44081921 sales and distribution management by tapan k panda (1)
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Introduction to Sales Management Sales management is the attainment of sales force goals in an
effective and efficient manner through planning, training, leading,and controlling organizational resources
Sales management is planning, direction and control of personalselling. This essentially includes recruiting, selecting, equipping,assigning, supervising, compensating and motivating the sales force
Objectives of Sales Management
Generate sales and earn revenueProviding Profitability
Improving Market Share
Improving Corporate Image
Selling concept proposes that customer will not buy enough of an
organization's products unless they are persuaded to do so throughselling effort. Where as Marketing concept proposes that to achievesuccess, the focus should be on organization's ability to create,communicate and deliver a better value proposition through itsmarketing offer.
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Introduction to Sales ManagementMajor Differences between Selling and Marketing
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Introduction to Sales Management Sales management involves the execution of the following
tasks: Setting personal selling objectivesFormulating sales policies.
Structuring the sales force.
Deciding the size of the sales force.
Designing / Demarcating / developing sales
territories.
Developing the sales forecasts and sales budgets.Fixing sales targets for individual sales territories
/salesman.
Creating the sales force
selection, recruitment, induction/ orientation.
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Introduction to Sales ManagementManaging the sales force- compensation, motivation, sales coaching/supervision
evaluation/appraisal, training/development Building the sales organization.Managing the marketing channels.Ensuring growth and developing new accounts. Sales communication and reporting.
Sales coordination and sales controlling including sales expensecontrol.Creating and maintaining right image for the company and its
products in the market.
Co-ordination with marketing management in the areas like,
product mix, pricing, distribution, advertising and sales promotion.Building relationship strategies with key customers
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Introduction to Sales Management
Personal selling: Personal selling is one of the forms of Promotion. Other forms
being advertising, sales promotion and publicity. It is the art of successfully persuading customers to buy a
product or services from which they can derive suitable benefits,thereby increasing their total satisfaction.
Personal selling is a face to face transaction, a personal
correspondence or a personal telephonic conversation between asalesman and a prospective customer.
A well trained salesman can be a very effective communicationmedium. Personal selling involves: Persuasion
Flexibility of approach
Supply of information
Mutual benefit
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Introduction to Sales Management It is because of personal selling that customers come to know about the use of new products in the
market. The sellers demonstrate the product before the prospective buyers and explain the use andutility of the products.
Personal selling also guides customers in selecting goods best suited to their requirements andtastes as.
It involves face-to-face communication.
Personal selling gives an opportunity to the customers to put forward their complaints anddifficulties in using the product and get the solution immediately.
Limitations of personal selling
Can not reach mass audience
Expensive per contact
Many sales calls may be needed to generate a single sale
Labor intensive
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Introduction to Sales Management
Services selling:
Services selling involves selling of intangible goods. Services have some unique characteristics whichdistinguish them from physical goods such as intangibility, simultaneity of production andconsumption, non storability etc. Examples of services industry are hospitality, health care,insurance, airlines etc.
Types of selling function: Different buying situations call for different types of selling function.
Broadly selling function can be categorized as follows
Order takersthey respond to existing customers.Order creatorsthey attempt to influence the specifiers
rather than customers.
Order gettersThey are the front line sales people or salessupport personnel
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Introduction to Sales Management
Order takers can be classified as
Inside order takers: these are retail sales assistants. They perform the role of completing thetransaction. They receive payment and passes the goods to the consumer : EG:- salespersons in BigBazar.
Delivery sales persons : They deliver the products to customers as in the case of orders received onphone. Eg:- Delivery boy in Dominos pizza.
Outside order takers:- They make sales call and take orders from customers. They do not deliveranything at customers place. Eg:- Sales people from Eureka Forbes.
Order creators
Missionary salespersons: They do not close a sale but persuade thecustomers to promote a sellers brand . Eg:- Medicalrepresentatives persuade the doctors to prescribe.
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Introduction to Sales Management
Order Getters are classified as: Front line salespersons
Organizational salespersonsthey are the industrial sellerswho try to establish long time relationship with organizationalbuyers.
Consumer salespersons are the door to door salesmen. Eg:-insurance agents, carpet sellers, sellers of spices etc.
Sales support sales persons:
Technical support salespersonsRender support to frontlinesales people when the product or the services being sold iscomplex.
Merchandisers: provide sales support in retail and wholesaling
situations.
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P l S lli Skill
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Personal Selling Skills
Selling skills:The essential selling skills of a sales persons are:
Communication skill. verbal
non-verbal.
Listening skills.Content listeningUnderstanding and retaining the message
Critical listeningUnderstanding and evaluating the speakers logic,
intentions, motives etc.Active listeningunderstanding speakers feelings, needs etc.
Conflict management and resolution skills.Conflict exists with in every organization/ department. There can be
Interest conflicts, Emotional conflicts, Value conflicts. Conflict need to beresolved.
Negotiation skillsSuccessful negotiation involves an attempt by two parties to reach a
mutually acceptable solution (preferably a win-win situation).
Problem solving skills.Problem solving process involves 1. Define the problem 2. Generate
alternatives 3. Decide 4. Implement 5. Evaluate the solution. 12
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Personal Selling Process
The sales process is a sequential series of actions:
Pre-sale preparation. Prospecting
Pre-approach before the interview
Approach the customer
Presentation
Handling the customers objections
Trial close Close
Follow-up and service.
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Personal Selling Process
Pre-sale preparation:by the salesman to equip himself with- Product knowledge
Types
Features
Benefits / Limitations
Price
Company knowledge History
Management
Size Finances
Policies and procedures
Competitors knowledge: Industry structure
Products
Market share
Policies
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Personal Selling Process Prospecting: involves locating and qualifying prospects. It is the
process of seeking and identifying prospective buyers or leads.
Qualifying prospects means to determine whether the prospect isable to buy. Few methods of prospecting are: Cold canvassing: goes door to door in an identified area.
Customer referrals: Requesting customers to provide a list of possible customers.
Prospect pools: Gathered from telephone directory or mailing list.
centers of influence: They are people in a position to influence others by the virtue of their power,popularity etc. Their referrals carry certain level of authority.
