Direct sales. Advantages and disadvantages

13.02.2024

Sales— supply of goods for the purpose of sale, sale by a company of products manufactured (purchased) by them. Sales is the process of a product entering the sphere of use; sales of products; delivery for the purpose of purchase and sale. Sales, to a greater extent, is a logistics operation, meaning the delivery of products to the buyer directly, or through sales intermediaries (suppliers of the buyer).

Sales assumes:

sales logistics;
building relationships with external sales network;
establishing relationships with sellers;
fulfillment of the supplier’s obligations regarding the delivery of products to the consumer.

Physical sales (physical distribution) - processing and execution of consumer orders and direct delivery of goods. Distribution is an integral element of marketing and sales, ensuring product availability to consumers in a timely and cost-effective manner. Sales is an integral part of the distribution process and includes all logistics operations associated with the physical movement and storage of finished products in commodity distribution structures.

Direct sales- delivery to the buyer, which does not imply the presence of intermediaries, since the sale of goods and sales operations are carried out directly and directly to consumers on the basis of direct contacts with them.

Indirect sales (not direct sales) involves the sale of goods through intermediaries. There are one, two and three-level sales channels, the task of which is the distribution and sale of goods.

Intensive sales- involvement in the process of selling goods of a wide range of resellers who are able to provide additional services (organization of service, supply of spare parts and consumables, etc.);

Selective sales- use of a limited circle of resellers. Selective sales are characterized by direct sales.

Targeted sales- specialization, focus on supply and sale of goods to a certain circle of buyers. Whereas non-targeted sales are the supply of goods to a wide range of consumers (typical of the consumer goods market), as a rule, with the participation of intermediaries and the formation of a distribution sales channel.

Distribution sales channel(distribution channel, sales channel) - a partially ordered set of intermediary entities that carry out the flow of goods from the source of generation (manufacturer) to the destination (consumer). See definition of "distribution channel".

Sales logistics- the area of scientific research into system integration of functions implemented in the process of distributing material and accompanying (information, financial and service) flows between various consumers, i.e. in the process of selling goods, the main goal of which is to ensure the delivery of the right goods to the right place, in the right time at the optimal cost.

Number of impressions: 57366

Product distribution is a system that ensures the delivery of goods to points of sale at a precisely defined time and with the highest possible level of customer service. Product distribution is a powerful tool for stimulating demand. The main result that is achieved in the product distribution system is the level of customer service. The results of product distribution planning, i.e. making decisions on the choice of distribution channels for products influence the amount of company expenses. Therefore, it is very important to correctly determine the form of trade organization and choose the distribution channel - direct or indirect. In order for the released product to find its grateful buyer, who is ready to “spend” money for the purchase, the manufacturer can use several sales methods:

1) direct (immediate) sales allows you to establish direct contacts with customers without resorting to the services of independent intermediaries. Direct sales are common in the capital goods market. Direct sales are less frequently used in the consumer goods market. Firms prefer to use the services of independent intermediaries and invest funds in their core business, which brings higher profits;

2) indirect sales - a sales method in which manufacturers of goods use the services of various types of independent intermediaries.

Direct delivery of products directly to consumers can be effective if:

the quantity of goods supplied is sufficiently large (corresponds to the transit norm);

consumers are concentrated in a limited area;

products sold require highly specialized service;

there is a fairly wide network of our own warehouses in sales markets;

the price of a product is subject to frequent changes.

It is better to sell goods through intermediaries if:

the consumer market is not limited to the region, but is scattered throughout the territory;

deliveries are carried out in small batches and with high frequency.

You can create a product that meets the most demanding consumer needs, choose the right distribution channel, and still not get the expected result. A lot depends on choosing a reseller and working with him. Successful work with an intermediary includes two components: choosing the seller of the goods; stimulation and control over the activities of the intermediary.

The following criteria exist for selecting a reseller:

1. Market segment served by this intermediary company.

2. Does this company represent a competitive product on the market?

3. Solvency of the intermediary (seller). Sources of its financing.

4. Whether the company was provided with loans and, if “yes,” then by which bank.

5. Reputation of the potential intermediary in the market.

6. Level of specialization of the intermediary. Personnel qualifications.

7. Level of material and technical base of the intermediary.

8. The manner of market behavior of the intermediary and the principles of his business ethics.

9. Personal characteristics of the leader: education, social status in society.

It is useful to enter into short-term agency agreements with the new firm to learn about its capabilities and responsibilities. You cannot focus on one intermediary. The golden rule of business is: “You can’t put all your eggs in one basket.”

