Module One

Sales and
Distribution
 Session Objectives

 Nature and importance of sales management

 Sales person to sales manager
 Emerging trends in sales management
 Role of distribution management
 Overview of distribution channel members
 Linking sales and distribution

2
 What is Personal Selling?

Involves two-way personal

communication between
salespeople and individual
customers whether:
face to face,
by telephone,
through video conferencing,
or by other means.

3
 The Role of the Sales Force

Represent the
Company to
Customers to Produce
Company Profit

Sales Force
Serves as a Critical Link
Between a Company and its Customers Since They:

Represent Customers
to
the Company to
Produce Customer
Satisfaction 4
 1
Types of Selling
1

Sales THE SELLING

Sales
Maintenance FUNCTION development

ORDER Sales
ORDER ORDER
TAKERS Support CREATORS GETTERS

INSIDE DELIVERY OUTSIDE MISSIONARY

FRONT SALES
ORDER SALES ORDER SALES
LINE SUPPORT
TAKERS PEOPLE TAKERS PEOPLE

NEW TECHNICAL MERCHAND

INDUSTRIAL CHANNELS BUSINESSES SUPPORT ISERS

5
 1

The complexity and difficulty of sales job categories

increase as they move left to right.

Order Takers Order Getters

6
1
Sales jobs differ from other jobs
1 because salespeople…
Implement a firm’s marketing strategies in
the field.
Are revenue generators
Are authorized to spend company funds in
travel, communication and entertainment.
Represent their company to customers and
to society in general.
Represent the customer to their
companies.
Operate with little or no direct supervision
and require a high degree of motivation. 7
1
Sales jobs differ from other jobs
1
because salespeople…
Have a higher level of social intelligence
and tact
Have to develop innovative solutions to
difficult problems.
Face role ambiguity, role conflict, and role
stress.
Face more failures than successes
Require considerable travel and time away
from home
Have to bear pressure from all fronts
8
1
Knowledge Updating Habits
1 of Successful Salespeople
Finding the right customers
Listening to customers’ customers
Cultivating resources in their own
organizations
Keeping an eye on bottom lines
Anticipating problems
Adopting a long-term view
Reviewing each sales call after-the-fact

9
1

1
Traits of Successful Salespeople

Initiative
Ambitious
Analytical Killer Instinct
Disciplined Persistent/Persuasive
Drive/Enthusiasm Personal Charisma
Good communicator Relationship
Empathy Oriented
Ethical/Integrity Resilience
Hard working Self confidence
Team Players

10
1

1
Selling Success Factors

1. Listening skills
2. Follow-up skills
3. Ability to adapt sales style to situation
4. Tenacity
5. Well organized
6. Verbal communication skills
7. Able to interact with people at all levels of an
organization
8. Ability to overcome objections
9. Closing skills
10.Personal planning and time management skills
11
 A Day in a Sales Manager’s Life

Von Oliver is currently national sales manager for a

division of Lockheed Martin Corp. Von’s typical day starts
at 7:30 A.M. going through e-mail and prioritizing the days
events. During the morning he will review reports, and
spend time with his sales reps. He will have lunch with
customers and spend the afternoon making sales calls
with his sales reps. He spends late afternoon reconciling
the days activities and setting his agenda for the next day.

Action

12
 A Day in a Sales Manager’s Life

Result

Von Oliver is involved in a variety of different activities.

