Sales and Distribution Management Unit-1

8/15/2019 Sales and Distribution Management Unit-1

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BY:

Mrs. Gurpreet K Chhabra





1. Willingness to go to bat for the buyer within thesupplier firm

2. Thoroughness and follow through

3. Knowledge of the sales person’s product line 4. Market knowledge and keeping the buyer posted5. Applying his product and services to buyer’s needs 6. Knowledge of the buyer’s product line 7. Preparation for sales calls

8. Regularity of Sales calls9. Diplomacy in dealing with operating departments10. Technical education



Persuasion

Consultative

Selling

Partnership

StrategiesBusiness

Management

Negotiation

Evolution of personal selling



Production conceptProduct conceptSelling conceptMarketing conceptSocietal concept

Marketing concepts



Customer

Needs

Sales Customers

Emphasis on

Seller’s Needs

Production

Production

Sales

Emphasis onCustomer

Needs

Societal marketing concept

(Sales Orientation)

(Marketing Orientation)



Nature and role of sales management

The determination of sales force objective and goals

Sales force organization, size, territory, and quotafinalization

Sales forecasting and budgeting

Sales force selection, recruitment, and training

Motivating and leading the sales force

Designing compensation plan and control systems

Designing career growth plans and building relationshipstrategies with key customers



• Industrial selling

• Retail selling

• Services selling

Types of personal selling



Types of selling

• Order taker sales people

• Order creators

• Order getters



Selling

Function

Order

Takers

Order Getters

Order

Creators

Outside Order

Takers

Inside Order Taker

Merchandisers

Delivery Sales

People

Missionary Sales

People

New BusinessSales People

Organizational

Sales People

Consumer

Sales People

Technical Support

sales People

Front Line

Sales People

Sales

Support

Sales

people

Types of Selling



Factory FactorySelling and

promotingProfits though

sales volume

Selling concept

Market concept

Market Customer

needs

Coordinated

marketing

Starting

point Focus Means Ends

Profits through

customer satisfaction

Difference between sales and marketing



Marketing management process

MARKET ANTICIPATION

Exchange offer of value

Producer

MarketerConsumer

Marketing mix

•Product

•Price

•Place

•Promotion



Formulation of a strategic sales programme

Implementation of the sales programme

Evaluation and control of sales force performance

Sales management process



Technology

Relationship sellingCustomer orientation

Global and ethical

Issues

New selling methods

Diversity

Emerging trends

in sales

management

Emerging trends in sales management

Technology





Selling and buying styles

9

8

7

6

5

4

3

2

1 2 3 4 5 6 7 8 9

C o n c e r n f o r t h e c u s t o m e r s

(1,9) People OrientedI am customer’s friend,

I want to understand him and

respond to his feelings and

interests so that he will like me. It

is the personal bond that leads

him to purchase from me.(5,5) Sales technique Oriented

I have tried an effective routine

for getting a customer to buy. It

motivates through a blended

personality and product emphasis

(1,1) Take it or Leave it

I place the product before the

customer and it sells itself as and

when it comes.

(9,1) Push the product Oriented

I take challenge of the customer

and hard sell him, polling on all

the pressure it takes to make him

buy

(9,9) Problem Solving Oriented

I consult with the customer so as to

inform myself of all the needs in his

situation that my products can satisfy.

We work towards a sound purchase

decision on his part, which yield him

the benefits he expects from it.



Selling situations

Sales task and function

Maintenance selling

Developmental selling





Communication process

Noise

Channel

FeedbackIntendedMessage

Sent Message

Encoding

PerceivedMessage

ReceivedMessage

Decoding

Sender Receiver





Process of listening

Attendance

Interpretation

Evaluations

Remembrance

Response Action



Levels of listening

Feedback

Paraphrasing

Emphatic listening

Clarifications

Active Listening

Barriers to Listening !



Conflict management skills

Models of conflict

Components of conflict

The conflict resolution process:

- avoidance

- coercion

- meditation- conciliation

- arbitration

- adjudication

- negotiation



Negotiation skills

Situation and timing for negotiations Formulation for a bargaining strategy

The theory and strategy of principle

negotiations

- separate the people from the problem- focus on interests, not on positions

- invent options for mutual gains

- insist on objective criteria



Problem solving skills

Habit I: be proactive Habit 2: begin with an end in mind

Habit 3: put first things first

Habit 4: think win– win

Habit 5: seek first to understand, then to be understood

Habit 6: synergize

Habit 7: renewal







Stages in the selling process

Pre-salepreparation

SalesPresentation

HandlingCustomer

Objections

Closing theSale

Follow upaction

Approach tothe customer

Pre- approachbefore theinterview

Prospecting





Process of prospecting

Identify and define prospects

Search for sources of potentialaccounts

Qualify the prospects from thesuspects





Selling process

• Pre approach to selling

• Approach to the customer

• Sales presentation- approach to sales presentation

- attracting customer attention- creating interest- arousing desire and building conviction

