Category: University of Mumbai BMS Notes

Activating your channel is the most fruitful opportunity available for accelerated sales growth over the next 12 months. For many companies tapping into an indirect sales channel, only 20 per cent of their channel partners is amassing the sales to have a positive impact on the bottom line.

But, what if you can activate the other 80 per cent of your channel network to generate new sales? The task of converting 80 per cent of your channel partners from passive to active status starts with understanding their needs and motivations. The sooner you can figure out what drives their behaviour, the sooner you can get them on the path to driving in more sales.

1. Motivation

It’s been proven time, and again that increased motivation leads to improved performance. When you prove to your channel how much you value them, you are rewarded in the form of higher productivity, increased sales and greater end-user satisfaction.

2. Provide them with the support they need

Distributors need constant support with day-to-day activities. This will include marketing materials, samples of your product, and sales data. All of which will all be used to pitch your product to buyers. The best support you can offer your channel partners is a commitment of your time and focus to ensure they are receiving everything they need to be successful.

3. Create an incentive program

A carefully designed and well-run incentive program can rouse a sales force, motivate marketing staff, or reinvigorate an uninspired channel network. Any of these objectives are reason enough to use incentives. Work with your distributors to set sales targets that are attainable, yet challenging to keep them interested.

Be Flexible: offering various rewards is a good rule of thumb, but is especially important when you aren’t familiar with the corporate culture of the particular sales force you are trying to motivate.

Reward good behaviour: while increasing sales is always the end goal, time and effort have their merit and should be rewarded as well.

Consider rewarding certain educational pursuits that demonstrate a long-term commitment to professional growth and development. These pursuits may include product training, certification or attending industry seminars and conferences. Incentive programs provide a way for suppliers to fight for the mindshare of their distributors much the way those same distributors compete for the mindshare of consumers.

4. Keep up communication

Suppliers can’t mount a leaderboard at a partner’s office, so consider promoting a program with regular communication. Email updates are always good. Consider even crafting two types of messages, one aimed toward executives and one toward frontline sellers, to get buy-in at all levels of your partner’s business.

Communications that signal the program launch and deliver regular updates to network partners build the brand and drive participant awareness, interest and enrolment. Ongoing discussions promote product sales and encourage participant engagement.

5. Train them

Distributors won’t be motivated to sell a product that they are not familiar with, so take the time to have every new distributor thoroughly trained. The training should focus on how the product works, what it’s made out of, and what unique features and benefits partners should be aware of.

Be sure to discuss how the product may be positioned to buyers, and whether the distributor should work with staff to train them on the product as well. When your channel partners know more about your product, they will become more confident about selling it, and thus be more effective when pitching it.

6. Don’t forget to track and analyse

Your program data is crucial to the understanding of how your program is driving business activity and determining the changes that will improve performance. Your program should be tracking the behaviours of your channel partners (and potentially end-users), and as a result, could yield early warnings about the market and competitive developments.

Track results: return on investment is a key metric to monitor. This will ensure that both sides are keeping up their ends of the deal. Volume, market share, or growth of strategic accounts can all be measured factors as well.

Importance of Motivation to Distribution Channel Members

Marketing products through indirect channels such as retailers or distributor outlets is an efficient way for your business to serve large numbers of customers that your sales force could not reach. An effective distribution strategy can boost revenue and profitability, while poor channel performance can have the opposite effect, according to Marketing MO. To encourage channel members to stock and market your products, you must motivate them.

1. Build Preference for Your Brand

Motivational tools help to ensure that channel members give preference to your products over your competitors. Distributors and retailers typically carry a wide range of products from many different suppliers. They must therefore make decisions about the level of sales and marketing resources they allocate to each product or manufacturer. Motivation plays an important role in winning channel members’ mind share, according to the business school MMC Learning. By winning mind share, you can ensure that channel members recommend or actively promote your product.

2. Add Value to Your Product Offer

Motivating distributors and retailers is an important strategy for influencing channel members’ behavior, according to the marketing consultancy Pure Channels. Offering training programs or marketing support to members adds value to the relationship between supplier and channel by helping them to improve their performance and grow their own business. A strong relationship makes it easier to launch new products or marketing campaigns through the channel, helping to build your own revenue and profit.

3. Increase Sales through the Channel

Financial incentives are an important source of motivation to channel members. By offering discounts on purchases above an agreed level or rewarding sales above target with bonuses, you can encourage channel members to stock and sell more of your products. Financial incentives can help you launch new products, increase sales of existing products or widen your distribution base, because channel members recognize that they will benefit from cooperating with you.

4. Improve Performance with Structured Programs

If you have a network of distributors or retailers, you will probably find that performance and commitment to your brand varies across the network. By setting up a structured channel program that offers different benefits at each level, you can motivate members to improve their performance. The program might take the form of a tiered structure, with tier 3 members receiving basic benefits and tier 1 members receiving a wide range of benefits that help them grow their business. The benefits might include different bonus or discount levels, marketing and training support, joint promotions and exclusive products. To reach higher tiers, you can set requirements such as stocking certain products, achieving sales targets, participating in training programs and agreeing to participate in promotions.

Conflict resolution skills are required for a wide range of positions across many job sectors. This requirement is based around the fact that conflict tends to reduce productivity and create a difficult work environment, leading to unwanted turnover in staff and reduced morale.

