Transcript Part 1
Promotion Through the Marketing Channel
Channel Member Support
• Why is channel member support one of the major focal points of the manufacturer's promotional mix?
– Most products are
sold direct to the final consumer and thus must be supported by the channel members in order to achieve the channel manager’s distribution objectives
“Push” vs. “Pull” Strategies
• Pull Strategies – Building strong consumer demand for a product to force members in to promoting the product because it’s in their best interest to do so.
• Push Strategies – Focus on mutual effort & cooperation in the development & implementation of promotional strategies by working directly with members in order to foster support.
Manufacturer 2 3 Channel members
† Manufacturer Channel members
Final users (consumer or industrial) *Numbers indicate sequence of flows † Sequence of flows is simultaneous Final users (consumer or industrial) Promotion flow Negotiation flow Product flow
Promotional Through Channel Members
• Favorable reception of one’s promotional strategy is enhanced when… 1. Promotional strategies used support members’ needs rather than simply focus on selling 2. Members are included during the development & implementation of promotional campaigns
“Push” Promotion Research Findings - #1
• Ad-hoc, quick-fix, and frequently offered push promotions do not foster high levels of channel member support on a consistent basis.
“Push” Promotion Research Findings - #2
• Push promotions should be viewed as part of strategic channel management rather than as a mere tactical action to elicit quicker channel member response to sell more product.
“Push” Promotion Research Findings - #3
• Given the wide range of factors that can affect channel members’ responses to promotions, manufacturers should study channel members’ needs carefully before launching major push promotions.
“Push” Promotion Research Findings - #4
• Post-promotion (i.e., follow-up) research to evaluate channel member response to a push promotion is needed if manufacturers expect to make steady progress in improving the effectiveness of future push promotions.
“Push” Promotion Research Findings - #5
• Despite the manufacturer’s best efforts, large and powerful channel members will inevitably come into conflict with the manufacturer over promotional issues because their interests and goals will at times diverge.
Basic “Push” Promotion Strategies
1. Cooperative Advertising 2. Promotional Allowances (i.e., “Monies”) 3. Slotting Fees 4. Displays & Selling Aids 5. In-store Promotions 6. Contests & Incentives 7. Special Promotional Deals & Merchandising Campaigns
• Typical Strategy: – Sharing in the cost on a 50/50 basis up to some percentage of the retailer’s purchases • Administration: – Administration is necessary to avoid abuses & to help secure cooperation from members – Must be sensitive to channel members’ primary concern about this strategy • Which is?
Promotional Allowances or “Monies”
• Typical Strategy: – Offering members a direct cash payment or a certain percentage of the purchases on particular products • Administration: – Should conduct research to determine whether it is getting its money’s worth in terms of retailer cooperation and follow-through
• Typical Strategy: – Payments made to persuade the member, especially retailers, to stock, display, and support new products • Administration: – Joint sponsorship of research between retailers and manufacturers on effects of slotting fees on various topics could help alleviate conflict.
Displays & Selling Aids
• Typical Strategy: – Include point-of-purchase (POP) displays, dealer identification signs, promotional kits, special in-store signage, & mailing pieces • Administration: – Should make the effort to see whether the firm’s selling aids and displays are serving any useful purpose and/or are even being used.
• Typical Strategy: – Short-term events designed to create added interest and excitement for the manufacturer’s product(s).
• Administration: – Planning of a successful in-store promotion should always include considerations of the potential benefits for the retailers involved.
Contests & Incentives
• Typical Strategy: – Any techniques that are used to stimulate channel member sales efforts for one’s products.
• Administration: – Must consider members’ views towards this form of promotion when determining the type of contest or incentive to run.
Special Promotional Deals & Merchandising Campaigns
• Typical Strategy: – Includes a variety of push-type promotional deals such as discounts to members to encourage the to order more products.
• Administration: – Must carefully develop strategies that are based on knowledge of the member’s needs and that take a long-term perspective on promotion through the channel.
Objective 7 & 8:
“Kinder & Gentler” Push Promotions
• Include: – Training Programs – Quota Specification – Missionary Selling – Trade Shows
• Wholesalers – Help develop their knowledge & selling techniques for customers they call on • Retailers – Help develop knowledge & selling techniques so as to instruct customers on product usage.
• Pro’s and Con’s – Can help offset costs of training, but – Often little time for training
• Definition: – Sales volumes that manufacturers specify for members to generate during a certain time period.
• Pro – Can amount to a substantial sum & can make a major different in the dealer’s overall profit • Cons – If seen as coercive, it can produce ill will and conflict – Members may ignore quota if line is not a major portion of their product mix
• Definition: – Manufacturer’s salespeople who are specially assigned to supplement the selling activities of the member.
• Pro – Useful when members lack sales capacity to handle tasks assigned to them • Cons – Expensive to implement – Some members view these salespeople as intruding on the time of their own sales force
• Definition: – Annual events organized by associations in particular industries • Pros – Opportunity for manufacturers to • Sell existing & new channel members substantial quantities on new products face-to-face • Socialize with channel members • Create a sense of pride & belonging within the channel by its members