Sales and Distribution Management | Distribution (Business) | Sales

Sales and Distribution Management

Dr. Prashant Mishra prashant@iimcal.ac.in

Nature of Personal Selling
• Most salespeople are well-educated, welltrained professionals who work to build and maintain long-term relationships with customers. • The term salesperson covers a wide spectrum of positions from:
– Order taker (department store salesperson) – Order getter (someone engaged in creative selling) – Missionary salesperson (building goodwill or educating buyers)

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.

The Role of the Sales Force
• Personal selling is effective because salespeople can:
– probe customers to learn more about their problems, – adjust the marketing offer to fit the special needs of each customer, – negotiate terms of sale, and – build long-term personal relationships with key decision makers.

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

Characteristics of Personal Selling
Flexibility
• Identify best prospects • Adapt to situations • Engage in dialogue

Builds Relationships
• Long term • Assure buyers receive appropriate services • Solves customer’s problems

Personal Selling Limitations
• Can not reach mass audience • Expensive per contact • Numerous calls needed to generate sale • Labor intensive

Personal Selling Tasks
Order taking
• Routine
– writing up orders – checking invoices – assuring prompt order processing

• Suggestive selling

Personal Selling Tasks
Order getting
• Seeking out customers • Creative selling • Pioneering • Account management

Personal Selling Tasks
• Missionary
– Detailer – Goodwill – “Closers”

• Cross-functional • Account service rep

Some Traits of Good Salespeople

Steps in the Selling Process Steps in the Selling Process
Step 1. Prospecting and Step 1. Prospecting and Qualifying Qualifying Step 2. Pre-approach Step 2. Pre-approach
Identifying and Screening For Qualified Potential Customers. Learning As Much As Possible Learning As Much As Possible About a Prospective Customer About a Prospective Customer Before Making a Sales Call. Before Making a Sales Call. Knowing How to Meet the Buyer Knowing How to Meet the Buyer to Get the Relationship Off to Get the Relationship Off to a Good Start. to a Good Start. Telling the Product “Story” Telling the Product “Story” to the Buyer, and Showing the to the Buyer, and Showing the Product Benefits. Product Benefits.

Step 3. Approach Step 3. Approach

Step 4. Presentation/ Step 4. Presentation/ Demonstration Demonstration

Steps in the Selling Process Steps in the Selling Process
Step 5. Handling Objections Step 5. Handling Objections
Seeking Out, Clarifying, and Overcoming Customer Objections to Buying.

Step 6. Closing Step 6. Closing

Asking the Customer for the Order.

Step 7. Follow-Up Step 7. Follow-Up

Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business.

Alternative Steps:
Find ’em Find ’em
Grab ‘em Grab ‘em Show ‘em Show ‘em Answer ‘em Answer ‘em

Sell ‘em Sell ‘em Keep ‘em Keep ‘em

Creative Selling Process
Identify and Qualifying Identify and Qualifying Prospects Prospects • Prospecting: Identifying • Prospecting: Identifying likely new customers likely new customers
– Leads – Leads

• Qualifying: Evaluating a • Qualifying: Evaluating a prospect’s potential prospect’s potential

Creative Selling Process
Approaching the Prospect Approaching the Prospect • Contact • Contact • Rapport • Rapport • “Only one chance to • “Only one chance to make a first impression” make a first impression”

Creative Selling Process
Sales Presentation Sales Presentation • Persuasive • Persuasive communication communication • Attention • Attention • Interest • Interest • Desire • Desire • “Tell the product’s story” • “Tell the product’s story”

Creative Selling Process
Handling Objections Handling Objections
– Questions – Questions – Reservations – Reservations

• • • • • • • •

Understand Concern Understand Concern Counterarguments Counterarguments Acknowledge concern Acknowledge concern Clues to process Clues to process

Creative Selling Process
Closing the Sale Closing the Sale • Closing signals • Closing signals • Trial close • Trial close • Ask for the sale • Ask for the sale

