Motivating And Compensating Channel Members
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The document discusses different ways to motivate and compensate channel members in a distribution and logistics system. It outlines financial rewards like higher margins and bonuses, as well as non-financial rewards like contests and training. The main forms of compensation for intermediaries mentioned are quantity discounts, trade discounts, and commissions, with commissions paid as a percentage of sales to agents for services like order booking and debt recovery.
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Motivating And Compensating Channel Members
- 1. Amity Business School MBA Class of 2010, Semester II Distribution & Logistics Management Ms.Vandana Gupta
- 2. MOTIVATION Financial rewards Non Financial rewards
- 3. Financial Rewards include Higher Margins Extended credit time Bonuses Reimbursement of expenses
- 4. The problem with most financial rewards, particularly higher margins and bonus, is that the wholesalers use them to reduce their prices for their customers.
- 5. Non Financial rewards include Contests Public recognition for higher performance through momentos paid holidays at company expense Trainings
- 6. COMPENSATING CHANNEL MEMBERS According to Stern and Ansary , Compensation to intermediaries should be paid only for what they actually do with in the system.
- 7. Forms of compensating intermediaries Quantity Discount Trade Discount Commission
- 8. Quantity Discount A form of compensation given to an intermediary, whether agent or merchant, in respect of the quantum of sale.
- 9. Trade Discount A form of compensation usually adopted to compensate a merchant middlemen who is appointed as a distributor or dealer and agrees to various forms of channel controls exercised by a manufacturer for whom they work.
- 10. Commission It is paid to agent intermediaries for the services rendered by them which usually include assisting in ownership transfer, negotiation, order booking, financing, promotion, debt recovery etc. It is calculated as a percent of the total amount or volume of sales generated by them.
Editor's Notes
- #2: Amity Business School