- Email: [email protected]
Will the real channel manager please stand up?
Will the real channel manager please stand up?
Rolph E. Anderson Royal H. Gibson, Sr. Professor of Marketing, Drexel University, Philadelphia, Pennsylvania
Rajiv Mehta Associate Professor of Marketing, New Jersey Institute of Technology, Newark, New Jersey
Alan J. Dubinsky Professor of Selling and Sales Management, Purdue University, West Lafayette, Indiana
For decades, marketing channel management has been widely written and talked about but never connected with any “real world” business position. What’s more, the many articles and textbooks on the topic seldom provide any hint as to who is supposed to be doing all these functions. At last, based on a national study and a systematic review of the literature to find the most likely suspect, we have identified the erstwhile unknown channel manager. It is now up to top management to provide the selection criteria, training, rewards, and respect for this newly recognized position because it is central to corporate success.
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n a long-running television show, “To Tell the Truth,” three people would claim to be someone with an unusual occupation or exceptional accomplishment. However, only one of them would actually be telling the truth; the other two were impostors. After asking each of the three people several specific questions, the panelists would try to guess which one was genuine. To maximize their winnings, the two impostors would do their best to mislead the panelists by making up their own false answers to the questions. Finally, after all the questioning was completed, the master of ceremonies would ask, “Will the real _________ (kickboxer, English Channel swimmer, or whatever) please stand up?” After a few feints, such as half rising from their chairs, the person with the unusual occupation or accomplishment eventually stood up. Something akin to this television show seems to be playing out in the marketing world, specifically in channel management. For decades, the channel manager has remained largely unconnected or unidentified with any “real world” company position. Indeed, only rarely does a company organization chart include a position titled “channel manager.” What’s more, in the numerous books and hundreds of articles on the subject, there is seldom any indication about who or what organizational position is supposed to be managing the marketing channel. This situation has gone on for so long that one might occasionally ponder whether some mysterious superperson determined to keep a secret identity may be handling these functions. Could it be a kind of Batman? Wonder Woman? Superman? Or might it be that the job of channel manager simply is not important enough to be assigned to anyone? Maybe marketing channel management somehow just takes care of itself without much attention from anyone in the company. Whatever the answers to these speculations, it seems apparent that the channel manager is going to remain unidentified until some investigator guesses or, preferably, systematically determines his identity. It is long overdue for someone to finally accept this challenge and ask the
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real channel manager to “please stand up!” We are determined to take up this quest. But before we do, we need to explore some basic questions to help guide our search:
Nor would any of us want hundreds of manufacturers arriving at all hours of the day and night at our homes or small stores to deliver individual items to us.
● What are marketing channels?
Marketing channel members handle not only discrepancies in quantity but also in the assortment or variety of products desired. By accumulating various products from many producers, a wholesaler or distributor can sort them out by type and quality and put together an assortment of products wanted by an office product retailer, department store, or plumbing business. Without these middlemen, the prices consumers and businesses pay for products and services would rise astronomically.
● Is marketing channel management really important? ● What does a marketing channel manager do? ● Who is the most likely channel manager suspect?
What are marketing channels?
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arketing channels, or distribution channels, comprise groups of interdependent organizations that work together to make products and services available for purchase by consumers or businesses. Simply put, they are pipelines or pathways to markets through which products flow from manufacturers to ultimate users. They connect companies as different as IBM and Campbell Soup, Hertz and McDonald’s, with various middlemen—wholesalers, distributors, retailers. These middlemen, in turn, perform a variety of distribution tasks to move products to end users: gathering and sharing information; buying and selling diverse product assortments; grading, storing, and transporting products; providing financing; and taking market risks. These marketing channel members, along with facilitating intermediaries (such as agents and brokers who may not take ownership of the products handled), ensure that consumer and industrial products flow through the different channel systems to reach the final customers at the right place, the right time, and in the right quantities. From the customer standpoint, according to Boone and Kurtz (2001), marketing channels create three basic kinds of utilities: time, place, and possession. Time utility makes products and services available when customers want them. Place utility provides them where customers want them. Possession utility enables the customer to purchase or lease products and then take them elsewhere for use as needed. Thus, marketing channels make life much more convenient and satisfying for customers.
Efficient exchanges Marketing channels also facilitate exchanges between sellers and buyers by reducing the number of transactions, thereby streamlining distribution and slashing costs. No manufacturer could afford to deliver most products— whether ballpoint pens, candy bars, computer paper, office staplers, or portable drills—directly to customers or small retail stores because of the huge discrepancy between the quantity the manufacturer wants to sell and the quantity the customer is willing to buy at one time. 62
Is channel management really important?
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t seems manifest that marketing channels play vital roles for manufacturers, middlemen, and other intermediaries, customers, and businesses. But is it really necessary to try to manage these channels of independent firms? Yes! As products become more and more like commodities with little significant differentiation (as perceived by consumers), competition is moving rapidly away from products toward efficiencies in distribution. Today, success or failure for many manufacturers depends on how quickly and inexpensively their products flow through the marketing channel to reach final customers. Without effective and efficient distribution channels, companies cannot get their products to markets on time to make profits when the “window of opportunity” opens. For smoothly functioning distribution systems, it is critical that all channel members work together. Close cooperation can lead to efficiencies, lower costs, the elimination of redundancies in the marketing channel, and the development of innovative approaches to satisfy customers and create competitive advantages. In fact, a country’s entire economy can be slowed dramatically by inefficient distribution channels. This is vividly illustrated by many undeveloped countries, as well as in the economic behemoth Japan, whose traditional use of mom-and-pop channel members has been a marketing nightmare. If products are not available in markets when, where, and how target customers want them, they are not going to sell. For example, if perishable products such as baked goods, fruits, and vegetables are delivered late, they may be unfit for sale to customers, resulting in huge losses all around. Because they are so dependent on channel members to resell their products and perform a variety of distribution functions, manufacturers are vitally concerned about the level of performance of these middlemen. In this era of customer relationship management and rapid innovations in distribution channels, especially advances in telecomBusiness Horizons / January-February 2003
munications, marketing channel management is more complex and more important than ever. Channel managers must not only satisfy their customers, they must also make every effort to keep them as loyal buyers—those who are the most profitable because they buy the most, cost less to serve, refer other customers, willingly pay price premiums for value, and tend to be the most forgiving
In terms of potential profit payoffs, there is no other business area more crucial than marketing channel management for ensuring effective and efficient distribution of products. when problems occur. In a study of companies across 14 industries, Reichheld and Sasser (1990) found that a 5 percent boost in customer loyalty could cause profits to rise between 25 and 95 percent. In terms of potential profit payoffs, there is no other business area more crucial than marketing channel management for ensuring effective and efficient distribution of products.
What do channel managers do?
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kay, we have learned that marketing channel management is very important. To be fully effective and efficient and to command customer satisfaction and loyalty, channels require leadership, cooperation, and management of all relationships. But what, specifically, do channel managers do? From the perspective of manufacturers looking down their channels toward ultimate customers, Rosenbloom (1995, 1999) lists seven critical activities a channel manager performs: ● formulating marketing channel strategy
● designing marketing channels ● selecting channel members ● motivating channel members ● coordinating channel strategy with members ● evaluating channel member performance ● managing conflict in the channels Will the real channel manager please stand up?
