Sales & Distribution Management - Class PPTs - Student Version

8/3/2019 Sales & Distribution Management - Class PPTs - Student Version

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1

Introduction to SalesManagement



2

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 posted

5. 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 calls

9. Diplomacy in dealing with operating departments

10. Technical education

Personal selling strategies



3

Persuasion

Consultative

Selling

Partnership

StrategiesBusiness

Management

Negotiation

Evolution of personal selling



4

Marketing concepts

1) Production concept

2) Product concept

3) Selling concept4) Marketing concept

5) Societal concept



© Oxford University Press 2005, All rights reserved.5

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 quota

finalization

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

relationship strategies with key customers


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Types of personal selling

•Industrial selling

• Retail selling

• Services 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


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10

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



11

Marketing management process

MARKET ANTICIPATION

Exchange offer of value

Producer

MarketerConsumer

Marketing mix

•Product

•Price

•Place

•Promotion



12

Formulation of a strategic sales programme

Implementation of the sales programme

Evaluation and control of sales force performance

Sales management process



13

Technology

Relationship sellingCustomer orientation

Global and ethical

Issues

New selling methods

Diversity

Emerging trends

in sales

management

Emerging trends in sales management

Technology



14

Selling Skills and Strategies




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




Selling skills

Selling Skills

Listening Skills

Conflict management and

resolution skills

Negotiation

and bargaining

skills

Problem

solving skills

Effective

communication

skills




Communication process

Noise

Channel

Feedback

Intended

Message

Sent Message

Encoding

Perceived

Message

Received

Message

Decoding

Sender Receiver




Communication processcontd.

Managing body language:

Personal Appearance

Posture Gestures

Facial Expressions

Eye Contact

Space Distancing




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:- lumping

- avoidance

- coercion

- meditation

- conciliation

- arbitration

- adjudication

- negotiation




Stage I

Potentialopposition or

Incompatibility

Stage II

Cognition &Personalization

Stage III

Intentions

Stage IV

Behaviour

Stage V

Outcomes

Antecedent

Conditions

Communication

Personal

Variables

Structure

Perceived

Conflict

Felt Conflict

Conflict handling

Intentions

Competing

Collaboration

Compromising

Avoiding

Accommodating

Overt Conflict

Party’s

behaviour

Others

reaction

Increasedgroup

performance

Decreased

group

performance

Conflict management process




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




Define the problem

Generate alternative solutions

Decide the solution

Implement the solution

Evaluate the solution

Problem solving process




ProblemDefinition

Techniques

Find out origin of the

problem

Explore theproblem

Present

desired state

analysis

Evaluate

problemstatement

Statement

and

Restatement

Dunker’s

diagram

Problem definition techniques

1

2

35

4

6




Dunker’s diagram

Achieve the desired state

Possible path to the desired state

Path 1 Path 2 Path 3

Solutions to implement & paths to desired solutions

Solution 1Solution 2 Solution 3

General Solution

Functional Solution

Specific Solution

S h i




Perceived problems

Re Statement

Re Statement

Final problem Statement

Relax

Constraints

Make an

Opposite

Statement

Generalize

Statement restatement technique




Components of a decision on thefuture course of action

Situation analysis

Problem analysis

PastWhat is the fault

Decision analysis

Potential problem

Analysis

FutureHow to prevent future

faults?




Decision on the best solution

Approval

Planning

Carry through

Follow up

Evaluation

I

M

P

L

E

ME

N

T

A

TI

O

N

Solution implementation process



© Oxford University Press 2005, All rights reserved. 32

The Selling Process




Stages in the selling process

Pre-sale

preparation

Sales

Presentation

Handling

Customer

Objections

Closing the

SaleFollow up

action

Approach to

the customer

Pre-

approach

before the

interview

Prospecting




Prospecting

Successful prospecting

50 potential prospects

15 Qualified prospects

6 Interviews

1 sale

50 potential prospects

25 Qualified prospects

17 Interviews

7 sales

Successful prospecting

No Yes




Process of prospecting

Identify and define prospects

Search for sources of potential

accounts

Qualify the prospects from the

suspects




Methods of prospecting

Cold canvassing

Endless chain customer referral

Prospect pool

Centers of influence

Non competing sales force

Observation

Friends and acquaintances

Lists and directories

Direct mail

Telemarketing

Trade shows and demonstrations




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

• Do not advertise willingness to concede

Suggested by SMITH




Methods of handling customerobjections

Superior feature method

Yes…But method

Reverse English method

Indirect denial method Pass out method

Comparison method

Direct denial method

Another angle method

Narrative method

Testimonial method

Question or WHY method




Closing the sale

• Methods of closing the sale

• Follow-up action

• B2B selling




Sales Organization




Sales organization

• an organization of individuals either working together

for the marketing of products and services manufactured

by an enterprise or for products that are procured by the

firm for the purpose of reselling

• a sales organization defines duties, roles, rights, and

responsibilities of sales people engaged in selling

activities meant for the effective execution of the salesfunction




Sales organizationcontd.

• a structural body through which the functions of

sales 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 actors

• Marketing mix related factors

• External factors:

-Sales Organisation design based on Team performance- Trend towards elimination of sales force (bazee.com)

- Market driven strategy (customer segmentation strategy) vs.

