Distribution Strategy and The Strategic Selling Cycle PDF

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MODULE 8 Distribution Strategy and The Strategic Selling Cycle LEARNING OUTCOMES: The following specific learning objectives are expected to be realized at the end of the session: 1. To understand the distribution mix and strategic selling cycle. 2. To know what are the different distribution channel. 3. To know what is gray marketing.

KEY POINTS

Distribution Mix Selling Cycle

Distribution Channel Gray Marketing

CORE CONTENT Introduction “Distribution’s (main) role is to provide an effective link between production and the target consumer. In today’s environment, the main question is who will perform this task and how will it be executed given the new tools of technology and management.” By: Cristina Tan General Manager, Suy Sing Commercial

IN-TEXT ACTIVIES: Distribution Strategy and the Strategic Selling Cycle Making products available requires a clear distribution plan composed of the following six (6) mix elements: 1) Coverage 2) Placement 3) Volume 4) Display 5) Pricing 6) Goodwill Coverage Having the proper types of outlet in a geographical area is important. Example:

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San Miguel Beer put up more satellite bottling plants in the areas of Laguna, Cavite, Cagayan de Oro and Ilocos region, not just to expand capacity but to lower cost and increase speed of logistics. Placement A product has placement when it is carried in a store. Placement objectives or having a right target number of outlets ensure consumer’s utmost convenience. Another example: The Philippines is one of the few places where cigarettes can still be bought on a per piece basis. The abundance of our unique street vendors (sometimes called ‘’tak-a-tak’’ boys) enables the most saleable brands like Hope cigarette and candies to enjoy a place utility advantage. Volume The right inventory level at the stores is critical. A firm may lunch a new brand of shampoo or a promotional campaign, which may result in out-of-stock situations. Too much inventory or “overloading” the outlets, on the other hand, is unhealthy as it goes against how a channel member normally earns profit. Display The right shelf and off- shelf locations plus adequate display space assure marketers a higher probability that consumers will choose their brand over competition. The good spaces in the stores, such as those at eye level, are usually given to the leading brands. As a consequence, new brands have to assure an equal chance of being seen in the marketplace. Example: Nescafe has dominant 70% of the space for coffee while Great Taste and Blend 45 may have to share the balance. Pricing Having the right resale prices promotes healthy competition among dealers. Price wars are usually avoided, as dealers do not gain anything in the end. Some dealers might also end up not wanting to sell the firm’s products due to financial non-gain. Example: Pure foods would meet with their wet market vendors in a price war situation to discourage them from proceeding with their price in case supply be pending if they continue to do so. Goodwill Goodwill refers to the best relationship between a supplier and his channel members. Goodwill enables marketers to have good display space in the stores, increases their inventory levels, and in some cases, enables firms to have advanced notice about impending competitive promotional activities or price movements. Goodwill is a result not only of monetary gains but also most importantly, of consistent “win-win” partnerships between two parties within the distribution chain.

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Strategic Selling Cycle Strategy Selling – organization's strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan. A. Selling to the End User

B. Selling to the Distribution Channels

Selling to the End User The producer sells the goods or provides the service directly to the consumer with no involvement with a middleman such as an intermediary, a wholesaler, a retailer, an agent, or a reseller.

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Prospecting Identify who is your target customer. Pre-Approach It is when you gather relevant information regarding the prospect in order to create customized sales presentation. Approach This step is where you begin to build relationship between your buyer. Sales Probing To understand and satisfy customer’s needs and wants. Presentation To identify the customers requirements, a better trust is created between the seller and the buyer. Handling Objections To identify the customers requirements, a better trust is created between the seller and the buyer. Demonstration It is a presentation with the use of an actual product (while a presentation may only be using sales aids like brochures. Closing It is the final step of a transaction. In sales, it is used more generally to mean achievement of the desired outcome. Selling to Distribution Channels Buy the product from the manufacturer and sell them directly to the consumer. This cycle works best for manufacturers that produce shopping goods like, clothes, shoes, furniture, tableware, and toys. Buy the products from the manufacturer and sell them to the consumer. In this cycle, consumers can buy products directly from the wholesaler in bulk. This distribution cycle involves more than one intermediary before the product gets into the hands of the consumer. This middleman, known as the agent, assists with the negotiation between the manufacturer and the seller. Routine Observation To ensure their success. Display Check Visit the selling area of the retailer to check on his product’s placement and display.

