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May 2002
Editor’s Note: It has come to our attention that many of our readers have heard a lot about the agency method of selling without getting a broad overview of the profession. So, rather than continue the series on
agency startup financing, over the next two months, we’ll define the term “manufacturers’ agent” and cover the duties, sales promotion activity, personal qualifications, education, working conditions and other basic
factors associated with the profession.
The Manufacturers’ Agent
Definition
A manufacturers’ agent or manufacturers’ representative is a self-employed salesperson who represents one or more manufacturers on a commission basis. A large portion of small- to medium-sized manufacturing firms in
the United States depends upon independent agents to sell their products. A number of larger companies are also turning to the independent agent form of representation because it is proving to be a very
cost-effective means of selling. Representatives may sell to wholesalers, retailers, government agencies, original equipment manufacturers, hospitals, schools, etc. The companies that an agent represents are called
principals. A manufacturers’ agent may represent several principals who produce compatible, but not competitive, lines. For example, an agent may represent one company who manufactures skis, another who makes ski
boots, and still others who make sunglasses, caps, gloves and other clothing for the skier.
Duties
Today’s manufacturers’ agents are considered highly skilled marketing professionals who call on various firms to acquaint them with the products they represent. They make regular contact with these firms, pointing
out special features of their products, giving demonstrations and advising them on the technical features that will meet customers’ requirements. The manufacturers’ agent must have extensive knowledge of the
companies he represents and the products he markets. Agents are also required to quote prices, credit terms, delivery dates, shipping methods and costs. They may handle one-time sales, introduce new products, keep
orders for established items coming into the plant and see that their customers get the best possible service. How they perform these duties depends upon whether they sell technical products to businesses and
industries or non-technical products for resale to the general public.
Technical Product Selling
Manufacturers’ agents who represent technical products usually sell merchandise that industries use in their own businesses. It may involve raw material and parts the company needs to produce the finished products it
sells, or it may be machinery or electronic equipment designed to make company operations more efficient. The largest employers of sales engineers are companies that manufacture transportation equipment, fabricated
metal products, electronics and heavy machinery. A single sale often represents hundreds of thousands of dollars worth of machinery, but one sale may take several months or even years to complete.
Non-Technical Product Selling
Manufacturers’ agents who represent non-technical products generally sell their merchandise to wholesalers or to big retail stores for resale to the general public. The manner in which they approach customers is
determined by the type of items they sell. They spend a great deal of their time taking orders from customers for lines already established, but they continually attempt to increase the size of these orders by
helping their wholesalers to sell current stock successfully.
Sales Promotion Activity
Another area in which manufacturers’ agents may earn a living is sales promotion work. These agents seldom sell a physical product; rather, they promote sales by supplying merchandising advice and services. They
build goodwill by helping retailers to increase sales, since they give advice on publicity opportunities, store designs, special events, exhibits, direct mail and other advertising media.
Next month we’ll cover more of the basics of being a manufacturers’ representative.
Principal Profile And Selection
by Ken Benjamin
Many of the guidelines I am recommending are the result of not having anyone to ask advice of in the early days. This resulted in my making some pretty dumb mistakes, which fortunately were small and not financially
crippling.
My own experience, as well as that of many others, has been that you want to search for and represent small companies that have never had a full-time professional salesman. Try to find a company that has “the better
mousetrap” and has been able to only sell them on a local basis by personal reputation. Sooner or later, these small companies run out of friends and neighbors to sell to!
What you’re really doing is discovering companies that are smaller, perhaps out of the way, and typify the entrepreneur owner who has the desire to expand, yet cannot afford to pay the sales cost for his own direct
salesman. Long-term, this type of prospect has the potential for a very long-term relationship profitable to both parties.
This article is excerpted from Make Your Future Happen, Ken Benjamin’s definitive guide to starting an agency. To order your copy, call MANA toll-free at (877) 626-2776 today!
Over the next few months, we’re going to take an in-depth look at what it took to start Western Environmental Equipment Corp. a very successful California manufacturers’ rep agency.
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