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to be considered a substitute of books or the source
An overview of
Sales & Distribution Management
by Mr. P. S. Kar, RIMS, Rourkela
This booklet is has been complied for the MBA students of the batch of 2009 – 2010, and should act as pre class introduction to this important subject. This brief text shall act as a base for the lectures, Projects, quizzes, assignments, case and in class discussions relating to this course. Students are advised to use it as a guide to collect and prepare further notes on relevant sections.
With inputs from, ICFMR’s promotional materials and various other open source as well as few authorized materials
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An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input, not to be considered a substitute of books or the source
Sales refer to the exchange of goods or services for an amount of money or its equivalent in kind. Selling helps an organization achieve its business goals. Thus, managing sales in an organization is a critical activity. A sales manager needs to ensure that the salespeople are motivated to perform the selling function in a way that will help the organization attain its goals. The sales team needs to continuously monitor the changes taking place in the external environment regarding competitors, customers, government and other regulatory agencies, as well as advances in technology, and industry trends. This provides the sales personnel with vital information regarding trends in organizational sales, product development, and budgets. By offering the management vital inputs pertaining to such information, the sales team helps the management to develop plans regarding sales, production, and design. Over the years, substantial changes have taken place in the selling environment, leading to changes in the sales function. The trends that have shaped the sales function include shorter product life cycles, longer and more complex sales cycles, reduced customer loyalty, intense competition among manufacturing firms, rising customer expectations, increasing buyer expertise, electronic revolution in communications, and the entry of women into the sales force. In addition to having a strong sales function, companies should also have efficient distribution channels to make the products available to the end consumer. Management of distribution channels involves efficient channel design, conflict management and implementation of sophisticated channel information system, which will enhance the process of making the products available to the end consumer in a timely manner. This booklet, an over view of Sales and Distribution Management provides an overview of the sales and distribution function. It discusses various aspects of the sales function ranging from various sales organization structures to the role of the sales manager in improving sales by hiring, training, motivating and leading the sales force. The second part of the book deals with the distribution function and discusses logistics and channel management. The last section presents few mini cases.
With inputs from, ICFMR’s promotional materials and various other open source as well as few authorized materials
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An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input, not to be considered a substitute of books or the source
Contents of the Booklet
0: MBE- 511: Sales & Distribution Management (SDM) 00: Basic idea about selling 000: Marketing & Sales Force Management 1: Introduction to Sales Management 2: The Sales Organization 3: Sales Functions and Policies 4: Personal Selling 5: International Sales Management 6: Sales Planning 7: Sales Budgets 8: Estimating Market Potential and Forecasting Sales 9: Sales Quotas 10 : Sales and Cost Analysis 11 : Hiring and Training Sales Personnel 12 : Time and Territory Management 13 : Compensating Sales Personnel 14: Leading the Sales Force 15: Leading the Sales Force 16: Evaluating Sales Force Performance 17: Marketing Logistics 18: Marketing Channels 19: Channel Integration 20: Channel Management 21: Evaluating Channel Performance 22: Managing Channel Conflicts 23: Channel Information Systems 24: Wholesaling 25: Retailing 26: Ethical and Social Issues in Sales & Distribution Management Appendix: Cases and Feedback
With inputs from, ICFMR’s promotional materials and various other open source as well as few authorized materials
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Personal Selling Personal Selling. Gupta. especially the marketing and sales team to have a good understanding of distribution management. And it directly contributes towards revenue growth of companies across business sectors. L. many sales organizations utilize a channel for going to the market. Gupta. ICFMR’s promotional materials and various other open source as well as few authorized materials 4 of 68 . Pingali Marketing Channel Management: A Customer Centric Approach. investment banking and financial services are often evaluated on the revenue they have brought in. theories and techniques applicable in a variety of settings. Care has been taken to cover basic concepts. L. Assignments & Projects 10 Mid Term Examination 10 Student Groups and Group specific exercises – go to page 6 Session Details: class Topics & Activities Reference Material and Handouts Havaldar and Cavle. require a sound foundation of sales and distribution management. Groups. S. Text Book Havaldar and Cavle. Management graduates irrespective of functional specialization. Sales and Distribution Management. Types of sales persons. Text and Cases [SLG] Venugopal.rimsology. The pedagogy of this course attempts to provide an optimum mix of theoretical rigor and practical applicability of the concepts. Sales and Module 1 Distribution Management Class – 1 Class – 2 Class – 3 Class – 4 Class – 5 Intro to Sales. (2001) Sales Management. Sales and Distribution Management. The quality of selling and sales management is an important determinant of success in customer acquisition. Sales and Distribution Management. Even managers from the knowledge sectors such as consultancy. The use of a channel makes it incumbent on aspirant mangers. Kinds of sales organizations. [PV] Reference Book Futrell. students will begin to appreciate the challenges involved in dealing with the real world situation. Activities. Internal Evaluation Class Participation 10 Presentations. Anderson. Sales Territories. frameworks.511: SALES & DISTRIBUTION MANAGEMENT (SDM) Overview and Focus Today SDM is as much a science as it is an art. Text and Cases [HC] S. not to be considered a substitute of books or the source MBE. Marketing Cannels (7th ed). Pearson [CASE] Cases and Readings: The Cases and Readings will be supplied by me via www.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.com to the students. Internal sending assessment Sales Management. Handouts. Presentation – 1 Presentation – 2 & 3 Selling skills. 23752451 m (3) 4649604-Great-Salespeople-Sell Havaldar and Cavle. Thomson Learning. C. Sales and Distribution Management. 2170478 s (4) With inputs from. Sales and Module 2 Distribution Management Class – 6 Determining the size of the Sales Force. Some businesses sell directly to their customers using a client acquisition team or company sales force. Stern &El-Ansary. Gupta. S. (6th ed). other related concepts & quiz 1 what makes a good salesperson (1) 31134030 (2). L. Routing and Scheduling. A wide range of material is covered and by the end of the course.M. [CMF] Coughlan.
Quota setting. Conflict and Competition Case discussion 4 26205301 d (12) Organizing & Managing C D. not to be considered a substitute of books or the source Class – 7 Class – 8 Class – 9 Class – 10 Class – 11 Class – 12 Class – 13 Class – 14 Class – 15 Class – 16 Class – 17 Class – 18 Class – 19 Case distribution and Re-orientation Sales Budget and Budgeting. 9704141115 (5) 6652132 (6). ICFMR’s promotional materials and various other open source as well as few authorized materials 5 of 68 . DEFINING scm (15). Kettunen Riina II (7) JohnWeitz1989 (8) 44466225 (9) Venugopal. 9211164405 d (10) 5005270 d (11). Pingali Marketing Channel Module 3 Management: A Customer Centric Approach Class – 20 Class – 21 Class – 22 Class – 23 Class – 24 Class – 25 Distribution Channel and Design Marketing Channel. Retailing and Retailer Marketing Decisions Presentation – 10 & 11 Management of Channels and Co-operation. 18617597 (6) Weitz1986 (7). solving of some problems relating to class 6 & 8 Case discussion 1 Presentation – 4 & 5 Recruiting and Selecting Sales Personnel Training and Development. With inputs from. Organizing for Physical Distribution Concept of Logistics and Supply Chain management Presentation – 14 & 15 Review VST 16423172 d (13) logisticsOct37-1 (14) a02v16n3 (15). Warehousing Inventory Presentation – 12 & 13 Transportation.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Motivating Salesman Presentation – 6 & 7 Compensating sales personnel.2 essentialsofsell030031mbp 2727540 (5). Venugopal. Pingali Marketing Channel Module 4 Management: A Customer Centric Approach Class – 26 Class – 27 Class – 28 Class – 29 Class – 30 Class – 31 Order Processing. Vertical and Horizontal Marketing Systems Wholesaler. Sales meetings and Contests Evaluation and Supervising Salesmen Presentation – 8 & 9 Case discussion 2 Case discussion 3 Review Quiz .
But to exercise the option the group members should have prior permission & consultation. VST Achievers 81 45 70 72 48 51 35 66 1 27 47 23 55 43 62 18 24 2 9 33 46 56 63 64 67 60 59 26 68 14 75 71 69 Assignments Quiz. G1 – G15) must chose a name of their group and shall have the option of choosing a minor research project or executable project instead of the taking the Quiz and VST. VST Section B G1 G2 G3 G4 G5 G6 G7 G8 G9 G10 G11 G12 G13 G14 G15 4 6 10 10 Dreamers 162 126 154 114 175 121 166 137 105 174 136 110 155 149 141 152 96 107 112 153 133 117 167 140 178 101 150 109 108 113 Present. VST Dreamers 87 49 12 15 22 31 61 53 28 17 79 25 8 39 29 50 83 42 34 77 57 73 5 3 20 6 65 11 38 44 Present. Case. Report Quiz. ICFMR’s promotional materials and various other open source as well as few authorized materials 6 of 68 .B.e. VST Class Participation Internal exam Class Participation Internal exam Class Participation Internal exam N. VST Class Participation Internal exam Class Participation Internal exam Achievers 134 161 125 119 129 177 143 94 104 118 139 89 147 104 146 106 160 128 148 164 127 132 116 92 144 123 122 142 159 131 173 111 171 Assignments Quiz.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Report Quiz. VST Class Participation Internal exam Executers 151 100 95 97 169 99 91 93 124 168 88 115 102 138 163 Profile. With inputs from. All groups (i. lead Quiz. Case. lead Quiz. not to be considered a substitute of books or the source Section A G1 G2 G3 G4 G5 G6 G7 G8 G9 G10 G11 G12 G13 G14 G15 6 4 10 10 Executers 41 40 84 82 19 86 7 78 85 30 4 16 80 74 32 Profile.