Customer driven strategy (partnership strategy)

- The speed of market change (higher decentralisation)

- Reduction in the number of vendors per buyer- Closer customer relationships

- Changes in regulations and international practices




Organizational principles Span of control

Centralisation vs. decentralisation

Unity of command

Hierarchy of authority

Stability and continuity

Coordination and integration (Marico & P &G for rural)

Homogeneity

Objectivity

Specialization




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

T i l t t f li i ti




Consumermarket

Institutionalmarket

Corporatemarket

National

DistributorsDirect to

Home

Direct

marketing Distributors Bundling Gifting

ConsumerRegional

Distributors

Retailers

Consumers

Typical structure of a line organization




Design by territory

VP Marketing

National Sales

Manager

Divisional Manager

(East)

Divisional Manager

(North)

Divisional Manager

(West)

Regional Sales

Manager

District SalesManager

Sales Staff

(City wise)

Regional Sales

Manager


Sales Staff

(City wise)

Regional Sales

Manager


Sales Staff

(City wise)




Design by management function

Mr. Dara singh,

VP(Marketing)

Mrs. Chitra Mohanty

(Advt / Sales

Promotion Mgr)

Staff Function Staff Function

Mr. Dibya Behera

(Sales Manager)

Mr. Chandra De

Manager

(MR)

20 Sales People




Design by product

President,

Marketing

Product Manager (A)

Product Manager (B)

Manager

(Sales)

Manager

(Training)

Manager

(Promotion)

Manager

(Sales)

Manager

(Training)

Manager

(Promotion)






Functional

Geographic

Customer

CombinedSales Org. Design

President

Marketing Manager

International

G.M

International Sales

Marketing Manager

India

Vice President

(Marketing)

G.M

Consumer care

G.M

International Sales

Vice President

(HRD)

Vice President

(Production)

Divisional Manager

Soaps

Divisional Manager

Food

Divisional Manager

Paper

Eastern SalesDivision

Western SalesDivision

Northern SalesDivision

Europe Division America Division Gulf Division

Product




Key account sales

Sales process automation

- focus on CRM

- customer profitability and value analysis

- the few accounts give incremental returns

- national accounts

- EDI – Electronic Data Exchange

Sales Organization




Emerging organizational design

• agency and distribution selling

• shared sales force

• telemarketing

• TQM and team-based selling

Customer

Sales MarketingTechnical

SupportManufacturing

Supplier selling team

N b f l l




Number of sales people

• 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 of

existing

customers)

(Numberof

Potential

customers)

(Ideal

frequency of

calls)

(Length of

a call)XXX

Ideal selling time available for a salesperson




Management of Sales Territory

S



57

Sales territory

A group of present and potential customers assigned to

an individual sales person, a group of sales persons, a

branch, a dealer, a distributor or a marketing

organization at a given period of time.



Objectives of Sales Territory

To formulate sales plans, policies, strategies around company’s

products/services, designed for a territory.

Analyze territory sales potential & plan marketing programs & key

potential customers for a territory.

Analyze strengths & weaknesses of competitors & work out

strategies to subvert competition for a territory.

Identification & classification of accounts according to their

potential & chalk out call plans for a territory.

Organize sales force, allocate sales efforts, implement sales plans

more effectively for a territory.

Review performance of sales force at regular intervals for a

territory

Redesign sales plans, policies, strategies in case of changes in

market trends/business environment for a territory. 58

S l i



59

Sales territory (contd.)

Advantages of designing a sales territory :

It ensures better market coverage

Effective utilization of the sales force

Efficient distribution of workload among sales people

It is convenient to evaluate the performance of salespeople

To control over the direct and indirect costs of the sales

function

Optimum utilization of sales time by sales people

D i i l i i



60

Designing sales territories

Select the basic geographiccontrol units

Decide on the criteria for

allocation

Decide on the startingpointCombine control units

adjacent to starting point

Compare territories on

allocation criteria andconduct workload analysis

Assign sales force to new

territories

Factors

influencing the

modifications

of a territory:

mergers

marketconsolidation

split in division

sales force

turnover

customer

relocations

product life

cycle change

product line

change

Modify

territorial

boundaries to

balanceworkload

and potential

T it h




Territory shapes

circlewedge

Clover leaf

St t i Pl i M t i



62

Strategic Planning Matrix

Opportunity

Strategy

Opportunity

Strategy

Strategy

StrategyAllocate a moderate level of resources to

maintain current advantage.

Either commit a minimal level of

resources to the account or consider

abandoning the account altogether.

The account offers stable opportunity since

the 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.It has high potential and the sales

organization has a differential

advantage in serving it.

Commit high levels of sales resources to

take advantage of the opportunity.

The account may represent a good

opportunity. The sales organization needs

to overcome its competitive disadvantages

and strengthen its position to capitalize on

the opportunity.

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

H

i

g

h

L

o

w



63

New Territories..?

