Sales control and distribution systems

The distribution channel is made up of a group of interrelated intermediaries who deliver products and services from manufacturers to consumers and end users.

1. Distribution Channels for Industrial Products

Industrial products have a different distribution than consumer products and use four channels that are:

Producers - industrial users: this is the most common channel for products for industrial use since it is shorter and more direct; uses sales representatives from the factory itself. Examples: large metal fabricators, conveyor belt producers, construction equipment manufacturers, and others. Producers - industrial distributors - industrial consumers: in this case, industrial distributors perform the same functions as wholesalers and sometimes perform the functions of wholesalers and sometimes perform the functions of sales force for manufacturers. Producers - agents - industrial distributors - industrial users:In this channel, the agent's function is to facilitate product sales and the distributor's function is to store the products until they are required by the industrial user. Industrial producers - agents - users: in this case industrial distributors are not needed and are therefore eliminated. Example: agricultural products.

2. Distribution Channels for Consumer Products

Channels for consumer products are in turn divided into five types that are considered the most common:

Producers Consumers: this is the shortest and fastest route used in this type of product. The most commonly used form is door-to-door selling, mail order, telemarketing, and telephone selling. Intermediaries are outside this system. Producers - retailers - consumers:This is the most visible channel for the final consumer and a large number of purchases made by the general public are made through this system. Examples of this distribution channel are automated dealerships, gas stations, and clothing stores. In these cases, the producer generally has a sales force that will be in charge of making contact with the retailers who sell the products to the public and place the orders after which they sell them to the final consumer. Producers - wholesalers - retailers or retailers: this type of channel is used to distribute products such as medicine, hardware and food. It is used with products in high demand as manufacturers do not have the ability to deliver their products to the entire consumer market.Producers - intermediaries - wholesalers - consumers: this is the longest channel, it is used to distribute products and provides a wide network of contacts; for that reason, manufacturers use intermediaries or agents. This is very common in perishable foods.

The fact that these channels are mentioned in the way they have been done does not mean that they are the only ones; sometimes a combination of them is made.

3. Integration of Distribution Channels

Producers and intermediaries act together to obtain mutual benefits. Channels are sometimes organized through agreements; there are others that are organized and controlled at the initiative of a single director who may be an agent, a manufacturer, a wholesaler or a retailer. This manager can set policies for the manager and coordinate the creation of the marketing mix.

The links of a channel can be combined horizontally and vertically under the management of a channel leader. The combination can stabilize supplies, reduce costs, and increase channel member coordination.

Vertical integration of channels. Two or more channel stages are combined under one direction. This results in the purchase of the operations of a channel link or the execution of the operations of this link to carry out the functions. For example, a large mass-merchandiser, such as discount stores, may store and transport the products that the manufacturer buys from them, eliminating the need to use the wholesaler.

This integration includes the control of all functions from manufacturing to the end consumer.

Horizontal integration of channels. It consists of combining institutions at the same level of operations under a single administration. An example will be department stores. This integration provides significant savings in advertising specialists, market research, purchases, etc. And it can be carried out by an organization by merging with other organizations or by increasing the number of units.

Horizontal integration is not the best management approach to improve distribution and its limitations include:

Difficulty coordinating more units Less flexibility Increased planning and research to deal with larger scale operations More heterogeneous markets

4. Criteria for the Selection of the Distribution Channel

Decisions about distribution should be made based on the overall marketing objectives and strategies of the company.

Most of these decisions are made by commodity producers, who are guided by three managerial criteria:

Market coverage. When selecting the channel, it is important to consider the size and value of the potential market to be supplied. As already mentioned, intermediaries reduce the amount of transactions that need to be made to contact a market of a certain size, but it is necessary to take into account the consequences of this fact; For example, if a producer can make four direct contacts with final consumers, but makes contact with four retailers who in turn do so with final consumers, the total number of contacts in the market will have increased to sixteen, which indicates how they have been increased market coverage with the use of intermediaries. Control.It is used to select the appropriate distribution channel, that is, it is the control of the product. When the product leaves the hands of the producer, control is lost because it becomes the property of the buyer and he can do what he wants with the product. This implies that the product can be left in a warehouse or presented in a different way on their shelves. Therefore it is more convenient to use a short distribution channel as it provides more control. CostsMost consumers think. The shorter the channel, the lower the distribution cost and therefore the lower the price that must be paid. However, it has been shown that intermediaries are specialists and that they perform this function more efficiently than a producer would; therefore, distribution costs are generally lower when intermediaries are used in the distribution channel.

From the above it can be deduced that using a shorter distribution channel generally gives a result, a very limited market coverage, a higher control of products and higher costs; conversely, a longer channel results in broader coverage, less product control, and lower costs.

The cheaper a distribution channel seems, the less chance it has for conflict and rigidity. When evaluating the alternatives, one must begin by considering their consequences on sales, costs and profits. The two known alternatives of distribution channels are: the sales force of the company and the producer's sales agency. As is known, the best system is the one that produces the best relationship between sales and costs. The analysis begins with a calculation of the sales that are made in each system, since some costs depend on their level.

