Consumer Communication process

Consumer communication and persuasion is an essential part of any Marketing

Strategy. In fact, it is the starting point of all improvement as consumer voices provide
companies with the data such as where they are lacking and what all they could do to improve
the product or service.

Do all companies listen to the consumer voices? Not really. It is only the ones which have an
effective consumer communication process in place, that are really able to focus on consumer
needs. Are you one of them? Let us take a look at the consumer communication process at
Suntory to understand the Consumer Communication Process.

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This company has set up a Customer Centre which takes up all inquiries, complaints, and
proposals from customers. Though most of the queries are answered, the customer voices are
sent across to related departments of the company. These departments analyze the gap between
the customer needs and the products and services. After doing so, the quality improvements are
suggested and the product development takes place in keeping with the customer demands.

Consumer communication should be used effectively to drive maximum benefits to the

company. You must be thinking how. Let us look at few ways which will help you market
effectively even in a downturn.

1. When economy is changing, it is all the more important to get the customer
feedback. It is not a good idea to fill their inboxes and mobiles with
promotional messages. More so, you can use online surveys to understand how
they are thinking and what they want. You can then make changes in your
strategies, processes and so on to deliver the product that your consumers are
aiming for.
2. It is just not important to feed information to your consumers. Having a
dialogue with them from time to time is also important. You can use the email
marketing newsletters to invite them for such conversations. Apart from
understanding their concerns, showing your consumers that you care is also
very important. This will have far-reaching consequence and will benefit your
company’s image.
3. Try and co-host an event with another local business. This will highlight your
product’s image in a positive manner. This is a kind of customer relationship
building activity where you interact face-to-face with the consumer and show
him your expertise.
4. Consumers are becoming more and more environmentally aware these days.
Anything against the environment would put you in a bad light. So focus that
your product or service is following all the environment friendly standards.
 You can also show your concern by teaming up with local charity and
involving your consumers in the event too.

The above points can also be used for consumer persuasion too. Face-to-face meetings are more
effective in persuading people to buy your stuff. People can judge easily whether what you are
saying has substance or not. Therefore, try your level best to portray the positive image of your
product in a positive fashion. Once you learn the essence of consumer communication, you
would never have to look back.

Elements of the Communications Process

 The Message Initiator (the Source)

 The Sender
 The Receiver
 The Medium
 The Message
 The Target Audience (the Receivers)
 Feedback – the Receiver’s Response
 Medium can be:
 Impersonal (mass media)
 Interpersonal (with salesperson or a friend)
 Interactive (direct feedback possibility exists)

Marketing communications is essentially a part of the marketing mix. Promotion is what

marketing communications is all about.

Marketing communication aims at conveying a firm’s message as effectively and accurately as

possible.

The process is as follows: Sender, Encoding, Transfer Mechanism, Feedback, Response and
Decoding.

 Source: A source is also referred to as a sender. The sender has a message to

convey to others. The sender can be anyone from a brand manager (in a major
corporation such as Nike or Budweiser) to a salesperson in a smaller
organization. At times, celebrities are used to endorse products and act as a
sender for the product. It is always important to make sure that the source is
credible and trustworthy.
 A direct source can be a salesperson delivering a message about a product.
 An indirect source uses a well known public figure to draw attention to a
product.
  Encode: The source encodes or translates ideas into a message. For example, a
brand manager decides to promote a new product.
 Message: After defining the target market, the marketer designs an effective
message that will achieve the communication objectives.
 Receiver: The receiver is the person or group with whom the sender attempts
to share ideas. Marketers want a response, the reactions of the receiver, after
being exposed to the message: for example, a consumer receiving the message
about the new product.
 Decode: The receiver decodes or interprets the message. For a message to be
decoded by a receiver the way it was intended by the sender, the sender and
receiver need to have common experiences. In other words, a receiver may not
decode a message the way it was intended to if her background and experience
differ greatly from the sender’s. A marketer has to be sensitive to the intended
audience.
 Noise: Noise interferes with or disrupts effective communication. This can
include a poor television or radio signal.
 Feedback: Feedback is monitoring and evaluating how accurately the intended
message is being received. This can be done by conducting market research.
Essentially, this involves asking consumers if they have seen the message, if
they recall the message, and what their attitude was towards the product.

Brand expression
Branding has many functions that go beyond its most basic requirement of identification
of a product. Branding, when done well, frames what consumers can expect from a
product and can become an important part of the proposition itself. While creating a
brand experience independent of the product is not always the goal of marketing,
creating distinctive brand positioning is needed.

 Coke stands for Happiness

 Apple stands for Creativity
 Harley-Davidson stands for Freedom
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How your brand expresses itself from its name, logo, corporate ID, packaging design
and copy, web design and copy all the annoying rules that fill its style guide is the most
tangible manifestation of your brand’s essence; intimations before purchase of the
brand’s soul, validation and reminder of its promise after trial.

No matter what industry, changing the culture is hard, lonesome, demanding work. But
in our experience, most higher education brands don’t need to change their culture as
much as they need to capture it and create a consistent “Brand Experience.”
Brand as motivational tool

The roar of the dotcom revolution, reduced to the whimper of de-listed penny stocks,
left behind at least one important legacy. It changed forever the employer/employee
dynamic.

Maybe it’s not as easy as it was to quit on Friday and find a better job by Monday, but
the revolving door of employee turnover hasn’t slowed dramatically.

Employers need to earn the loyalty of their employees. Employees need to be reminded
why they should get up and go to work. Off-site vision quests, benefits and perks only
go so far.

Brand design extends your ad budget

If you’ve got an unlimited ad budget, skip this section. The rest of you, trying to
squeeze every ounce of value from each hard-fought penny, listen up.

In this world of fractured media the number (and cost) of messages needed to hit your
target between the eyes increases every season. Consumers are multitasking and
zoning out from ad saturation (or digitally avoid your messages entirely). But these
same consumers are meeting your brand face-to-face on shelf or online.

Brand design protects turf

The current cycle of innovation is constant. The time you can afford to rest on the
laurels of product superiority is shorter than a pit stop. Today’s improvement is
tomorrow’s price of entry. No wonder companies are becoming addicted to the heroin
of R&D, minute “product improvements” and promotions. Again, brand design can help.

Your consumers’ connection with your brand results from its behaviour over time. But
the connection is sustained at the level of look, feel and voice. If your consumers know
most of the brands in the category are alike, what criteria do they have left with which
to make their choice?

We’ve all stayed with brands we suspect have lost their original claim to superiority
because of an emotional connection. Their “voice” speaks to us. Or, they make up for
their deficits (or parity) with a great personality. We like them more.

Brand design or voice can’t cover up for product flaws. Bill Bernbach said: “Nothing is
worse for a bad product than good advertising.” But investment in brilliant brand design
can provide as much insulation against encroaching competition as investment in
product improvement R&D.

Strategies:

 Discover an ideal in one of five fields of fundamental human values.

 Build your culture around your ideal.
 Communicate your ideal to engage employees and customers.
 Deliver a near-ideal customer experience.
 Evaluate your progress and people against your ideal.

Role of Communication Mix in Marketing

Communicating your company’s brand positioning and delivering it to the target audience is the
foundation of the organization’s marketing strategy. Designing the right marketing mix involves
the four P’s i.e. Product, Price, Place and Promotion. If you are in the field of marketing
communications, then you must coordinate your efforts towards the last P of the marketing mix –
Promotion. You need to develop strong sales and advertising messages that will connect with
your customers instantly and effectively highlight your product’s quality and differentiation from
other brands. Remember, while creating your promotional mix, you should ensure that you can
deliver your promises and are able to create a believable position in the market. Company
reputation is built over years but it just takes seconds to lose it because of unethical promotions
or inability to deliver to your customers. Therefore, promotions are as important as your product
or service quality, pricing and other offerings. Creating an effective marketing communication
mix through a well-researched strategy will not only help your reach out to your customers but
also help you adapt to the ever-changing marketing environment.

1. Identifying target audience

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If you don’t know who your audience is, you can’t decide on what to communicate, how to
communicate, when, where and who will communicate the company’s message. Therefore, the
first step to building a marketing communication mix is to identify your target audience.

2. Determine Communication Objectives

Companies must find out at what stage of buyer-readiness their consumers are presently in. The
six stages that consumers normally go through before buying a product are – awareness,
knowledge, liking, preference, conviction and purchase. For more insights on creating the right
marketing communications mix, skip right ahead to this course on effectively managing your
digital Marketing Campaign. You must design your communication mix so as to address all
these aspects as well as the organization’s objectives in delivering the message and moving the
target audience towards a favorable stage.
 3. Delivering the Message

Your promotional messages must not only be catchy and hold the consumers’ attention but also
compel them to like your product and make a purchase. Putting the message content together and
choosing the appropriate communication media either through personal or non-personal channels
is an important part of delivering the right message at the right time.

4. Setting up Promotional Budget

While there are innumerable ways to attract the customers, you need find out how much you can
spend on promotions. Budgeting based on the target consumers and industry requirements is key
to achieving promotional success.

