Channel-Management Decisions 243
Selecting Channel Members
During the selection process, producers should determine what characteristics distin-
guish the better intermediaries. They will want to evaluate number of years in busi-
ness, other lines carried, growth and profit record, solvency, cooperativeness, and rep-
utation. If the intermediaries are sales agents, producers will want to evaluate the
number and character of other lines carried and the size and quality of the sales force.
If the intermediaries are store or Internet retailers that want exclusive distribution, the
producer will want to evaluate locations, brand strength, future growth potential, and
type of clientele.
Selection of channel participants is actually a two-way process: Just as producers
select their channel members, the intermediaries also select their producer partners.
Yet producers vary in their ability to attract qualified intermediaries. Toyota was able to
attract many new dealers when it first introduced its Lexus line, but Polaroid initially
had to sell through mass-merchandising outlets when photographic-equipment stores
would not carry its cameras.
Selection can be a lengthy process. Consider the experience of Japan’s Epson
Corporation. A leading manufacturer of computer printers, Epson decided to add
computers to its product line but chose to recruit new distributors rather than sell
through its existing distributors. The firm hired a recruiting firm to find candidates
who (1) had distribution experience with major appliances, (2) were willing and able
to set up their own distributorships, (3) would accept Epson’s financial arrangements,
and (4) would handle only Epson equipment, although they could stock other com-
panies’ software. After the recruiting firm went to great effort to find qualified candi-
dates, Epson terminated its existing distributors and began selling through the new
channel members. Despite this time-consuming, detailed selection process, Epson
never succeeded as a computer manufacturer.^11
Training Channel Members
Companies need to plan and implement careful training programs for their distribu-
tors and dealers because the intermediaries will be viewed as the company by end
users. Microsoft, for example, requires third-party service engineers who work with its
software applications to complete a number of courses and take certification exams.
Those who pass are formally recognized as Microsoft Certified Professionals, and they
can use this designation to promote business.
As another example, Ford Motor Company beams training programs and tech-
nical information via its satellite-based Fordstar Network to more than 6,000 dealer
sites. Service engineers at each dealership sit at a conference table and view a monitor
on which an instructor explains procedures such as repairing onboard electronics and
then answers questions. Such training initiatives keep employees updated on the latest
product specifications and service requirements.
Motivating Channel Members
The most successful firms view their channel members in the same way they view their
end users. This means determining their intermediaries’ needs and then tailoring the
channel positioning to provide superior value to these intermediaries. To improve
intermediaries’ performance, the company should provide training, market research,
and other capability-building programs. And the company must constantly reinforce
that its intermediaries are partners in the joint effort to satisfy customers.
More sophisticated companies go beyond merely gaining intermediaries’ coopera-
tion and instead try to forge a long-term partnershipwith distributors. The manufacturer