Delivering Value

Direct
OR

Indirec
t
Decision to choose Direct and Indirect Sales Force
Marketin
g Factors
 Marketing Factors

Direct Sales Force Indirect sales force

Potential customers are large,
homogenous and easily identifiable are difficult to find or understand
Buying is centralized
Strong knowledge of the local
market and has good access
Broad product line
Absence of potential partners
Products are complex, unique,
technical, new, differentiated,
intangible or customized
Large selling cycle, high value
orders
Company wishes to control
Market is fragmented, customers
Buying is decentralized and
customers are heterogeneous
Lack of local market knowledge and
access
Few products
Marketing expertise in potential
partners
Products are easily understood
Short selling cycle and low value
orders
Tight control on the selling effort
not required
Information
Factors
 Information Factors

Direct Sales Force Indirect sales force

Company needs info for Ongoing support not required,
maintenance, servicing or technical customer info not important
support
Supply of the product is not assured Supply of the product is assured

Monitoring sales performance is Monitoring of sales performance is

difficult easy
Encourage sales people performing Short term drivers are sufficient
activities with long term payoff drivers

Dynamic environment, forecasting Stable environment and demand is

is difficult predictable
Financial
Factors
 Financial Factors

Direct Sales Force Indirect sales

force
Company can sustain some Controlling the cost and minimizing
financial risk financial risk are important goals

The need for the sales force will be The need for the sales force is
sustained over time temporary or inconsistent

Competitive market-Risk of partner Not very competitive market

joining competition

Billing and collection experience No billing and collection experience

Advantages of direct selling
Distribution
Seller
Buyers
Seller
Buyers
Options?
 Options are
based on various
factors
Why Distributors?
 Distribution

Why Distributors?

Manufacturers lack of expertise in

distributing their products to their consumers

Lack of resources and infrastructure

Requirement of additional services and

benefits ex: credit ,training, warranty,
service..etc
If all manufacturers tried to reach
all consumers

M1 C1

M2 C2

C3
M3
If they tried to go through an
intermediary

M1 C1

M2 D1 C2

C3
M3
 Types of Marketing Channels
Consumer Goods

13-21
 Types of Marketing Channels
Business Goods
Services

13-22
Dual Distribution: Network
that moves products to a
firms target market through
more than one marketing
channel

13-23
Reverse Channels:
Channels designed to return
goods to their producers

13-24
Channel functions
Gathers information on customers,
competitors and other external market data
Develop and disseminate persuasive
communication to stimulate purchases
Agreement on price and other terms so that
transfer of ownership can be effected
Placing orders with manufacturers
Channel functions
(contd)
Acquire funds to finance inventories and
credit in the market
Assume responsibility of all risks of the
trade
Successive storage and movement of
products
Helps buyers in getting their payments
through with the banks
Oversee actual transfer of ownership
What kind of distribution?
Exclusive
Selective
Intensive
Channel
Conflicts
 Distribution

Functions of channel members

Producer Develop and produce the product

Wholesaler Typically buys and stores in large volumes,

warehousing and transportation would be key
Distributor
Typically B2B,promotional and sales support for
the product
Retailer Directly to the end user, Merchandising and
displaying the products
End user Consumers or businesses who ultimately buy for
their own use
 Distribution

Type of Producer Wholesal Distributor Retailer End user

product er
s
Perishable Growers focus Buys in large Stores & Consumer
Goods on production volumes, vendors
stores and
resells them
Products Manufacturer Distributers The
sold to B2B who designs targeting organisations
and produces usually large
no. of
organisations.C
atalog sales
and personal
selling
Products Manufacturer The
sold in the who designs manufactur
large stores and produces er directs
sells it to
the large
stores
directly
Products Manufacturer or
sold through service provider
the direct
Channel management
Selecting channel members
Training channel members
Motivating channel members
Adding channels
Advantages
Increased market coverage
Lower channel costs
More customized selling
Disadvantages
Increases selling costs
Increases channel control
Breeds channel conflict
Logistics objective
Getting the right goods at the right place
at the right time for the least cost
the last frontier for cost economies.
Market Logistics
decisions
Order processing
Warehousing
Inventory
Transportation
 Distribution

Disintermediation
The process of eliminating the traditional intermediaries in the
chain and creating value for both manufacturer and the end
user by reducing the distribution costs

Reallocate the
functions to the
remaining channel
members
 Distribution
Direct Marketing

Manufacturer Consumer

Company
website
Direct sales
force
Company
owned
showrooms
Direct
catalogues
Distribution

Life Time Value of a

customer(LTV)
How Principals Evaluate Potential Reps

1.REPRESENTATIVE
COMPANY INFORMATION
How Principals Evaluate Potential Reps

1.History
A.Are you a Private Limited, a
partnership or a sole
proprietorship?
B.How long have you been in
business?
C.Will you furnish a brief company
history, resume or brochure?
How Principals Evaluate Potential Reps

2.Company Growth and Future

Plans
A.Will you describe your growth
history?
B.Do you operate on a sales plan
and budget?
C.What are your growth plans?
How Principals Evaluate Potential Reps
3. Territory Covered and Market
Served
A.What territory do you cover?
B.Can you supply a county map
describing your territory?
C.Will you accept deviations from
this ?
D.What do you consider to be your
primary and secondary markets?
How Principals Evaluate Potential Reps

4 .Office Facilities
A.How many offices do you
have,size? and what are their
locations?
B.Do you have Broadband
connection and other facilities?
C.Do you utilize electronic data
processing?
How Principals Evaluate Potential Reps

5.Warehousing
A.Do you have a warehouse?
B.What is its size?
C.Do you presently stock items
for resale?
How Principals Evaluate Potential Reps

6.Personnel
A.How many people are employed
by your company?
B.How many are outside
salesmen?
C.How many are inside
salesmen?
D.Will you provide resumes of
your salesmen?
How Principals Evaluate Potential Reps

7.Management
A.Who is actively engaged in the
management of your company?
B.What are their backgrounds?
C.Is the management active in
sales?
How Principals Evaluate Potential Reps

8.Present Lines Represented

A.Will you furnish a list of your
principals?
B.Do you feel there is compatibility
with our products?
C.Is there any product conflicting
with your other principles
How Principals Evaluate Potential Reps

9.Stock Ownership
Do you participate in stock
ownership of any of your
principals?
How Principals Evaluate Potential Reps
2.MARKETING SERVICES
1.Quotations
A.Do you write quotation?
B.Do you make proposals?
2.Sales Forecasts
A.Do you make sales forecasts? How often?
3.Market Surveys
A.Do you make market surveys for your present
manufacturers?
B.What compensation do you think is fair for conducting
these surveys?
4.Sales performance
A.How do you monitor sales performance?
B.Will you advise the manufacturer of performance if
requested?
C.Do you make monthly sales reports?
Thank
Thank
You
You