5. Creating a Promotion Mix

Different companies have different marketing strategies wherein they use several promotional
tools like advertising, direct marketing, personal selling or online marketing etc. Each tool has its
own advantage and costs involved; therefore it is important for you to choose the right marketing
communications mix also called as promotion mix.

Customer acquisition process

Customer acquisition is the process of acquiring new customers for business or
converting existing prospect into new customers. The importance of customer
acquisition varies according to the specific business situation of an organization. This
process is specifically concerned with issues like acquiring customers at less cost,
acquiring as many customers as possible, acquiring customers who are indigenous and
business oriented, acquiring customers who utilize newer business channels etc. The
whole process should concentrate on following considerations:

 Primarily it is important to determine and focus on psychology of

customers, like how the customers feel and think and then selecting the
product segment to be presented to them.
 Concentrating on how the customers are influenced by the surrounding
environment like the business culture, technology, media etc.
 Analysis of customer behavior and tendency while buying specific range
of product.
 Studying the customer’s limitation of knowledge processing power
which influence the decision making power.
 Finally it’s very important to engage best strategies for effectively
convincing new customers and improving marketing campaigns.
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Customer acquisition techniques change with technological changes. There is always a
need to optimize and upgrade the traditional ways of marketing channels available.
Exploring new methods to entertain customers is important to remain in competition
and have high acquisition rate.

It allows the business to:

 Cover the cost of its expenses, including the cost of labor.

 Increase its profits over time.
 Reinvest in its own growth.
 Show evidence of growth to partners, investors, influencers and other
outside parties.

Acquiring a customer depends on how effectively the organization is able to build a

comprehensive relationship with that customer. When suppliers have healthy
relationship with customers, the revenue of the organization always increases as
customers tend to buy more and more. There is possibility that a satisfied customer
seek to buy special category of related products apart from the regular ones from that
particular supplier. For instance if a satisfied and loyal customer has a home insurance
policy from an insurance company then there are positive chances that he could also
insure his property and car if he is fully satisfied with the services of that insurance
company. This will definitely result in growth of business.

While acquiring, the nature of response provided to acquisition is the key aspect to
create an impressive opinion in customer’s mindset. Hence, the suppliers should always
have prompt, responsive and experienced executives to serve customers. For example,
if a customer calls and asks about some critical features of any product and the
executive fails to explain it or being non-responsive to most of his questions then the
customer could probably divert his way to some other organization for better response
which could definitely result in end of the deal and relationship with that customer.

Improving customer acquisition is the primary challenge which an organization faces.

Hence it is important to identify critical approaches to enhance customer acquisition
power. This includes acquiring more number of customers or more number of attractive
customers at low cost. One of the best strategies to acquire new customers is
performing promotional campaigns. These campaigns should be efficient and well
targeted to customers. Encouragement of customer referrals can also attract new
customers. It is always a cost-free advocacy by customers to provide referrals to
supplier when they feel satisfied and encouraged and when they have a healthy
relationship with customers. These referrals or customer’s reference of other customers
act like a piece of cake for suppliers as there is no cost and struggle involved in this.
Process:

Identify the target customers

The first step in the customer acquisition process is to identify your target audience, the
people who are most likely to purchase your products and services. Unless the product
or service your business sells meets a universal need, the best way to promote your
products and grow your business is by identifying one or two of the best market
segments for your business.

Identify where your target audience is

To enhance your customer acquisition process, you need to know where to find your
customers both online and offline. Once you identify the places your target audience
frequents, you can then develop strategies to target them there. As an example, if your
ideal audience frequents a particular social media site, you may want to consider
advertising there.

If you’re unsure where your target audience spends time, consider polling your existing
audience. You could also reach out to potential customers individually to learn more
about them, their interests and what sites they spend the majority of their time on.

Start a blog

Blogging on your website is a highly effective customer acquisition method that allows
you to discuss different topics, demonstrate how much you know about the industry
and establish yourself as a source of authority. It also allows you to regularly engage
your audience, providing them with a resource they can go to for information related to
your niche. You could write for the blog yourself, task a member of your team with
doing the writing or outsource to a freelancer.

Create video content

Video content is very popular online, which is why you should consider creating videos
as part of your customer acquisition strategy. Create a mixture of educational and
entertaining videos. Your educational videos should provide your target audience with
valuable information about your industry, topics that are relevant to your industry and
your products and services. Your other video content should focus on entertaining and
engaging your target audience online.

Optimize your website for the search engines

Search marketing is also another important strategy that you should prioritize. Also
referred to as search engine optimization (SEO), this strategy involves modifying your
content to increase the likelihood that it will rank in the search engines. While this
strategy takes longer to grow than some of the others, once you optimize your content,
you can see a steady flow of clients into the business.

Build an email list

Email marketing is an effective way to maintain contact with customers as well as

potential buyers who have expressed interest in your products and services. As you
email your list, it’s important to monitor the behavior of your subscribers. For example,
take note of the links that your subscribers are clicking on within your emails.

Also, pay attention to the emails that have the highest open rates or unsubscribe rates.
This information can help you create better content that your audience is interested in,
which can help you to increase customer acquisition and conversions.

Produce quality content frequently

Another effective customer acquisition strategy is to establish yourself as a trustworthy

source of information in your industry or niche. One way you can accomplish this is by
creating high-quality, useful content on a regular basis. Many companies use social
media, blogs or even email newsletters to establish themselves as a reliable source of
information and build trust for their brand.

Create gated content

Gated content is a different type of content marketing strategy that typically involves
creating an in-depth and highly valuable piece of content that potential customers can
access in exchange for personal information like their name and email address.
Relevant, gated content is an important part of a customer acquisition strategy since it
can help you grow your email list and generate more leads and, ultimately, sales.

Create a referral strategy

Referrals are a great way to increase the profitability of your business while keeping
marketing costs low. For this reason, a referral program is a powerful method for
acquiring new customers. The easiest way to encourage customers to refer your
products and services to your family and friends is by offering some kind of incentive.
Many businesses, for example, offer extra features or discounts to customers who
successfully refer other people to their products and services.
Track your customer acquisition

Once you have different types of content in place, it’s important to monitor incoming
leads to identify the acquisition channels for your new customers. Monitoring will make
it possible for you to determine which channels are most effective for generating quality
customers. It also helps you monitor word-of-mouth referrals and determine whether
the feedback from customers is positive. This can guide your company decision-making
to ensure any word-of-mouth referrals you receive are positive.

Developing Effective Communication

All marketing communications or advertising for your small business, whether delivered in
person, through promotions, or via traditional media, direct mail, or e-mail, need to accomplish
the same tasks:

 Impart information the prospect wants to know.

 Grab attention.
 Present offers that are sensitive to how and when the prospect wants to take
action.
 Affirm why the prospect would want to take action.
 Offer a reason to take action.
 Launch a relationship, which increasingly means fostering interaction and two-
way communication between you and your customer.
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1) Identifying the Target Audience:

Even for the same product, the target audience may be different in different countries. For
example, certain consumer durables, which are used even by the low-income groups in the
advanced countries, may be used only by high-income groups in the developing countries. In
several cases the need satisfaction by the product varies between markets.

 Who marketers target will dictate?

 What is to say or convey?
 How it should be say?
 When it should be say?
 And where it should be say?

2) Determining Communication Objectives:

The communication objectives may also be different in some cases. For example, when the
product is in the introduction stages in a market, the emphasis of communication could be on
consumer education and creation of primary demand. In a market where the product is at other
stages of the life cycle, the communication objectives would be different.

3) Determining the Message:

The decisions regarding the message content, message structure, message format and message
source are influenced by certain environmental factors like cultural factors and legal factors. The
differences in the environmental factors among the countries may, therefore, call for different
messages so as to be appropriate for each market. In this stage companies need to focus on:

 Message Content
 Message Structure and
 Message Format

4) Budget Decisions:

The size of the total promotional expenditure and the apportioning of this amount to the different
elements of the promotion mix are very important but difficult decisions.

5) Communication Tools / Mix Decisions:

The promotion decisions faced by export marketing management can be reduced to the
following:

i) What messages?

ii) What communications media?

iii) How much effort or money to spend?

6) Feedback of communication Strategy

After all, above steps and implementing the communication strategy then companies need to get
feedback and response from targeted audience. Monitoring and feedback provide a continuous
improvement process. So marketers should regularly measure and monitor the effectiveness of
marketing communication strategy and make changes as needed.

Functions and Responsibilities of Sales Person

A salesperson is an important sales management position maintaining vital link between an
enterprise and customers, society, distributors, retailers and others. Nature of roles played by a
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(i) Diagnostic

This involves a salesperson probing and finding the cause of a problem, i.e., why a customer
often changes a brand or why a customer is loyal to a particular brand.

(ii) Analyst

A salesperson analyses customer needs and market trends and identify the linkages.

Example:

A farmer prefers a motorcycle compared to a scooter, so marketer must segment rural middle
class for various types of motorcycles.

(iii) Information Provider

A salesperson is also an intelligent agent. He keeps the management informed of any significant
development in his territory, i.e., any strategic change of competitor etc.

