Introduction to Sales Management

Sales management is the attainment of sales force goals in an effective and efficient manner through planning, training, leading, and controlling organizational resources Sales management is planning, direction and control of personal selling. This essentially includes recruiting, selecting, equipping, assigning, supervising, compensating and motivating the sales force Objectives of Sales Management  Generate sales and earn revenue  Providing Profitability  Improving Market Share  Improving Corporate Image  Selling concept proposes that customer will not buy enough of an organization's products unless they are persuaded to do so through selling effort. Where as Marketing concept proposes that to achieve success, the focus should be on organization's ability to create, communicate and deliver a better value proposition through its marketing offer.
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Introduction to Sales Management
Major Differences between Selling and Marketing

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Introduction to Sales Management 

Sales management involves the execution of the following tasks:  Setting personal selling objectives  Formulating sales policies.  Structuring the sales force.  Deciding the size of the sales force.  Designing / Demarcating / developing sales territories.  Developing the sales forecasts and sales budgets.  Fixing sales targets for individual sales territories /salesman.  Creating the sales force selection, recruitment, induction/ orientation.
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Introduction to Sales Management 
Managing the sales force
- compensation, motivation, sales coaching/supervision evaluation/appraisal, training/development  Building the sales organization.  Managing the marketing channels.  Ensuring growth and developing new accounts.  Sales communication and reporting.  Sales coordination and sales controlling including sales expense control.  Creating and maintaining right image for the company and its products in the market.  Co-ordination with marketing management in the areas like, product mix, pricing, distribution, advertising and sales promotion.  Building relationship strategies with key customers
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Introduction to Sales Management 
Personal selling: 
  
Personal selling is one of the forms of Promotion . Other forms being advertising, sales promotion and publicity. It is the art of successfully persuading customers to buy a product or services from which they can derive suitable benefits, thereby increasing their total satisfaction. Personal selling is a face to face transaction, a personal correspondence or a personal telephonic conversation between a salesman and a prospective customer. A well trained salesman can be a very effective communication medium. Personal selling involves:  Persuasion  Flexibility of approach  Supply of information  Mutual benefit
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Introduction to Sales Management 

The importance of personal selling from the point of view of manufactures as well as consumers.  

From manufacturer s point of view  It creates demand for products both new as well as existing ones.  It creates new customers and, thus help in expanding the market for the product.  It leads to product improvement. While selling personally the seller gets acquainted with the choice and demands of customers and makes suggestions accordingly to the manufacturer.  Builds long term relationship. From customer s point of view  Personal selling provides an opportunity to the consumers to know about new products introduced in the market. Thus, it informs and educates the consumers about new products.
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 Personal selling also guides customers in selecting goods best suited to their requirements and tastes as. The sellers demonstrate the product before the prospective buyers and explain the use and utility of the products. Limitations of personal selling  Can not reach mass audience  Expensive per contact  Many sales calls may be needed to generate a single sale  Labor intensive  7  .Introduction to Sales Management It is because of personal selling that customers come to know about the use of new products in the market.  It involves face-to-face communication.  Personal selling gives an opportunity to the customers to put forward their complaints and difficulties in using the product and get the solution immediately.

 Selling to Government organizations the buying process often is different from that in public sector.  Institutional selling. Kmart. Eg. 8  . The word retail is derived from the French word Retallier which means breaking the bulk or cutting to pieces . Spencer s etc. The retailer buys in bulk from the Industrial seller and then sells the goods in smaller assortments as per the demand of the consumer. Types of Personal selling  Introduction to Sales Management Industrial selling / B2B selling  Selling to resellers like wholesaler.. Retail selling  Retail selling involves direct selling to the end/ ultimate consumer for personal use or consumption.reliance sells plastic granules plastic film manufacturers.Johnson & Johnson selling surgical equipments to hospitals. Eg: Wal-Mart. Eg:. retailer etc.  Selling to business users. Shopper Stop. Big Bazar.

simultaneity of production and consumption. insurance. Examples of services industry are hospitality. Services have some unique characteristics which distinguish them from physical goods such as intangibility. airlines etc. non storability etc.  Order creators they attempt to influence the specifiers rather than customers.  Order getters They are the front line sales people or sales support personnel 9 . health care.Introduction to Sales Management  Services selling:  Services selling involves selling of intangible goods.  Broadly selling function can be categorized as follows  Order takers they respond to existing customers.  Types of selling function:  Different buying situations call for different types of selling function.

 Delivery sales persons : They deliver the products to customers as in the case of orders received on phone.  Outside order takers:.They make sales call and take orders from customers. 10 .Introduction to Sales Management  Order takers can be classified as  Inside order takers: these are retail sales assistants.  Order creators Missionary salespersons: They do not close a sale but persuade the customers to promote a sellers brand . Eg:Medical representatives persuade the doctors to prescribe. They do not deliver anything at customer s place. They perform the role of completing the transaction. Eg:. Eg:.Sales people from Eureka Forbes.Delivery boy in Dominos pizza.salespersons in Big Bazar. They receive payment and passes the goods to the consumer : EG:.

insurance agents. sellers of spices etc.  Consumer salespersons are the door to door salesmen. Eg:.  Sales support sales persons:  Technical support salespersons Render support to frontline sales people when the product or the services being sold is complex.  Merchandisers: provide sales support in retail and wholesaling situations.Introduction to Sales Management  Order Getters are classified as:  Front line salespersons  Organizational salespersons they are the industrial sellers who try to establish long time relationship with organizational buyers. carpet sellers. 11 .

 Conflict exists with in every organization/ department. Evaluate the solution.  Content listening Understanding and retaining the message  Critical listening Understanding and evaluating the speaker s logic. Generate 12 alternatives 3. Implement 5.  Listening skills.Personal Selling Skills  Selling skills: The essential selling skills of a sales persons are:  Communication skill. Decide 4. Active listening understanding speaker s feelings.  Problem solving skills. intentions. Conflict need to be resolved. motives etc. Value conflicts. needs etc.  Problem solving process involves 1.   Conflict management and resolution skills. Emotional conflicts. There can be Interest conflicts. Define the problem 2. .  verbal  non-verbal.  Negotiation skills  Successful negotiation involves an attempt by two parties to reach a mutually acceptable solution (preferably a win-win situation).

