Sales, Distribution, and Customer Relationship Management Chapter 11 Sales, Distribution, and Customer Relationship Management © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Introduction to Business

Learning Objectives Understand the relationship between marketing, distribution, sales, and personal selling. Discuss the main distribution channels a company can use to reach customers and the factors that determine distribution channel choices. Differentiate between different approaches to personal selling and explain why the nature of a company’s products determines the selling approach.

Learning Objectives Outline the major issues and problems that arise during each stage of the personal selling process. Explain how customer relationship management can improve the profitability of the sales and distribution process.

Distribution and the Sale of Products to Customers the selection of the distribution channels to reach and deliver products to customers most efficiently and effectively Distribution channel the specific method a company uses to sell and deliver its products to customers

Types of Distribution Channels Company-owned or licensed distributors Wholesalers Retailers Direct distribution

The Four Main Product Distribution Channels Figure 11.1

Sales and Distribution Activities Involved in Managing the Upstream Value Chain Figure 11.2

Company-Owned or Licensed Distributors Personal selling direct face-to-face communication by salespeople with existing and potential customers to promote a company’s products

Company-Owned or Licensed Distributors Downstream value chain all of the activities related to managing a product from the time it is made to the time it is delivered and used by customers

Company-Owned or Licensed Distributors Licensed distributors or dealers independent companies that buy the rights to distribute, sell, and service a company’s products within a specific geographical area Exclusive dealerships distributors that are licensed to stock and sell only one brand of a product

Question? What are intermediaries who sell other companies’ products to the final customer? Wholesalers Retailers Distributors Merchants The correct answer is “B” – retailers. See slide 11-15.

Wholesalers Wholesaler an intermediary or broker that buys products from manufacturers and then resells them to other companies, such as retailers, which in turn distribute them to the final customer

Wholesalers Final customer the person who actually uses or consumes a product

Retailers Retailers intermediaries who sell other companies’ products to the final customer

Direct Distribution Direct distribution distribution channels used to deliver and sell products directly to the final customer

The Distribution Mix and How It’s Chosen the combination of channels a company selects to place, promote, sell, and deliver its products to customers

Factors Affecting the Choice of Distribution Mix Product characteristics The importance of the purchase to the final customer The need to customize a product

Product Characteristics Complex products products with qualities and characteristics that make them difficult for customers to evaluate

Factors Affecting the Distribution Mix Figure 11.3

The Choice of Distribution Mix Figure 11.4

Approaches to Selling Complex Products Figure 11.5

Selling Complex Products Technical selling selling that requires a company’s sales representatives to impart detailed technical information to their customers

Selling Complex Products Missionary selling selling that occurs when a salesperson educates customers, builds goodwill, and performs promotional activities to encourage them to purchase a product at a later date Agent a person, or intermediary, acting on behalf of final customers

Selling Complex Products Creative selling selling that requires salespeople to combine their technical knowledge and personal selling experience to craft creative and unique ways to better meet the needs of their customers

Selling Complex Products Connoisseur a person with immense knowledge about a particular type of product and who can identify the qualities that make it valuable

Approaches to Selling Standardized Products Figure 11.6

Selling Standardized Products Trade selling Retail selling Telemarketing

Selling Standardized Products Trade selling selling done through intermediaries, such as wholesalers and retailers, which manage the sale of a company’s products to other companies Retail selling selling to the final customer – the person who buys a product for his or her own use

Selling Standardized Products Telemarketing a sales method used to contact prospective customers exclusively by phone Find out how to use telemarketing at Telemarketing.com

Stages in the Selling Process Prospecting for customers Making the initial contact Making the sales presentation Handling objections Closing the sale Doing after-sales service, follow-up, and information gathering

Question? What are potential customers for the goods and services a salesperson is offering? Patrons Sponsors Consumers Prospects The correct answer is “D” – prospects. See next slide.

Prospecting for Customers Prospects potential customers for the goods and services a salesperson is offering

Making the Initial Contact Cold calls the first contact a salesperson has with a customer, either by e-mail, phone, or in person

Doing After-Sales Service, Follow-Up, and Information Gathering Buyer’s remorse a phenomenon that occurs when a customer believes he or she made a poor purchasing choice

Customer Relationship Management Customer relationship management system an IT-based knowledge management system designed to track a company’s customers – what they are buying, how satisfied they are, and how their demands are changing

Components or Modules of a CRM System Figure 11.8

Video: New Belgium Brewery NBB achieves efficiencies through its supply chain management processes where it fully utilizes its facilities by employing machines and technology and reducing the need for direct labor. What are the key components involved in comparing manufacturing to service organizations? Discussion Questions: What methods are employed by NBB to ensure high quality? Answer NBB uses various methods to ensure profitability and the highest quality beer possible. TQM is the operating philosophy involved in the production processes. They also have a supply chain management process that includes all aspects of the production flow from raw materials through finished goods. Consistency of the quality and the product are keys to their success. What are the key components involved in comparing manufacturing to service organizations? Answer: Four of the key issues include: (1) uniformity of inputs (raw materials, water, hops, etc); (2) uniformity of outputs (high quality beer), (3) labor required by quality standards (significant use of technology and machines); and (4) means of production (TQM is utilized across the production process). What are the five main sources of operating costs affected by Operations Materials Management? Answer: At NBB and in other production facilities, the five main sources of operating costs affected by OMM are: costs of raw materials and components, plan, labor, inventory, and distribution.