(iv) Strategist

A salesperson being in the forefront of sales organization can command on time and route plans
of sales organization.

For Example:

A salesperson may at time make the announcement of a price change in his territory in such a
way that it will give him maximum benefit. Likewise, evolving a strategy to sell to an aggressive
customer is the role of a salesperson.

(v) Tactician

He is a tactician in the sense that he (or she) evolves tactics to win over the customer or enhance
distribution/retailer satisfaction. A tactic is a short-term action plan and is part of a strategy,
which is a long-term concept.

(vi) Change Agent

A salesperson acts as a Change Agent in his territory. For it is he who introduces new product
ideas and influences the life styles and consumption pattern by making new products and
services available in the territory and influencing opinion of manager to accept and recommend
the same to other salesperson.
Thus, the modern society owes a lot to salespersons, for it is they who help upgrade life style and
quality of living. The Selling process or The Selling Theories on which the salespersons depend
are Stimulus- Response Theory, Product Oriented Selling and Need-Satisfaction Theory.

Other Functions Performed by a Sales Person

(a) Line functions

i. Achieves volume of sales

ii. Responsible for enhancing market share

iii. Responsible for profitability of the organization

iv. Attends to customer service.

(b) Staff functions

i. Provides assistance for ware housing In charge

ii. Provides assistance for Transport Department

iii. Provides assistance to Production Department regarding Product knowledge and knowledge
about specific customers.

(c) Line and staff functions

i. Helps General Sales Manager with sales fore-cost, market information and information about
competitors

ii. Helps Corporate Management in respect of product development, Diversification and

information about market and competitors.

Responsibilities of Sales Person

The duties and responsibilities of a salesman differ from one business to another depending upon
the nature of the business, the size of the business, the type of selling job, the sales policies of the
concern, etc. However, there are certain duties and responsibilities which are common to all
types of business.

Responsibilities of a Salesman
 1. Selling

The fundamental duty of a salesman is selling. This duty includes meeting the prospects,
presenting and demonstrating the products, inducing the prospects to buy, taking orders and
effecting sales.

2. Guiding the buyers

A salesman should guide the buyers in buying the goods they want.

3. Attending to complaints

A salesman should attend to the complaints of the customers immediately and try to settle their
grievances quickly and sincerely.

4. Collection of bills

Sometimes, a salesman may be required to collect the outstanding bills relating to the goods sold
by him. In such a case, he has to collect the bills and remit the amount to his firm.

5. Collection of credit information

A salesman may, sometimes, be required to collect information about the credit-worthiness of

the customers. In such a case, he has to collect detailed information and submit it to his firm in
time.

6. Reporting

A salesman, especially a traveling salesman, is required to send daily, weekly or monthly reports
to his firm, providing information about the calls made, sales effected, services rendered, route
schedule, expenses incurred, business conditions, competition, if any, etc.

7. Organizing

A salesman, i.e., a traveling salesman, is required to organize his tour programme. He has to
prepare the route and time schedules for his tour so as to systematize his sales efforts.

8. Attending sales meetings

A salesman is required to attend the sales meetings convened by his employer at periodical
intervals to discuss the marketing problems, sales promotion activities, sales policies, etc.

9. Touring
A traveling salesman has to undertake touring regularly to cover the sales territories assigned to
him.

10.Arranging for packing and delivery

A salesman, i.e., a counter salesman, has to arrange for the packing of the goods sold and the
delivery of the packages to the buyers.

11.Window and counter displays

A salesman, i.e., an indoor or counter salesman, has to arrange for the window and counter
displays of the products in an attractive manner so as to attract or induce the prospects to buy.

12.Promotion of goodwill

Every salesman has to build up satisfied clientele (i.e., customers) for his employer and thereby
promote the goodwill of his firm.

13.Recruiting and Training

Recruiting new salesmen, imparting training, by accompanying them while making sales calls.

14.Working with Middlemen

Salesmen establish direct relations with middlemen — distributors, wholesalers, etc., and collect
market information and pass it on to their firm

Relationship Communication
Marketing focuses mainly on Establishing, Developing, Maintaining successful
exchanges with customers. In marketing vertical every relationship is an exchange
process where each one gives something in return for a payoff perceived to be or of
greater value.

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 Value Added Exchanges

 Transactional Exchanges
 Collaborative Exchanges

Transactional Exchange
Centers on timely exchange of basic products at highly competitive market prices.
These types of transactions are autonomous in nature i.e. there is little or no concern
as to the needs of buyer or seller.

Example: A person goes in a shop and buys a toothpaste. The buyer wants a
toothpaste and the seller sells him one.

Transactional Exchanges

Packaging machines and products, cleaning and sanitizing technology and Products,
Commodity type products, Service activity where bidding is applied. Transactional
exchanges employ a type of arms-length relationship.

Collaborative Exchange

Exists when alternatives are few, market is dynamic, the purchase is complex and the
prices are high.

Main features include close information, social, and operational linkages and mutual
commitments.

Switching costs are highly esssential to collaborative customers. Trust is the main factor
and it there when one party has complete confidence in their partner’s ability and
integrity.

Managing Buyer Seller Relationships

a) Switching Costs

b) Value Drivers in Collaborative Relationships

c) Increasing Collaborative Relationships

d) Improving Transactional Customer Loyalty

Motivate the Employees

Dedicated employees are the key to a successful customer relationship strategy.

1. Hire good people.

 2. Invest in them to increase their value to the company and its
customers.
3. Develop challenging careers and align incentives to performance
measures.

Precaution to be Care:

Take care of your tone and pitch as well. Make sure you are not too loud or too soft.
Being loud might hurt the other person. Speak softly in a convincing way. The other
person must be able to understand what you intend to communicate.

An individual must interact with the other person regularly for the relationship to grow
and reach to the next level. Speaking over the phone. SMSing are ways of
communicating and staying in touch especially in long distance relationships where
individuals hardly meet.

Choice of words is important in relationships. Think twice before you speak. Remember
one wrong word can change the meaning of an entire conversation. The other person
might misinterpret you and spoil the relationship. Be crisp. Express your feelings clearly.
Do not try to confuse the other person. Being straightforward helps you in relationships.

Try to understand the other person’s point of view as well. Be a patient listener. Unless
you listen carefully, you will never be able to communicate effectively.

Be polite. Never ever shout on your partner even if he has done something wrong.
Discuss issues and try to sort out your differences amicably. Abusing, fighting, criticizing
spoil the relationship and in adverse cases might end it as well. Being rude is a crime in
relationships.

Call preparation
Before you start making sales calls, it’s a good idea to prepare for them. A lack of
preparation means a much higher chance of things not going according to plan when
you make the call. Of course, preparing for a sales call can’t promise a favourable
outcome, but it’ll increase the chances of getting what you want from the call.

Before you pick up the phone or charge into someone’s office to try and sell something,
do a little preparation. The idea is to develop a comfortable framework where you have
enough knowledge to get started and to ensure that you’re prepared for certain
eventualities on the call itself.
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Steps:

Define Your Goals

Make your objectives clear. What do you want to accomplish before the call ends? What
does your potential customer want to achieve during this call?

Write down specific, targeted questions that are relevant to your potential customer’s
business, industry, pain points, needs, and buying behaviors. Be ready to listen and
take notes so that you can react to what the potential buyer says. Limit your questions
so that the meeting feels like a conversation, not an interview.

Call objectives include:

 Finding out the name (and other contact details) of the person who
buys services like yours.
 Scheduling a meeting with the person who buys services like yours.
 Getting the person to request marketing materials (such as your
portfolio, CV, corporate brochure, etc.).
 Getting the person to ask for a quotation on a particular project
 Closing a sale.

Structure the Call

Creating an informal itinerary for the conversation will help you maintain control. First,
practice how you’d start the meeting to point it in the right direction. Then, map out
how to shift the conversation from topic to topic so that you reach all defined goals.

Know Your Value

The truth is that your potential customer is extremely busy. They only have a small
window of time to devote attention towards their buying decision. That means they
want to feel like they spent their time wisely when they talk to you.

Do you know the value you can provide to this potential buyer? How can you inspire
them to speed up their buying decision or move them to the next step in the sales
process?
Provide information that answers their questions, speaks to their needs, or explains any
concerns they may have. The call should end with your potential customer having
actionable steps to carry out and feeling positive about the experience.

Do Your Research

Basic information on your potential customer is essential, but it’s not always enough.
Sometimes you need to do your homework in order to understand the big picture as
well as the details about the specific challenges they face and how you can provide the
solution.

Before every sales call, you should check out the company’s:

 LinkedIn page as well as your potential customer’s professional profile

 Twitter stream
 Website, particularly the About Us and News sections
 Their previous conversations with your company as recorded in your
CRM

Visualize Success

Think of how athletes prepare for an Olympic race. They control their breathing, stretch
and shake out their arms and legs. They visualize each step around the track, picturing
how hard to swing their arms, how wide to make each step, and how much energy will
be needed to push through the finish line.

This is how you should approach your sales calls. Like an athlete, a balance of
adrenaline and oxygen is what you need to maintain performance and focus.