Use of Information Technology

IT enabled services

computer programmes

simulation techniques

Sales territories

Decide Basic Territories: Market Build Up Method



Decide Basic Territories: Market Build-Up Method

64

Management must determine:

Desirable call pattern (call frequency per account per year)

Total calls needed in each control unit

Workload capacity

Tentatively set territorial boundary lines combining control units

until, “total calls needed = total calls possible”

Modify territories as needed

Workload approach: Example-I.



65

Workload approach: Example I.

Customer Call

frequency

/ annum

No. of

customers

No. of

calls /

annum

No. of

customers

No. of

calls /

annum

Total no.

of calls /

annum(in both

units)

Control Unit - 1 Control unit - 2

Major 8 100 800 150 1200

Moderate 6 150 900 250 1500

Minor 4 600 2400 700 2800

4100 5500 9600

Workload= No of working days x av. no. of calls / day240 working days x 4 calls per day = 960

Required no. of sales persons = 9600 ÷ 960 = 10 (for 2 control units)

Workload approach: Example- II.



66

Customer

Type

Time / call Calls /

annum

Hours /

annum

Total hours /

annum

Major

(250)

60 min. / call 40 40 hrs. 10,000 (250x 40 hrs.)

Moderate

(500)

30 min. / call 30 15 hrs. 7,500 (500 x 15 hrs.)

Minor

(800)

20 min. / call 18 6 hrs. 4,800 (800 x 6 hrs.)

Total 22,300 hrs.

No. of working days / annum = 273 (Sundays+holidays+Training

days+ meeting days+ conference days+ sickness days)

273 x 8 hrs. per day = 2184 hrs.Selling activities = 40% of selling hours (2184) = 873.6 hrs.

Non-selling activities = 60% of selling hours (2184) = 1310.4 hrs.

No. of sales persons needed = 22,300 ÷ 874 = 25 sales persons.

D id B i T i i S l B k D M h d



Decide Basic Territories: Sales Break-Down Method

67

Management must determine:

Company Sales Potential

Sales potential in each control unit

Sales volume expected from each sales person

Tentative territorial boundary lines by combining control unitsuntil total sales potential = expected sales volume

Territorial modifications as needed

1 C S l P t ti l




1. Company Sales Potential

S = NVP

N = No. of prospective buyers of firm

V = Estimated sales units (through sales forecasting)P = Price per unit

2. Forecast sales potential of each control unit =

Total sales potential x Market Index of each unit (e.g., B= Buying

Power Index)For PCs, B = f (I,E,D) where I=Income, E = Education, D = No. of

Distributors in that unit.

3. Estimate sales volume expected from each salesperson (how

much of sales potential).

Profit (20% of sales) = Sales – (cost of products sold + distributioncost) (50% of sales) – direct selling cost (Rs.6,00,000).

0.20Y = Y – 0.50 Y – Rs.6,00,000.

Y = Rs.20,00,000 = av. volume of sales, a salesperson should achieve




Sales Potential Method

No of salespersons needed = NAnnual Sales Forecast for company = S ( Rs.40,000,000)

Est. productivity of av. salesperson = P (Rs.20,00,000)

Est. percentage of annual salesperson turnover = T (10%)

N = S/P + T (S/P), or,

N = S/P (1+T)

Therefore,

N= 40,000,000 /20,00,000 (1+ 0.10) = 22 salespeople will be

needed for the entire company.




Management of Sales Quota

Sales quota




Sales quota

• A quota is an expected performance objective

• A quota is a sales assignments or goal to be

achieved in a specific period of time

• It is routinely assigned to the sales units (e.g.

departments, divisions, and individuals)• Sales units proceed to reach quotas in their

respective domains

“A sales quota is the sales goal set for a product line,company division, or sales representative. It is

primarily a managerial device for defining and

stimulating the sales effort.”. … Kotler

Principles of quota setting




Principles of quota setting

• Setting of sales quotas is a challenge to the sales

manager and should be handled with precision

and adequate skill

• It must be simple to understand both to themanager and the sales people

• Objectivity to be observed while fixing quotas

and should be based on facts and figures drawnfrom the market

• Quotas set above the achievable limit oftendemotivate and result in high turnover in theorganization

Principles




• Flexible to the prevailing and emerging market

conditions

• There should be a level of definiteness in the quota

set for a salesperson

• It should be fixed either in terms of geographicterritory, on money value, or on the basis of units of

product(s)

• A participatory quota setting procedure followed

jointly by the sales manager and sales people together

serves as a tool of motivation and leads to the

realization of the organizational sales goals

Principles..contd.

S M A R T




P

ECI

FIC

E

ASU

RAB

LE

T

TAI

NAB

LE

E

ALI

STI

C

I

ME

SPEC

IFIC

SBO…

MBO in theSales domain?