Individuals who are able to resolve conflicts are often excellent mediators, rational, and able to manage difficult personalities from a place of empathy.

Conflict resolution is the process by which two or more parties reach a peaceful resolution to a dispute.

In the workplace, there can be a variety of types of conflict:

• Conflict may occur between co-workers, or between supervisors and subordinates, or between service providers and their clients or customers.
• Conflict can also occur between groups, such as management and the labor force, or between whole departments.

The Conflict Resolution Process

The resolution of conflicts in the workplace typically involves some or all of the following processes:

• Recognition by the parties involved that a problem exists.
• Mutual agreement to address the issue and find some resolution.
• An effort to understand the perspective and concerns of the opposing individual or group.
• Identifying changes in attitude, behavior, and approaches to work by both sides that will lessen negative feelings.
• Recognizing triggers to episodes of conflict.
• Interventions by third parties such as Human Resources representatives or higher level managers to mediate.
• A willingness by one or both parties to compromise.
• Agreement on a plan to address differences.
• Monitoring the impact of any agreements for change.
• Disciplining or terminating employees who resist efforts to defuse conflicts.

Kenneth Thomas and Ralph Kilmann developed five conflict resolution strategies that people use to handle conflict, including avoiding, defeating, compromising, accommodating, and collaborating.

This is based on the assumption that people choose how cooperative and how assertive to be in a conflict. It suggests that everyone has preferred ways of responding to conflict, but most of us use all methods under various circumstances. It is helpful to understand the five methods, particularly when you want to move a group forward.

Thomas-Kilmann Conflict Mode Instrument

The Thomas Kilmann Conflict Mode Instrument is a model for handling conflict:

Conflict Management Styles

Here are the five conflict management styles according to Thomas, K.W., and R.H. Kilmann:

1. Accommodating

This is when you cooperate to a high-degree, and it may be at your own expense, and actually work against your own goals, objectives, and desired outcomes. This approach is effective when the other party is the expert or has a better solution.  It can also be effective for preserving future relations with the other party.

2. Avoiding

This is when you simply avoid the issue. You aren’t helping the other party reach their goals, and you aren’t assertively pursuing your own. This works when the issue is trivial or when you have no chance of winning. It can also be effective when the issue would be very costly. It’s also very effective when the atmosphere is emotionally charged and you need to create some space. Sometimes issues will resolve themselves, but “hope is not a strategy”, and, in general, avoiding is not a good long term strategy.

3. Collaborating

This is where you partner or pair up with the other party to achieve both of your goals.  This is how you break free of the “win-lose” paradigm and seek the “win-win.” This can be effective for complex scenarios where you need to find a novel solution.This can also mean re-framing the challenge to create a bigger space and room for everybody’s ideas. The downside is that it requires a high-degree of trust and reaching a consensus can require a lot of time and effort to get everybody on board and to synthesize all the ideas.

4. Competing

This is the “win-lose” approach. You act in a very assertive way to achieve your goals, without seeking to cooperate with the other party, and it may be at the expense of the other party. his approach may be appropriate for emergencies when time is of the essence, or when you need quick, decisive action, and people are aware of and support the approach.

5. Compromising

This is the “lose-lose” scenario where neither party really achieves what they want. This requires a moderate level of assertiveness and cooperation. It may be appropriate for scenarios where you need a temporary solution, or where both sides have equally important goals. The trap is to fall into compromising as an easy way out, when collaborating would produce a better solution.

Channel design decisions are critical because they determine a product’s market presence and buyer’s accessibility to the product. Channel decisions have additional strategic significance because they entail long-term commitments. It is usually easier to change prices or promotion than to change marketing channels.

1. Market dimensions

It focuses on customer( market) orientation. In developing and adapting the marketing mix, then, marketing managers should take their basic cues from the needs and wants to the target markets at which they are aiming. Four basic sub categories of market variables are particularly important in influencing channel structure. They are:

• Market geography
• Market size
• Market density
• Market Behaviour

2. Product Dimension

Product variables are another important category to consider in evaluating alternative channel structures. Some of the most important product variables are as follows:

• Bulk and weight
• Perishability
• Unit value
• Technical versus non- technical
• Newness

3. Company dimensions

The most important company variables affecting channel design are:

• Size
• Financial capacity
• Managerial Expertise
• Objectives and Strategies

4. Intermediary Dimensions

The key intermediary variables related to channel structure are:

• Availability
• Cost
• Services

5. Environment dimension

Environmental variables may affect all aspects of channel development and management. Economic, sociocultural, competitive, technological, and legal environmental forces can have a significant impact of environmental forces is one of the more common reasons for marketing channel design decisions.

1. Defining the customer needs

In designing the market channel, the marketer must understand the service output levels its target customer want. It is essential to capture customer requirements while designing marketing channel. It includes the following:

• Product information
• Product customization
• Product quality assurance
• Lot size Product variety
• Spatial convenience / availability
• Waiting and delivery time After sales service
• Logistics

2. Defining channel objective

The channel objective vary with product characteristics:

• Perishable products requires more direct marketing
• Bulky products, such as building materials, require channels that minimize the shipping distance and amount of handling.
• Non- standard products, such as custom-built machinary and specialised business forms, are sold directly by company sales representatives.
• High- unit- value products such as generators and turbines are often sold through a company sales force rather than intermediaries.

