Find solutions to sales problems

"Once again you guys failed to complete the plan... Disbanded, what a lazy bunch!". During the business process, surely many people in leadership positions have had this thought. Let's reflect to see if all employees are at fault when the company is not effective in sales. row? Reality has shown that things are not like that at all. It can be affirmed that the fault of the sales department in selling the product is actually much less than what people often blame it on. That sales job is just a mirror reflecting the overall working status of the organization. Let's try to reflect on the words of the ancients: "Don't blame the person in the mirror..." So why do we blame, if... In some cases, the company's problem is specifically called the weakness of the sales department? row. Some people will immediately analyze the "frame of reference" of the famous "marketing mix" strategy. The classic "4P" marketing - mix strategy will now be converted to "6P": Product, Place, Price, Promotion, People and Processes. (Procedure). In this section, we will look at the Distribution factor (Place) - a factor closely related to the work of the sales department. From this aspect, its unique characteristics depend entirely on the company's business strategy, but from another aspect, it directly affects the formation and development of the strategy. Distribution (Place) This factor directly reflects the effectiveness of the sales department's activities, whose main job is to provide products to customers who want to buy them on time and in the required quantity. We will study the main factors affecting the performance of the sales department from the perspective of the "frame of reference" of the marketing mix. Distribution channel Accurately determining distribution channels and the relationships between them is part of the company's business strategy and is the responsibility of sales leaders. The concept of a distribution channel is understood as a set of elements of a goods circulation chain, connected by common signs and ensuring the supply of goods to a certain market segment. There are a number of distribution channels such as: retail networks, market sales points, online shopping, home delivery services, etc. It is necessary to distinguish between direct sales and indirect sales. Direct selling is selling directly to the final consumer (for example, door-to-door delivery or MLM (multi-level marketing - a form of network marketing that represents the business model of some companies such as Herbalife, Avon, Faberlic, Oriflame, etc.), or retail store form (retail business network). Indirect sales (through many levels) require the presence of intermediary distributors, the number of levels is determined by the business strategy on the basis of the marketing concept. Most companies operating in the field of consumer goods (FMCG) choose an indirect sales scheme ranges from exclusive distribution to extended distribution. Exclusive distribution uses only one partner in a specific area and for a certain period of time. This form of cooperation is often used in the car trade or high-quality goods, such as high-end cosmetics, perfumes, expensive clothes and alcohol, etc. However, exclusive distribution rights are still present in the consumer goods market. In many cases, partners of this type are limited in their right to sell other manufacturers' goods that are not competing goods. Sometimes, exclusive distribution is used to bring goods into the market. a specific market. For example, in Russia, cigarette manufacturer British American Tobacco (BAT) attacked the Ho-Re-Ca (Hotel–Restaurant–Café) market segment with exclusive contracts with large companies operating in the hotel, restaurant, and coffee sectors such as Elki-Palki, Rostik Group or Vogue Café and that allowed this company to successfully penetrate the market that Philip Morris previously dominated. The problems that the sales department may encounter when choosing this form of distribution are associated with the limited resources (first of all financial resources) of the intermediary organization. Often the distributor's capabilities (e.g. logistics situation, market presence, location of business, impact on end consumers, retail outlets, quality and quantity) number of sales representatives as well as selection strategy) are overestimated, which leads to a reduction in the presence of goods in the store in terms of quantity and quality or supply interruptions, on the other hand, leading to to the ability to "soak in capital" due to customers' debt (it is not simple to get sales from a single customer - an individual/unit capable of fully ensuring the circulation of goods and presence of the goods on the market). With the aim of minimizing costs, a large-scale manufacturing company selected an intermediate goods distribution organization and allowed it the exclusive right to distribute a famous brand of toothpaste. Despite continuous advertising support from the manufacturer, the establishment of “specialized departments” as well as the active help of the sales department, the presence of goods at the counter began to continues to decline, the quality of products and services at the point of sale declines, and problems with logistics arise, and the debts owed to customers increase. . The strategy of using a single distributor to fill a large country's retail market with fast-moving, high-selling products proved ineffective and demonstrated the company's lack of vision. long-term. As a result, the manufacturing company lost its leading position in the market and was subsequently forced to abandon the idea of exclusive distribution, switching to an expanded distribution system with many participating units. Often, a special management group