SALES AND DISRTIBUTİON CHANNEL  SYSTEMS AND TYPES IN TURKEY

I wrote this article to introduce the sales channel and dealer and distributor structure in Turkey to companies that want to enter the Turkish market or to improve their sales activities in Turkey. The dealership system exists in almost every sector in Turkey. It is a very common system and thousands of dealers operate in each business line. I believe that it will be a guide for companies that want to enter the Turkish market and do not know where to start.

Dealership systems  that are generally known and referenced are exclusive dealership systems. In other words, these are the dealerships where the dealer sells a single brand. However, there are not only exclusive dealership systems in the market. Despite their shortcomings, there are non-exclusive dealerships that work with dealership logic and fiction. In order to clarify the concepts about dealership and dealer management, I will evaluate dealership systems and their types in this section.

The companies I worked for for many years - the sectors - were the institutions that established and managed their dealership systems with the logic of exclusive dealership. In other words, these were systems in which the dealer only sold a single brand and even limited its activities to a single product category. The dealer's identification with the company, a high level of dependence on the company and working with full rules are the main characteristics of this system.

But as you expand into different industries, product categories, and companies, you begin to see that franchise isn't always so rigid. There are systems where the level of addiction is medium, low or even zero. These different types of franchises inevitably lead to confusion.

It is necessary to make a conceptualization so that companies that want to transform their existing dealership systems or that want to establish a new dealership system do not get lost in this conceptual confusion. I will try to remove the complexity and residue on the franchise systems so that everyone can see it clearly.

We can refer to the following three points when determining dealership systems and types.

Dealership systems are generally shaped according to the following setup.

• Selling one or more product/product categories

• Working with one or more supplier companies/brands

• Working with one or more legal entities

When we add one or more places (office, warehouse, etc.) and one or more team options to this setup, the big picture is completed.

The diagram below gives us a strong perspective to solve the dealership systems.

The horizontal axis above shows the number of companies/brands worked, and the vertical axis shows the number of products sold. A dealer can work with one company/brand and sell a product range, or work with more than one company/brand and sell more than one product range. Above, each section represents a particular type of dealer.

Therefore, we can formulate certain dealership systems as follows;

Under a single legal entity;

• Working with a single product/product category and a single supplier/brand

 Fuel, LPG, white goods, automobile

• Working with one supplier/brand but more than one product/product category

Ready-to-wear, paint/hardware

• Working with a single product/product category but with more than one supplier/brand in the product category

Carpet makers, furnishers

• Working with more than one product/product category but more than one supplier/brand for each product

Different types of retailing (food, cosmetics, DIY market, agriculture etc.)

Sometimes, when dealers cannot gather different products and suppliers under one company, they may prefer to establish additional companies. This may be due to the physical properties of the products or the contractual provisions of the supplier companies. Or it may be based entirely on the financial structure and preferences of the dealer.

Sometimes, dealers can keep separate physical spaces (office, store, warehouse) or set up teams for these different businesses and companies. It is possible to create this diversity as the professional management quality of the dealers increases.

In accordance with this analysis, we can define 4 types of dealership systems*;

• Fully exclusive franchise:

• Exclusive dealership

• Free Franchise

• POS

 

Considering this diagram, we can redefine the concepts;

Fully exclusive dealership: Working with a single supplier/brand with a single product/product category

Exclusive dealership: Working with one supplier/brand but more than one product/product category

Free Dealership: One product/product category, but working with more than one supplier/brand in the product category

Point of Sale: More than one product/product category, but working with more than one supplier/brand for each product

 

In the terminology section, we have defined the necessary and sufficient conditions of the dealership. Accordingly, working within a contracted, regular and corporate management system was an indispensable condition of dealership. In this respect, the last two categories do not adequately meet this requirement. However, we can see these structures as a type of dealership, even if they are irregular and loose. These are called "traditional dealership" systems.

Dealership types can take many different forms in industries. It may occur in structures that do not fully comply with the classification here. In fact, companies and company managers in our country work without being aware of these distinctions. Since a company in the traditional dealership sector does not know the exclusive systems, the understanding of dealership is limited to this system. Or, on the contrary, a company with an exclusive dealership system does not know the traditional structures. This is normal because the experience of each firm and each employee is limited to the field in which they work. The problem is experienced by the vendors and managers who change their jobs within these different structures. A person who has worked and gained experience in a certain structure for years is stunned when he switches to a different structure. When he tries to apply his familiar and habitual working style in his new company, he also has problems or falters. Adaptation problems to the new structure, performance losses, conflict, etc. processes are taking place. Due to inexperience, people can blame either the company or themselves in such cases. However, the problem is neither with the company nor with the people. It is the compatibility problems brought about by the differences between the two structures. In case of being aware of this, the parties can manage these processes better.

The type or type of dealership system in a sector or company is shaped or shaped beyond the company's strategies and policies, and is proportional to the average business volume and profitability of the dealer. If the dealer can provide a satisfactory business volume and profitability with a single product and a single supplier, "exclusive" dealership is in question. This business volume and profitability are the main determinants in the course from a fully exclusive dealership to the point of sale.

Among these four systems, the identification of the dealer with the main company, the level of dependency and the intensity of regular work differ. There is a loosening from the exclusive dealership to the point of sale. The diagram below explains this situation.

Such a conceptualization will enable companies to improve their dealer management processes. Especially if a new dealership organization is to be established, the first strategic decision is to determine which of these types the dealership will be. It will provide a clarification on what, how much and how to do for companies that want to transform an existing dealership system.

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www.faruksener.com.tr ,          faruk@faruksener.com.tr