Setting Up Cooperative Programs

To implement its overall marketing strategy, the manufacturer needs the cooperation of its distributive outlets. In consumer-goods markets, for instance, retailers must have adequate stocks of a product on hand prior to the launching of national consumer advertising campaigns. Retailers must provide support through tie-in displays and local advertising. Manufacturers of industrial goods look to their distributive outlets for similar support.

The initiative for establishing and maintaining cooperative programs almost always comes from the manufacturer rather than from the distribu­tive outlets. Within the manufacturer’s organization, the sales department is often the initiator of such programs and generally the implementer. The product is, after all, the manufacturer’s product, and the manufacturer’s sales department has the most direct interest in selling it.

Most manufacturers recognize their dependence upon their associated channel partners. However, many channel partners, perhaps the majority, do not recognize their parallel dependence upon any one manufacturer. They have contact with, and in most cases represent, other manufacturers, many times even those with competitive lines. Then, too, in most market­ing situations, the manufacturer’s organization is larger, more experienced, and better equipped to plan and administer cooperative programs. There­fore, the channel partners usually look to the manufacturer to set up and manage any cooperative efforts.

Some manufacturers achieve marketing success without the cooper­ation of the outlets handling their products. A few succeed even in spite of their channel partners’ hostility and open resentment. Manufacturers of high-volume convenience goods, for example, sometimes achieve strong consumer preference through heavy expenditures for advertising, thus forcing the cooperation of dealers who recognize that they will miss opportunities for profit if they do not service the consumer demand. In such cases, although dealers may dislike the manufacturer and its products, they serve the manufacturer’s interests, mainly because that is the profit­able thing to do.

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.