Advertising and Sales Management

Assignment
On
(i) Motivating Channel Members
And
(ii)Determining the size of Sales force

Submitted by:
Pranav Jain(UM10504)
Nitesh Bhardwaj(UM10503)
Akshey Goel(UM10301)

DATE: -1/12/2014

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Motivating the Channel Members

1. Introduction:
Marketing channel/ trade channel/ distribution channel are sets of independent organizations
involved in the process of making a product/service available for use or consumption. They
are a set of pathways a product/service follows after production culminating in purchase and
use by the final end user. Intermediaries can be wholesalers, retailers, brokers, sales agent
etc.
In making products and services available to consumers, channel members add value by
bridging the major time, place and possession gaps that separate goods and services from
those who use them.
Motivating the channel members means taking such actions that foster channel member
cooperation in implementing the manufacturers distribution objectives beyond compliance
active representation of products.
It includes:
o

finding out needs and problems of channel members.

offering support to the channel members that matches with their needs and problems.

o Providing leadership through the effective use of power.

2. Means to motivate channel members:

Cooperative Arrangements
Partnerships & Strategic Alliances
Distribution Programming

1) Cooperative Arrangement:
It focuses on channel member needs & problems. It is a simple & straightforward method that
conveys a clear sense of mutual benefit. It includes:

Cooperative advertising allowances

Payments for interior displays

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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

2) Partnership and Strategic alliance

This method focuses on a continuing and mutually supportive relationship between the
manufacturer and its channel members. Some points are:
1. 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 roles Manufacturer should continually appraise the appropriateness of the policies
guiding his or her relationship with the channel members
3. Manufacturer should continually appraise the appropriateness of the policies guiding his or
her relationship with the channel members

3) Distribution Programming:
This method includes comprehensive set of policies for the promotion of a product through
the channel. It develops as a joint effort between the manufacturer and the channel members
to incorporate the needs of both.
Steps for developing a program:
1. Analysis of marketing objectives & the kinds of levels of support needed from channel
members i.e. Ascertains channel members needs & problem areas
2. Formulate specific channel policies that offer:
Price concessions to channel members
Financial advice
Some kind of protection for channel members

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3. Channel power:
It is defined as the ability to alter channel members behavior so that they take actions they
would not have taken otherwise. It becomes sometimes necessary for manufactures to use
such powers to efficiently manage the distribution channel.
Following type of power can be drawn by manufacturer to get continued cooperation:

CORCEIVE POWER

A manufacturer threatens to withdraw a resource or terminate a relationship if

intermediaries fail to cooperate.
This power can be effective but its exercise produces resentment and can generate
conflict and can lead the intermediaries to organize countervailing power.

REWARD POWER

The manufacturer offers intermediaries an extra benefit for performing specific acts or
functions.
It typically produces better results than coercive power , but can be overrated.
Intermediaries may come to expect a reward every time the manufacturer wants a
certain behavior to occur.
LEGITIMATE POWER
The manufacturer requires a behavior that is warranted under the contract.
As long as intermediaries view the manufacturer as a legitimate leader, legitimate
power works
EXPERT POWER
The manufacturer has special knowledge that the intermediaries value.
However when expertise passes on to intermediaries this power weakens.
REFERENT POWER
The manufacturer is so highly respected that intermediaries are proud to be associated
with it.
Companies such as IBM, Caterpillar and HP(Hewlett-Packard) have high referent
power

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4. Importance of motivating channel members

Build preference for brands

Motivational tools helps to ensure that channel members give preference to companys
product over competitors product
Motivation plays an important role in winning channel members mind share.
By winning mind share, channel member recommend or actively promote companys product
over competitors product

Add value to product offer

Motivating intermediaries is an important strategy for influencing channel members behavior.

Offering training programs or marketing support to members add value to the relationship
between supplier and channel by helping them to improve their performance and grow their
own business.
A strong relationship makes it easier to launch new products or marketing campaigns through
the channel, helping to build revenue and profits

Increase sales through the channel

Financial incentives are an important source of motivation to channel members.

By offering discounts, on purchases above an agreed level channel members can be
encouraged to stock or sell more products.
Financial incentives help in launching new products, increase sales of existing products and
widen distribution base.

Improve performance

Motivation helps channel member to improve their performance.

Offering them different bonus or discount levels, marketing and training support,
performance level can be enhanced.

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Determining the size of sales force

Sales force is the most important asset and major component of companys promotion mix. It
decides the companys fate as revenues are provided through sales. Its effectiveness
determines overall marketing objectives of the firm. Moreover sales force is required for
various kinds of services.
A company after formulating its sales force strategy and structure start considering its sales
force size. It is usually fixed at the optimum level. It includes expected level of sales together
with the number of sales persons required for such sales. Increasing the number of their
sales representatives will increase both sales and costs. Thus, the sales force size can be
established on the number of customers they want to tackle.

Work load approach: This method to determine sales force was given by Philip Kotler and is
as follow:
(i)
(ii)
(iii)
(iv)
(v)

(vi)
(vii)
(viii)

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The buyers are categorized according to their yearly sales volume.

Then, the call frequencies per year are established for each category.
The number of accounts for each category is multiplied by the call frequencies
to find out the complete work load in sales call per year.
Through it, the number of calls a sales person can utilize per year is find out.
By dividing the total year calls needed with the average year calls done by the
sales person can determine the number of sales persons required by the
company.
The size of sales force depends upon its structure and productivity and some
other factors.
The size is also changeable according to the companys market conditions.
The company determines the sales force size upon its affordability and its
requirements for the job.