3. Channel alternative

A company looks at alternatives for its distribution channel after it has decided on the targeted customers and the customer service deliverables it desires from its channel partners to reach these customers. At the time of deciding the company will scan for:

Type of intermediaries

• Distributors or re-distribution stockiest
• Carrying and forwarding agents
• Logistics service providers.
• Manufacturer’s agents, stockist, guarantors
• Financing agencies
• Wholesalers and semi wholsalers
• Retailers and service centres.
• Number of intermediaries.
• Cost of the channel system.
• Terms and responsibility of channel members.

4. Evaluation of major alternative

The major problem before the producer is to decide which of the alternatives would be best satisfy the long term objectives of the firm taking in view the factors which would affect the channel decision. For this purpose, each alternative must be rated against economic; control and adequate criteria:

• Economic Criteria
• Control Criteria
• Adaptive Criteria

5. Ideal channel structure

With the completion of forgoing steps, the number of alternatives would have narrowed down considerably. The firm must evaluate design and choose the best among them.

It represents the level of international availability selected for a particular product by the marketer; the level of intensity chosen will depend upon factor such as the production capacity, the size of the target market, pricing and promotion policies and the amount of product service required by the end-user.

There are three broad options:

1. Intensive Distribution

Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g., cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to choose from. In other words, if one brand is not available, a customer will simply choose another.

This alternative involves all the possible outlets that can be used to distribute the product. This is particularly useful in products like soft drinks where distribution is a key success factor. Here, soft drink firms distribute their brands through multiple outlets to ensure their easy availability to the customer.

Hence, on the one hand these brands are available in restaurants and five star hotels and on the other hand they are also available through countless soft drink stalls, kiosks, sweetmarts, tea shops, and so on. Any possible outlet where the customer is expected to visit is also an outlet for the soft drink.

2. Selective Distribution

Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g., training) on them. Selective distribution works best when consumers are prepared to “shop around” in other words they have a preference for a particular brand or price and will search out the outlets that supply.

This alternative is the middle path approach to distribution. Here, the firm selects some outlets to distribute its products. This alternative helps focus the selling effort of manufacturing firms on a few outlets rather than dissipating it over countless marginal ones.

It also enables the firm to establish a good working relationship with channel members. Selective distribution can help the manufacturer gain optimum market coverage and more control but at a lesser cost than intensive distribution. Both existing and new firms are known to use this alternative.

Selective distribution involves selling products at select outlets in specific locations. For instance, Sony TVs can be purchased at a number of outlets such as Circuit City, Best Buy, or Walmart, but the same models are generally not sold at all the outlets. The lowest-priced Sony TVs are at Walmart, the better Sony models are more expensive and found in stores like Circuit City or specialty electronics stores. By selling different models with different features and price points at different outlets, a manufacturer can appeal to different target markets. You don’t expect, for example, to find the highest-priced products in Walmart; when you shop there, you are looking for the lower-priced goods.

3. Exclusive Distribution

Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.

When the firm distributes its brand through just one or two major outlets in the market, who exclusively deal in it and not all competing brands, it is said that the firm is using an exclusive distribution strategy. This is a common form of distribution in products and brands that seek a high prestigious image.

Typical examples are of designer ware, major domestic appliances and even automobiles. By granting exclusive distribution rights, the manufacturer hopes to have control over the intermediaries’ price, promotion, credit inventory and service policies. The firm also hopes to get the benefit of aggressive selling by such outlets.

Exclusive distribution involves selling products through one or very few outlets. Most students often think exclusive means high priced, but that’s not always the case. Exclusive simply means limiting distribution to only one outlet in any area, and can be a strategic decision based on applying the scarcity principle to creating demand. For instance, supermodel Cindy Crawford’s line of furniture is sold exclusively at the furniture company Rooms to Go. Designer Michael Graves has a line of products sold exclusively at Target. To purchase those items you need to go to one of those retailers. In these instances, retailers are teaming up with these brands in order to create a sense of quality based on scarcity, a sense of quality that will not only apply to the brand but to the store.

Wholesaler is a trader, who buys goods in bulk quantities and sell it in smaller ones. On the other hand, distributors are the reseller of products, which cover a specific area or market.

To make goods available to the final consumer, a manufacturer or producer should choose the best channel for distribution, as he cannot sell the goods directly to consumers. In this way, the supply chain of a company has a great role to play because it highly influences its marketing and promotional activities. The two most important links of supply chain management are wholesaler and distributor, as they ensure timely availability of merchandise to the end user. As these two links are interconnected, they are quite commonly confused for one another.

Wholesaler

The wholesaler can be understood as an intermediary entity that buys goods in large quantities and resells them to the retailer, with the sole aim of earning profit. He/She acts as a middle-person between a manufacturer and retailer. Due to direct buying from the manufacturer or producer of goods, wholesaler obtains products at low prices and sells them to the retailer at higher prices. Thus the remaining amount is the source of revenue.

Whole-selling entities play a crucial role in the supply chain process, as it buys the goods from different manufacturers in bulk, break bulk into smaller units, hold inventories in warehouses, provides quicker delivery to buyers, reduces risk by taking the title of goods, and so on. As these entities mostly deal with business customers, i.e. re-sellers they do not pay much attention to the location, atmosphere and promotion.

