Wholesalers and distributors
Where a product user does not warrant direct call from a manufacturer’s representative, perhaps because of low volume orders, remoteness of location, or simply a limitation on sales resources such that all potential customers cannot be covered by the supplier’s team, another alternative is to introduce the customer to a wholesale stockist or other distributorswho can provide the products and any supporting service. These other distributors are not agents, in that they take title to the goods and resell on their own behalf.
They may have a formal territorial franchiser distribution agreement with the supplier,or simply take goods on a non-exclusive wholesale basis. Exclusive distributors maybe more aggressive in pushing a supplier’products, but often have the limitation of not covering all of the potential customers within any assigned geographical area or trade channels.
Brokers and agents
An extension of wholesale distributors could be the appointment of sales brokers (see Figure), who effectively act as sales agents on a fee or commission basis without taking title to the goods. Some brokers will go beyond a pure agency role, and actually hold stocks where they have the facilities to provide logistical support such as physical distribution,invoicing and credit control. The role of sales brokers is well established in the USA where few companies can afford national sales organization. In other markets the term broker may not be in use, but therole is often filled by independent sales agents.
At some point in the selection process it will be essential to visit potential customers and end users (for industrial products) to satisfy yourself that the potential agent or distributor has market acceptance and credibility,and to get a feel for how aggressive the potential agent may be in pushing your products. Should you be marketing consumer products, there is no substitute for your own random store check to establish:
Agreements with agents and distributors
Before entering into any exclusive agency representation or distribution agreement,check the local laws that may be applicable to such agreements in the market. Some countries have agency laws that will give protection to agents, after termination of a contract,in respect of future commissions on business from customers introduced by them (this is the position within the European Union).
There are probably as many different forms of agreement as there are lawyers, or so it seems to the lay person, but the key points essentially cover:
Sales Management Related Tutorials
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The Planning Process
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Merchandising At The Point Of Sale
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