There are the following forms of work between a manufacturing enterprise and intermediaries.

Extensive sales - placement and sale of goods at any enterprises of resellers who are ready and able to do this.

Exclusive distribution is the choice of one reseller in a given region, who will sell the manufacturer’s products.

Selective (selective) sales - selection of a limited number of intermediaries depending on the nature of their clientele, service capabilities, and level of personnel training.

Modern marketing defines two leading types of sales: direct and indirect.

Direct sales are profitable if the money saved due to higher trade margins is higher than the costs associated with organizing the ownership of the sales structure (Table 1).

With direct sales, there is a direct impact on the consumer, so you can control the quality of the product and quickly respond to market demands.

With indirect sales, it is difficult to maintain the image of the manufacturer's brand, organize the necessary service, and control prices. There is no contact with the end consumer, which may ultimately affect the competitiveness of the product.

Marketing policy in the field of sales is significantly different when the seller is a manufacturer and when an intermediary (Table 2).

Table 1. Characteristics of some costs of organizing direct sales

Distribution body	Main cost items for organizing distribution
	Purchasing transport for delivery (or renting transport)
Sales department: sales by calling consumers. Delivery of goods is possible	Costs for representative information materials (price lists, information letters, advertising leaflets) Payment for telephone calls Purchasing or renting transport
Sales department: sales through sales agents and traveling salesmen. Delivery of goods is possible	Costs for representative information materials Agent commission costs Payment for vehicles (partial depreciation) of an agent or traveling salesman is possible
Sales through your own retail network (shop, stall, tray, car)	Costs associated with purchasing or renting a store located outside the company's premises Retail security Purchase of vehicles
Sales through branches and representative offices	Costs of organizing a branch or representative office (searching for a partner, renting premises, security, etc.) Maintaining its activity during the first 6-12 months
Sales through subsidiaries	Costs of organizing a subsidiary (there is a risk that it may subsequently engage in other activities)
Wholesale and retail trade from warehouse	Costs of organizing a warehouse (repairs, equipment) and its operation (staffing, security, etc.)
Sales at fairs, auctions, exhibitions, exchanges	Costs for renting retail space Payment for brokers and auctioneers

Direct and indirect sales have a number of their own specific characteristics. These characteristics are shown in the table below.

Table 2. Difference between direct and indirect sales policies

Sales Policy	Direct sales	Indirect sales
Price policy	Single selling price, pursuit of a single retail price. Moderate trade margin	Price differentiation based on demand, region, consumer High retail margins
Product policy	Keeping your product on the market is, as a rule, a conservative trade policy, because product innovation requires investment	Selecting a product that is in demand. The intermediary demands modifications or a new product from the manufacturer
Distribution policy	Large orders, large permanent intermediaries or consumers. Imposition of the entire range	Small order quantities. Demand for an assortment that is in demand
	Promoting your brand. Formation of the manufacturer's image	Formation of the image of an intermediary through the trademark and image of the manufacturer

Produce only what will definitely be sold, and not try to sell what you have managed to produce.
Marketing rule.

The most important activity of the enterprise's marketing service is the development and implementation of a sales policy in the marketing system in a single complex with product, pricing and communication policies.

Sales (marketing activities) in a broad and narrow sense. Sales methods

Sales (marketing activities) is an element of the marketing mix that characterizes the organization’s activities aimed at making the product available to target consumers. Concepts such as “sales,” “distribution,” and “product distribution” are often used as synonyms for the concept of “sales.” The concept of “sales” can be interpreted in both the broad and narrow sense of the word.

Sales in a broad sense - the process of organizing transportation, warehousing, maintaining inventories, refining, promoting wholesale and retail trade links, pre-sale preparation, packaging and sale of goods in order to satisfy the needs of customers and make a profit on this basis. Here, sales activities begin from the moment the product leaves the production complex and ends with the transfer of the goods to the buyer.