Net working Non competing sales force.
Telemarketing.
Direct mailing
Using internet.
Trade shows and demonstrations at exhibitions
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Personal Selling ProcessPre-approach before selling: The pre-approach takes place prior to
meeting the qualified prospect. In this stage the salesperson mustdecide how to best initiate a face to face meeting. This includes
analysis of available information about the prospects buyingbehaviour and evaluation of competitors products.
Approach: This takes place when the seller first meets theprospective buyer. It is necessary to fix an appointment with thecustomer at their desired place and time, before meeting him. Thegoal at this stage is to gain the interest and attention of the buyer.Careful pre-approach planning is needed to achieve this.
Presentation: the presentation of the sales message may take theform of a prepared (canned) presentation or take an interactive(needs-satisfaction) approach. The message is intended to persuadebuyers to purchase the product based on its attributes and benefits.During sales presentation there are basically three approaches usedattracting attention, creating interest and arousing desire / convictionbuilding.
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Personal Selling ProcessHandling objections:This needs considerable sales skill. Well
preparedsalesmen anticipate objections and are prepared to handlethem. Commonly used objection handling methods are
Boomerang methods - Converting objections in to reasons forbuying.
CompensationUsed when objections are valid but there arefactors which compensate or outweigh the objections
Forestalling - With his experience anticipates and counters thepossible objections at the presentation level itself.
Feel, felt, foundSalespeople express their understanding of howprospects feel, indicate that it is possible to feel that way becauseothers have also felt that way but have found their fears to be
unfounded.
Head onIt is used when the objections are based on incorrectinformation. Salespeople in such a situation
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Personal Selling Process
politely but firmly deny the validity of the objections.
Indirect denial: This is when a head on approach is better
avoided. Here the approach is not to tell the buyer directly thathe is wrong but yet manage to correct the impression by statingthe facts.
Closing the sale : This the stage at which the seller tries to gain apurchase commitment from the prospect. Salespersons who are
uncertain that it is an appropriate time to close the deal may use a trialclose. If a trial close seems to be going well , it can be pursued to acomplete close. If not, it can be withdrawn with out detractingreducing the effectiveness of the meeting.
Follow-Up: This step in the process represents the salespersons effortsto assume customer satisfaction after the sale. These efforts providean important basis for building goodwill and future sales. It may beused to suggest additional sales of the product or related goods.
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Sales ForecastingSales forecasting is estimating what a company's future sales are likely
to be in the future. It is a projection into the future of expected sales,given a stated set of environmental conditions.
Sales forecasting plays a vital role in sales planning, budgeting anddecision making.
Forecasting in marketing is partly art and partly science. The blend ofthe two is fundamental for successful forecasting. The amount of each
varies from one situation to another. The contribution of science comes from application of various
statistical techniques used to analyze past data about a market
The contribution of art lies in an ability to link experience of, andfeel for, a market with the results of various analyses, plus the
ability to assess the significance of factors which can not yet beincluded in the statistical analysis and the effects of which maynot yet have been experienced.
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Sales Forecasting
Importance of Sales forecasting and its role can be understood fromthe following:
Sales forecasts are vital to the efficient operation of the firm andcan aid managers on such decisions / areas such as:
Future investments in new ventures, capacity expansion, resource allocation to functional areas,cash flow projections etc.
Material requirement planning, inventory to carry.
Personnel requirement planning.
Planning marketing and sales programs and to allocate resources among the various marketingactivities such as advertising, distribution etc.
Deciding on proper price to charge, and the salaries to pay salespeople.
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Sales Forecasting
Sales / demand forecasting can be classified as Short range forecast
Long range forecast Perspective forecast
Short range forecasts are made for one year and reviewed monthly,quarterly or half yearly. They are used for projecting cash flows,planning marketing activities such as personal selling, advertising,
warehousing. They are also used for other functional areas likeProduction, Human resources and Materials.
Long range forecasting is made for 5 to 10 years. This is used forexpansion, diversification and other investment decisions. Long termforecasting is relatively difficult because of uncertainties involved
Perspective forecasting is still longer term forecasting. It may be aforecast of 15 to 20 years.
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Sales Forecasting
Characteristics of Forecasts
Forecasting is a difficult process because of the uncertainties
involved. More the number of factors influencing a situationmore complex and inaccurate the forecasting tends to be. Thedifference between the forecast and the actual is the forecasterror. The objective is to minimize it.
Long term forecasts are more error prone than short term
forecasts. Aggregate forecasts are more accurate than disaggregate
(individual) forecasts.
In todays business scenario, due to globalisation consumers havemore product choices. They also demand greater product diversity and
innovation. This is aided by rapid technological advancement. Becauseof this dynamics forecasting is becoming increasingly difficult.
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Sales Forecasting
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Sales Forecasting
There can be two approaches to sales forecasting:
- Break down approach and Build up approach.
In Break down approach the companys internal and external environments arestudied to determine the significant factors that influence the sales.
The internal factors studied are:
Pricing
Product changes
DistributionPromotion
Resources availablefinance, facilities, material, labour.
Management skills
Technology.
The external factors studied are:
General economy
Industry related activities
Competition
Government laws and regulations.
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Sales Forecasting
The steps in Break down methods are:1. General environment forecast
2. Industry sales forecast
3. Company sales forecast
4. Sales forecast for product lines
5. Individual product forecasts.
In Buildup approach, estimated sales figures for individual
products/market segments are totaled up to arrive at forecast figures.This can be rather cumbersome process if the organisation has many
product varieties serving multiple markets.
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Sales Forecasting Sales forecasting methods:
Qualitative methods
Experts opinion method
Delphi method Sales force composite method
Survey of buyers expectation method / User expectation method / End-use method
Quantitative methods (statistical methods)
Extrapolation method
Moving Average method
Exponential Smoothening method
Time series analysis
Regression analysis
Test marketing.
Market Research methods
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Sales Forecasting Experts opinion method: This a commonly used method. In this the
estimates of experts with versatile experience and sound knowledgesuch as marketing professionals, distributors, marketing consultants
are sought. One way is taking the average and another way is in whichthe group meets, each one presents his estimate then a groupconsensus is arrived at.
