1000 Business Lessons Every Businessman Must Know

Chapter 20 Channel Decision: Directly Affecting the Realization of Product Sales (1)
[-]. What is a sales channel

Sales channels refer to the channels through which products are transferred from manufacturers to final consumers, and are composed of organizations through which commodity ownership is transferred from manufacturers to final consumers.Sales channels in a broad sense include all enterprises and individuals involved in the production, distribution and consumption of a manufacturer's products, including suppliers, manufacturers, intermediate agents, assistants and end users.The narrow concept only refers to the intermediaries between manufacturers and end users.The manufacturer is the starting point of the sales channel, the final consumer is its end point, and there are intermediaries with different functions in between.The relationship between the parties in this combination is stable, and their respective rights, responsibilities and obligations are stipulated in corresponding agreements.

150. Levels of sales channels
In the process of sales channel, every time the ownership of the product undergoes a transfer, it constitutes a sales channel level.According to different levels, it can be divided into the following categories:
(1) Direct sales channel: manufacturer→consumer

(2) One-tier channel: manufacturer→retailer→consumer

(3) Second-tier channels: manufacturer → wholesaler → retailer → consumer

(4) Three-tier channels: manufacturer→wholesaler→professional dealer→retailer→consumer

(5) Four-tier channel: manufacturer→national wholesaler→regional wholesaler→retailer→consumer

Direct sales channels refer to direct sales from producers to consumers. Commonly used methods include door-to-door sales, mail order and manufacturers' own stores.

With the advent of the Internet economy, the scale of online sales is getting bigger and bigger, and direct sales channels are increasingly becoming an important channel in sales channels.The production and consumption of the service industry have the same time and space, which can be regarded as a direct sales channel.

Other multi-tiered channels, involving varying numbers of intermediaries.In actual marketing, the level is not so clear, maybe the wholesaler is also engaged in retail business, and the professional dealer directly retails.

151. The breadth of sales channels
The width of the sales channel refers to the number of middlemen selected in the same link or level of the sales channel, the more is wide, and the less is narrow.

Whether to choose a wide sales channel or a narrow sales channel depends on the company's strategic goals, product characteristics and customer dispersion.Generally, the wholesale link is narrow and the retail link is wide.

In the retail link, the width of different commodities is also different, special products and new products are narrower, daily necessities and mature products are wider.

The sales channels of the service industry are generally wide, especially for enterprises that provide living services to residents.For example, schools must be built in places where it is convenient for schoolchildren to go to school nearby, bus lines must be located in places where residents can get on and off buses, and banks and restaurants must be located as close as possible to residential areas and commercial areas.

152. What are the functions of sales channels?

The main function of the sales channel is commodity circulation, in addition to the following functions:

1. Communication information

Collect marketing information through market research and daily information and communicate and deliver it among sales channels.

2. Promote sales

Attract customers through promotional activities such as personal selling, advertising, and public relations.

3. Negotiate business
Sales channel members, in a sense, purchase from manufacturers on behalf of final consumers and negotiate purchase conditions.

4. Financing
Generally speaking, the purchase funds invested by middlemen are the funds that have been returned to producers on behalf of consumers before the products actually reach the final consumers.

5. Entity Allocation
Intermediaries complete the spatial transfer of product entities from producers to consumers.

6. Risk taking
The middleman and the producer jointly bear the market risk, and at the same time independently bear the risk in the process of transportation, storage, loading and unloading.

7. Transfer of Ownership
The most essential function undertaken by the entire marketing network system is to complete the transfer of product or service ownership from producers to consumers.

[-]. Types of channels

Sales channels are composed of various intermediary organizations, among which the most basic and traditional intermediaries are independent wholesalers, retailers and agents.It is very important to understand the operating characteristics of these three types of intermediary organizations to determine the overall marketing strategy.

153. Wholesalers

Wholesalers are the intermediate links at the starting point of commercial circulation.Wholesalers purchase goods from manufacturers and resell them to other wholesalers, retailers, industrial users or various non-profit organizations.

When choosing a wholesaler, you should formulate selection criteria for wholesalers based on your own product characteristics, market distribution range, and financial status.

(1) First of all, it is necessary to consider whether the geographical distribution area of ​​the wholesaler's business scope is consistent with the target area of ​​the enterprise.When most companies launch a certain product, they first sell successfully in a limited market, so they should choose regional wholesalers rather than national wholesalers.

(2) Secondly, the production enterprise should consider whether the scope of commodities operated by the wholesaler and the distribution of customer groups are consistent with the target customers of the enterprise's products.For example, ordinary shampoo manufacturers choose general commodity wholesalers because their customers are widely distributed, and they are convenience products that can be sold in small department stores or supermarkets; high-end shampoo manufacturers with special effects choose professional wholesalers.