Personal Selling Process  The sales process is a sequential series of actions:  Pre-sale preparation.  Prospecting  Pre-approach before the interview  Approach the customer  Presentation  Handling the customer s objections  Trial close  Close  Follow-up and service. 13 .

Personal Selling Process  Pre-sale preparation: by the salesman to equip himself with Product knowledge  Types  Features  Benefits / Limitations  Price Company knowledge  History  Management  Size  Finances  Policies and procedures Competitor s knowledge:  Industry structure  Products  Market share  Policies   14 .

popularity etc.  centers of influence: They are people in a position to influence others by the virtue of their power. 15  Trade shows and demonstrations at exhibitions .  Direct mailing  Using internet.  Net working  Non competing sales force. Prospecting: involves locating and qualifying prospects. Qualifying prospects means to determine whether the prospect is able to buy. It Personal Selling Process is the process of seeking and identifying prospective buyers or leads .  Telemarketing.  Customer referrals: Requesting customers to provide a list of possible customers. Few methods of prospecting are:  Cold canvassing: goes door to door in an identified area. Their referrals carry certain level of authority.  Prospect pools: Gathered from telephone directory or mailing list.

In this stage the salesperson must decide how to best initiate a face to face meeting. This includes analysis of available information about the prospect s buying behaviour and evaluation of competitor s products. before meeting him. It is necessary to fix an appointment with the customer at their desired place and time. The message is intended to persuade buyers to purchase the product based on it s attributes and benefits. Approach: This takes place when the seller first meets the prospective buyer. Presentation: the presentation of the sales message may take the form of a prepared ( canned ) presentation or take an interactive (needs-satisfaction) approach. creating interest and arousing desire / conviction building. 16 . Pre-approach before selling: The pre-approach takes place Personal Selling Process   prior to meeting the qualified prospect. The goal at this stage is to gain the interest and attention of the buyer. Careful pre-approach planning is needed to achieve this. During sales presentation there are basically three approaches used attracting attention.

Converting objections in to reasons for buying.  Head on It is used when the objections are based on incorrect information. Salespeople in such a situation 17 .  Compensation Used when objections are valid but there are factors which compensate or outweigh the objections  Forestalling . indicate that it is possible to feel that way because others have also felt that way but have found their fears to be unfounded.  Feel.Personal Selling Process  Handling objections: This needs considerable sales skill. felt.With his experience anticipates and counters the possible objections at the presentation level itself. Well prepared salesmen anticipate objections and are prepared to handle them. found Salespeople express their understanding of how prospects feel. Commonly used objection handling methods are  Boomerang methods .

Here the approach is not to tell the buyer directly that he is wrong but yet manage to correct the impression by stating the facts. Follow-Up: This step in the process represents the salesperson s efforts to assume customer satisfaction after the sale. It may be used to suggest additional 18 sales of the product or related goods.Personal Selling Process politely but firmly deny the validity of the objections. These efforts provide an important basis for building goodwill and future sales. it can be pursued to a complete close. Salespersons who are uncertain that it is an appropriate time to close the deal may use a trial close.  Indirect denial: This is when a head on approach is better avoided. If a trial close seems to be going well . Closing the sale : This the stage at which the seller tries to gain a purchase commitment from the prospect. it can be withdrawn with out detracting reducing the effectiveness of the meeting. If not.   .

   Sales forecasting is estimating what a company's future sales are likely to be in the future. and feel for. plus the ability to assess the significance of factors which can not yet be included in the statistical analysis and the effects of which may not yet have been 19 experienced. a market with the results of various analyses. It is a projection into the future of expected sales. Forecasting in marketing is partly art and partly science.  The contribution of science comes from application of various statistical techniques used to analyze past data about a market  The contribution of art lies in an ability to link experience of. The blend of the two is fundamental for successful forecasting. Sales Forecasting . Sales forecasting plays a vital role in sales planning. The amount of each varies from one situation to another. budgeting and decision making. given a stated set of environmental conditions.

inventory to carry.  Deciding on proper price to charge. . capacity expansion. cash flow projections etc. distribution etc.  Personnel requirement planning.  Planning marketing and sales programs and to allocate resources among the various marketing activities such as advertising. resource allocation to functional areas.Sales Forecasting  Importance of Sales forecasting and its role can be understood from the following:  Sales forecasts are vital to the efficient operation of the firm and can aid managers on such decisions / areas such as:  Future investments in new ventures. and the salaries to 20 pay salespeople.  Material requirement planning.

quarterly or half yearly. planning marketing activities such as personal selling. advertising. Human resources and Materials. Long range forecasting is made for 5 to 10 years. Long term forecasting is relatively difficult because of uncertainties involved Perspective forecasting is still longer term forecasting. This is used for expansion.Sales Forecasting  Sales / demand forecasting can be classified as  Short range forecast  Long range forecast  Perspective forecast Short range forecasts are made for one year and reviewed monthly. 21    . diversification and other investment decisions. warehousing. It may be a forecast of 15 to 20 years. They are also used for other functional areas like Production. They are used for projecting cash flows.

They also demand greater product diversity and innovation. This is aided by rapid technological advancement.  Aggregate forecasts are more accurate than disaggregate (individual) forecasts. Because of this dynamics forecasting is becoming increasingly difficult. due to globalisation consumers have more product choices. The difference between the forecast and the actual is the forecast error . More the number of factors influencing a situation more complex and inaccurate the forecasting tends to be. The objective is to minimize it. In today s business scenario.  Long term forecasts are more error prone than short term forecasts. 22 .Sales Forecasting   Characteristics of Forecasts  Forecasting is a difficult process because of the uncertainties involved.

In Break down approach the company s internal and external environments are studied to determine the significant factors that influence the sales. 23 . labour.  The external factors studied are:  General economy  Industry related activities  Competition  Government laws and regulations.Sales Forecasting  There can be two approaches to sales forecasting:  .  The internal factors studied are:  Pricing  Product changes  Distribution  Promotion  Resources available finance. facilities. material.Break down approach and Build up approach.  Management skills  Technology.