ICFMR’s promotional materials and various other open source as well as few authorized materials 7 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. not to be considered a substitute of books or the source Relationship between “Marketing & Sales Force Management” With inputs from.
and negotiating with customers to sell the company’s products profitably.. longer and more complex sales cycles. and the entry of women into the sales force. suppliers and distributors. ICFMR’s promotional materials and various other open source as well as few authorized materials 8 of 68 . increasing buyer expertise. rising customer expectations. etc. The setting up of industries led to mass production of goods and the opening of a large number of showrooms and sales offices. developing a positive relationship with the customers. In addition to helping an organization achieve its business goals. the sales function continues to evolve. The industrial revolution brought about a dramatic change in the sales scenario and gave rise to modern sales and marketing practices. The sales team of an organization can play these roles effectively only when it receives the required support from other departments. Over the years.Andrew Carnegie. further revolutionized the selling process across the world. suppliers. Management cannot be expected to recognize a good idea unless it is presented to them by a good salesman. it is useless to be a creative original thinker unless you can also sell what you create. reduced customer loyalty.David M. not to be considered a substitute of books or the source “You can take away my money and take away my factories.” . intense competition among manufacturing firms. Advancements in transport and communication technology in the form of the railways. Without the sales function. Does your sales process reflect your customers’ acquisition process? Selling steps. even in the twenty first century. So ask yourself how well your sales process maps the customer acquisition process. distributors. A sales manager needs to ensure that the salespeople are motivated to perform the selling function in a way that will help the organization attain its goals. but leave me my sales staff and I’ll be back where I was in two years. substantial changes have taken place in the selling environment. “In the modern world of business. Therefore. With continuing advances in technology. a firm cannot stay in business for long. Basic idea about sales Selling is the most important and the most difficult function in any organization. Some of the trends that have shaped the sales function include shorter product life cycles. employees and other people. Ogilvy. the selling function performs various other roles as well. as we’ve seen. With inputs from. managing sales in an organization is a critical activity. such as customers. and redesign any areas where there’s a gap. sparking more changes in the sales function.” . are of no value—or even detrimental—unless they are firmly rooted in how your customers buy. the telegraph.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. the postal system. Seven characteristics of good Sales Process 1. electronic revolution in communications. such as that of enhancing knowledge about both the internal and external environments. All the roles of the sales team are interdependent and the success of one role depends upon the success of the others.
4. Sales forces without good process must learn by trial and error—mostly error—and that makes it harder for them to grow. Yet few sales processes do this. Does your process increase efficiency? Good process doesn’t just put light in the tunnel. In other words. If not. 7. in their stead. Does your process allow mortals to succeed? The test of good process is not the performance of top salespeople. ask yourself whether it could be improved to create more value for your salespeople. So ask yourself how your process is affecting the performance of your average salespeople. Are your milestones objectively measurable events. not to be considered a substitute of books or the source 2. it’s a red flag that should alert you that you may need to redesign the process by reducing steps or building in new thinking based on analysis of what your successful performers are actually doing to reduce sales cycle length. The final constituency is salespeople themselves. it must add value to customers.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. 5. ICFMR’s promotional materials and various other open source as well as few authorized materials 9 of 68 . it’s whether or not middle-of-the-road performers are doing better. good process provides institutional value by reducing dependency on rock stars. if not. Ask yourself whether your process makes life easier or better for the customer. if your present process is encountering resistance. Rigid sales procedures out the touch with how the customer buys often masquerade under the name of ―sales process. permits growth. There’s nothing wrong with a theoretical process model as a starting point. So. it allows for quicker and more certain performance that. Is your process self-correcting? Can your sales process learn from real-world feedback? Too many sales processes are theoretical dreams generated in the bowels of some corporate staff office. bringing them more quickly up the learning curve to proficiency? Are they getting better results from a given amount of selling effort? 6. Rest assured that unless they feel the sales process actively helps them. Is it. back process can inhibit growth. As we’ve seen. in turn. Good sales process—like any other— learns from its environment. they will fight and ultimately subvert it. Conversely. not on activities? Review your process and cut out garbage in—garbage out activities such as ―make presentations‖ or ―submit proposals‖ and.‖ With inputs from. So a good test is to ask yourself whether your selling cycle has become shorter as a result of your sales process. for example. put objective milestones like ―complete a three-week product trial‖ or ―take the customer on a site visit to see the equipment in action. The second constituency is the institution. First and foremost. and. Is your process scaleable? One of the great strengths of good process is that it provides a track to run on that is replicable and scaleable. Does your process create value? Good sales process earns its keep by adding value to their separate constituencies. it actually makes the tunnel shorter. provided that it’s continuously improved by real-world feedback from customer experience.‖ So ask yourself whether your present process is a growth enabler or a growth inhibitor. 3. be prepared to go back to the drawing board and redesign it.
rising customer expectations.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. substantial changes have taken place in the selling environment. and the entry of women into the sales force. sales has a rather negative image associated with it. contribute to profits. In addition to helping an organization achieve its business goals. ICFMR’s promotional materials and various other open source as well as few authorized materials 10 of 68 . The evolution of the sales concept can also be studied in terms of seven generations. suppliers and distributors. The various trends that have shaped the sales function include shorter product life cycle. longer. through the Iron ages and the Middle Ages to sales in the twentyfirst century. The major objectives of a sales organization are to increase sales volume. Despite the crucial role the selling function plays in the growth of an organization. intense competition among manufacturing firms. developing positive relationships with customers. reduced customer loyalty. the selling function performs various other roles such as enhancing knowledge pertaining to the internal and external environments. A constant evolution has been witnessed in the sales function from the early Stone Age. it is essential to integrate the sales and marketing functions so that coordination of activities can be achieved. Sales’ has formed an important part of business throughout history and will continue to do so. For an organization to be successful. increasing buyer expertise. It is the principal. sparking a change in the sales function too. and negotiating with customers to sell the company’s products profitably. Over the years. not to be considered a substitute of books or the source Introduction to Sales Management A Summary Sales’ is one of the most crucial functions of an organization. and attain long-term growth. This can be attributed more to the misconceptions in the minds of the people rather than actual knowledge of the profession. electronic revolution in communications. and often. more complex sales cycle. the only revenue generating function in the organization. With inputs from.
slow growth in markets and different customer expectations.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. An inefficient organization structure can frustrate top managers as it may result in strategic plans going astray due to absence of clearly defined responsibilities and reporting relationships. sales organizations have to reengineer their organization structures and streamline their processes. More Complex Sales Cycle Reduced Customer Loyalty Intense Competition Among Manufacturing Companies Rising Customer Expectations Increasing Buyer Expertise Electronic Revolution in Communication Entry of Women in Sales Management The Sales Organization A Summary Owing to intense global competition. Developing customer-centric organizations. not to be considered a substitute of books or the source The basic ideas that one should acquire Evolution of the Sales Concept Nature and Role of Selling Image of Selling Objectives of Sales Management Integrating Sales and Marketing Management Environmental Changes Affecting Sales Management Shorter Product Life Cycle Longer. ICFMR’s promotional materials and various other open source as well as few authorized materials 11 of 68 . With inputs from. building strong relationships within and outside the organization. modifying the traditional top-down hierarchical structure and introducing crossfunctional teams are some steps companies are taking to improve their efficiency and profitability.
level of sales desired. rites and rituals. tales and stories. ceremonies. reporting relationships. Internal factors influencing the design of a sales organization include the company objectives. The strength and direction or fit of the sales culture also plays a crucial role in developing a sound sales organization. attitudes and personality of top management in an organization. facilitate effective coordination and control and develop an efficient sales force structure to ensure effective selling strategy. Sales culture is a collective impression of the values. These are formal and informal structure. The various components that make up sales culture include symbols. a company can have a product-based. To efficiently serve the ever-changing needs of customers in the best possible manner. size of the sales force and the width and depth of the product mix are some factors that influence the decision on the type of sales force structure to be adopted. It pervades down to the lower levels of hierarchy over time. The type of customers. authority. streamline reporting relationships. centralized and decentralized structure. four basic organization structures are possible. The role of a sales organization is to achieve company objectives. Designing the sales organization plays a crucial role in a company’s overall success. Based on the span of control. One must consider the influence of external and internal factors while designing a sales organization. the size of the sales force.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. vertical and horizontal structure and line and staff organization structure. the market size and its potential. ICFMR’s promotional materials and various other open source as well as few authorized materials 12 of 68 . Sales culture plays an important role in the success of a sales organization. language. geographic-based. role models. With inputs from. the type of industry in which the company is operating. etc. compensation system. customer-based or a combination-based sales force structure. hierarchical levels and departmentalization. not to be considered a substitute of books or the source The organizational structure should fulfill the purpose for which it has been designed. and values and beliefs. External factors include the markets targeted and the technology prevailing in the target market. core competence of the company. Sales culture has a significant influence on sales force activities and attitudes.