Delphi method: In this panel of experts are formed from within oroutside the organisation. A coordinator interacts with experts. The
experts work separately, so that they can not influence each other.They give their opinions individually in written form. The coordinatorcompiles, processes and sends back for revision. This goes on forseveral rounds as long as a final forecast does not evolve.
Sales force composite method: This forecast is done by the sales force
of the organization. Sales men are in direct contact with the market soit is assumed that they are well informed about the market trends. Theindividual forecasts of salesmen are combined to form the overalldemand forecast of the organization. But the result can be biasedbecause of self interests, ignorance of broad changes taking place inthe market place etc.
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Sales Forecasting
Survey of buyers expectation method: This is also called Userexpectation method or End-use method. In this a sample of potential
buyers is taken and then the information regarding their likelyconsumption of the product and their buying plan are collected. Theinformation is then extrapolated to get the total demand forecast. Butoften there is a difference between the stated and the actual demand.
Extrapolation method: This is a simple inexpensive method and can be
adopted in market situations where little changes occur. It involvesplotting of the sales figures of past years and then extending the line toforecast the future demand.
Moving average method: This an averaging method in which the pastdata beyond a certain period is considered irrelevant. The periodneeds to be selected judiciously. In a weighted moving averagemethod, weightages are assigned to the data of different time periodsby the analyst depending upon his perception of their importance.
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Sales Forecasting Exponential Smoothening method: It is essentially a modified version
of the weighted moving average technique. Here we have asmoothening constant. ExampleSay the old forecast for presentperiod = 100 but the actual observed for the period was= 80. To getthe forecast for the next period if the smoothening constant =0.3 thenit means the weightage given to old forecast is 0.7 and the weightagegiven to the actual is 0.3. The forecast for the next period is = 100 x 0.7+ 80 X 0.3 = 94. In effect it considers all past data but places heaviestweightage to the most recent data and the weightage lessens as thedata ages.
Time series analysis: This statistical method is used to identifysystematic cyclical / seasonal variations that repeats itself as a pattern.
Regression analysis: This is a form of correlation technique. Acorrelation basically the degree of linear association between twovariables where one is treated as dependent variable and the otherdependent variable. In regressin analysis attempt is
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Sales Forecastingto relate sales to those variables that influence sales. They may beeconomic factors, price etc.
Test marketing: This is a method often used for measuring consumeracceptance of a new product. The outcomes of a test market aremathematically extrapolated to forecast future sales. Here a limitednumber of cities/ towns with representative population are chosen fortest marketing. Effectiveness of promotion campaign can be measured
by the difference in sales between test market and control market. Market research methods: Marketing research methods adopted for
sales forecast are basically of two types -Market testing (focus grouptechnique is used) and Market survey (interviews, Questionnaires etcare used).
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Forecast Error
Different measures of forecast errors are: Mean squared error (MSE) :- This estimates the variance of forecast error.
Mean absolute deviation (MAD) :- Average of the absolute deviation.
Mean absolute percentage error ( MAPE):- First absolute percentage deviation is calculated bysubtracting forecast from actual and then dividing it by actual value. The MAPE is expressed asaverage mod percentage value over selected time zone. MAPE does not differentiate betweenpositive and negative error but it does have reference to the quantum of the value.
Bias :- It is the average of the deviations (with signs +/- considered ). It is calculated as - the sumof all errors ( signs +/- considered) divided by the number of periods. It shows under/over
estimates of demand.
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Setting Personal Selling objectives
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Setting Personal Selling objectives As a first step it is important for the sales management to precisely
determine the role of personnel selling in the marketing mix.
Setting the personal selling objectives clarifies the role of the sales force
facilitates the determination of the size and the quality of thesales force
forms the basis of setting goals ( or targets) and the evaluation of
the performance of the sales force
The objectives will vary from organisation to organisation dependingon:
Overall objectives of the organisation
Nature and type of the products Nature of the market
Nature of competition
Distribution channel, etc.
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Setting Personal Selling objectives
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Setting Personal Selling objectives
Objectives of personal selling need to be set in the following areas:
Sales volume (overall and product wise)
Sales growth ( overall and product wise)
Market share ( overall, product wise and territory wise)
Profits ( overall, product wise and territory wise)
Selling costs
Key customers ( volume, growth, share, profit contributions etc)
New customers Expansion of channels, new dealers etc.
Collection of dues (sales proceeds)
Ratio of cash to credit sales
Service levelpre and post sales.
Training of dealers / customers as needed
Gathering and communicating market information.
Involvement in promotional activities of the company
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Sales Organisation
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Sales Organisation
What is an organisation?
An organisation in general can be defined as the rational
coordination of the activities of a number of people for theachievement of some common explicit purpose or goal,through division of labour and function, and throughhierarchy of authority and responsibility.
The important portions of the definition are:-1. Coordination of activities
2. Group of people
3. Achievement of common goal
4. Division of labour
5. Hierarchy of authority and responsibility and responsibility.
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Sales Organisation
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Sales Organisation A sales organisation is a team of individuals working together to
achieve the set sales objectives. A sales organisation operates within a
organisational / corporate framework. A sales organisation ought to have a well defined structure to operate
efficiently and effectively.
A well designed organisational structure does the following:
Defines jobs - roles, responsibilities and duties of the personnel
Clarifies authority and power at each level.
Promotes specialisation
Avoids duplication of work
Facilitates coordination and communication
Facilitates adaptationby being flexible to the changingenvironmental needs.
Facilitates growth
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Sales Organisation
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Sales Organisation
The factors considered while designing a sales organisation structureare -
Nature of the product and services factors: For example the salesorganisation structure in case of FMCG products like soaps,shampoos, toothpaste (the customer base is large and thefrequency of purchases is also high) is very different from sellingtechnical products like machine tools or computers.
Organisational related factors: Size, volume, product range,geographical expanse of business etc influence the salesstructure.
Marketing mix related factors: The type of distribution channel,
pricing policy, marketing communication influence the salesstructure.
External factors: Nature of competition for instance.