He spends much of his time interacting with
individuals, especially salespeople and customers.
But, he also plans strategies and continuously
monitors performance. In other words, he performs all
the major sales management functions.
13
 The Marketing Concept
 Production Era – up to 1970
 Focus on mass-producing a limited variety of
products for as little cost as possible.
 Consultative Selling Era (70s)
 Age of the hard-sell.
 Strategic Selling Era (80s)
 The marketing concept first emerges.
 Partnering Era (Mid 90s to Present)
 The buyer and seller commit to doing business
over a long time

14
 Sales Management in the 21st Century

 Behavioural – Rising customer expectation,

globalisation, demassification of markets
 Technological – sales force automation,
sales offices, electronic channels
 Managerial – Shift to Direct Marketing,
outsourcing of sales and merging of sales
and marketing

15
 Sales Force Management Challenges in the 21st
Century

 Customer relationship management (CRM)

 Sales force diversity
 Electronic communication systems and
computer-based technology
 Selling teams
 Necessary skills to sell intangibles
 Complex channels of distribution
 An international perspective
 Ethical behavior and social responsibility

16
Sales Management in the 21st Century

 Creating more nimble and adaptable sales

organizational structures
 Removing functional barriers within the
organization to create greater job
ownership and commitment from
salespeople
 Integrating salesperson performance
evaluation to incorporate all activities and
outcomes

17
 Sales Management in the 21st Century

 Small business is where the business is

 IBM changing its focus to organisations with 100 to 1000
employees
 HP Small Office Initiative
 Smaller companies purchase with a higher
speed and frequency
 Prefer to research products online
 Want to be partnered not entertained
 Simple in their approach
 Prefer a single point of contact
 No more cold calls

Source: Jennifer Gilbert, “Small but Mighty” Sales and Marketing Jan 2004 18
 The Internet has allowed many companies to shift
sales support for small accounts to e-commerce sites
and away from sales personnel. Additionally, many
regularly occurring functions have become
automated, allowing customers with any size
organization to use web-based systems to place orders
and submit warranty requests. Can you think of any
other areas where Internet-based
technologies could change the
way a sales force interacts
with their customers?
19
48
 Help on the Net
Percentage of Companies Using the Internet for Sales Activities

100%

80%
Product Explanation

60%
Competitive Reporting
Proposal Development

Expense Reports
40%

Prospecting

Order Entry
20%

0%
20
Source: “G-BB,” Sales and Marketing Management, June 2000, pp. 64&65.
 Sales Management

The planning, direction and control of personal

selling, including recruiting, selecting, equipping,
assigning, routing, supervising, paying and
motivating as these tasks apply to the personal sales
force
American Marketing Association

The management of the personal selling component

of an organisation’s marketing programme

21
 Sales Force Management
Designing Salesforce Strategy and Structure

Recruiting and Selecting Salespeople

Training Salespeople

Compensating Salespeople

Leading and Motivating Salespeople

Evaluating Salespeople 22
 The Nature of Sales Management

 Has evolved from recruitment , training,

supervising and motivating the sales force
to also include :
 Strategic Planning
 Forecasting
 Budgeting
 Territory Planning
 Sales Cost Analysis
 He has to have the ability to select the right
person and keep him motivated through
the highs and the lows

23
 Roles and Skills of a Sales Manager

 No longer the driver but the support

 From boss to leader
 Detailed understanding of the customer
 Partnering the sales reps
 Flexibility to deal with hybrid sales force of
reps, telemarketing, MSRs
 Seeking ways to exceed customer
expectations
 Better at people skills than at analytical or
evaluative skills

24
 Sales Management Trends

Transactions Relationships

Individuals Teams

Sales Volume Sales Productivity

Management Leadership

Local Global
25
 TRANSACTION TO RELATIONSHIP

Transaction Oriented Relationship oriented

 Get new accounts  Retain existing accounts

 Get the order  The preferred supplier
 Cut the price  Price for profit
 Short term  Long term profit
 Sell to anyone  Concentrate on high
profit potential accounts