ICFMR’s promotional materials and various other open source as well as few authorized materials 13 of 68 . not to be considered a substitute of books or the source With inputs from.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
a problem-definer. a coordinator and scheduler. Likewise. a merchandiser as well as an ombudsman. motivating. which fall in the sphere of sales as well as marketing management. Sales Functions and Policies A Summary A sales person’s professional life is characterized by various highs and lows. not to be considered a substitute of books or the source The basic ideas that one should acquire Role of a sales organization Basis for designing a sales organization -Types of organizations Formal and informal organizations Vertical and horizontal organizations Centralized and decentralized organizations Line and staff organizations -Types of sales force structure Product-based sales force structure Geographic-based sales force structure Customer-based sales force structure Combination-based sales force structure -Sales culture Components of sales culture Role of sales culture in developing a sound sales organization. In addition to playing a variety of roles in sales management. setting targets for sales people and tracking the results. providing leads and sales support. sales forecaster. a service provider. and allocate scarce resources.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. leader. These include the responsibility of hiring. Like a sales manager. the sales persons. These include people who belong to the organization as well those who are external to it. market analyst. but also various other groups of people. an advocate. a traveler. controller. at other times he may have to face the customer’s rejection. training. ICFMR’s promotional materials and various other open source as well as few authorized materials 14 of 68 . conducting sales meetings. recruiter. organizing the sales effort. a salesperson too has his own set of responsibilities to fulfill. a sales manager also plays a variety of roles . Both have distinct roles to play and responsibilities to fulfill toward the achievement of the sales objectives of the organization. The sales manager who occupies a middle-level position in an organization satisfies the demands and expectations of not only those above him and those whom he is supervising. Thus. a customer-ego builder. a sales manager also has a set of responsibilities to fulfill. the operations and functioning of a sales organization is governed by certain policies. He has to play the role of a persuader. budget manager. The sales force of a company comprises the sales managers and the sales personnel. What differentiates a successful company from a not-sosuccessful one is its sales force. an information-gatherer and reporter. and communicator. With inputs from. The sales manager has several functions to perform.planner. At times he may clinch a deal and close a sale. the life of a salesperson is certainly not an easy one. coaching. The sales-related policies that have an impact on the sales achieved by an organization fall into three categories. Further. The salesperson’s job is also a demanding one. a display arranger for the wholesaler or the retailer.
The product-related policies also help specify the company's stand regarding product design and quality. policies related to the product. the marketer's reputation. after-sales service. marketing efforts. and whether to add or drop a particular product or product line. These policies also highlight the relationship between various factors such as product quality. product recall. The distribution-related policies in a sales organization deal with how the distribution of a product affects its sales. product promotion and sales. warranties and repair. and policies related to the pricing of the product. its positioning. The basic ideas that one should acquire Role of A Sales Manager -Responsibilities of a Sales Manager Hiring Training Coaching Motivating Setting Targets and Tracking the Results Recognizing and Rewarding Performance Providing Leads and Sales Support Organizing the Sales Effort Conducting Sales Meetings Allocation of Scarce Resources Role of a Sales Executive Responsibilities of a Sales Executive -Policies That Impact Sales Management Sales-Related Policies Pertaining To the Product Sales-Related Policies Pertaining To Distribution Sales-Related Policies Pertaining To Pricing With inputs from. policies related to the distribution aspects. The policies that relate to pricing of the product discuss the relationship between product or service pricing and its impact on sales. The product related policies determine the products and product lines the company should be involved in. not to be considered a substitute of books or the source namely. ICFMR’s promotional materials and various other open source as well as few authorized materials 15 of 68 . and the need for coordination among these various factors.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
With inputs from. The interaction between a buyer and a seller comprises a buyer-seller dyad. The likelihood of a salesperson making a sale to a customer is higher if he or she shares some characteristics with the customer. As a part of the selling process. ICFMR’s promotional materials and various other open source as well as few authorized materials 16 of 68 . The effectiveness of communication between the salesperson and the customer during the sales process decides the success of the sales call.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. salespersons perform two entirely different tasks – sales development and sales maintenance. not to be considered a substitute of books or the source Personal Selling A Summary Personal selling is the process of selling goods and services directly to customers. Personal selling is therefore a highly interactive tool of promotion and is best suited for products or services that are complex in nature. Personal selling is far more significant than other forms of promotion as it allows the salesperson to describe the product in detail to the customer in person.
independent sales agents. The objectives of the sales force are of two kinds. As most companies require the same salesperson to carry out both tasks simultaneously. ICFMR’s promotional materials and various other open source as well as few authorized materials 17 of 68 . because there is a continuous transaction between the sales person and the customer here. the behavioral equation theory and the right set of circumstances theory. developing hybrid-marketing systems and by establishing strategic alliances. The sales force strategies of a company fall into two categories – strategies for gaining market access and account relationship strategies. qualitative and quantitative. Maintaining strong relationships with customers will definitely boost repeat purchases. The customer buys the same type of products from the sales person at frequent intervals of time. With inputs from. not to be considered a substitute of books or the source These tasks require different skill sets and different approaches. Account relationship strategy deals with ways to manage sales accounts in an organizational set-up and individual sales accounts. This theory states that a prospective customer's mind passes through these five stages before he makes the actual purchase. making it tough for salespeople. that is. Market access can be gained by using distributors. Offering discounts occasionally will significantly improve the chances of repeat purchases. salespersons often tend to ignore the more difficult of the two tasks. AIDAS is an acronym for Attention. Qualitative objectives relate to the methods of sales force operations while quantitative objectives are the measurable actions of the sales force. It is essential for the sales force to develop and manage long-term customer relationships. telemarketing. Desire. the Internet.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Interest. The theories of personal selling include the AIDAS theory. This is especially important in the case of an industrial sales force. the buying formula theory of selling. sales development. Action and Satisfaction. The buying formula theory states that the purchase process is characterized by a psychological sequence of events that take place in the prospect's mind. Sales management has to differentiate between these two selling jobs for the company to be successful.
finding customers. providing customer service and finally. Further.solution . Connectivity not only provides the sales force with a competitive edge in selling but also improves their effectiveness and productivity. response and reinforcement. so that customers remain loyal to the company for a long time. Sales force automation tools have made it possible for sales representatives to remain connected to their office and with their customers at all times.purchase . approach.satisfaction. The basic ideas that one should acquire Buyer Seller Dyads -Types of Selling Jobs Sales Development Sales Maintenance Sales Force Objectives -Sales Force Strategies Market Access Strategies Account Relationship Strategy -Theories of Personal Selling AIDAS Theory Buying Formula Theory of Selling Behavioral Equation Theory Right Set of circumstances theory -Approaches to personal selling Stimulus Response Approach Need Satisfaction Approach Problem Situation Approach -Personal selling process Prospecting Pre-Approach With inputs from. The right set of circumstances theory is based on the assumption that creating the right set of circumstances will make the buyer respond positively and will result in a sale. handling objections/sales resistance. Some critical customer related issues in personal selling include understanding types of customers through different styles of selling. Today. pre-approach. The selling process consists of a series of seven steps – prospecting. Over the years. sales presentation. salespeople have a number of tools and techniques available to them that have made their jobs easier. in order to develop and maintain account relationships. not to be considered a substitute of books or the source The sequence of events includes need recognition .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. cues. creating customer satisfaction. a salesperson can adopt any of three approaches – stimulus response approach. ICFMR’s promotional materials and various other open source as well as few authorized materials 18 of 68 . sales personnel are being increasingly exposed to a number of advanced technology tools. Companies should devote significant attention to customer satisfaction. and at the same time challenging. The behavioral equation theory says that decision making by a customer comprises stages of the learning process and consists of drives. communicating effectively. researching customers. need satisfaction approach or problem situation approach. close and post sales follow-up.
It also helps sales personnel understand where the organization is headed. As an With inputs from. It provides a framework and direction to all actions involved in sales management. improves coordination and control and reduces uncertainty and risk. provides a sense of direction. ICFMR’s promotional materials and various other open source as well as few authorized materials 19 of 68 . not to be considered a substitute of books or the source Approach Sales Presentation Handling objections Sales resistance Close Post-sales Follow-up -Customer related issues in personal selling Understanding customer types through different selling styles Finding customers Researching customers Communicating effectively Providing customer service Creating customer satisfaction -Automation in personal selling Benefits of sales force automation Sales Planning A Summary Most organizations find themselves operating in highly competitive markets with varying customer needs and expectations. Sales’ planning is very important to an organization because it helps in better implementation of plans. This has made them redefine the importance of meticulous planning to be successful in the globalized environment. develop objectives. how it will reach the desired position and what activities must be undertaken to fulfill the organization’s mission. The sales manager’s role has gradually shifted over the years to that of a planner and administrator. An understanding of the sales planning process is essential to effectively manage the sales management function. As a planner. procedures and standards and prepare sales budgets. formulate policies. design the sales organization. the sales manager has to forecast.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
frame. Plans are generally accurate With inputs from. re-evaluating. Lack of awareness of important aspects.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. the sales manager has to supervise. not to be considered a substitute of books or the source administrator. absence of proper planning. implementing the sales plan. organizing action. measuring results against standards. delegate and motivate the sales force. and control of the sales force performance. The accuracy of the sales plan is dependent on the time. The primary reason is the habit of sales managers to duplicate the successful plans of other organizations without trying to understand the specific requirements of their organization. Most plans fail due to a host of reasons. The planning process involves . ICFMR’s promotional materials and various other open source as well as few authorized materials 20 of 68 . Managers must also ensure that ethical standards are followed by the sales force during selling. absence of sales force participation and lack of effective communication of planning elements also lead to failure of sales plans. coordinate. determining operations to meet these objectives.setting objectives.
