1000 Business Lessons Every Businessman Must Know

Chapter 21 Channel Decision: Directly Affecting the Realization of Product Sales (2)
TV shopping is a very special form of direct response marketing.These programs will display products, and viewers can dial toll-free numbers to order directly from manufacturers by credit card.

8. Internet online shopping

Online retailing is a two-way interactive service that uses personal computers to browse shopping websites and shop online.

159. Sales branches of manufacturing enterprises

The sales branch of a manufacturing enterprise is a sales organization that is relatively independent from the production and operation department in the manufacturing enterprise, and it undertakes the actual distribution function.When an enterprise decides not to use or only partially utilize middlemen, the sales branch of the enterprise is responsible for completing the functions of middlemen.

With the increasing scale of manufacturing enterprises and the intensification of competition, self-organized sales networks and undertaking distribution functions are on the rise, especially in the wholesale field.As early as the mid-20s, the wholesale sales completed by sales branches of the US manufacturing industry accounted for as high as 70% of the total wholesale sales, and their operating efficiency was much higher than that of independent wholesalers.The reason is that the wholesale business engaged in by the sales branch of the manufacturing enterprise is directly connected with the production, reducing intermediate links, and gaining benefits by coordinating production and sales within the enterprise.

Generally speaking, for those highly specialized products in the industrial user market, such as production equipment, raw materials, and spare parts, since users are concentrated in certain industries and regions, it is not difficult for manufacturers to organize sales by themselves.In the case of relatively concentrated competition in the industry where the manufacturing industry is located and the large scale of enterprises, even in the face of the individual consumer market, it is often the case that self-organized distribution systems are adopted, because manufacturing enterprises can use their monopoly position to seek through The self-organized distribution network strengthens the control of the final market, strengthens the confrontation with competitors, and effectively coordinates the contradictions in all aspects of production and sales.

[-]. Channel selection
160. The choice of sales channel depends on the product

The determination of sales channels will affect other aspects of the company's marketing strategy mix, and once the channels are determined, the relationship between the company and other companies will be basically determined for a long time.The following focuses on the influence of product factors.

The characteristics of the product include the unit price of the product, technical service standards, physical characteristics, natural attributes, fashion, whether it is a new product, etc.

(1) Products with high unit prices are generally sold by salesmen of enterprises, and seldom go through middlemen, because the high profits brought by high prices are enough to cover the cost of direct sales.

(2) Products with difficult technical services can choose short and narrow channels to meet the technical requirements of the market for sales personnel.

(3) Short sales channels are suitable for products with large volume and weight, so as to avoid increased logistics costs caused by repeated loading and unloading.

(4) Perishable and perishable commodities require more direct sales to reduce losses.

(5) Popular products with fast-changing styles and colors need to choose short and wide sales channels, use more middlemen to quickly occupy the market, and strive to sell them in time during the epidemic period.

(6) Non-standardized products need to be directly customized by customers or special-made products, which must be sold directly by the company's sales representatives.

(7) The launch of new products requires the self-promotion of manufacturers.

161. Other factors in choosing sales channels
Enterprises should fully consider the influence of various factors when choosing sales channels in order to make reasonable decisions.The above focuses on product factors, and the following introduces other factors that affect the choice of dealers:

1. The middleman factor

When selecting and designing sales channels, we should take advantage of their strengths and avoid their weaknesses according to the differences in target customers, sales capabilities and achievements, promotion capabilities, reputation, market coverage, manager quality, logistics conditions, and marketing costs of channel sales intermediaries. , formed into a scientific and practical sales channel combination.

2. Competitive factors
When choosing a sales channel, it will inevitably be restricted by the channels used by competitors. Enterprises must use different strategies, sometimes compete with competitors for existing channels, and sometimes avoid competition, change sales methods, and adopt different levels of sales channels.If the enterprise is in a leading position in the competition, the design of its sales channels generally proceeds from expanding market share and reducing sales channel costs to increase profits.Under the conditions of oligopoly competition, due to its strong strength, it is very common to develop sales channels directly controlled by itself.The way the industry competes also affects channel choice.In an industry dominated by price competition, it is necessary to choose the sales channel with the lowest cost.In an industry dominated by non-price competition such as product differentiation, service differentiation, and advertising induction, members of the marketing network are required to improve their own functions.

3. Customer characteristics
Customers' buying habits, market distribution, and market demand capacity all restrict the choice of sales channels.Products with small purchase volume and frequent purchases require longer channels to reduce the cost of frequent orders in small quantities.If the target market is concentrated, you can choose a shorter sales channel.Commodities with a large market capacity and many potential buyers can choose longer sales channels and expand sales through middlemen.