is established within the exclusive distribution company's structure to focus its efforts on selling a particular product (such a group is called an "independent" or "independent" group). “monopoly” group or a specialized functional department). Although there are obvious advantages (such as cost savings, ease of operation, close relationships with distributors), this way of working still contains a potential threat, first of all related to to financial risk and strategic risk (business dependence on a partner, which in turn affects the presence of goods and therefore the company's position in the market, making limiting business development leverage, etc.). Selective distribution is understood as the selection of certain individuals/intermediaries and/or retail stores with the maximum combination of product or service marketing concepts. When entering the Russian market, the Vichy brand was deployed in only one way: through pharmacies, which are not traditional channels for selling cosmetic products. The concept of the product, its premium status, accompanying promotional information materials... are necessary and sufficient factors suitable for this type of distribution. The selection of retail points on the pharmaceutical market according to the content of this distribution channel allows to create the image of a quality product that has both medicinal and cosmetic effects and is obvious. occupies the leading position in its segment. Expanded distribution – Using a large number of intermediary distributors also presents some disadvantages due to fierce competition. And if there is bias or priority for a certain group of distributors, conflicts will inevitably arise. Another important point is the suitability of the chosen distribution channel with the product marketing perspective. OLAY ice cream (P&G) is a fairly expensive product, originally belonging to a widely demanded product group, that has been repositioned by the company as a premium product with packaging consistent with a high price strategy and campaign. big marketing. According to this method, in the first few months, the product is brought to the market exclusively through a famous cosmetics trading network. At the store, the company arranged high-tech equipment to access specialized information, had consultants working regularly, etc. This created the image of a luxury product that later Can be included in large-scale distribution channels. The success of P&G's solution becomes clearer if we remember that, a few years ago, the company conducted an unsuccessful test to bring this product to market. The cause of business failure is often due to incompatibility in the selection of sales channels with the product marketing concept, incorrect channel selection, or a combination of these conditions. A few years ago, a large company launched a makeup product using mass distribution, that is, supplying a wide network of retail stores. However, the makeup business requires adherence to a defined pricing model, ensuring the store is supplied with the necessary equipment, and some other approaches to sales. Using large-scale distribution to sell in this way has proven ineffective. The project failed due to a mismatch between the product and the distribution channel. After that, this company abandoned large-scale distribution and sought the help of an exclusive distributor. The operation of multi-level marketing systems with other sales channels is often associated with complexity. This type of system requires detailed business operating conditions for each sales channel and a clear understanding of the business strategy. Mistakes can lead to fierce competition between distributors (e.g. nationally and regionally) or between intermediary distributors and product manufacturers, and, moreover, between distributors and product manufacturers. production is not always the winner… if we speak honestly about success in a price war, it is clear that there are no winners. How many distributors are needed to work effectively? In 2005, Japan Tobacco International cut the number of dealers from 80 to 11; British American Tobacco partners with a number of distributors specializing in direct sales. Volkswagen plans to expand its dealer network in Russia from 45 to 110 locations, Audi works with about 30 central dealers, but Toyota prefers to have at least two dealers in each region in the belief that this allowing it to maintain independence from its business partners. Regulating the number of direct customers often leads to conflicts with distributors. The sales department needs to implement the approved process most carefully. There is no general recommendation on the optimal number of distributors or levels in a complex sales system. Perhaps the quantity needs to be minimized to achieve the greatest coverage in terms of quantity and quality of retail outlets in an area, or to serve customers in the most quality and competitive way (in case of service provision). Now determining the choice of the type of distribution indicates the type of product (service), its properties, marketing perspective, as well as the current market situation and competitive situation. Business strategy is part of the company's overall development plan. For organizations working in the FMCG industry, the transition to a direct retail network has recently become mandatory in the competitive battle for the market. At the same time, the development of the store network also becomes a risk to the very existence of traditional retail methods. It is no coincidence that the proportion of traditional stores from 2003 to 2004 decreased from 75% to 67%, while the percentage of modern sales points (modern trade) increased from 8% in 2003 to 23.8%. in 2005. According to forecasts, the proportion of modern