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• Terms and responsibilities of Channel Members: There are various terms and conditions industrial marketer must be able to control as well as modify the channel structure. Each channel
which the industrial marketer must make clear to the participating channel members like the member should be committed to the agreement they have with other members.
responsibilities and tasks, conditions of sale and territorial rights that would enable both of them
to enhance their performance. For example, a Tyre Company who is trying to enter into market is a manufacturer of safety
systems for vehicle tyres whose products allow the vehicle to continue to be driven even if the tires
• Responsibilities and tasks: In order to avoid any future disagreements, there should be clarity in burst or are shot out. The main customers for the systems are police forces, security companies,
the roles of both the industrial marketers and the channel partners. Each should comply with the emergency services like ambulance and fire service, armies, trucking companies, and even the
commitments about their individual responsibilities and tasks to be performed. general public. The organization cannot serve all types of customers through a single distribution
channel, so depending on the size of the market, value and the level of usage, the market for safety
• Conditions of sale: It should be clearly mentioned well in advance about the discounts offered by systems can be divided into three segments.
the manufacturers to the distributors, the commission to be paid to the agents or brokers. Other 1. Government Organizations (Ambulance, fire services, armies),
terms relating to warranty period, replacement of defective parts also should be appropriately
stated. 2. Private sector (Original equipment manufacturers like Trucking companies & vehicle

manufactures),
• Territorial rights: The territory between the distributors should be well demarcated so as to avoid
any future confusion that may lead to legal issues. 3. General public.

6. Evaluating Alternate Channels In the above scenario, channel 1 comes under direct distribution channel where the organizations
directly deal with the customers. This distribution channel does not have any intermediaries like
There are several channel alternatives available to the industrial markets. They have to determine distributors, wholesalers, retailers etc. Direct distribution channel the manufacturer’s own sales force
the best among the alternatives by evaluating them based on the following criteria:
deals directly with the customer segments, and the manufacturer has the complete responsibility for
1. Economic Performance: Different channel alternatives generate different levels of sales and performing all the required channel tasks. Channel 2 and channel 3 come under indirect distribution
incur different levels of costs. An industrial marketer has to pose a question whether sales channels. Indirect channel distribution uses one or more intermediaries like distributors, retailers,
generation would be more by direct selling through company sales force or through the channel sales representatives etc..
members. Many of the industrial marketers believe that sales will be more from company sales
force as they exclusively concentrate on company’s product, they are given proper training to 1
sell the product, they show more aggressiveness as their career depends on company’s success Producer Wholesaler Retailer Consumer
and finally customers prefer to deal with the company directly. But it may also happen that the
intermediary can sell more than the company sales force. The possible reasons for this could
be the agency having many sales people with it or its sales force are much motivated with the
commission offered by the company or the customers prefer to deal with agents who have
extensive contacts. The marketing manager has to similarly estimate the total costs of selling
through different channel members. 2 Producer Retailer Consumer

2. Degree of control: This is another important factor while evaluating the channel alternatives.
An industrial marketer exercises different levels of control over different channel members.
The degree of control is more on company sales force and least on distributors. The distributor
may concentrate more on those products that earn him high products rather than following the
instructions of the manufacturer to push less preferred products. Similarly an agent entertains
his potential customers most rather than concentrating on manufacturer’s product. 3 Producer Consumer

3. Degree of adaptability of channel members: With the market changing dynamically, the channel
members should have the capacity to adapt themselves to the changing environment. The Figure 8.4Evaluating Alternate Channels