Value Selling and Consequences

Value-based selling is a process of defining the real needs, measurable objectives,
possible impact on the potential customer’s bottom line, and pricing accordingly to the
value our product can deliver.

Value selling is a hot concept in the technology industry, and one that sales leaders are
researching and discussing frequently. Outcome selling is trending on a similar curve.
Unfortunately, too many leaders think these two motions are similar and
interchangeable.

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Cost savings and financial outcomes are only part of the story. In fact, anchoring
around value selling can be detrimental to your sales efforts when used at the wrong
time and with the wrong buyer.

Here’s an example: let’s say you’re a hardware company selling a new Managed
Services offering. You formulate a calculation of how much money a customer will save
over the course of the next three years if they pay you to operate their infrastructure
rather than purchasing and managing it themselves. Maybe your numbers are solid, and
you’re confident you can stand behind your ROI calculations.

Outcome selling is a new and better approach to enterprise technology sales that
centers around two objectives:

 Allowing the supplier to demonstrate how their solution contributes to

the achievement of the outcome.
 Providing priority business outcomes that your customer is trying to
achieve.

Outcome selling is about leading with insights; sharing your knowledge of what other
similar companies are doing and then building the connection between your offering
and their highest priority business outcomes. And here’s the thing you (the supplier) are
providing insight and input as to what those outcomes should be.

It’s not about saying that you understand their business better than they do; that can
come across as arrogant and alienating. However, you’re in a position to share your
insights and experience based on the fact that you’ve worked with dozens, or even
hundreds, of similar companies before. It is obvious why this approach would be far
more strategic and valuable to the customer.

Outcome-based selling is about being able to confidently articulate how your solution
contributes to:

 Financial goals
 Operating KPIs
 Priority business outcomes

Strategies:

Elevate The Conversation to A Business Level

The first key to effective value selling is to elevate your conversations to business-level
discussions. The conventional approach to sales is to identify a problem and sell your
solution to that problem. So, if you sell technology that delivers a manufacturing
solution, the easy or conventional wisdom is that you go in and uncover problems that
you can solve with that solution. Then, you have a conversation with your prospect
about manufacturing problems or supply chain problems.

Requalify Every Opportunity in The Pipeline

In any crisis, sales leaders will take stock and reevaluate current opportunities; this is
the second key. Lately, we’ve been talking to our clients about their pipelines and the
fact that every opportunity must now be requalified. Business priorities have shifted.
Staff has changed. Some companies have had to adjust their business models or make
changes to their supply chain.

Ask Smart Questions

The third key explains how to best execute point one (driving a valuable business
conversation) and point two (continuous qualification). This third key focuses on the
questions you ask your prospect and your ability to understand their point of view and
circumstances and the context of the issues they face. To gain these insights, you
should ask thoughtful, deliberate questions that go beyond merely scratching the
surface of open-ended questions. You should prepare to approach a conversation with
pointed and specific probing questions in mind, as well as confirming questions to
ensure you have a mutual understanding.

By asking smart questions, you can position yourself to direct a value-based

conversation. This conversation is not about the product or service you are selling, but
instead is a discussion built on questions that uncover your prospect’s point of view
around the business issue and how this impacts their position and their company’s
results. Asking smart questions also lends itself to establishing your credibility as
someone they want to do business with.

Principles:

Focus on the value of solving their problem

That’s why the first principle of value-based selling is to focus on the value to the
prospect of dealing with the issue they have identified. If the prospect cannot articulate
the costs and consequences of the problem and the value of solving it, their chances of
getting their organisation to agree to invest in any solution is remote as are your
chances of winning.
It’s dangerous to assume that your prospect is fully aware of all of these costs and
consequences. In fact, a key role of the sales person in these early stages must be to
help the prospect recognise the full horror of sticking with the status quo. Almost
always, this will involve drawing their attention to aspects of the problem they may not
have recognised or even better introducing high-impact issues that they may not have
previously been aware of.

But if, despite all your efforts, the value of solving the problem remains unclear or
weak, it’s usually best to qualify out the “opportunity” and defer it for future nurturing
even if you appear to have a good solution fit.

Be specific about the value you offer

Marketers sometimes make a great deal of fuss about articulating your company’s
“unique value proposition”. But no matter how agonisingly carefully they are crafted,
these can only ever be generic statements designed to appeal to your target market as
a whole. Value-based selling requires that you get very specific about the value you
offer each prospect in effect you need a personally tailored unique value position.

Rather than a broad description of all that you can offer, you’ll get much more traction
by selectively identifying and highlighting the small subset of your total capabilities that
are most relevant to successfully addressing the issue you have identified. And you
need to clearly explain how you deliver unique and relevant value to every member of
the decision-making team.

Create and capture mutually meaningful value in every interaction

If your contacts are serious decision-makers with substantial workloads, they will not
appreciate being involved in conversations and meetings that leave them wondering
why they just wasted their valuable time. So, the third core principle of value-based
selling is to seek to establish mutually meaningful value in every customer interaction.

This value might be expressed by responding their questions simply, directly and
completely rather than leading them around the houses with an ambiguous or
deliberately obfuscated response. Or it might be expressed by sharing an insight that
causes them to think differently or by revealing a relevant fact they were previously
unaware of.

Facilitate their buying process, not your sales process

Conventional sales processes are all-too-often designed around the needs of the seller,
not the buyer. So, it’s hardly surprising that things the sales person sees as important
are often regarded by the prospect as irrelevant or (even worse) profoundly irritating,
while at the same time their interests and concerns are being poorly served by the sales
person.

That’s why your sales approach and the key stages in your sales pipeline and CRM
system must be designed around the key stages and milestones in your prospect’s
buying decision journey. Your sales activities, sales enablement tools and shareable
content must be designed to advance a well-qualified opportunity through their buying
decision process.

If you can’t contribute distinctive value, qualify out

The final principle is simple: if your solution doesn’t offer a distinctively different and
higher-value approach solving to the prospect’s identified problem than any of the other
options they are considering, you need to either do something about it or qualify out.

Order fulfilment, Relationship building

Order fulfilment

The method by which a company processes a sales order to the customer’s

specifications, that understates its importance. Customers hold more power than ever,
are more informed and have higher expectations. Efficient order fulfillment is key to
your brand’s reputation, your company’s profits and your ability to retain clients.

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Order fulfillment is a process consisting of receiving and processing goods for
distribution to customers.

Order fulfillment means fulfilling a sales order to the customer’s specifications. That is,
delivering goods as promised at the time of sale. There are three main steps in this
process: receiving, processing and shipping.

Companies make money by selling goods, products and services to businesses or direct
to consumers. No matter whether you’re B2B or D2C, the sale is not complete until the
sold items are received by that customer. Order fulfillment is how companies complete
the sale and it’s at the heart of every business.

Process

Receiving inventory
Goods may come from a third party, another company department or a company
warehouse; a pipeline (as with oil, fuel, water or some other fluid product); as digital
data from a database; or in a variety of forms from other external or internal sources.

In any case, the incoming inventory must be counted, inspected and inventoried to
ensure the proper amount was received and the quality is acceptable. SKUs or bar
codes on the arriving products are used in the receiving and storage processes, and to
retrieve goods from internal storage later.

Inventory Storage

Once goods are received in the fulfillment center, they are inventoried and either
immediately disbursed or sent to short- or longer-term storage. Items are ideally stored
just long enough to help organize the orderly distribution of goods for existing sales,
rather than to hold product for future sales.

Order Processing

An order processing management system dictates the product picking and packing
activities per each newly received customer order. In the online marketplace, order
management software can be integrated with the shopping cart on an ecommerce
website to automatically initiate order processing.

Picking

A picking team or automated warehouse robots select items from the warehouse
according to a packing slip’s instructions. The packing slip contains specific information,
such as a list of item SKUs, product colors, sizes, number of units and location in the
distribution center’s warehouse.

Packing

Packing materials are selected by a packing team or automated fulfillment robots to

achieve the lowest practical dimensional weight, which is calculated by multiplying
package length times width times height. Since space on delivery trucks is at a
premium, optimizing dimensional weight (or DIM weight) is important to speed
transport while also potentially lowering shipment costs.

Further, packing teams often include return shipping materials and labels in case the
customer wishes to exchange or return the item for a refund later.

Shipping
The order is sent to a transportation channel or shipping node to be shipped to the
customer. Shippers and carriers be they freight lines or airlines, FedEx, UPS, the U.S.
Postal Service (USPS) or other carriers determine freight billable costs by whichever is
greater: actual package weight or its dimensional weight.

Even if the actual weight is low, such as with a t-shirt, packing it in the lowest DIM is
often worth it to keep the packaging from adding significantly to the overall package
weight. Also, most carriers have packaging rules to optimize their own profits from the
shipping space they have available. Failing to meet those requirements can delay
shipments if carriers refuse to accept the order.

Delivery

It is common for shipping routes to include more than one carrier. For example, FedEx
may pick up a package at the fulfillment center that will later be delivered by the USPS
to the customer’s home. There are many reasons for these hybrid shipping methods.
One common example is that the USPS delivers even to remote areas where most other
commercial carriers do not. It’s simply more practical to use the USPS for the last mile
of delivery in those cases.