General environment forecast 2. Individual product forecasts. Industry sales forecast 3. In Buildup approach. estimated sales figures for individual products/market segments are totaled up to arrive at forecast figures. 24 .Sales Forecasting The steps in Break down methods are: 1. Company sales forecast 4. This can be rather cumbersome process if the organisation has many product varieties serving multiple   markets. Sales forecast for product lines 5.

  Market Research methods 25 .Sales Forecasting  Sales forecasting methods:  Qualitative methods Expert s opinion method  Delphi method  Sales force composite method  Survey of buyer s expectation method / User expectation method / End-use method   Quantitative methods (statistical methods) Extrapolation method  Moving Average method  Exponential Smoothening method  Time series analysis  Regression analysis  Test marketing.

A coordinator interacts with experts. They give their opinions individually in written form. In this the estimates of experts with versatile experience and sound knowledge such as marketing professionals. so that they can not influence each other. marketing consultants are sought. But the result can be biased because of self interests.Sales Forecasting    Expert s opinion method: This a commonly used method. The experts work separately. Sales force composite method: This forecast is done by the sales force of the organization. distributors. each one presents his estimate then a group consensus is arrived at. ignorance of broad changes taking place in the 26 market place etc. This goes on for several rounds as long as a final forecast does not evolve. processes and sends back for revision. The individual forecasts of salesmen are combined to form the overall demand forecast of the organization. Sales men are in direct contact with the market so it is assumed that they are well informed about the market trends. One way is taking the average and another way is in which the group meets. The coordinator compiles. Delphi method: In this panel of experts are formed from within or outside the organisation. .

27 . But often there is a difference between the stated and the actual demand. The period needs to be selected judiciously. In a weighted moving average method. Extrapolation method: This is a simple inexpensive method and can be adopted in market situations where little changes occur.Sales Forecasting    Survey of buyer s expectation method: This is also called User expectation method or End-use method. In this a sample of potential buyers is taken and then the information regarding their likely consumption of the product and their buying plan are collected. Moving average method: This an averaging method in which the past data beyond a certain period is considered irrelevant. It involves plotting of the sales figures of past years and then extending the line to forecast the future demand. weightages are assigned to the data of different time periods by the analyst depending upon his perception of their importance. The information is then extrapolated to get the total demand forecast.

Example Say the old forecast for present period = 100 but the actual observed for the period was= 80. Time series analysis: This statistical method is used to identify systematic cyclical / seasonal variations that repeats itself as a pattern. The forecast for the next period is = 100 x 0. Regression analysis: This is a form of correlation technique. To get the forecast for the next period if the smoothening constant =0. Here we have a smoothening constant. A correlation basically the degree of linear association between two variables where one is treated as dependent variable and the other dependent variable.3 = 94.3 then it means the weightage given to old forecast is 0. In effect it considers all past data but places heaviest weightage to the most recent data and the weightage lessens as the data ages.7 + 80 X 0.7 and the weightage given to the actual is 0. In regressin analysis attempt28 is .Sales Forecasting    Exponential Smoothening method: It is essentially a modified version of the weighted moving average technique.3.

Test marketing: This is a method often used for measuring consumer acceptance of a new product. Effectiveness of promotion campaign can be measured by the difference in sales between test market and control market . Questionnaires etc are used). 29 . price etc. Market research methods: Marketing research methods adopted for sales forecast are basically of two types -Market testing ( focus group technique is used) and Market survey ( interviews.Sales Forecasting   to relate sales to those variables that influence sales. They may be economic factors. The outcomes of a test market are mathematically extrapolated to forecast future sales. Here a limited number of cities/ towns with representative population are chosen for test marketing.

It is calculated as . .the sum of all errors ( signs +/.considered) divided by the number of 30 periods.This estimates the variance of forecast error.Average of the absolute deviation. Bias :.considered ). MAPE does not differentiate between positive and negative error but it does have reference to the quantum of the value.Forecast Error  Different measures of forecast errors are: Mean squared error (MSE) :. It shows under/over estimates of demand.It is the average of the deviations (with signs +/. Mean absolute percentage error ( MAPE):.First absolute percentage deviation is calculated by subtracting forecast from actual and then dividing it by actual value. The MAPE is expressed as average mod percentage value over selected time zone. Mean absolute deviation (MAD) :.

Setting Personal Selling objectives    As a first step it is important for the sales management to precisely determine the role of personnel selling in the marketing mix. . etc. Setting the personal selling objectives  clarifies the role of the sales force  facilitates the determination of the size and the quality of the sales force  forms the basis of setting goals ( or targets) and the evaluation of the performance of the sales force The objectives will vary from organisation to organisation depending on:  Overall objectives of the organisation  Nature and type of the products  Nature of the market  Nature of competition 31  Distribution channel.

product wise and territory wise)  Selling costs  Key customers ( volume.Setting Personal Selling objectives  Objectives of personal selling need to be set in the following areas:  Sales volume (overall and product wise)  Sales growth ( overall and product wise)  Market share ( overall.  Collection of dues (sales proceeds)  Ratio of cash to credit sales  Service level pre and post sales. new dealers etc. product wise and territory wise)  Profits ( overall. growth. 32  Involvement in promotional activities of the company . profit contributions etc)  New customers  Expansion of channels.  Training of dealers / customers as needed  Gathering and communicating market information. share.

Achievement of common goal 4.Sales Organisation  What is an organisation?   An organisation in general can be defined as the rational coordination of the activities of a number of people for the achievement of some common explicit purpose or goal. The important portions of the definition are:1. Hierarchy of authority and responsibility and responsibility. through division of labour and function. Coordination of activities 2. Division of labour 5. and through hierarchy of authority and responsibility. 33 . Group of people 3.

