44081921 Sales and Distribution Management by Tapan K Panda (1)

8/13/2019 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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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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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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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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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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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

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


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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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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

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


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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 Organisation


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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 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 Office

Salespeople Salespeople Salespeople Office Staff

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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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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



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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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Product Division of Line Authority

GeneralSales

Manager

SalesManagerProduct 1

Director ofSales

Analysis

Directorof

SalesPromotion

Director ofSales andTraining



SalesPersonnelProduct 1


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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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Marketing Channel Division of Line Authority

GeneralSales

Manager


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


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 Quotas


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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


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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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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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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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Recruitment and selection of sales force


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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

Orientation and socialization


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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 the sales force


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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- thejob 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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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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Motivating the sales force


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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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DISTRIBUTION

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


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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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Physical Distribution Protective packaging


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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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Physical DistributionT d ff b f f


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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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Types of marketing ChannelsT i l k ti h l


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Typical marketing channels:

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Types of intermediaries


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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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Types of intermediariesWh l l / t ki t


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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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Types of intermediaries Retailer/ Dealer


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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 Strategy


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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

E l ti f di t ib ti i t


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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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Channel Management

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

Documents

44081921 Sales and Distribution Management by Tapan K Panda (1)