The basic ideas that one should acquire -The Importance of Sales Planning Better Implementation of Corporate Plans Provide a Sense of Direction Focus on Realistic Objectives Improve Coordination Facilitate Control Ensure Healthy Interpersonal Relationships Reduce uncertainty and risk -Sales Manager as Planner and Administrator Sales Manager as Planner Sales Manager as Administrator -The Sales Planning Process Setting Objectives Determining Operations to Meet Objectives Organizing for Action Implementing Measuring Results Against Standards Re-evaluating and Control -Causes of Unsuccessful Sales Planning Lack of Awareness or Understanding of Important Aspects Absence of Proper Planning Lack of Systematic Communication Absence of Sales Force Involvement Accuracy of Sales Planning Sales Budgets A Summary A budget is a plan expressed usually in monetary terms. not to be considered a substitute of books or the source for shorter time spans than for longer periods.sales budgets. Developing sales budgets serve two purposes . There are several benefits an organization derives from budgeting.as a mechanism of control and an instrument of planning.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.improved planning.affect the accuracy of the sales plan. It is a process of allocating a portion of an organization’s resources for its various activities for a specified period of time. They are -. better communication and coordination. Sales budgets are developed for the smooth functioning of the sales function. psychological benefits and avoiding uncontrolled expenditure. A sales budget gives a plan showing the expected sales for a specified With inputs from. selling expense budget and administrative budget. involvement of top management. It helps in planning and coordination of the organization’s activities. sales managers prepare three types of budgets . size of the organization. The rate of profits. ICFMR’s promotional materials and various other open source as well as few authorized materials 21 of 68 . communication and sales force participation . performance evaluation. In practice.
percentage-of-sales method. A meticulously developed sales budget provides many benefits to an organization. not to be considered a substitute of books or the source period in the future. sales forecasting. Administrative budget specifies the budgetary allocations for general administrative expenses that would be incurred by the sales department. like any other management concept. ICFMR’s promotional materials and various other open source as well as few authorized materials 22 of 68 . The basic ideas that one should acquire -Purpose of sales budgets Mechanism of control Instrument of planning -Benefits of budgeting Improved planning Better communication and coordination Control and performance evaluation Psychological benefits Principles of budgeting -Types of budgets Sales budget Selling-expense budget Administrative budget & Profit budget -Methods of budgeting for sales force Affordability method Percentage of sales method Competitive parity method Objective-and-task method Return oriented method -Requirements for successful budgeting Involvement & support of top management Flexibility in budgeting -Developing a sales budget Review and analysis of the situation Identifying specific market opportunities and problems Sales forecasting Communicate sales goals and objectives Preliminary allocation of resources Preparing the budget Getting approval for the budget -Precautions in preparing sales budgets Inability to project course of future events Inability to gain acceptance With inputs from. But. objective-and-task method and return-oriented method. The different methods for budgeting include the affordability method. communicating sales goals and objectives. Once adequate care is taken to overcome the limitations of budgeting. Selling expense budgets details the schedule of expenses that may be incurred by the sales department to achieve planned sales. budgeting has its share of limitations. it will act as a tool to enhance the profitability of the organization. competitive parity method. The success or effectiveness of each of these depends on the involvement and support received from the top management and the flexibility built into the budgets. They include inability to project the course of future events. To develop an efficient sales budget a manager has to follow certain steps like review and analysis of the situation. inability to gain acceptance by all people in the organization. consumption of significant amount of managerial time and avoidance of expenditures that will bear fruit only in the long run. identifying specific market opportunities and problems.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. preparing the budget and getting approval for it. preliminary allocation of resources.
ICFMR’s promotional materials and various other open source as well as few authorized materials 23 of 68 . not to be considered a substitute of books or the source Involvement of time Repudiation of the long term Estimating Market Potential and Forecasting Sales A Summary Estimating the potential of a market is very important for a company planning to enter a new market. Over the years. Besides studying the broad market factors such as the size of the population. This is a process where an organization estimates the attractiveness of the market for selling its products or services. With inputs from. GDP and the spending capacity of the market. Forecasting can be classified into qualitative forecasting and quantitative forecasting. Estimating the future sales of the company in a given market is called sales forecasting. many new software tools have emerged for forecasting sales in a better fashion.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. the cultural factors prevailing. the importance of sales forecasting has been on the rise across the world. Apart from the mathematical models developed earlier. their willingness to buy the products and so on. it is very important to asses it in order to avoid irrecoverable losses. Data regarding customer and market specific factors can be obtained through primary and secondary sources. Before venturing into a market and investing huge sums of money. firms should also analyze market specific factors such as customers’ tastes and preferences.
regression and correlation analysis. The method of sales forecasting is selected on the basis of factors such as accuracy. durability. pattern of data. Delphi technique and market test. available time. lack of time. exponential smoothing. certain criteria in terms of accuracy. moving averages. The methods used in quantitative forecasting are time series analysis. ICFMR’s promotional materials and various other open source as well as few authorized materials 24 of 68 . The changing customer attitudes. flexibility. costs. sales force composite. and changing fashions and fads also act as hurdles to effective forecasting. money and qualified personnel. Selecting the appropriate forecasting method is of great importance for a firm. experience of the company and requirements of the software.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. not to be considered a substitute of books or the source The methods used in qualitative forecasting are user expectations. Sales forecasting faces several difficulties such as lack of adequate sales history. jury of executive opinion. and multiple regression models. For effective forecasting. availability of statistical indexes. The basic ideas that one should acquire Importance of assessing market potential Need to determine market potential -Analyzing market potential Ability to buy Willingness to buy -Sources of data Secondary sources Primary sources Importance and uses of sales forecasts -Sales forecasting methods Qualitative methods Quantitative methods -Selecting a forecasting method Accuracy Costs Type of data available Requirements of the software Experience of the company -Criteria For Effective Forecasting Accuracy Plausibility Durability Flexibility With inputs from. organizational participation and demand patterns. should be met. plausibility.
All activities of the sales force revolve around the fulfillment of sales quotas.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. The four categories of sales quotas widely used are -. It must also help in the coordination of sales force activities. among which. Sales quotas help in directing. flexible and must satisfy management objectives. Compensation plans are invariably linked to quotas. ICFMR’s promotional materials and various other open source as well as few authorized materials . They form an indispensable tool for sales managers to carry out sales management activities. and help motivate the sales force. Convincing salespeople about the fairness and accuracy of quotas helps the sales management to successfully implement quotas. Sales quotas are prepared on the basis of sales forecasts and budgets. not to be considered a substitute of books or the source Availability of statistical indexes Demand patterns in the market for the product -Difficulties associated with forecasting Lack of adequate sales history Lack of time money and qualified personnel Changing customer attitudes Fashions and fads Sales Quotas A Summary Sales quotas are a way of life for the sales force. The commission and bonuses given to sales persons are based on their meeting quotas set for them. expense quotas. Sales quotas serve various purposes in organizations. Various methods are used to set sales quotas. challenging yet attainable. easy to understand. Skilful administration by sales managers is required for effective implementation of quotas. A sales quota should be fair. They signify the performance expected from them by the organization. 25 of 68 With inputs from. They provide targets for sales personnel to achieve. activity quotas and profit quotas. Setting motivating and easy to understand quotas is essential to obtain the cooperation of the sales force.sales volume quotas. Sales quotas are targets assigned to sales personnel. quotas based on sales forecasts and market potential are the most common. evaluating and controlling the sales force. rewarding. act as standards to measure sales force performance.
The basic ideas that one should acquire Purpose of sales quotas -Importance of sales quotas Provide performance targets Provide standards Provide control Provide change of direction Tool for motivating salespeople -Types of sales quotas Sales volume quotas Profit quotas Expense quotas Activity quotas Characteristics of a good sales quota -Methods of setting sales quotas With inputs from.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. With changes in the competitive environment and variations in customer expectations. difficulty in comprehending if complicated statistical calculations have been used and focusing on attaining sales volumes at the cost of ignoring important non-selling activities. not to be considered a substitute of books or the source Sales quotas have certain limitations such as being time consuming. Quotas may reduce risk-taking among sales personnel and may influence them to adopt unethical selling practices. many companies have started developing compensation plans that are increasingly based on non-traditional aspects. thereby reducing dependency on quotas. ICFMR’s promotional materials and various other open source as well as few authorized materials 26 of 68 .
It includes the total sales of the company by territory. classifying. it is also bound by a few limitations like dependency on accounting records. a marketing audit With inputs from. and product category. The sales efforts of a company can be studied through a sales analysis that involves gathering. planning systems. and taking up corrective action if necessary. A sales audit is periodically taken up by the sales management to examine the entire selling operations of the firm. ICFMR’s promotional materials and various other open source as well as few authorized materials 27 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. The present day dynamic marketplace has forced sales managers to shift their focus in sales control from sales volume alone and to lay equal emphasis on costs incurred in implementing the sales effort. A cost analysis involves spreading the natural costs. studying the profitability of the units. Though a sales analysis helps identify the problems associated with the sales activities of the firm. The process of sales control involves setting goals. A sales analysis can be most informative when the sales data is broken down hierarchically. and sales management functions. The audit involves an audit of the sales organization. the sales environment. Sales analysis involves analyzing the sales volume or the total sales of the company. customer. and implementing appropriate action depending on the findings of the analysis. While a sales analysis measures the sales volume achieved. An analysis of volume of sales by categories is very helpful in identifying the root causes of the problems in the sales activities of the firm. Just as a sales audit examines the entire sales operations of a firm. the marketing cost analysis looks into the costs and expenses incurred to achieve the sales volume and their justification. comparing actuals with the targets. The objective of sales control is to ensure that the company’s sales efforts are in tune with its sales plan by taking necessary measures in case of deviations. etc. not to be considered a substitute of books or the source Quota setting processes Quotas based on sales forecasts and market potential Quotas based on sales forecasts alone Quotas based on past experience Quotas based on executive judgment Quotas based on sales force compensation Quotas set by sales people themselves -Administering sales quotas Minimizing acceptance problems Managing and controlling people through quotas Limitations of sales quotas Sales and Cost Analysis A Summary Control is one of the most critical functions performed by a sales manager as it measures the performance of the system and helps the manager take corrective action if the performance of the system is not in agreement with the formulated plans. and studying the sales data of the company. comparing the sales figures with some standards and processing the data to generate reports. A typical sales analysis involves deciding on the purpose of evaluation. inability to reflect the profitability of sales. The sales control function measures the performance of the sales force and identifies the problems and opportunities that the firm is exposed to. allocating them to functional units. comparing.