34  Facilitates growth . A sales organisation ought to have a well defined structure to operate efficiently and effectively.Sales Organisation    A sales organisation is a team of individuals working together to achieve the set sales objectives. A sales organisation operates within a organisational / corporate framework.roles.  Promotes specialisation  Avoids duplication of work  Facilitates coordination and communication  Facilitates adaptation by being flexible to the changing environmental needs. A well designed organisational structure does the following:  Defines jobs . responsibilities and duties of the personnel  Clarifies authority and power at each level.

volume.  Organisational related factors: Size. geographical expanse of business etc influence the sales structure.  Marketing mix related factors: The type of distribution channel. pricing policy.Sales Organisation  The factors considered while designing a sales organisation structure are  Nature of the product and services factors: For example the sales organisation structure in case of FMCG products like soaps.  External factors: Nature of competition for instance. product range. marketing communication influence the sales structure. toothpaste (the customer base is large and the frequency of purchases is also high) is very different from selling technical products like machine tools or computers. shampoos. 35 .

 Centralisation and Decentralisation: Centralisation of authority refers to the relative concentration of authority for decision making especially at top level. A narrow span of control permits a more effective and close supervision but results in more number of layers which means higher cost. In a highly centralised sales organisation most of the decisions are made at the corporate level and very few at 36 the field . The process of communication takes shorter time. communication time. A wider span has fewer levels of supervision.Sales Organisation  Major principles based on which the sales organisation is designed:  Span of control: It refers to the number of subordinates a manager can effectively manage. larger gap between the top management and customers.

uniformity in product and service delivery. 37 . In Titan Watches for instance decentralised service centers are under field managers but the training is provided by the corporate office. uniformity in compensation packages of the sales force. In many organisations combination of centralised and decentralised organisational structures are used. Consistency in the marketing plan. integration of the sales force are the essential features of centralised structure. A decentralised structure helps in making the organisation more responsive to the market and regional demands.Sales Organisation manager s level. But to be more competitive organizations are preferring to go in for more decentralised structures. In Modi Xerox recruitment of sales force at the ground level is done by field managers but the regional training center provides the training.

Sales Organisation  Organisations adopt different kinds of structures      To assure that all necessary activities are performed To define authority To achieve coordination and control To permit the development of specialists To economize on execution time 38 .

1 Assistant Sales Manager Div. 3 Assistant Sales Manager Office Salespeople Salespeople Salespeople Office Staff 39 . 2 Assistant Sales Manager Div.BASIC TYPES OF SALES ORGANISATIONS Line Sales Organization General Manager Sales Manager Assistant Sales Manager Div.

BASIC TYPES OF SALES ORGANISATIONS Line and Staff Sales Organization President VP (Marketing) Advertising Manager General Sales Manager Manager (Marketing Research) Director (Sales and Training) Sales Personnel Director Assistant General Sales Manager District Sales Managers Branch Sales Managers Sales Personnel Assistant to General Sales Manager Sales Promotion Manager Director of Dealer and Distribution Relations 40 .

BASIC TYPES OF SALES ORGANISATIONS Functional Type of Sales Organization Director of Sales Administration Installation and Service Manager Manager of Sales Training Manager of Sales Supervision Manager of Sales Promotion Manager of Dealer and Distribution Networks Manager of Sales Personnel Salesperson Salesperson Salesperson Salesperson Salesperson Salesperson 41 .

BASIC TYPES OF SALES ORGANISATIONS Geographic Division of Line Authority General Sales Manager Sales Personnel Director Eastern Division Sales Manager Director of Sales and Training Central Division Sales Manager Director of Sales Promotion Western Division Sales Manager Director of Sales Analysis Branch Sales Managers Branch Sales Managers Branch Sales Managers Sales Personnel Sales Personnel Sales Personnel 42 .

BASIC TYPES OF SALES ORGANISATIONS Product Division of Line Authority General Sales Manager Sales Manager Product 1 Sales Director of Personnel Sales and Training Director Director of Sales Promotion Director of Sales Analysis Sales Manager Product 2 Sales Personnel Product 1 Sales Manager Product 1 43 .

Construction Industry Sales Director of Sales Training Branch Sales Managers Manager. Lumber Industry Sales Director of Sales Planning Manager.BASIC TYPES OF SALES ORGANISATIONS Customer Division of Line Authority General Sales Manager Director Product R and D Branch Sales Managers Manager. Mining Industry Sales Director of Sales Promotion and Advertising Branch Sales Managers Sales Personnel Sales Personnel Sales Personnel 44 .

BASIC TYPES OF SALES ORGANISATIONS Marketing Channel Division of Line Authority General Sales Manager Sales Personnel Director Director of Sales Planning Sales Promotion Manager Director of Customer Relations Advertising Manager Sales Manager Chain Store Sales Sales Personnel Sales Manager Wholesale Sales Sales Manager Institutional Sales Sales Personnel Export Sales Manager Sales Personnel Sales Personnel 45 .

accessibility. optimisation of travel time.Sales Territories     Sales territory is a geographical grouping of existing and potential customers allocated to  an individual  a group of salespersons. . Sales territory must be designed to meet certain criteria such as easy administration.  a branch  a dealer  a distributor  A marketing organisation Essentially designing territory means to divide the market into convenient clusters. Designing of sales territories can be done by Equal Workload 46 Method or Equal Potential Method.

Sales Territories  Designing of sales territory has various advantages:  Better market coverage  Better work load distribution  Improves the performance of salespersons  Reduces loss of sales (opportunities)  Reduces sales expenses  Increases individual attention to key customers  Advantages of segmentation can be gained.  More effective planning. As characteristics of different territory can be different. Accountability is better.  Helps in assigning responsibilities to salespersons. 47 . implementation and control.

the market share expected from it and the profitability of sales in that territory. Participative approach while fixing the sales quota is desirable. The objective of fixing Sales quotas are :  Motivating the sales force  To bring in the right focus (products to be given importance)  These form an important basis for feedback. The basis for fixing the sales quota should not only be potential of the territory and the past data but also factors such as territory s importance to the company. distributor.Sales Quotas       Sales quota is the target or goals assigned to sales units (such as sales person. . These quantified objectives should be realistic. territory) to be achieved in a specific period of time. dealer. evaluation of 48 and reward for the performance of a sales unit. Sales quotas (quantified objectives) may be expressed either in monetary terms or in volume terms.

