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What is a Manufacturers' Agent
(Representative)? |
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The Manufacturers' Agent (more correctly referred to
as The Manufacturers' Representative and sometimes called
a Sales agent, Sales Rep. or just plain Rep.) is a self-employed
person who has elected to earn his living by representing
two, or more manufacturers (Principals) in a sales capacity.
His agency maybe a sole proprietorship, partnership
or corporation. In essence, Manufacturers' Representatives
provide services as an "out-sourced" sales
function. |
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The Manufacturers' Agent, hereinafter referred to as
the Manufacturers' Representative is the sales force
of the manufacturer and as such, represents the manufacturer
in a sales capacity in a specific, exclusive assigned
territory. Geography, market or industry segment, specific
accounts, or a combination of these elements may define
the territory. |
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The Manufacturers' Representative will usually
select and contact Principals for the types of lines he has an
interest in selling which are compatible with his other lines and
customer base. The lines represented can be OEM component parts,
capitol goods or services -- the list is long and varied, but nearly
every product manufactured can be sold by a Manufacturers'
Representative. |
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Product line compatibility and synergy are important
to the Manufacturers' Representative, because it permits
him to call and sell all, or certainly most of the lines
he represents, to the same type of industry. This makes
calling time more effective and saves time that is always
at a premium for a Manufacturers' Representative. |
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From the Principal's viewpoint, the Manufacturers'
Representative can provide a national or international
sales force at very low cost to the Principal. The Principal
pays no salesman salaries, no fringe benefits, no automobile
cost and no travel and living expenses. The Principal
must only provide support to the Manufacturers' Representative
in the form of product training, sales literature, sales
leads, quality products to sell at competitive prices,
competitive deliveries and occasional joint calls. The
Manufacturers' Representative, by IRS definition, is
an independent contractor and as such the Principal
must not pay his expenses nor direct his activities
except in an advisory capacity. |
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The Manufacturers' Representative's
responsibility to the Principal is to provide diligent coverage of
the assigned territory and to professionally promote the Principal's
products and services according to the agreed upon policy guidelines
and product specifications. One of the Manufacturers'
Representative's primary responsibilities is to be an effective
communicator. The Manufacturers' Representative's broad selling
experience usually makes him more familiar with the customer's
specific needs and the Principal's particular capabilities.
Therefore, the Manufacturers' Representative will endeavor to
establish three-way communication between the Representative; the
customer and the Principal with the objective to secure orders and
maintain continued customer relations. |
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So, what is the cost to the Principal for this national
or international sales force of self-employed Manufacturers'
Representatives? - only commissions on orders from the
territory. No cost is incurred by the Principal for
non-productive calls; territory development or customer
follow up for service. |
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For his sales efforts, the Manufacturers'
Representative receives a commission from the Principal on the
average of 5% to 25% of the order value, depending on the type of
products sold. The Manufacturers' Representative, however, has all
the selling expenses that the Principal would normally pay for a
direct sales force. These expenses include auto, travel and living,
office rent, secretarial, fringe benefits, FICA, unemployment
compensation, insurance, entertainment of customers and a retirement
program. All of these expenses must come out of the commission paid
to the Manufacturers' Representative and still leave enough to
provide salaries for himself and any sales persons he has working
for him. |
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The Manufacturers' Representative is a unique individual
who has selected this profession in order to be his/her
own person and to be an independent entrepreneur. Representative,
Principals and Customers are, in fact interdependent. |
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| Wisconsin
Association of Manufacturers' Agents, Inc. |
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1504 N. 68th Street |
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Milwaukee, WI 53213 |
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(Phone and Fax) 414/778-0640 |
| (E-mail) wama@wama.org. |
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