The basic ideas that one should acquire Sales manager’s responsibility to ensure profits -Nature of sales control Objectives of sales control The sales control process Difficulties in sales control -Sales analysis Elements of sales analysis Steps in sales analysis Variations of Sales Analysis Problems in sales analysis -Sales audit Elements of sales -Marketing cost analysis Types of costs Procedure for cost analysis -Marketing audit Procedure for a marketing audit Components of a marketing audit -Profitability analysis Break-even analysis Capital budgeting tools -Principles of analysis Iceberg principle 80-20 Principle Cross-classifications With inputs from. This helps sales managers to take necessary measures to ensure higher profitability of the firm’s sales transactions. and practices. They forewarn sales managers of impending dangers and help them to take measures to counter them. These principles reveal the behavior of sales data and the actual reasons underlying them. not to be considered a substitute of books or the source evaluates and enhances the effectiveness of a firm’s marketing operations by studying its marketing strategies. the 80/20 principle and crossclassifications guide sales managers in conducting effective sales and cost analysis. policies. A number of principles such as the iceberg principle.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Sales managers use profitability analysis to relate the sales revenues to marketing costs. ICFMR’s promotional materials and various other open source as well as few authorized materials 28 of 68 .
An ineffective salesman can cause great damage to the company’s reputation due to his poor product knowledge. selection of those who match the organizational requirements. In addition to these costs. Recruiting the wrong person costs a great deal to a company in terms of recruitment cost. failure to serve the customer properly and poor selling techniques which only tend to With inputs from. A greater area of concern is the opportunity cost that is involved in hiring an unsuitable candidate for a position and missing out on the profits that could have been generated by the company by hiring a competent person instead. While super salesmen can increase a company’s revenue significantly.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. The greatest challenge faced by all companies is to be able to hire the best talent and to be able to utilize that talent to achieve organizational objectives. cost of placing advertisements. ICFMR’s promotional materials and various other open source as well as few authorized materials 29 of 68 . cost of screening potential candidates and interviewing them. the company also has to bear the cost of paying them a salary at least till the time they are asked to leave the organization. not to be considered a substitute of books or the source Hiring and Training Sales Personnel A Summary Hiring is a personnel function that consists of various stages such as the recruitment of candidates with the right qualifications. poor performers can hinder the company’s growth and drive it towards losses. assessing. The quality of a company’s sales force plays a crucial role in determining the ability of the company to compete and survive in the competitive business environment. placing and training them after selection. and placing them in a suitable position in the organization. Reimbursement for the sales expenses incurred by such sales persons is yet another cost which has to be borne by the company.
communication skills. conducting reference checks. work habits. conducting the selection test. and work motivation. physical examination. dominance. ICFMR’s promotional materials and various other open source as well as few authorized materials 30 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. sociability. numerical ability and mechanical interest. The selection process for hiring a salesman involves a number of stages. competitiveness. These include sourcing the candidates. business terms and memory recall aptitude.mental aptitude dimensions. screening the candidates. The personality dimensions. not to be considered a substitute of books or the source alienate the customers. holding personal interviews. and personality dimensions. high energy levels. emotional maturity. cynicism. With inputs from. checking letters of recommendations. Salespersons are hired on the basis of the satisfactory fulfillment of a company’s requirements. Companies seek specific characteristics in a potential salesperson. include honesty or character strength. on the other hand. These characteristics are clubbed together into two categories . and making the employment offer. The mental aptitude dimensions of salespersons include mental alertness.
to improved company image and customer relations. implementing the training program and evaluating the training program. a company’s efforts must not just end with designing a training program to achieve its objectives. Kirkpatrick’s four-stage model of sales force training evaluation is the most widely used method of evaluating training programs and evaluates the training program on four levels.initial sales training. behavior change/ transfer of learning. both to the sales persons as well as to the organization. Looking at the large amount of expenditure that companies incur to train their sales force. timing of training. etc. However. the candidate needs to be properly trained to increase his effectiveness and productivity in selling. enhanced morale of the sales force. training offered by the manufacturer to the sales force of its distributor and training offered by the manufacturer to its customers. and organizational outcomes. These benefits range from decrease in sales force turnover. evaluation of training programs becomes essential to justify this expenditure and to objectively examine whether the training programs have been successful in accomplishing their objectives. reactions.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Sales training programs consist of three components: designing the training program. place of training. The company must also take measures to implement the training program effectively so that it helps the company achieve its objectives. not to be considered a substitute of books or the source Once a suitable candidate has been hired for the position of a salesman. namely. ICFMR’s promotional materials and various other open source as well as few authorized materials 31 of 68 . The basic ideas that one should acquire Recruitment and its importance -Determining specific requirements of the sales personnel Mental aptitude dimensions -Sales personnel selection process Sourcing the candidates Screening the candidates Selection test Background check Personal interview Letters of recommendation Physical examination Making the employment offer Importance of sales training -Types of sales training With inputs from. refresher or follow-up training. Sales training offers several benefits. knowledge acquisition. Sales training is of four types . The implementation of the training program takes into consideration issues such as – Selecting the right trainer. The designing of training programs should be done keeping in view the organizational objectives.
There has been a fundamental shift in organizations’ approach to time management with the advent of better technological options. ICFMR’s promotional materials and various other open source as well as few authorized materials 32 of 68 . breakdown method and incremental method. Subsequently the With inputs from. The buildup method consists of designing sales territories by assessing the attractiveness of current and prospective customers. branch. located within a given geographical area and assigned to a salesperson. helps in reducing selling costs. not to be considered a substitute of books or the source Initial sales training Follow-up or refresher training Training by the manufacturer to the distributor’s sales force Training by the manufacturer to the customers Benefits of sales training -Sales training programs Designing the training program Implementing the training program Evaluating training programs Time and Territory Management A Summary Effective time management will significantly help a salesperson improve his performance. Sales territories should be designed efficiently so that the potential of salespersons can be exploited to the maximum. technological advancements have also provided several techniques to help salespersons manage their time efficiently. or intermediary. Sales territories are designed using the three methods – buildup method. Efficient time management leads to better customer coverage. However. Advancements in technology have simultaneously led to a significant increase in time pressure on the salesperson. In this method. A sales territory comprises a number of present and potential customers.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. current and prospective customers are identified and their sales requirements analyzed individually. improving customer service and helps in accurate evaluation of salespeople.
ICFMR’s promotional materials and various other open source as well as few authorized materials 33 of 68 . Routing and scheduling are two widely accepted techniques for territory management. week and a month. additional territories are created as long as the revenues generated from them exceed the cost of serving them. Scheduling involves allocation of time to the various activities that a salesperson is involved in during a day. This is followed by determining the average number of sales that each salesperson is required to make and the territories are then accordingly allocated to individual salespersons. Routing refers to the process of deciding the pattern of movement of a salesperson in his territory for making sales calls in a way that minimizes the total distance traveled. the travel expense and the travel time.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. the market potential for the product is identified and then the market share that the company is targeting assessed. sales are forecast. not to be considered a substitute of books or the source salespersons are assigned territories on the basis of the sales volumes and the number of calls they are supposed to make to these accounts. Based on this. Once the designing of territories is completed. In the incremental method. The basic ideas that one should acquire -Time management and its importance Better market coverage Reduced selling costs Improved customer service More accurate evaluation of sales force personnel -Territory management and its importance Benefits of territory management -Criteria for territory design Sufficient potential Reasonable size Adequate coverage Minimum impediments -Methods for designing territories Buildup method Breakdown method Incremental method -Procedures for developing territories With inputs from. salespersons are allocated to individual territories according to their capabilities. The breakdown method is the reverse of the buildup method and in this.
A truly successful sales compensation plan must help achieve overall organizational goals and not just sales goals. flexible. It should be fair. The compensation plan must fulfill the primary objective of balancing the needs of the sales personnel. Organizations compensate sales forces in many ways. The objectives of a compensation plan should be clearly stated. and provide them income and security. Every organization has to design its own compensation plan that will enable it to fulfill sales objectives and to attract and retain sales personnel. ICFMR’s promotional materials and various other open source as well as few authorized materials 34 of 68 . fulfill the needs of sales personnel and lead to the achievement of organizational objectives. not to be considered a substitute of books or the source Identify objectives and criteria for territory formation Bases for developing territories Assigning sales personnel to territories -Operating the territory management system Routing Scheduling Compensating Sales Personnel A Summary There is no single sales compensation plan that is suitable for all organizations. It should also be effective in all business conditions – good or bad.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. easy to administer. The compensation plan may be a With inputs from. so that it becomes easier to determine whether the organization is able to achieve them.