• Methods of sales presentation- canned presentation- organized presentation- tailored presentation



Handling customer objections

• Start with your highest expectations

• Avoid conceding first

• BE sure the customer understands the value of a concession

• Make concessions in small amounts

• Admit mistakes and make corrections willingly

• BE prepared to withdraw a concession

• Avoid ‘split the difference’ strategy • Do not advertise willingness to concede

• Use TRACT formula to buy time

Suggested by SMITH

l h l



Closing the sale

• Methods of closing the sale• Follow-up action

• B2B selling



Forecasting process

The forecasting process is defined as the series of decisions andactions taken by a business organization in:

identifying the forecasting objectives

determining the independent anddependent variables

developing a forecasting procedure

using the available data in theselected method to estimate the sales infuture

i d



Develop forecastingprocedure

Forecasting process contd.

Select forecastinganalysis method

Comprehend totalforecasting procedure

Collect, collate,gather and analyze

data

Determineindependent and

dependent variables

Present all theassumptions about

data

Forecast objectives

Evaluate performanceresults against theforecasts

Make and finalizethe forecast



• marketing decision support system

- an MDSS is an ongoing future-oriented information structure designedto collect, collate, categorize, edit, store, and retrieve information on

demand to aid decision making in an organization’s sales and marketingprogramme

Market demand forecasting

P l h d i f i



Qualitative methods

Expertopinion

Survey ofbuyer’s

expectation

Sales forcecomposite

Delphitechnique

History analogyQuantitative methods

Test marketing Naïve method Trend method

Moving average Regressionmethod

Exponentialsmoothening

Popular methods in forecasting

T d f f S l



Observed sales Forecasted sales

Time

Sales

Trend forecast of Sales



M th d f i



In this method available data are divided into two parts, usually with equalnumber of years on both the parts

Year Sales

1993 102

1994 105

1995 114

1996 110

1997 108

1998 116

1999 112

The average of the first three years will be:102+105+114 321----------- = -------- = 107

3 3Similarly, for the last three years,

108 + 116 + 112 336---------------------- = --------- = 112

3 3

Method of semi-averages

M th d f i



The 3-yearly moving average can be computed with the followingformula:

a+b+c b+c+d c+d+e d+e+f--------- , ----------- , ---------- , --------- , ………….

3 3 3 3

Method of moving averages

Method of Least Square

The least squares method is a formalization of the eyeball-fitting orgraphical technique. It is used to mathematically project the trend lineto the forecasting period with the time as the independent variablethat influences the dependent variable i.e sales.

It is a time series method in which seasonality is taken in to account while doing demand forecasting. This method consists of threeessential steps which are illustrated below.

Decomposition method



Exponential smoothing method • It is similar to the movingaverage forecasting method

• The forecaster is allowed to vary the weights assigned topast data points

• It allows consideration of all past data, but less weight is

placed on data as it ages

• Exponential smoothing is basically a weighted movingaverage of all past data

• The method is used to forecast only one period in the future

• Exponential smoothing techniques vary in terms of howthey address trend, seasonality, cyclical and irregularinfluences





Marketing decision support system



MDSS

TRANSACTIONAL SYSTEMS USERS

Marketing decision support system

Correlation analysis



Correlation analysis

• a correlation is basically the degree of linear association between two

variables where one variable is treated as independent variable and sales asthe dependent variable

• sales managers look for variables that correlate with orrelate to sales

• correlation analysis involves the determination of whether a relation exists,and if it does, then measuring it, testing whether it is significant, andestablishing the cause and effect relation

• the degree of relationships between the variables is calledco-efficient of correlation



M k f i di h d



• the most commonly used market factor indexmethod is Buying Power Index Method (BPI)• BPI is used to predict sales for specific

geographic regions for retailer and FMCGsector such as clothing, food, auto, and other

consumer items• BPI is also used to determine sales quota by

many multinational organizations• applications are limited in Indian

organizations as we do not have data bases to

support this method at different levels of themarket

Market factor indices methods

M k t f t i di th d td



Econometric techniques

Econometric techniques uses multiple independent variables where

the assumption is that of a liner equation between the dependent

variable (sales) and independent variables

Market factor indices methods contd.

Market factor indices methods contd



Factors affecting selection of a forecasting technique

• data availability• cost• variability

• consistency of the data• the degree of detail necessary• time horizon• technical sophistication• ability of the method to capture the level of risk and

variability• the level of accuracy of the forecast• fundamental change indicators

Market factor indices methods contd.