Distributor

As the name suggests, the distributor is an agent who distributes products and services to various parties in the supply chain network. It is impossible for the manufacturer to reach customers directly for selling products and services, and for this purpose, they have to rely on middle agents or distributors, who exclusively store and sell the company’s products, in different locations.

The distributor is also known as channel partner who deals with the manufacturers to promote and sell their products and services to various customers, such as retailers or final consumers. To do so, the distributor enters into an agreement with the producer and purchase the right to sell the producer’s product. However, he cannot use the producer’s trade name.

Distributors purchase non-competing goods or product lines from different manufacturers, hold stock in warehouses, transport it to various locations and resell it to various parties.

Differences between Wholesaler and Distributor

The difference between wholesaler and distributor can be drawn clearly on the following grounds:

1. The term wholesaler is defined as a person or entity, who purchase goods in bulk and sell them in relatively smaller units. On the other hand, the distributor is one of the major links that supplies goods and services to the entire market.
2. In general, distributors enter into the contract with the manufacturer to trade in non-competing goods or product lines. Conversely, a wholesaler do not enter into the contract with the manufacturer, i.e. he has the liberty to offer products of competing for nature to the retailer, provided by various manufacturers.
3. There are four types of distribution levels, in which wholesaler is present in two level and three level channel. Unlike, the distributor is present only in the three-level channel of distribution.
4. As a distributor acts as a middleman to supply specific goods in the market, his area of operation is larger than the wholesaler, who serves a limited area.
5. Retailers are the only customers of a wholesaler. On the contrary, a distributor provides goods to many parties in the supply chain, like wholesalers, retailers and even direct consumers.
6. Wholesalers do not involve in marketing, pitching, selling products to the prospective buyers or retailers, i.e. product of an individual manufacturer waits for the retailer’s interest and order placement. In contrast, the distributor sets deal with the producer and engage in promotional activities, to increase sales. Hence, they act as a sales representative to the producer.

Conclusion

Wholesalers generate their income from the discount charged on products, i.e. they purchase products in large volumes from producers at a low price and sell it further to the retailers in small lots at relatively high price. Hence, the amount received from customers less amount paid to manufacturers is the source of income to the wholesaler.

On the other hand, distributor charge service fees for rendering services as a percentage of net sales. The fee is the major source of income to the distributors.

A channel partner is a person or organization that provides services or sells products on behalf of a software, hardware, networking or cloud services vendor. Channel partners include value-added resellers (VARs), systems integrators, consultants, managed service providers (MSPs), original equipment manufacturers, distributors and independent software vendors. Many technology providers, including Amazon Web Services (AWS), Cisco, Dell EMC, IBM and Microsoft, have formed partnership programs to engage closely with channel partners.

Two well-known channel partner programs are:

• Managed Services Channel Program (MSCP): Defines best practices for channel partner market or industry services. Best practice compliance validates channel partners and services.
• Outsourcing Channel Program: Designed for channel partners handling asset management for a specified period. Includes combined manufacturer, service provider or data center technologies.

A referral partner is a sales representative, consultant or customer that enhances marketing and boosts sales by directly referring customers to manufacturers via multiple channels.

Channel and referral partners are often compensated with gratis discounts, training, technical support or lead generation tools.

WHOLESALER

The wholesaler can be understood as an intermediary entity that buys goods in large quantities and resells them to the retailer, with the sole aim of earning profit. He/She acts as a middle-person between a manufacturer and retailer. Due to direct buying from the manufacturer or producer of goods, wholesaler obtains products at low prices and sells them to the retailer at higher prices. Thus the remaining amount is the source of revenue.

Whole-selling entities play a crucial role in the supply chain process, as it buys the goods from different manufacturers in bulk, break bulk into smaller units, hold inventories in warehouses, provides quicker delivery to buyers, reduces risk by taking the title of goods, and so on. As these entities mostly deal with business customers, i.e. re-sellers they do not pay much attention to the location, atmosphere and promotion.

Wholesaler – Business to Business sales and Business to customer sale

• Wholesalers have huge quantity of the same product (Imagine a marble shop which is a wholesaler and has huge quantity of different marble floorings and tiles).
• If you want to buy from a wholesaler, you have to visit his place. (He does not distribute the items)
• In large companies, wholesalers may buy from distributors. Wholesalers are lower then distributors in channel sales. There might be multiple wholesalers in the same city.
• Wholesalers mostly sell directly to other businesses (like retailers) but they are likely to sell to customers who need in bulk as well (example a cement wholesaler selling small amount of cement locally just to meet demand)
• Are very important in the perishable goods market (fish, vegetables etc).
• Major work is of warehousing
• Margins are lesser but the volumes are huge.

The best example of wholesalers is the local cement guy or the local vegetable market. Although a normal vegetable retailer might roam the market with his van or might visit place to place, a wholesaler sits in his own place and does business.

You might noticed from time to time various Cloth wholesale markets where a huge business is done from a small shop. The wholesalers generally operate from a small shop but they will have a huge warehouse nearby from where they supply the material.

Because wholesalers sell material in huge bulk or the material which they sell is in demand, these wholesalers do not move from shop (this is generally the norm) and they sell most of their products from their own shop. Imagine the vegetable wholesaler who might sell tons of vegetables from his shop when retailers visit him.