4. The conditions of the enterprise itself

The size and strength of an enterprise itself determine its marketing channel strategy.The production capacity of the enterprise is strong, the funds are abundant, and the room for choosing sales channels is relatively large.The wider the product mix of an enterprise, the greater its ability to sell directly.The deeper the product mix, the more inclined to use exclusive distribution or a smaller selection of intermediaries.The product mix is ​​highly correlated and generally uses similar sales channels.Enterprises have strong sales capabilities and can choose shorter channels.If an enterprise wants to establish a solid sales channel, it often achieves the goal by means of holding, joint venture, agreement, etc.

5. Policy and regulatory environment
The economic boom and macroeconomic policies and regulations will have an impact on the choice of sales channels.When the economic situation is not good, the cost constraints of the channel are stronger, and the most economical method must be adopted.Policies and regulations, such as prohibiting pyramid schemes and anti-monopoly regulations, have strict restrictions on the arrangement of channels.

162. Channel selection needs to analyze intermediaries

For a manufacturer whose target market and market positioning have been determined, the channel selection is inseparable from the type and number of intermediaries.

1. Start by understanding the types of intermediaries undertaking their channel work
Investigate the target customers, sales ability and performance, promotion ability, reputation, market coverage, manager quality, logistics status and other aspects of each type of dealer included in the selection range to determine whether middlemen are needed and what kind of dealers are needed. Middlemen, whether it is a long sales channel or a short sales channel.

2. The number of intermediaries to be used at each level must be determined

There are three strategies to choose from.

First, intensive distribution.The more stores that sell goods, the better, as is often the case with manufacturers of convenience goods and general raw goods.

Second, exclusive distribution.Producers consciously limit the number of companies that operate their products, and the most extreme is exclusive sales and exclusive monopoly.

Third, selective distribution.In between, using more than one intermediary, but not allowing all intermediaries who are willing to distribute to operate a specific product, the purpose is to establish a good working relationship with selected intermediaries to obtain better results .

and the conditions of members of each channel and their mutual responsibilities.

163. Determination and conditions and responsibilities of channel members

Businesses must determine the terms and responsibilities of channel members.mainly includes:
(1) Formulate a fair and reasonable price list and discount table.

(2) Give cash discounts or other special guarantees to distributors who pay early.

(3) Division of regional rights, that is, in which regions distributors enjoy franchise rights.Scope and responsibility must be clearly demarcated, especially for franchises and exclusive distribution.

After determining several options for channel selection, the enterprise needs to evaluate and select according to the three criteria of economy, controllability and adaptability.

(1) The economic standard is used to measure the sales volume of each channel program and the cost when they reach different sales levels.Market coverage is an important indicator to measure the sales ability of sales channels, and the cost of sales channels includes the investment in developing sales channels and the cost of maintaining marketing networks.

(2) The controllability standard involves the control of sales channels.

(3) The adaptability standard is to consider issues such as the duration of each channel and the possibility of obtaining new sales channels.From an economical and controllable point of view, channels with long-term commitments are superior.

[-]. Channel management

In order to ensure the long-term and efficient operation of the system to achieve the distribution goals and overall goals of the enterprise, the enterprise must also manage and control the sales channels.

164. Establish sales channel database
Enterprises should pay attention to two-way communication with channel members, pay attention to collecting and sorting out information materials of each sales channel member, and establish databases for them respectively.

All information related to members of the sales channel, such as market coverage, sales volume, commodity composition, price, advertising, capital, reputation, competitive position, etc. can be collected, and a file is created for each member to serve as a basis for evaluating and managing sales. The basis for channel membership.

165. Close relationship with intermediaries

The traditional way of dealing with intermediary relations is self-centered and adopts two-faced tactics of carrot and stick, such as high profits, subsidies, delayed delivery, and termination of supply. In the long run, this kind of cooperation will not stable.

How to establish a long-term and stable cooperative relationship with middlemen?Only on the basis of deepening the understanding of middlemen, establish a set of planned, professional management, vertical marketing system, and firmly combine production enterprises and middlemen.

Understand the needs of intermediaries and the wishes of production enterprises, including the cooperation required in price, delivery, promotion, market research, training and after-sales service.On this basis, determine the cooperation goals, inventory levels, advertising, promotion and training programs of both parties.

166. Incentives for middlemen
Effective control and management of sales channel members can be achieved through effective incentives for middlemen. There are three ways to motivate middlemen:

(1) Awards, to motivate middlemen by setting target awards, cost awards, cooperation awards, and payment awards.

(2) Contests, mobilize the enthusiasm of members through sales competitions, service competitions, and sales promotion competitions within the marketing network.

(3) Status improvement, such as selecting the best dealer, or upgrading from a general dealer to a special dealer, or upgrading to a regional or national general agent, etc.

