Manufacturing agents – In marketing a product, a manufacturer may use agents and intermediaries who do not have the rights to the goods. Typically, these agencies will only do a small amount of marketing flow. Meanwhile, its main function is to facilitate buying and selling: that is, bringing sellers and buyers together and negotiating between the two.
Agents that are commonly found in the real estate industry, insurance, to food, can represent sellers or buyers and then are paid by the party that employs them. Often times, an agent may represent several non-competitive product manufacturers on a commission basis.
One of the agents that cannot be dismissed from the industry is a manufacturing agent . Then, what exactly is meant by a manufacturing agent? Check out the full explanation in this article, Sinaumed’s
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Definition of Manufacturing Agent
Manufacturing agents are agents who work directly with factories, to carry out marketing to some or all of the goods produced by these factories. There can be more than one factory whose products are sold by a manufacturing agent, and usually the products sold are products that do not compete in the same industry.
Among companies that don’t have enough capital to independently recruit a sales team, the existence of this one agent is very popular, Sinaumed’s.
In the United States, most manufacturing companies, both small and medium-sized, rely on independent agents to sell their products. The independent agency form of representation is also transitioning for a number of large companies as it has proven to be a cost-effective selling tool.
Wholesalers, retailers, government agencies, equipment manufacturers, hospitals, and schools are places where agents can sell products. As mentioned, a manufacturing agent may also represent several manufacturers who produce compatible, but non-competitive, lines.
For example, one agent could represent a company that produces shoes and bags.
Manufacturing Agent Duties
Today, manufacturing agents are considered to be highly skilled marketing professionals, which is also where companies introduce these agents to the products they will represent. With these companies, agents are in regular contact, demonstrating special product features, giving demonstrations, and advising on technical features that will be useful.
Extensive knowledge about the company represented and the product to be marketed must be owned by a manufacturing agent. In fact, agents must also quote credit terms, prices, delivery dates and methods, to costs.
In addition, these agents may also handle one-off sales, introduce new products, keep track of orders for certain items coming into the factory, and ensure their customers receive excellent service.
Advantages and Disadvantages of Manufacturing Agents
As we have seen, having a manufacturing agency is very popular among certain companies that are short on capital. So, what are the advantages and disadvantages of using the services of a manufacturing agent? Here’s the review.
Excess
- More efficient marketing and sales budgets for newly established pilot factories.
- Manufacturers gain insight into market trends, customer demographics, and industries from other regions.
- Manufacturing agents can help sales by selling compatible products into a single market, for industries where the market is narrow.
Lack
- Because they feel they have good sales performance, manufacturing agents have the potential to act autonomously even though they are not employees of the company.
- Often times, manufacturing agents fail to handle sales because they don’t focus on just one product.
Types of Manufacturing Agents
Sinaumed’s, next, we will describe the types of manufacturing agents that you need to know. Let’s see together!
1. Technical Product Selling
Usually, a manufacturing agent whose type is technical product selling sells merchandise that is used by the industry in its own business. Perhaps, this process involves the raw materials and parts that the company needs to produce the finished product that it sells. It can also be machinery or electronic equipment designed to make a company operate more efficiently.
Companies that produce transportation equipment, fabricated metal products, electronics, and heavy machinery are the largest employers who can use manufacturing agents. Often, a single sale represents hundreds of thousands of dollars worth of machines. However, it may take that one sale months to years to complete.
2. Non-Technical Product Selling
Generally, manufacturing agents representing non-technical products sell their wares to wholesalers or large retail stores for resale to the general public. The type of goods sold also determines how they approach customers.
A lot of time that this type of manufacturing agent spends taking orders from customers through existing channels. However, efforts are made to increase the size of these orders by helping wholesalers to sell their existing stock properly.
3. Sales Promotion Activities
Another place for manufacturing agents to profit is in sales promotion jobs. This type of agency promotes sales by providing merchandising services and advice instead of selling physical products.
They also help retailers and build intent, both to increase sales. The reason is, they provide advice on store design, publicity opportunities, exhibitions, special events, to other advertising media.
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Manufacturing and Small Business Agents
Approximately, how are manufacturing agents and small businesses related? What are the advantages and disadvantages like? Come on, see below!
1. Profit
Manufacturing agents also provide information to relocation companies or new companies regarding demographics and market trends directly, aka being at the forefront, in addition to providing financial benefits. Companies can gain instant access to industry knowledge or expertise in a given region or country by contracting with a manufacturing agency.
In addition, there are other advantages such as offering one of the best ways of market access for manufacturers with narrow product lines. Manufacturing agency companies generally have good relations with the manufacturer’s main target market because they usually sell compatible products to a single market.
This allows manufacturers to enter markets that may be difficult to reach with a direct sales force. Not only that, new businesses can get ideas from manufacturing agents regarding where to advertise, estimates of the potential for certain areas, to comments on competitor strategies!
2. Lack
The drawback is that, despite using manufacturing bros, business owners and consultants note that it makes perfect sense for small companies that have to allocate their financial resources very vigilantly and learn quickly about the market, running into certain drawbacks.
For example, the most frequent complaint of business owners when discussing manufacturing agency companies is the lack of control over agents. This is because company ownership cannot determine how to run a business because manufacturing agents are not company employees.
Indeed, small business owners can negotiate certain matters with agents, just as clients do with vendors. However, some critics in the final analysis also claimed that manufacturing agents were not always able to devote the necessary time to a single product line because they were doing business on behalf of more than one manufacturer.