Organization of the sales job




Organization of the sales job

Defining annual objectives

Procedure for setting sales quota

Conferencing with each sales person I n d i v i d u a l G o a l s e t

t i n g f o r m

Output

Name

Year

Your territory

Results expected

Pessimistic Realistic Optimistic Results1. Volume per month

2. Expenses per month

3. Gross margin /month

4. Market share/month

5. Key account coverage/

month

Types of sales quota




Types of sales quota

• sale volume quota

• sales budget quota

• sale activity quota

• combination quota

M h d f i l




Methods of setting sales quota

Quotas are based on…

• sales forecasts and potentials

• forecast

• past sales and experience

• executive judgement

• sales people judgement

• based on compensation




Problems in setting sales quota

1. There is a high level of individual difference in every

organization

2. A perfect quota is a combination of selling and non-

selling activities

3. Often sales people do not give proper attention to the

non-selling activities (e.g. searching for prospects,

handling customer objections, and creating market forprobable entry of new products)

•Compare the annual sales volume of the 3 salespersons mentioned below. Determine the rupee

diff b h i l d C l l h ’ f i d Wh




difference between their sales and quota. Calculate each person’s performance index. What

conclusions can you draw based on your results?

Sales Quota Actual Sales Performance Index

Mr . A 150,000 160,000 107 Mr . B 190,000 160,000 84

Mr. C 160,000 110,000 69

Performance index can be calculated by dividing actual sales by quota (x 100) and then the sales

manager can draw inferences about the activity of each sales man in this case. Mr ‘C’ is under

performing where as Mr ‘A’ is doing well. Mr ‘B’ can improve upon as his performance index is within

an acceptable limit.

•Calculate the order to sales call ratio and the average size of order for the year from the following

table. Why does the salesperson’s performance differ?

Name No. of Calls No. Of Orders Actual Sales Sales/Call Sales/Order

Mr . A 1300 350 Rs 500,000 Rs. 384.6 Rs. 1428.6

Mr. B 1400 650 Rs 560,000 Rs. 400.0 Rs. 861.5

Mr. C 1600 580 Rs. 900,000 Rs. 562.5 Rs. 1551.7

Total 4300 1580 Rs. 19,60,000 Rs.455.8 Rs.1240.5

The order to sales call ratio can be found out by dividing the actual sales by calls and actual sales by

orders. The average size of the order can be found out by dividing actual sales by number of orders.

The sales performance differs because the calls to order ratio varies among sales people.

.



80

Evaluation of the Sales ForcePerformance



81

Evaluation stands on two important factors:

1. Setting predetermined standards

2. Comparing actual performance with the

set standards

Criteria for Performance Evaluation



Criteria for Performance Evaluation

82

Systematic PeriodicResult Oriented Flexible

Provide directions Encouraging

Understandable Strategic Fitness

Realistic Fair

Vision forimprovement

Aim for max. accuracy

Steps in Sales Force E al ation Process



Steps in Sales Force Evaluation Process

83

Set sales goals & objectives

Design implementation mechanisms

Establish performance standards

Measure actual results

Compare results against standards

Take controlling measures



Setting sales goals & objectives

Attainable

Realistic

Quantifiable / Measurable

Comparable / analysable

84



Designing implementation mechanisms

How salespersons achieve targets? (by way of meeting customer satisfaction & company’s

economic interests):

How quickly & accurately they apprise thepotential customers

How quickly they procure orders & fulfils them

How precisely they can convert sales orders tomonetary benefits to the company

85



Establishing Performance Standards

Quantitative Performance Standards

Qualitative Performance Standards

86



87

Sales Analysis

(an integrated

process)

Cost AnalysisProfitability

Analysis

Productivity Analysis

(Effectiveness & Efficiency)

1. Measure actual results (sales analysis)

2. Compare results against standards

3. Take corrective actions

Quantitative Performance Standards



(a) Sales Volume (Rupees/ Units)

i. By Productsii. By Customer Groups

iii. By Territories

(b) Profitsi) Gross or net profit margins required

• By Products

•

By Customer Groups• By Territories

ii) Gross Margin Ratio – gross margin to total sales

iii) Net Profit Ratio – net profit to total sales 88

Quantitative Performance Standards (contd.)



(c) Sales Orders

i. Call : Order Ratioii. No. of orders procured (customers developed vs.

volume of orders acquired)

iii. Order Value (sales volume vs. expected target)(d) Accounts

i. No. of old accounts held

ii. No. of new accounts added

iii. No. of existing accounts lost

89

Quantitative Performance Standards (contd.)



(e) Selling Expense Ratios

i. Selling expenses : Total Sales

ii. Field selling expenses : total selling expenses

iii. Average selling expenses / call

(f) No. of calls / day

(g) Cost / call

(h) Call frequency ratio (no. of actual calls to no. of

accounts held)

(i) Market share analysis (% of company’s sales to totalindustry sale in a particular territory/region etc.)

(j) Sales coverage effectiveness index (no. of customers to

no. of prospects in a territory)90

Q lit ti P f St d d



91

Qualitative Performance Standards

(a) Knowledge on:i. Products/services dealt with

ii. Company policies

iii. Competition

iv. Distribution channels

v. Customer behaviours

(c) Personal & personality factors:i. Personal appearance

ii. Cooperation

iii. Industriousness

iv. Stability of mind

v. Tact

vi. Assertivenessvii. Ego drive

viii. Agreeableness

ix. Empathy

x. Achievement motivation

xi. Conscientiousness

xii. Punctuality, etc.