26
 Effective Sales Managers:

Utilize a Strategic Perspective Focused on

Customers

Attract, Keep, and Develop Sales Talent

Leverage Technology

27
 Selling and Managing

Activity Sales rep Sales Manager

Primary responsibility Develop accounts Develop people

Working relationships Alone Through others

Role Player Coach

Part of Management No Yes

28
 Designations

Front Line Middle Senior

Sales Rep Area Manager Branch Manager

Area Executive Major Account Manager Regional Manager

Medical Rep District Manager Zonal Manger

Territory Manager Unit Sales Manager General Manager

Officer Supervisor Vice President

29
 Sales Personnel Career Path

Senior/Top
Level

Middle Level

Front Line

30
Importance of Personal Selling and Sales
Management
 In our Economy
 Buyers’ market from mid 70s. The problem has shifted
from production to selling
 Production and sales are seen as the two pillars with all
other areas supporting these functions
 In an individual organisation
 All marketing plans go awry if not implemented by the
sales force
 Biggest expense post manufacturing
 To you, the students
 The line which you will join and stay with for at least
another five years

31
 The best executive is the one who has enough
sense to pick good people to do what he wants done
and self-restraint enough to keep from meddling
with them while they do it.
Theodore Roosevelt

32
48
Module One

Sales and
Distribution
 The Need for Marketing Channels
 Manufacturers lack the financial resources to
carry out direct sales both in terms of
inventory and selling costs
 Practically not feasible especially for low
value high volume products
 Returns on manufacturing higher than
returns on retail

40
 What is a Marketing Channel?

 A set of interdependent organisations

involved in the process of making a product
or service available for consumption or use
 Intermediaries
 create and meet demand
 Facilitate smooth flow of goods and funds
between manufacturers and consumers

40
 Major Role of an Intermediary

Place Time
Utility Utility

Possession
Utility
A customer wants to buy a tube of toothpaste at 8 pm on a Tuesday evening 40
 What is a Marketing Channel?

 A set of interdependent organisations

involved in the process of making a product
or service available for consumption or use
 They are the intermediaries who
 Create and meet demand
 Facilitate smooth flow of goods and funds
between manufacturers and consumers
 Are the agents of delivery for manufacturers who
concentrate on production and brand building
 What is a Marketing Channel?

 Examples:
 Computers from direct sales to VARs to retailers
to Internet
 Books authors, publishers, wholesalers, retailers
to the net. Impact for logistics
 Pharmaceuticals involving hospitals, doctors,
wholesalers, distributors. Identification of key
players on scanning the changing environment
 Why are there Marketing Channels?

 Demand Side factors

 Facilitation of Search both for the manufacturer
and the end user
 Example – Bond paper vs. fancy stationery
 Adjustment of Assortment Discrepancy
 Sorting - case of fruits, grading
 Accumulation – from various suppliers, variety
 Allocation – breaking bulk
 Assorting – breakfast table
 Consumer Marketing Levels

M A N U F A C T U R E R S

Two Levels
Distributors
Zero Level

One Level

Three Levels
Wholesalers Wholesalers

Retailers Retailers Retailers

C O N S U M E R S
40
 Industrial Marketing Levels

M A N U F A C T U R E R S
Zero Level

One Level
Sales Branches

Two Levels
Industrial Industrial
Distributors Distributors

C O N S U M E R S
40
41
Cost Value Relationships

40
 Distribution Modes

 Choice of combination and contribution of

each set is determined by:
 Nature of products
 Nature and dispersal of customers
 Market expectations of credit
 Company’s capabilities and strengths
 Desired speed of market penetration
 Competitive forces

40
 Functions of Marketing Channels

 Demand Side factors

 Facilitation of Search both for the manufacturer
and the end user
 Example – Bond paper vs. fancy stationery
 Adjustment of Assortment Discrepancy
 Sorting heterogeneous supply into relatively homogeneous
sets – grading
 Accumulation – from various suppliers, variety
 Allocation – breaking bulk
 Assorting for resale in association with each other –
breakfast table
 Functions of Marketing Channels

 Routinisation of transactions
 Each purchase transaction involves ordering,
valuating and paying for goods/services
 Routinisation of these transactions lead to higher
efficiencies and standardisation of goods
 Electronic Data Interchange
 Continuous Replenishment Programmes

