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

3. 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.

4. 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.

5. 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

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

7. The Four Main Product Distribution Channels
Figure 11.1

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

9. 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

10. 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

11. 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

12. 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

13. 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

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

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

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

17. 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

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

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

20. Factors Affecting the Distribution Mix
Figure 11.3

21. The Choice of Distribution Mix
Figure 11.4

22. Approaches to Selling Complex Products
Figure 11.5

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

24. 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

25. 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

26. 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

27. Approaches to Selling Standardized Products
Figure 11.6

28. Selling Standardized Products
Trade selling
Retail selling
Telemarketing

29. 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

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

31. 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

32. 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.

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

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

35. 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

36. 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

37. Components or Modules of a CRM System
Figure 11.8

38. 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.