5. Importance of Distribution Channels

Decisions about distribution channels give products the benefits of place and the benefits of time to the consumer.

The benefit of place refers to the fact of bringing a product close to the consumer so that he does not have to travel long distances to obtain it and thus satisfy a need. The benefit of place can be seen from two points of view: the first considers the products whose purchase is favored when they are very close to the consumer, who is not willing to make a great effort to obtain them. The second point of view considers exclusive products, which must be found only in certain places so as not to lose their character of exclusivity; in this case, the consumer is willing to make some effort, to a greater or lesser degree, to obtain it depending on the product in question.

The benefit of time is a consequence of the previous one, since if the benefit of place does not exist, neither can it occur. It consists of bringing a product to the consumer at the most appropriate time. There are products that must be available to the consumer at a time after which the purchase is not made; others have to be sought for some time to ensure greater consumer satisfaction.

6. Intermediaries

Marketing intermediaries are the companies or persons that cooperate with the company for the promotion, sale and distribution of its products among final buyers. They include intermediaries, physical distribution companies, marketing service agencies, and financial intermediaries.

Definition

Intermediaries are companies that serve as distribution channels and help the company find or sell customers. They are the wholesalers and retailers who buy and resell merchandise (often called resellers. The main marketing method of marketing your product is to sell it to hundreds of independent merchants who resell it at a profit.

Intermediaries are independent groups that are in charge of transferring the product from the manufacturer to the consumer, thereby obtaining a profit and providing the buyer with various services. These services have great importance because they constitute to increase the efficiency of the distribution.

Features

Commercialization. They adapt the product to the needs of the market . Pricing. Products are priced high enough to enable production and low enough to promote sales. Promotion. They provoke in consumers a favorable attitude towards the product or towards the firm that sponsors it. Logistics. They transport and store the goods.

In addition to the fact that there are a series of services provided by intermediaries such as: purchases, sales, transportation, volume shipping, storage, financing, assuming risks and administrative services.

Importance of Intermediaries

Producers are completely free to sell directly to their final consumers, but they do not do so and use intermediaries for various reasons, including the following:

Very few producers have the economic capacity to carry out a direct marketing program for their product; if this is achieved, it would be necessary for many producers of complementary goods to become intermediaries for other producers, in order to achieve the required mix of articles for efficient distribution. Very few producers have the necessary capital for this. Producers who have the necessary resources to create their own distribution channels prefer to direct them towards other aspects of production, where their utility is increased to a greater degree.

Therefore, the importance of intermediaries within the distribution channel is indisputable; Furthermore, by carrying out their commercial tasks and functions, they contribute their experience, their specialization, their commercial relationships, etc. to the distribution of the product, which could not be better if the product were to do so on its own.

Intermediary Agents

They are the ones in charge of speeding up transactions by handling the product within the distribution channel, without receiving the title of ownership of the product. They only receive a commission for their activity.

Some companies do not have much to choose from with respect to intermediaries, since they and their competitors use the same type of channel.

The number of intermediaries that the company chooses will be related to the degree of exposure it wants to give its product. In general, there are three degrees of exposure to the market.

Intensive Distribution. It consists of getting the product to the largest number of stores possible. Here it is vital to know how to use all distributors. Exclusive Distribution. It consists of granting exclusive rights to distributors in certain territories. By granting these rights, the producer requires the merchant not to work lines of the competition. This type of distribution has its advantages: it develops a greater effort in sales; greater control is exercised by the producer over prices, promotion, credit and various services. Selective distribution. It consists of the imitated use of the stores in a certain territory. It is used with well-known brand products and with products to which the consumer is loyal.

There are many criteria on which the producer or manufacturer relies to determine the quality of the intermediaries in its distribution channel; The most important thing is that the intermediary must supply the market that the manufacturer wants to reach. Other criteria that are also used are: the location of the intermediary, their financial situation, their ability to advertise a product, the line they handle and their relationship with the product or line they handle, the services they provide and their administrative talent. to carry out a good distribution.

Merchant Intermediaries

They can be classified in many ways and are based on the number of distribution channels that consumers want and that organizations can design.

They are the ones who receive the title to the product and resell it. These are classified, according to the volume of their operations, in:

Wholesalers

The main objective of wholesalers is to exchange products to resell or use the merchandise in their businesses. Any transaction from one producer directly to another is classified as a wholesale transaction.

This type of exchange includes all those made by any person or organization as long as they are not the final consumers. The wholesalers acquire the property of the products and carry out the necessary operations to transfer it through the distribution channels; There are also wholesale agents who do not acquire ownership of the products but do carry out many of the activities of wholesalers.