Often, the initial assistance and follow-up services that are included in the basic elements of customer service must be supplied by the manufacturer even if the goods are sold out of the hands of a manufacturing agent.
Another concern with manufacturing agents is that they increase sales costs by acting as intermediaries in the process.
However, as Bob Trinkle mentions at Agency Sales Magazine , while manufacturing agencies are an alternative or substitute for direct selling so they should be viewed as a form of outsourcing of the sales function, the need to maintain an internal sales staff for a specific region or product line should be eliminated when hiring agents. manufacture.
Actually, agents in this way can help small businesses in reducing administrative costs.
Choosing a Manufacturing Agent
Manufacturers have many factors to consider when they go through the process of selecting a manufacturing agent. Small business owners should look for someone who demonstrates the ability and willingness to be knowledgeable about their product and application, as well as someone who will respond quickly and present the product in terms of meeting customer needs.
A good agent will also represent the various product lines he or she markets in a fair way, giving each line the attention it deserves, regardless of how much revenue is factored in (this last concern is especially important for small and new businesses).
The best rule of thumb for manufacturers is to be patient and do lots of preliminary research. After all, the choice will be the main link between the company and its target audience. Bad choices can ruin a company; conversely, good choices can help launch new producers toward long-term financial stability.
Given the stakes involved in this choice, MANA recommends in its Directory of Manufacturer Sales Agencies that business owners consider doing the following when weighing their options:
1. Create an Ideal Agency Profile
Make the profile clear, but also flexible and realistic. The perfect agency doesn’t exist, but there are many who would do a great job given the chance.
2. Create a Manufacturing Company Profile
Manufacturers are encouraged to compile profiles of their target customers, an overview of business needs, and a summary of the philosophy that governs the business. Many agencies can be selective about who to add to their client list, so it makes sense to let them know about the business and its goals and prospects.
The profile should also be honest and touch on growth plans, the real advantages of the products it manufactures, and past history.
3. Securing Referrals from Other Agencies
In the United States, manufacturing agents are closely related and many can name several suitable agencies for the line.
4. Get References from Other Manufacturers
Companies in the same area that sell similar products but are not competitive can be a good source of information in finding potential agents. Some may even recommend their own agent, although others may be reluctant to have their agent take on additional product lines and responsibilities.
5. Be patient
While manufacturers don’t have the luxury of waiting forever when filling agent vacancies, doing an early re-search is usually a good idea. Many manufacturers later admit that they did not spend enough time exploring their options and learning about their chosen agent. It’s better to take the time it takes to pick the right prospects than to rush into a bad situation and have to fix it later.
6. Be Flexible in Setting Up Territories
Agents should have exclusive rights within a territory, but rather than assigning an arbitrary region based on geography, it’s often better to choose the agent best suited to our line and let their scope define the region.
“Manufacturers should always recognize that independent agents choose independence because they want to do what they want to do, not what any producer wants them to do,” writes Harold J. Novick in Agency Sales Magazine .
“Therefore, the key to success with an independent agency is finding that one high-performing agency that comes closest to doing what you want it to do in the market today. Hiring an agent with even one key characteristic missing can substantially reduce your possible market share in that regard. Finding the right representatives creates a high probability for a true win-win situation, as both ‘partners’ have the same goal,” he continued.
7. Liaising with Agents
Manufacturers should remember that their manufacturing agents are independent sales agents who are not employees of any of their principals, but are business partners with each principal. Thus, manufacturers cannot have the same type of direct control that they exercise over their own personnel.
From a legal standpoint, it’s important to remember that the manufacturer pays nothing to the agent until the sale is made. They also don’t pay withholding taxes or Social Security.
Using a manufacturing agent also means that some of the manufacturer’s bookkeeping needs will be taken care of by non-employees. This is an important distinction for the Internal Revenue Service (IRS), which strongly dislikes arrangements in which companies disguise employees under the guise of an independent agent or contractor.
When assessing this, the IRS usually uses it as one of its tests of the amount of direct control it exercises over the sales force. If regular reports are requested from an independent agent, the IRS can declare the agent an employee and request various applicable withholding taxes.
Communication remains an integral part of the relationship between agents and their clients. Both sides need to continue to judge the other about their operations. Agents must tell their principals what they are doing for them in the field, regardless of sales levels at the time, while agents need up-to-date information on things like product specifications and prices.
In the end, both parties just need to recognize that a cohesive working relationship is in their mutual best interest. In dealing with representatives, manufacturers expect: loyalty; knowledge of the region and/or industry; knowledge of the product line after reasonable exposure; quick response to suggestions; regular follow-up; and their fair share of time agents. Agent.
Meanwhile, both parties have the right to expect a number of things, including:
- Fair contracts that recognize performance and reward success and longevity.
- Access to customer service, training and technical support.
- Quality product.
- Timely delivery.
- A true commitment to building a business in their area.
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Closing
Sinaumed’s, that’s an explanation regarding manufacturing agents and their relationship with various products and even producers. It is also important to know the practice abroad as a reference. That way, our insights about manufacturing agents are increasing. After knowing various things about manufacturing agents, are you interested in getting into the world of manufacturing?
If Sinaumed’s is interested in reading books related to manufacturing, then you can get them on the sinaumedia.com website. To support Sinaumed’s in adding insight, sinaumedia always provides quality and original books so that Sinaumed’s has #MoreWithReading information .
Author: Sevilla Nouval Evanda