An expense plan must be easy to administer. the success or failure of a compensation plan is dependent on its ability to motivate sales personnel to fulfill organizational objectives and to retain the best talent in the organization. To ensure success. training. Ultimately. The effectiveness and success of a compensation plan depend on its execution. organizations have started formulating tailor-made sales compensation plans for individual sales personnel. commissions and incentives. beneficial to the organization and sales personnel and must be communicated clearly to the sales force. periodic monitoring is also essential. partially or in the form of an excess commission that sales personnel must use for meeting selling expenses. Compensation plans have an impact on recruitment. medical benefits and paid holidays. employee stock options. Next. While deciding on the type.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. This is also called indirect compensation. ICFMR’s promotional materials and various other open source as well as few authorized materials 35 of 68 . A sales manager must plan a sales contest well in advance and avoid indiscriminate usage. sales contests will lose their efficacy. a sales manager should control sales force expenses in the form of expense quotas. With changes in the global environment. Otherwise. It may be in the form of a straight salary. In most organizations. To ensure profitability. special cash and non-cash incentives and fringe benefits are also used as a form of payment to the sales force. selling expenses are be reimbursed either completely. it is necessary to consider the differences in territory characteristics. The plan should be tested in a territory before it is implemented throughout the organization. Different industries have different levels of payments. commission or bonus or a combination. While designing a compensation plan. Sales force expenses make up a large portion of total organizational expenditure. With inputs from. evaluation and control functions too. a commission-based type or a combination of salary. Sales contests are widely used as a source of compensation. sales activities and objectives of sales personnel. The last step in designing the plan is deciding on the method of payment for the sales force. not to be considered a substitute of books or the source straight salary type. insurance schemes. Drawing account. especially when an organization wants to emphasize certain activities with the primary aim of increasing profits. Fringe benefits have become a common method of compensation in most organizations. Fringe benefits may be in the form of retirement benefits. the level of payment should be established. its objectives must be stated.
Sales managers can motivate their team by following any of the theories of motivation. there are others who need to be motivated to perform. expectancy theory. goal-setting theory. Motivation in the sales function refers to the amount of effort a salesperson is willing to expend in the selling job. Herzberg's two-factor theory. drive and goal. It helps to initiate desired behavior in an individual and direct it toward the attainment of organizational goals. it is essential that the sales force is highly motivated. Further.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Satisfaction of the need in the individual cuts off the drive in him to work toward satisfaction of the need. safety or security. Maslow's hierarchy of needs theory. not to be considered a substitute of books or the source The basic ideas that one should acquire -Objectives of compensation plans Balancing the needs of personnel Managing effects of time -Characteristics of compensation plans Fairness to all Flexibility Provide incentive and motivation Lead to direction of efforts towards company objectives Ease of administration and comprehension -Types of compensation plans Straight salary Straight commission plans Combination salary plans -Designing compensation plans Determine specific objectives Establish desired levels of earnings Methods of payment Implementing compensation plans -Sales contests Planning sales contests Evaluating sales contests -Sales force expenses Expense plans Types of expense plans -Fringe benefits Elements in fringe benefit Advantages of fringe benefits Motivating the Sales Force A Summary Motivation is the process that produces goal-directed behavior in an individual. ICFMR’s promotional materials and various other open source as well as few authorized materials 36 of 68 . Physiological needs are the lowest order needs while self-actualization needs are the highest order needs. The effectiveness of the sales force plays a crucial role in the success and growth of an organization. social. Herzberg's twoWith inputs from. namely. and job design theories. as lower order needs get satisfied. self-esteem and self-actualization needs. While some salespersons are self-motivated. an individual strives to satisfy higher order needs. In order to attain the goals of the organization. Maslow's hierarchy of needs theory classifies the needs of an individual into five categories – physiological. Motivation consists of three elements – need.
Further.designed compensation plans and reward systems. well. and service-oriented. not to be considered a substitute of books or the source factor theory states that the job environment of an individual is characterized by two types of factors – hygiene factors and motivational factors. achiever. Such salespersons hence tend to have low productivity. The goal-setting theory presumes that people have specific needs and aspirations to fulfill for which they set certain goals for themselves. According to this theory. motivation is a function of expectation. The primary concern of sales managers is to motivate With inputs from. They then go about achieving these goals by taking purposeful action. Sales managers can take various measures to motivate the sales force and boost its productivity. Sales managers are increasingly concerned about the need to motivate salespersons as they move through various stages in their career. the personality traits of the salesperson play a vital role in influencing his motivation. The expectancy theory states that an individual is motivated by the perceived consequences of his or her actions. lack motivation tend to be poor performers and fail to achieve their sales targets. sales contests. and that ensuring certain job characteristics can satisfy these needs. On the other hand.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. etc. valence and instrumentality. ego-driven. ICFMR’s promotional materials and various other open source as well as few authorized materials 37 of 68 . Salespersons having a high level of motivation tend to perform well in the selling job and have high productivity. Salespersons can be divided into four types – competitor. setting higher goals produces higher output. A salesperson's motivation plays a crucial role in influencing his performance and thereby his productivity. among salespersons who. Job design theories assume that all individuals have the same needs. Further. These measures can be in the form of sales quotas.
task. and With inputs from. Effective leaders. Thus. These include the personal characteristics or traits of the sales manager. Also. consistency.expert. assertiveness. not to be considered a substitute of books or the source salespersons in the various stages of their career to direct them toward greater selling efforts and enhanced sales performance. A salesperson's career passes through four stages – exploration. ICFMR’s promotional materials and various other open source as well as few authorized materials 38 of 68 . reward. and an eye for talent. empathy. ego strength. There are several characteristics that make a sales manager an effective leader of his sales team. maintenance and disengagement. enhance the morale of their subordinates and followers and lead the organization towards success and growth. or an objective. on the other hand. establishment. the need and motives of the manager determine how successful he will be as a leader. risk taking ability.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. There are five bases of power available to a sales manager -. urgency. his needs and motives. effective leadership is not optional but a prerequisite for success of an organization. referent. The personal characteristics of a sales manager that make him an effective leader include clarity. The bases of power that a sales manager is equipped with determine his ability to lead the sales force. The basic ideas that one should acquire Concept of Motivation -Motivational Theories Maslow’s hierarchy of needs theory Herzberg’s two-factor theory Goal setting theory Expectancy theory Job design theories Motivation and Productivity of the Sales Force -Effect of Personal Characteristics on Sales Force Motivation Competitor Achiever Ego-driven Service-oriented Sales motivational mix -Motivating the Sales Personnel at Different Stages of their Career Exploration stage Establishment stage Maintenance stage Disengagement stage Leading the Sales Force A Summary Leadership is a process wherein one person influences others to accomplish a mission. innovativeness. ego drive. the bases of his power as well as his past experience. A weak leader heading an organization tends to demotivate others in the organization. legitimate.
and situational leadership. Accordingly. namely. and interpersonal skills. high task behavior-low relationship behavior. a sales manager should possess certain soft skills or people-focused skills. The traditional leadership styles include autocratic. intellectual stimulation. To be effective as a leader. communication.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. administrative. and individualized consideration. The leadership styles displayed by various sales managers can be broadly classified into traditional and modern styles of leadership. ICFMR’s promotional materials and various other open source as well as few authorized materials 39 of 68 . management-by-exception and follower's level of experience. Transactional leadership is based on contingent rewards. low task behavior-high relationship behavior and low task behavior-low relationship behavior. describes leadership along two dimensions -. democratic. These include the skills of delegation. consultative. team-building. high task behavior-high relationship behavior. bureaucratic. the model describes four leadership styles. and laissez-faire leadership. Modern leadership styles include transactional or transformational leadership. The situational leadership model. Transformational leadership is characterized by charisma.task behavior and relationship behavior. a widely accepted style of leadership. inspirational motivation. The basic ideas that one should acquire Nature of leadership -Characteristics of an effective leader With inputs from. not to be considered a substitute of books or the source coercive power. Past experience of the sales manager is also one of the characteristics that influence his leadership behavior.
Performance evaluation can also help in improving the relationships between the sales force and superiors by minimizing suspicion and improving interaction. It exerts an influence on the With inputs from. not to be considered a substitute of books or the source Personal Characteristics of the Manager Needs and Motives Bases of Power Past Experience -Leadership Styles of Sales Managers Traditional Leadership Styles Modern Leadership -Skills Essential for a Leader Delegation skills Communication skills Team-building skills Administrative skills Interpersonal skills Evaluating Sales Force Performance A Summary One of the most important responsibilities of sales managers is to evaluate the performance of the sales personnel. The purpose of conducting performance evaluation is to crosscheck whether the sales force activities are in alignment with organizational objectives. Step three involves establishing performance standards that can be used as a basis to compare the performance of the sales force. A proper evaluation process ensures that the organization is well managed. height. ICFMR’s promotional materials and various other open source as well as few authorized materials 40 of 68 . etc. while some can be modified. The next step involves the selection of criteria that will be used to evaluate the performance. Some of these are beyond the control of the individual. it is necessary for the sales manager to put in place a performance evaluation procedure. personal factors like age. and empathy towards the customers are inherent in the individual salesperson. The factors affecting sales peoples’ performance are many. Ineffective performance appraisal tends to become a time-consuming and unpleasant activity for the sales manager as well as the sales personnel. It also helps monitor the sales force activities and provide remedial action. The first step is to determine the factors that affect the performance of the sales force. role perception. along with the different functions of sales management come under external factors. The performance evaluation process generally involves five steps. job satisfaction. The performance appraisal period can become one of those times that a salesperson dreads. the ego drive. Environmental and organizational factors. Performance evaluation also helps to prepare a future action plan for the sales personnel and fulfill the organizational objectives. It is difficult for the sales manager to predict the influence of the external factors on the performance of the sales force.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Aspects like motivation. unless the appraisal is effectively conducted. skill-set. if required. sex. It also provides the sales personnel with information on their performance and gives recommendations for further improvement. To measure performance. Step four involves monitoring actual performance. The last step is to review and provide feedback to the sales personnel.