There are three general categories of wholesale intermediaries:

Wholesalers. They are the distributors and they acquire ownership of the products they distribute. Based on the services they provide they are classified into full-service and limited-service wholesalers. The full-service ones are the distributors that offer almost all the services that a wholesaler provides and are classified in turn into two:

Those of service of merchandise in general Those of limited line.

Full service ones handle an extensive line of non-perishable items and supply many retailers.

Limited-line full-service vendors handle a few product lines, but offer a wide range of services and tend to serve single-line or limited-line retailers.

Limited services are those that offer a range of services. In general, these wholesalers do not play a preponderant in the distribution of the products.

Wholesalers of cash payment without delivery. It is an advantage for small retailers, as they tend to pay in cash and transport the products themselves, which saves a lot of costs. Wholesalers who sell through trucks. They use trucks as the point from which they sell their products and almost always provide a full service. Sellers in displays or shelves. They are arguably innovative wholesalers. They are similar to truck wholesalers and display products on the shelf in the same store.

Agents and brokers. It does not acquire the title of ownership of the articles and only accelerates the sale process. Sometimes they provide limited services; they receive a commission and generally have a portfolio of clients. Manufacturers' sales branches. The manufacturers themselves establish their sales facilities, provide services, etc.

Retailers are those merchants whose activities are related to the sale of wine and / or services to end consumers; they usually own the establishment they serve. They are classified into:

Type of store. It refers to the effort that the consumer makes to make his purchase. They are classified according to how the consumer perceives the store or the image it projects:

Quick service stores. They are centrally located in residential neighborhoods or near work centers. Commercial stores. They specialize in more durable consumer items such as clothing, electrical items. Specialty stores. They offer a specific type of product and have the preference of a clientele and must fight to ensure their loyalty. Place where there are different types of establishments that allow customers to find various purchase options.

Form of ownership. Retailers can operate independently or be part of chains: voluntary chains, cooperatives or franchises. They are classified into five categories:

Independent retailer. He is the owner of the establishment and is not affiliated with any group. Chain stores. They consist of two or more establishments that are owned by one person or organization. Organization by cooperatives. Group of merchants who come together to combine their resources and achieve profits from large-scale purchases. Voluntary chains. Group of merchants pooling their resources; only that they are run by a wholesaler who organizes the chain. Franchise. It is an association constituted by contract between a wholesale manufacturer or service organization, and an independent company that buys the right to operate one or more units; The difference between franchise and concession is that the first is acquiring not only the name but the buying company has to adjust to the management rules,setting of the premises, types of employees, etc., since the selling companies take good care of the uniformity in the service and the quality of the associates.

Product lines. The third way to classify retailers is according to the variety and assortment of products they offer to the public.

General merchandise retailers. From a certain point of view, it is the ideal classification since it offers its consumers a large number of articles from the most diverse lines. Limited line retailer. These types of merchants offer a line of products or several complementary ones that seek to satisfy only one type of needs in a complete way. Retailers of special lines. They offer only one or two product lines aimed at satisfying one type of need in a very deep way.

II. Physical distribution

1. Importance

Physical layout can be a gauge between success and failure in business. At this stage, the most important savings can be made because the exchange is facilitated through activities that help to store, transport, handle and process product orders.

Physical distribution involves planning, instrumentation, and control of the physical flow of materials and finished goods from their point of view to their places of use, in order to meet customer needs for a profit. The highest cost of physical distribution corresponds to transportation, followed by inventory control, warehousing, and order delivery with customer services.

Administrators have come to worry about the full cost of physical distribution, and experts believe that great savings can be made within this area. Wrong decisions about physical layout can lead to high costs. Even large companies sometimes make too little use of modern decision tools to coordinate inventory levels, modes of transportation, and plant, warehouse, and store locations.

For example, at least part of the blame for Sears' slow growth and declining profits in recent years lies with its expensive and antiquated distribution system. Its old multi-story warehouses and non-automated equipment have made it far less efficient than its competitors. Its distribution costs represent 8 percent of its sales, compared to less than 3 percent for its close competitors like K mart and Wal-Mart.

Additionally, physical distribution is not just a cost, but a powerful demand-building tool. Companies can attract more customers by giving them better service or lower prices through better physical distribution. Instead, they lose customers when they fail to deliver goods on time.

2. Types of Distribution

Many companies express their goal as: getting the right goods, to the right places at the right time, and at the lowest cost. Unfortunately, no physical distribution system can both maximize customer service and minimize distribution costs. A maximum level of customer service means large inventories, the best mode of transportation, and many warehouses, all of which drive up distribution costs. Minimal distribution costs mean cheap transportation, low inventories, and few warehouses.

The company cannot simply let each physical distribution manager limit their own costs. In effect, transportation, warehousing, and order processing costs interact, often inversely. For example, low inventory levels reduce these types of costs, but also increase those that represent lack of supplies, backorders, paperwork, special production cycles and express shipments, which are more expensive. Since the costs and acts of physical distribution involve heavy transactions, decisions must be made on the basis of the entire system.

