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Evaluating channel member performance

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Purpose of evaluating channel performance ... Framework for channel audit. Table 9.4, p. 9.9 - 9.11 (study guide) Audit issues ... – PowerPoint PPT presentation

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Title: Evaluating channel member performance


1
Evaluating channel member performance
  • Module 9
  • Chapter 14

2
Lecture overview
  • Purpose of evaluating channel performance
  • Factors that affect the scope and frequency of
    evaluations
  • Types of channel evaluation
  • Marketing channel audit
  • Evaluation criteria
  • Four basic dimensions
  • Six common criteria
  • Quantitative v qualitative criteria

3
  • Three approaches to applying performance criteria
  • Taking corrective action

4
Why is channel member performance evaluated?
  • Are distribution objectives being met?
  • Are distribution tasks being performed
    effectively?
  • Are required customer service requirement being
    met?
  • Are channel members efficient and profitable?
  • Are any corrective actions required?

5
Scope and frequency of channel evaluation
  • Scope what is evaluated?
  • Frequency how often it is evaluated?
  • Factors include
  • Degree of manufacturer control
  • Importance of channel members
  • Nature of the product
  • Number of channel members

6
Degree of manufacturer control
  • Control can be attained through contracts,
    ownership or various forms of power.
  • If high, then greater scope and frequency of
    evaluation can be demanded

7
Importance of channel members
  • How critical is the channel member to the
    manufacturers success?
  • How easily can the relationship be terminated or
    alternative distribution be attained?
  • If high, then greater scope and frequency of
    evaluation

8
Nature of the product
  • If expensive (high unit value) or complex, then
    the greater the scope and frequency of
    evaluations
  • If expensive, one lost sale can be critical

9
Number of channel members
  • Intensity of distribution
  • Exclusive and selective arrangements mean that
    channel members are more critical for success
  • If high, narrower scope and frequency of
    evaluations

10
Types of channel evaluation
  • Day to day monitoring of sales
  • Scanning data
  • Marketing channel audit
  • A periodic and comprehensive review of channel
    member performance (p. 430)
  • usually conducted on an annual basis
  • Framework for channel audit
  • Table 9.4, p. 9.9 - 9.11 (study guide)

11
Audit issues
  • Channel structure
  • Relationships
  • Customer service
  • Physical distribution
  • Marketing research and information systems
  • Product
  • Pricing
  • Promotion
  • Technology
  • Specific issues
  • Services
  • International markets

12
Three steps in conducting a channel performance
audit
  • Refer to table 14.1, p. 431
  • 1. What will we measure criteria?
  • 2. Measurement and evaluation against benchmarks
  • 3. Take corrective action if required

13
Measuring channel performance four key dimensions
  • 1. Effectiveness
  • task performance
  • service delivery
  • achieving distribution objectives
  • total quality management
  • 2. Equity
  • how well the channel services disadvantaged
    market segments

14
  • 3. Productivity
  • physical efficiency output/input
  • inputs
  • labour, equipment, facilities, capital,
    management expertise
  • outputs
  • task performance, service, sales
  • 4. Profitability
  • financial efficiency
  • ROI, profits

15
Criteria used for evaluating channel member
performance includes.
  • Sales performance
  • past sales
  • channel by channel
  • sales quota
  • Inventory maintenance
  • Table 14.2, p. 435
  • Levels, floor or shelf space, by product,
    condition of stock, age of stock, inventory
    control systems and processes etc.

16
  • Selling capabilities
  • Number of sales people
  • Product knowledge and expertise
  • Effort and level of support
  • Attitudes of channel members towards the
    product/brand
  • Competition
  • Performance relative to other channel members

17
  • General growth prospects
  • Table 14.3, p. 438
  • performance
  • financial status
  • character and reputation
  • service quality
  • objectives
  • ability to adapt
  • resources etc.

18
  • Other quantitative and qualitative measures
  • refer to tables 9.1 and 9.2 (study guide)
  • outcome based and behaviour based
  • refer to table 15-1 and 15-2, (text pp. 641-2)
  • Refer to table 9.3, p. 9.8 (study guide)
  • measuring reseller performance

19
Applying performance criteria
  • Separate performance evaluations
  • Multiple criteria combined informally
  • Multiple criteria combined formally

20
Separate performance evaluations
  • refer to table 14.1, p. 439
  • based on one or two key criteria
  • e.g. sales, inventory maintenance
  • used for large and intensive channel systems
  • simple and fast
  • not combined not an index
  • provides little insight of overall performance

21
Multiple criteria combined informally
  • refer to figure 14.1, p. 440
  • criteria are combined to arrive at an overall
    measure of performance
  • informal and qualitative
  • no weighting or ranking etc.
  • simple and flexible
  • does not reflect relative importance of criteria
  • subjective and does not permit relevant
    comparisons across channel members

22
Multiple criteria combined formally
  • Multiple criteria are combined to arrive at a
    quantitative measure of overall performance
  • Refer to table 14.5 and table 14.6 , pp. 441-3
  • criteria are weighted
  • channel member is rated on each criteria
  • weighted scores are calculated (w x r)
  • weighted scores are summed to arrive at overall
    performance score
  • Allows comparisons by channel member refer to
    table 14.7, p. 443

23
Taking corrective actions
  • Identify underperformers
  • Less profitable
  • Less efficient
  • Determine cause of the problem
  • Why might some channel members be less
    profitable?
  • Why might some channel members be less efficient?
  • What are the needs and problems of channel
    members?

24
Taking corrective action
  • Develop programs that address the cause of the
    problem
  • tailored to the needs of individual channel
    members
  • avoid use of coercive power

25
Summary
  • Purpose of evaluating channel performance
  • Factors that affect the scope and frequency of
    evaluations
  • Types of channel evaluation
  • Marketing channel audit
  • Evaluation criteria
  • Four basic dimensions
  • Six common criteria
  • Three approaches to applying performance criteria
  • Taking corrective action

26
Tutorial program
  • Case 16 Hyde-Phillip Chemical Company, pp.
    604-6
  • Review question 1, but change scope of question
    to approach of evaluation of sales
    respresentation
  • Activity 9.3
  • Selected reading 9.1
  • Activity 9.6, p. 427
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