167. Do a good job of conflict management
Doing a good job in channel conflict management mainly includes the following two aspects:
1. Take steps to prevent conflict
Gain a leadership position in the marketing network, gain trust and respect; strengthen communication among network members and work together; when making decisions for production companies, the interests of middlemen must be considered, and help middlemen in an appropriate way to facilitate work; advance Carry out loss insurance.

2. Handle conflicts properly
After conflicts arise, marketing network leaders have the responsibility to formulate clear solutions and adopt effective coordination methods to control the situation and avoid the deterioration of the situation.The two parties involved should be calm-headed, jointly investigate the problem, clarify the facts, clarify responsibilities, and explore solutions.

168. Inventory Control Management
The method of inventory control is to adjust the production of the enterprise and determine its inventory quantity on the basis of scientifically predicting the order time and quantity of the merchant.

The first is the merchant order time prediction.Although experience is a common way to determine ordering time, the following formula provides an important basis for determining ordering time.

Safe Order Point = Order Lead Time × Utilization Rate

(The safe order point is the minimum inventory that the merchant needs to maintain in order to prevent the goods from being out of stock when the order is placed. The lead time of the order is the average time required from the time the order is sent to the receipt of the goods. The utilization rate is a certain period of time. Quantity purchased per day.)
The second is the forecast of the number of orders ordered by merchants.Merchants mainly consider ordering cost and inventory cost when determining the order quantity.Ordering cost is the order processing fee incurred from placing an order to receiving and inspecting the goods.Inventory costs include storage charges, capital costs, tax insurance premiums, depreciation and scrap losses.

Again it's the level of service.When the enterprise formulates the inventory level, it should consider whether the service provided to the customer is satisfactory to ensure that the customer's order is processed in a timely manner.Factors that an enterprise should consider when formulating service levels include: trust, communication, prior notice, delivery time, financial issues, service expectations from merchants to the enterprise, and competition.

Finally there is inventory level control.

After determining the above elements, on the one hand, the company can help customers establish a scientific inventory system to minimize the cost of customers.For example, the EOS system being implemented in developed countries is a management device for retailers to take inventory and process orders.On the other hand, it predicts the order time and quantity of customers, adjusts production in a timely manner, and controls inventory.

169. Delivery management

Distribution is the process of sorting and distributing goods at the logistics base according to the requirements of users, and delivering the goods to the consignee.It requires delivery in full compliance with customer requirements on the basis of complete distribution, including types, varieties, quantities, time and other requirements. It is an organic combination of "distribution" and "delivery".

In terms of service methods, delivery is a "door-to-door" way, delivering goods from the distribution center to the customer's warehouse or home.Due to the "diversification and individualization" of modern consumption, the distribution requirements are "multiple varieties and small batches".

On the basis of meeting the requirements of customers, in order to reduce operating costs, enterprises are required to convert small-volume orders into large-volume commodity collections to make full use of transportation capacity.As a result, the method of "joint distribution" came into being, that is, several companies united to jointly establish and use a distribution center, jointly formulate distribution plans, use distribution vehicles, and jointly deliver to users in a certain area.

170. Channel information management
Enterprises with a strategic vision pay great attention to gathering information through sales channels.For example:
Japan's Mitsubishi Corporation has established 128 branches in 124 countries with more than 3700 employees. The headquarters receives more than 4 telegrams, more than 6 telephone calls, and more than 3 mails from various branches every day.

1. Collection of information

Enterprises use sales channels to collect the following information: market information, including competitive products and competitor information; user needs and after-sales evaluation information; information about future product changes and development information, and market development information related to the development and expansion of the company's target market in the future; Profile information about the customer's personal background; information on the business strength and business characteristics of sales channel members.

Information collection must be fast, authentic, up-to-date, and cheap.Collection methods generally include the following:

(1) A fixed feedback system, using computer networks and modern communication tools to receive feedback information in a timely manner. For example, "Qian Xiangyi", which is famous for its silk business in my country, established "one registered letter a day" as early as 1919.

(2) Questionnaire, which is specially designed for in-depth research on a certain issue, in order to collect comprehensive and specific information.

(3) Sales conferences, collecting first-hand information by means of various order fairs, exhibitions, fairs, fairs, symposiums and other forms held by enterprises.

(4) Friendship activities, often hold some tourism activities, fraternities, dances and seminars attended by representatives of enterprise management personnel, sales personnel and marketing members.

2. Information collation, analysis and use
Organize information is to make information systematized and organized for easy storage and analysis.The information collected by enterprises is often confused and difficult to distinguish between true and false. Eliminating erroneous, one-sided or false information is the first step in sorting out.The second is to classify and number the materials of the same nature according to certain standards.Then, conduct quantitative and qualitative analysis on the collated data to reveal the laws behind the information.Finally, the analysis results are used to manage entity allocation, evaluate or adjust sales channel members, and adjust overall marketing strategies.

(End of this chapter)