Formulating marketing channel strategy Developing overall channel strategy involves long-run planning and implementation efforts designed to create a sustainable competitive edge for the company’s distribution channel over those of competitors. In this era of multiple physical and virtual channels, consumers and business customers are being reached in many innovative ways, so strategies must continually evolve. Office Depot sells nearly everything for the office and uses multiple marketing channels—retail stores, Web sites, catalogs, kiosks, wireless ordering—to reach consumers and business customers. Facing tough competitors like Staples and OfficeMax, Office Depot is continually expanding into new marketing channels. Its Web site, officedepot.com, which sells every product available in its stores, is the company’s fastest growing channel and the second largest Internet retailer in the world, trailing only Amazon.com. Alliances with Microsoft, Intuit, and several other companies also enable Office Depot to offer a wide range of online services, such as tax preparation and sales force automation. Viking Office Products, its catalog division, reaches small international customers who prefer to order via postal mail. Office Depot stores also contain Internet kiosks so customers can place online orders immediately if they can’t find what they want on the store shelves. The company’s latest channel, called Office Depot Anywhere, allows business customers to order products through wireless handheld Internet access devices. By electronic linkages across its multiple channels, Office Depot efficiently manages all its customer relationships, ordering processes, and rapidly turning inventories. What is most exciting is that its multiple channels are not “cannibalizing” sales from one another. Instead, the company has increased its overall share of its customers’ office product purchases. With rapid advances in technologies, many new marketing channels are opening up. And it is the job of the channel manager to anticipate and quickly capitalize on these opportunities to provide better and more profitable service to customers.
Designing marketing channels Channel design involves developing new channels or modifying existing channel structures to satisfy customer demands and achieve company objectives. According to Anderson, Day, and Rangan (1997), devising the structure involves four key dimensions: 1. number of levels—the number of intermediary levels between the manufacturer and ultimate users 2. intensity—the number of intermediaries at each level 3. types of intermediaries 4. number of channels (single, dual, or multiple)
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With countless possible combinations of these four dimensions, the design of marketing channels must consider different target markets, product types, and relevant environmental and behavioral factors. For example, to decide the appropriate intensity of coverage for a product requires the channel manager to consider the product’s size, storage life, packaging, price, target market characteristics, and geographic dispersion, as well as the buying patterns of customers.
the manager still must decide from among various alternatives which would be best for a given product or service. The introduction of electronic, direct marketing, and international channels of distribution (Web sites, kiosks, television home shopping, telesales and telemarketing, catalogs, vending machines) makes design even more complex than before. A multifaceted and dynamic activity, it requires continuous monitoring and skillful decision making by a very knowledgeable channel manager.
Thinking through these decision areas, the product manager for Coca-Cola would logically decide that its soft drink varieties need intensive distribution because they are relatively small, well-packaged, inexpensive products with limited shelf-life that consumers will buy almost anywhere at any time. So diverse retailers (beverage stores, restaurants, amusement parks, athletic stadiums), mass feeding institutions (schools, prisons, hospitals), and vending machines in countless locations must be incorporated into the distribution channels.
Selecting marketing channel members
On the other hand, a Rolex watch should have exclusive distribution because buying a prestigious, high-quality, expensive, and somewhat fragile timepiece entails a very carefully thought-out, infrequent purchase by a narrow target market. To ensure that its prestigious brand is presented and priced appropriately, Rolex wants to maintain as much control as possible over the types of distribution channels and middlemen, especially retailers, who will market it to the company’s upscale customers. Allowing a discount wholesaler or low-price retailer such as Target or Wal-Mart to handle the brand would prove disastrous.
Once the channel has been designed, its members must be chosen to represent the company and resell its products all down the line. To accomplish this, a prospective channel member’s credentials (credit history, reputation, number of product lines, market coverage, number of salespeople) need to be examined carefully for congruency with the manufacturer’s marketing objectives, strategies, and business policies. If there is significant incompatibility or deviation between any of the members and the manufacturer in terms of pricing strategy, reputation, creditworthiness, or treatment of customers, the success of the entire channel can be jeopardized. If a manufacturer of a high-quality, well-known branded line of clothing, let’s say, uses wholesalers or retailers who are volume discount-oriented and have little concern for customer service or satisfaction, the manufacturer’s brand could suffer irreparable damage in the eyes of customers. Ultimately, the success of the marketing channel depends on the quality and compatibility of the members its manager selected.
Motivating marketing channel members
Marketing channels can be either direct or indirect. In Because channel members are usually independent firms direct channels, companies use their own employees and not under the manufacturer’s direct control, they do not physical facilities to distribute goods. Sherwin-Williams owns, staffs, and operates most of the retail outlets that sell its paints. Companies like Figure 1 Procter & Gamble and GenTraditional marketing channel structures eral Mills, however, use indirect channels and work with a Consumer products number of independent firms Manufacturer——————————————————————————->Consumers to serve their markets. Analyzing alternatives and designing channels can be extremely complex, so some companies use sophisticated quantitative and computerized models to select the optimal channel structure. This is understandable, given the vast number of alternatives for channel design. However, even when considering only traditional marketing channels, as shown in Figure 1, 64
Manufacturer ————————————————————->Retailer——>Consumers Manufacturer ————————————->Wholesalers——->Retailers——>Consumers Manufacturer ——>Agents or Brokers——->Wholesalers——>Retailers——>Consumers
B2B products Manufacturer———————————————————————>Industrial customers Manufacturer——————————————->Distributor———->Industrial customers Manufacturer——->Agents or brokers————————————->Industrial customers Manufacturer——->Agents or brokers————>Distributor———>Industrial customers Services Service producer——————————————————————————->Customers Service producer ——————————————->Agents or brokers———->Customers Service producer————>Wholesalers—————>Agents or brokers———->Customers
Business Horizons / January-February 2003
always readily cooperate or comply with its requests. So manufacturers need to develop and update motivational programs regularly to induce channel members to cooperate and put forth greater effort in serving target markets. Various motivational strategies have been successfully employed, including paying higher slotting allowances, offering higher trade discounts, providing strong advertising and promotional support, training the members’ salespeople, and offering superior logistical support. Keeping all channel members motivated to work cooperatively in doing their best for customers is a never-ending concern because customers’ expectations are continuously growing along with the efforts of competitive marketing channels to meet them. Thus, channel managers have no comfort zones or rest stops along the way in their drive to maintain high levels of channel member motivation while trying to satisfy ever more demanding customers.
Coordinating strategy Coordinating dissimilar but interdependent firms that work loosely together for mutual financial benefits requires open lines of communication and prompt sharing of information up and down the line. A manufacturer, sitting at the top of the channel, must ensure that all members are aware of its marketing strategies and operating policies. Despite the differing goals of independent participants, coordination of the channel is essential to eliminate work redundancy and the inefficient allocation of distribution tasks among members. If channel strategy is variably or unreliably implemented anywhere from the manufacturer down the line to the ultimate customers, confusion and dissatisfaction will mount until the channel becomes much less effective and efficient. When that happens, competing marketing channels become much more attractive to customers. Therefore, one of the channel manager’s most important jobs is to ensure that marketing strategy is consistently and compatibly implemented.