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Sales Organisation Major principles based on which the sales organisation is designed:
Span of control: It refers to the number of subordinates a
manager can effectively manage. A narrow span of controlpermits a more effective and close supervision but results inmore number of layers which means higher cost, communicationtime, larger gap between the top management and customers. Awider span has fewer levels of supervision. The process of
communication takes shorter time. Centralisation and Decentralisation: Centralisation of authority
refers to the relative concentration of authority for decisionmaking especially at top level.In a highly centralised sales organisation most of the decisionsare made at the corporate level and very few at the field
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Sales Organisationmanagers level. Consistency in the marketing plan, uniformity in
product and service delivery, uniformity in compensationpackages of the sales force, integration of the sales force are the
essential features of centralised structure.But to be more competitive organizations are preferring to go infor more decentralised structures. A decentralised structurehelps in making the organisation more responsive to the marketand regional demands. In many organisations combination ofcentralised and decentralised organisational structures are used.In Titan Watches for instance decentralised service centers areunder field managers but the training is provided by thecorporate office. In Modi Xerox recruitment of sales force at theground level is done by field managers but the regional trainingcenter provides the training.
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Sales Organisation
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Sales Organisation Organisations adopt different kinds of structures
To assure that all necessary activities are performed
To define authority
To achieve coordination and control
To permit the development of specialists
To economize on execution time
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BASIC TYPES OF SALES ORGANISATIONS
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Line Sales Organization
General Manager
Sales Manager
Assistant SalesManager Div. 1
Assistant SalesManager Div. 2
Assistant SalesManager Div. 3
Assistant SalesManager Office
Salespeople Salespeople Salespeople Office Staff
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BASIC TYPES OF SALES ORGANISATIONS
BASIC TYPES OF SALES ORGANISATIONS
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Line and Staff Sales OrganizationPresident
VP (Marketing)
Advertising Manager Manager (Marketing Research)General Sales Manager
Director (Sales and Training)
Director of Dealer andDistribution Relations
Sales Promotion Manager
Assistant to GeneralSales Manager
Assistant GeneralSales Manager
District Sales Managers
Branch Sales Managers
Sales Personnel
Sales Personnel Director
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BASIC TYPES OF SALES ORGANISATIONS
BASIC TYPES OF SALES ORGANISATIONS
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Functional Type of Sales Organization
Directorof
SalesAdministration
Installation
andServiceManager
Manager of
Dealer andDistributionNetworks
Manager
ofSales
Personnel
Manager
ofSales
Promotion
Manager ofSalesSupervision
Manager
ofSales
Training
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Salesperson Salesperson Salesperson Salesperson Salesperson Salesperson
BASIC TYPES OF SALES ORGANISATIONS
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Geographic Division of Line AuthorityGeneral
SalesManager
SalesPersonnelDirector
WesternDivisionSales
Manager
Director ofSales
Analysis
Directorof
SalesPromotion
CentralDivisionSales
Manager
Director ofSales andTraining
EasternDivisionSales
Manager
BranchSales
Managers
BranchSales
Managers
BranchSales
Managers
SalesPersonnel
SalesPersonnel
SalesPersonnel
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BASIC TYPES OF SALES ORGANISATIONS
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Product Division of Line Authority
GeneralSales
Manager
SalesManagerProduct 1
Director ofSales
Analysis
Directorof
SalesPromotion
Director ofSales andTraining
SalesPersonnelDirector
SalesManagerProduct 2
SalesPersonnelProduct 1
SalesManagerProduct 1
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BASIC TYPES OF SALES ORGANISATIONS
BASIC TYPES OF SALES ORGANISATIONS
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Customer Division of Line Authority
GeneralSales
Manager
DirectorProductR and D
Manager,Mining
IndustrySales
Director ofSales
Promotion andAdvertising
Directorof
SalesTraining
Manager,Construction
IndustrySales
Director ofSales
Planning
Manager,LumberIndustry
Sales
BranchSales
Managers
BranchSales
Managers
BranchSales
Managers
SalesPersonnel
SalesPersonnel
SalesPersonnel
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BASIC TYPES OF SALES ORGANISATIONS
BASIC TYPES OF SALES ORGANISATIONS
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Marketing Channel Division of Line Authority
GeneralSales
Manager
SalesPersonnelDirector
AdvertisingManager
Director ofCustomerRelations
SalesPromotionManager
Director ofSales
Planning
Sales ManagerInstitutional Sales
Sales Personnel
Sales ManagerWholesale Sales
Sales Personnel
ExportSales Manager
Sales Personnel
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Sales ManagerChain Store Sales
Sales Personnel
BASIC TYPES OF SALES ORGANISATIONS
Sales Territories
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Sales Territories
Sales territory is a geographical grouping of existing and potentialcustomers allocated to
an individual
a group of salespersons.
a branch
a dealer
a distributor A marketing organisation
Essentially designing territory means to divide the market intoconvenient clusters.
Sales territory must be designed to meet certain criteria such as easyadministration, accessibility, optimisation of travel time.
Designing of sales territories can be done by Equal Workload Methodor Equal Potential Method.
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Sales Territories
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Sales Territories
Designing of sales territory has various advantages:
Better market coverage
Better work load distribution
Improves the performance of salespersons
Reduces loss of sales (opportunities)
Reduces sales expenses
Increases individual attention to key customers
Advantages of segmentation can be gained. As characteristics ofdifferent territory can be different.
More effective planning, implementation and control.
Helps in assigning responsibilities to salespersons. Accountabilityis better.
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a es uo as
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a es uo as Sales quota is the target or goals assigned to sales units (such as sales
person, dealer, distributor, territory) to be achieved in a specific periodof time.
Sales quotas (quantified objectives) may be expressed either inmonetary terms or in volume terms.
These quantified objectives should be realistic.
The basis for fixing the sales quota should not only be potential of the
territory and the past data but also factors such as territorysimportance to the company, the market share expected from it and theprofitability of sales in that territory.
Participative approach while fixing the sales quota is desirable.
The objective of fixing Sales quotas are :
Motivating the sales force
To bring in the right focus (products to be given importance)
These form an important basis for feedback, evaluation of andreward for the performance of a sales unit.
