Monday, October 11, 2010

Rebate good use of this double-edged sword

Rebate is a double-edged sword, if used properly can play the role of dealer incentives can be used properly once, will play opposite effect, become short-term behavior of the induced bad dealer agent.

To motivate distributors, many companies are developing rebate incentives, the intention is to mobilize the enthusiasm of the rebate. Rebate is judged according to certain manufacturers, in cash or in kind to the dealer incentives lag, which has lagged cash features. The current approach of most enterprises is linked with sales. However, the rebate is a double-edged sword, used properly can play the role of dealer incentives can be used properly once, will play opposite effect, become short-term behavior of the induced bad dealer agent.

Manufacturers generally based on the dealer to rebate sales, higher sales volume, the higher the rebate. This is to mobilize the enthusiasm of dealers, to encourage dealers to market and sell their products. This is true to some extent, can play the role of dealer incentives. After all, is very important for the manufacturers to improve sales, especially early in the product market, dealers manufacturers whether their ability is an important standard to dominate the market. When the products to capture the market, manufacturers shifted the focus of sales efforts to stabilize the market. At this time, simply based on sales volume rebates will be more and more obvious defects. To fight for the interests, dealers will want to increase sales, but in a certain time limit of the region can not complete the sales goal, they inevitably think of changing commodity, such as product sales at a low price will be out, or flat out into the flat or even lower in the wholesale purchase price. Results, leading to confusion or even crash the price system.

Case: rebate, is not easy to say love you

Side is always the marketing boss of a cosmetics manufacturer, the sales performance last year, well, this year prepared a go. To achieve this goal, the party always introduced new incentives, based on last year to further improve the amount of sales rebate incentives.

Side developed three different total annual sales volume targets, that is a necessary task, tasks, and sprint for the task, the completion of the higher annual sales targets, the greater the percentage rebate is at the end to inspire more sales distributors. Three indicators as a necessary task 2 million, 2.5 million yuan for the task and the sprint task 3 million yuan, rebate rates were 1%, 3% and 5%, corresponding to the rebate amount of 20 000, 75 000 and 15 million.

From the side view of the total rebate policy, if the dealer will guarantee of 200 million mission, can only get 20,000 yuan of sales rebates, but the completion of three million of the sprint task, you can get 150,000 yuan. So long as a 50% increase in sales, rebates can withstand a good turn.

For dealers, the profits of their own is definitely placed first. Induction of the new rebate policy, the dealer will Qiaojiannaodai red sales, for the maximum amount of rebates received awards. As a result, some dealers wantonly changing commodity to the other regions; some dealers down fire sale prices. It seems as long as they can get the maximum levels of rebates, the expense of profit or cost-effective point spread.

Changing commodity and cheap to stop the fire sale, the gross violation of the dealer for some repeated demands, and threatened to deduct the rebate, but simply does not work. Because manufacturers bunk payment deduction in the hands of dealers, so dealers have nothing to fear. Thus, the situation escalated, intensified, the original number of dealers have been forced to comply with the order involved, the more sold, the lower the price, less than a year, the price close to the "sell through."

Dealers blamed each other, complaints continue, the total party was badly battered, the company's marketing staff around the fire, exhausted, the original "make the market" of the marketing staff has now become a "do fire," the. In order to minimize the gross low-priced products on the market order the destruction of a particularly serious for those who sell regional market, the manufacturers pay for the fire sale of products bought cheap. But the situation has not improved, because the source is not blocked, manufacturers continue to buy cheap products has continued to flow to the market.

How do? Total pain side determined to dealers on the implementation of several serious FALSIFYING out of stock. The dealer was out of stock dissatisfied that none other than the first, if provoked FALSIFYING war, how should I FALSIFYING it? I am not in a FALSIFYING, so what right off my goods? Them in retaliation for manufacturers, the remaining products will be lower prices Shuaixiang market.

Originally wanted to prepare this big, did not expect to like this. Then the manufacturer should be rebates on how to maximize the incentive to check their negative effects? Recommendations from the following three tasks:

1, according to the process of management is necessary to consider the standard rebate

Rebate policies in the development, not solely to sales as a standard, but should be managed according to the needs of integrated assessment process, it is necessary to attach importance to sales incentives, but also should pay attention to process management. This is to help distributors increase sales, but also to prevent irregular operation of the dealers, but also foster a healthy and orderly market environment.

Manufacturers can work for marketing some of the details to set up a reward distribution rate may relate to the scope, vivid point of sale, all items purchase, safety stock, to comply with regional sales, special sales, distribution and compliance of payment and so positive.

1. Shop market display award

Just enter the target market in the product, in order to quickly reach terminal products, manufacturers to distributors Distribution Issues Award as the appropriate human resources, capacity subsidies and distributors of products on display in the best position to be rewarded.

2. Channel maintenance award

To avoid stranded goods dealers and led to products based on the work of lagging sales decline, manufacturers of "channel maintenance award" in the form of incentives for distributors to maintain a product's effective, appropriate size of channel network.

3. Price credibility Award

In order to prevent FALSIFYING, arbitrary price for their bad behavior and causes the final loss of profit margins, manufacturers set the "price of credit Award" to strengthen the dealer's control.

4. A reasonable stock awards

Manufacturers taking into account local market capacity, delivery period, the goods turnover, and accident safety reserves and other factors, to establish "reasonable inventory Prize" to encourage dealers to maintain proper inventory.