In most organizations. regular monitoring and review of the sales force activities is also necessary to ensure that the organizational activities are aligned to the sales plan. Many methods of performance evaluation have been developed over the years. qualitative standards. or cost-based standards. there is no single method that can be considered ideal for all organizations.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.. fixing of sales quotas. Quantitative criteria are those aspects that measure the sales performance in terms of the end results whereas qualitative criteria involve all those activities that the sale person does to achieve the end results. The quantitative factors include the sales volume. have been developed to suit variations and other requirements. rating scales. and the current objectives of the organization. management by objectives and behaviorally-anchored rating scales. territory management skills. Yet. ICFMR’s promotional materials and various other open source as well as few authorized materials 41 of 68 . Qualitative criteria include sales skills. Several modern methods like critical incident appraisal. These are also termed the behavior and outcome components. and decisions on the transfer or removal of the salesperson from the organization. it is the immediate superior or the sales manager who conducts the performance appraisal. the costs involved. work-standards method. The sales manager or the concerned person involved in appraising the sales force can take the help of quantitative or qualitative criteria. Periodic performance appraisal is necessary to identify any discrepancies in the overall sales plan and correct them. along with the sales manager. etc. appraise the sales personnel. Some of the commonly used methods are essays. sales orders. The standards vary from industry to industry and are different for different job profiles. Performance standards come under quantitative standards. etc. family of measures. average calls per day. Finally. etc. All the sales force activities can be segregated into one of these four categories and compared with the base standard. It depends on the complexity of the sales plan. time-based standards. rankings. The timing of appraisal also varies for different organizations. The sales manager must ensure that the performance standards are set to compare and evaluate the actual performance of the sales force. personality traits. Sometimes a team of people including the personnel manager and the department head. The basic ideas that one should acquire Sales Force Performance -Determinants of Sales Force Performance Internal Factors External Factors -Performance Evaluation Purpose and Reasons Who should Evaluate When to Evaluate Information Sources for Evaluation -Criteria for the Evaluation of Sales Force performance Qualitative Quantitative Establishing Performance Standards -Methods of Sales Force Evaluation Essays Rating Scales Forced Choice Method Ranking New Methods of Evaluation With inputs from. not to be considered a substitute of books or the source mode of compensation.
piggybacking with local distributors. socio-cultural and political conditions in different countries. many companies have started looking at international opportunities. direct or indirect exporting. business approach and personal philosophy. makes selling in international markets a challenging task. selection. expectations. franchising. With increasing competition. first-mover advantage and faster growth rate of the economy in comparison to the home market.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. The basic ideas that one should acquire -Role of the Sales Manager in the International Market Basic-level functions Advanced Level Functions International Sales and Marketing Opportunities -Challenges in International Sales Management Economic Environment Legal Environment Cultural Environment With inputs from. using intermediaries or operating independently by establishing a direct sales force. joint-ventures and wholly-owned subsidiaries. scale and mode of entry are also crucial to the success of a company. Companies can adopt different structures while operating in foreign markets. The timing. An awareness of the recruitment. The strategic issues to be considered pertain to the marketing mix. training and compensation procedures for the sales force appropriate for the host country is necessary to successfully operate in different regions of the world. An awareness of various strategic issues is necessary to ensure success in foreign markets. not to be considered a substitute of books or the source International Sales Management A Summary Globalization has opened up markets and provided hitherto untapped opportunities to companies across the world. strategic alliances. International sales management plays an important role in implementing the marketing policies and selling programs of the company in the foreign market at the ground level. attaining low costs of labor and manufacturing. green-field investments. A thorough understanding of the overall operations of the organization in the global context. These include use of long-distance selling. The decision to enter and operate in international markets is a strategic one. economies of scale. sources of information and mode of entry into the foreign market. ICFMR’s promotional materials and various other open source as well as few authorized materials 42 of 68 . licensing agreements. Companies enter foreign markets in search of opportunities. These pitfalls may be in the form of economic. turnkey contracts. most organizations employ local people to sell their products. an open approach to multi-cultural differences and the ability to implement both the basic and advanced levels of sales management functions is necessary for the sales manager to succeed. An awareness of the pitfalls that accompany entry into foreign markets is also necessary to fully reap the benefits. Finally. changing customer needs and stagnation of demand in domestic markets. due to differences in culture and traditions and associated problems. Variations in economic. The modes of entry include long-distance selling. are some of attractions that woo companies to enter these markets. It requires a great deal of sensitivity to local customer needs. The chances of diversifying the market base. The international sales manager plays the crucial role of planning and organizing this effort and ensuring that the desired results are obtained. socio-cultural and legal factors.
the increasing shortage of raw materials. The various types of With inputs from. receiving. materials handling. price. the growing complexity of product lines. and the perceived need for an effective system of computerized inventory control. Communication using satellite technology and sophisticated devices makes it possible for the various players involved in the logistics chain of processes to remain in constant communication with one another and with the end customer. Effective logistics management requires that the actual status of goods and services be communicated in real-time to the various groups of people involved in the logistics process. ICFMR’s promotional materials and various other open source as well as few authorized materials 43 of 68 . Since competitors can easily imitate each of these competitive advantages. inward transport. parts. or promotion. need for location of retail outlets closer to the market. Logistics is a complex process and involves several functions such as procurement or purchasing.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Logistics is a complex process by which companies transport products. place. and returns & waste disposal functions. This helps logistics service providers to improve their service by keeping a closer watch on inventory and taking the steps necessary to avoid losing customers. stock control. physical distribution management. the emphasis on building a sustainable competitive advantage has made companies focus their attention on logistics. These reasons include wider availability of alternatives to maintain cost and service standards. and materials from the place where they are manufactured to the place where they are required. Technology is playing a key role in communication as well as in other processes in the logistics function and helping logistics firms to attain a competitive advantage. order picking. which provides such a means for companies to successfully differentiate themselves from competing firms. warehousing. There are several reasons for the overriding importance being given to logistics by businesses across the world. outward transport. not to be considered a substitute of books or the source -Strategic Issues for International Sales and Marketing Marketing mix-Adapt or Standardize ? Obtaining International Information Entering Overseas Markets -International Sales Techniques Preliminary Selling Advanced Selling Time and Territory Management -Structures for International Sales Organizations Long-Distance Selling Manufacturer’s Representatives Piggybacking Intermediaries Establishing Direct Sales Force Abroad -International Sales Management Practices Recruitment of Sales Personnel Selection of Sales Personnel Training and Development of Sales Personnel Sales Incentives and Compensation Marketing Logistics A Summary Companies today are finding it extremely difficult to maintain their competitive advantage over others purely on the basis of innovative strategies pertaining to the product. recycling.
and bar coding and scanning. firms face several challenges. artificial intelligence. modes of transport. businesses are beginning to realize the need to focus on their logistics strategy in order to efficiently maintain their supply chain capabilities. expert systems. In their efforts at logistical management. communication technology in the form of satellite and wireless communication. ICFMR’s promotional materials and various other open source as well as few authorized materials 44 of 68 . which may be local or global in their scope. and purpose.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. need to integrate supply chain activities. It is necessary to streamline the logistics process to maintain the efficiency of the logistics network. not to be considered a substitute of books or the source technology being implemented in logistics activities include Electronic Data Interchange. cultural and political differences. In addition to integrating information technology and advanced logistical approaches into their business operations. While the need for integration of logistics activities and lack of qualified personnel are the primary challenges faced in logistics management at the local level. A logistics strategy examines logistical operations and activities and provides logistical firms with a sense of unity. need for flexibility and speed. direction. It helps firms involved in the business to attain a competitive advantage over others by allowing them to promptly respond to the opportunities and threats in the business environment. globalization. documentation. The basic ideas that one should acquire Logistics and its importance -Functions in Logistics Management Procurement /Purchasing Inward Transport Receiving Warehousing Stock Control Order Picking Materials Handling Outward Transport With inputs from. the global challenges include challenges arising due to greater distance. coordination of intermediaries. and challenges due to emphasis of companies on green logistics.
They facilitate the search process of buyers and sellers. ownership. As the product moves through different stages. The channel design has to be meticulously planned taking into consideration the channel functions and other strategic business objectives. from being production-oriented to customer. any marketing channel witnesses eight basic types of flows. Channel members play a dominant role in moving products across the marketing channel. Marketing channels ensure the smooth flow of products between channel members. risk. ICFMR’s promotional materials and various other open source as well as few authorized materials 45 of 68 . In the process. and Waste Disposal Importance of Communication in Logistics -Technology in Logistics Electronic Data Interchange (EDI) Artificial Intelligence Expert Systems Communication Technology Bar Coding and Scanning Streamlining the Logistics Process Strategic Issues in Logistics Management -Local and Global Challenges in Logistical Management Local Challenges Global Challenges Marketing Channels A Summary A marketing channel acts as a differentiating factor and provides businesses with a competitive advantage. financial. negotiation. These are flow of possession. ordering and payment. Marketing channels comprise several individuals and interdependent organizations that facilitate the process of making a product or service available to end users. The evolution of marketing channels has primarily been a response to changes taking place in businesses due to the environment. The basic ideas that one should acquire -Evolution Of Marketing Channels The Production Era The Sales Era The Marketing Era Relationship Marketing Era -Channel Members and Their Roles With inputs from. logistics and other supporting functions. Each flow is associated with certain costs. These involve all activities that facilitate the flow of products from the manufacturer to the end user. Therefore.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. They also perform the role of sorting. it is necessary that marketing channels be designed to eliminate redundancy of flows. making transactions routine and contractual efficiency. The most important elements in channel design are channel structure. marketing channels perform several functions. Marketing channels have evolved over time. promotion. Designing an appropriate marketing channel is crucial to the success of a business. channel intensity and the type of intermediaries at each level. Returns.centric. In addition.. different members in the distribution channel perform the functions of exchange. not to be considered a substitute of books or the source Physical Distribution Management Recycling.