Assessing member performance Channel member performance is evaluated by the degree to which the member engages in behavior that contributes to the fulfillment of the channel leader’s objectives. Because of manufacturers’ growing reliance on channel members for marketing efficiency and effectiveness, the individual and overall levels of performance are critical for competitive advantage. The channel manager must regularly evaluate and provide feedback on each member and encourage needed changes. Like any chain, a distribution channel is only as strong as its weakest link.
Managing conflict Marketing channels are influenced by the same behavioral dynamics, positive and negative, associated with all social
Will the real channel manager please stand up?
systems. So when one member takes actions that another believes will impede its ability to achieve its objectives, conflict arises. When Goodyear decided to expand its market coverage by allowing Sears and Discount Tire to sell its tires, 2,500 independent Goodyear dealers got upset and began giving less attention to selling those brands. Channel conflicts can have adverse effects on member performance, so channel managers must make conscious efforts to detect and resolve them.
It takes a channel manager Of course, developing and maintaining a channel of distribution requires a major initial and ongoing investment of resources—time, money, and human effort. Once the channel has been established, the focus is on maintaining both customer and channel member satisfaction while achieving individual member and overall channel objectives. Even though rapid technological innovations have made it possible for firms to introduce alternative approaches for making some products available to end users, it is important to recognize that electronic marketing channels do not have the potential to fully replace traditional distribution methods. Marketing channel systems will still need to be managed using the seven activities that are “part and parcel” of channel management. Any deficiencies by the channel manager in carrying out any of the seven will likely lead to channel underperformance— and, hence, manufacturer underperformance.
The channel manager finally stands up!
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hew, that’s a big job! With expanding channel innovations in the commercial world of “bricks and clicks,” firms that fail to establish responsibility and accountability for channel management activities may see many of these seven critical functions deteriorating from neglect as various managers protest, “Don’t blame me. It’s not my job.” The need to find the channel manager seems increasingly urgent, so let’s quickly continue our search for the extraordinary person who is able to do all that we have described. A review of the literature reveals few articles that even hint as to who actually performs the channel manager functions. So who is the most likely suspect? Well, sales managers’ fingerprints have been found a few times on these activities. If sales managers are, indeed, the de facto channel managers for their companies, then textbooks need to be radically revised and updated. Moreover, if such a finding is empirically substantiated, firms will need to make major changes in recruiting, selecting, training, evaluating,
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and rewarding sales managers, as well as establish new, more demanding criteria for selecting candidates for the position. Not satisfied with merely finding fingerprints, we decided to conduct our own study to see whether sales managers are in fact involved in channel management activities. We sent out a 42-item questionnaire to a national sample of 500 sales managers representing manufacturing firms randomly selected from the databases of a commercial mailing list company. Addressing the seven areas of marketing channel management, the questionnaire contained items that started with the phrase “I am involved in...,” to which sales managers were asked to respond on a scale ranging from “Strongly disagree” (1) to “Strongly agree” (5). We were also interested in determining whether channel management responsibilities vary by sales management position, so we also asked respondents to report whether they were field, branch, district, regional, general, or national sales managers. Of the returned questionnaires, 158 were complete and usable, for an effective response rate of 32 percent. Based on the standard categorization, we divided the respondents into lower-level sales managers (field or branch, n=47), intermediate-level sales managers (district or regional, n=50), and higher-level sales managers (general or national, n=61). Our results showed that, irrespective of hierarchical level, sales managers are well involved with channel management. With few exceptions, those at lower, intermediate, and upper levels participate actively in all seven key facets of it. However, we did find a significant distinction in the degree of participation at different hierarchical levels with regard to six of the functions: formulating strategy, channel design, member selection, motivating members, assessing member performance, and managing conflict. Our analysis revealed that as sales managers ascend to more senior levels, they tend more and more to attend to these six functions compared to their lower-level counterparts. Only one activity—coordinating channel strategy— was not affected by hierarchical level. We also learned that the intermediate-level managers participate more in formulating channel strategy and designing marketing channels than do those at the lower level. At least two possible explanations can be offered for the finding that coordinating channel strategy is not affected by hierarchical level. First, lower-level sales managers typically concentrate on leading, managing, and controlling the sales force in generating revenues. When channel decisions, strategies, and company-wide policies are formulated and disseminated by senior-level management, lower-level sales managers (as well as their higher-level counterparts) play an important role in relaying that tactical information to the channel members. In other words, all sales managers consider coordinating channel strategy important because it raises the chances that the manufac66
turer and its channel participants are in sync on mutually beneficial goals. Second, as the number of channel members increases, communicating changes in policies and coordinating strategies becomes increasingly difficult due to the greater number of information exchanges. Consequently, sales managers at all levels must effectively communicate with channel members. As firms use more and more intermediaries, sales managers at all levels help coordinate channel-related tasks and eliminate redundancies in work effort among channel participants.
Sales manager as channel manager: Now what?
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ow that we’ve finally identified the sales manager as the once unknown channel manager, we can almost hear the book authors and article writers revising their manuscripts to incorporate this new information. But what does this mean for upper-level marketing management? It means that this study can provide useful administrative implications suggesting that seniorlevel marketing managers must be more involved in recruiting, selecting, training, evaluating, rewarding, and showing respect for sales managers.
Recruitment and selection Despite the inroads made by emerging technologies as viable distribution alternatives, current technological trends reveal that e-commerce does not have the potential to displace or eliminate traditional marketing channel systems and intermediaries. Moreover, as long as firms continue to use distributive institutions for reselling products to final customers, sales managers at all organizational levels—as this study reveals—will, as de facto channel managers, still be involved in managing channels. Therefore, the person recruited and selected for the position should have the appropriate knowledge, skills, aptitudes, and other characteristics (KSAOs) to undertake the increasingly complex nature of the job in two areas: (a) sales force management and (b) marketing channel management. As the leader of the sales force, the sales manager’s “traditional” job-specific KSAOs are intraorganizational in nature, with the focus on attending to sales reps. Consequently, these managers require proficiency in such dayto-day activities as recruiting, training, motivating, deploying, and evaluating sales personnel, as well as analytical capability for use in sales forecasting, budgeting, and quota setting. As the channel manager, however, the sales manager’s KSAOs are interorganizational in nature, with a focus on the administration of the channel system. This requires Business Horizons / January-February 2003
expertise in all seven of the channel management functions. Candidates for upper-level positions should have more facility in a larger array of channel management functions than their lower-level counterparts. Moreover, the administration of an efficient and effective marketing channel system requires its manager to have superior skills in negotiating with intermediaries, building trust, forging long-term relationships, and managing customer relationships, as well as being knowledgeable about employing specific leadership styles that may be more effective in fostering a higher level of cooperation among members. To discern whether sales manager candidates have the germane channel manager KSAOs, various recruitment and selection techniques such as screening interviews, application blanks, in-depth interviews, reference checks, and psychological tests can be employed. Ideally, however, only candidates who exhibit skills in sales force and marketing channel management should be recruited for this important combination position. Personnel who have worked in sales and have experience in dealing with major channel issues (such as personnel from brand management, traffic, or distribution) should be excellent prospective candidates.