A wholesaler may buy direct from the company or he might buy from another distributor. If you look at the ice cream market, there is a C&F (wholesaler of ice cream) involved who stocks the ice cream in bulk and other ice cream vendors may buy from him or the distributor arranges transportation from the wholesaler to the retailer. This bulk stocking wholesaler is needed in every city within a few milers because otherwise the ice cream will melt. As a result, wholesalers have a huge role to play in perishable good items.

Finally, distributors are not allowed to sell to end customers are all whereas a wholesaler might do that. For example – a cement wholesaler generally sells in bulk to the local developers who are erecting buildings. However, he may sell small items through a shop to local labourers, plumbers who need small work to be done with cement (home jobs). A distributor cannot do that because he is obstructing the sale of the retailer to whom the distributor is selling.

DISTRIBUTOR

As the name suggests, the distributor is an agent who distributes products and services to various parties in the supply chain network. It is impossible for the manufacturer to reach customers directly for selling products and services, and for this purpose, they have to rely on middle agents or distributors, who exclusively store and sell the company’s products, in different locations.

The distributor is also known as channel partner who deals with the manufacturers to promote and sell their products and services to various customers, such as retailers or final consumers. To do so, the distributor enters into an agreement with the producer and purchase the right to sell the producer’s product. However, he cannot use the producer’s trade name.

Distributors purchase non-competing goods or product lines from different manufacturers, hold stock in warehouses, transport it to various locations and resell it to various parties.

Distributors – Strictly business to business sales

• Distributors are the ones whose job is to increase the visibility and sales of the product, for which they might visit shop to shop and pick orders.
• An excellent example of distributors are the ones selling Samsung Smart phones who visit all the shops within a region to ensure that the material is on display by the retailers. You will not find a wholesaler of Samsung but you will find retailers and distributors.
• Distributors sell to both – Wholesalers and retailers.
• Transportation is a huge cost for distributors as delivery from warehouse to end retail outlet is the work of the distributor.
• Distributors are never allowed to sell to end customers because the distributors have a lower price of the product and this move will cut off the sale of the retailers.
• The turnover done by the retailers is the target of the distributor. A distributor is more concerned with secondary sale (sales from retailer to customer) because if secondary sales don’t happen, then primary sale from happen (sale from distributor to retailer).
• Major job is visibility, distribution to many outlets and sales.

Consumer durable, electronics, hardware or other equipments, medicines are perfect examples of sectors which use distributors and not wholesalers. A medicine retailer may have more then 1000 different type of medicines. He cannot afford to visit wholesalers who are stocking all these machines.

So the companies appoint a distributor who can distribute the various medicines to the retailer who in turn sells it to customers. Similarly, there are various distributors for washing machines, televisions and other white and brown goods who distribute products to retailers – small retailers or modern retailers.

There might be vegetable and perishable goods disributors as well. These distributors might visit from town to town and deposit a bulk of the material with the local wholesaler who will later sell it forward to other retailers. In this case too, the cost of distribution from distributor to wholesaler has to be bourne by the distributor.

Transportation is a major cost for any distributor and hence, the distributor considers the cost of transportation in his profitability analysis. Alternatively, a distributor might try to club together various deliveries to the same place so that the cost is lesser for deliveries and transportation.

The main work of the distributor is to push retailers in converting more sale. Imagine the competition between Samsung and Micromax or Oppo or Vivo. There is a distributor for each of these companies and all distributors will try to push their own products in the market. They can do this by launching various trade promotions or pushing the retailer in picking more material so that the sale is maximum for their brand.

So if a retailer picks more Micromax unit from the Micromax distributor, he is likely to sell the Micromax brand more then Samsung to the end customer. For this to happen, the distributor has to give promotional support to the retailer or push for more sales so that ultimately the retailer sells more unit to the end customer.

If the secondary sale is happening (sale from retailer to customer), the primary sale (sale from distributor to retailer) will happen automatically. A good distributor concentrates on secondary sale and not primary sale.

A distributor is also supposed to stock products in bulk but he can anytime order smaller quantities from the company from time to time to distribute forward. Generally distributors are not expected to have as big warehouses as wholesalers because it is the work of the distributor to distribute and not to warehouse. Distributors use the storing capacity of retailers below them or wholesalers below them to stock the material.

Key Differences between Wholesaler and Distributor

The difference between wholesaler and distributor can be drawn clearly on the following grounds:

1. The term wholesaler is defined as a person or entity, who purchase goods in bulk and sell them in relatively smaller units. On the other hand, the distributor is one of the major links that supplies goods and services to the entire market.
2. In general, distributors enter into the contract with the manufacturer to trade in non-competing goods or product lines. Conversely, a wholesaler do not enter into the contract with the manufacturer, i.e. he has the liberty to offer products of competing for nature to the retailer, provided by various manufacturers.
3. There are four types of distribution levels, in which wholesaler is present in two level and three level channel. Unlike, the distributor is present only in the three-level channel of distribution.
4. As a distributor acts as a middleman to supply specific goods in the market, his area of operation is larger than the wholesaler, who serves a limited area.
5. Retailers are the only customers of a wholesaler. On the contrary, a distributor provides goods to many parties in the supply chain, like wholesalers, retailers and even direct consumers.
6. Wholesalers do not involve in marketing, pitching, selling products to the prospective buyers or retailers, i.e. product of an individual manufacturer waits for the retailer’s interest and order placement. In contrast, the distributor sets deal with the producer and engage in promotional activities, to increase sales. Hence, they act as a sales representative to the producer.