(b) Individual skills:

i. Selling skill

ii. Customer relationship skill

iii. Communication/presentation skill

iv. Problem solving skill

v. Analytical skill

vi. Managerial skill

vii. Interpersonal skill

Sales Force Control



92

Sales Audit ( investigation of the impact of internal/external factors

on sales performance)

i. What decisions were taken at planning & implementation stages?ii. How these affect the sales operations?

iii. What changes are to be brought in, to improve the situation?

Management Information System (MIS)i. Internal reporting system

ii. Marketing intelligence system

iii. Marketing research

iv. Analytical systems

Management by exceptions

Whenever significant deviations are noticed, corrective actions are

taken, without delay.



93

Performance Appraisal MethodsTraditional Methods Modern Methods

a) Ranking method a) Management by objectives (MBO)

b) Paired Comparison method b) Behaviourally anchored rating scale (BARS) – job analysis

c) Graphic Rating scale c ) 360 degree appraisal

* MBO – long term goal setting / joint short term

goal setting / preparation of action plans / periodic performance review / formal appraisal.

d) Checklist method (weighted / un-

weighted)

e) Critical Incidents method

f) Forced Distribution method (on

various performance criteria based)

Traditional Methods



Traditional Methods

Ranking Method:• Ranked on the level of their performance,

regardless of the type of work they perform.

•

Ranking arranges salespeople in terms of bestperformance, next best performance till the

least performing salerperson is reached.

•

Actual degree of difference in the performanceof the salespersons cannot be ascertained.

94

Traditional Methods (contd )



Traditional Methods (contd.)

Paired comparison method: Two salespersons are compared at a time &

compared on a common criteria.

If there are 10 persons, the no of pairedcomparisons will be 45 : n (n-1)/2

Thus while it is better than ranking method but

the procedure is very tedious, time consuming& subject to human error which will multiply

with more sets of performance criteria.

95

T diti l M th d ( td )




Graphic Rating Scale1. Continuous scale: factors are evaluated

continuously, marking somewhere in the

continuum, on a specific factor.

96

1

Very high

3

High

5

Moderate

7

Low

9

Very Low

Subjective judgment – bias cannot be ruled out




Discreet Scale:

97

Very Good Good Average Bad Very Bad

5 4 3 2 1

based on subjective judgment – can lead to bias




Traditional Methods (contd.)Weighted Checklist Method (range= 5 to 1):

98

Attributes Relative

weight

Excellent

(5)

Good

(4)

Fair

(3)

Bad

(2)

Very Bad

(1)

Score

Product

knowledge

0.3 √ 1.2

Co.knowledge

0.2 √ 0.8

Selling

Skill

0.1 √ 0.3

CRM

Skills

0.1 √ 0.2

Motivation 0.1 √ 0.2

Diligence 0.2 √ 0.6

Total

weight

1 3.3

T diti l M th d ( td )




Critical Incident Method (5-point scale):The rater should record significant events, called critical

incidents that happen when salespeople are involved in

sales activities ( for individual salespersons).

The essence- to ascertain critical events that make the

difference between performance & no performance.

a. Bright in prospecting

b. Not smart in customer handlingc. Writes call reports well

d. Demo skill is exceptional, etc.

99





Forced Distribution Method:

100

Observations of the rater Performance Standards

Communication skill = 25% Very Good = > 60%

Good = 40 – 60%

Average = 20 - 40%Bad = < 20%

Very bad = < 10%

It is simple to implement andcan avoid bias to a large extent.

Selling skill = 40%

Persuasive skill = 50%

Personality = 30%

Emotional maturity = 30%

Overall rating = 35% = Average.




Field Review Method:

The rater interviews field sales managers and

supervisors to know how salespersons perform in

the field on both quantitative as well as qualitativeparameters.

However validity & reliability of information so

collected from the field should be checked.

101

Modern Methods



Modern MethodsManagement by Objectives (MBO):

Organisational goals as guidelines – long term goals

Joint goal setting – Sales managers & salespeople

establish short-term performance targets & how

managers can help them achieving such targets.

Preparation of action plans – resource requirements &

methods of selling are developed. Job responsibilities

are clearly defined/modified.

Performance review – tracking progress of salesperformance on a periodic basis.

Formal appraisal – performance results compared with

targets & corrective actions taken/ goals redefined.102

Modern Methods (contd.)




Behaviourally Anchored Rating Scale (BARS):

a) Analyse characteristics & behavioural areas of the job.b) Identify critical behavioural areas & categorize them as

most-effective to least-effective factors.

c)These critical incident areas are reviewed & refined to asmall group of performance dimensions & each is given

right definition.

d) Another group of salespeople/supervisors with experience

are asked to review & rate on 1 (low effectiveness of behaviour) -10 (high effectiveness of behaviour) scale.

e) Finally, few performance dimensions with individual

rating scales define the BARS. 103




ode et ods (co td )

360 degree appraisal

104

Distributors

Salespeople

Peers

Sales

Managers

Themselves




Sales Force Compensation



106

Sales Force Compensation

Plan

FairnessManagement

– judiciously

Motivation

CompetitivenessFlexible Cost

effective



107

Compensation Level

Firm’s Internal factors Firm’s External factors

a) financial ability a) prevailing compensation policies

in industry

b) Compensation policy b) Legal conditions

c) Recruitment & selection policy c) Economic conditions

d) Promotion policy d) Market competition

e) Job description e) Trade union

f) Job evaluation f) Global considerations

g) An employee’s position &designation

h) An employee’s relativecontribution to the job

Aims of a good compensation plana) To increase enthusiasm & motivation of salespeople