Relationship building

Relationship building skills are a combination of soft skills that a person applies to
connect with others and form positive relationships. In the workplace, relationship
building skills are essential for getting along with coworkers, contributing to a team and
building an understanding between yourself and others.

The following skill sets can typically be considered as essential skill sets to developing
successful relationship building skills:

Non-verbal communication skills

Non-verbal communication can have an impact on how you build relationships with
others. For instance, learning how to read body language can help you pick up on other
people’s emotions.

Interpersonal skills

Relationships are people-centered. To form successful and strong work relationships,

you should possess effective interpersonal skills. Being able to understand another
person’s perspective, showing respect when you feel it’s unwarranted or showing
compassion for your team can all be attributed to developing interpersonal skills.
Listening skills

Active listening is an essential part of communication, however, developing active

listening skills can sometimes be more effective than learning how to speak in a
meeting. Active listening encompasses making eye contact, being aware of non-verbal
cues and asking questions that show you are invested in the conversation. This not only
shows that you respect your team’s ideas, it can also show that you care about all
perspectives.

Verbal communication skills

Verbal communication is also essential to building strong relationships. For instance, if

you join a meeting with your colleagues, you can practice your verbal communication
by finding opportunities to contribute ideas and ask questions. This can show that you
are interested and open to hearing your team’s ideas as well as motivated to contribute
your thoughts, too.

Emotional intelligence

Emotional intelligence can be beneficial to develop overall and not just in the
workplace. However, being emotionally intelligent can mean that you observe the
dynamics in the office and find ways to contribute to your team, help solve conflict and
generally work from a place of understanding.

Empathy

Empathy is another key aspect of effective relationship building skills. Having empathy
for your friends and co-workers means you seek to understand their feelings and
emotions. When you actively practice empathy in the workplace, you can show your
teammates and managers your dedication to maintaining your work relationships.

Networking skills

Building successful work relationships can also benefit from developing your networking
skills. Meeting new people, exchanging ideas with other professionals and offering
assistance to other business professionals can all help to boost your networking skills.
With effective networking skills, you can increase your professional reach as well as
form lasting professional relationships.

Team-building skills
Working as part of a team will almost always require effective relationship building.
Develop your teamwork skills by practicing effective communication, showing respect
for others’ ideas and contributing and assisting where it’s needed.

Relationship with Customers

Be transparent in your dealings. Keep your customers well informed. Communicate with
them through mails, SMses or over the phone. Your client has all the rights to know
even the minutest detail of a product. After all he /she is paying for the same. Do not
hide anything from them. They would in any case come to know about it and it is
always advisable if they come to know through you rather than from others.

Do not be after your client’s life to take quick decisions. Give them time and space. Too
much of phone calls will definitely spoil your relationship with the other person.
Moreover, if you are constantly bothering your client, in due course of time, he/she
would stop attending your calls. Rather than calling up the other person every single
day, a gentle reminder either through SMs or email can do the trick. After all, if
someone is convinced about your product, he/she would invest in any case; no matter
you call him/her once or twice.

Be polite in your conversations. Never use foul words in your speech. It is completely
unethical and unprofessional. For maintaining a healthy relationship with your clients,
you need to learn to keep a check on your words. Never be rude to your clients.

Be a patient listener. Listen to what your clients have to say, rather than imposing your
own ideas on them. Do not go unprepared in any of your business meetings.
Remember, your client can ask you anything. If you do not know something at that
point of time, it is always better to check and get back to him/her later rather than
lying. Try to resolve all your client’s queries.

Try to give a personal touch in all your business meetings. Help your clients in taking
decisions. Give them the right suggestion.

Never speak ill about your competitors and their products. Such a behaviour is
completely unethical. If your products are genuinely good and have an edge over
competitors, your client would definitely invest in them. You do not have to be too
pushy.

Never ignore your client’s calls. If you have missed any of their calls, make sure you call
them later.
Do remember to take proper feedbacks. After sales service is one of the major factors
which plays a crucial role in maintaining healthy and long term relationship with your
clients. If your client is not satisfied with any of your products, replace the same
immediately. Action needs to be taken at the earliest. Do not keep issues pending for
long.

Always maintain a folder of personal information of your clients. Wish them on their
birthdays, anniversaries or any other special occasion. It would further strengthen your
bond with your client. Moreover, if you share a healthy relationship with your client;
trust me they will always come back to you. In fact they would not even think of going
to your competitors. Networking is the key to success in today’s business scenario.
Contacts help in the long run. Always remember to take business cards of people you
meet on a daily basis. Even if you are through with your deal, make sure you are in
constant touch with your client. Drop him at his office sometimes or call him to your
office for a cup of coffee.

Marketing Distribution: Distinctive nature

Industrial distribution is unique as there are several different methods of channeling the
products and services to industrial consumers. The type of product, the selling price of
the product and technical knowledge required to sell the product all play a considerable
role in selecting the proper sales or distribution channel. Unlike consumer organizations,
the decisions taken by the industrial organizations on distribution channels is of great
significance as the decisions involved are of long-term nature that cannot be changed
frequently. The industrial organizations carry on certain important functions till the
products reach the consumers like utilizing the services of transportation companies for
distribution, the services of warehouses for safe storage of goods, inventory control,
order processing and selection of marketing channels. This necessitate taking important
decisions like devising effective communication tools, planning promotional activities,
managing finances etc that help in serving the consumers better.

 Size: Unlike consumer markets, the industrial markets tend to have

fewer channels of distribution. Even the industrial channel is shorter in
size as organizational buyers expect immediate product availability,
technical expertise and prompt after-sales service. This indirectly
demands investment in training and physical facilities for the industrial
organizations.
 Geographical Distribution: The industrial distributors are
concentrated highly in the industrial markets they serve and certain
other places that have large number of industries like large towns and
cities.
  Mixed channels: A combination of direct and indirect channels is used
by some industrial marketers to cater to different market segments or
when they have some resource constraints. To cater to large-volume
customers, industrial firms generally use their own sales force, and to
cover small scale organizations, they use independent distributors. In
case of large geographical territories, due to resource constraints they
use their agents called as ‘manufacturers representatives’.
 Intermediary characters: The intermediaries involved in industrial
marketing are technically qualified who maintain very close relationship
with industrial organizations. Industrial manufacturers tend to depend
more heavily on each member of the channel and may do more to
support that channel member. Industrial distributors, brokers and
agents are some types of intermediaries used by industrial marketers to
reach customers.
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Types of Industrial Middlemen

The industrial middlemen are the intermediaries used by the manufacturers to deliver
their products to the end users. They are categorized based on the number and the
extent to which they specialize in the performance of certain functions. Different types
of industrial middlemen are manufacturers representatives (also called agents), brokers,
commission merchants, industrial dealers or distributors, value-added resellers (VARs),
jobbers and drop shippers.

 Brokers: Brokers are the middlemen who represent either the buyer or
the seller. They help the manufacturer to find potential buyers and vice
versa and take the commission when sales process is complete.
 Manufacturers Representatives: The manufacturers’ representatives
(sales agents or manufacturers agents) are very commonly seen
middlemen who secure orders from existing and potential customers.
They provide relevant information on market conditions to the
manufacturers as well as customers. They are paid a certain amount of
pre-specified commission on sales and other tasks performed to make
the sales. Generally small and medium-sized industrial firms use the
services of agents in territories with low market potential. Agents are
cost-effective for them because commission is paid as per the orders
generated. The agents particularly have good knowledge about the
product, their target market apart from excellent contacts with the
buyers.
 Commission Merchants: They deal with large quantities of items like
raw materials. They are paid commission by the manufacturers when
they perform certain functions. Their general functions include getting
the raw materials inspected, negotiating during sales and finally close
the sales. They receive the commission based on the net sales value as
is compensated to agents and brokers.
 Industrial Distributors: Industrial distributors are the important and
most preferred middlemen that are typically small and independent
serving narrow geographic markets. They perform functions like buying,
transportation and warehousing, promotion and selling, and offering
credit. Because of such varied functions, they are sometimes referred to
as full function intermediaries. They are offered trade discounts on the
price list of the products as their compensation. Industrial distributors
are categorized as general line distributors or mill supplies houses that
stock wide variety of products and sell to a diversified group of
customers. They are referred to as the supermarkets of industry. The
products stocked by them include maintenance repair and operating
(MRO) supplies, original equipment manufacturer (OEM) supplies, and
equipment used in the operation of a business, such as hand tools,
power tools and conveyors etc. The second type of distributors known
as specialized distributors specializes in products they handle or
customers they serve. Because of increase in specialized markets, their
numbers are increasing. Specialized distributors limit their inventories to
specific product range like bearings, office equipment and supplies,
electrical equipment and supplies, or abrasives etc. The third category
called the combination house sell directly to industrial customers as well
as some other retailers or dealers.
 Value-added Resellers (VARs): They add some value or feature to
an existing product and sell to end-users as a new package. This is
found often in the computer industry, where a company purchases
computer components and builds a fully operational personal computer.
By doing this, the company has added value above the cost of the
individual computer components. Customers would purchase a
computer from the reseller to either save time or if they do not have the
skills to build a unit themselves.
 Drop Shippers: When an online marketer has certain concerns like
where to get the goods from, where to store them until they are sold,
and what amount to charge for shipping the goods to the customers,
then drop shippers come to the rescue of such marketers who work
 with merchants to move the products. Drop Shipping is generally used
by web site owners, shop owners and mail order firms who do not stock
inventory of the products sold for future delivery through mail order,
catalog and internet advertising. Middlemen send single unit orders for
products to manufacturers, or major stocking distributors, who in turn
drop ship the merchandise direct to the customers of the middlemen.
Manufacturers providing drop shipping services can gain additional
sales, shift advertising costs to middlemen, offer advertising material
and reduce inventory requirements. Middlemen who initiate drop ship
orders shift the risks of stocking inventory to the supply source,
including storage, insurance, overhead, and personnel by spending
nothing on inventory.
 Jobbers: They get orders from the customers and pass them to the
manufacturers. Though they do not handle the goods physically in any
form, they take the title to the products they sell. Jobbers specialize in
marketing bulky products like coal, iron ore etc, that are transported in
huge quantities and do not require assorting or grouping of products.