An unit of a product may higher points than another product) Sales Budget quota: These quotas are set with the objective of controlling expenses. Profit quotas are set. Relative weightage. Expenses are often controlled by setting an expense budget as a percentage of the territory sales. By this the salesmen are encouraged to sell more profitable products.Sales Quotas  Types of sales quota:    Sales volume quota: These are basically of three kinds  Monetary sales volume quota  Unit sales volume quota ( resorted to because rupee value may vary price may vary)  Point sales volume quota ( followed in multi product situations. increasing gross margin / profit. 49 . Sales activity Quota: Activity quotas are fixed for salesmen in addition to sales quotas.

Sales Quotas  As an example the activity quota may be set for number of  sales call to be made  number of dealer contacts  number of product demonstrations to be made  number of new accounts to be created  Methods for fixing sales quota: Sales quotas can be fixed based on  Sales potential / forecast  Average of Past sale  Executive judgment  Judgment of salesmen 50 .

The recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation whereas selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. loss of company information etc. The importance of right recruitment and selection process can never be over-emphasised. High turnover of sales persons can be very damaging to the organisation for more many reasons . customer dissatisfaction.Recruitment and selection of sales Persons      Creating an effective sales force is essential. So the recruitment process and selection process should be sound. The first step in creating a sales force is recruitment followed by selection. 51 .the cost of hiring a salesman and training them is high.

1.Recruitment and selection of sales Persons  The following steps need to be undertaken for recruitment  Job analysis  Locating prospective candidates / Sources  Job analysis: Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further categorized into following sub components. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. 52 . Job position: This refers to the designation of the job and employee in the organization.

Recruitment and selection of sales Persons 2. 3. the level of experience needed.e. etc. It states the key skill requirements. It is also known as job evaluation. It is also known as job evaluation. Once it is determined that how much the job is worth. 53 . Job Worth refers to estimating the job worthiness i. level of education required. Job description is used to analyze the job worthiness. Job description: It refers to the activities that an employee has to do in a particular job position. it becomes easy to define the compensation strategy for the position. how much the job contributes to the organization. It describes the roles and responsibilities attached with the job position. It also helps in benchmarking the performance standards. Roles and responsibilities helps in determining the outcome from the job profile.

promotions etc.Recruitment and selection of sales Persons  Locating the candidates ( sources) There are two categories  Internal sources: The internal sources can be  Lateral and upward moves (Transfers.)  Interns  Employee referral ( existing salesmen as talent scouts)  External sources: The external sources can be:  Competitor company  Other industries ( may be from customers or suppliers industry)  Educational institutions  By advertising  Employment agencies / HR consultants  Networking  Internet / Web sources 54 .

to verify information provided. references etc. experience. in a 55 discerning /judicious manner. The application form gives the details regarding the applicant s qualifications. Personality tests etc. Aptitude tests. . hence this forms the guideline for short listing the applicants.  Negotiating / fixing the terms of services  Appointment Screening applicants for an interview: The job analysis done previously helps in short listing candidates. The job description specifies the competencies required for a job position. References should be used. reasons for leaving previous organizations. employment history. health history.Recruitment and selection of sales Persons   Selection Process comprises of the following steps:  Screening the candidates this generally includes receiving and screening of application forms  Personal interviews  Reference check  Physical examination  Psychological and other tests like Intelligence tests. previous compensation.

Questions should be posed in a manner so that it calls for long responses. The purpose is to effectively gather information about the candidate from the candidate himself. knowledge.  Managing the interview: Broad based questions should be followed by specific questions. Behavior based interviewing focuses on experiences.Recruitment and selection of sales force  Scientific and psychological tests related to intelligence. Behavioral interview is a popular method adopted for this purpose. behaviors. Loaded or leading questions should not be asked. personality etc helps to gain insights about the candidates. Selecting Applicants: Personal interview is carried out for this. ability. skills and abilities that are job related. Interviewer should be a good listener and be able to sort out relevant / important information related to the job from 56 the irrelevant/ unimportant ones. The following needs to be done:  Preparation for the interview: An interview needs to be conducted effectively hence it needs preparation. It is based on the belief that past behavior and performance predicts future behavior and performance. .

Help employees adapt to their new surroundings.Explain the mission/purpose of the company and the job so employees can see the big picture. policies and procedures. . learn who all the players are and how they work together.Ensure new employees have all the information and tools they need to do their jobs. These are key to early productivity and improving employee retention. They need to be designed with the following in mind .Make new employees feel welcome and valued as key players on the team.Orientation and socialization  designed to introduce new employees to a company's mission so that they begin to feel they are a vital part of the team. 57 Orientation Programs: Effective orientation programs are . .Establish friendly relationships among co-workers managers. .Develop the long-term commitment to the organization. .Familiarize employees with rules. . .

It attempts to improve their performance on the current job or prepare them for an intended job.  Types of training:  58 .Training the sales force Training is a process of learning a sequence of programmed behavior and application of knowledge. It gives people awareness of the rules and procedures to guide their behavior.

59 . and performance standards as a lesson plan. The trainee is placed on the job and the manager or mentor shows the trainee how to do the job and receive immediate feedback.Training the sales force ON THE JOB TRAINING ( OJT) :     This is the most common method of training. In this method the employee is placed in to the real work situation and shown the job and the method of work by an experienced employee or the supervisor.the. job breakdowns. On. the training should be done according to a structured program that uses task lists. while working. This method is basically learning by doing.job training (OJT) is conducted at the work sites and in the context of the actual work. To be successful.

The method also called training through step by.Training the sales force On the job training methods:  Job Instruction Training  Coaching  Mentoring  Job Rotation  Job Instruction Training :  Job instruction training (JIT) is a systematic approach to the job training. This is a proven and systematic method to teach workers how to do their current jobs.step learning involves:  Preparation of the trainees for the instruction.  Presentation of trainees for instruction.  Performance of the job by the trainee.  Motivating the trainee to follow up the job regularly 60 .

 Periodic feedback and evaluation gives immediate benefits to an organisation . The superior points out the mistakes & gives suggestions for the improvement. free from worries of the daily 61 .Training the sales force  Coaching:  Coaching is a continuous process of learning by doing. the superior guides his sub-ordinates & gives him/her job instructions. In this. Merits  It requires the least centralized staff coordination as every executive can coach his subordinates. Demerits  The training atmosphere duties is not available.