108

b) To instill a sense of commitment in salespeople towards their job

c) To inject an atmosphere of team spirit & morale within the salespeople

d) To develop a stable sales force & reduce chances of attrition of sales force

e) To retain efficient sales force for a long run

f) To coordinate & control sales force successfully

g) To attract efficient salespeople from the competing firms

h) To increase loyalty of sales force to the firm

i) To increase quality of interaction of salespeople with customers

j) To improve sense of confidence of customers on sales force & the firm

k) To create a dedicated sales force who leaves no stone unturned to achieve

firm’s goals

Steps in developing Compensation Plan



109

Review job

description

Establish

compensation

objectives

Establish

compensation

level

Choose

compensation

method

Decide on

indirect

compensations

Review the entire

plan

Implement the

plan

M h d f i



Methods of compensation

Straight salary

Straight commission

Combination plans

i. Salary and commission

ii. Salary and bonus

iii. Salary + commission and bonus

110

Straight Salary



1 1 1

Advantages Disadvantages

a) Provides a sense of security a) It has no provision to pay

incentives to salespeople. This may

restrain them taking additional

initiative & drive in personal selling

b) Ensure stability of income b) Selling expenses are not related to

sales volume. Selling expenses areincurred regardless of sales volume

c) Helps to develop a loyal sales force c) It gives equal treatment to both

high & low performing salespersons

d) Prevents high turnover of

salespeople

d) The scheme may not attract high

performing salespeople from the

competing firms

e) Enhances sense of belongingness

of salespeople to the company

e) Seriously lacks motivational push

for potential & energetic salespeople

f) Safe to new salespeople f) May discourage salespeople to

offer additional efforts for slow




moving items

g) Simple to understand and is

economical in application

g) Hard working salespeople may not

find this method attractive

h) Salespeople feel more committed to

their job

i) Salespeople pay more attention

retaining customers than generatingnew ones

j) Salespeople can concentrate on

customer satisfaction to retain

customer loyalty

k) Salespeople can give more attention

to non-selling activities as well

l) Sales managers can exercise close

control & supervision on salespeople

Straight Commission





g g

a) Acts a s a great motivator a) Loss of control over salespersons

b) Differentiates high performing

salespeople from rest

b) Salespeople may not take interest in

slow selling / less margin products of thecompany

c) Unlimited opportunity to earn for

efficient salespeople

c) Salespersons will concentrate on easy

selling or high margin products

d) Management has no pressure to incur

selling costs

d) Salespersons will try to push

expensive variants of product despiteavailability of economical variants

serving same purpose to consumers

e) Salespeople can work freely e) Salespeople may indulge in aggressive

selling that may affect image of company

f) Easy to understand and economical tooperate

f) Salespersons will lack sense of belonging to the company

) S l l t l i f ) S l di l




g) Salespeople cannot complain for

any underpayment - linked to

performance

g) Salespersons can divulge

valuable information of the

company to outside sources

h) Salespeople will not resent against

any pressure selling jobs.

h) Salespeople may not pay attention

to non-selling activities

i) Salespeople may not be interested

in building long term relationshipwith customers

j) Salespeople will not be interested in

a developed market

k) Since earnings are uncertain,salespersons may leave in periods of

bad sales or for better job prospects



115

Combination plans

i. Salary + commission

ii. Salary + bonusiii. Salary + commission + bonus

Combination Plan (salary+commission+bonus)



116

( y )


a) Stable income+ additional financialincentives

a) Not simple to understand & difficultto operate

b) Sense of job security + financial

incentives for generating more sales

b) Selling costs vary across different

selling situations – implementing &

comparing this uniformly across

selling situations is difficult

c) Income varies with sales

productivity, also is a flexible option

c) Sales managers find it difficult to

control sales operations

d) Combination plan tackles

differences in sales potential in

different territories, better than single

plan

d) Plan require constant recording of

sales turnover that may appear to be

cumbersome to sales managers

e) Efficient salespeople are benefited e) It demands high administrative cost

f) Ideal for ambitious & self motivated

salespersons

f) Fixing composition of plan may be

problematic & time consuming



117

g) This plan can be made flexible

by suggesting differentcombinations for different levels of

salespersons

g) Combination plans lead to

unequal income of salespeople indifferent territories. Hence

comparison of their performance

on common standards is difficult.

h) Salespersons may underestimate

the non-selling activitiesi) When sales targets are fixed at high

levels for salespersons to attain, this

plan will discourage them to do their

best

j) Long term deferred payment of

incentives may frustrate salespeople

Compensation schemes : non-financialh



approach

Career advancement through promotion – jobenrichment

Selling expenses – fix expense quota to control undue

expenses by salespersons

Fringe benefits – medical benefits, insurance cover,

LTC, retirement benefits, entertainment allowance,

mob bill allowance/reimbursements, data card

Perks – company car, fuel charges, room furnishingallowance etc.

