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date: 19 February 2019

Abstract and Keywords

This article examines the advantages and disadvantages of using manufacturer's representatives, and develops a framework for managing and compensating independent agents. Strategic decisions concerning whether the selling function should be performed using a company sales force, an outsourced partner, or combination of the two have an important impact on a firm's competitive advantage. Commission-compensated representatives do not take title of the product, do not set prices, usually do not handle merchandise, and do not sell competing products. However, they typically sell non-competing products. Several factors affect the decision to outsource the sales force, including the feasibility of building commitment with the independent representative, market coverage efficiencies, and selling effectiveness. Several advantages are offered including stability of the rep, market focused agility, portfolio selling capabilities, and risk reduction. Certain challenges are involved in managing the relationship. A different set of management competencies is required compared to a conventional in-house sales force.

Keywords: manufacturer's representatives, sales force, outsourced partner, commission-compensated representatives, market coverage efficiencies

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