Last week, Marka and the FEI tribe discussed how strategic discounting can lead to better profits. This week, their focus is on selecting a distribution strategy for FEI products. Remember, fire = print.
It was a muggy afternoon, typical of Olympus’ warm autumns. On Main St., just a two-minute chariot ride from FEI headquarters, stood Zoot. He wore a sandwich board and held a box of torches in his hand. The sandwich board read: “I GOT FIRE! WHO WANTS SOME?”
Lucy, Org, Marka and Numo encountered the FEI salesperson on their way to work. “What are you doing, Zoot?” Lucy asked.
“Direct sales can’t do it all,” Zoot explained. “We need another way to distribute our torches and other products. I thought standing on the street corner might work.”
“I think we can come up with better ideas than that,” Lucy said.
“Probably,” Zoot admitted. “I came up with it at 3 a.m. last night.”
“I agree with you, Zoot,” Org said. “Historically, fire’s been a direct sale. Prometheus and Custo went door-to-door giving fire to mankind. This worked fine for two generations. But as our company grows, so must our sales channels.”
“It’s no longer cost-feasible to send a salesperson to the door of every FEI customer,” Numo agreed.
“Before making distribution decisions, let’s start by simply determining where the types of people who need our products are most likely to look for them,” Lucy advised. “Two generations ago, Olympians may have expected a fire salesperson to arrive at their door every week. But today, many of our customers look for fire products in retail stores, on the Onet and elsewhere. Our distribution strategy must reflect these changes in consumer behavior.”
“Our goal is to come up with a distribution strategy that reaches the maximum number of customers interested in FEI products, for a reasonable price,” Lucy continued. “There are four main sales channels that we can use to accomplish this goal. Today, we’ll talk about the first one. Zoot, turn around please.”
Lucy fished a piece of coal out of her toga and scribbled on the back of the Zoot’s sandwich board.Direct Sales
“As Numo mentioned, direct sales isn’t cost-effective for every prospect,” Lucy began. “Salespeople are expensive. But our largest B2B prospects will almost always warrant a direct sales approach. Zoot, can you think of an example?”
“Olympian’s World, of course,” Zoot replied. “It buys millions of drachmas of fire each year—for fireworks shows, to heat its facilities and light them at night. Its business is paramount to FEI’s continued success. A prospect of this magnitude requires frequent direct, in-person contact in order to keep the buyer satisfied and aware of the products and services we provide.”
“Even for prospects like Olympian’s World, however, direct sales can’t do it all,” Marka added. “They have multiple fire decision-makers, all of whom we must influence. This will not always be possible through direct sales alone. Instead, we need to take an integrated approach: direct sales, yes, but also ‘drip’ marketing, public relations, and the like.”
“Agreed,” Org said. “Are there a few more distribution methods that we can use to get our products out to the people who want to buy them?”
“Yes,” Lucy said, “but that’ll have to wait until next week.”Today’s FIRE! Point
Before making distribution decisions, start by simply determining where the types of people who need your products are most likely to look for them. There are four main distribution channels through which you can reach potential customers: direct sales, retail, wholesale/distributors and online. FIRE! in Action:Hindustan Lever Gets Direct with Rural Consumers
Every sales trainee for the Indian hygiene products company spends up to eight weeks living in a small, rural village. Doing so helps them intimately understand the needs of the rural people that constitute an important, often-neglected West Asian market. The results? Lever claims 70 percent of shampoo sales
from these rural markets.Next week: The FEI tribe goes over the advantages of the retail distribution method.