Creative Selling Process
Following Up Following Up • Commitments met • Commitments met
– Shipment – Shipment – Performance – Performance

• • • •

Reinforce relationship Reinforce relationship Satisfied customers Satisfied customers rebuy & recommend rebuy & recommend

Sales Management
Setting objectives

Planning

Organizing Organizing activities

Motivate, evaluate, & control

Controlling

Directing

Recruit, select, train, develop, manage, & motivate

Organizing Sales Activities
Sales Territory: Sales Territory:
• • • • • • • • Geographic divisions Geographic divisions Customer types Customer types Product lines Product lines Selling task Selling task

Geographic Division
Vice-President Marketing

Regional Sales Manager

Regional Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

Sales Rep California

Sales Rep Pacific NW

Sales Rep Southeast

Sales Rep Northeast

Customer Type
Vice-President Sales

New Accounts Manager

Existing Accounts Manager

New Account #1

New Account #2

Existing Account #1

Existing Account #2

Product Line
Vice-President Sales

Snack Foods Sales Manager

Beverages Sales Manager

Sales Rep Sales Rep Eastern Region West’n Region

Sales rep Sales Rep Eastern Region West’n Region

Directing the Sales Force
• Recruiting and selecting • Training & develop • Compensating • Motivating

Compensation Methods Compensation Methods

Straight salary or wage Salary plus commission Straight commission

Quota-bonus plan

Commission with draw

Evaluation and Control
• Required reports • Measurement against plan or sales standards • Expense control • Productivity • New account development

Ethical Issues
• Kickbacks, bribes and “gifts” • Price discrimination • Cheating on expense accounts • Misrepresentation

Distribution Channel Design and Management

Distribution’s Function
• The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost. • The “when and where” is the function of Distribution

What is a Distribution Channel?
• A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. • Marketing Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision.

Why are Marketing Intermediaries Used?
• The use of intermediaries results from their greater efficiency in making goods available to target markets. • Offer the firm more than it can achieve on it’s own through the intermediaries:
– – – – Contacts, Experience, Specialization, Scale of operation.

• Purpose: match supply from producers to demand from consumers.

Distribution
P R O D U C E R C O N S U M E R

DISTRIBUTION

Distribution Channel Distribution Channel Functions Functions
Information Information Transfer Transfer Payments Payments Physical Physical Distribution Distribution Risk Taking Risk Taking Communication Communication Negotiation Negotiation Ordering Ordering Financing Financing

Typical Channels of Distribution

ANUFACTURE R GENT ETAILER

ONSUME R

HOLESALER

Business-to-Business Channels

Direct

Wholesaler Agent

Business-to-Business Channel Trends

Infomediaries & Vertical Exchange

Conventional Distribution Channel vs. Vertical Marketing Systems
Conventional marketing channel Manufacturer Vertical marketing channel Manufacturer

Wholesaler Retailer Consumer

Retailer

Consumer

Wholesaler

Types of Vertical Marketing Systems Types of Vertical Marketing Systems
Common Ownership at Different Common Ownership at Different Levels of the Channel Levels of the Channel

Corporate Corporate

Leadership is Assumed by One or Leadership is Assumed by One or a Few Dominant Members a Few Dominant Members

Administered Administered

Contractual Agreement Among Contractual Agreement Among Channel Members Channel Members

Contractual Contractual

Vertical Marketing Systems
• Corporate systems - total ownership

• Contractual - legal relationships

• Administered - strong leadership

Planning the Channel of Distribution
• Determining the structure
– – – – – – – Marketing mix strategy Organizational resources External environmental factors Market characteristics Consumer preferences and behavior The nature and availability of Intermediaries Other environmental factors

Customers’ Desired Service Levels
• • • • • Lot size Waiting time Spatial convenience Product variety Service backup

Steps in Distribution Planning

Choosing a Distribution System
Intensive Intensive Distribution Distribution

Exclusive Exclusive Distribution Distribution

Distribution Distribution Intensity Intensity

Selective Selective Distribution Distribution

Intensive Distribution
Producer

Seeks to obtain Seeks to obtain maximum product maximum product exposure at the exposure at the retail level retail level