5. Competitive Collaboration Award

Implementation of policies for the dealers, advertising and promotional tie, setting up collaboration and information feedback Award, this can strengthen their relationship with the manufacturers, but also dilute the conflict of interest between them.

Second, phase adjustment according to product rebates focus

With a rebate to encourage dealers, manufacturers should first understand the specific objectives to be achieved at this stage what is targeted in order to obtain really want. Stages in different markets, manufacturers of key objectives are different, so the focus at different stages of the rebate should be different, so manufacturers can achieve goals and inspire unity of purpose.

For example, in product introduction focused on the rebate incentives to encourage dealer distribution rate, opening rate, and so vivid indicator of the amount of improvement and dealer delivery to complete; growth stage in the product key lies rebate against competing goods, plus college marketing, market intelligence feedback, distribution efforts, implementation of effective promotional items such incentives ratio supplemented by certain sales incentives; in product maturity will have to attach importance to maintaining access order, rebates should keep area sales, compliance with price regulations mainly shipping and payment compliance, sales incentives play a supporting role only.

Third, as a management tool for rebate

Rebate incentives both play the role of distributors, dealers have to play the role of management and control. Because the rebate is not on the spot cash awards but lagged realized, some dealers profits deduction in the hands of manufacturers, and manufacturers to seize the initiative, if done correctly, can be made into a control dealer rebate an effective tool.

Some manufacturers such rebate policy formulation: Dealers full implementation of the price system by the company's sales rebate of 3%; dealer sales exceeded requirements, rebate of 1%; dealer did not cross-regional sales rebate of 0.5%; Dealers better plan the implementation of marketing and promotions, rebates of 1%. If the dealer is not changing commodity prices and other arbitrary acts, you can get at least 3% of the rebate, if the dealer does not regulate a variety of means to the sales charge ahead, they can only receive 1% rebate, and then sold a large distribution business is not worth the candle. Of course, not only surpassed those sales, and no random act of changing commodity prices dealers benefit the most.

Some manufacturers also more rigorous management to crack down on disorder and other short-term behavior of changing commodity prices, as long as the dealers have random acts of changing commodity prices, the year-end rebate to be abolished, this dealer is a great deterrent. So, manufacturers will be able to use rebates to curb short-term behavior such as changing commodity dealers.

If the company only wanted to give dealers a bigger profit margins, but also to maintain price stability, then how to do? One approach is that business to the dealer's wholesale price is the dealer's Chuhuo Jia, and is not spread, dealer profits have not spread, so that the profit depends entirely on the manufacturers dealer rebate.

Home dairy enterprise is to take this approach, the factory to a dealer price of 10.6 yuan per bag, while a dealer has to lower the price by the distributors, and distributors to higher point Price sold to retailers, a dealer in principle, there is no spread of profits. Pricing policies for sale of products by manufacturers of a dealer, after the end of each quarter, according to the amount of sales per case to a higher rebate amount. The factory price for non-compliance with the policy of a dealer, then no rebate, or even revoke its franchise. This makes the product price in the market to maintain stability and to prevent such a race FALSIFYING bargain confusion, and ensures the dealer profits, enhance their business initiatives.

Reference: Pepsi's rebate policy

Pepsi rebate policy on the provisions of sub-divided into five parts: an annual deduction, quarterly awards, annual awards, specialty awards and incentives to support next year, in addition to annual deduction for the "out back" outside the (specified in the contract of 1% ), and the remaining four awards for the "dark back," without prior agreement of the implementation of standards, afterwards told the dealer.

1. Quarterly Bonus: after the end of each quarter within two months, according to a certain percentage of the product form for purchase. This is not only dealers on the quarter recognition of the work, but also for the next quarter, sales support, so that manufacturers and distributors to promote cooperation in each quarter finished, reflect on the situation of cooperation and summary, mutual exchanges, study the market situation. PepsiCo also send each end of the quarter, sales director of the dealer sales representative training and guidance, to help implement the next quarter sales and implementation of measures to enhance mutual trust.

2. On buckle and annual awards: the year is to complete the sales dealer recognition and reward. Deduction and annual awards in the following year's first quarter, according to purchase a certain percentage of the number given in the form of product.

3. Monopoly incentives: a dealer in the contract period, Pepsi-Cola in soft drink monopoly product, the end of the contract, the factory according to distributor sales, market share as well as cooperation with the manufacturers for their reward. Voluntary agreement established by the distributor monopoly, and in written form to fill in the contract text. In the contract execution process, the factory will check whether the implementation of the monopoly distributor agreement.

4. Support the award next year: the completion of the year sales goal is to continue and Pepsi-Cola companies, and has renewed the contract of sale of the dealer's sales activities in support of the following year, this award the following year at the dealer to complete the premise of the first quarter sales Under the first month in the second quarter to give the product form.

Because of incentives advance over the "bottom" of space is too small, low-cost selling dealer if the losses and risks, manufacturers will not be considered. And Pepsi in the contract also provides for quarterly evaluation of the distributors of some items: for example, actual sales; regional sales market share; to safeguard the sales market and Pepsi sales price stability; whether the implementation of the factory's sales policies and strategies and so on.

To prevent fraudulent sales, the company provides appraisal by the Marketing Department, Planning Department staff are deployed to form a coalition team to inspect from time to time to ensure the accuracy of score results, authenticity, truly reward and manufacturers to jointly maintain and expand market dealers.

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