LogisticsPPS9b

Topic 6

Assessing channel member performance

Assessing channel member performance

Scope and frequency – factors:• Degree of control by M –

strong if have contract with others or have strong acceptance for its products

• Importance of the channel members for M (rely totally on or partly?)

• The more complex the product, the broader the scope of evaluation (unit value and volume)

• Intensive vs selective (number of channel members)

Member performance

Comprehesive performance evaluation =

Channel member

performance audit

Channel member performance audit

Develop performance measurement criteria

Evaluate channel member against those criteria

Take corrective action if needed

Performance measures in marketing channels

Evaluating total channel effectiveness

Determine customer needs for channel service: • Locational services• Lot size• Delivery time• Product variety

Determine which channel institutions are responsible for providing which channel services

Determine how well customer needs are being met

Take corrective action, if needed

Reinforce effective performance

Taking the five steps into consideration, evaluate the effectiveness of the marketing

channel systems for the following:

• FMCG’s• Cellphones

• Medical services

Channel system equity

Channel system productivity

Measure how efficiently an intermediary uses resources i.e.

- Land- Labour- Capital to generate output = sales

volume, gross margin & value-added variables

CHANNEL SYSTEM PROFITABILITY

Distribution

Productivity

Distribution channel environment:Consumer-demand

Technology

Consumerism and trade actions

Legal regulations

Economic conditions

Competitive conditions

Labour unions

Capital and international markets

Distribution channel structure:Number of channel levelsTypes of institutions participating at each level

Number of establishments of each institutional type

Functions performed at each channel level

Extent of routinisation of transactions

Incidence of postponement/ speculation in the channel

Distribution channel member policies:Product assortment to be carried

Market segments and territories to be served

Ordering time and minimum order requirements

Safety margin, never-out-list and other inventory policies

Prices, discounts and buy-lease policies

Advertising and sales promotion obligations

Credit and payment policies

Corrective action

1. Clarify tasks by marketing managers in channel

2. Use of power perhaps necessary to reinforce expectations/ requirements

3. Elimination i.e. YOU’RE FIRED!

Read through

Page 264 – 265 When modification of the existing

channel may become necessary.

case study

Page 266 – 268 and answer questions on page 268