272 CHAPTER 10 CHANNELCONCEPTS:DISTRIBUTINGTHEPRODUCT
Havingidentifiedseveralpossiblealternativechannel structures, thechannelman-
ageris nowat a placewhereheorshecanevaluatethesealternatives withrespecttosome
setofcriteria. Companyfactors,environmentaltrends,reputationofthereseller,experi-
enceofresellerarejusta fewexamples.WhoShouldLead
Regardlessofthechannelframeworkselected,channelsusuallyperformbetterifsomeone
isincharge,providingsomelevelofleadei"ship.Essentially,thepurposeofthis leadership
istocoordinatethegoalsandeffor~sofchannelirstitutions.Thelevelofleadershipcan
rangefromverypassivetoquiteactive-vergingondictatorial.Thestylemayrange from
verynegative,basedonfearandpunishment,toverypositive,basedonencouragementand
reward.Ina givensituation, anyoftheseleadershipstylesmayproveeffective.
Giventherestrictionsinherentinchannelleadership,thefinalquestion is "whoshould
leadthechannel?" Twoimpor;anttrendsarewor~hnoting,sincetheyinfluencetheanswer.
First,if welookattheearlyyearsofmarketing,i.e.,pre-I92G,theroleofthewholesaler
(tobringtheproducerandconsumertogether)wasmostvital.Consequently, during this
period,thewholesalerledmostchannels. Thisisnolongertr..~e.A secondtrendistheappar-
entstrategyofbothmanufacturersandretailerstoexert powerthroughsize.In atypeof
businesscoldwar,manufacturersandretailersareconstantlytryingtomatcheachother's
size.Theresult hasbeensomeseriouswarfareto gainchannel superiority.
Underwhichconditionsshouidthemanufacturerslead?Thewholesaler?Theretailer?
Whiletheansweris contingentupon~anyfactors,ingeneral, themanufacturershouldlead
if controloftheproduct(merchandising,repair)is criticalandifthedesign andredesign
ofthechannelisbestdonebythemanufacturer.Thewholesalershouldleadwhere the man-
ufacturersandretailershaveremainedsmallinsize,largeinnumber, relativel y scattered
geographically, arefinanciallyweak,andlackmarketingexpertise. Theretailershould lead
whenproductdevelopmentanddemandstimulationarerelativelyunimportantan d when
personalattentiontothecustomeris important.EvaluatingChannelMemberPerformance
Theneedtoevahatetheperformancelevelofthechannelmembersis justas important as
theevaluationoftheothermarketingfunctions.Clearly,themarketingmixisquite inter-
dependentandthefailureofonecorr:ponentcancausethe failureofthewhole. Thereis
oneimportantdifference,withtheexceptionofthecorporateVMS;thechannel member
isdealingwithindependentbusinessfirms,ratherthanemployeesandactivities underthe
controlofthechannelmember,andtheirwillingnesstochangeis lacking.
Salesisthemostpopularperformancecriteriausedinchannelevaluation.Salesmight
furtherbesubdividedintocurrentsalescomparedwithhistor~calsales,comparisonsofsales
withotherchannelmembers,andcomparisonsofthechannelmember's sales with prede-
terminedquotas.Otherpossibleperformancecriteriaare:maintenanceof ad equateinven-
tory,sellingcapabilities,attitudesofchannelintermediariestoward the product,competition
fromotherintermediariesandfromotherproductlinecarriedbythe manufacturersown
channelmembers.CorrectingorModifyingthe Channel
Asa resultoftheevaluationprocess,orbecauseofotherfactorssuchasnewcompeti-
tion,technology,ormarketpotential,changeswillbemadeinthechannel structure.
Becausechannelrelationshipshavetendedtobelong-term, andthechannel decis ion