Sales contests – rewards for achieving short term goals

118

Application of compensation methods Specific Plan

Company wants to go in for extensive prospecting drive

While launching a new product in the market



119

While launching a new product in the market

Easy to evaluate proficiency among sales people

Company has well established brand names in the market

For sales trainees or newly appointed salespeople

When financial strength of company is weak

For technically complex products / products of high quality

When non-selling activities are not important

When company products have reached a maturity / declining stage

Company wants to get into a new geographical territory

Company wants to relate selling expenses to sales volume

Company introduces a new product / product line

Company wants to do overseas selling

When products are sold through dealers & merchandising & display are

important

When company appoints part time sales people



© Oxford University Press 2005, All rights reserved.

120

Distribution channelmanagement - an introduction

Role of distribution channels




121

• To adjust the discrepancy of assortment through the process

of sorting, accumulation, allocation, and assorting

• To minimize the distribution costs through routinising and

standardizing transactions to make exchange more efficient

and effective

• To facilitate the searching process of both buyers and sellers

by structuring the information essential to both the parties

• To provide a place for both parties to meet each other andreducing uncertainty

How do distribution channelscontribute




122

contribute

•Intermediaries can improve the efficiency of theexchange process

• Channel intermediaries adjust the discrepancy of

assortment through the performance of the sorting

process

• Marketing intermediaries hang together in channel

arrangements to provide for the routinisation of

transactions

• Channels facilitate the searching process

Discrepancies in the process ofexchange




123

exchange

Spatial discrepancy (physical distance)

Temporal discrepancy (difference between timeof manufacturing vs. time of consumption)

Need to break the bulk (consumed in smallerquantities)

Need to provide assortment (heterogeneous mix.)

The cost and control aspects of




124

pintermediation

Direct Distribution Indirect distribution

Control

Cost

efficiency

Distribution channel strategy




125

• Setting distribution objectives in terms of the

customer requirements (service output demands)

• Finalizing the set of activities that are required to be

performed to achieve the channel objectives

• Organizing the activities so that the responsibility of

performing the activities is shared among the entities

who are meant to perform these activities

• Developing policy guidelines for the smooth

functioning of the channel on a day to day basis

Distribution channelmanagement (contd.)




126

a age e t (co td )

• Distribution channel management encompasses all

activities dealing with the distribution function of the firm

• The distribution strategy provides guidelines for decision

making.

• The distribution management function can be viewed as

happening in two phases: distribution process mapping &establishment + day-to-day management of channels.

Distribution channelmanagement (contd.)




127

management (contd.)

• The ex ante phase involves all the activities that areassociated with the design and establishment of the

distribution channel. These activities actually take place

before the distribution channel actually starts functioning.

• The ex poste phase involves managing the day to day

activities of the channel wherein the behavior of the

individual channel members are coordinated

Channel Management tasks




128

Channel Management tasks

Distribution Channel Strategy

Channel ObjectiveActivity Finalization

Organizing the activities

Developing Policy Guidelines

Design of the

channel structure

Establishing the

channel

Motivating

Channel Members

Resolving Conflicts

among channel

members

Ex ante

Phase

Ex Poste

Phase

Manufacturer

Channels of drug distribution




129

Manufacturer

C&F /Depot / Super Stockist

Stockist

Wholesaler

Retailer/ Chemist

Patient

Institution Hospital




130

Designing customer-oriented

marketing channels

Channel Design




131

The channel design is normally meant to give a clear

idea about: The number of channel entities in the channel network

The way in which they are linked

The roles and responsibilities of the entities in thenetwork

The rewards for participating in the activities and also

Clear cut guidelines for the major activities to be

performed during the normal functioning of the

channel.

What are the service outputs




132

Convenience (availability vs. inventory cost) Breaking the bulk (Consumption of one unit at

a time, at retail point)

Spatial convenience ( channel intensity vs.cost)

Waiting time (days / off-the shelf)

Assortment (products that are bought together)

Distribution channel design




133

g

To consumea product

Service outputs

have to be delivered

Channels

Participates in

channel flows

Activities have

to be performed Thus performs activities

Example of a service output deliveredtemplate




134

Sl.No. Service dimension Service output delivered

1. Bulk-Breaking Units are delivered in ones

2. Spatial convenience There is at least one outlet for almost every

3 km radius excluding of course thinly

populated areas

3. Waiting time Not more than 2 days for any model

4. Assortment Other consumer goods items including that

of other competitors are available at all the

outlets where the products are otherwise

Available

5. Installation support Available

6. After sales support Free for first two years, but available onpayment afterwards. Also available at every

city from where the product was bought.