The starting point for the design of the system is the study of what consumers want and what competitors offer. The former ask for several things from their suppliers: punctual deliveries, large enough inventories, the ability to meet emergency needs, careful handling of merchandise, good service after the sale, and the willingness to return or exchange the items. defective items. A company has to research the importance of these services to consumers

A company should also examine the service levels of the competition before setting its own. Generally, you will want to offer at least the same level as the others. But your goal is to maximize profits, not sales, and therefore you must analyze the costs of providing a higher level of services. Thus, some companies offer less service, but charge a lower price; on the other hand, others provide more service than their competitors and charge higher prices to cover higher costs.

Ultimately, the company must set targets for the physical layout to guide planning. For example, Coca Cola wants to "place a Coca where it is enough to stretch out your arm to achieve your wish." Other companies go further and define tiers for each service factor.

Thus, a manufacturer of electrical appliances has defined the following service rules: deliver at least 95 percent of orders within seven days of receipt, satisfy the dealer's order with 99% accuracy, answer their questions about the status of your order within a maximum of three hours and ensure that the goods damaged during transport do not exceed 1%.

Now with a set of goals, the company is ready to design a physical distribution system that minimizes the cost of achieving them. The main points are as follows: How should orders be handled (order processing) Where should stocks be located (storage?) How much should be kept on hand (inventory)? And how should the goods be shipped (transportation)?

Service level

The number of days that pass from the moment the order is placed until the merchandise is delivered is determined by it. This system reduces the supply of backorders at the given level. There are many elements that make up the level of customer service and some are mentioned below.

Product Availability Out of Stock Proportion Delivery Frequencies Delivery Security

Each company has a different way of determining its level of customer service, but in many cases it is determined based on the guidelines set by the competition. That is, if you offer a lower level of service, you are in danger of losing your clientele, unless there is some trade-off in your marketing mix. On the contrary, if you offer a higher level of service, your competition can also improve your level of service, which would raise costs for all companies.

The value that consumers give to the service provided to them is one of the most difficult factors to measure within the distribution channel system, but with a little skill it is possible to do so even though the decision process may be modified.

Merchandise transports

It is an element of great importance within the physical distribution. To transport products from one city to another, the different communication routes are used.

Main Means of Transportation

Truck. - Trucks have been steadily increasing their share in transport and represent 35% savings of the total load. They handle most of the transportation within cities as opposed to intercity transportation. Every day trucks travel more than a billion miles equivalent to 300,000 round trips to the moon. They can deliver products from door to door, which saves buyers the need to transfer their products from one place to another which is sometimes a waste of time.

Pipeline.- Pipelines are specialized means to send oil, natural gas and chemical products from their points of origin to the markets. Shipping the oil costs less than by train, but more than by ship. Most of the pipelines are used by their own owners to ship their own products.

Rail.- is one of the most cost-efficient means of shipping large volumes of products - such as coal, sand, minerals, or agricultural products. A new equipment has been designed for the handling of special category of products, they provide flat wagons to transport trailers by rail and transit services, such as the diversion of products sent to other destinations.

Kinds of transport

Motor vehicles Railways Waterways Pipelines Air lines Multimodal transport

The transport system implies taking advantage of its technology, that is, taking the advantages that the physical handling procedures that the existing roads offer can offer.

Cost and transport capacity are not the only factors that must be taken into account in the transport of products, that is, for the selection of transport; Safety also counts and is very important as it creates time and place benefits for your products and has a direct impact on the availability of the same product.

Criteria for the selection of Transport - it is evaluated if the means of transport is actually equivalent to what it costs; compared to other media. Times in transit.- is the total time in which the goods are in the possession of the carrier. - It refers to the integrity of both the seriousness and the consistency of the service offered by the means of transport. Time and reliability affect the seller's demand costs in addition to possible sales that, due to not having the merchandise available, cannot be made. -It is the space that transport has to give an adequate service to each type of merchandise, since there are different products and therefore there will be a different treatment. The means of transport must be able to retransport the merchandise. - It is the knowledge, by the carrier, of the specific route or network to carry the goods. - The merchandise must arrive in optimal conditions where the consumer, generally he transposes, is responsible for all losses and damages in the lost of the merchandise. The security problem depends on the transport companies and the geographical areas Coordination of transport services.-coordinates and integrates various means of transarte. The. company or transportation agents are those who carry out these jobs

Product Management

It is necessary that the products are conveniently placed to make their handling accessible when needed. This proper displacement and placement is a responsibility that falls on good material handling. It is essential to have transportation systems, vehicles, cargo elevators, etc., so that the handling of the product is sufficiently efficient.

Management Process

To achieve the required efficiency, it is necessary to develop large, standardized and easy-to-handle containers, in which small packages can be handled for easy shipment.

The packaging or protective packaging will be the one that avoids its mistreatment since the articles when damaged lose the possibility of satisfying the needs of the client, at the same time that they lose usefulness.

