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Chapter 11
Sales, Distribution, and Customer Relationship
Management
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
McGraw-Hill/IrwinIntroduction to Business
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Learning Objectives
1. Understand the relationship between marketing, distribution, sales, and personal selling.
2. Discuss the main distribution channels a company can use to reach customers and the factors that determine distribution channel choices.
3. Differentiate between different approaches to personal selling and explain why the nature of a company’s products determines the selling approach.
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Learning Objectives
4. Outline the major issues and problems that arise during each stage of the personal selling process.
5. Explain how customer relationship management can improve the profitability of the sales and distribution process.
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Distribution and the Sale of Products to Customers
• Distribution - 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
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Types of Distribution Channels
• Company-owned or licensed distributors• Wholesalers• Retailers• Direct distribution
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The Four Main Product Distribution Channels
Figure 11.1
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Sales and Distribution Activities Involved in Managing the Upstream Value Chain
Figure 11.2
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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
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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
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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
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Question?
What are intermediaries who sell other companies’ products to the final customer?
A. WholesalersB. RetailersC. DistributorsD. Merchants
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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
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Wholesalers
• Final customer - the person who actually uses or consumes a product
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Retailers
• Retailers - intermediaries who sell other companies’
products to the final customer
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Direct Distribution
• Direct distribution - distribution channels used to deliver and
sell products directly to the final customer
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The Distribution Mix and How It’s Chosen
• Distribution mix - the combination of channels a company
selects to place, promote, sell, and deliver its products to customers
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Factors Affecting the Choice of Distribution Mix
• Product characteristics• The importance of the purchase to the final customer
• The need to customize a product
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Product Characteristics
• Complex products - products with qualities and characteristics
that make them difficult for customers to evaluate
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Factors Affecting the Distribution Mix
Figure 11.3
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The Choice of Distribution Mix
Figure 11.4
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Approaches to Selling Complex Products
Figure 11.5
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Selling Complex Products
• Technical selling - selling that requires a company’s sales
representatives to impart detailed technical information to their customers
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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
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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
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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
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Approaches to Selling Standardized Products
Figure 11.6
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Selling Standardized Products
• Trade selling• Retail selling• Telemarketing
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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
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Selling Standardized Products
• Telemarketing - a sales method used to contact prospective
customers exclusively by phone
Find out how to use telemarketing at Telemarketing.com
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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
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Question?
What are potential customers for the goods and services a salesperson is offering?
A. PatronsB. SponsorsC. ConsumersD. Prospects
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Prospecting for Customers
• Prospects - potential customers for the goods and services a salesperson is offering
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Making the Initial Contact
• Cold calls - the first contact a salesperson has with a
customer, either by e-mail, phone, or in person
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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
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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
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Components or Modules of a CRM System
Figure 11.8
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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?