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Sales QuotasTypes of sales quota:
Sales volume quota: These are basically of three kinds
Monetary sales volume quota Unit sales volume quota ( resorted to because rupee value may varyprice may vary)
Point sales volume quota ( followed in multi product situations. Relative weightage. An unit of a
product may higher points than another product)
Sales Budget quota: These quotas are set with the objective ofcontrolling expenses, increasing gross margin / profit. Profit
quotas are set. By this the salesmen are encouraged to sell moreprofitable products. Expenses are often controlled by setting anexpense budget as a percentage of the territory sales.
Sales activity Quota: Activity quotas are fixed for salesmen in
addition to sales quotas.
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Sales Quotas
As an example the activity quota may be set for number of sales call to be made
number of dealer contacts number of product demonstrations to be made
number of new accounts to be created
Methods for fixing sales quota:Sales quotas can be fixed based on -
Sales potential / forecast
Average of Past sale
Executive judgment
Judgment of salesmen
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Recruitment and selection of sales Persons
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Recruitment and selection of sales Persons
The following steps need to be undertaken for recruitment Job analysis
Locating prospective candidates / Sources
Job analysis:Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be
further categorized into following sub components.
1. Job position: This refers to the designation of the job andemployee in the organization. Job position forms an
important part of the compensation strategy as it determinesthe level of the job in the organization.
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Recruitment and selection of sales Persons
2. Job description: It refers to the activities that an employee hasto do in a particular job position. It describes the roles andresponsibilities attached with the job position. It states the keyskill requirements, the level of experience needed, level ofeducation required, etc. It also helps in benchmarking theperformance standards.
3. Job Worth refers to estimating the job worthiness i.e. how muchthe job contributes to the organization. It is also known as jobevaluation. Job description is used to analyze the job worthiness.It is also known as job evaluation. Roles and responsibilitieshelps in determining the outcome from the job profile. Once it is
determined that how much the job is worth, it becomes easy todefine the compensation strategy for the position.
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Locating the candidates ( sources)There are two categories Internal sources: The internal sources can be
Lateral and upward moves (Transfers, promotions etc.)
Interns
Employee referral ( existing salesmen as talent scouts) External sources: The external sources can be:
Competitor company
Other industries ( may be from customers or suppliersindustry)
Educational institutions
By advertising
Employment agencies / HR consultants
Networking
Internet / Web sources
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Selection Process comprises of the following steps: Screening the candidatesthis generally includes receiving and
screening of application forms
Personal interviews Reference check Physical examination Psychological and other tests like Intelligence tests, Aptitude
tests, Personality tests etc.
Negotiating / fixing the terms of services Appointment
Screening applicants for an interview: The job analysis done previouslyhelps in short listing candidates. The job description specifies thecompetencies required for a job position, hence this forms theguideline for short listing the applicants. The application form gives the
details regarding the applicants qualifications, experience, previouscompensation, employment history, reasons for leaving previousorganizations, health history, references etc. References should beused, in a discerning /judicious manner, to verify informationprovided.
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Scientific and psychological tests related to intelligence, ability,personality etc helps to gain insights about the candidates.
Selecting Applicants: Personal interview is carried out for this. Thefollowing needs to be done:
Preparation for the interview: An interview needs to beconducted effectively hence it needs preparation. The purpose isto effectively gather information about the candidate from thecandidate himself.
Behavioral interview is a popular method adopted for thispurpose. Behavior based interviewing focuses on experiences,behaviors, knowledge, skills and abilities that are job related. It isbased on the belief that past behavior and performance predictsfuture behavior and performance.
Managing the interview: Broad based questions should befollowed by specific questions. Questions should be posed in amanner so that it calls for long responses. Loaded or leadingquestions should not be asked.Interviewer should be a good listener and be able to sort outrelevant / important information related to the job from theirrelevant/ unimportant ones. 56
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Orientation and socialization
Orientation Programs:Effective orientation programs are designedto introduce new employees to a company's mission so that they begin
to feel they are a vital part of the team. These are key to earlyproductivity and improving employee retention. They need to bedesigned with the following in mind
- Make new employees feel welcome and valued as key players onthe team.
- Explain the mission/purpose of the company and the job soemployees can see the big picture.- Familiarize employees with rules, policies and procedures.
- Help employees adapt to their new surroundings, learn who allthe players are and how they work together.- Establish friendly relationships among co-workers managers.- Ensure new employees have all the information and tools theyneed to do their jobs.- Develop the long-term commitment to the organization.
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Training is a process of learning a sequence of programmed
behavior and application of knowledge. It gives peopleawareness of the rules and procedures to guide theirbehavior. It attempts to improve their performance on thecurrent job or prepare them for an intended job.
Types of training:
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Training the sales forceON THE JOB TRAINING ( OJT) :
This is the most common method of training.
On- the- job training (OJT) is conducted at the work sites and inthe context of the actual work.
This method is basically learning by doing, while working. In thismethod the employee is placed in to the real work situation andshown the job and the method of work by an experienced
employee or the supervisor. The trainee is placed on the job and the manager or mentor
shows the trainee how to do the job and receive immediatefeedback. To be successful, the training should be done accordingto a structured program that uses task lists, job breakdowns, andperformance standards as a lesson plan.
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Training the sales forceOn the job training methods:
Job Instruction Training
Coaching Mentoring
Job Rotation
Job Instruction Training :
Job instruction training (JIT) is a systematic approach to the jobtraining. This is a proven and systematic method to teach workershow to do their current jobs. The method also called trainingthrough stepby- step learning involves:Preparation of the trainees for the instruction.
Presentation of trainees for instruction.
Performance of the job by the trainee.
Motivating the trainee to follow up the job regularly
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a g t e sa es o ce Coaching:
Coaching is a continuous process of learning by doing. In this, the
superior guides his sub-ordinates & gives him/her jobinstructions. The superior points out the mistakes & givessuggestions for the improvement.
Merits
It requires the least centralized staff coordination as everyexecutive can coach his subordinates.
Periodic feedback and evaluation gives immediate benefits to anorganisation .
Demerits
The training atmosphere free from worries of the daily duties isnot available.
