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THE
APRIL 12, 1924
MUSIC TRADE
REVIEW
Is the Exclusive Agency Worth While?
The Division of Responsibility Between the Manufacturer and the Merchant in This Form of Distribution—
The Dealers' Interest in the Manufacturers' Advertising—Manufacturers' National Distribu-
tions—Second of a Series of Articles on Present-day Piano Distribution
OR many years one of the most disputed
points in piano distribution has been the
value of the exclusive agency, both to the
manufacturer and the dealer. For a long period
this method had been the general trend in piano
distribution, many manufacturers going so far
as to grant large territory promiscuously to
dealers with no certainty of the number of in-
struments they could sell. Even when sales
volume bore no proper ratio to the potentialities
of the territory, these agencies were continued,
either because the manufacturer had no detailed
knowledge regarding that particular locality or
else because he feared to drop a representative
and seek a new one. It was also true that many
manufacturers allowed the creation of name
value to be largely in the hands of the dealer,
with the result that the latter acquired what
seemed to be a vested right in the agency, an
idea that in many cases had a real foundation.
A Gradual Change
Of late years, however, with the appearance
of the nationally advertised piano and player-
piano of medium grades, the exclusive agency,
particularly in this field, has tended to disap-
pear. In its place has come general distribution
with a consequent increase in sales due to the
larger number of outlets. Thus sufficient ex-
perience has been had with both of these
methods of distribution to warrant a careful
study of their effects and arrive at some definite
conclusions regarding the efficiency of both
methods, and the particular instruments to
which both plans of distribution apply most
readily.
In securing an exclusive agency from a manu-
facturer the dealer at the same time acquires a
responsibility. If a manufacturer is willing to
confine his distribution to one outlet within a
certain locality, the dealer in turn assumes an
implied obligation to create a sufficient volume
of sales to warrant that restriction. It has often
been this lack of realization on the part of the
dealer, combined with the attitude of many man-
ufacturers in granting large territories without
sufficiently protecting themselves in regard to
sales volume, that has led to most of abuses
which have grown but of the exclusive agency.
Cases have been known of manufacturers who
have granted a large section of an entire State
to a dealer who had neither the sales organiza-
tion nor the facilities to cover such an extent of
territory, with the result that on the manufac-
turer's distribution map big stretches of prof-
itable selling territory were barren of results
and what appeared to be a national distribution
was in reality but 50 or 60 per cent of the
country.
Mutual Injury
When a manufacturer grants an exclusive
agency he injures both himself and the dealer
it he gives the latter more territory than the
latter can efficiently cover. The injury to the
manufacturer is apparent enough; the injury to
the dealer is more difficult to discover. Granted
that the instrument is a name value piano, and
exclusive agencies are only sought for pianos
of that type, the inevitable result upon the dealer
and his sales organization is to take the easy
sales and make but little effort to obtain the
more difficult ones. A sales policy based on
the lines of least resistance means soft selling
and soft selling means an unworked territory.
If the attitude of the selling organization to-
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wards the leader of the line has this character-
istic, it will exist in regard to every instrument
handled, with the result that the dealer's busi-
ness will be materially curtailed with very little
chance of any remedy being found and applied
to remove the evil.
Given a wide enough stretch of territory,
there are always sufficient sales of a name value
piano to create a fair sales volume, and espe-
cially when the dealer has never studied the
potentialities of the territory, self-satisfaction
exists. There are a number of instances of
retail houses in the trade doing a fair sales
volume, but not making nearly enough of their
opportunities, which have suffered for years
from this interior dry-rot. This condition has
had much wider effect upon piano distribution
than has been usually considered.
Agency and Quota
Thus the exclusive agency has served in many
cases to create a steady deterioration of retail
selling methods. But this is not an inherent
defect of this method; it has grown up by the
abuse of it. The manufacturer should grant no
exclusive agency for his product save by a
direct understanding with the dealer that the
latter will make a sufficient volume of sales to
warrant a restriction of outlets in his territory.