RETAILER

When buyers buy a product and sell it to the final customers for their consumption, and not to any supplier or wholesaler, this is known as Retail. The retailers are the mediator between wholesaler and customers. They purchase goods from the wholesaler and sell them to the ultimate customers in small quantity. Retailers offer a vast variety of goods and are in direct communication with a large chain of suppliers, giving them an opportunity to manufacture and develop more sustainable goods.

A retailer does not manufacture any product they sell, but they are the final link in the distribution chain and the one who connects and delivers the goods and services directly to the customers.

Importance of Retailer

1. Provide Assortments

Supermarkets or small Kirana shops sell different product items manufactured by different companies. These places enable and give choices to customers to pick from a vast assortment of goods, sizes, brands, and prices at one location.

2. Breaking Bulk Orders

Manufactures and wholesalers sell the products in bulk to the retailers. The retailers then sell it to the customers in smaller and more useful quantities. This activity of breaking bulk order into tiny amount according to customer’s requirement is known as breaking bulk.

3. Holding Inventory

The significant action accomplished by the retailer is maintaining an inventory, so the items are available whenever the customers want. This action allows the customer to buy products in a small quantity as required.

4. Providing Services

Retailers implement services that make customers shopping journey favourable. Example, retailers showcase all the products so that the customers can see and buy them. Retail store’s employee salesperson to assist the customers.

Key Points of Retailer

• It creates a high annual sale and has a huge impact on the economy.
• Creates employment and offers extensive varieties of career opportunity.
• Offers widespread categories of products and services.
• A retail service can improve a product’s image.
• Spread information to customers through display, signs, and sales personnel.

In the field of marketing, channels of distribution indicate routes or pathways through which goods and services flow, or move from producers to consumers.

We can define formally the distribution channel as the set of interdependent marketing institutions participating in the marketing activities involved in the movement or the flow of goods or services from the primary producer to the ultimate consumer.

The prime of object of production is its consumption. The movement of product from producer to consumer is an important function of marketing. It is the obligation of the producer to make goods available at right place, at right time right price and in right quantity. The process of making goods available to the consumer needs effective channel of distribution. Therefore, the path taken by the goods in its movement is termed as channel of distribution.

Distribution channels are the network of organizations, including manufacturers, wholesalers, and retailers, that distributes goods or services to consumers. A distribution channel is the network of individuals and organizations involved in getting a product or service from the producer to the customer. Distribution channels are also known as marketing channels or marketing distribution channels.

An entrepreneur has a number of alternative channels available to him for distributing his products. These channels vary in the number and types of middlemen involved. Some channels are short as they directly link producers with customers. Whereas other channels are long and indirectly link the two through one or several middlemen.

In short, the distribution channel can be defined as ‘the path through which goods and services or payment for those goods or services travel from the vendor to the consumers’. Distribution channel can be as short as a direct transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as the followings:

• Wholesalers
• Distributors
• Agents and
• Retailers

Need for Selecting an Appropriate Channel of Distribution

It is a fact that the distribution channels are greatly required by the manufacturers. The need for selecting an appropriate channel can be understood on the basis of the parameters considered, which highlight the fact why distribution channels must be selected?

1. Attention

Little attention of companies to their distribution channels may damage results such as profit, brand, number of customers etc.

2. Imaginative distribution systems

Companies can use imaginative distribution systems to take competitive advantage. For example Dell, Flipkart.com etc. Dell is the best example of revolution in Distribution channel. Dell is selling its products directly to the consumer rather than through retailer.

3. Difficult to Replace

Companies can change their products, advertising and Pricing easily but not their distribution channels. It is not an easy task to change distribution channel, franchisees, dealers and retailers.

4. Value Addition

Distribution Channel Members can provide greater efficiency in making availability of goods to the target markets through their Contacts, Specialization, experience, and scale of operation. This can add value to the product or service at each level of distribution.

5. Reduced number of Channel Transactions

Marketing intermediaries or channel members help to reduce the number of channel transactions.

6. Information

Gathering and distributing information is very helpful.

7. Promotion

Communication to the consumer regarding product information and offers through advertising and promotion.

8. Financial support

Offering financial support for example Purchase on credit, exchange options, purchase using payment plans

9. Other

Financing, Physical Distribution and Risk Taking are other parameters that influence a channel selection decision Reduces Distribution cost and time.

Objectives of channels of distributions

The objectives of channels of distributions are discussed as follows:

1. Receiving Fast and Accurate Feedback of Information

In order to maintain and provide an efficient distribution system and service, a good and regular. How of relevant information is necessary, which includes inventory levels, sales trends, damage reports, service levels, cost monitoring etc.

2. Making the Product Readily Available to the Market Consumers

To ensuring the product is represented in the right type of outlet or retail store is an important objective of channels of distribution. Having identified the correct marketplace for the goods, the company must make certain that the appropriate physical distribution channel is selected to achieve this objective.