Training The current business environment requires “supermarketers.” Consequently, both newly selected and incumbent sales managers should be given training that helps them integrate sales with other marketing functions. In a recent study, Anderson, Mehta, and Strong (1997) found that although newly recruited sales managers recognized the need for the relevant training if they were to function effectively, they also perceived that their past skills were insufficient for them to succeed in their new jobs without receiving further management instruction. Thus, training becomes increasingly urgent as traditional sales manager roles and duties change dramatically. For firms that depend on marketing channel members to resell their products, sales managers must be trained to make effective decisions in the seven areas that encompass marketing channel management. After all, overseeing a hybrid sales force operating in diverse electronic and field channels while managing ongoing customer and channel member relationships are activities that call for people with exceptional abilities. The training should be continuous, as emerging and rapidly growing innovations are complicating channel management. Although classroom training will clearly be used, on-thejob training will serve as a strong complement. In fact, the prominent use of selling teams, selling centers, and crossfunctional teams will likely provide many people in sales positions with some on-the-job education as well as enhanced understanding of and appreciation for channelrelated issues. Another implication of training applies to academic settings. Specifically, when teaching courses on Will the real channel manager please stand up?
sales management and channels of distribution, instructors should discuss the role of the sales manager as the channel manager.
Evaluating and rewarding Along with the recognition of the eclectic nature and demands of their dual jobs, sales/channel managers require not only new recruitment, selection, and training standards, but also revised performance evaluation systems and updated reward criteria. Traditional performance criteria include such dimensions as their unit’s sales, percent of goal, market share, profitability, and expenses, as well as manage-
Personnel who have worked in sales and have experience in dealing with major channel issues (such as personnel from brand management, traffic, or distribution) should be excellent prospective candidates. rial and leadership ability. Now companies will want to incorporate the efficiency and effectiveness with which they perform channel management functions. The juggernaut for firms today is customer relationship management (CRM). Commitment to this watchword involves two-way collaboration, joint problem solving, multilevel linkages, mutual commitments, and trust between seller and buyer. If a firm is to adopt CRM, it should naturally begin evaluating and rewarding sales managers for channel management functions. After all, channel members are customers in longterm relationships. And member satisfaction induces member loyalty, while effective and efficient performance of channel functions contributes to satisfaction and loyalty all down the line. Thus, sales managers should be held accountable and rewarded for extracting satisfaction and loyalty from the firm’s middlemen.
Respect When Aretha Franklin bellowed out “R-E-S-P-E-C-T” in the 1960s, it certainly was not directed at sales/channel managers. Now, however, it is extremely pertinent to them. Top management has often viewed sales managers as little more than “super-salespeople” whose primary job is to show sales reps how to sell. (“They were successful in sales, so let’s have them pass their skills along to their subordi67
nates.”) As the leader of the sales force, however, the “traditional” job has always required well-rounded sales management expertise, leadership, and motivating skills. Now we know it also requires superior knowledge and skill in managing marketing channels. Czinkota, Kotabe, and Mercer (1997) maintain that the sales manager’s responsibility for handling the entire interface with customers is possibly the single most important factor in maintaining and perpetuating company success.
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ales managers have at long last stood up and been recognized as channel managers too. Now the onus is on top management to provide this newly recognized role—perhaps it can be called the “customer relationship manager”—with the recruitment and selection criteria, training, rewards, and respect it deserves. After all, their companies’ success depends on how well this dual job is accomplished. ❍
References and selected bibliography Anderson, Erin, George S. Day, and V. Kasturi Rangan. 1997. Strategic channel design. Sloan Management Review 38/4 (Summer): 59-69. Anderson, Rolph E. 1996. Personal selling and sales management in the new millennium. Journal of Personal Selling & Sales Management 16/4 (Fall): 17-32. ———, Joseph F. Hair, Jr., and Alan Bush. 1992. Professional sales management. New York: McGraw-Hill. Anderson, Rolph E., Rajiv Mehta, and James Strong. 1997. An empirical investigation of sales management training programs for sales managers. Journal of Personal Selling and Sales Management 17/3 (Summer): 53-66. Boone, Louis E., and David L. Kurtz. 2001. Contemporary marketing. Fort Worth, TX: Dryden Press. Cascio, Wayne F. 1998. Managing human resources. New York: McGraw-Hill. Coughlan, Anne T., Erin Anderson, Louis W. Stern, and Adel I. El-Ansary. 2001. Marketing channels. Upper Saddle River, NJ: Prentice-Hall.
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Czinkota, Michael R., Maasaki Kotabe, and David Mercer. 1997. Marketing management: Text and cases. Cambridge, MA: Blackwell. Daft, Richard L. 2000. Management. Fort Worth, TX: Dryden Press. Day, George S. 2000. Managing market relationships. Journal of the Academy of Marketing Science 28/1 (Winter): 24-30. Gaski, John F. 1984. The theory of power and conflict in channels of distribution. Journal of Marketing 48/3 (Summer): 9-29. Gomez-Mejia, Luis R., Joseph E. McCann, and Ronald C. Page. 1985. The structure of managerial behaviors and rewards. Industrial Relations (Winter): 147-154. Hall, Richard H. 2002. Organizations: Structures, processes, and outcomes. Englewood Cliffs, N J: Prentice-Hall. Jones, Gareth R. 2001. Organizational theory: Text and cases. Englewood Cliffs, N J: Prentice-Hall. Lusch, Robert F. 1978. Conflict and performance in distribution channels. In Foundations of marketing channels, ed. Arch G. Woodside, et al., 288-302. Austin, TX: Lone Star Publishers. Mehta, Rajiv, Trina Larsen, and Bert Rosenbloom. 1996. The influence of leadership style on cooperation in channels of distribution. International Journal of Physical Distribution and Logistics Management 26/6: 32-59. Moon, Mark A., and Gary M. Armstrong. 1994. Selling teams: A conceptual framework and research agenda. Journal of Personal Selling and Sales Management 14/1 (Winter): 17-30. Moon, Mark A., and Susan F. Gupta. 1997. Examining the formation of selling centers: A conceptual framework. Journal of Personal Selling & Sales Management 17/3 (Spring): 31-41. Pride, William M., and O.C. Ferrell. 2003. Marketing: Concepts and strategies. Boston: Houghton Mifflin. Reichheld, Frederick, and Earl Sasser, Jr. 1990. Zero defections: Quality comes to services. Harvard Business Review 68/5 (September-October): 105-111. Rosenbloom, Bert. 1995. Channel management. In Companion encyclopedia of marketing, ed. Michael J. Baker, 551-570. London: Routledge. ———. 1999. Marketing channels: A management view. Hinsdale, IL: Dryden Press. ———, and Rolph E. Anderson. 1985. Channel management and sales management: Some key interfaces. Journal of the Academy of Marketing Science 13/3 (Summer): 97-106. Yinon, Yoel, J. Amsel, and Moshe Krausz. 1991. How do managers in different levels explain their subordinates’ success and failures? Journal of Business and Psychology (Summer): 477-487.
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Rolph E. Anderson Royal H. Gibson, Sr. Professor of Marketing, Drexel University, Philadelphia, Pennsylvania
Rajiv Mehta Associate Professor of Marketing, New Jersey Institute of Technology, Newark, New Jersey
Alan J. Dubinsky Professor of Selling and Sales Management, Purdue University, West Lafayette, Indiana
For decades, marketing channel management has been widely written and talked about but never connected with any “real world” business position. What’s more, the many articles and textbooks on the topic seldom provide any hint as to who is supposed to be doing all these functions. At last, based on a national study and a systematic review of the literature to find the most likely suspect, we have identified the erstwhile unknown channel manager. It is now up to top management to provide the selection criteria, training, rewards, and respect for this newly recognized position because it is central to corporate success.
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n a long-running television show, “To Tell the Truth,” three people would claim to be someone with an unusual occupation or exceptional accomplishment. However, only one of them would actually be telling the truth; the other two were impostors. After asking each of the three people several specific questions, the panelists would try to guess which one was genuine. To maximize their winnings, the two impostors would do their best to mislead the panelists by making up their own false answers to the questions. Finally, after all the questioning was completed, the master of ceremonies would ask, “Will the real _________ (kickboxer, English Channel swimmer, or whatever) please stand up?” After a few feints, such as half rising from their chairs, the person with the unusual occupation or accomplishment eventually stood up. Something akin to this television show seems to be playing out in the marketing world, specifically in channel management. For decades, the channel manager has remained largely unconnected or unidentified with any “real world” company position. Indeed, only rarely does a company organization chart include a position titled “channel manager.” What’s more, in the numerous books and hundreds of articles on the subject, there is seldom any indication about who or what organizational position is supposed to be managing the marketing channel. This situation has gone on for so long that one might occasionally ponder whether some mysterious superperson determined to keep a secret identity may be handling these functions. Could it be a kind of Batman? Wonder Woman? Superman? Or might it be that the job of channel manager simply is not important enough to be assigned to anyone? Maybe marketing channel management somehow just takes care of itself without much attention from anyone in the company. Whatever the answers to these speculations, it seems apparent that the channel manager is going to remain unidentified until some investigator guesses or, preferably, systematically determines his identity. It is long overdue for someone to finally accept this challenge and ask the
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real channel manager to “please stand up!” We are determined to take up this quest. But before we do, we need to explore some basic questions to help guide our search:
Nor would any of us want hundreds of manufacturers arriving at all hours of the day and night at our homes or small stores to deliver individual items to us.
● What are marketing channels?
Marketing channel members handle not only discrepancies in quantity but also in the assortment or variety of products desired. By accumulating various products from many producers, a wholesaler or distributor can sort them out by type and quality and put together an assortment of products wanted by an office product retailer, department store, or plumbing business. Without these middlemen, the prices consumers and businesses pay for products and services would rise astronomically.
● Is marketing channel management really important? ● What does a marketing channel manager do? ● Who is the most likely channel manager suspect?
What are marketing channels?
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arketing channels, or distribution channels, comprise groups of interdependent organizations that work together to make products and services available for purchase by consumers or businesses. Simply put, they are pipelines or pathways to markets through which products flow from manufacturers to ultimate users. They connect companies as different as IBM and Campbell Soup, Hertz and McDonald’s, with various middlemen—wholesalers, distributors, retailers. These middlemen, in turn, perform a variety of distribution tasks to move products to end users: gathering and sharing information; buying and selling diverse product assortments; grading, storing, and transporting products; providing financing; and taking market risks. These marketing channel members, along with facilitating intermediaries (such as agents and brokers who may not take ownership of the products handled), ensure that consumer and industrial products flow through the different channel systems to reach the final customers at the right place, the right time, and in the right quantities. From the customer standpoint, according to Boone and Kurtz (2001), marketing channels create three basic kinds of utilities: time, place, and possession. Time utility makes products and services available when customers want them. Place utility provides them where customers want them. Possession utility enables the customer to purchase or lease products and then take them elsewhere for use as needed. Thus, marketing channels make life much more convenient and satisfying for customers.
Efficient exchanges Marketing channels also facilitate exchanges between sellers and buyers by reducing the number of transactions, thereby streamlining distribution and slashing costs. No manufacturer could afford to deliver most products— whether ballpoint pens, candy bars, computer paper, office staplers, or portable drills—directly to customers or small retail stores because of the huge discrepancy between the quantity the manufacturer wants to sell and the quantity the customer is willing to buy at one time. 62
Is channel management really important?
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t seems manifest that marketing channels play vital roles for manufacturers, middlemen, and other intermediaries, customers, and businesses. But is it really necessary to try to manage these channels of independent firms? Yes! As products become more and more like commodities with little significant differentiation (as perceived by consumers), competition is moving rapidly away from products toward efficiencies in distribution. Today, success or failure for many manufacturers depends on how quickly and inexpensively their products flow through the marketing channel to reach final customers. Without effective and efficient distribution channels, companies cannot get their products to markets on time to make profits when the “window of opportunity” opens. For smoothly functioning distribution systems, it is critical that all channel members work together. Close cooperation can lead to efficiencies, lower costs, the elimination of redundancies in the marketing channel, and the development of innovative approaches to satisfy customers and create competitive advantages. In fact, a country’s entire economy can be slowed dramatically by inefficient distribution channels. This is vividly illustrated by many undeveloped countries, as well as in the economic behemoth Japan, whose traditional use of mom-and-pop channel members has been a marketing nightmare. If products are not available in markets when, where, and how target customers want them, they are not going to sell. For example, if perishable products such as baked goods, fruits, and vegetables are delivered late, they may be unfit for sale to customers, resulting in huge losses all around. Because they are so dependent on channel members to resell their products and perform a variety of distribution functions, manufacturers are vitally concerned about the level of performance of these middlemen. In this era of customer relationship management and rapid innovations in distribution channels, especially advances in telecomBusiness Horizons / January-February 2003
munications, marketing channel management is more complex and more important than ever. Channel managers must not only satisfy their customers, they must also make every effort to keep them as loyal buyers—those who are the most profitable because they buy the most, cost less to serve, refer other customers, willingly pay price premiums for value, and tend to be the most forgiving
In terms of potential profit payoffs, there is no other business area more crucial than marketing channel management for ensuring effective and efficient distribution of products. when problems occur. In a study of companies across 14 industries, Reichheld and Sasser (1990) found that a 5 percent boost in customer loyalty could cause profits to rise between 25 and 95 percent. In terms of potential profit payoffs, there is no other business area more crucial than marketing channel management for ensuring effective and efficient distribution of products.
What do channel managers do?
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kay, we have learned that marketing channel management is very important. To be fully effective and efficient and to command customer satisfaction and loyalty, channels require leadership, cooperation, and management of all relationships. But what, specifically, do channel managers do? From the perspective of manufacturers looking down their channels toward ultimate customers, Rosenbloom (1995, 1999) lists seven critical activities a channel manager performs: ● formulating marketing channel strategy
● designing marketing channels ● selecting channel members ● motivating channel members ● coordinating channel strategy with members ● evaluating channel member performance ● managing conflict in the channels Will the real channel manager please stand up?
Formulating marketing channel strategy Developing overall channel strategy involves long-run planning and implementation efforts designed to create a sustainable competitive edge for the company’s distribution channel over those of competitors. In this era of multiple physical and virtual channels, consumers and business customers are being reached in many innovative ways, so strategies must continually evolve. Office Depot sells nearly everything for the office and uses multiple marketing channels—retail stores, Web sites, catalogs, kiosks, wireless ordering—to reach consumers and business customers. Facing tough competitors like Staples and OfficeMax, Office Depot is continually expanding into new marketing channels. Its Web site, officedepot.com, which sells every product available in its stores, is the company’s fastest growing channel and the second largest Internet retailer in the world, trailing only Amazon.com. Alliances with Microsoft, Intuit, and several other companies also enable Office Depot to offer a wide range of online services, such as tax preparation and sales force automation. Viking Office Products, its catalog division, reaches small international customers who prefer to order via postal mail. Office Depot stores also contain Internet kiosks so customers can place online orders immediately if they can’t find what they want on the store shelves. The company’s latest channel, called Office Depot Anywhere, allows business customers to order products through wireless handheld Internet access devices. By electronic linkages across its multiple channels, Office Depot efficiently manages all its customer relationships, ordering processes, and rapidly turning inventories. What is most exciting is that its multiple channels are not “cannibalizing” sales from one another. Instead, the company has increased its overall share of its customers’ office product purchases. With rapid advances in technologies, many new marketing channels are opening up. And it is the job of the channel manager to anticipate and quickly capitalize on these opportunities to provide better and more profitable service to customers.
Designing marketing channels Channel design involves developing new channels or modifying existing channel structures to satisfy customer demands and achieve company objectives. According to Anderson, Day, and Rangan (1997), devising the structure involves four key dimensions: 1. number of levels—the number of intermediary levels between the manufacturer and ultimate users 2. intensity—the number of intermediaries at each level 3. types of intermediaries 4. number of channels (single, dual, or multiple)
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With countless possible combinations of these four dimensions, the design of marketing channels must consider different target markets, product types, and relevant environmental and behavioral factors. For example, to decide the appropriate intensity of coverage for a product requires the channel manager to consider the product’s size, storage life, packaging, price, target market characteristics, and geographic dispersion, as well as the buying patterns of customers.
the manager still must decide from among various alternatives which would be best for a given product or service. The introduction of electronic, direct marketing, and international channels of distribution (Web sites, kiosks, television home shopping, telesales and telemarketing, catalogs, vending machines) makes design even more complex than before. A multifaceted and dynamic activity, it requires continuous monitoring and skillful decision making by a very knowledgeable channel manager.
Thinking through these decision areas, the product manager for Coca-Cola would logically decide that its soft drink varieties need intensive distribution because they are relatively small, well-packaged, inexpensive products with limited shelf-life that consumers will buy almost anywhere at any time. So diverse retailers (beverage stores, restaurants, amusement parks, athletic stadiums), mass feeding institutions (schools, prisons, hospitals), and vending machines in countless locations must be incorporated into the distribution channels.
Selecting marketing channel members
On the other hand, a Rolex watch should have exclusive distribution because buying a prestigious, high-quality, expensive, and somewhat fragile timepiece entails a very carefully thought-out, infrequent purchase by a narrow target market. To ensure that its prestigious brand is presented and priced appropriately, Rolex wants to maintain as much control as possible over the types of distribution channels and middlemen, especially retailers, who will market it to the company’s upscale customers. Allowing a discount wholesaler or low-price retailer such as Target or Wal-Mart to handle the brand would prove disastrous.
Once the channel has been designed, its members must be chosen to represent the company and resell its products all down the line. To accomplish this, a prospective channel member’s credentials (credit history, reputation, number of product lines, market coverage, number of salespeople) need to be examined carefully for congruency with the manufacturer’s marketing objectives, strategies, and business policies. If there is significant incompatibility or deviation between any of the members and the manufacturer in terms of pricing strategy, reputation, creditworthiness, or treatment of customers, the success of the entire channel can be jeopardized. If a manufacturer of a high-quality, well-known branded line of clothing, let’s say, uses wholesalers or retailers who are volume discount-oriented and have little concern for customer service or satisfaction, the manufacturer’s brand could suffer irreparable damage in the eyes of customers. Ultimately, the success of the marketing channel depends on the quality and compatibility of the members its manager selected.
Motivating marketing channel members
Marketing channels can be either direct or indirect. In Because channel members are usually independent firms direct channels, companies use their own employees and not under the manufacturer’s direct control, they do not physical facilities to distribute goods. Sherwin-Williams owns, staffs, and operates most of the retail outlets that sell its paints. Companies like Figure 1 Procter & Gamble and GenTraditional marketing channel structures eral Mills, however, use indirect channels and work with a Consumer products number of independent firms Manufacturer——————————————————————————->Consumers to serve their markets. Analyzing alternatives and designing channels can be extremely complex, so some companies use sophisticated quantitative and computerized models to select the optimal channel structure. This is understandable, given the vast number of alternatives for channel design. However, even when considering only traditional marketing channels, as shown in Figure 1, 64
Manufacturer ————————————————————->Retailer——>Consumers Manufacturer ————————————->Wholesalers——->Retailers——>Consumers Manufacturer ——>Agents or Brokers——->Wholesalers——>Retailers——>Consumers
B2B products Manufacturer———————————————————————>Industrial customers Manufacturer——————————————->Distributor———->Industrial customers Manufacturer——->Agents or brokers————————————->Industrial customers Manufacturer——->Agents or brokers————>Distributor———>Industrial customers Services Service producer——————————————————————————->Customers Service producer ——————————————->Agents or brokers———->Customers Service producer————>Wholesalers—————>Agents or brokers———->Customers
Business Horizons / January-February 2003
always readily cooperate or comply with its requests. So manufacturers need to develop and update motivational programs regularly to induce channel members to cooperate and put forth greater effort in serving target markets. Various motivational strategies have been successfully employed, including paying higher slotting allowances, offering higher trade discounts, providing strong advertising and promotional support, training the members’ salespeople, and offering superior logistical support. Keeping all channel members motivated to work cooperatively in doing their best for customers is a never-ending concern because customers’ expectations are continuously growing along with the efforts of competitive marketing channels to meet them. Thus, channel managers have no comfort zones or rest stops along the way in their drive to maintain high levels of channel member motivation while trying to satisfy ever more demanding customers.
Coordinating strategy Coordinating dissimilar but interdependent firms that work loosely together for mutual financial benefits requires open lines of communication and prompt sharing of information up and down the line. A manufacturer, sitting at the top of the channel, must ensure that all members are aware of its marketing strategies and operating policies. Despite the differing goals of independent participants, coordination of the channel is essential to eliminate work redundancy and the inefficient allocation of distribution tasks among members. If channel strategy is variably or unreliably implemented anywhere from the manufacturer down the line to the ultimate customers, confusion and dissatisfaction will mount until the channel becomes much less effective and efficient. When that happens, competing marketing channels become much more attractive to customers. Therefore, one of the channel manager’s most important jobs is to ensure that marketing strategy is consistently and compatibly implemented.
Assessing member performance Channel member performance is evaluated by the degree to which the member engages in behavior that contributes to the fulfillment of the channel leader’s objectives. Because of manufacturers’ growing reliance on channel members for marketing efficiency and effectiveness, the individual and overall levels of performance are critical for competitive advantage. The channel manager must regularly evaluate and provide feedback on each member and encourage needed changes. Like any chain, a distribution channel is only as strong as its weakest link.
Managing conflict Marketing channels are influenced by the same behavioral dynamics, positive and negative, associated with all social
Will the real channel manager please stand up?
systems. So when one member takes actions that another believes will impede its ability to achieve its objectives, conflict arises. When Goodyear decided to expand its market coverage by allowing Sears and Discount Tire to sell its tires, 2,500 independent Goodyear dealers got upset and began giving less attention to selling those brands. Channel conflicts can have adverse effects on member performance, so channel managers must make conscious efforts to detect and resolve them.
It takes a channel manager Of course, developing and maintaining a channel of distribution requires a major initial and ongoing investment of resources—time, money, and human effort. Once the channel has been established, the focus is on maintaining both customer and channel member satisfaction while achieving individual member and overall channel objectives. Even though rapid technological innovations have made it possible for firms to introduce alternative approaches for making some products available to end users, it is important to recognize that electronic marketing channels do not have the potential to fully replace traditional distribution methods. Marketing channel systems will still need to be managed using the seven activities that are “part and parcel” of channel management. Any deficiencies by the channel manager in carrying out any of the seven will likely lead to channel underperformance— and, hence, manufacturer underperformance.
The channel manager finally stands up!
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hew, that’s a big job! With expanding channel innovations in the commercial world of “bricks and clicks,” firms that fail to establish responsibility and accountability for channel management activities may see many of these seven critical functions deteriorating from neglect as various managers protest, “Don’t blame me. It’s not my job.” The need to find the channel manager seems increasingly urgent, so let’s quickly continue our search for the extraordinary person who is able to do all that we have described. A review of the literature reveals few articles that even hint as to who actually performs the channel manager functions. So who is the most likely suspect? Well, sales managers’ fingerprints have been found a few times on these activities. If sales managers are, indeed, the de facto channel managers for their companies, then textbooks need to be radically revised and updated. Moreover, if such a finding is empirically substantiated, firms will need to make major changes in recruiting, selecting, training, evaluating,
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and rewarding sales managers, as well as establish new, more demanding criteria for selecting candidates for the position. Not satisfied with merely finding fingerprints, we decided to conduct our own study to see whether sales managers are in fact involved in channel management activities. We sent out a 42-item questionnaire to a national sample of 500 sales managers representing manufacturing firms randomly selected from the databases of a commercial mailing list company. Addressing the seven areas of marketing channel management, the questionnaire contained items that started with the phrase “I am involved in...,” to which sales managers were asked to respond on a scale ranging from “Strongly disagree” (1) to “Strongly agree” (5). We were also interested in determining whether channel management responsibilities vary by sales management position, so we also asked respondents to report whether they were field, branch, district, regional, general, or national sales managers. Of the returned questionnaires, 158 were complete and usable, for an effective response rate of 32 percent. Based on the standard categorization, we divided the respondents into lower-level sales managers (field or branch, n=47), intermediate-level sales managers (district or regional, n=50), and higher-level sales managers (general or national, n=61). Our results showed that, irrespective of hierarchical level, sales managers are well involved with channel management. With few exceptions, those at lower, intermediate, and upper levels participate actively in all seven key facets of it. However, we did find a significant distinction in the degree of participation at different hierarchical levels with regard to six of the functions: formulating strategy, channel design, member selection, motivating members, assessing member performance, and managing conflict. Our analysis revealed that as sales managers ascend to more senior levels, they tend more and more to attend to these six functions compared to their lower-level counterparts. Only one activity—coordinating channel strategy— was not affected by hierarchical level. We also learned that the intermediate-level managers participate more in formulating channel strategy and designing marketing channels than do those at the lower level. At least two possible explanations can be offered for the finding that coordinating channel strategy is not affected by hierarchical level. First, lower-level sales managers typically concentrate on leading, managing, and controlling the sales force in generating revenues. When channel decisions, strategies, and company-wide policies are formulated and disseminated by senior-level management, lower-level sales managers (as well as their higher-level counterparts) play an important role in relaying that tactical information to the channel members. In other words, all sales managers consider coordinating channel strategy important because it raises the chances that the manufac66
turer and its channel participants are in sync on mutually beneficial goals. Second, as the number of channel members increases, communicating changes in policies and coordinating strategies becomes increasingly difficult due to the greater number of information exchanges. Consequently, sales managers at all levels must effectively communicate with channel members. As firms use more and more intermediaries, sales managers at all levels help coordinate channel-related tasks and eliminate redundancies in work effort among channel participants.
Sales manager as channel manager: Now what?
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ow that we’ve finally identified the sales manager as the once unknown channel manager, we can almost hear the book authors and article writers revising their manuscripts to incorporate this new information. But what does this mean for upper-level marketing management? It means that this study can provide useful administrative implications suggesting that seniorlevel marketing managers must be more involved in recruiting, selecting, training, evaluating, rewarding, and showing respect for sales managers.
Recruitment and selection Despite the inroads made by emerging technologies as viable distribution alternatives, current technological trends reveal that e-commerce does not have the potential to displace or eliminate traditional marketing channel systems and intermediaries. Moreover, as long as firms continue to use distributive institutions for reselling products to final customers, sales managers at all organizational levels—as this study reveals—will, as de facto channel managers, still be involved in managing channels. Therefore, the person recruited and selected for the position should have the appropriate knowledge, skills, aptitudes, and other characteristics (KSAOs) to undertake the increasingly complex nature of the job in two areas: (a) sales force management and (b) marketing channel management. As the leader of the sales force, the sales manager’s “traditional” job-specific KSAOs are intraorganizational in nature, with the focus on attending to sales reps. Consequently, these managers require proficiency in such dayto-day activities as recruiting, training, motivating, deploying, and evaluating sales personnel, as well as analytical capability for use in sales forecasting, budgeting, and quota setting. As the channel manager, however, the sales manager’s KSAOs are interorganizational in nature, with a focus on the administration of the channel system. This requires Business Horizons / January-February 2003
expertise in all seven of the channel management functions. Candidates for upper-level positions should have more facility in a larger array of channel management functions than their lower-level counterparts. Moreover, the administration of an efficient and effective marketing channel system requires its manager to have superior skills in negotiating with intermediaries, building trust, forging long-term relationships, and managing customer relationships, as well as being knowledgeable about employing specific leadership styles that may be more effective in fostering a higher level of cooperation among members. To discern whether sales manager candidates have the germane channel manager KSAOs, various recruitment and selection techniques such as screening interviews, application blanks, in-depth interviews, reference checks, and psychological tests can be employed. Ideally, however, only candidates who exhibit skills in sales force and marketing channel management should be recruited for this important combination position. Personnel who have worked in sales and have experience in dealing with major channel issues (such as personnel from brand management, traffic, or distribution) should be excellent prospective candidates.