A manufacturer of one of the best names in the
country, whose product is sold on an exclusive
agency basis, never grants an agency unless the
house is sure the dealer can properly cover the
territory. Then the dealer is told that a certain
quota of sales is expected annually if the agency
is to remain in his possession. This quota is
figured on the condition of the territory within
a certain radius of the dealer's warerooms and
takes into consideration such factors as the
population, the income tax statistics, whether
the territory is industrial, commercial or agri-
cultural, the number of individually owned
homes, the number of individually owned
automobiles, the number of banks and the
number of bank depositors, as well as the total
deposits, the number of piano dealers and com-
petitive conditions, including the competitive
lines handled, and other information of a similar
character. With this information at the manu-
facturer's disposal, he figures a reasonable
quota, with due allowance made for fluctuating
local industrial conditions, and the agency is
valuable enough for the dealer to agree to it
in order to secure the representation.
Many dealers, of course, would consider that
such a system throws too much responsibility
upon their shoulders. But in the experience
of this manufacturer, an agency is rarely trans-
ferred, staying with the same retail house year
after year, and the quotas are met. The house
itself has one of the few really national dis-
tributions that exist in the piano industry and
has built it up simply because it has consistently
followed this policy. Its agencies include the
best retail dealers in the country.
Medium and Low-priced Products
Manufacturers of medium and low-priced
pianos and player-pianos have largely discon-
tinued the exclusive agency, especially when
their selling plan is based on national adver-
tising. One manufacturer, who was among the
pioneers in this policy, has developed this work
so far that, in a city like Chicago, he has ap-
proximately twenty dealers, all handling his
line under its own name, for he makes no other
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instruments save those which carry his name
on their fallboards. Ten years ago such a dis-
tribution was unknown in retail piano selling
and would have been thought out of the
question. Yet, this manufacturer, through ad-
vertising his product steadily and consistently,
has built up such a demand with the buying
public that these dealers, many as there are
of them, make imposing sales figures in selling
this line on its name and, of course, on the
intrinsic value which the name denotes.
One of the outstanding features of this manu-
facturers' selling policy has been the steady en-
couragement he has always given his dealers to
utilize his national publicity in their own selling
work. Strange as it may seem, this has re-
quired a long campaign of written propaganda
and personal work by his travelers. To-day all
dealers who handle this line link their ware-
rooms closely with the national campaign,
partly by means of the dealers' helps which the
manufacturer sends out and partly by closely
following the national publicity as it appears
with their own advertising in the local news-
papers. It is quantity selling, of course, but
quantity selling methods are required in
handling a line which has such a wide potential.
market.
Checking Volume
The manufacturer of a similar line who is
still trying to use the exclusive agency in mar-
keting it is checking his own development as
well as that of the dealers with whom he places
his agencies. Quantity selling, which implies
a comparatively small profit, must mean a large
number of outlets. The manufacturing problem
here sets the selling problem and unless they
are both in a proper relationship, distribution
inevitably suffers.
Considering the exclusive agency from the
standpoint of efficient piano distribution, inevi-
tably the conclusion must be arrived at that
it is only efficient when applied to instruments
of the higher grades, which appeal to a com-
paratively restricted buying public because their
prices place them beyond the reach of the aver-
age family income. On the other hand, in the
distribution of instruments in the medium and
lower grades the exclusive agency inevitably
tends to restrict outlets and thus sales volume.
For, with an instrument of name value in these
grades, there are no retail selling organizations
large enough nor with sufficient facilities to
cover the prospective buyers for it.
B & E
Murphy in New Warerooms
SAVANNAH, GA., April 7.—The Murphy Music
House has taken larger and more convenient
quarters at 144 Whitaker street, removing from
112 Whitaker, where it has been doing business
for several years. The business was established
in 1904 by John D. Murphy and its present
owner and proprietor is G. A. Murphy.
Incorporated in Missouri
KANSAS CITY, MO., April 5.—The Starr Piano
Co. Sales Corp., of Indiana, has recently been
incorporated to sell musical instruments in
Kansas City, with an authorized capitalization
of $10,000. Harry and Clarence Gennett and
C. V. Bissell are the incorporators.
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