Retailer Retailer Retailer Retailer Retailer

Retailer Retailer Retailer Retailer Retailer

Retailer Retailer Retailer Retailer Retailer

Selective Distribution

Producer

Product is sold Product is sold in a limited in a limited number of number of outlets outlets

Retailer

Retailer

Retailer

Retailer

Retailer

Retailer

Exclusive Distribution

Product is sold in Product is sold in only one outlet in only one outlet in a given area a given area

Producer Retailer

Developing Distribution Tactics
Selecting Channel Partners Selecting Channel Partners Managing the Channel of Distribution Managing the Channel of Distribution
Channel Leader Power Channel Leader Power

Economic Economic Power Power

Legitimate Legitimate Power Power

Reward or Reward or Coercive Coercive Power Power

Distribution Channels & the Marketing Mix Distribution Channels & the Marketing Mix

Physical Distribution
When to order When to order How much to order How much to order

Inventory Inventory Control Control

Order Processing Order Processing
Received Received Processed Processed Shipped Shipped

Transportation
Rail, Water, Trucks, Air, Pipeline, Internet

Physical Distribution Functions
Materials Handling Materials Handling

Number Needed Number Needed Where Where What Type What Type

Warehousing Warehousing

Moving Products Into, Moving Products Into, Within, and Within, and Out of Warehouses Out of Warehouses

Transportation Modes
Cost-effective for shipping bulk products, Cost-effective for shipping bulk products, piggy-back, fishyback, birdyback. piggy-back, fishyback, birdyback. Low cost for shipping bulky, low-value, Low cost for shipping bulky, low-value, non perishable goods, slowest form. non perishable goods, slowest form. Most important carrier for consumer Most important carrier for consumer goods, flexible. goods, flexible. High cost, ideal when speed is needed or High cost, ideal when speed is needed or distant markets have to be reached distant markets have to be reached Carry petroleum based products, Carry petroleum based products, very low cost, requires little energy. very low cost, requires little energy. Web sites have products available, used Web sites have products available, used especially for services. especially for services.

Rail Rail

Water Water

Truck Truck

Air Air

Pipeline Pipeline

Internet Internet

Channel Relationships
• Cooperation

• Conflict
• Power
– Coercive – Expert – Legitimate

Decision Making Framework
Prospects of Importance of threatened Destructive channel in terms of current or potential Conflict volume or profitability High Low High (FIRE) Act to avert or address Allow threatened conflict channel to decline Low (Smoke) Look for opportunities to Do nothing reassure threatened channel and leverage your power

Channel Conflict: Identifying Threats
• First, are the channels really attempting to serve the same end users? • Second, do channels mistakenly believe they are competing when in fact they are benefiting from each other's actions? • Third, is the deteriorating profitability of a griping player genuinely the result of another channel's encroachment? • Fourth, will a channel's decline necessarily harm a manufacturer's profits?

Managing Channel Conflict
WHEN TWO OR MORE CHANNELS TARGET THE SAME CUSTOMER SEGMENT

• Differentiate the Channel offer • Define Exclusive Territories • Enhance or Change the Channels Value

Managing Channel Conflict
CHANNEL ECONOMICS DETERIORATE • Change the channels economic formula: (Grant rebates if an intermediary fulfill certain requirements; Adjust margins between products to support different channel economics; and Treat channels fairly to create level playing field) • Create Segment Specific Programs (certain services not available via direct channels) • Complement value proposition of the existing channel by introducing a new channel • Foster consolidation among intermediaries in a declining channel

Managing Channel Conflict
THREATENED CHANNEL STOP PERFORMING OR RETALIATE AGAINST THE SUPPLIER • Leverage Power (eg. Strong Brand) against the channel to prevent retaliation • Migrate volume to winning channel • Back off

Other Distribution Management Issues
• Reverse distribution
One Coca Cola Distributor

• Ethical, Political, & Legal

Difficult

OK

One thousand retailers

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