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Question 1. Why should the manufacturer consider using on an independent agent?

detonovo      Obviously we also have better experience and expertise in marketing since our core business is to sell which they can apply to the product. Feedback can be invaluable as we may be more in touch with customer needs since the manufacturer’s competence is in manufacturing and not selling.

Should the firm rely on independent agents to represent its interests or hire its own company salespeople?

 

• Due to the seasonal nature of your products you have to be efficient in a minimum amount of time.

• You need the guarantee of immediate benefits without neither wasting too much time, nor invest in the creation of local structures.

• You need to fulfil your sales ambitions as quickly as possible.

The fixed costs of using external agents are lower than those of using a company salesforce because there is usually less administrative overhead and agents do not receive a salary or reimbursement for selling expenses. Thus, agents are typically more cost efficient at lower levels of sales but less so as volumes increase. This helps explain why agents tend to be used by smaller firms or by larger firms in their smaller territories where sales are too low to justify a company salesforce.