3. Achieving a given Level of Service

Once again, from both the supplier’s and the customer’s viewpoints, a specified level of service should be established, measured, and maintained. The customer normally sees this as crucial and relative performance in achieving service level requirements is often used to compare suppliers and may be the basis for subsequent buying decisions.

4. Enhancing the Prospect of Sales being Made

The most appropriate factors for each product or type of retail store will be reflected in the choice of channel. The general aims are to get good positions and displays in the store; and to gain the active support of the retail salesperson, if required. The product should be “visible, accessible, and attractively displayed’.

Channel choice is affected by this objective in a number of ways:

(i) Does the deliverer arrange the merchandise in the shop?

(ii) Are special displays being utilised?

(iii) Does the product required to be installed, demonstrated or explained?

(iv) Is there a special promotion of the product is required?

5. Minimising Logistics and Total Costs

Costs are very crucially significant as they are reflected in the final price of the product. The selected channel will reflect a certain cost and this cost must be assessed in relation to the type of product offered and the level of service required.

6. Achieving Co-Operation with Regard to any Relevant Distribution Factors

These factors can either be from the supplier’s or the receiver’s point of view and include minimum order sizes, unit load types, product handling characteristics, materials handling aids, delivery access (e.g., vehicle size), and delivery time constraints, etc.

Marketing is defined as the set of activities which are undertaken by the companies to provide satisfaction to the customers through value addition and making good relations with them, to increase their brand value. It identifies and converts needs into products and services, so as to satisfy their wants. There are two types of marketing namely, domestic and international marketing. Domestic marketing is when commercialization of goods and services are limited to the home country only.

On the other hand, International marketing, as the name suggests, is the type of marketing which is stretched across several countries in the world, i.e. the marketing of products and services is done globally.

Domestic Marketing

Domestic Marketing refers to the marketing activities employed on a national scale. Marketing strategies were undertaken to cater customers of a small area, generally within the local limits of a country. It serves and influences the customers of a specific country only.

Domestic Marketing enjoys a number of privileges like easy to access data, fewer communication barriers, deep knowledge about consumer demand, preferences and taste, knowledge about market trends, less competition, one set of economic, social & political issues, etc. However, due to the limited market size, the growth is also limited.

International Marketing

International Marketing is when the marketing practices are adopted to cater the global market. Normally, the companies start their business in the home country, after achieving the success they proceed their business to another level and become a transnational company, where they seek to enter in the market of several countries. So, the company must be known about the rules and regulations of that country.

International marketing enjoys no boundaries, keeping the focus on the worldwide customers. However, some disadvantages are also associated with it, like the challenges it faces on the path of expansion and globalisation. Some of which are socio-cultural differences, changes in foreign currency, language barriers, differences in buying habits of customers, setting and international price for the product and so on.

Differences between Domestic and International Marketing

The significant differences between domestic and international marketing are explained below:

1. The activities of production, promotion, advertising, distribution, selling and customer satisfaction within one’s own country is known as Domestic marketing. International marketing is when the marketing activities are undertaken at the international level.
2. Domestic marketing caters a small area, whereas International marketing covers a large area.
3. In domestic marketing, there is less government influence as compared to the international marketing because the company has to deal with rules and regulations of numerous countries.
4. In domestic marketing, business operations are done in one country only. On the other hand, in international marketing, the business operations conducted in multiple countries.
5. In international marketing, there is an advantage that the business organisation can have access to the latest technology of several countries which is absent in case domestic countries.
6. The risk involved and challenges in case of international marketing are very high due to some factors like socio-cultural differences, exchange rates, setting an international price for the product and so on. The risk factor and challenges are comparatively less in the case of domestic marketing.
7. International marketing requires huge capital investment, but domestic marketing requires less investment for acquiring resources.
8. In domestic marketing, the executives face less problem while dealing with the people because of similar nature. However, in the case of international marketing, it is quite difficult to deal with customers of different tastes, habits, preferences, segments, etc.
9. International marketing seeks deep research on the foreign market due to lack of familiarity, which is just opposite in the case of domestic marketing, where a small survey will prove helpful to know the market conditions.

Conclusion

After digging the differences in the two subjects, we came to the conclusion that the world itself is a market, and that is why the guiding principles are versatile. It does not make any change that where the principles are applied i.e. in a local or a global market. The basic cause of the difference between domestic and international marketing is the area of its implication and the market conditions.

Direct consumer selling

Direct consumer selling is the oldest way of selling the goods. Under this system, the goods are directly sold to the consumer by the manufacturer. Direct consumer selling is gaining immense popularity these days on account of high cost of distribution through the middlemen.

Large organizations adopt direct selling in order to reduce distribution costs because they have ample facilities to sell directly to consumers. A manufacturer can sell goods to the consumers by opening his own retail shop in mill’s premises or by mail house to house selling or by engaging salesmen or by employing mechanical devices.

Direct consumer selling may be undertaken in the following circumstances.

