A market development fund (MDF) is a resource that a vendor grants to its indirect sales channel partners to help the channel with sales and marketing activities. The fund may be monetary or knowledge-based.
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For example, a vendor may allocate financial incentives to a channel partner that has achieved a particular membership status within the channel partner programs by meeting the vendor’s requirements in terms of revenue and/or certifications. The same vendor may also award financial incentives to a company that has been identified as a potential partner, capable of helping the vendor build business. Knowledge-based resources may include leads and mailing lists or access to the vendor’s own marketing resources. For example, a vendor might provide a channel partner with prepackaged HTML marketing materials, bulk mailers for a direct-mail campaign or tools for creating a webinar.
It is recommended that channel partners looking for MDF to offset or fully fund an event should provide the vendor with a simple plan of action that included "the ask" (dollars, equipment, speakers, etc.), the action (what the event will be) and the expected results (in terms of return of investment.) Channel managers can sometimes help channel partners secure additional resources for specific campaigns or marketing events when needed.
Market development funds differ from co-op marketing funds, which are usually granted to distributors, are a set amount and are used for longer-term marketing activities such as annual campaigns.