Channel Strategy and design

Marketing channels are set of mutually dependent organizations involved in the process of
making product or service available for utilization. It is established in academic studies that
Marketing channels are the means by which goods and services are made available for use by the
customers. All goods go through channels of distribution, and marketing will depend on the way
goods are distributed. The direction that the product takes on its way from production to the
consumer is imperative because a marketer must choose which channel is best for his particular
product. It can be said that channel is the link between manufactures and purchasers. Decisions
about the marketing channel system are decisive for management.

The marketing channels chosen by marketers influence all other marketing decisions. The firm’s
sales force and advertising decisions depend on how much training and inspiration dealers need.
Further, channel decisions involve comparatively long-term commitments to other firms. Holistic
marketers guarantee that marketing decisions in all these different areas are made to jointly
maximize value.

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Channel of distribution (Marketing channel)

In current competitive climate, big companies are using hybrid channels in any one area. The
firm must choose how much effort is needed to assign to push versus pull marketing. A push
strategy uses the manufacturer’s sales force and trade promotion to encourage intermediaries to
carry, promote, and sell the product to customers. This is suitable where there is low brand
loyalty in a category, brand choice is made in the store, the product is desired item, and product
benefits are well understood. In a pull strategy, the manufacturer uses advertising and promotion
to influence customers to ask intermediaries for the product, thus inducing the intermediaries to
order it. This is suitable when there is high brand loyalty and high involvement in the category,
people perceive differences between brands, and people choose the brand before they shop. A
marketing channel executes the work of moving products from producers to consumers, beat the
time, place, and possession gaps that separate goods and services from those who need or want
them.

Channel level: The producer and the final customer are part of every channel. There are
numerous channels by which goods and services are distributed. It is divided into direct and
indirect channel. In direct channel also known as zero-level channel, manufacturer and customer
deal directly with each other. There is no middleman in this channel. It consists of a producer
selling directly to final customers through door-to-door sales, Internet selling, mail order,
telemarketing, home parties, TV selling, manufacturer-owned stores, and other methods.

In indirect channel, companies manufacture products in huge scale and sell these products to
middle man for example whole seller and retailers. This channel can be very expensive.

Manufacturer to Customer: Manufacturer produces the goods and sells them to the customer
directly with no mediator, such as a wholesaler, agent or retailer. Goods come from the
manufacturer to the user without an intermediary.

Manufacturer to Retailer to Consumer: Purchases are made by the seller from the manufacturer
and then the retailer sells the products to the consumer. This channel is used by manufacturers
that specialize in producing shopping goods.

Manufacturer to Wholesaler to Customer: Consumers can buy directly from the wholesaler. The
wholesaler breaks down bulk packages for resale to the consumer. The wholesaler reduces some
of the cost to the consumer such as service cost or sales force cost, which makes the purchase
price cheaper for the consumer.

Manufacturer to Agent to Wholesaler to Retailer to Customer: This type of distribution involves

more than one intermediary involves an agent called in to be the middleman and help with the
sale of the goods. An agent receives a commission from the producer. Agents are useful when
products or services need to move rapidly into the market soon after the order is placed.

Market channels by which goods and services are distributed

Characteristics of Marketing Channels

Link between Producer and Consumer.

Flow of Goods

Remuneration.

Classification-Direct and Indirect.

Activities- Financing, Credit Facility

It is important to consider some factors when choosing appropriate marketing channel such as
product, market, company. It is observed that middle man plays vital role in distribution of
product in market channel. The core responsibility of intermediaries is to deliver products to
customers in their desired location. To accomplish this objective, they purchase goods and store
these and then ship to customers.

Marketing channel function performed by middleman.

Designing a Marketing Channel System

Designing a marketing channel system entails factors such as analysing customer needs,
establishing channel objectives, identifying major channel alternatives, and evaluating major
channel alternatives.

Analysing Customers’ Desired Service Output Levels: The marketer must recognize the service
output levels which its target customers want. Channels produce five service outputs:

1. Lot size: The number of units the channel allows a particular customer to buy at
one time.
2. Waiting and delivery time: The average time consumers of that channel wait
for receipt of the goods. Customers generally prefer fast delivery channels.
3. Spatial convenience: The extent to which the marketing channel facilitate for
customers to obtain the product.
4. Product variety: The variety provided by the channel. Usually, consumers
prefer a greater collection, which enhances the chance of finding what they
need.
5. Service backup: The add-on services such as credit, delivery, installation,
repairs provided by the channel.

Providing greater service outputs denotes increased channel costs and higher prices for
consumers. The triumph of discount resellers (online and offline) designates that many
consumers will accept lower outputs if they can save money.

Establishing Objectives and Constraints

Another factor in designing a marketing channel system is that marketers must declare their
channel objectives in terms of targeted service output levels. In competitive conditions, channel
institutions should coordinate their functional tasks to reduce total channel costs and still offer
desired levels of service outputs. Generally, planners can recognize several market segments that
want different service levels. Successful planning needs to determine which market segments to
serve and the best channels for each. Channel objectives differ with product characteristics.
Channel design is also affected by numerous environmental factors as competitors’ channels,
monetary conditions, and legal regulations and limitations.

Selection, Motivation and Evaluation of

intermediaries
Identify Major Channel Alternatives

Other decisive factor in developing market channel is to recognize alternatives. Companies may
select array of channels to approach customers, each of which has distinctive strengths as well as
limitations. Each channel alternative is explained by

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(i) The types of available intermediaries

(ii) The number of intermediaries needed; and

(iii) The terms and responsibilities of each channel member.

Types of Intermediaries entails a firm needs to discover the types of intermediaries available to
run its channel work. Some intermediary merchants such as wholesalers and retailers buy, take
title to, and resell the products. Agents such as brokers, manufacturers’ representatives, and sales
agents chase customers and may bargain on the producer’s behalf but do not take title to the
merchandise. Facilitators, including transportation companies, independent warehouses, banks,
and advertising agencies, help in the distribution process but neither neither take title to goods
nor negotiate purchases or sales.

Companies should recognize pioneering marketing channels. Number of Intermediaries indicates

that to choose intermediaries to use, companies can adopt one of three strategies: exclusive,
selective, or intensive distribution. Exclusive distribution means severely limiting the number of
intermediaries. Selective distribution depends on more than a few but less than all of the
intermediaries willing to carry a particular product. In intensive distribution, the producer places
the goods or services in as many outlets as possible. This strategy is usually used for items such
as snack foods, newspapers, and gum. Terms and Responsibilities of Channel Members signify
that each channel member must be treated courteously and given the opportunity to be lucrative.
The main constituents in the “trade-relations mix” are price policy, conditions of sale, territorial
rights, and specific services to be performed by each party. Price policy assists the producer to
ascertain a price list and schedule of discounts and allowances that intermediaries see as
equitable and sufficient.

Evaluating the Major Alternatives

The Company must assess each alternative against suitable economic, control, and adaptive
criteria. The firm should verify whether its own sales force or a sales agency will create more
sales and it estimates the costs of selling different quantities through each channel.

Managing Marketing Channel

In order to maximize profit, companies must manage their marketing channel effectively.
Management of marketing channel refers to the process of analysing, planning, organizing and
controlling its marketing channel. In marketing channel two different activities occur. One is the
establishment of physical distribution system and other is management of marketing objectives.
Management of marketing channel involves all functions of marketing mix which include
product, price, physical distribution, program and people. The physical distribution system and
channel structure is established through which products flow in the marketing channel.

Marketing Mix Activities In Marketing Channel Management: (McCalley, 1996)

To Mange marketing channel, firms must adopt motivational strategies such as paying higher
slotting allowances, offering higher trade discount, providing strong promotional and advertising
support, training channel member sales people, giving high level logistic support. Management
professional stated that after a firm has selected a channel system, it must select, train, motivate,
and evaluate individual intermediaries for each channel. It must also modify channel design and
arrangements over time.