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Warehouse Check Done to determine the inventory level of the firm’s products before collection of accounts is done. Electronic data interchange (EDI) It is an electronic communication system that provides standards for exchanging data via any electronic means. Handling Objections When a sales person demonstrates a feature, talks about a benefit or uses a sales closing technique, their customer may well respond in the negative sense, giving excuses or otherwise heading away from the sale. Sell-Out Plan It is a contract for the sale of securities or commodities one expects to own at a later date and at more advantageous terms. Closing It is the final step of a transaction. In sales, it is used more generally to mean achievement of the desired outcome. Distribution Channels What is Distribution Channels? A distribution channel performs the work of moving products from manufacturers to final consumers or business users. A good distribution channel shortens the time, place, and possession gaps between the manufacturers and consumers. Manufacturer Manufacturer makes the good and sells them to the consumer directly with no intermediary, such as wholesaler or retailer. Purchases are made by the retailer from the manufacturer and then the retailer sells the merchandise to the consumer. This channel is used by manufacturers that specialize in producing shopping goods. Consumer’s can buy directly from the wholesaler. The wholesaler breaks down bulk packages for resale to the consumer. The wholesaler reduces some of the cost to the consumer such as service cost or sales force cost, which makes the purchase price cheaper for the consumer. Direct Marketing – is about making direct contact with existing and potential customers to promote your products or services. Indirect Marketing – In indirect channels of distribution there are one or more middlemen between the manufacturer and consumers. There is no direct contact between the producers and the customers.

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Distributors Distributors are appointed to perform the distribution function for manufacturers in making their products available. They may cover an entire country on an exclusive distributor basis or may be appointed to do the distribution function within a defined territory or defined store type. Wholesaling Wholesaling are activities of persons or organizations that sell to those who buy for resale (like retailers) or business use (like industrial, institutional, and commercial users). Wholesaling lessen the interaction between manufacturers/principals and retailers. Jobbers Jobbers are wholesalers who also provide warehousing space for manufacturers and distributors, thus enabling the letter to avoid a fixed cost. Jobbers are usually appointed in areas where a firm does not have economies of sales. Jobbers enjoy a discount depending on the amount they purchase. Ex-Truck Ex-truck is a sales operation where the ex-truck salesman carries stock in his van or small truck, saturates a given territory regularly by selling his stocks on ‘’cash” basis, and delivers the stocks immediately upon order. Retailing It is an activity involving the sale of products or services directly to final consumers. Franchising It is an accelerated method to expand distribution coverage is thru franchising. In franchising, a franchise fee is paid to the franchise owner in exchange of an establishment brand name, a proven system of operation, training and other infrastructure support. Gray Marketing Term used to describe unauthorized importation and distribution of products bearing genuine brands across markets. A market where a product is bought and sold outside of the manufacturer's authorized trading channels. The unofficial trading of a company's shares, usually before they are issued in an initial public offering (IPO). For example, if a store owner is an unauthorized dealer of a certain high-end electronics brand, the product is considered to be sold in the grey market. If the product is illegal, it would be selling on the "black market". The grey market is an over-the-counter market where dealers may execute orders for preferred customers as well as provide support for a new issue before it is actually issued. This activity allows underwriters and the issuer to determine demand and price the securities accordingly before the IPO.

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SESSION SUMMARY This module discussed about the different distribution strategies and strategic selling cycle. Making products conveniently available to the consumers or final users through the distribution channels from the manufacturer, wholesaler, distributors and retailers. ASSESSMENT/EVALUATION Assignment: Instruction: Research for a specific company and discuss the distribution channel. Include who are their manufacturer/producer/supplier, wholesaler, distributors and retailers (which is applicable to the company). REFERENCES Refer to the references listed in the syllabus of the subject.

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