1. If the manufacturer’s plant is located near the majority of the customers, it would be easier to sell directly to them.
2. If the manufacturer is not satisfied with the services of established retailers or if the retailers refuse to stock his goods, he may sell directly to customers.
3. In case of new products, the manufacturer may like to introduce the same directly to the customers.
4. Articles of technical nature which require demonstration before sale and as such services before sale can be best provided by the manufacturer.
5. If the manufacturer wants to curtail retail prices of his products, he can resort to direct consumer selling by eliminating various middlemen.
6. If the article is produced in small quantity, it is better to sell direct without intermediaries.
7. A manufacturer with enough capital and in a position to undertake the various marketing functions on his own may employ his sales force or establish his retail stores to sell his product directly to the consumers.
8. Manufacturers of perishable & fashionable goods may sell directly to avoid physical deterioration or fashion obsolescence.
9. Manufacturers of products requiring after sales services may sell directly to consumers in order to maximise sales and giving maximum satisfaction to customers.

Organizational Selling

Organizational selling is the process of selling goods to companies and organizations instead of to individual consumers. The buyers in organizational selling transactions use their purchased to support ongoing operations or to resell to their own customer base.

When selling to an organization instead of an individual, you have to consider the group you are selling to, and their production needs that go beyond the buyer’s journey. Here are some considerations to help you understand and master organizational selling.

Difference between Consumer Selling and Organizational Selling

Both individuals and organizations need to purchase items to accomplish their daily tasks. There is a large difference, however, in how and why an organization purchases goods and services versus how an individual shops. Understanding these differences is important if you want to tap into both an organizational and a consumer market.

Why Goods are Purchased?

Organizations purchase goods to use in their ongoing operations and to resell to consumers, while consumers purchase goods for their personal use. Organizations also purchase more raw materials such as wood, steel and other items used in manufacturing than individuals who don’t have the tools or knowledge to put those raw materials to use as a product. Organizations generally purchase goods in larger volumes than individuals, and are driven by customer demand and need for manufacturing materials.

Consumers, on the other hand, are driven both by need and by want. It is possible to entice a consumer to purchase something he does not need through effective marketing or peer pressure, but it is much harder to entice an organization to buy an unnecessary product, especially when dealing with a purchasing department that is accountable for what it spends.

Buying Products in Bulk

Organizations often purchase in bulk, whereas consumers typically do not. For example, a consumer might buy three gallons of white paint to paint his house while an organization might need 3,000 gallons to paint shelving units for resale. The organizational market is thus more condensed it is possible to have a business succeed catering only to a small number of organizational clients while businesses that typically focus on consumers sell smaller quantities to more people.

That said, Costco and similar wholesale warehouse companies do successfully market low-price, high-quantity goods to individual consumers. These consumers tend to buy for small office spaces or family homes, however, rather than only for themselves.

Choices and Use

Consumers typically purchase goods for different reasons than organizations, and have more freedom in choosing the items they want. A consumer may purchase a chair so people can sit comfortably in his home. He will be able to choose any chair within his budget that he likes. An organization, on the other hand, may purchase a chair because an administrative assistant needs it to do his job.

The organization may be restricted in a chair purchase, not only by the budget set by a purchasing manager, but also by guidelines set by the Occupational Health and Safety Administration, and by company-wide guidelines on office furniture.

Marketing Strategy for Each

Reaching organizational clients requires explaining how your products and services will help their organization serve their clients and customers. It is a help them help others approach. However, to reach a consumer market, you have to show how your products enhance a consumer’s life in some way. whether it makes life easier or more enjoyable, or both.

Hard Selling

Hard sell strategies are aggressive and usually put a high amount of pressure on the client. The clerk who sold me the shovel is a simple example. Other tactics include cold calls, forceful sales letters, and unsolicited pitches. You’re there to sell, they know it, and you know it, there’s no gray area.

The main advantage of hard selling is that it gets straight to the point. This is especially important for clients who are ready to buy and aren’t looking around to do a few more meetings. The decision should be made now, and you want to step up and offer yourself as a part of their team.

The problem with the hard sell is that when it’s done too aggressively, your attempt to help will be seen as an annoyance. This plays a big role, especially if you’re working with small businesses that are savvy to such sales techniques. No matter how genuine your offer is, it might come off sounding like a scam.

Soft Selling

Soft selling focuses on the relationship-building aspect of sales. You don’t put psychological pressure on potential buyers. Instead, you find passive ways to show them that you have the solutions they need.

In online freelancing, this could be done through your blog, by providing a free ebook or white paper, or even by participating in online discussions. With all the available online tools for these, it’s no wonder that this tends to be the approach chosen by more tech-savvy freelancers.

A study released by New Century Media in October 2007 showed user buying behavior after being exposed to informational and educational resources that were actually soft selling efforts from businesses. According to the study, consumers were 30 percent more willing to buy a product through non-direct advertising rather than media advertising. Not only that, consumers exposed to this method of advertising were 97 percent more likely to tell their friends about it, and 95 percent more likely to repeat their experience with the business.

There is, however, such a thing as taking an approach that’s “too soft.” You might spend so much energy on updating your personal blog that you forget to use it as a platform for selling your services. Or you could be spending so much time Tweeting with your potential clients that you don’t make firm, actionable proposals that will bring you recurring revenue in exchange for your efforts. Being too gentle with your sales approach might also give clients the impression that you’re not too confident about your services, or that you’re just not interested in working with them.

Soft selling may work in some cases, but it doesn’t make sense to apply those tactics to all of your clients, regardless of where they are in their buying cycle and what services you’re trying to sell. Find out the conditions that make soft selling work and apply it there, but don’t waste your time and effort using these techniques exclusively.