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g
Mentoring:
Mentoring is a relationship in which a senior manger in an organisation
assumes the responsibility for grooming a junior person. Technical,interpersonal and political skills are generally conveyed in such a relationshipfrom the more experienced person. Mentors help employees solve problemsboth through training them in skills and through modeling effective attitudesand behaviors.
Merits
There is an excellent opportunity to learn.
Constant guidance helps the mentee to be on track, using facilities to goodadvantage.
Demerits
It may create feeling of jealousy among other workers who are not able toshow equally good performance.
If mentors form overly strong bonds with trainees, unwarranted favoritismmay result. This can have a demoralising effect on other workers.
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g Job Rotation:
This involves the movement of trainee from one job to another.The trainee is given several jobs in succession, to gain experienceof a wide range of activities.
Merits
Improves participantsjob skills, job satisfaction.
Provides valuable opportunities to network with in the
organisation. Offers faster promotions and higher salaries to quick learners.
Demerits
Increased workload for participants.
Constant job change may produce stress and anxiety.
Mere multiplication of duties do not enrich the life of a trainee. Development costs may shoot up when trainees commit mistakes
handle tasks less optimally.
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gOFF - THE- JOB TRAINING:
Off-the-job trainingsimply means that training is not a part of everyday job activity.The actual location may be in the company, class-room or in place which are owned by
the company in universities or associations which have no connection with thecompany.
Some methods of Off-thejob Training are:
Lectures Conferences
The Case Study Role Playing In-Basket Method
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gLECTURES:
Lecture are regarded as one of the most simple ways of imparting
knowledge to the trainees, especially when facts, concepts orprinciples, attitudes, theories and problem solving s abilities areto be taught.
Merits:-Presenting basic material that will provide a common background for subsequent activity.
Illustrating the application of rules, principles, reviewing, clarifying and summarizing.
The main advantage of the lecture system is that it is simple and efficient and through it morematerial can be presented within a given time than by any other method.
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gTHE CONFERENCE METHOD :
In this method, the participating individuals confer to discuss the
points of common interest to each other. A conference is a formalmeeting, conducted in accordance with an organized plan, inwhich the leader seeks to develop knowledge and understandingby obtaining a considerable amount of oral participation of thetrainees.
There are three types of conference methods.
1. Directed discussion :- The trainer guides the discussion so that the facts, principle or concepts areexplained.
2. Training conference:- The instructor gets the group to pool its knowledge and past experience andbrings different points of view to bear on the problem.
3. Seminar conference problem:- The instructor defines the problem, encourages and ensures fullparticipation in the discussion.
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g CASE STUDY
The individual is expected to study the information given in the
case and make decisions based on the situation. if the student isprovided a case involving an actual company, he is expected toresearch the firm to gain a better appreciation of its financialcondition and corporate culture.
Typically, the case method is used in the class room with an
instructor who serves as a facilitator. Analytical, problem-solving and thinking skills are most
important.
The KSAs (Knowledge, Skills, Abilities) required are complex andparticipants need time to master them.
Active participation is required.
The process of learningis as important as content.
Team problem solving and interaction are possible.
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gROLE PLAYING
It is a technique in which some problems real or imaginary
involving human interaction is presented & spontaneously actedout. Participants assume roles of specific organizational membersin a given situation & then act out their roles.
It develops interpersonal skills among participants. They learn bydoing things. Immediate feedback helps them corrects mistakes,
change & reorient their focus in a right way. On the negative side, realism is sometimes lacking in role-playing,
so the learning experience is diminished. It is not easy toduplicate the pressures & realities of actual decision-making onthe job; & individuals, often act very differently in real lifesituations than they do in acting out a simulated exercise.
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Compensation plan for sales force
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p p A motivated sales force is essential for sales performance. A good well
structured and balanced compensation plan is required to attract andretain a quality sales force and keep it motivated.
An effective compensation plan (characteristics):
Directs the sales force toward activities that are consistent withoverall marketing objectives.
Connects efforts, performance and rewards
Helps to attract and retain competent sales persons. Is based on the principles of equity.
Helps to stimulate sales persons to put in their best efforts
Has two components, one as an assured income another as an
additional income for superior performance. Is flexible to adjust to changes in the environment.
Is simple to understand and administer.
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Designing the compensation plan involves following steps:
Consider Job analysis, job evaluation and overall compensation
structure of the company Consider Industry practice ( What competitors offer?)
Decide compensation level after discussions.
Decide compensation mix: Financial
Direct payment like salary.
Indirect payment - medical care, paid vacation, LTA etc. Non financial
Promotions, better designation etc.
Recognition Decide on weightage of different elements in the mix.
Implement , evaluate / review and improve.
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Compensation plan for sales force
T f ti l
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Types of compensation plans: Straight salary
Straight commission
Salary plus group commission.
Salary plus commission
Straight salary plan:Merits
Simple and easy to design and administer.
Gives a sense of security.
Is suitable when
the company adopts a pull strategy.
the product/ territory is new
efforts and actual sales are loosely correlated.
Negotiation and purchase cycle is long (Eg: technical projects)
Demerits Is not a stimulant to increase sales
Cost of fixed salary is to incurred even if the sales is poor.
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Straight commission plan:Merits
Incentive to perform better.
Commission is a variable cost and is linked with volume/ profits. It is suitable when:
Company has adopted a push strategy.
Not much of non-selling activities are involved.
Market is highly competitive and sales effort is directly linked with sales
results. Demerits
Often difficult to design and administer.
May be ineffective when there are many new salesmen.
May lead to unhealthy rivalry/ jealousy among salesmen.
May lead to unhappiness when market is down due to external reasons. Income of salesmen can be unstable.
Overaggressive salesmanship might dissatisfy customers.
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The mettle of a sales manager lies in his ability to motivate his salesforce. The greater is this ability greater are the chances of his success.
The elements of the motivational mix are:
Compensation plan
Recognition (like trophies, certificates, praise encouragements, jobenrichment )
Promotions
Fair and transparent performance evaluation Good forecasting, budgeting, Fair quotas/territory definition.