In the handling of products many times the characteristics of these determine handling conditions; For example, in the case of liquids and gases, their characteristics determine how they should be transported and stored. Otherwise, even the characteristics of the products could change.

That is why it is necessary to have special equipment for handling the products and take into account the characteristics of the product when designing the material handling system.

The physical distribution in this aspect has evolved, because through packaging and packaging shipments have exceeded their transport capacity, causing it to be more extensive and transport to be carried out with the greatest speed and above all safety.

Storage

It requires a place to store the products and an inventory is maintained. Here the size, quantity and location of the storage facilities are taken into account.

Warehouse functions
- Receive goods. It is responsible for the goods it receives from external carriers or from a nearby factory. Identify goods. The amounts received for each item are recorded and noted. Sometimes it is necessary to mark the articles by means of a code, the bar code etc. to classify merchandise. As the name implies, the goods are classified into the appropriate areas. Send the goods to the warehouse. It has identified the place where the goods are. Keep goods. Protect merchandise until needed. Remove, select or pick merchandise. Items must be efficiently selected from where they are properly stored for the next step: ordering shipment.The articles that make up the shipment are grouped and reviewed to verify that they are complete or determine the cause of the shortages. Dispatch the shipment. The order is packed appropriately, the corresponding transport vehicle is brought in and the necessary documents are prepared.
Warehouse Types

The expense of physical storage facilities is important within the cost of physical distribution. There are two types of warehouses:

Private warehouses. They are owned by a company that operates them for the purpose of distributing its own products.

Public warehouses. They are commercial organizations, whose main activity is to provide storage for the physical distribution of the products of other companies on a rental basis. These warehouses come to offer products, etc. The difference between one and the other is that private spending is a variable cost and public spending is a fixed cost such as insurance, taxes and interest.

III. Sales force

1. Salesmen's Work (Comparison with other employees)

It is enough to analyze the definition of the sales force to realize how complex its operation is since it combines, on the one hand, all the efforts of the organization, which are generally being channeled through a direction or sales management, and on the other hand, the efforts made by the salespeople who have been classified as the essential element of personal sales because they are the ones who will directly exercise the sales action.

From an etymological point of view the word seller derives from selling, which comes from the Latin word Vendo which means to come and Daré which means to give, that is to say come and give me, in Spanish. In general, the seller could be defined as:

"The person who carries out the action of selling something, that is, offering and transferring ownership of a good or the provision of a service in exchange for an established price"

Sales work is underestimated by many people, but it is an extremely important task since it is simply the means by which the company will channel a large part of the income, thus becoming a valuable engine of production and the economy. from the country.

Among the main factors that have diminished the image of the seller is pointed out in the following points:

The concept that some entrepreneurs have of the seller because they consider it a necessary evil. The habit of many customers to treat some sellers as inferior elements, either due to malice or personal complexes. The fact that some purchasing departments Forget that you must treat salespeople with the same courtesy with which you would like to treat people from your own company.The damage caused by those people who, by not finding fields of action for the development of their professional skills, dedicate themselves to this activity "improves the situation." This results in poor quality work in most cases. Dishonest sellers who cheat and offer things that are unreal in order to achieve their sales.Some even get to modify the content of the products in order to get some extra profit.

The sales work is, due to its characteristics, very different from the others carried out by the company's employees since it is the salespeople who are going to represent the outside world. Thus, the following basic differences can be pointed out between the sales position and the others.

Sellers work

They operate with little direct supervision of their activities They require a high degree of motivation They need tact, diplomacy and social stimulation They have permission to spend per diem but must justify it They travel constantly They are subjected to very strong pressures such as mental stresses and disappointments, coupled with physical fatigue.

Employee work

They operate under close and constant supervisory control They do not require special tact They take into account the ability of people according to the policies of each company They are limited in terms of expenses They are static The pressures are given to a lesser degree as well than physical and mental fatigue.

Despite the opportunities that sales work offers, it is a very difficult and demanding job with people with very special skills and especially preparation and experience. Anyone can be a salesperson, but not a good salesperson.

The changes that have taken place in the general context of the marketing activities have now given a strong value to the sales activity. Indeed, now it is not only required to simply place the articles produced by a certain company on the market, but true analysts are needed in order to interpret the wishes of customers and transmit them to the company so that it can take the necessary actions to satisfy them.

It also takes a good combination of your skills, experience and sales technique in order to out-compete the competition and convince the consumers you deal with.

2. Sales Force and Distribution Channel (Differences, similarities, advantages and disadvantages)

The size of the sales force is one of the most important decisions faced by executives in many industries. In practice, this decision is affected by other elements in the marketing mix and influences the overall marketing strategy. The specific options chosen (size of sales force whether they are aimed at the use of wholesalers, distributors, agents and others) depend on the relative costs and sales tasks required for analysis of the intermediate solutions.

