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Manufacturers Reps
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Manufacturers Reps fill a different role than

Industrial Distributors.
They perform a much higher level of service.

They:
1. 2. 3. 4. 5.

Are more technically advanced Know their territory better Are able to sell professionally Are experienced in the industry Usually represent several companies

Manufacturers Reps
Used by small, medium and large firms.
Often, small and medium firms cannot support a

full time salesperson. Large firms use them to supplement their direct force for introducing new products to an area not covered by their sales force. The main reason for using Reps is because it is economically correct to do so. Little or no training costs, no benefits, no outrageous risks, and Reps are highly motivated vs. employees.
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 Product is not standardcloser to made-to-order Reps do not take title nor hold inventory Reps are normally paid commission, however deals can be made to be paid a monthly minimum Commission rates can range from 3%, 20% or more Gross margin is not large Relatively few customers or concentrated

geographically or concentrated in few industries

Customers order relatively infrequently and allow fairly long lead times
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Channel Administration Addresses:

1.

Selecting good channel participants and making sure that all tasks and obligations are assigned and understood.

2.

Motivating members to perform tasks necessary to achieve channel objectives.

Controlling inter-channel conflict. Controlling and evaluating performance.
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3. 4.

PARTNERSHIP

The channel is motivated by the understanding that the relationship is a partnership. Relationship Marketing demands: Trust Working together Open communication Support during good and bad times This relationship leads to meeting performance
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a.
b. c.

d.

Margins and commissions are the driving force to motivate this element of marketing. Margins and commissions must meet market norms. Companies and products that offer higher commissions and margins do get the attention over those that dont meet norms. Many companies ask the distributor to do more and those extra services need to be compensated for. Example: Market research.

Trust The Ultimate Compliment

Another way for trust to occur is for each member to make the system work and to reduce channel conflict. Techniques include: a. Joint decision making b. Joint goal setting c. Cooperative programs d. Arbitration committees to settle problems

Needs communication and trust. To manifest this:

1. Members

offer benefits and resources superior to what other partners could offer. 2. Corporate values are similar throughout the chain. 3. Members share information on expectations, markets and performance. 4. Members dont take advantage of each other.

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Competitive Advantage
By working together, business

marketers and their channel members can enjoy sustainable competitive advantage over their rivals and their networks.

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QUESTIONS For many years, critics have charged that intermediaries contribute strongly to the rising prices of goods in the economy. Would business marketers improve the level of efficiency and effectiveness in the channel by reducing as far as possible the number of intermediate links in the channel? Support your position. Describe why it might be necessary for a business-toBusiness firm to serve some customers through reps, some through distributors, others exclusively online, and still others through a direct sales force.

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Roughly 80 percent of Cisco Systems sales are generated on its Web site. Customers use a program that walks them through the task of configuring a networking system to fit their specific needs. Using the Web site, customers can also access online product seminars or educational sessions. Given these self-service capabilities, does a firm like Cisco need a sales force or dealers and distributors? Explain. Describe specific product, market, and competitive conditions that lend themselves to: (a) a direct channel of distribution and (b) an indirect channel of distribution.

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