Good sales coaching and supervision
Regular sales meeting and conventions
Sales contest Effective training programmes
A good leadership style.
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MANAGEMENT75
Distribution Management
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Distribution management is concerned with managementof physical movement of goods from the production center
to the consumer through different distribution channels,involving transportation, warehousing, inventory, andinformation system order processing and documentation.
Distribution management comprises of two distinct sections Physical distribution Distribution channels
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Physical distribution is related to Place of the marketing mix.
It provides Place utility and Time utility to a product by ensuringthat it is available to the user at the right place and at the right time.
It becomes all the more important where the distance between theproduction centers and the consuming centers (market) is large andtime consuming.
A good physical distribution or availability at the right place and time
increases sales and helps to build a customer base/network.
Distribution cost forms a substantial part of the total cost. With somany alternatives available, it is an area with high cost reduction
potential.
The distribution function is undergoing a tremendous change becauseof technological developments in communication, transportation andInformation technology.
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The factors considered for designing physical distribution system are :
The distribution objectives and the minimum service level desired.
Expectations of the customer in the product delivery (lead time, meeting
emergencies etc) Finding out what the competitors do?
Optimising cost which means incurring lowest cost without sacrificing theminimum service level.
Ensuring flexibility of the system.
Functions involved in physical distribution are: Transportation
Inventory management
Warehousing
Order processing
Packaging
Material handling
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Transportation
Transportation and delivery add approximately 10 percent to
product costs. Classes of carriers include common carriers, contract carriers, and
private carriers.
Major transportation modes include railroads, motor carriers, watercarriers, pipelines, and air freight.
Intermodal operations: Combination of transport modes such as railand highway carriers (piggyback), air and highway carriers (birdyback), and water and air carriers (fishy back) to improve customerservice and achieve cost advantages.
Freight forwarders and supplemental carriers consolidate shipmentsto gain lower rates and faster delivery service for their customers.
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Warehousing Ware houses are basically of two types
Storage warehouseholds goods for moderate to long periods to balance supply and demand for
producers and purchasers. Distribution warehouse assembles and redistributes goods, keeping them moving as much as
possible.
Automated warehouse technology can cut distribution costs andimprove customer service.
Decisions regarding warehouse locations are influenced by: warehouse building costs
materials handling costs
delivery costs from warehouses to customers.
Questions that arise are1. private or a public warehouse ? 2. Howmany warehouses? Where should they be located ?
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Inventory Control systems Companies must balance customer demand with costs of carrying
excess inventory.
Firms use just-in-time delivery systems, RFID technology or vendor-managed inventory to help manage costs.
Order processing This is a set of procedures for receiving , handling and filling orders
promptly and efficiently. Directly affects firms ability to meetcustomer service standards.
Includes four major activities: Conducting a credit check.
Keeping a record of the sale.
Making appropriate accounting entries.
Locating orders, shipping them, and adjusting inventory records.
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Protective packaging
Packaging costs and form of packaging is influenced by mode oftransport and material handling equipment's. Vice versa the
selection of particular mode of transport determines thecharacteristics (form, design etc.) of packaging
Material handling
Materials handling systemactivities for moving products withinplants, warehouses, and transportation terminals.
Unitizingcombining as many packages as possible into eachload that moves within or outside a facility.
Containerizingcombining several unitized loads.
Proper material handling system helps to 1. Decrease materialdamage, maintain quality of storage, facilitate order processing, moveright material at right time to make them available to right customers.
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Physical DistributionTh t f h i l di t ib ti t h th f ll i
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The concept of physical distribution system has the followingcomponents: Total cost perspective
TDC (total distribution cost) = Transport cost + Facilities cost + Communication cost + Inventory cost +Protective packaging cost + Distribution management cost
Trade off : An integrated approach towards reducing the total cost needs to be adopted otherwise decreasing cost
in one area can lead to increase (may be higher) in another area. For example an attempt to reducetransportation cost can lead to an increase in the inventory cost thus offsetting the advantage. Because
of this a tradeoff is required. The main purpose of doing trade off is to achieve a net gain.
Total system perspective : (Supply chain management). It involveschannel partnership and strategic alliances.
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Tradeoffs can be of four types
Intra-activity tradeoff: Eg:- Whether to use public carrier or own private carriers.
Inter-activity tradeoff: Eg: Increasing transport cost might reduce inventory cost and warehousing cost.Xerox in US found air freighting the spares cheaper than storing them in warehouses without affecting
customer service level. Inter functional tradeoff : Eg:- Packaging a product might be best in terms protecting the product but
may not be good for promotion or transportation purposes.
Inter organizational : This is a tradeoff between manufactures and the channel partners. Manufacturershould ensure excellent relationship with the channel partners and should examine all externalorganization's and thus capitalize on tradeoff opportunities.
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Distribution Channel
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What is distribution channel? A set of interdependent organizations involved in the process of making a product or
service available for use or consumption by the consumer or business user. - Stern
The main function of a distribution channel is to provide a linkbetween production and consumption.
It is the Supply chains front end.
The use of Distribution channels may not be limited to movement of
physical products alone. They may be used for moving a servicefrom producer to consumer in certain sectors. For instance, hotelsmay sell their services (booking of rooms) directly or through travelagents, tour operators, airlines etc.
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Marketing intermediaries
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Physicalflow
Title flowPayment
flow Information flow
Promotion
What are the uses of marketing intermediaries?
Functions of a Distribution ChannelCh l i ti f k f ti
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Channel organisations perform many key functions :- Information: Gathering and distributing market research and
intelligence - important for marketing planning
Promotion: Developing and spreading communications aboutoffers
Contact: Finding and communicating with prospective buyers
Matching: (presales service)Adjusting the offer to fit a buyer'sneeds, including grading, assembling and packaging
Negotiation: Reaching agreement on price and other terms of theoffer
Physical distribution: Transporting and storing goods
After sales services:This may include installation andmaintenance.
Financing: Acquiring and using funds to cover the costs of thedistribution channel
Risk taking: Sharingcommercial risks. E.g. holding stock
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Typical marketing channels:
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Following are the types of intermediaries in a marketing channel:
Sole selling agent:
It is a large marketing intermediaries with large resources. Operates in an extensive territory. Works on
commission basis. Usually chosen when a manufacturer prefers to stay out of marketing and distributiontask.