Sales in the narrow sense (sale, implementation) - a process of direct communication between a seller and a buyer, aimed at making a profit and one that requires knowledge, skills and a certain level of trading competence. Here, “sales” means only the final phrase - direct communication between the seller and the buyer, and all other operations in the field of sales are classified as product distribution.

In order for the released product to find its buyer, the manufacturer can use the following marketing methods: direct, indirect and combined.

Direct (direct) sales allows you to establish direct contacts between the manufacturer and buyers, without resorting to the services of independent intermediaries. Direct sales are common in the market for capital goods; less often, direct sales are used in the market for consumer goods.

Direct delivery of products directly to consumers can be effective if:

Indirect sales – a sales method in which product manufacturers use the services of various types of independent intermediaries. It is better to sell goods through intermediaries if:

the consumer market is not limited to a region, but is scattered over a large territory;
deliveries are carried out in small batches and with high frequency.

Combined sales – a sales method in which organizations with mixed capital are used as intermediaries, including, among other things, the capital of the manufacturing company itself.

intensive sales – a sales method in which a wide range of resellers are involved in the process of selling goods, capable of providing additional services (organization of service, supply of components and consumables, etc.);
selective sales – a sales method that uses a limited number of resellers;
targeted sales - specialization, focus on the supply and sale of goods to a certain circle of buyers.

Sales policy of the enterprise: concept, goals, development

Sales issues must be resolved when an enterprise develops a marketing policy. It is at this stage that it is necessary to make a decision regarding the choice of sales markets, sales methods and its stimulation, to determine priority areas, means and methods necessary to enhance sales, which generally represents the sales policy of the enterprise.

Sales policy of the enterprise - this is a set of interrelated elements of sales activities aimed at meeting the needs of consumers through optimal use of the sales potential of the enterprise and ensuring sales efficiency on this basis.

Sales policy goals may be as follows :

maximum satisfaction of consumer demand;
ensuring (increasing) the required sales volumes;
increasing the market share of a company or an individual brand;
providing the enterprise arrived and its increase;
maintaining market share or maintaining a occupied niche;
entering a new market and gaining a share of target segments;
launch of a new product on market ;
retaining clientele and attracting new clients.

The development of an enterprise's sales policy should be based on the results of an analysis of the existing sales system. It is advisable to carry out the analysis not only on quantitative indicators, but also on qualitative ones, such as the level of service, satisfaction with product quality and customer preferences, the effectiveness of communication policy, the correct choice of market segments, the effectiveness of the sales department, etc.

Main directions of sales policy , formulated on the basis of careful analysis, in accordance with the goals and objectives of sales, can be set out in the following documents:

internal standards of sales activities of an enterprise (firm) and standards for control of sales (sales) of finished products;
regulations on departments and job descriptions regulating the sales activities of an enterprise (firm);
product distribution and transportation policies (product distribution channels, sales forms, choice of intermediaries, types of transportation and delivery lines);
product policy of the enterprise (in terms of product nomenclature and assortment, production volumes and development of new products);
pricing policy of the enterprise (in terms of pricing and pricing strategy).

Sales is the most important function and stage in the activities of any enterprise producing any product. Regardless of the nature of the products produced, any manufacturing company deals with the sale of finished products. It is possible to produce useful and high-quality goods (food, cars, equipment, software, clothing), but if you fail to build efficient sales channels products, it simply will not reach its target consumers. That is why so much attention is paid to sales, sales strategy and organization of distribution channels both in theory and in practical business. In this article we will look at sales channels in marketing.

Concept, characteristics and functions of the distribution channel

Sales channel in marketing(English " distribution channel") - a chain of individuals and/or legal entities involved in the process of movement (through purchase and sale) from manufacturer to consumer.

To put it as briefly as possible, then sales channel– a chain of intermediaries (although it is worth noting that distribution channels completely without intermediaries are possible, and we will talk about them a little later).

The sales channel (or otherwise: sales channel, distribution channel, distribution channel) allows you to connect the manufacturer of products or services with their consumers, ensuring the flow of goods in one direction and funds in the other. It turns out that the sales channel is a kind of bridge between the manufacturer and the buyer, a highway connecting them.

Example The distribution channel can be the following chain of participants: car plant (car manufacturer), car dealership (reseller, dealer) and car buyer (end consumer).