40
 Functions of Marketing Channels

 Reduction in Number of
Contacts by Manufacturers
 Manufacturer also wants to
take advantage of bulk
packs to reduce
transaction and
distribution costs
 Lot sizes, frequency of
delivery, payments and
communications
routinised through
channels
40
 Reduction in Number of Contacts
 Quality of Contacts at different levels is
different
 Company sales force vs. Wholesaler sales force
 All retailers may not contact all wholesalers
 Channels therefore reduce cost of
contact(debatable)

40
 Who Belongs to a Marketing Channel?

 Manufacturers own distribution centres and

Carrying and Forwarding Agents (These were
very necessary in the pre VAT days)
 Intermediaries
 Distributors, Stockists, Value Added Resellers
and Agents
 Wholesalers
 Retailers
 End Users

40
 Intermediaries

 They can be broadly classified into:

 Merchants who buy, take title to and resell the
goods – wholesalers, retailers
 Agents who search for customers, negotiate on
manufacturer’s behalf but do not take title to the
goods – brokers, merchant representatives
 Facilitators who assist the distribution process but
neither negotiate nor take title to the goods –
transporters, warehouses, banks, advertising
agencies

40
 Patterns of Distribution

 Intensive – normally for FMCG and fast

moving electricals
 Selective – normally for consumer durables
 Exclusive – LG, Samsung, Benetton

40
 Historical Perspective India

 50s and 60s

 Wholesalers
 Regional distributors
 Direct sales
 70s and 80s
 Shift to dealer network
 90s
 Direct marketing
 The recent past
 Internet
 Private labels
 Direct selling agents

40
 Marketing Flows in Channels

Physical Physical Physical

Possession Possession Possession
Ownership Ownership Ownership
MANUFACTURERS

Promotion Promotion Promotion

WHOLESALERS

CONSUMERS
RETAILERS
Negotiation Negotiation Negotiation

Financing Financing Financing

Risking Risking Risking

Ordering Ordering Ordering

Payment Payment Payment

40
 Marketing Flows in Channels

Marketing Flow Cost represented

 Physical possession Storage and delivery costs
 Ownership  Inventory carrying costs
 Promotion  Personal selling, Advertising, Sales
Promotion, Publicity, PR
 Negotiation  Time and legal costs
 Financing  Credit terms, terms and conditions of
sales
 Risking  Price guarantees, warranties, insurance,
repairs and after sales service
 Ordering  Order processing costs
 Payment  Collections, bad debt costs

40
 Value Added by Distribution Channels

 Channels are not only the conduits but have

to be viewed as adding value through
services provided:
 Bulk Breaking – reducing large sizes
 Spatial Convenience – reducing distance between
producers and consumers
 Waiting and Delivery Time
 Assortment - providing variety
 Other areas of value addition are:
 After Sales Service
 Financial support for high value item

40
 Customer Service Levels and Distribution
Objectives

 Customer service levels looks at:

 Number of channels
 Frequency of visits
 Stock levels
 Setting distribution objectives:
 In terms of time, place and possession utilities
 Credit period

40
 Set of Activities

 Area wise sales forecast

 Dispatch of goods and maintenance of
inventory levels
 Developing market beats for sales and
service personnel
 Collection of proceeds
 Carrying out promotional activities
 Relationship building with bigger channel
members

40
 Distribution Organisation

 Who does what?

 How much does he get compensated for it?
 Guidelines for selection and appointment of
channel partners
 Guidelines for financial investments by
channel members

40
 Policy and Procedures

 Operating manual issued to sales people:

 Basic space and finance requirement
 Exclusivity
 Terms of delivery
 Terms of payment
 Basic discounts
 Other discounts
 Promotional support
 System for handling disputes
 Additional support for rural markets
 Coverage of institutional business

40
1
We Often Do Not Reach Our
1 Potential Because

We set our limits

It is hard to breakaway from our old self

59