C&F agents (CFAs)
Often manufacturers employ carrying and forwarding agents, referred to as CFAs or C&F agents. They actas branches of the manufacturer. They do not resell products but act as agent/ representative of themanufactures.
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Wholesaler/ stockist A wholesaler buys in bulk ( large quantities) from the and resells the
goods in sizable lots to semi-wholesalers and retailers. Usually awholesaler does not sell directly to consumers ( except theinstitutional buyers). Wholesalers not only play the role ofstockholders and sub-distribution, but also perform functions suchas promotion, financing, market feedback etc. They can becategorised as 1. Agent wholesaler 2. Merchant wholesaler. Agentwhole saler perform all or most of of the marketing functionsassociated with wholesaling. Agent wholesaler unlike merchantwholesaler do not take ownership . They are primarily involved inthe buying and selling of the products. They negotiate sales but do
not but do not take title to merchandise. They also participate incollecting market information, promotion and receiving orders.
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Retailer/ Dealer.
They sell to the ultimate customers. They are at the last end of the distribution chain. Incases where the company operates a single tier distribution system, they operate directlyunder the company. The retailers are also sometimes referred to as dealers or authorised
representatives. The stocks they keep are just operational stocks needed for immediatesale at the retail outlet.
Retailers perform much more than simply buying and selling. They add value to goods andservices that they sell by creating time, place, possession and form utility.
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Channel selection
Distribution intensity Channel strategy
Channel integration
Channel selection
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Market factors: buyer behavior; installation and technicalassistance; willingness of partner to market a product;
location of buyers
Producer factors: resources of partner; product mix; controlof channel operations
Product factors: large, complex, perishable, difficult tohandle
Competitive factors: Selecting a unique or a tried andtested channel.
Distribution intensity
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Intensive distribution: using all available outlets; mass market products, heavycompetition e.g. beer, chewing gum.
Selective distribution: limited number of outlets; select only the best; e.g.cameras, hi-fi equipment, personal computers...
Exclusive distribution: only one outlet in a geographic area, reduces competitione.g. cars
Channel integration
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Conventional marketing channels:
Benefits of specialization against lack of control
Administered vertical marketing system e.g. Procter & Gamble
Franchising:
Shared resources and access to local knowledge against areas of potential conflict
Contractual vertical marketing system
e.g. Mc Donalds, car industry, Benetton
Channel ownership:
purchasing outlets; total control over distributor against high costs;
Corporate vertical marketing system
e.g. Pepsi purchased Pizza Hut
Channel designSteps of channel design:
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Steps of channel design:
Setting the objectives. Basic expectations from a channel:
Effective coverage of the target market
Cost effective and efficient physical distribution. Convenience of the consumer.
Uninterrupted manufacturing while channel members take care ofthe sales.
Playing supportive role in financing and sub-distribution tasks.
Identifying the functions expected from the channel.
Linking Channel design to product characteristics. Consider thefollowing:
Industrial and consumer goods channels need different types of
channels Buying behaviour of different consumer goods are different so they
need different types of channel.
Channel choice is influenced by PLC stage.
Channel design
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Evaluation of distribution environment.
Evaluation of competitors channel design
Matching the channel design to company resources.
Evaluating the alternatives and selecting the best.
Balance cost, efficiency and risk.
Should have flexibility and controllability.
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Channel Management
Once channels have been designed the challenge becomes
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Once channels have been designed, the challenge becomeseffectively managing all the relationships
The challenge is to set up a system or method for assigningresponsibilities, controlling behaviors, and monitoringperformance
Channel Management involves:
Selecting channel members Motivating, training and resolving conflicts.
Evaluating channel members
Feedback
Corrective actions
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Selecting the channel members:
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Selecting the channel members: Factors that need to be considered while selecting a channel
member are: Financial strength
Product lines
Market coverage
Management strength
Equipment facilities
Sales strength
Willingness Ordering and payment procedures
Compatibilityworking culture
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Channel Management
M ti ti t i i l i fli t
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Motivating, training, resolving conflicts: Monetary and non-monetary motivators are used to control the
behaviours of channel members.
Under monetary motivators a manufacturer can use reward powerwhile under non-monetary motivators manufacturers can usecoercion, functional knowledge, leadership etc.
A n attractive Trade margin is a major motivator. It is essential to set
the dealer margin to a level that would enable the dealer to have areasonable retained earning after meeting all the normal expenses.
The firms need to collaborate with their dealers to help them inachieving a larger turnover and greater retailing productivity.
A long term partnership approach needs to be adopted to build aharmonious relationship with the channel members. Ideas need tobe exchanged, complaints and queries need to be addressedpromptly.
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Channel Management Training the members of the channel member is a vital activity This
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Training the members of the channel member is a vital activity. Thisinvolves preparing the channel members to represent the firm inthe best possible way. The trainees are provided complete
knowledge of the firm, product, consumer, company objective andstrategies. Apart from these essentials of inventory management,credit management and sales promotion may also be a part of theirtraining programme.
There are possibilities of conflicts within the channel members. One
channel member might perceive the behaviour of another channelmember to be obstructive to its goals. These conflicts need to beresolved tactfully. Managing conflicts is an important task of thechannel manager. In fact, conflict management attempts to preventthe conflicts to appear or detect it at early stage and take correctiveactions.
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Channel ManagementEvaluating the channel members:
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Evaluating the channel members: The purpose of performance appraisal and monitoring the same, is
to improve the performance of the dealers.
The channel members are evaluated in terms of their sales quotaachievement, average inventory levels, Customer delivery time,service level provided to customers co-operation in promotionaland training programmes, enlistment of new account, treatment ofdamaged goods,, market intelligence report.
The performance appraisal system should be discussed in advancewith the dealers.
Feedback and Corrective action: The performance appraisal should be discussed with the channel
members on a regular basis in a proactive style.
Corrective actions needed should taken both at the firms and thedealers end. Termination of relationship should be the lastalternative but a firm should not hesitate to take the extreme stepwhen necessary