Selecting Channel Members: For successful management, Companies must have to choose
talented channel members cautiously because for customers, the channels are the company.
Producers should decide what features distinguish the better intermediaries and scrutinize the
number of years in business, other lines carried, growth and profit record, financial strength,
cooperativeness, and service reputation of potential channel members. If the intermediaries are
sales agents, producers should assess the number and character of other lines carried and the size
and quality of the sales force. If the intermediaries want exclusive distribution, the manufacturer
should assess locations, future growth potential, and type of customers.

Training and Motivating Channel Members: It is a major responsibility of a company to

examine its intermediaries in the same way it views its customers. It needs to establish
intermediaries’ needs and build a channel positioning such that its channel offering is tailored to
provide superior value to these intermediaries. To enhance intermediaries’ performance, the
company should offer training, market research, and other capability-building programs. The
company must also continually strengthen that its intermediaries are to jointly gratify the needs
of end users. Producers differ greatly in channel power, the ability to change channel members’
behaviour therefore the members take corrective actions. Often, gaining intermediaries’
collaboration is a major challenge. Sometimes, Producers try to forge a long-term affiliation with
channel members. The manufacturer must talk clearly what it expects from its distributors in the
way of market coverage and other channel issues and may ascertain a compensation plan for
adhering to these policies. Motivating channel members takes numerous forms in order to gratify
the requirements at each level in channel. Profitability is major Motivational force for whole
seller for product selection. When profit motivation is satisfied, whole seller will look for
marketing programs offered by producers to sell products to retailers. Whole seller checks the
credit option and terms of payment when assessing the profit option for business when dealing
with particular supplier. Retailers are mainly concerned with maintenance of product supply and
availability. It is observed in market that when customers cannot get product in one retail shop,
they immediately search for it in another retailers. But retailers do not want to lose customers.
Another interest of retailers is profitability of the product.

Motivational consideration for channel members: (McCalley, 1996)

Evaluate Channel Members: To successfully manage market channel, producers must assess
intermediaries’ performance at regular intervals against such standards as sales-quota attainment,
average inventory levels, customer delivery time, treatment of damaged and lost goods, and
cooperation in promotional and training programs. A producer will occasionally determine that it
is paying particular intermediaries too much for what they are actually doing. Producers should
establish functional discounts in which they pay specific amounts for the intermediary’s
performance of each agreed-upon service. People who are not performing must be given extra
training or counselling.

Modifying Channel Arrangements: Channel arrangements must be reassessed regularly and

altered when distribution does not work as planned, consumer buying patterns change, the
market develops, new competition occurs, inventive distribution channels appear, and the
product moves into later stages in the product life cycle. No marketing channel remains
successful over the entire product life cycle. Early purchaser might be willing to pay for high-
cost value-added channels, but later buyers will change to lower-cost channels. In highly
competitive markets with low entry barriers, the best channel structure will transform over time.
The company may add or drop individual channel members, add or drop particular market
channels, or develop a new way to sell merchandise. The process of adding or dropping an
individual channel member needs an incremental analysis to decide profitability of company.
Additionally, marketers adopt data mining to analyse customer shopping data as input for
channel decisions. The most complicated decision is whether to modify the overall channel
scheme. Channels can become old-fashioned when gap occurs between the existing distribution
system and the ideal system to gratify customer’s needs and wants.
The most challenging face of channel management is the maintenance of control over all parts of
distribution flow and marketing activities. Marketers have to undergo legal issues in controlling
marketing channels therefore they need to develop successful channel programs that will
stimulate the action planned without creating conflict among competitive channel members.

To summarize, market channel is medium through product from raw material move to costumer.
In designing market channel it is important to comprehend customer’s need. The task of
managing marketing channel falls to marketing and sales managers. These people directly
involve with channel members and company’s competitors. They know how to find valuable
information for good management decisions. To organize marketing channel, it is imperative to
gather relevant information. It assists in writing accurate and detail market profile statement.
Most marketing channels are created with one or more intermediaries between the manufacturer
and consumer.

Business Marketing Channels: Direct and

Indirect Distribution Channels
Distribution channels in marketing are one of the classic “4 Ps” (product, promotion, price,
placement a.k.a. “distribution”). They’re a key element in your entire marketing strategy — they
help you expand your reach and grow revenue.

B2B and B2C companies can sell through a single distribution channel or through multiple
channels that may includeUME00:00/00:00TECH1adlogoTRUVIDFULLSCREEN

 Wholesaler/Distributor
 Direct/Internet
 Direct/Catalog
 Direct/Sales Team
 Value-Added Reseller (VAR)
 Consultant
 Dealer
 Retail
 Sales Agent/Manufacturer’s Rep

Here are three examples of distribution channels in marketing:

SELL THROUGH A
DIRECT TO END SELL THROUGH A
VAR (VALUE-ADDED
USERS DEALER NETWORK
RESELLER)
 You have a sales team that
sells directly to Fortune
100 companies.
You have a second product
line for small businesses.
Instead of using your sales
team, you sell this line
directly to end-users
through your website and
marketing campaigns.
You have two markets and
two distribution channels.
You sell a product through
a geographical network of
dealers who sell to end-
users in their areas. The
dealers may service the
product as well.
Your dealers are essentially
your customers, and you
have a strong program to
train and support them with
marketing campaigns and
materials.
You sell a product to a
company who bundles it
with services or other
products and resells it.
That company is called a
Value Added Reseller
(VAR) because it adds
value to your product.
A VAR may work with an
end-user to determine the
right products and
configurations, and then
implement a system that
includes your product.

To create a good distribution program, focus on the needs of your end-users.

 If users need personalized service, you can utilize a local dealer network or
reseller program to provide that service.
 If your users prefer to buy online, you can create an e-commerce website and
fulfillment system and sell direct; you can also sell to another online retailer or
distributor that can offer your product on their own sites.
 You can build your own specialized sales team to prospect and close deals
directly with customers.

Wholesalers, resellers, retailers, consultants and agents already have resources and relationships
to quickly bring your product to market. If you sell through these groups instead of (or in
addition to) selling direct, treat the entire channel as a group of customers – and they are, since
they’re buying your product and reselling it. Understand their needs and deliver strong marketing
programs; you’ll maximize everyone’s revenue in the process.

Best Case Neutral Case Worst Case

You’ve used one or more
distribution channels to
grow your revenue and
market share more quickly
than you would have
otherwise.
Your end-users get the
You’re using one or more
distribution channels with
average success.
You may not have as many
channel partners as you’d
like, but your current
system is working
You probably aren’t hitting
your revenue goals because
your distribution strategy is
in trouble.
With your current system,
you may not be effectively
reaching your end-users;
your prospects probably

information and service
they need before and after
the sale.
If you reach your end-user
through wholesalers, VARs
or other channel partners,
you’ve created many
successful marketing
programs to drive revenue
through your channel and
you’re committed to their
success.
moderately well.
You devote resources to
the program, but you
wonder whether you’d be
better off building an
alternative distribution
method — one that could
help you grow more
aggressively than you are
growing now.
aren’t getting the
information and service
they need to buy your
product.
Your current system may
also be difficult to manage.
For example, channel
members may not sell at
your suggested price; they
don’t follow up on leads
you deliver; they don’t
service the product very
well and you’re taking calls
from angry customers.

Distribution Channels Concepts & Steps

Before you begin

You can evaluate a new distribution channel or improve your channel marketing / management
at any time. It’s especially important to think about distribution when you’re going after a new
customer segment, releasing a new product, or looking for ways to aggressively grow your
business.

Evaluate how your end-users need to buy

Your distribution strategy should deliver the information and service your prospects need. For
each customer segment, consider:

 How and where they prefer to buy

 Whether they need personalized education and training
 Whether they need additional products or services to be used along with yours
 Whether your product needs to be customized or installed
 Whether your product needs to be serviced

Match end-user needs to a distribution strategy

 If your end-users need a great deal of information and service, your company
can deliver it directly through a sales force. You can also build a channel of
qualified resellers or consultants. The size of the market and your price will
probably dictate which scenario is best.
  If the buying process is fairly straightforward, you can sell direct via a
website/catalog or perhaps through a wholesale/retail structure. You may also
use an inbound telemarketing group or a field sales team.
 If you need complete control over your product’s delivery and service, adding a
channel probably isn’t right for you.

Identify natural partners

If you want to grow beyond the direct model, look for companies that have relationships with
your end-users. If consultants, wholesalers or retailers already reach your customer base, they’re
natural partners.

Build your distribution channel

If you’re setting up a distribution channel with one or more partners, treat it as a sales process:

 Approach the potential channel partner and “sell” the value of the partnership.
 Establish goals, service requirements and reporting requirements.
 Deliver inventory (if necessary) and sales/support materials.
 Train the partner.
 Run promotions and programs to support the partner and help them increase
sales.