The objective pursued by distribution is "to make the product available to the final consumer in the quantity demanded, at the time they need it and in the place where they want to buy it, all in a way that stimulates their acquisition at the point of purchase. sale and at a reasonable cost »

Distribution (this set of activities, as is clear from its objective) is necessary because it creates utility of time, place and possession:

- Creates time utility, because it makes the product available to the consumer at the time they need it

- Creates utility of place, through the existence of points of sale close to the consumer (that is, it brings the product closer to the consumer)

- Creates utility of possession, because it allows the physical delivery of the product

Therefore, we can say that, based on this utility, the objective of the distribution is the one we defined above. The characteristics of marketing as a marketing-mix variable are:

- It is a strategic variable, because they are long-term decisions, very difficult to modify (the same as the product variable, and unlike the promotion and price variables that are operational, easier to change.

- It is a variable of great importance, because it decisively affects the final sale price of the product.

- It is a variable that makes it difficult for the manufacturing company to control the products (a critical variable)

A distribution channel is «the path that a product must follow from its point of origin / production to its consumption, that is (as well as), the set of people or organizations that carry out the distribution functions along that path »

These people or organizations that stand between the producer and the consumer are called intermediaries. And the set of people or organizations that act as intermediaries in a certain geographical area is called COMMERCIAL SYSTEM OR COMMERCIAL SECTOR

3. Sales Steps and Processes

The interaction that exists between the seller and the buyer accentuates the possibility of developing an adequate and efficient procedure to carry out the sales process, which varies according to the characteristics of the customers, the sellers, etc. However, a general process is followed when it comes to selling products; This process consists of the following steps.

Pre-sale activities. The certainty that the sales person is prepared is taken into account, that is, that he is related to the product, the market and the sales techniques. In addition, this person must know the motivation and behavior of the market segment to which he wants to sell; It must be informed about the nature of the competition, the business conditions and those that prevail in its territory. Location of potential clients. The seller will design a customer profile; This will be helped by consulting the records of past and current clients to obtain a list of people or companies that are potential clients.

Other means of obtaining a list of prospects are:

Sales managers usually prepare a list for them. Current customers may suggest some leads. Current users may want newer or different models of the product. The seller may compile a user list of competing products.

Pre-approach to individual candidates. Before visiting potential customers, the salesperson should learn as much as possible about the people or companies to whom they hope to sell. You can also find out what products or brands are currently being used and the reactions to them. The salesperson should try to find out the personal habits, tastes and things that annoy the potential customer; In addition, I have to obtain all the possible information so that he is able to plan presentations for his clients. Sales presentation. This stage consists of three steps:

Attract attention.
- Personal contact is a simple way to attract the attention of the future client: welcome them, introduce themselves and mention what they are coming from. If the salesperson was referred to the prospect by a client, the correct technique will be mainly the presentation with a reference to this common acquaintance. A consultant-in-training frequently greets a potential client with the question: if you can cut your cost of sales in half and at the same time double your sales volumes would you be interested?

If the seller has a new product, the way to attract attention is simply to show the potential customer the product.

Keep the interest and arouse the desire.

To maintain interest and stimulate a desire in the customer for the product, a sales talk can be held. The product demonstration is invaluable since the product when shown is going to sell itself. Salespeople are advised to use this pre-made sales talk as most of the time it is effective.

Answer objections and close the sale.

As an important part of a presentation, the salesperson should try, periodically, to make a test sale closing in order to measure the willingness to buy of the potential customer.

After-sales activities. Sales success depends on repeat business. The satisfied customer will provide data for other potential customers.

After-sales services can promote a good image before the customer after his decision since according to the so-called cognitive dissonance, after a person has made a decision, an anxiety will invade him because he knows that the chosen alternative has some unpleasant characteristics as well as advantages.

Like other after-sales services, the seller must assure the customer that he has made the right decision by:

A summary of the benefits of the product An exposition of the advantages of the product compared to the possible alternatives discarded An indication of the degree of satisfaction that the customer will have with the use of the product.

4. Sales Classes

According to the type of Client

Most companies carry out some sort of customer classification even on the basis of their most obvious characteristics, such as, for example, "commercial category" (that is, wholesalers, retailers, supermarkets, cooperatives, individuals, etc.) although valid, this type of classifications are not very useful to determine what should be the strategy to follow with them, especially with regard to categories that are not mutually exclusive: thus a supermarket can be part of a diversified chain and at the same time a cooperative.

In any case, none of these descriptions defines exactly what type of commercial attention has to be provided in each case. For planning purposes, a classification should be used that allows the competent person to judge which type of activity is the most efficient and at the same time the most acceptable due to its costs.There are at least four factors to consider:

The type of company, that is, its activity plus its name or legal qualification. The criteria, which can be deduced from the observation, with which the time necessary for the visits can be evaluated. The current sales results (if any) The sales potential.

The analysis of these data will allow to deduce the sales program that must be followed according to the characteristics of the client: what forms of action, what type of employees, what frequency, what time averages, etc.

