Directorate of distance education

Evaluating Potential Channel Members
Once a pool of potential channel members has been identified, it 
is necessary to determine whether they would be suitable. The first step 
in the evaluation process is to identify appropriate evaluation criteria. 
These criteria will reflect the distribution objectives and tasks set by 
the manufacturer earlier in the channel design process. Some typical 
evaluation criteria include:
➢ Credit worthiness and financial condition
➢ Sales strength - quality, skill and number of sales people
➢
Product lines - competitive products, compatible products, 
complementary products, quality of lines carried
➢ Reputation and image
➢ Markets served - geographic coverage, target markets, market 
contacts
➢ Sales performance - volume, profitability, call conversion rate
➢ Management succession - longevity and continuity of the firm
➢ Management ability - managing the business and the sales force
➢ Attitude - enthusiasm, motivation, initiative
➢ Size - larger intermediaries are normally preferredCosts of Utilizing 
Channel Members
Loss of Revenue – Resellers are not likely to offer services to a 
marketer unless they see financial gain in doing so. They obtain payment 
for their services as either direct payment (e.g., marketer pays for shipping 
costs) or, in the case of resellers, by charging their customers more than 
what they paid the marketer for acquiring the product (termed markup). 
For the latter, marketers have a good idea of what the final customer 
will pay for their product which means the marketer must charge less 
when selling the product to resellers. In these situations marketers are not 
reaping the full sale price by using resellers, which they may be able to do 
if they sold directly to the customer. 
➢ Loss of Communication Control – Marketers not only give up 
revenue when using resellers, they may also give up control of 
the message being conveyed to customers. If the reseller engages 

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in communication activities, such as personal selling in order to 
get customers to purchase the product, the marketer is no longer 
controlling what is being said about the product. This can lead 
to miscommunication problems with customers, especially if 
the reseller embellishes the benefits the product provides to the 
customer. While marketers can influence what is being said by 
training reseller’s salespeople, they lack ultimate control of the 
message. 
➢ Loss of Product Importance – Once a product is out of the 
marketer’s hands the -importance of that product is left up to 
channel members. If there are pressing issues in the channel, such 
as transportation problems, or if a competitor is using promotional 
incentives in an effort to push their product through resellers, the 
marketer’s product may not get the attention the marketer feels it 
should receive.