chapter 14 evaluating channel member performance
TRANSCRIPT
Chapter 14Chapter 14
Evaluating Channel Member Performance
Evaluating Member Evaluating Member
PerformancePerformance
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Objective 1:
The importance of channel member performanceequals that of employee evaluations within the firm.
1. The channel manager works with individual firmsrather than with individual employees.
2. The setting is interorganizational rather thanintraorganizational.
1. The channel manager works with individual firmsrather than with individual employees.
2. The setting is interorganizational rather thanintraorganizational.
Except
1414Scope & Frequency Scope & Frequency of Evaluationsof Evaluations
Objective 2:
1. Degree of the manufacturer’s control
over channel members
2. Relative importance of channel members
3. Nature of the product
4. Number of channel members
1. Degree of the manufacturer’s control
over channel members
2. Relative importance of channel members
3. Nature of the product
4. Number of channel members
1414Degree of ControlDegree of Control
Control that a producer,manufacturer, or franchisor has
over members is based onstrong contractual agreements
Control that a producer,manufacturer, or franchisor has
over members is based onstrong contractual agreements
Channel managercan demand a great deal of
information on memberoperations
Channel managercan demand a great deal of
information on memberoperations
Manufacturer lacksstrong market acceptancefor its products & strong
channel control based oncontractual commitments
Manufacturer lacksstrong market acceptancefor its products & strong
channel control based oncontractual commitments
Manufacturercan exert little control
over channel members
Manufacturercan exert little control
over channel members
1414Importance of Channel MembersImportance of Channel Members
Evaluation of channel members is more comprehensive for manufacturers who sell all of theiroutput through intermediaries than for manufacturers
who rely less on intermediaries.
Evaluation of channel members is more comprehensive for manufacturers who sell all of theiroutput through intermediaries than for manufacturers
who rely less on intermediaries.
Because the firm’s success in the market is directlydependent on the channel members’ performance
Because the firm’s success in the market is directlydependent on the channel members’ performance
Why?
1414Nature of the ProductNature of the Product
The more complex the product, the broader the scope of evaluation
The more complex the product, the broader the scope of evaluation
For products of very high unit value, thegain or loss of a single order is important to the manufacturer
For products of very high unit value, thegain or loss of a single order is important to the manufacturer
+
1414Number of Channel MembersNumber of Channel Members
Manufacturers who useintensive distribution
Manufacturers who useintensive distribution
Channel memberevaluation may
be cursory
Channel memberevaluation may
be cursory
Manufacturers who usehighly selective
distribution
Manufacturers who usehighly selective
distribution
Channel memberevaluation is
comprehensive
Channel memberevaluation is
comprehensive
Evaluation versus MonitoringEvaluation versus Monitoring1414Objective 3:
Performance Evaluation
Day-to-DayMonitoring
Overall performancereviews that give
management a complete& objective analysis of
each distributor’soperations
Appraisals that assist management in
maintaining currentoperating control ofdistributors’ efforts
1414Performance AuditPerformance Audit
Three Phases
1. Developing criteria for measuring channel member performance
2. Periodically evaluating the channel members’performance against the criteria
3. Recommending corrective actions to reduce thenumber of inadequate performances
Objective 4:
1414Key Criteria for Key Criteria for Performance AuditPerformance Audit
Objective 5:
Sales performance of channel members
Inventory maintenance of channel members
Selling capabilities of channel members
Attitudes of channel members
Competition faced by channel members
General growth prospects of channel members
1414Sales PerformanceSales Performance
Criteria channel managershould use to evaluate sales data:
1.
Comparisons of thechannel member’s current
sales to historical sales
2.
Cross comparisons ofa member’s sales with
those of other members
3.
Comparisons of thechannel member’s sales
with predetermined quotas
1414Inventory MaintenanceInventory Maintenance
1. Total level of channel member’s inventory2. Shelf or floor space devoted to inventory3. Shelf or floor space provided relative to competitors’
inventory4. Breakdown by particular products in units & dollars5. Comparison of figures with channel members’ estimated
purchases of related & competitive lines6. Condition of inventory & inventory facilities7. Amount of old stock on hand & efforts made to move it8. Adequacy of channel member’s inventory control &
record-keeping system
Key Criteria for evaluating member inventory performance:
1414Selling CapabilitiesSelling Capabilities
Manufacturer who obtains sales recordsfor channel members’ salespeople should
examine the following factors:
1.
Number of salespeoplethe channel member
assigns to manufacturer’sproduct line
2.
Technical knowledge and competenceof channel member’s salespeople
3.
Salesperson interestin manufacturer’s products
Attitudes
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Negative ones often addressed after they have contributed
to poor performance
Attitudes of Channel MembersAttitudes of Channel Members
Should be evaluated independently of sales data
Not usuallyevaluated unless
sales performanceis unsatisfactory
1414CompetitionCompetition
Channel manager should consider two types of competition:
1.
Competition from otherintermediaries
2.
Competition fromother product lines
carried by the manufacturer’s ownchannel members
General Growth ProspectsGeneral Growth Prospects1144
Key issues for evaluating channel member growth prospects:
1. Past performance2. Overall performance3. Expansion or improvement of organization4. Level of growth and qualification in personnel5. Management, age, health, or succession
arrangements6. Adaptability & overall capacity to meet market
expansions7. Member’s estimates of its own medium- & long-range
outlooks
Applying Performance CriteriaApplying Performance Criteria1144
Objective 6:
Three Approaches
1. Separate performanceevaluations on one or more criteria
2. Multiple criteria combined informallyto evaluate overall performance
qualitatively
3. Multiple criteria combined formallyto arrive at a quantitative index of
overall performance
Separate Performance Separate Performance EvaluationsEvaluations
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Commonly used when the number of channelmembers is very large & when criteria arelimited to no more than sales performance,inventory maintenance, & possible selling
capabilities
Multiple Criteria Combined Multiple Criteria Combined InformallyInformally
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Operational performance measures obtained
Managerial judgment usedto combine performance measures
Qualitative judgment made aboutoverall channel member performance
1414Multiple Criteria Combined Multiple Criteria Combined FormallyFormally
5 Steps1. Criteria & associated operational measures are decided on
2. Weights assigned to each of the criteria
3. Each member evaluated is rated on each of the criteria
4. Score on each criterion multiplied by weight for that criterion
5. Weighted criterion ratings summed to yield overall performance rating for each member
1414Recommending Recommending Corrective ActionsCorrective Actions
Channel manager should attempt tofind out why members have
performed poorly
1. Develop concrete & practical approaches to actively seek information on member needs and problems
2. Programs of member support must be congruent with member needs & problems
3. Constraints imposed by interorganizational setting of marketing channel must be understood
Objective 7: