Imagine these three scenarios:
You are a producer of ‘Grand Pens’ a brand of fountain pens.
A customer seeks advice from a pen shop on which pen to buy and the retailer strongly recommends yours.
A customer asks a retailer, who stocks your pen, for another brand called ‘Bad Pens’. The retailer recommends and offers your pen as superior.
A retailer actively solicits business for you by asking customers buying other products to come and have a look at the exquisite ‘Grand Pen’.
This retailer is obviously very motivated. ‘Mindshare’, as it is called in the USA, has to do with how important your product is in the distributor’s mind relative to the other lines they carry. Winning the battle for the distributor’s share of mind can be more important than many other marketing strategies. It applies in industrial markets and consumer markets where intermediaries play important roles in the distribution channel.
In reality, maintaining continually high levels of motivation among intermediaries presents a challenge. It requires a reasonable quality product, creative promotions, product training, joint visits between producer and distributor, co-operative advertising, merchandising and display.
Most of these apply to agents as much as distributors and retailers.
Keeping the intermediary stimulated is important. Positive motivators, like sales contests are preferred to negative motivators like sanctions such as reduced discounts and the threat of terminating the relationship.
A positive reward works better than a negative punishment. Ideally there should be a shared sense of responsibility – a partnership – a strategic partnership. The supplier and intermediary are there to help each other. Vertical Marketing Systems are a good example.
Clear communications, covering sales goals, review meetings, reporting procedures, marketing strategy, training , market information required, suggestions for improvements, all help. Regular contact through visits, review meetings, dinners, competitions, newsletters, thank you letters, congratulatory awards all help to keep everyone working closely together.
These are all non-financial incentives which provide a form of psychic income as opposed to financial income. That’s not to say that financial incentives aren’t useful motivators, it just means that there are other motivations there too. In fact the money spent on financial incentives is often spent more effectively when the sales person is rewarded with a plaque, a gold pen or a holiday in the Bahamas rather than just the cash which tends to get soaked up and lost in a sea of ordinary household daily expenditure.
Non cash rewards appeal to the higher levels of Maslow’s Hierarchy of Needs – belonging, esteem and self actualisation.
Despite this, conflict can occur when too many distributors are appointed within close proximity of each other, or the producer engages in a multiple channel strategy of direct marketing as well as marketing through intermediaries.
Carefully motivating distributors is vital if goods are to flow smoothly through the channel and reach satisfied customers.