Customer and discounts
is a sales tool which is to increase customers interest in buying bigger quantities in each of the periods. These are just two parameters to be set: the buying threshold, and the rebate (% of price) for exceeding the threshold.
The rebate program is very transparent. however, it does not allow for distinction of any customer. In reality there are situations when one would like to grant a customer with extra bonus resulting from settlements or negotiations. Sometimes one would like to exclude a customer from any discount. You can use individual discount to do either. Individual discounts are granted at customer or customer group level. Any time we might switch a discount off, or modify its characteristics. These are:
- Discount level in %, i.e. how much we reduce the selling price to the customer or group of customers
- Exclusivity. If you select yes, a flat discount will be applied to the customers, irrespectively of the purchase quantities. The rebate program would not apply to these customers. If you choose no - the rebate will be added to the one earned within the rebate program.
Important: Discount granted to a customer overrides the one granted to its group. For instance, if a customer X, belonging to the retail chains channel has discount 2%, while the retail chains 3% - it will earn 2% while other customer from the same group 3%. Switching off discounts completely for a customer is thus straightforward - you just need to define 0% individual, and exclusive discount.
As a manufacturer you concentrate primarily on the product characteristics, but you also need effective distribution. On the other hand it is not desirable to multiply the number of direct customers at is increases the customer service (logistic) costs. You need to find a balance between the width of distribution (number of direct customers) and the optimum costs level. It might be a good choice not to deliver to every single independent retailer and leave it to distributors.
There is on general rule applicable to the distribution channels/suppliers management. The sales transactions can take place if both, the selling, and buying business agree to cooperate. You might see the decisions of your potential customers in this view. However, even if they decided to (generally) buy from you - they still do not have to buy from you all the products.