Management of the point of purchase and sales channels

Introduction

There are two main challenges when managing the point of purchase, the level of control and the dispersion or number of points of purchase.

Figure 4.10 Control and dispersion-level matrix of sales channels

Matrix of the channel management challenge in terms of level of control and number of points of purchase. Owned points of purchase, like concept and e-stores. have a high level of control but are small in number. Third-party stores come with less control. E-tailers have few points of purchase, while modem retail normally has a higher number, all with high sales per point of purchase. Traditional and fragmented trade, and e-commerce, either re-sellers or consumer to consumer are more numerous and with fewer sales per point of purchase.

Source: Author

In the case of a high level of control of the points of purchase, the shopper marketing strategy can be fully implemented, and the point of purchase becomes, in the best case, a seamless extension. Where the level of control is low, a specific sales function will be necessary to handle and manage the points of purchase, either directly or thr ough third parties as distributors, or both. Depending on the level of consolidation, key account management or individual point of purchase approaches are necessary. In the case of numerous points of purchase with low individual sales, distributors are often employed. These distributors are key accounts themselves and need to be managed as such. There are also mixed systems where specific tasks are divided among the manufacturer, a distributor and other third-party organizations, e.g. merchandising companies.

Own points of purchase, both brick and mortar and digital, are simpler to activate, as they are under the foil control of the brand, product and service owner, even more so in the case of concept stores such as Apple, Nike and Adidas. The more stores, the more complicated to keep up sound implementation, monitoring and control of their outlets.

Franchise and partner points of purchase are a specific challenge. There are partner stores for strong brands, e.g. Apple, and there are franchise businesses, e.g. 7-Eleven stores. There are clear criteria for activation and presentation, but the relationship is defined by a contract and the control of the activation is indirect. The stronger the negotiating power the more concessions a business partner will be able to secure. Partner and franchise solutions are an important way to increase presence while lowering costs and investments.

Managing and activating points of purchase can be summarized in three key activities: development of the competitive position at the point of purchase; sales and ordertaking activities; and operations in teims of ensuring that products, services, equipment and materials are present at the right time and place. Depending on the consolidation of the customer, activities can be more or less centralized, and depending on the agreement, the activities can be allocated to either the manufacturer or the retailer.

Figure 4.11 Activities in managing brick-and-mortar points of purchase

Key point of purchase management activities to ensure activation in line with commercial objectives.

Source: Author