Training The current business environment requires “supermarketers.” Consequently, both newly selected and incumbent sales managers should be given training that helps them integrate sales with other marketing functions. In a recent study, Anderson, Mehta, and Strong (1997) found that although newly recruited sales managers recognized the need for the relevant training if they were to function effectively, they also perceived that their past skills were insufficient for them to succeed in their new jobs without receiving further management instruction. Thus, training becomes increasingly urgent as traditional sales manager roles and duties change dramatically. For firms that depend on marketing channel members to resell their products, sales managers must be trained to make effective decisions in the seven areas that encompass marketing channel management. After all, overseeing a hybrid sales force operating in diverse electronic and field channels while managing ongoing customer and channel member relationships are activities that call for people with exceptional abilities. The training should be continuous, as emerging and rapidly growing innovations are complicating channel management. Although classroom training will clearly be used, on-thejob training will serve as a strong complement. In fact, the prominent use of selling teams, selling centers, and crossfunctional teams will likely provide many people in sales positions with some on-the-job education as well as enhanced understanding of and appreciation for channelrelated issues. Another implication of training applies to academic settings. Specifically, when teaching courses on Will the real channel manager please stand up?
sales management and channels of distribution, instructors should discuss the role of the sales manager as the channel manager.
Evaluating and rewarding Along with the recognition of the eclectic nature and demands of their dual jobs, sales/channel managers require not only new recruitment, selection, and training standards, but also revised performance evaluation systems and updated reward criteria. Traditional performance criteria include such dimensions as their unit’s sales, percent of goal, market share, profitability, and expenses, as well as manage-
Personnel who have worked in sales and have experience in dealing with major channel issues (such as personnel from brand management, traffic, or distribution) should be excellent prospective candidates. rial and leadership ability. Now companies will want to incorporate the efficiency and effectiveness with which they perform channel management functions. The juggernaut for firms today is customer relationship management (CRM). Commitment to this watchword involves two-way collaboration, joint problem solving, multilevel linkages, mutual commitments, and trust between seller and buyer. If a firm is to adopt CRM, it should naturally begin evaluating and rewarding sales managers for channel management functions. After all, channel members are customers in longterm relationships. And member satisfaction induces member loyalty, while effective and efficient performance of channel functions contributes to satisfaction and loyalty all down the line. Thus, sales managers should be held accountable and rewarded for extracting satisfaction and loyalty from the firm’s middlemen.
Respect When Aretha Franklin bellowed out “R-E-S-P-E-C-T” in the 1960s, it certainly was not directed at sales/channel managers. Now, however, it is extremely pertinent to them. Top management has often viewed sales managers as little more than “super-salespeople” whose primary job is to show sales reps how to sell. (“They were successful in sales, so let’s have them pass their skills along to their subordi67
nates.”) As the leader of the sales force, however, the “traditional” job has always required well-rounded sales management expertise, leadership, and motivating skills. Now we know it also requires superior knowledge and skill in managing marketing channels. Czinkota, Kotabe, and Mercer (1997) maintain that the sales manager’s responsibility for handling the entire interface with customers is possibly the single most important factor in maintaining and perpetuating company success.
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ales managers have at long last stood up and been recognized as channel managers too. Now the onus is on top management to provide this newly recognized role—perhaps it can be called the “customer relationship manager”—with the recruitment and selection criteria, training, rewards, and respect it deserves. After all, their companies’ success depends on how well this dual job is accomplished. ❍
References and selected bibliography Anderson, Erin, George S. Day, and V. Kasturi Rangan. 1997. Strategic channel design. Sloan Management Review 38/4 (Summer): 59-69. Anderson, Rolph E. 1996. Personal selling and sales management in the new millennium. Journal of Personal Selling & Sales Management 16/4 (Fall): 17-32. ———, Joseph F. Hair, Jr., and Alan Bush. 1992. Professional sales management. New York: McGraw-Hill. Anderson, Rolph E., Rajiv Mehta, and James Strong. 1997. An empirical investigation of sales management training programs for sales managers. Journal of Personal Selling and Sales Management 17/3 (Summer): 53-66. Boone, Louis E., and David L. Kurtz. 2001. Contemporary marketing. Fort Worth, TX: Dryden Press. Cascio, Wayne F. 1998. Managing human resources. New York: McGraw-Hill. Coughlan, Anne T., Erin Anderson, Louis W. Stern, and Adel I. El-Ansary. 2001. Marketing channels. Upper Saddle River, NJ: Prentice-Hall.
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Czinkota, Michael R., Maasaki Kotabe, and David Mercer. 1997. Marketing management: Text and cases. Cambridge, MA: Blackwell. Daft, Richard L. 2000. Management. Fort Worth, TX: Dryden Press. Day, George S. 2000. Managing market relationships. Journal of the Academy of Marketing Science 28/1 (Winter): 24-30. Gaski, John F. 1984. The theory of power and conflict in channels of distribution. Journal of Marketing 48/3 (Summer): 9-29. Gomez-Mejia, Luis R., Joseph E. McCann, and Ronald C. Page. 1985. The structure of managerial behaviors and rewards. Industrial Relations (Winter): 147-154. Hall, Richard H. 2002. Organizations: Structures, processes, and outcomes. Englewood Cliffs, N J: Prentice-Hall. Jones, Gareth R. 2001. Organizational theory: Text and cases. Englewood Cliffs, N J: Prentice-Hall. Lusch, Robert F. 1978. Conflict and performance in distribution channels. In Foundations of marketing channels, ed. Arch G. Woodside, et al., 288-302. Austin, TX: Lone Star Publishers. Mehta, Rajiv, Trina Larsen, and Bert Rosenbloom. 1996. The influence of leadership style on cooperation in channels of distribution. International Journal of Physical Distribution and Logistics Management 26/6: 32-59. Moon, Mark A., and Gary M. Armstrong. 1994. Selling teams: A conceptual framework and research agenda. Journal of Personal Selling and Sales Management 14/1 (Winter): 17-30. Moon, Mark A., and Susan F. Gupta. 1997. Examining the formation of selling centers: A conceptual framework. Journal of Personal Selling & Sales Management 17/3 (Spring): 31-41. Pride, William M., and O.C. Ferrell. 2003. Marketing: Concepts and strategies. Boston: Houghton Mifflin. Reichheld, Frederick, and Earl Sasser, Jr. 1990. Zero defections: Quality comes to services. Harvard Business Review 68/5 (September-October): 105-111. Rosenbloom, Bert. 1995. Channel management. In Companion encyclopedia of marketing, ed. Michael J. Baker, 551-570. London: Routledge. ———. 1999. Marketing channels: A management view. Hinsdale, IL: Dryden Press. ———, and Rolph E. Anderson. 1985. Channel management and sales management: Some key interfaces. Journal of the Academy of Marketing Science 13/3 (Summer): 97-106. Yinon, Yoel, J. Amsel, and Moshe Krausz. 1991. How do managers in different levels explain their subordinates’ success and failures? Journal of Business and Psychology (Summer): 477-487.
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