Demerits  It may create feeling of jealousy among other workers who are not able to show equally good performance. unwarranted favoritism may result. Merits  There is an excellent opportunity to learn. interpersonal and political skills are generally conveyed in such a relationship from the more experienced person. This can have a demoralising effect on other workers. Mentors help employees solve problems both through training them in skills and through modeling effective attitudes and behaviors. Technical.  Constant guidance helps the mentee to be on track. 62 .Training the sales force  Mentoring:  Mentoring is a relationship in which a senior manger in an organisation assumes the responsibility for grooming a junior person.  If mentors form overly strong bonds with trainees. using facilities to good advantage.

job satisfaction.  Provides valuable opportunities to network with in the organisation. to gain experience of a wide range of activities.  Mere multiplication of duties do not enrich the life of a trainee. 63 .  Development costs may shoot up when trainees commit mistakes handle tasks less optimally.Training the sales force  Job Rotation:  This involves the movement of trainee from one job to another. The trainee is given several jobs in succession. Demerits  Increased workload for participants.  Constant job change may produce stress and anxiety. Merits  Improves participant s job skills.  Offers faster promotions and higher salaries to quick learners.

 Some methods of Off-the job Training are:  Lectures  Conferences  The Case Study  Role Playing  In-Basket Method 64 .JOB TRAINING:  Off-the-job training simply means that training is not a part of everyday job activity. class-room or in place which are owned by the company in universities or associations which have no connection with the company. The actual location may be in the company.THE.Training the sales force OFF .

 The main advantage of the lecture system is that it is simple and efficient and through it more material can be presented within a given time than by any other method. concepts or principles.Training the sales force  LECTURES:  Lecture are regarded as one of the most simple ways of imparting knowledge to the trainees. reviewing. principles.  Illustrating the application of rules. 65 . especially when facts. attitudes. clarifying and summarizing. Merits: Presenting basic material that will provide a common background for subsequent activity. theories and problem solving s abilities are to be taught.

. A conference is a formal meeting. encourages and ensures full participation 66 in the discussion.The trainer guides the discussion so that the facts.The instructor defines the problem. Training conference :.Training the sales force  THE CONFERENCE METHOD :   In this method.The instructor gets the group to pool its knowledge and past experience and brings different points of view to bear on the problem. principle or concepts are explained. in which the leader seeks to develop knowledge and understanding by obtaining a considerable amount of oral participation of the trainees. 2. the participating individuals confer to discuss the points of common interest to each other. 3. Directed discussion :. 1. There are three types of conference methods. conducted in accordance with an organized plan. Seminar conference problem :.

. Analytical. Active participation is required. Abilities) required are complex and participants need time to master them.Training the sales force  CASE STUDY        The individual is expected to study the information given in the case and make decisions based on the situation. Skills. he is expected to research the firm to gain a better appreciation of its financial condition and corporate culture. The process of learningis as important as content. the case method is used in the class room with an instructor who serves as a facilitator. 67 Team problem solving and interaction are possible. if the student is provided a case involving an actual company. Typically. The KSAs (Knowledge. problem-solving and thinking skills are most important.

realism is sometimes lacking in roleplaying. so the learning experience is diminished. It is not easy to duplicate the pressures & realities of actual decision-making on the job. Participants assume roles of specific organizational members in a given situation & then act out their roles. & individuals. 68 . They learn by doing things. change & reorient their focus in a right way. often act very differently in real life situations than they do in acting out a simulated exercise.Training the sales force  ROLE PLAYING    It is a technique in which some problems real or imaginary involving human interaction is presented & spontaneously acted out. It develops interpersonal skills among participants. On the negative side. Immediate feedback helps them corrects mistakes.

it creates a healthy competition among participants. The papers. call for actions ranging from urgent to routine handling. Assigning a priority to each particular matter is initially required. the method is somewhat academic & removed from real life situations. presented in no particular sequence.Training the sales force  IN-BASKET METHOD      The participant is given a number of business papers such as memoranda. reports & telephone messages that would typically cross a managers desk. If the trainee is asked to decide issues with in a time frame. On the negative side. 69 . The participant is required to act on the information contained in these papers.

 Is based on the principles of equity.Compensation plan for sales force   A motivated sales force is essential for sales performance. one as an assured income another as an additional income for superior performance. An effective compensation plan (characteristics):  Directs the sales force toward activities that are consistent with overall marketing objectives. . A good well structured and balanced compensation plan is required to attract and retain a quality sales force and keep it motivated.  Helps to stimulate sales persons to put in their best efforts  Has two components.  Is flexible to adjust to changes in the environment. performance and rewards  Helps to attract and retain competent sales persons.  Connects efforts. 70  Is simple to understand and administer.

paid vacation.  Non financial  Promotions.  Decide compensation mix:  Financial  Direct payment like salary.  Indirect payment . LTA etc.medical care. . 71  Implement . better designation etc.  Recognition  Decide on weightage of different elements in the mix. evaluate / review and improve. job evaluation and overall compensation structure of the company  Consider Industry practice ( What competitors offer?)  Decide compensation level after discussions.Compensation plan for sales force  Designing the compensation plan involves following steps:  Consider Job analysis.

Demerits   72 .  the product/ territory is new  efforts and actual sales are loosely correlated.Compensation plan for sales force  Types of compensation plans:     Straight salary Straight commission Salary plus group commission. Salary plus commission  Straight salary plan: Merits    Simple and easy to design and administer. Gives a sense of security. Is suitable when  the company adopts a pull strategy.  Negotiation and purchase cycle is long (Eg: technical projects) Is not a stimulant to increase sales Cost of fixed salary is to incurred even if the sales is poor.

 Market is highly competitive and sales effort is directly linked with sales results.  Not much of non-selling activities are involved. Commission is a variable cost and is linked with volume/ profits. May lead to unhealthy rivalry/ jealousy among salesmen.  Demerits       Often difficult to design and administer.Compensation plan for sales force  Straight commission plan: Merits    Incentive to perform better. It is suitable when:  Company has adopted a push strategy. May lead to unhappiness when market is down due to external reasons. Income of salesmen can be unstable. 73 . Overaggressive salesmanship might dissatisfy customers. May be ineffective when there are many new salesmen.

praise encouragements. The elements of the motivational mix are:  Compensation plan  Recognition (like trophies. certificates. budgeting. Fair quotas/territory definition.  Good sales coaching and supervision  Regular sales meeting and conventions  Sales contest  Effective training programmes 74  A good leadership style. The greater is this ability greater are the chances of his success. job enrichment )  Promotions  Fair and transparent performance evaluation  Good forecasting. .Motivating the sales force   The mettle of a sales manager lies in his ability to motivate his sales force.

