Channel Evaluation

Channel evaluation is a multidimensional construct and includes both performance measures of the channel and measures of contribution to consumers by th channel. These measures of channel performance have been grouped under three main dimensions also known as 3Es, i.e., Effectiveness, Efficiency, and Equity. Effectiveness is further subdivided into delivery and stimulation.

• Delivery is defined as a short term measure of how well the channel meets the demand for service outputs placed on it by the consumption sector.
• Stimulation is defined as a long term, goal oriented measure of how well the channel member stimulate latent demand to reach optimum levels of demand.

Efficiency is further subdivided into productivity and profitability:

• Productivity is defined as the efficiency with which output is generated from resources and inputs used. In essence, productivity is a measure of physical efficiency.
• Profitability is a general measure of financial efficiency of channel member, in terms of return on investment, liquidity, leverage, growth patterns in sales and profits, growth potential in sales and profits, market share, average inventory maintained, etc.

Equity is the extent to which marketing channels serve problem-ridden markets and market segments, such a disadvantaged or geographically isolated consumers.

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Appointing a Dealer

1. The Branch Manager perceives a need for an additional dealer in an area. Need occurs if any existing dealer leaves or is removed. It could also happen when the company expands into new territory.
2. The Branch Manager has to convince the general manager of the division about the need for anew dealer.
3. The selection process for the dealer begins with placing advertisements in newspapers and trade magazines inviting applications. Applications for dealership are directed to the concerned branch manager.
4. The branch manager then reviews the application forms and prepares a shortlist if necessary. The company has not laid down any concrete guidelines for shortlisting at this stage. The branch manager is allowed to exercise his discretion.
5. The shortlisted applicants are interviewed by the branch manager along with the regional sales manager of the division. Whatever additional information is required is obtained from the applicants during the interview. The dealers are evaluated on:
   1. Prior business record
   2. The capability of maintaining and running his own showroom
   3. Financial strength
   4. Inventory: The dealer must have enough working capital for maintaining specified level of inventory. This condition is however is applied only in the case of dealers whose territories are located considerably away from a branch office. This is because there is a company owned warehouse along with every branch office and for dealers located in the same cities there is no necessity to maintain separate inventory
   5. Contacts with customers
   6. Availability of salesforce to service customer effectively. In addition, technicians also need to be present to meet the after-sales service requirements of the products
6. The final selection decision is made after talking with the bankers of the applicant. This is done to check the veracity of information regarding financial strength and prior business experience. It is only after the company is satisfied regarding all aspects of he information, that it sends the dealer an appointment letter
7. The appointment letter lays down several terms of the contract that have to be fulfilled by the dealer. The company expects the dealers not to sell any competitors’ products. The dealer is also expected to conduct his business only within the clearly demarcated sales territory allocated to him by the company.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Buying Behavior

The effectiveness of the different options would depend on the buying behavior. Telemarketing is an example that highlights the importance of understanding the buying behavior before allotting the functions. Several telemarketing agencies promote their products through television. However, the sales of those brands are not picking up as this method is unable to allow the consumers to feel the  product or have a demonstration. Noticing this deficiency the telemarketing agencies open franchise outlets in major towns to satisfy this consumer requirements.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Operating Leverage

It is a financial thought quite similar to break-even analysis. Both fixed and variable costs are used in the production and marketing of products. The higher the operating leverage, the faster the speed of increase of total profits after the sales crosses the break-even volume. Likewise, those firms with high operational leverage will suffer losses at a faster rate after the sales volume drops under the break-even point.

Organizations with high operating leverage gain more from sales from organizations that have low operating leverage. Organizations with high operating leverage are more responsive to drop in sales volume, losses will occur at a faster speed.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Retail Trends & Strategies

• Better market positioning: This involves more careful identification of market segments and providing service superior to that of competition.
• Market intensification: This involves clustering more stores in the same metropolitan area and contiguous markets.
• Secondary markets: Expansion will be increasingly focused on secondary markets  of under 100,000 population because there may be less competition from larger retailers, and costs, such as wages, may be lower.
• Differences in store size: Retailers will have a more flexible portfolio of different sized stores depending on the size of the community and existing retail competition. More use of second-hand space will occur because this can result in savings of 30 percent or more in rent.
• Productivity increases: The application of central checkout, self-selection, and low gross margins to areas of trade where these techniques have not been used before will occur. Look now at toy supermarkets, home-decorating centers, and self-service shoe stores.
• Fewer product options: Product lines will increasingly be consolidated, and new product development will be cut back.
• Service growth: Services retailing will continue to grow as a percentage of total retail sales. Services already represent about 50 percent of the gross national product.
• More mergers: Increasingly, smaller and weaker firms will be absorbed as more retail outlets struggle to survive.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Marketing Eras

