
Research designed and executed by a third party is sometimes necessary if complete and
3) Marketing Channel Audits
The basic thrust of this approach should be to gather data on how channel members
perceive the manufacturer’s marketing program and its component parts, where the
relationships are strong and weak, and what is expected of the manufacturer to make the
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4) Distributor Advisory Councils
Three significant benefits emerge from the use of a distributor advisory council. First, it
provides recognition for the channel members. Second, it provides a vehicle for
Offering Support to Channel Members
Support for channel members refers to the manufacturer’s efforts in helping channel
members to meet their needs and solve their problems. Such support for channel
members is all too often offered on a disorganized and ad hoc basis.
The attainment of a highly motivated cooperating “team” of channel members in an
interorganizational setting requires carefully planned programs.
Such programs can generally be grouped into one of the following three categories: (1)
cooperative, (2) partnership or strategic alliance, and (3) distribution programming.
A) Cooperative Arrangements
Cooperative arrangements between the manufacturer and channel members at the
wholesale and retail levels have traditionally been used as the most common means of
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B) Partnerships and Strategic Alliances
Partnerships or strategic alliances stress a continuing and mutually supportive
relationship between the manufacturer and its channel members in an effort to provide a
more highly motivated team, network, or alliance of channel partners.
Figure 9.3 shows the relationship between Coca-Cola and Wal-Mart.
Webster’s basic guidelines can be used for establishing partnerships or strategic alliances
in marketing channels.
C) Distribution Programming
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Key Term and Definition
▪ Distribution programming: “A comprehensive set of policies for the promotion of a
product through the channel.”
Further, the manufacturer must ascertain the needs and problem areas of channel
members.
Table 9.3 outlines some of the major areas that should be included in the analysis for
both the manufacturer and the channel members.
Providing Leadership to Motivate Channel Members
Control must still be exercised through effective leadership on a continuing basis to attain
a well-motivated team of channel members.
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Little explained succinctly the problems of achieving very high levels of control and
leadership in this interorganizational setting when he said:
“Because firms are loosely arranged, the advantages of central direction are in large
Answers to Review Questions
1. Channel management refers to the administration of existing channels, while channel
design refers to setting up new channels where none had existed before or to the
2. An apt channel design is necessary but not sufficient. Even a near optimal allocation
of distribution tasks does not guarantee the performance of those tasks in an efficient
3. Ideally, a truly effective information flow would provide all the information the
channel manager needs. However, the ideal information flow does not exist. In
practice, the communication systems operating in marketing channels do not
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5. Channel managers can learn about the needs and problems of channel members using
four approaches:
▪ Research Studies Conducted by the Manufacturer: The manufacturer’s own staff
designs and conducts the study.
6. (1) The cooperative approach is basically a “helping hand” offered by the
manufacturer to its channel members to encourage them to give more emphasis to its
7. A channel arrangement based on distribution programming has a much more
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8. Control is the ability to predict events or to achieve a desired outcome. Leadership is
the use of power to achieve control. Power is the capacity of one channel member to
9. Because most channels operate in an interorganizational setting, the following
conditions exist to a higher degree than is usually found in an intraorganizational
10. As discussed in the chapter, Cisco distributed more than $30 billion annually through
it “value-add channel resellers” or VARs. The VARs are channel members that go
well beyond the mere reselling of Cisco products. Cisco VARs develop close
Commentaries on Issues for Discussion
1. It is unfortunate for Steinway that they allowed the relationships with their dealers to
deteriorate so far before responding to problems. Several methods are available to
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3. The Harley-Davidson dealers are not just being “crybabies” in their accusation of
Harley as channel stuffing to give the appearance of sales growth. Harley-Davidson
can be criticized for failure to motivate the dealers, being insensitive to the dealers’
needs, using questionable cooperative arrangements and not providing the leadership
4. The issue raised here is the need for objective (unbiased) channel research in order to
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information about its very poor reception by the channel members. If the people in
the research department believe that Robinson can affect their future in the company
5. A possible answer to this question is that no, McDonald’s™ does not really
understand the needs and problems of its franchisees and yes, the support in the form
of an attempt to provide a better product for the customer was misdirected.
The reasons for these answers will vary by student. However, most should pick up on
the fact that:
a. McDonald’s did not fully “find out” what needs and problems of their franchisees
would experience using the new kitchen technology prior to implementing it
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6. Virtually every sales organization faces two perpetual challenges:
▪ generating qualified sales leads
▪ conducting technical presentations and training
7. As Webster explained, distribution partnerships are not born out of legal necessity, but
out of a need for mutually supportive relationships. Simply, in a rapidly changing
environment such as the one in which Film District finds itself, an alliance with
Netflix provides a degree of relative stability, at least for the foreseeable future.
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8. There always is a need for channel management. The Toyota dealerships will not run
themselves, nor will Toyota’s channel run itself. Even the most comprehensive,
detailed and formal programmed system cannot be expected to deal with all