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Principles of Marketing - Philip Kotler

Evaluation of participants in the channel

The manufacturer should periodically assess the performance of distributors on such indicators as the performance of sales standards, maintaining the average level of inventory, delivery efficiency of goods to consumers, related to damaged or missing goods, cooperation with the firm in the implementation of sales promotion and education programs, as well as a set of services, that the intermediary must provide to consumers.

Typically, a manufacturer assigns mediators specific marketing standards. At the end of the next planning period, he could be sent to all intermediaries with a summary of trade performance of each of them. This summary should give a laggard incentive to work better, and advanced - to hold achievements. Indicators intermediaries trading activities can be compared with their own figures for prior periods. The norm can be considered as the average percentage increase in performance for the group as a whole.

Manufacturers need to be sensitive to its dealers. Anyone who does not show proper attention to intermediaries, risk losing their support and not be in conflict with the law. Box 30 describes the rights and obligations of producers and members that are part of their distribution channels.

Box 30. Decisions on the distribution system and social and public policy

Basically, in terms of the law, manufacturers are free to create any distribution channels arranging their structure. Incidentally, the law relating to the distribution channels is to ensure that the manufacturer will not deprived of the possibility of using the channel as a result of the tactical maneuvers of others. But at the same time it imposes on him the obligation to take a cautious approach to their own actions, which may be a limitation for other companies. Most of the legislation deals with the rights and responsibilities of the manufacturer and the channel members in relation to each other after the establishment of the partnership.

Exclusive dealership. Many manufacturers and wholesalers like form for the goods channels of distribution rights of exclusivity. Exclusive dealership beneficial to both parties. Manufacturers and wholesalers have at their disposal a reliable trading enterprise without having to invest in them, and distributors - a constant source of supply and support from vendors. However, as a result of such actions by other manufacturers are deprived of the possibility of selling their products to these dealers. All this has led to the fact that contracts for the exclusive dealership fallen under the antitrust laws. They are entitled to, as long as do not contribute to a significant reduction of competition and create a monopoly and both sides come to an agreement is completely voluntary.

Exclusive dealership in the specified area. Exclusive dealerships often implies the existence of exclusive agreements on areas of activity. The seller may agree to deliver their goods to other distributors in the specified area, and the buyer may agree on their part to sell the goods only within their trading area. The first option - a phenomenon quite common in the practice of systems based on trading privileges and is one of the means to promote the efforts of the dealer, and increased investments in sales organization within the zone. Seller no legally forced to sell their products through more than he wants to, the number of commercial enterprises. The second option, in which the manufacturer is trying to limit the trading activities of its dealers only border trade zone, has become the subject of attention of legislators.

Agreement on tying. Manufacturers of branded goods that are in particularly high demand, dealers sometimes sell it on the condition that they will acquire at the same time and all or some of the other products included in the range. This practice is called the imposition of the full range. Such agreements are not tying illegal by themselves, but if they contribute to a substantial lessening of competition, that are illegal under antitrust law. Dealers in this case make it impossible to exercise free choice among providers of goods of other brands.

Dealer Rights. Vendors are free to choose their dealers without any restrictions, but the right to terminate the relationship with the selected dealers are restricted in some cases. In general, sellers may refuse dealer services "for a good reason." But they can not do that in case of failure of dealers to participate in the dubious legality of actions, such as the conclusion of certain types of agreements on exclusive dealing and tying arrangements.