DISTRIBUTION MANAGEMENT 75 .

Distribution Management   Distribution management is concerned with management of physical movement of goods from the production center to the consumer through different distribution channels. warehousing. Distribution management comprises of two distinct sections  Physical distribution  Distribution channels 76 . inventory. and information system order processing and documentation . involving transportation.

it is an area with high cost reduction potential. It becomes all the more important where the distance between the production centers and the consuming centers (market) is large and time consuming. It provides Place utility and Time utility to a product by ensuring that it is available to the user at the right place and at the right time. transportation and Information technology. The distribution function is undergoing a tremendous change because of technological developments in communication. With so many alternatives available.Physical Distribution       Physical distribution is related to Place of the marketing mix. A good physical distribution or availability at the right place and time increases sales and helps to build a customer base/network. 77 . Distribution cost forms a substantial part of the total cost.

Physical Distribution  The factors considered for designing physical distribution system are :      The distribution objectives and the minimum service level desired. Ensuring flexibility of the system. Transportation Inventory management Warehousing Order processing Packaging Material handling 78  Functions involved in physical distribution are:       . Expectations of the customer in the product delivery (lead time. meeting emergencies etc) Finding out what the competitors do? Optimising cost which means incurring lowest cost without sacrificing the minimum service level.

pipelines. Classes of carriers include common carriers. contract carriers. Intermodal operations: Combination of transport modes such as rail and highway carriers (piggyback). and air freight. and private carriers. and water and air carriers (fishy back) to improve customer service and achieve cost advantages.Physical Distribution  Transportation      Transportation and delivery add approximately 10 percent to product costs. . Major transportation modes include railroads. motor carriers. water carriers. Freight forwarders and supplemental carriers consolidate shipments to gain lower rates and faster delivery service for 79 their customers. air and highway carriers (birdy back).

private or a public warehouse ? 2. Decisions regarding warehouse locations are influenced by:  warehouse building costs  materials handling costs  delivery costs from warehouses to customers.Physical Distribution  Warehousing     Ware houses are basically of two types  Storage warehouse holds goods for moderate to long periods to balance supply and demand for producers and purchasers. keeping them moving as much as possible. How many warehouses? Where should they be located ? 80 . Questions that arise are 1.  Distribution warehouse assembles and redistributes goods. Automated warehouse technology can cut distribution costs and improve customer service.

Includes four major activities:  Conducting a credit check. This is a set of procedures for receiving . and adjusting inventory 81 records. shipping them.  Order processing   .  Keeping a record of the sale.  Locating orders.  Making appropriate accounting entries.Physical Distribution  Inventory Control systems   Companies must balance customer demand with costs of carrying excess inventory. handling and filling orders promptly and efficiently. Directly affects firm s ability to meet customer service standards. RFID technology or vendor-managed inventory to help manage costs. Firms use just-in-time delivery systems.

Physical Distribution  

  



Protective packaging  Packaging costs and form of packaging is influenced by mode of transport and material handling equipment's. Vice versa the selection of particular mode of transport determines the characteristics (form, design etc.) of packaging Material handling Materials handling system activities for moving products within plants, warehouses, and transportation terminals. Unitizing combining as many packages as possible into each load that moves within or outside a facility. Containerizing combining several unitized loads. Proper material handling system helps to 1. Decrease material damage, maintain quality of storage, facilitate order processing, move right material at right time to make them available to right customers. 82

Physical Distribution 

The concept of physical distribution system has the following components:   

Total cost perspective  TDC (total distribution cost) = Transport cost + Facilities cost + Communication cost + Inventory cost + Protective packaging cost + Distribution management cost Trade off :  An integrated approach towards reducing the total cost needs to be adopted otherwise decreasing cost in one area can lead to increase (may be higher) in another area. For example an attempt to reduce transportation cost can lead to an increase in the inventory cost thus offsetting the advantage. Because of this a tradeoff is required. The main purpose of doing trade off is to achieve a net gain. Total system perspective : (Supply chain management). It involves channel partnership and strategic alliances. 83

Physical Distribution 

Tradeoffs can be of four types
Intra-activity tradeoff: Eg:- Whether to use public carrier or own private carriers.  Inter-activity tradeoff: Eg: Increasing transport cost might reduce inventory cost and warehousing cost. Xerox in US found air freighting the spares cheaper than storing them in warehouses without affecting customer service level.  Inter functional tradeoff : Eg:- Packaging a product might be best in terms protecting the product but may not be good for promotion or transportation purposes.  Inter organizational : This is a tradeoff between manufactures and the channel partners. Manufacturer should ensure excellent relationship with the channel partners and should examine all external organization's and thus capitalize on tradeoff opportunities. 

84

They may be used for moving a service from producer to consumer in certain sectors.Distribution Channel  What is distribution channel?  A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user . 85 . It is the Supply chain s front end. . hotels may sell their services (booking of rooms) directly or through travel agents. airlines etc. The use of Distribution channels may not be limited to movement of physical products alone.Stern    The main function of a distribution channel is to provide a link between production and consumption. For instance. tour operators.

Marketing intermediaries What are the uses of marketing intermediaries? Physical flow Title flow Payment flow Informatio n flow Promotion flow 86 .

assembling and packaging  Negotiation: Reaching agreement on price and other terms of the offer  Physical distribution: Transporting and storing goods  After sales services: This may include installation and maintenance.g. holding stock  87 .important for marketing planning  Promotion: Developing and spreading communications about offers  Contact: Finding and communicating with prospective buyers  Matching: (presales service) Adjusting the offer to fit a buyer's needs.  Financing: Acquiring and using funds to cover the costs of the distribution channel  Risk taking: Sharing commercial risks. including grading.Functions of a Distribution Channel  Channel organisations perform many key functions :Information: Gathering and distributing market research and intelligence . E.

