Sales Structures, Marketing Strategies & Distribution Channels

Posted on Mar 30, 2025 in Business Administration and Management (BAM)

Sales Force Structures Compared

Geographic Structure

  • Strengths: Simplicity, Relatively low cost.
  • Weaknesses: Difficulty in selling a wide product range, Lower understanding of the complexities of buyer behavior, Poorer reporting of changes in the marketplace.

Product Specialization Structure

  • Strengths: Good knowledge of products, Selling skills, Greater attention given to new products, Eliminates competition between the selling of new and existing products.
  • Weaknesses: Rising travel costs, Relatively high cost.

Industry-Based Structure

  • Strengths: Good customer knowledge, Good for monitoring changes and trends within markets/industries.
  • Weaknesses: Very high cost of servicing key accounts.

Account-Size Structure

  • Strengths: Close working relationships, Improved communication and coordination, Better service, Higher sales, Provides career opportunities for salespeople, Reduces costs of servicing small accounts.
  • Weaknesses: Very high cost of servicing key accounts.

Consumer and Distributor Motivation Strategies

Pull Strategy

(“Pull” the consumer): The manufacturer or intermediary creates tactics to make the consumer go into the point of sale and buy.

Push Strategy

The manufacturer or intermediary “pushes” the channel using advertising, incentives, etc., to increase sales.

Vertical Marketing Systems (VMS)

Contractual VMS

Independent organizations at different levels of production and distribution who join together to obtain more economies or sales impact.

Franchise Systems

The most common type of contractual VMS.

Franchiser Role

Provides a brand name, marketing, start-up, and accounting assistance. Provides management know-how.

Advantages and Disadvantages

  • Advantages:
    • Franchiser: Secures fast expansion and distribution without assuming full costs.
    • Franchisee: Buys an established brand name, requires limited capital to start the business, reduction of costs and risks, gets instant expertise.
  • Disadvantages:
    • Franchiser: Gives up some control.
    • Franchisee: Can damage the brand name by not operating according to the right standards.

Distribution Channel Systems

Multi-channel Distribution

A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments. A variety of direct and indirect approaches are used to deliver the firm’s goods to its customers.

  • Advantages: Increase sales, Expand market coverage, Better opportunity to tailor products to different segments.
  • Disadvantages: Difficult to control, Can generate conflict among other intermediaries.

Omnichannel Distribution

Integration of “all” channels. Revolves around your customer and creates a single customer experience across your brand by unifying sales and marketing that accounts for the spillover between channels.

Understanding Channel Conflicts

Types of Conflicts

  • Horizontal: Generated between members of the same level in the channel. It is usually due to the natural process of competition between companies or even between retailers.
  • Vertical: The most frequent type; involves disagreements at different levels of the channel.
  • Multichannel: Today it is common for manufacturers to use two or more channels to reach a market. Conflict is often due to different pricing or margin policies.

Channel Power

The ability of a channel member to force another member to perform some commercial action or to close some agreement. The ability to influence.