stores in 2010 is about 44 to 61%. Obviously, the nature and parameters of distributors will change under the influence of these factors. Choice of distributors After determining the business strategy and sales channels, we now need to choose a partner. At this stage, difficulties may also appear that lead to failure. The wrong choice of intermediary distributor, even if only due to one of the criteria listed below, can bring damage to the market position of not only a company. In finding a distributor, it is necessary to rely on the following criteria: 1. Capacity: sales volume and growth rate, market share and proportion (number of buyers, their structure, ratio of wholesale and retail levels), market share of target customer groups (manufacturers interest), current state of sales structure (number of sales representatives, including those selling at list prices, their efficiency), penetration into regional markets (number of branches, their locations, market shares of key customers in the local market), etc 2. Logistics indicators: Warehouse area and condition, including locality, storage volume, transportation characteristics, supply cycle, and damaged inventory index. This parameter becomes increasingly important in situations where when market conditions change, distributors begin to reposition themselves as logistics suppliers, although in reality their functions are broader. much. 3. Current status of financial indicators: value and fluctuation of debt, inventory turnover; solvency; working capital needs; terms for buyers. 4. Image. This important indicator is often overlooked, even though the intermediary's image is part of their sales brand. In the example mentioned above, people use the cosmetics retail network as a product distribution channel that views OLAY as a high-end product. Imagine if these cream boxes were sold in the market next to laundry detergent and shampoo? It is truly unimaginable if in fact this happened (with other goods, the same is true)! The issue of the appropriateness of presenting the image and reputation of the manufacturer and intermediary distributors is very important for implementing the sales plan. The selection of intermediary distributors is a core element of marketing policies. In the 90s of the twentieth century, the KAMAZ truck factory supplied dealers in Poland with a batch of products. The Polish agent immediately resold it to Korea for twice the purchase price. After just a few minor tweaks, the Koreans immediately sold it to Latin America at a price more than one and a half times the purchase price from Poland. As a result, just because KAMAZ chose the wrong intermediary distributor did not achieve at least three-quarters of its profits. Customer database The set of problems that can arise from sales department errors is not limited by the choice of sales channels and specific distributors. An equally important issue is the presence of a common customer database of the company and intermediary distributors. Do you know who you're really working with? This problem is not so simple. Successful cooperation starts with the creation of a common database. Frequently encountered problems during this stage are related to the following factors: 1. The company completely relies on distributors to use their customer database, then the manufacturer is not interested in distributing the product, they are only interested in completing the plan sales and achieve growth. A company of this type operates almost blindly, and the complexities of sales wait for no one. Not having a database is the source of inevitable problems. 2. The existing database is within the framework of customers who buy products directly. This is just the beginning of the goods circulation chain! When the next path of the goods is not known, when it is not possible to check and control (even just track) them, the company will not be in a position to ensure competitiveness for all branches of the chain. . For companies operating, for example, in the consumer goods market, information about retail locations is more important than data about direct distributors. 3. Limit information about customers. Usually information included in the company's customer base, within the limits of official information (address, phone number, full name of sales representatives, total sales volume, in the best case is to obtain additional sales fluctuations during the year, a description of general activity). The practical value of this information source is the least, the database needs the most information about the partner (see above). 4. The company's database is divided among sales staff; Each of them has its “customers”. Even though there is a clear danger of losing customers when employees quit (this happens often and closely!), sales service managers continue to make this mistake. 5. Lack of regular updating of information into the database. Many companies still process information from audit results performed three or four years ago, even though the situation in the market has long changed. As is known, the proportion of modern commercial retail stores has increased from 8% in 2003 to 23.8% in 2005. The database is from three years ago, does not reflect the actual situation, using Using them or, worse yet, relying on them to establish a business strategy is reminiscent of driving a fast car while looking in the rearview mirror. In this section, we have considered the main issues of building a consumption circulation network as a necessary tool to move goods to large-scale distribution. However, building sales channels, choosing partners and building a distribution system is only a small part of a business strategy; other important factors are research and response to customer needs. business environment. Share on CyVee