Seller's Obligations

Salespeople in the development of their work have to fulfill a series of obligations that derive from the objectives and types of activities they carry out and whose fulfillment requires people with special abilities and characteristics.

To the company:

Convince your company daily of your skill, enthusiasm, perseverance and spirit of collaboration Respect and maximize the efficiency of the company's sales policies Project a favorable image of the company Provide the company with information about complaints, feelings, needs, modalities and opinions of the clients with whom it deals Prepare the sales reports and other documents that the company requires in the development of the activity Efficiently perform its work Maintain or increase the volume of sales, where appropriate, Promote the use of Products To achieve the introduction of new products in the market

For the proper functioning of your work:

Be ready at all times to improve your knowledge and sales techniques Specialize in your field of action in order to achieve better results Develop and make the most of your skills, experiences and knowledge of each sale you make Try to know perfectly everything related with the product you sell to know the advantages and disadvantages of it. Know perfectly the area in which it operates, in terms of customers and skills. Plan each sale in advance.

To customers.

To convince your customers that you not only think about increasing your sales and thus your income, but that you want to help solve their problems. Always demonstrate the contagious enthusiasm to successfully achieve your sales. Serve them in the best way and with the greatest respect, without mention qualities that the product does not have or mislead with other arguments Provide products, services and conditions that meet their needs Comply with the promised conditions Show interest in the customer, being cordial, considerate, study their point of view and express yourself in terms advantageous to the customer.

To himself.

Convince yourself of your ability and interest in the job, its importance and the luck of belonging to the company Seeking personal development both in your position and in your income within the organization. This point obviously must coincide with the objectives that the seller pursues on a personal level.

6. Seller Profile

Being a good salesperson implies developing to the maximum a whole series of requirements and personal qualities, among which are:

Security.- Be a determined person, who trusted in herself and in her abilities; A good salesperson must be convinced of the quality of his work and, above all, that he has the material and psychological tools necessary to be successful. Sympathy.- Having the ability to please others. Observation capacity.- Being able to judge the people with whom you deal to know what way you should act with them. Empathy.- Ease of feeling an alien situation as yours. Determination.- Be firm with the objectives and ideas. Ease of speech.- That he knows how to say things. Power of persuasion.- Knowing how to distinguish yourself from others to convince customersCourage.- To have a fought spirit that does not minimize before slights. Initiative.- Being an enterprising person and capable of getting ahead. Creativity.- Ease of carrying out good ideas at the right times. Serenity.- Do not lose patience in any difficult situation. Sincerity.- The seller must always be sincere and honest in his work relationships. Responsibility.- Being fulfilled in all senses is a fundamental requirement in all types of work. Touch.- The seller must know how to manage their ability to say or do without offending or letting them abuse it. Courtesy.- Always observe good manners.Imagination.- Being able to foresee the things that are likely to happen. Professional ethics. - You must satisfactorily fulfill your professional obligations which many times do not exist in a formal way within the organization. Ambition. - This condition is important in a salesperson since being ambitious forces him to fight for his ideals. +

Seller Development

The personal development of a salesperson can be oriented to the structure of the organization or to the increase of its sales, and therefore of its commission income; Although regularly obtaining good sales volumes leads to the achievement of better positions, in many cases sellers give up accepting them in order not to lose their customers and income, which can be very high.

There are some essential factors that must be considered in the personal development of a salesperson and they are:

Desire to progress Effective management of your time A correct exploration of your qualities and abilities Personal concern to increase your knowledge day by day Experience Character, firmness and will.

Any professional or serious salesperson should always strive for continuous preparation. He must be an analyst of the things that happen around him, so he must give part of his time and, usually in his free hours, to inform himself and study the economic, social, psychological, technical and cultural aspects of the environment in which unfolds.

7. Size of the Sales Force

Workload Methods

To address the problem of the size of the sales force, many companies use one of several rather simple methods: The decomposition method or the percentage of sales method and the workload method.

Workload equalization:

Talley (1961) recommends another method based on equalizing the workload of sales representatives. Its method assumes that the management has determined the optimal number of calls to make on accounts of different types and has the following steps:

Clients are grouped into classes according to size.

The desired call frequency is established for each class. (Number of sales calls per account according to time unit.)

The number of accounts for each class is multiplied by the corresponding call frequency to arrive at the total workload for the region or county.

The average number of calls that a sales representative can make in a year is determined.

The number of sales representatives is necessarily determined by dividing the total annual calls required by the annual average number of calls made by a sales representative.

Example of the workload method for the size of the sales force: Suppose the firm has three classes of customers as described in the following table:

Client Category	Number of clients	Calls per year	Total calls
TO	30	24	720
B	90	12	1080
C	400	6	2400
		Total calls required =	4200
Number of sales persons = Total calls required / no. calls by sales people per year.
Number of sales persons = 4200/700 = 6

The product requires 4200 calls per year. If an average representative can make 700 calls per year, then six sales representatives are required.