MAPE (M Ab l t P t E )



• level of accuracy is an explanation of the gap between

the actual and predicted sales• techniques with lower level of gap are more accurate

• statistic used to calculate the level of accuracy of aforecast is called MAPE (Mean Absolute Percentage

Error)

MAPE (Mean Absolute Percentage Error)

• MAPE is the average percentage forecast error and is apopular way to measure accuracy

S l i ti



Sales organization

• an organization of individuals either working togetherfor the marketing of products and services manufacturedby an enterprise or for products that are procured by the

firm for the purpose of reselling

• a sales organization defines duties, roles, rights, andresponsibilities of sales people engaged in selling

activities meant for the effective execution of the salesfunction

Sales organization (cont )



Sales organization (cont….)

• a structural body through which the functions ofsales management are carried out

• sales organization always makes efforts to increase sales,thereby achieving the principle of profit maximization,

which contributes to the overall growth of enterprise



Factors influencing structure

• product and service related factors

• organization related factors

• marketing mix related factors

• external factors:

- the speed of market change- reduction in the number of vendors perbuyer

- closer to customer relationships- changes in regulations and internationalpractices

Organizational principles



Organizational principles

span of control

unity of command

hierarchy of authority

stability and continuity

coordination and integration

homogeneity

objectivity

specialization

Organizational design



Organizational design

- formal and coordinated task

- assigning territories

- establishing flows of communication and responsibilities

of sales groups and individuals to customers effectively

Line organization Mr. Ratnakar ShettyPresident / Owner

Mr. Chandrakant VP (Sales)

Five sales people

Typical structure of a line organization



Consumermarket

Institutionalmarket

Corporatemarket

National

DistributorsDirect to

Home

Direct

marketing Distributors Bundling Gifting

ConsumerRegional

Distributors

Retailers

Consumers

yp g

Design by territory



Design by territory

VP Marketing

National SalesManager

Divisional Manager

(East)

Divisional Manager

(North)

Divisional Manager

(West)

Regional SalesManager

District SalesManager

Sales Staff(City wise)







Design by management function



Design by management function

Mr. Dara singh,

VP(Marketing)

Mrs. Chitra

Mohanty

(Advt / Sales

Promotion Mgr)

Staff Function Line Function

Mr. Dibya Behera

(Sales Manager)

Mr. Chandra De

Manager

(MR)

20 Sales People

Design by product



Design by product

President,Marketing

Product Manager (A)

Product Manager (B)

Manager(Sales)

Manager(Training)

Manager(Promotion)

Manager(Sales)

Manager(Training)

Manager(Promotion)

Design by customer



Design by customer

President

(Marketing)

Sales Manager Wholesalers

Sales ManagerRetail Sales

Sales People

Sales ManagerIndustrial Relations

Vice President(Marketing)

Sales People Sales People

President



Functional

Geographic

Customer

CombinedSales Org. Design

Marketing ManagerInternational

G.M

International Sales

Marketing ManagerIndia

Vice President(Marketing)

G.M

Consumer care

G.M

International Sales

Vice President(HRD)

Vice President(Production)

Divisional ManagerSoaps

Divisional ManagerFood

Divisional ManagerPaper

Eastern SalesDivision

Western SalesDivision

Northern SalesDivision

Europe Division America Division Gulf Division

Product



Emerging organizational design



g g g g

• agency and distribution selling

• shared sales force

• telemarketing

• TQM and team-based selling

Customer

Sales MarketingTechnical

SupportManufacturing

Supplier selling team

Number of sales people



p p

• determined by:

- territories vary in their demand structure for prospecting- product mix demands

- levels and types of prospecting

- nature of the customer segments

Affordability method (based on sales budget)

Incremental method

Workload method

Number of sales people =

(Number ofexisting

customers)

(Number ofPotential

customers)

(Idealfrequency of

calls)

(Length ofa call) X X

X

Ideal selling time available for a salesperson

Sales territory



y

• a group of present and potential customers assigned to

an individual

• sales person, a group of sales person, a branch, a dealer,

a distributor or a marketing organization at a given

period of time





Territory shapes



y p

circlewedge

Clover leaf

Strategic Planning Matrix



Strategic Planning Matrix

Opportunity

Strategy

Opportunity

Strategy

Strategy

Strategy Allocate a moderate level of resources tomaintain current advantage.

Either commit a minimal level of

resources to the account or consider

abandoning the account altogether.

The account offers stable opportunity sincethe sale organization has differential

advantages to serving them.

Opportunity

Opportunity

The account offers little opportunity. Its

potential is small and the sales organization

is at a competitive disadvantage in serving

it.

The account offers a good opportunity. Ithas high potential and the salesorganization has a differential advantagein serving it.

Commit high levels of sales resources to

take advantage of the opportunity.

The account may represent a goodopportunity. The sales organization needs toovercome its competitive disadvantages andstrengthen its position to capitalize on theopportunity.

Either direct a high level of sales

resources to improve the position and totake advantage of the opportunity or

shift resources to other accounts.

Strong Weak

High

Lo

w

Sales Territories



New Territories..?

Use of Information Technology

IT enabled services computer programmes simulation techniques

Documents

Sales and Distribution Management Unit-1