Types of marketing Channels  Typical marketing channels: 88 .

89 .  C&F  agents (CFAs) Often manufacturers employ carrying and forwarding agents. Works on commission basis. Operates in an extensive territory. Usually chosen when a manufacturer prefers to stay out of marketing and distribution task. referred to as CFAs or C&F agents.Types of intermediaries  Following are the types of intermediaries in a marketing channel:  Sole  selling agent: It is a large marketing intermediaries with large resources. They act as branches of the manufacturer. They do not resell products but act as agent/ representative of the manufactures.

Usually a wholesaler does not sell directly to consumers ( except the institutional buyers). 90 . promotion and receiving orders. financing. but also perform functions such as promotion. Agent wholesaler unlike merchant wholesaler do not take ownership . Agent whole saler perform all or most of of the marketing functions associated with wholesaling. Agent wholesaler 2.Types of intermediaries  Wholesaler/ stockist  A wholesaler buys in bulk ( large quantities) from the and resells the goods in sizable lots to semi-wholesalers and retailers. Wholesalers not only play the role of stockholders and sub-distribution. They are primarily involved in the buying and selling of the products. They negotiate sales but do not but do not take title to merchandise. They can be categorised as 1. They also participate in collecting market information. market feedback etc. Merchant wholesaler.

They add value to goods and services that they sell by creating time. The retailers are also sometimes referred to as dealers or authorised representatives. 91 . place.Types of intermediaries  Retailer/ Dealer. Retailers perform much more than simply buying and selling. In cases where the company operates a single tier distribution system. They are at the last end of the distribution chain. The stocks they keep are just operational stocks needed for immediate sale at the retail outlet. possession and form utility.  They sell to the ultimate customers. they operate directly under the company.

Channel Strategy  Channel selection  Distribution intensity Channel strategy  Channel integration .

. control of channel operations Product factors: large.Channel selection     Market factors: buyer behavior. location of buyers Producer factors: resources of partner. product mix. installation and technical assistance. willingness of partner to market a product. perishable. difficult to handle Competitive factors: Selecting a unique or a tried and tested channel. complex.

. e. Exclusive distribution: only one outlet in a geographic area. hi-fi equipment. chewing gum.g. cars . Selective distribution: limited number of outlets. mass market products. personal computers. cameras.g.Distribution intensity    Intensive distribution: using all available outlets.. select only the best.g. heavy competition e. reduces competition e. beer.

Corporate vertical marketing system e. Pepsi purchased Pizza Hut  Franchising:     Channel ownership:    . Mc Donald s.Channel integration  Conventional marketing channels:    Benefits of specialization against lack of control Administered vertical marketing system e. car industry.g. Benetton purchasing outlets.g. total control over distributor against high costs.g. Procter & Gamble Shared resources and access to local knowledge against areas of potential conflict Contractual vertical marketing system e.

 Convenience of the consumer. Basic expectations from a channel:  Effective coverage of the target market  Cost effective and efficient physical distribution.Channel design Steps of channel design:    Setting the objectives. Identifying the functions expected from the channel. Consider the following:  Industrial and consumer goods channels need different types of channels  Buying behaviour of different consumer goods are different so they need different types of channel.  Channel choice is influenced by PLC stage.  Uninterrupted manufacturing while channel members take care of the sales.  Playing supportive role in financing and sub-distribution tasks. . Linking Channel design to product characteristics.

 Should have flexibility and controllability. Evaluating the alternatives and selecting the best. 97 . Evaluation of competitors channel design Matching the channel design to company resources.Channel design     Evaluation of distribution environment.  Balance cost. efficiency and risk.

training and resolving conflicts. the challenge becomes effectively managing all the relationships The challenge is to set up a system or method for assigning responsibilities.  Evaluating channel members  Feedback  Corrective actions 98 . controlling behaviors. and monitoring performance Channel Management involves:  Selecting channel members  Motivating.Channel Management    Once channels have been designed.

Channel Management  Selecting the channel members:  Factors that need to be considered while selecting a channel member are:  Financial strength  Product lines  Market coverage  Management strength  Equipment facilities  Sales strength  Willingness  Ordering and payment procedures  Compatibility working culture 99 .

Channel Management  Motivating. It is essential to set the dealer margin to a level that would enable the dealer to have a reasonable retained earning after meeting all the normal expenses. training. leadership etc. complaints and queries need 100 to be addressed promptly. functional knowledge. A long term partnership approach needs to be adopted to build a harmonious relationship with the channel members. . The firms need to collaborate with their dealers to help them in achieving a larger turnover and greater retailing productivity. Under monetary motivators a manufacturer can use reward power while under non-monetary motivators manufacturers can use coercion. Ideas need to be exchanged. A n attractive Trade margin is a major motivator. resolving conflicts:      Monetary and non-monetary motivators are used to control the behaviours of channel members.

These conflicts need to be resolved tactfully. 101 . company objective and strategies. One channel member might perceive the behaviour of another channel member to be obstructive to its goals. conflict management attempts to prevent the conflicts to appear or detect it at early stage and take corrective actions. The trainees are provided complete knowledge of the firm.Channel Management   Training the members of the channel member is a vital activity. Apart from these essentials of inventory management. In fact. consumer. This involves preparing the channel members to represent the firm in the best possible way. credit management and sales promotion may also be a part of their training programme. There are possibilities of conflicts within the channel members. Managing conflicts is an important task of the channel manager. product.

market intelligence report. Customer delivery time. is to improve the performance of the dealers. 102  Feedback and Corrective action:   . treatment of damaged goods. average inventory levels.Channel Management  Evaluating the channel members:    The purpose of performance appraisal and monitoring the same. The performance appraisal system should be discussed in advance with the dealers. Termination of relationship should be the last alternative but a firm should not hesitate to take the extreme step when necessary. The performance appraisal should be discussed with the channel members on a regular basis in a proactive style.. Corrective actions needed should taken both at the firms and the dealer s end. The channel members are evaluated in terms of their sales quota achievement. enlistment of new account. service level provided to customers cooperation in promotional and training programmes.