Important distribution channel characteristics in marketing – its length, width and levels:

length of the distribution channel - the number of links (intermediaries) in the distribution chain;
distribution channel width - the number of participants in the distribution process in each channel link (for example, if a company sells goods through 3 retail chains, then the width here will be 3);
channel level channel level") is a separate intermediary in the distribution chain, participating in the process of distribution of goods from manufacturer to consumer.

In our example, there is only one intermediary (car dealership). Accordingly, the length of the sales channel will be equal to 1. The same as the width (since cars are sold through one car dealership). And the car dealership itself can be considered one level of the sales channel.

In addition, the nature of the interaction between the links of the distribution system, as well as the functions they perform, are no less important.

The following can be distinguished sales channel functions in marketing:

research – collection of market data;
stimulating – encouraging the purchase of products;
contact – creating and maintaining feedback with customers;
negotiation room – establishing, agreeing and adjusting sales conditions (price, packaging, service);
organizational – ensuring the movement of goods (by and large: transportation, loading, storage);
financial – searching for financial resources to compensate for costs;
risky – accepting full responsibility for the operation of the channel.

As you can see, sales, in fact, plays a huge role in the work of almost any company. And now, having understood the concept and functions of a distribution channel, let’s move on to considering its varieties.

Types of distribution channels

Sales channels in marketing can be classified according to various criteria. But the most popular division of distribution channels according to number of intermediaries.

Main types of sales channels in marketing: direct and indirect

1. Direct sales channels– characterized by the absence of independent intermediaries. That is, the manufacturer independently and directly sells products to customers. He can do this in various ways:

through own (branded) stores;
peddling (for example, culinary products);
selling goods via the Internet.

Example: The publishing house has its own network of bookstores through which it sells books to its readers. Or a furniture factory sells its products at retail from a warehouse. Or the manufacturer of production equipment provides direct deliveries to customer factories.

Since there are no intermediaries in the direct distribution channel, it is considered to be of zero length and is called a “zero-level channel.” Direct sales channels are used quite rarely. They are mainly used in the manufacturers' market.

2. Indirect (indirect) sales channels– one or more intermediaries take part in the distribution process.

Depending on the number of intermediaries (length), indirect sales channels are divided into a number of varieties:

single-level - with a single intermediary. For example, it could be an agent for the sale of industrial equipment;
two-level - here we are already dealing with two intermediaries. An example is the market for consumer goods (food, household chemicals, clothing), where often on the path of products from manufacturer to buyer there are two intermediaries, as an option: a wholesale warehouse and a retail supermarket;
three or more levels – by analogy, this is a distribution channel with 3 or more intermediaries. For example, for a three-level distribution channel, they could be a large wholesaler, a seller of smaller wholesale quantities of goods, and a chain of retail stores.

If there are 1-2 intermediaries in an indirect sales channel, it is called short. If there are more than 2 intermediaries, such a distribution channel is called long.

When it simultaneously uses both direct and indirect distribution channels, such a distribution system is called combined. And a separate article will be devoted to this topic. In the meantime, let's look at the pros and cons of direct and indirect distribution.

Both direct and indirect marketing channels have their advantages and disadvantages. A brief comparison table is presented in the figure. And then we will analyze everything in more detail, and start with direct channels.

Comparative table of direct and indirect sales (distribution) channels from a marketing point of view

Advantages of direct channels sales:

comprehensive control over the sales process, product quality and price;
you can make a big profit, since the intermediary markup is excluded from the price structure;
close contact with consumers (the manufacturer is better aware of their desires and preferences);
increasing the share of cash in;
it is easier to maintain an attractive company image and correctly position the product;
Buyers are often more willing to purchase products from their direct manufacturer.

Disadvantages of direct channels distributions:

market coverage and sales volumes are generally small;
the necessary substantial investments for the implementation of sales activities;
there is an accumulation of products awaiting sale in the enterprise’s warehouses (as a result, storage costs and the risk of spoilage increase);
the manufacturer is forced to independently engage in market analysis, promote products and maintain a sales network, which requires additional resources and investments;
accounting for commodity and cash flows is complicated.

Indirect sales channels in marketing also have their pros and cons.

Benefits of Indirect Channels sales:

the manufacturer can have at its disposal an extensive sales network of an intermediary with wide market coverage, which will increase sales volumes and, as a result, profits;
there is an opportunity to quickly develop new markets;
the manufacturer is freed from the need to create his own warehouse and can focus directly on production;
sale of larger quantities of products is possible;
customer needs in terms of quantity, speed and service are more fully satisfied.

Disadvantages of indirect channels distribution:

the manufacturer loses direct contact with its consumers, the quality of feedback deteriorates, and it becomes more difficult to respond to changes in demand;
the manufacturer also loses control over, in some way, the quality of the product;
the percentage of profit decreases (since it is necessary to provide discounts to intermediaries, selling goods at a price below the market price);
the manufacturer may become heavily dependent on intermediaries.

Thus, on the one hand, selling your products through intermediaries allows you to better satisfy the needs of a larger circle of buyers, but at the same time the manufacturer loses control over the price and the sales process.

On the other hand, selling goods by the enterprise itself without intermediaries is associated with great difficulties and high costs; it allows satisfying the needs of only a limited market segment, but the manufacturer understands its consumer better and can fully control the price and quality of the product.

As you can see, it is impossible to say definitively that indirect distribution channels are best or that direct distribution channels are bad. It all depends on the characteristics of the product, the specifics of the market, the capabilities of the manufacturer, the selected intermediaries, the sales strategy and many other factors. But it is clear that the choice of a distribution system should be approached as responsibly as possible.

Selection of sales channels

Choosing the most appropriate sales marketing system for a given enterprise and market is extremely important. The fact is that the peculiarity of distribution channels is such that once having made a choice in favor of one or another system of distribution of goods, in the future it will be extremely difficult for the manufacturer to change anything in it. Once goods begin moving through the distribution channel, it is very difficult, and often almost impossible, to influence them.

Myself distribution channel selection process marketing can be divided into 4 stages:

Determining the company's sales strategy.
Finding suitable distribution channels.
Analysis and assessment of possible distribution channels.
Selecting partners and resellers.

When choosing a distribution channel, you should consider and analyze complex of factors:

characteristics of the product and the breadth of its range;
transportability of products, conditions and terms of their storage;
geographical location of the manufacturer;
level of profitability of the distribution channel;
specifics of the target market;
the degree of correspondence of the distribution channel to the target consumer segment;
the ability of the enterprise to control the distribution process;
level of competition in the selected market;
projected market share, sales volumes and profit levels;
the minimum necessary costs of cash and other resources for organizing sales;
opportunities to expand sales markets.

In addition, analysis of alternative distribution channels is often used based on complex from 3 groups of criteria:

Economic forces– level of possible sales, projected expenses;
Control factors– period of delivery of goods to the consumer, sales promotion system;
Adaptive factors– the time required to connect the channel to the enterprise’s distribution system, the level of its flexibility and ability to adapt to changes in the market environment.

In international economic practice, this set of criteria is called “ 3C» sales, according to the first letters of the names of the main criteria: “Cost” - costs or expenses, “Control” - control, “Coverage” - market coverage.

In addition, there is an expanded approach to the selection of sales channels in marketing, called “ 6C" Here, to the three above “C”, three more are added: “Capital” - capital (investments required to create a sales channel), “Character” - features of the channel (its properties, degree of compliance with the target market), “Continuity” - stability (financial stability of the trading intermediary, his focus on long-term partnership).

Which sales channel shows the best results based on the analyzed set of factors is selected.

Summary

Let's summarize the entire article and briefly list the main points.

Sales plays an important role in the activities of any enterprise, along with purchasing, production and other functions. Sales of finished products are carried out through distribution channels (sales, distribution, distribution).

Sales channel– a chain of intermediaries along the route of goods from producer to consumer.

Each distribution channel is characterized length(number of links in the channel), width(number of participants in each link) and levels(each individual intermediary).

There are 2 main types of distribution channels in marketing: straight– sales are carried out without intermediaries, directly from the manufacturer to the final buyer; indirect– through intermediaries (a distribution channel with 1 intermediary is called single-level, with 2 - two-level, etc.). In addition, with the simultaneous use of both direct and indirect distribution channels, they speak of combined sales.

Particular attention should be paid to choosing a distribution channel (taking into account the characteristics of the intermediary, costs, the nature of the market and other factors), since it will not be easy to change it later.

Galyautdinov R.R.