Like the decomposition method, the workload method is easy to use and has been widely applied. The drawback is that the influence of the call rate on the sales of a given customer is not taken into account, and it ignores the issue of how call rates are determined. Furthermore, the method does not view the determination of the size of the sales force as an investment that will yield the highest possible profitable return.

A growing number of firms are relying on new quantitative industry guidelines to support their sales and communications spending decisions. The basic idea is that budgeting expenses are related to a number of product and market characteristics.

Workload method:

Talley proposed a method based on matching the workload of sales reps rather than the sales potential of the territory. Their method assumes that management has determined the economic number of visits to make to accounts of different sizes and consists of the following steps:

Clients are grouped into size categories, according to their annual sales volume.

For each category, the desirable frequencies of visits are established (number of sales visits to an account per year.)

The number of accounts in each size category is multiplied by the corresponding frequency, to arrive at the total load for the country, in sales visits per year.

The average number of visits that a representative can make per year is determined.

The number of sales representatives required is calculated by dividing the total annual visits required by the average annual visits made by a representative.

Methods of Increasing Productivity

Productivity method:

Sales representatives are among the most productive and costly asset of a company, and an increase in their number will increase both sales and costs.

Semlow proposed a solution to the problem of the size of the sales force, which requires measuring the sales productivity of representatives in territories of different sizes and his method includes:

Estimate the operating profit before the variable cost of sales on each volume of sales.

Deduction of the variable cost of sales, mainly the size of the sales force by the cost per representative.

This gives an estimate of operating profit on that sales volume.

Subsequently, the working capital and investment in plant required in each alternative sales volume is estimated

And finally, it expressed the estimated operating profit as a relation to the required investment.

Maslow's method relies on having a sufficient number of existing territories to allow a statistical estimate of creating territories of equal sales potential. It also assumes that sales productivity is a function solely of the sales potential of the territory and ignores the variations that the mix of accounts in the territory, their geographic dispersion, and other factors could produce.

Sellers estimate expected sales in their territories for a certain period. The sum of the individual estimates make up the forecast of the Company or the Division. The downside is the tendency of sellers to make very conservative estimates that make it easier for them to obtain future commissions and bonuses.

Colonization of the Sales Force by Territory or Zones

It should be emphasized that the purpose of the delimitation of territories is in no way to achieve uniformity in the sales of all of them.

Unless all clients are the same, it is obvious that the number of them will not be the same in all territories, since, as we have said, this is not a good method of setting limits. Similarly, customers in the various territories will not necessarily produce identical performance figures.

On the contrary, the territories are delimited in such a way that they generate the same amount of work and it will be the responsibility of the management to judge the results that can be expected from the tasks entrusted. For this reason, the payment to sellers is strict according to their results, this is through commissions on the sales made to their clients, it usually constitutes a series of problems.

Some territories are more juicy than others in commissions, which are achieved independently of the seller's efforts; on the other hand, sometimes sales are due both to actions taken by other sectors of the company and to the achievements of the seller.

At the time of reallocation of territories, sellers will be reluctant to part with their larger customers. In short, whatever the method of remuneration and motivation chosen, it is advisable to avoid those that restrict the freedom of the management to balance workloads fairly and accordingly with the sales strategy.

By Products

Sellers must know their products, especially if the products are many, unrelated and complex. This need, coupled with the trend toward product management, has led many companies to adopt a product structure for their sales force, in which case the sales force sells product lines.

For example, Kodak uses one sales force for its film products and another for its industrial products.

However, the structure by product can create problems if any given customer purchases many products from the company. For example, Baxter International, a company that sells supplies to hospitals, has several product divisions, each with a separate sales force. Multiple Baxter salespeople could visit the same hospital, on the same day.

This means that they travel the same routes and wait for the purchasing agents to receive them. These extraordinary costs must be weighed against the benefits offered by increased product knowledge and attention to individual products.

By Types of Clients

Vendor bodies can be assembled for different industries or clients, to serve current clients, as opposed to finding new ones, and split important accounts, as opposed to normal accounts.

For example Xerox classifies its customers into four basic groups, each of them served by different salespeople. The first group is made up of the large national accounts located in many different points. These clients are served by some 250 to 300 national account managers. Here are the large accounts that, although they are not national, can be located at various points within a region; These are managed by one of Xerox's 1,000 or so large account managers.

The third group of clients is made up of normal business clients, with a sales potential of between $ 5,000 to $ 10,000 per year and are served by account representatives. All other clients are served by marketing representatives.

Organizing its sales force by customer can help the company focus more precisely on customers.

By Combination

When a company sells a wide variety of products to many types of customers over a large geographic area, it often combines several types of structures for its sales force. Sellers can specialize by territory and product and market, by product and market, or by territory, product and market. The vendor will report to one or more general managers.

Contributed by: Raúl Fernando Chamoso Vedia

Next, and as a complement to this document «Sales control and distribution systems», a series of videos through which you can learn more about distribution channels, physical distribution and the sales force. (4 videos - 43 minutes)

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