(3) Marketing capabilities of wholesalers.It mainly refers to whether the wholesaler has a wide range of business contacts, whether the quality of personnel is high, whether the sales promotion ability is strong, and whether the business scale is large. These factors determine the realization of the value of the product.

(4) Wholesalers have the ability to grasp and feedback market information.Manufacturers usually do not directly contact end users, but they need information feedback from users to adjust product and marketing strategy combinations.Therefore, enterprises tend to prefer wholesalers who have professional market supply and demand information and customer feedback information.

(5) The cooperative spirit and ability of wholesalers.Manufacturers always hope to choose wholesalers who are willing to cooperate as sales channels.

154. Agency

The business scope of agents is generally narrow and highly professional. The function they undertake is to assist in the transfer of commodity ownership, and does not involve the physical distribution, financing, risk-taking and other functions undertaken by commercial wholesalers.However, agents rely on their professional market and commodity knowledge, extensive customer contacts in the industry, the ability to quickly obtain information, and strong negotiation and sales capabilities, which are needed by the society and also by enterprises to develop markets.

Sales agents are usually authorized to sell all the products of the manufacturer, and have a great influence on the transaction conditions and sales prices. The scope of their sales and promotion is generally not restricted by region. Generally, a manufacturer can only use one sales agent and not Commission another agency or set up a sales agency yourself.The use of an agent by the manufacturer actually entrusts all marketing work to the sales agent, who becomes the sole agent for the product.Enterprises generally seek sales agents when they need to concentrate on solving production and technical problems, or when they feel that their marketing capabilities are limited.Sales agents are usually large in scale, not only responsible for sales promotion, but also responsible for advertising and promotion, participating in domestic and foreign exhibitions, investigating changes in market demand, and making suggestions to manufacturers on product design, style, and pricing.

155. Chain store
Chain stores are owned and managed by the same company, including two or more stores.These stores have similar commodity categories, implement centralized procurement and sales, and even have similar architectural styles and signs.

The advantage of a chain store comes from its size.It breaks through the limitation of single store scale development of traditional retail business due to scattered customers and markets, and achieves scale through concentration.Scale not only brings strong bargaining power, which can lower the cost of purchase, but also obtains scale benefits in operation, such as modernization of equipment, division of labor, and sharing of expenses.

The huge procurement and sales capabilities and planning management of chain stores are especially suitable for large and mature manufacturers, especially those with relatively standardized products and a wide range of sales. They can even realize self-ordering through computer networks.Small and medium-sized enterprises can also use the brand of chain stores to expand the market. At the same time, chain stores determine the design, quality, price and quantity of products on the basis of familiarity with consumers' needs, organize small and medium-sized production enterprises to produce according to the plan, and then purchase.For agricultural producers, the strong food sales capabilities of chain stores can speed up the turnover of fresh and perishable agricultural, animal husbandry, and fishery products, reduce losses, and expand sales.

The existing business forms of chain stores mainly include supermarkets, convenience stores, department stores, cheap stores (similar to discount stores), restaurants, specialty stores, and chain stores in the service industry such as dry cleaning, color expansion, and maintenance.Chain operation can improve the management level and operating efficiency of my country's commercial and service industries through scientific, planning, and centralized management; in addition, the development of chain industry is also a way to make my country's scattered small and medium-sized businesses form economies of scale.For manufacturing companies, recognizing this development trend, developing products suitable for chain operation, and establishing a stable supply relationship with chain business groups will help to establish effective sales channels for their products.

156. Franchising
Franchising is the most potential and efficient business organization method in today's retail and service industries, especially suitable for those small and scattered retail and service industries.Compared with other modes of operation, it is unique in that: the core of the franchise system is the transfer of franchise rights, the relationship between the franchisor and the franchisee is stipulated by the agreement, but the personnel and finance are independent, and the two parties have no agency or affiliation Each franchisee is independent of each other and has no horizontal connection; the franchisor provides necessary information, technology, knowledge, and training to the franchisee during the franchise period, and the franchisee enjoys the franchisor's business name, Product and business technology rights, and at the same time must engage in business activities and pay management fees in accordance with the provisions of the agreement.

Franchising can be divided into two types: product and trademark franchising; business model franchising.

On the whole, franchising is mainly suitable for small businesses and service industries with fragmented markets.For small private capital, franchising reduces the failure risk of independent opening; for the service industry with a scattered market, a company with good reputation and operating technology needs to get close to as many consumers as possible, and franchising is the fastest and fastest way. economical method.

For consumers, franchising can make the franchisor's high-quality products or services easier to obtain, and ensure the standard and quality of the products.For example, the hamburger of McDonald's in the United States, the mutton in Donglaishun of China, and the Peking duck in Quanjude.