7. Consumer financing Available

Fl Di I di O h

Channel flows and contribution toservice outputs




135

Flow Directcontribution

Indirectcontribution

Othercontribution

PhysicalPossession

Spatial convenience,bulk breaking,waiting time

Assortment

Ownership Spatial convenience

Promotion Spatial convenience Is a service outputin itself

Negotiation Spatial convenience,bulk breaking

Assortment

Risk taking Waiting time, bulkbreaking, spatialconvenience

Financing Spatial convenience,

waiting time, bulkbreaking

Assortment

Ordering Bulk breaking,spatial convenience,waiting time

Payment Bulk breaking,spatial convenience,

waiting time

Channel design effort decisions –




136

gconsumer durables

The service output levels

The flows or activities that are associated

with the achievement of the service outputlevels

The type of entity who would be entrusted

with the performance of each of these flows

Parameters for comparing




137

p gchannel designs

Efficiency (inputs vs. desired output levels)

Effectiveness (zero waiting time)

Equity (remuneration should reflect activities &their criticality)

Scalability (channels should take higher load, as

and when required) Flexibility ( should handle fluctuating demand)

The channel establishment plan(contd.)

Th i f th h l t b t




138

The main purpose of the channel to be set-up.

The profile of the customers who are the target market forthe channel .

The needs and requirements of the target market with regard

to the identified service outputs provided by the proposed/

existing channel.

Analysis of the operations of the existing channels that deal

in similar product/service lines – ideas for differentiation.

Detailed activity chart for achieving the service output

objectives - linking service objectives to specific activities.

Plan….. Contd.

Details about the various channel constituents who will be




139

performing these tasks

The cost of performing the activities The designated roles and responsibilities of the channel

constituents

The proposed remuneration for performing these roles and

responsibilities

Standards for measuring the performance (targets,

customer satisfaction etc.)

Procedures for reporting and information sharing (ERP)

Monitoring mechanisms (reports, personal inspection)

Criteria for appointing the channel members (investment,

experience, past history etc.)




140

Managing Channel MemberBehaviour

Channel relationships




141

Channel relationships

• Perceptions of organizational power

• Dependence

• Control

• Trust

• Commitment

• Co-operation

Discrete relational exchangeti




142

continuum

Arm’s length relationship

Relational exchange relationship

Channel control




143

Pay – Off

Function

Tolerance

Function

(lost

opportunities)

Supplier authority

profit earned by

channel

member

Zone of acceptanceA

Role of persuasion, authority, and coercionin channel control




144Authoritypersuasion

Coercion

Pay – off

function

A B

C

Channel members

profit

Tolerance

function

control

Components of channel offeringManufacturer sales

f i i




145

Financial returnsQuality products

Competitive price

Reliable delivery

National reputation

Promotionalsupport

Training

MarketresearchCompany

policies

Technical

assistance

Responsiveness

systems

force incentives

Distributor

sales force

incentives

Distributor firmincentives

Capability

building

programmesChannel core

elements

Incentive

programme

Influence

Strategy

Types of Influence

Strategy

Explanation




146

Channel Manager’s Influence

strategy types

group

Indirectinfluence

strategies

Information exchange Information control

Modelling

Where information on general businessissues and the channel program is

merely exchanged with channel

member personnel.

Direct

UnmediatedStrategies

Recommendation

Warning Positive normative

Negative normative.

In this type of strategy the

consequences of the acceptance orrejection of the channel programme or

its implementation are stressed, but

these consequences are based on a

response from the market environment,

not on the mediation of the channel

Principal.

Reward and

Punishment

Strategies

Economic reward

Non-economic reward

Economic punishment

In this type of strategy rewards

and punishments are directly

given to channel members




147

(contd.) Influence strategy types

Strategies p

Non-economic punishment

g

Direct

unweighted

strategy

Direct request This strategy involves making adirect request to the channel

member where the Principal

mainly communicates desires or

wishes concerning the channel

member’s acceptance of the

channel program.

Direct

Mediated

strategies

Personal plea

Promise

Threat and

Legalistic reference.

In this type of strategy specific

action is requested;

consequences of acceptance or

rejection are stressed and are

based on the mediation of the

channel principal.

Influence situations in channelrelationship




148

Reinforcement

process

Behavioural

Reinforcement

(non-economic

reward)

Moderate

rationalization

Attitude change

(Recommendation

)

Radical

rationalization

Attitude change

(Recomm./warning

/inf. exchange)

Inducement process

Behavioural change

(economic reward)

Moderate

confrontation

Behavioural and

attitudinal change

Radical

confrontation

Behavioural and

attitudinal change

Positive NegativeNeutral

+ ve

- ve

Attitude towards the channel progranmme

Behaviour

towards the

channel

programme

Stages in channel conflictAttitudinal




149

sources

of conflict

Structural

sources of conflict

Conflict

resolution

Cognitive/

Affective

conflict

Manifest

conflict

Conflict

outcomes

CAUSES OF CONFLICTS

Attitudinal Causes

Structural causes

Conflict management methods at differentstages of conflict

Institutional approaches




150

Latent conflict

Felt conflict

Manifest conflict

Institutional approachesJoint membership of associations

Exchange of executivesCooptation

Dealer councils

Third party mechanisms

Mediation

arbitration

Negotiation

Negotiation strategies




151

Accommodative Collaborative/problem

solving

Compromise

Avoidance Competitive /aggressive

Concern

for the

others

interest

HIGH

LOW

LOW HIGHConcern for

own interest



Thank you

Documents

Sales & Distribution Management - Class PPTs - Student Version