How the distribution system works and how to organize the work of selling products. Distribution: management and control What is weighted distribution
2015-11-26 17:06:14
Qualitative and quantitative distribution
Qualitative and quantitative distribution are two terms that are very often used by sales people in communication, as well as in the commercial departments of an enterprise. If you look into the literature, it is not difficult to make sure that in various sources the interpretation of these phrases is different because there is no unambiguous explanation and concept for them, many interpret them in their own way. However, in most cases, the meaning is preserved, the names are simply swapped.
Qualitative distribution represents the number of types of goods in one outlet (store). It should be understood that focusing only on high-quality distribution will not lead to large sales, as there is tension in relations between stores and the agent, the reason for which is the refusal to invest in a product that is difficult to sell or there is no information about consumer characteristics and properties of this product. The latter usually happens when the product is new. In this case, with the help of a store check, the presence of goods in retail stores is analyzed, they are divided into groups, and the required assortment of goods in each group is determined. The representative should place this assortment on the shelves.
Quantitative distribution, on the other hand, determines, as you might guess from the name, the number of retail outlets operating in a certain territory with a trading enterprise. The calculation can be carried out according to the following formula: the number of employees at the TRT (trade point) / the number of all TRTs in a certain territory * 100%. It is necessary to conduct a census of all trade and retail outlets in the territory and to count the worked TRT. It must be remembered that the counting must be carried out by actual addresses, because stores sometimes work for more than one legal entity at the same address and the distribution program may count them as different TPTs.
In practice, it can be seen that in most cases, manufacturing enterprises seek to increase the quality of distribution, and distribution companies, on the contrary, quantitative. To promote a brand, it is imperative that the manufacturer and the distribution company work together in building quantitative and qualitative distribution for the growth and prosperity of both.
www.realcatalog.ru Apartments in Spain are very expensive, but a successful distributor earns quite a lot and can afford both an apartment and a luxury car, but to achieve success in this industry, you need tremendous knowledge in the field of economics and psychology, as well as the ability to communicate with people. Knowledge of foreign languages will not hurt either, but this is not at all necessary, because there are translators for this. And finally, I would like to wish good luck to all newcomers in this industry.
At first glance, a simple question: “How to evaluate the quantitative and qualitative distribution? » But, asking it to a representative of a manufacturing and distribution company, you will probably receive completely different evaluation criteria.
In our practice, when carrying out work to improve the work of distribution, we often have to agree on criteria for assessing quantitative and qualitative distribution. And we often come across the fact that the distributor evaluates the quantity and quality of work with retail, and the manufacturer evaluates the quantity and quality of work with the shelf. Those. the distributor determines his quantitative distribution by the number of outlets where the goods were shipped, and the manufacturer determines the number of outlets where his products are present.
If a distributor evaluates quality distribution by the shipment of key items at retail, then a manufacturer evaluates it by the presence of key items on the retail shelf. Of course, in recent years, a manufacturer and distributor have determined quality distribution by the presence of key positions on the shelf (high competition in the FMCG market affects, where the struggle is not for a point of sale, but for a place in a point of sale). But even here, manufacturers often do not correctly evaluate quality distribution. In practice, manufacturers evaluate the quality of the distributor's work in terms of quality distribution on the basis of a store check, making a cut by territory. This cut, as a rule, includes outlets with which the distributor works and does not work, which does not give an accurate assessment of the distributor's work in terms of quality, because the distributor evaluates the quality distribution precisely for those outlets to which he ships the goods.
In fact, a distributor may not develop quantitative distribution, but may achieve high rates of qualitative distribution. Hence all the inaccuracies in the search for the potential for sales growth - either to look for it in an increase in quantitative distribution, or in a qualitative one.
It is our deep conviction that the lack of uniform standards of distribution work leads not only to disagreements between production and distribution companies, but also sows a seed of discord between marketing and distribution departments, forms a distorted picture of reality in the eyes of the owner.
.
There are no uniform evaluation criteria, no reliable control system, no way to track how distribution works. But in all these “nos” there is a huge growth potential for the company.
To evaluate the work of your distribution, you can use our expert assessment. At the request of distribution and manufacturing companies, we carry out diagnostics of the distribution system in order to find the answer to the question: “What qualitative changes in the work of distribution will allow us to get an increase in shipments of goods to retail? ".
One way or another, everyone who is involved in the field of trade prays for Key Performance Indicators ( Key Performance Indicators or KPIs). These indicators can be completely different in different areas: someone has a plan in rubles, someone in tons or pieces, however, all these values eventually turn into a single value that describes the successes and failures of a particular product.
Distribution is the word business prays for...
What is Distribution?
The concept of "distribution" in the field of sales describes the nature and extent of penetration of a product or service in a certain territory.
Distribution corresponds to the "PLACE" component in
Thus, all the efforts of various levels of the sales organization are a system whose task is to “saturate” all levels of consumption with their product.
Distribution allows you to describe the level of "saturation".
If you want, those who are engaged in sales are a kind of "pump" that exerts commodity pressure on the market in general and on each individual consumer in particular. This pump, through a variety of channels (wholesale, retail) delivers the product in the maximum possible volume.
The result of penetration is distribution.
In simple words, we can say this: how accessible is the product or service for the consumer to the consumer at any given time.
Distribution types.