• Production Era:  Prior to 1925, most firms operating in highly developed economies focused narrowly on production. Manufacturers stressed production of quality products and then looked for people to purchase them.  The production era did not reach its peak until the early part of 20^th century.
• Sales Era: Manufacturers began to increase their emphasis on effective sales forces to find customers for their output. Firms attempted to match their output to the potential number of customers who would want it. Companies with a sales orientation assume that customers will resist purchasing products and services not deemed essential and that the task of personal selling and advertising is to convince them to buy. Although marketing departments began to emerge from shadows of production, finance, and engineering during the sales era, marketing dominated sales and other areas. Selling is thus a component of marketing.
• Marketing: Personal incomes and consumer demand for products and services dropped rapidly thrusting marketing into a more important role. Organizational survival dictated that managers pay close attention to the markets for their goods and services. The trend ended with the outbreak of World War 11, when rationing and shortages of consumer goods became commonplace. The war years created only a pause in an emerging trend in business: a shift in the focus from products and sales to satisfying customer needs.
• Relationship: It emerged during the 90s. Organizations carried the marketing era’s customer orientation one step further by focusing on establishing and maintaining relationships. This effort represented a major shift from the traditional concept of marketing as a simple exchange between buyer and seller. Relationship marketing by contrast, involves long-term, value-added relationships developed over time, strategic alliances and partnerships retailers play major roles in relationship marketing.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Listening

Listening to the other’s point of view starts during pre-selling. Don’t switch off when you’re through talking, Listen. Understand. If you don’t understand, ask questions until you do. Then you can do a better selling job because you know more than you did when you started.

Listening is one of the best times to pick up sales points and disagreement between otherwise agreeable allies. Listen to the words and to the tone. You will be able to tell who is leading whom. You can’t learn without listening, and the more you know, the better your chance of obtaining your goal.

Don’t let your mind wander or focus on objections, and don’t spend your pre-selling time trying to develop responses instead of concentrating on what has been said.

Listen, listen, listen. There is no substitute for listening, especially during the pre-sell period

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Discounted Cash Flow

It is a useful conception from Discounted Cash Flows that they are future cash flows expressed in terms of their present value. The discounted cash flow technique employs this reasoning by evaluating the present value of a business’s net cash flow (cash inflows minus cash outflows). A simplified view of cash flow is “cash flow from operations,” which is net income plus depreciation charges, because depreciation is a non-cash charge against sales to determine net income. The present value of a stream cash flows is obtained by selecting an interest or discount rate at which these flows are to be valued, or discounted, and the timing of each. The interest or discount rate is often defined by the opportunity cost of capital—the cost of earning opportunities forgone by investing in a business with its attendant risk as opposed to investing in risk free securities

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Market Sales Potential

Market sales potential is a quantitative approximation of effective demand. Specifically, market sales potential is the maximum level of sales that might be available to all organizations serving a defined market in a specific time period given 1) the marketing mix activities and effort of all organizations, and 2) a set of environmental conditions. As this definition indicates, market sales potential is not a fixed amount. Rather, it is a function of a number of factors, some of which are controllable and others not controllable by organizations. For example, controllable marketing-mix activities and marketing related expenditures of organizations can influence market sales potential. On the other hand, consumer disposable income, government regulations, and other social, economic, and political conditions are not controllable by organizations, but do affect market sales potential. These uncontrollable factors are particularly relevant in estimating market sales potential in developing countries.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Good Pricing Decisions

Pricing decisions draw on many areas of marketing expertise. It requires a comprehensive understanding of the forces that shape the market, including competitive  interactions, technology and consumer psychology. Sometimes these forces interact and are likely to put downward pressure on prices, such as substitutes, technological advances, price-driven competition, customer experience, and changes in internal focus, such as sales forecasts. Customer makes it difficult to raise prices, as repeat customers’ ability to perceive incremental value of a company’s product or service diminishes over time, especially as substitute or competitive products emerge. Increased internal expectations in the form of expected sales increases or new budgets can send prices on a downward spiral. Customer price sensitivity may also serve  to keep prices in check, especially in the presence of available competitive substitutes or among a company’s marginal customers.

Even in a deflationary economy, there are opportunities for keeping prices from dropping or even for raising prices. However, customers must perceive that these enhancements deliver a genuine, meaningful benefit, or they will continue to seek lower cost alternatives.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.