157. Store retailer

Retailers are composed of enterprises and individuals engaged in retail operations. They directly face the individual consumer market and are the export of sales channels and the last link in commodity circulation.The customers that retailers face are very scattered, and their business forms are also very diverse.

Before the reform and opening up, my country's retailers can be divided into department stores, specialty stores, non-staple food and grocery stores scattered in residential areas according to the scope of commodity business. After the 20s, a large number of major retail business forms from western countries were introduced and combined with our country's original retail business forms.

1. Department store
A department store is composed of multiple commodity departments, and deals in a wide variety and wide range of commodities.Traditional department stores mainly deal in high-end soft goods, such as clothing, textiles, and cosmetics, and later added hard goods such as hardware, furniture, sporting goods, and household appliances.

Department stores are generally large in scale, with a complete range of designs and colors for each major category of merchandise, gorgeous interior decoration, and particular attention to merchandise display and window layout.Department stores generally have more sales assistants who can provide commodity consultation and provide a wide range of services.

When a manufacturer chooses a department store as a sales channel, it first examines whether the image of the department store in the minds of local consumers is consistent with the image of the company's products.Secondly, it is necessary to examine the variety of goods sold in the department store, customer situation, facilities, appearance, quality of employees and location.

2. General store
General stores are essentially small-scale department stores, but there are fewer varieties of commodities in each category, lower grades, and fewer service items provided.

3. Discount stores
Discount store is a retail method developed after World War II, and its outstanding feature is to sell a large number of goods at a much cheaper price than general stores.In order to achieve the goal of low prices, discount stores adopt the following measures: chain operation, location away from urban areas, simple decoration, and self-service shopping.For example, Wal-Mart, the largest chain company in the United States, has more than 6900 branches, of which there are more than 4000 in the United States.In recent years, due to fierce competition, discount stores have expanded their business scope, provided more services, and developed into professional stores.

4. Specialty stores
The specialty store is characterized by operating a single category, with a complete range of designs, colors, varieties and specifications.

5. Convenience Store
Small shops close to residential areas.The business hours are long, mainly selling fast-moving goods and services such as convenience goods and emergency supplies.In recent years, it has expanded rapidly in the form of franchising.

6. Supermarket
A supermarket is a general food retail store.Supermarkets create a consumer self-service retail operation mode, and are characterized by large-scale, fast turnover, low price, and low cost.The development trend of supermarkets now is to have larger areas and more varieties, and to expand to other industries such as sports equipment, pharmacies, toys, etc.

7. Warehouse store or wholesale club
The biggest feature of warehouse stores is that they are sold in packages, and the markup rate is lower.Warehouse stores encourage bulk shopping, targeting both individuals and small retailers.

158. Retail without stores

Non-store retailing is a retail method that has developed rapidly in western countries in recent years. Some people predict that in this century, non-store retailing will account for 1/3 of the total retail sales.

1. door-to-door sales
A door-to-door sales pitch is when a marketer goes door-to-door, door-to-door, office-to-office, or holds a home sales meeting.For example, Avon in the cosmetics market is a good example.Its characteristic is to use friends, neighbors, relatives and other relationships to reduce resistance, increase affinity, and use non-professional salesmen to sell in their spare time.

2. Vending machines

Vending machines are now widely used to sell beverages, newspapers, candies, cigarettes, etc.Its biggest advantage is convenience, 24-hour work, and wide distribution, but the machinery and equipment are expensive and may be damaged, making it inconvenient to return.

3. Direct marketing
Direct marketing is a marketing system that uses the interaction of one or more advertising media in order to generate measurable responses and agreements anywhere.In short, it refers to the use of various media to promote products to consumers, transmit information, and then give order replies through the Internet, telephone, or letters, and the ordered goods are delivered to customers by mail, and payment is made by credit card or check.The "direct" of direct and compound marketing means that consumers can directly respond to the promotional effects of operators, and they can order goods immediately when they want to buy goods.Direct marketing generally uses the Internet, radio, television, telephone and other media to implement promotions to consumers.Marketing methods include sending online marketing, mailing advertisements, mailing catalogs, telemarketing, TV marketing, etc.

4. Mail Order Catalogs
Consumers can now buy almost anything from mail order, from the ubiquitous books, music and polo shirts, to the myriad of London taxis, English country estates or diamond-encrusted bras.

5. Telemarketing
Telemarketing is the use of telephone to sell goods directly to consumers.It includes outgoing sales calls as well as incoming calls, which are 800 toll-free or 900 pay calls.

6. E-retail
E-retailing includes 24-hour home shopping TV networks and online shopping via computers.

7. TV Shopping
(End of this chapter)