There are two types of distribution:
- Numerical (or quantitative) distribution(Numerical Distribution, Dn) - A value that describes the percentage of points of sale where the product is available.
If out of 100 outlets your product is in 60, then the numerical distribution will be 60%. - Formula for Numerical Distribution Calculation as follows:
Dn = number of outlets that have your product / total number of outlets on the market * 100% - Weighted (or quality) distribution(Net Weighted Distribution, Dw) —
indicator reflecting the share of the product in the gross sales of the product group.
If, for example, crackers are sold in a store per month for 10,000 rubles, and the brand you are interested in costs 1,000 rubles, then the weighted distribution will be 10%.
Sales volume can be determined in other units: pieces, liters, kilograms. - Formula for calculating weighted distribution:
Dw=your products sold/total category sales*100%
This indicator very easily and clearly describes the situation on the market: if the numerical distribution decreases, then this means that the product began to be sold in a smaller number of outlets, if the weighted distribution falls, then it began to be consumed less.
In addition, significant gaps in the values of quantitative and qualitative distribution allow us to assess the current situation on the market and take steps to change the situation.
Example 1:
Numerical distribution - 90%, weighted - 20%.
This means that the product is available in almost all points of sale, but the sales volume leaves much to be desired. What could be the reason for such a phenomenon?
Option 1: The product is in stock in the store window, but it is chronically out of stock.
Possible reasons: incorrectly calculated order, insufficient production volume (goods are in short supply)). The culprits of the wrong order volume. as a rule, there are lazy sales representatives or negligent buyers.
Option 2: the product is in the leftovers and is on display.
Here, the reasons can be both insufficient visibility (zone C) or its complete absence, and, for example, an overpricing. The buyer either does not know that the product is in stock, or is not ready to buy at the specified price.
Example 2:
Numerical distribution - 30%, weighted - 80%.
This ratio of numbers indicates insufficient coverage of the territory: the product most likely has a high potential and is in demand by the end consumer, but there are too few places where you can buy it.
This is a signal for the development of the sales structure: either by connecting third-party sub-distributors, or by expanding the staff of sales representatives.
Also, one of the interpretations may be the insufficiently active work of the team of sales representatives with an inactive client base.
It should be remembered that without the necessary volume of goods in the balances, high-quality distribution is impossible, especially in relation to FMCG products. The buyer will easily switch to another brand if he systematically gets into situations where he cannot buy what is in the window.
It is also extremely difficult to sell a product that is in the required volume in the warehouse, but not on the display, especially given the high level of competition for shelf space.
And where the possibilities of an ordinary sales representative are exhausted, marketing tools come to the rescue. But this is a completely different topic.
Both the distributor and the manufacturer have their own idea of what quantitative and qualitative distribution is. Each of them interprets the concepts depending on the specifics and features of the organization of their workflow.
To build the right business strategy, you need to understand how both parties see this process. Therefore, let's look at how each of its participants considers and interprets qualitative and quantitative distribution.
This species has another name - numerical. Its main task is to take into account all available outlets that work with the goods you produce. For the supplier, the calculation goes specifically to the number of points on the shelves of which his products are present, for the distributor they are presented in the form of points where he sent the goods of manufacturers within a month.
To calculate the quantitative distribution for manufacturers, use the following formula. Take the total number of outlets that were taken into account during the audit and divide by the total number of outlets that were audited.
Let's look at an example.
For example, you audited 100 outlets and only 75 of them had your product on the shelves. We get that the indicator of quantitative distribution is 75%. The result obtained is average with a large error, since 100 audit points is a small indicator for accurate calculations.
For a distributor, the calculation formula looks different. Here it is necessary to divide the number of outlets where the goods were delivered during the month by the total number of outlets represented in the controlled territory.
In this case, the calculation result will be more reliable, but it has 2 main drawbacks:
- The goods could be delivered only once, for example, in the first half of the month, and the remaining units simply went unnoticed in the warehouses. Or the product was sold out in the first days after delivery.
- There is no exact data on the total client base. Therefore, it is better to carry out the count at the same time as the annual distribution inventory of the territory.
Quite often, the received data remains unused by the supervisor. Therefore, for productivity, it is better to use special ones. They are able to quickly synchronize with 1C systems on a PC and thus provide real-time data with less financial and time costs.
Indicators of qualitative and quantitative distribution are very important for increasing the efficiency of sales of a particular type of product. For a manufacturer, an indicator of the professional construction of high-quality distribution will be the consideration of 3 factors at once, each of which must have 100% indicators:
- TOR - on the shelves of the outlet;
- the prevalence of its product among similar products;
- compliance with the POS-materials standard.
Quantitative distribution indicators are an indicator of the scale of the business as a whole. For a more complete assessment, it is important to conduct an analysis in an automated system and include a merchandising block in it. In this way, the manufacturer will be able to obtain data on product placement areas, availability of POS material, as well as the presence of SKUs on storefronts during the audit process.
For distributors, an indicator of building an effective high-quality distribution will be systemic outlets with an indicator above 75%. This data can also be recorded and monitored in automated programs from ABMDD, track the efficiency and growth dynamics of the distributor's work.
For a supervisor, such a solution will significantly save time and money, help streamline the management process and significantly reduce irrelevant costs.
Also read related articles:
