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MDF or Market Development Funds are monetary funds given by manufacturers, brand owners, sales or marketing departments to help a partner/reseller/distributor to market the manufacturer’s brand. MDF funds are disbursed based on the execution of a marketing plan agreed-to, between the partner and the manufacturer. These funds are not sales incentives or promotions. They are mainly used for the co-marketing and co-branding of products. Providing market development funds is in the best interest of the manufacturer to increase the outcome.

The end-to-end business processes of the MDF solution enables companies to better manage and allocate funds to their channel partners; provide partner self-service for requesting and claiming funds; ensure legal compliance of funding practices; and most importantly, helps the Brand Owner understand the effectiveness of their channel marketing expenditures.

MDF is part of the Partner Channel Management scenario in the SAP CRM solution. The Brand Owner/Manufacturer is often referred to as Channel Manager and the reseller/distributors as Channel Partners or Partner. In this blog, I refer to them as Brand Owner and Partners respectively.

MDF consists of long and short term planned projects where the product manufacturer/brand owner decides to market a particular product; defines the kinds of marketing activities to be done;  how much and how the funding is to be used for these marketing activities. In setting up projects, you can decide on the participating partners, define what expenses can be claimed, duration, and kind of activities that can be conducted, as well as define reimbursement rates at which the expenses can be claimed.

SAP CRM MDF supports –

Brand owner to:

  • Allocate funds to their partners to execute marketing activities.
  • Centrally plan, manage and align marketing activities (such as when, where and what) conducted by partners.        
  • Track expenses incurred by the partners in the execution of marketing activities.

Partners to:  

  • Use the solution to allocate funds within their network and manage their activities.        
  • Create claims for reimbursement, track approval and payout status.

The above processes are supported by the following functionalities:

  • MDF Program setup
  • MDF execution with Partners
  • Funds Management
  • Claims Management
  • Financial accrual management
  • And is fully integrated with SAP ERP – payout and controlling.

Furthermore, MDF is also about co-marketing activities done along with your partners, who use the (Brand Owner’s) product as an internal element in their own product -forming a channel of sales, which is further utilized for marketing and co-branding. E.g.: Processor supplied to Laptop manufacturers, graphics cards supplied to gaming device manufacturers.

With MDF, partners are motivated to market products due to additional funding from the brand owner. Brand owners are enabled to proactively market when they want to showcase and promote their brand to increase market presence – leveraging on Partner presence and marketing activities in various regions to increase the marketing reach and ensure consistent branding of the product.

Predominately used by the high tech industry, MDF supports all of the Brand Owner’s collaborative marketing activities along with their Partners in other industries.

Benefits of MDF to Brand Owners and Partners:

Brand owners:

  • Can closely monitor the expenses incurred by partners during the execution of marketing activities.
  • Have visibility and can control unwanted and fraudulent claiming
  • Regulate funding usage by assigning an expiration period to the funding.

Partners can:

  • Model themselves and their channel in the system, as well as, organize and manage them.
  • Plan activities, regulate and spread it over time or reserve money for future activities.
  • Directly create claims for the money spent.

MDF Claims are integrated to ERP payout processing and CO-PA – allowing accrual management and triggering accrual posting into ERP.

For detailed information, please see the RKT Material on the SAP Service Marketplace under http://service.sap.com/rkt-crm -> CRM 7.0 (or CRM 2007) -> Partner Channel Management.

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9 Comments

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    1. Vijay Vijayasankar
      funds management is one of the things MDF does – along with claims, marketing, FI integration etc.

      And funds can belong to any account (business partner) – it is possible to model your fund master data to have certain funds for partners and others for internal use. Subject to certin constraints, you can ove money between funds too.

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      1. Swarna Mishra Post author
        Hello Piyush,

        Vijay’s reply summarizes it well. Funds Management as it is called it allows one to manage and model your funds. In MDF we use it to model funds assigned to Partners.

        Regards,
        Swarna.

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    1. Swarna Mishra Post author
      The uptake of the product has been very positive specially in the High Tech industry. Unfortunately SAP does not provide customer numbers on such granular level, therefore I cannot share it.
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  1. Anonymous
    Hi
    You blog was really good, helped me to understand MDF concept, I have one Question, CRM earlier has MSM ( Marketing Spend Management ), which too was similar in concept with MDF. Can you pl. share something into this
    Also do you have idea for BI integration with MDF.
    OR,  location from where I can get Business content details related to MDF – BI

    Thanks
    Dushyant

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    1. Swarna Mishra Post author
      Hello Dushyant,

      Yes you are correct that MSM was on a similar concept but the MDF solution is more detailed with respect to tracking of expenses and claims within the CRM system.
      In MDF we have integration with Funds and claims Management both are integral parts of CRM. Funds Management allows both Brand Owner and Partners to see their allocated amount for the marketing activities, the reserved amounts, already claimed expenses and the amounts already been paid out. Using the claims Management from CRM both Brand Owners and Partners can directly create claims in the CRM system which are paid out using ERP.

      For BI we offer extractors for the MDF content to SAP BW.  During a customer implementation BI content can be developed based on customer needs.

      Regards,
      Swarna

      (0) 

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