Minimize pricing conflicts

If you use multiple channels, carefully map out the price for each step in your channel and
include a fair profit for each type of partner. Then compare the price that the end-user will pay; if
a customer can buy from one channel at a lower price than from another, your partners will
rightfully have concerns. Pricing conflict is common, and it can jeopardize your entire strategy,
so do your best to map out the price at each step and develop the best solution possible.

Drive revenue through the channel

Service your channel partners as you’d service your best customers and work with them to drive
revenue. For example, provide them with marketing funds or materials to promote your products;
run campaigns to generate leads and forward them to your partners.

Introduction to Logistics and Supply chain

Management
The term “Supply Chain Management” was coined in 1982 by Keith Oliver of Booz, Allen and
Hamilton Inc. But the discipline and practice has been in existence for centuries.

The terms Logistics and Supply Chain Management are used interchangeably these days, but
there is a subtle difference that exists between the two.

PLAYVOLUME00:00/00:43TECH2adlogoTRUVIDFULLSCREEN
‘Logistics’ has a military origin, and used to be associated with the movement of troops and
their supplies in the battlefield. But like so many other technologies and terminologies, it entered
into the business lexicon gradually and has now become synonymous with the set of activities
ranging from procurement of raw materials, to the delivery of the final polished good to the end
consumer.

In a typical business scenario, many organizations work in tandem (knowingly or unknowingly)

to get the final product in hand of the end consumer. The supply chain is a network of these
organizations that coalesce with each other (downstream or upstream) to make the final shipment
successful.

A group of farmers, a cotton mill, a designer and a tailor is the least number of stakeholders you
can expect from a regular shirt you wear every day

Introduction to Logistics and Supply Chain Management (SCM)

Logistics is generally seen as a differentiator in terms of the final bottom line of a typical “hard
and tangible goods” organization; enabling either a lower cost or providing higher value.

While a lower cost is mostly a one-time feel good factor and has been the traditional focus area
in logistics, high value comes into the picture much later and may be tangible or intangible in a
good’s initial stages.

So while an organization like Zappos may look costly at a first glance, the extraordinary
customer service due to robust policies is a value which more than offsets the slightly higher
cost.

Logistics is concerned with both materials flow and information flow. While the materials flow
from the supplier to consumer, the information flows the other way round. It is not only
concerned with inventory and resource utilization, customer response also falls under the ambit
of logistics.

In simple terms, logistics can be seen as a link between the manufacturing and marketing
operations of a company. The traditional organizations used to think of them separately, but there
is a definite value addition in integrating the two due to the interdependence and feedback
channel between the two.
The level of coordination required to minimize the overall cost for the end consumer gets
tougher to achieve as the number of participants in a supply chain increase, as an extremely
efficient flow of material and information is required for optimization.

Logistics cover the following broad functional areas: network design,

transportation and inventory management.

Manufacturing plants, warehouses, stores etc. are all facilities which form key components in the
network design. Transportation: the cost and consistency (reliability) required out of the
transportation network determines the type and mode of the movement of goods and also affects
the inventory.

Buffer (or safety) stock is the reserve stock held to safeguard against shortages or unexpected
surge in demand, to avoid “stock-outs”. Fewer inventories with negligible stock-outs — the
hallmark of an efficient logistical system

Basic concepts of Logistics and SCM

Inventory Planning

Organizations want to minimize the inventory levels due to its almost linear relationship with the
cost. Yet if the demand is forecasted accurately, there would ideally be no need for inventory and
the goods will move seamlessly from warehouses to customers.

 That would have been awesome, but it is deep into the ideal world zone. In the
real world, the forecasted numbers can only take you so far and some inventory
has to be maintained to satiate any surges in demand; the cost of unhappy
consumers who are not serviced is often huge, and is immeasurable in most
cases.
 Yet overstocks lead to increase in working capital requirements, insurance
costs and blocked resources which could have been productive someplace else.
 Making a business forecast has largely been a gut-based process, but is
changing rapidly in the era of data-based decision making. The forecast
depends on the historical baseline for sales, seasonality (soft drinks have higher
sales volume in May), recent trends (Samsung is losing out to competitors
when it comes to phones, a declining trend), business cycles (economies go
through expansion and contraction every few years), promotional offers (up to
50% off can drive the average fashionista mad) etc.

Transportation
The kind of transportation employed by an organization is a strategic decision (it usually
accounts for around 1/3rdof the total logistics cost) based on the required level of risk exposure,
customer service profiles, geographic area covered etc. Truck shipments take more time for
delivery compared to air transport (customers with relaxed turnaround times); is cheaper but
necessitates maintenance of higher inventory levels.

 Transportation serves the purpose of not just product movement, but storage as
well (not very intuitive). Time spent for delivery means saved time for
warehousing, and many times the cost to offload and reload shipments can be
greater than the cost of letting the goods stay in the transportation vehicles
itself.
 Two basic thumb rules apply for transportation decisions: truck load (TL)
shipments are better than less-than-truckload (LTL) shipments as storage space
is a perishable commodity (just like a commercial airline does not want to fly
with empty seats), and the cost per kilometer decreases as the distance
increases (two 500 km shipments is usually more expensive than a single 1000
km shipment).
 The factors which determine the economies of transportation decisions include
but are not limited to: distance between the starting and destination points, and
density (higher density products take less space — space constraints outweigh
weight constraints by a huge margin), stow ability (spherical packaging will
lead to more empty spaces compared to cubical) and volume of the goods.
Different modes of transport serve different strategic ends (rail, road, air, water
etc).
 FlipKart has eKart for its logistical operations and warehousing, whereas
smaller e-commerce players generally outsource their operations to specialized
logistics players such BlueDart, DHL and now Delhivery.

Packaging
The end goals differ: can either be done for end consumers or for logistical considerations. The
packaging will then depend on the end goal; form factor plays the lead role when packaging
goods for the end consumers, while function plays the lead role in packaging for logistical
operation.

Warehousing
It is the back-end building for storing goods. Based on the needs of the organization, it can be in-
house or outsourced.

 Primary functions of a warehouse are product movement and storage. Activities

such as offloading of the goods coming from the suppliers, the intermediate
 packaging (if required), and shipping to other destinations (retailers or end
consumers) are handled in the warehouse. Similarly, they can also serve as a
storage house for handing peak consumer demand to avoid stock out of items,
and acts as a buffer between the starting point (usually manufacturing plant)
and ending point (think about a typical retail outlet).

Different distribution strategies can be adopted by an organization based on its needs and
infrastructure in place, namely:

 Cross-Docking: Relies on minimal processing at the warehouse level and

facilitate seamless connection between “incoming” and “outgoing” goods
through technologies such as bar code scanners; becoming increasingly
important due to established structured communication between retailers and
manufacturers; best for high velocity goods with predictable demand patterns.
 Milk Runs: The delivery guy is out to deliver items from a single supplier to
multiple retailers or to pick up items from multiple suppliers for a single
retailer (An Indian Doodhwala can literally teach a thing or two about this,
hence the naming we think).
 Direct Shipping: A supplier directly ships to a particular retailer without any
intermediaries. Mostly happens with big-name stores with huge good volumes,
and very frequent replenishments. Big savings on time.
 Hub and Spoke Model: Hub serves as the central node for nearby places, and
the spokes depend on the hub for their needs (think of a metropolitan and
various tier-2 cities in its proximity).
 Pooled Distribution: Region is the most important factor driving this strategy.
Delivers to every destination point in a geographical area, smart for handling
peak time loads and LTL shipments. Plus one for the planet as a bonus!

Human : Arteries :: Logistics : Information

Traditional paper-based information systems are increasingly on their way out, and electronic
exchanges are making rapid inroads into the logistical process flow. The initial investment in
electronic systems is recouped quickly by cost savings due to better operational efficiency and
enhanced customer service. Advances in electronic data interchange (EDI), artificial intelligence
and wireless communication is partly responsible for this intelligent shift.

 The principal information flow can be subdivided in two main streams: one for
planning (looking into the future) and the other for operational flows (in the
past and present). Plans are to be made for production, storage and movement
of goods. Manufacturing constraints (internal) and expected sales (external) are
the key areas focused upon. Operating flows refer to the information generated
(or required) to serve the orders to the customer.
  Enterprise Resource Planning (ERP) is a fancy term used by IT people for one-
stop, integrated packages to support multiple functions across an organization.
It serves as a central destination to capture data which aids in making optimal
decisions, while also serving as a repository to better understand the current
business scenario and plan for any future needs.

Green Supply Chain Management: Lean Practices

Green is the new way to go about things, and the myth that profits and environment cannot go
hand in hand is evaporating fast. Commitment to lean practices is a promise to do away with
inefficiencies in the system to reduce wastes and have a minimal impact on the environment.

The emphasis on continuous product flows, standardization within the organization/industries

and a greater integration between producers and consumers — all these have contributed to
efficient supply chains with gradually decreasing waste levels.

Information is often the key differentiator when it comes to successful supply chain practices,
and the organizations that share information with each other based on the premise of trust and
long-term business viability will often have decisive competitive advantage over organizations
that do not share critical information upstream and downstream.

The best part is everybody winning — organizations, end consumers and Mother Nature.