increased efficiency in inventory management. companies have adopted vertical marketing systems. bridges the time. It is an arrangement within a distribution channel in which two With inputs from. better economic control. one of the channel members may own the others. In this form of integration. and variety gaps between production and consumption and reduces the business opportunities lost due to stock-outs and delayed delivery. stability in operations. Contracts direct the channel members to cooperate with each other for mutual benefits. A horizontal marketing system is another approach that has gained widespread support. companies have realized that effective distribution systems can be a source of competitive advantage. decrease in costs leading to better competitive advantage. Here. The benefits of VMSs include improved profitability. reduces business opportunism. increased ability to respond to changing market needs. small firms come together and form a system. space. Contractual VMS consists of independent firms operating at different channel levels and forming a system on a contractual basis. the world over produce millions of dollars worth of goods for consumers. not to be considered a substitute of books or the source Roles of Channel Members Channel Functions -Designing Marketing Channels Channel Structure Channel Intensity Types of Channel Intermediaries at Each Level Channel Flows and Costs Channel Integration A Summary Companies. contractual. and reduction in risks arising from competitor actions. It reduces transaction costs. Channel integration involves streamlining the different channel activities and information flow in a manner that leads to mutual benefits to all the partners concerned. The three types of VMS’s are administered. one of the channel members exerts complete control over the rest of the channel partners and everyone follows the objectives and procedures as dictated by this dominant channel member. Franchising is one of the best known forms of this system. and corporate. The other popular forms of contractual system are the retailer-sponsored cooperative organizations (RCOs) and the wholesaler sponsored voluntary organization (WVOs). or develop a contractual arrangement with the different channel members. better control on the product quality. ICFMR’s promotional materials and various other open source as well as few authorized materials 46 of 68 . Companies can develop their own distribution channels or delegate the functions to different channel members through channel integration. An administered VMS is similar to a conventional distribution system except that there are greater inter-organizational relationships and sharing of an overall objective. improved marketing know-how. acts as a barrier to new entrants. To gain the advantages of integration. influence the others due to better bargaining power. VMSs have emerged as the dominant mode of distribution over the traditional systems. Over the last few decades. A new concept that has emerged is value-added partnerships. These goods reach the end-consumer through a maze of distribution systems. improves inventory management. In a VMS. In a corporate VMS. Another principal benefit that prompts many companies to vertically integrate is differentiation. The advantages of channel integration are manifold.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. each participating channel member performs a single channel function at a particular channel level.
In the recruitment process. To effectively manage the hybrid channel system. experience factors. and the benefit of developing a customized approach to selling and distribution of products. The basic ideas that one should acquire Importance of Channel Integration Vertical Marketing Systems -Types of Vertical Marketing Systems Corporate VMS Administered VMS Contractual VMS -Benefits and Costs of Vertical Marketing Systems Benefits Costs Horizontal Marketing Systems -Hybrid Channel Systems Designing and Managing Hybrid Channel Systems Channel Management A Summary Managing channels is one of the most important dimensions of businesses across the world for improving their value in the market. when purchasing goods. The advantages of using hybrid channels include better product promotion.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Effective channel management helps companies decrease costs and reach potential customers profitably. administrative factors and risk factors. With inputs from. screening involves elimination of applicants who do not match the criteria set for the position. assess its magnitude. These criteria can be divided into sales factors. Modern information systems have enabled organizations to effectively manage the hybrid channels and avoid overlap of activities and draining of resources. increase in market and customer coverage. identifying the channel mix properties and selecting the number of channels that will bring about the desired outcomes. telemarketing. the company has to make the final selection based on some criteria. and retail selling. not to be considered a substitute of books or the source or more firms at the same channel level work towards a common goal. and analyze the time needed to solve the conflict. Hybrid channel systems develop when organizations begin to use a number of channels to sell their products. the manager must be able to identify the source of any conflict. reduction in transaction costs. observe the reaction of customers and channel members. ICFMR’s promotional materials and various other open source as well as few authorized materials 47 of 68 . the participating organizations usually operate in different segments and are unrelated. In this system. Recruiting channel members should be a continuous process. Effective channel management involves proper recruitment of channel members. Most companies operate through a strategic alliance or a joint venture. catalog selling. The advantage of this type of arrangement is that the firms pool together resources and skills the others do not have. with the objective of exploiting the available market opportunity. Designing hybrid systems involves identifying the tasks required to fulfill the desired objectives and then segregating the selling tasks and assigning them to the respective channels. These channels include a direct sale force. product factors. Customers are constantly on the look out for convenience and service. direct mail. Designing hybrid systems involves determining the channel characteristics. After effective screening.
An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. While channel efficiency emphasizes controlling costs incurred by intermediaries while performing channel functions. The performance of intermediaries is measured on three scales. The basic ideas that one should acquire -Recruiting Channel Members Recruiting as a Continuous Process Recruiting Manufacturers Screening -Criteria for Selecting Channel Partners Sales Factors Product Factors Experience Factors Administrative Factors Risk Factors -Motivating Channel Members Distributor Advisory Councils Evaluating Channel Members -Modifying Channel Arrangements PLC Changes Customer-Driven Refinement of Existing Channels Growth of Multi-Channel Marketing Systems -Managing Channel Relationships Cooperation and coordination Conflict Power Evaluating Channel Performance A Summary The performance of a channel can be measured across multiple dimensions. efficiency. productivity.level is evaluated through societal contributions of intermediaries. care should be taken in dealing with channel members for proper channel management. namely facet. channel members’ cooperation in promotional and training programs. proper management of inventory. equity and profitability of the channel. channel productivity is concerned with maximizing outputs for a given level of inputs. average inventory levels. adaptation and pattern maintenance. etc. The parameters that are measured usually are effectiveness. Channel effectiveness deals with the intermediary’s proficiency in satisfying customer needs and channel equity measures the distribution of accessibility of the channel among customers. they have to be constantly evaluated and based on their performance. Channel members can be evaluated by using parameters like sales quota attainment. global and composite scales. integration. not to be considered a substitute of books or the source After selecting channel members. While performance at a macro. the company will either retain existing channel members or try to forge relationships with new channel members. The distribution requirements of a company will keep changing according to changes in the product life cycle. Conflict management among channel members is another important activity for the management of the organization. a micro. However. With inputs from.level evaluation involves assessing the performance of individual intermediaries in terms of achieving the manufacturer’s objectives of goal attainment. Modifying channels accordingly is essential for the success of the organization. ICFMR’s promotional materials and various other open source as well as few authorized materials 48 of 68 .
Marketing channel strategies and channel structures are also important sources of conflict. arbitration and mediation. An effective distribution channel can provide channel services demanded by customers and extend its capacity within the constraints of the market environment. horizontal or multi-level. They can originate from competing roles. While the channel profitability is assessed using the Strategic Profit Model from a broader perspective. Activity Based Costing and Direct Product Profit are used for detailed analysis of channel performance. persuasion. They are primarily segregated into structural and behavioral conflict resolution strategies. Channel level conflicts may be vertical. Channel conflicts arise in channel systems when one or more channel members start perceiving the behavior and actions of another channel member as an impediment to goal attainment. To ensure effective coordination and channel functioning. the success of a channel and its efficiency are determined by the efficiency of channel intermediaries in delivering goods and services to customers and the quality of services offered in the process. Based on the timing of conflicts. different conflict management techniques can be used. There are many sources of channel conflicts. problem solving. ICFMR’s promotional materials and various other open source as well as few authorized materials 49 of 68 . cooptation. Channel conflicts can be of different types. Thus. They can be primarily divided into pre-contractual and post-contractual conflicts and conflicts based on channel levels. Another pivotal factor for channel performance is the quality of services offered through the channel. Channel members can also resolve conflicts by exchange of personnel between channels and by association with different trade organizations. his or her channel profitability that is concerned with his or her financial performance is also evaluated. not to be considered a substitute of books or the source In addition to an intermediary’s performance in meeting supplier aims. they are divided into conflicts that arise before channel members enter into agreements and those that arise after channel members enter into agreements. Some commonly used strategies include negotiation. clash of domains and differing perceptions of reality.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. The basic ideas that one should acquire -Performance Measures in Marketing Channels Channel Performance at a Macro Level Channel Performance at a Micro Level -Models to Diagnose Channel Profitability Strategic Profit Model Economic Value Analysis -Appraisal of Channel Members’ Contribution Activity based costing Direct product profit Result of Channel Performance Managing Channel Conflicts A Summary All channels are based on the premise that anyone joining the channel and performing channel functions stands to benefit. With inputs from.
Creative and effective channel leadership results in channel members moving towards shared goals. McKesson’s ECONOMOST system. Point-of-Sale Systems (POS). Power sources are usually effective when wielded by channel leaders. They vary for business-to-business applications. not to be considered a substitute of books or the source Channel power is also frequently used as a conflict management tool. PrecisionCode. business to consumer applications and interactive applications for consumers. Archer’s Retail Database Management With inputs from. The hardware. United Airlines and American Airlines’ Apollo and Sabre systems. Channel leaders can use referent. expert. coercive and reward power to minimize channel conflicts. Analytic Systems Automatic Purchasing (ASAP) by Baxter Healthcare. If this ideal situation is achieved. Efficient Consumer Response System (ECR).An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. ICFMR’s promotional materials and various other open source as well as few authorized materials 50 of 68 . are some commonly used information systems. software and networks vary depending on the application requirements of channel members. Information systems have revolutionized the way information is collected. DataDesigns. processing and transmission of information.. Channel information systems comprise an information database and the hardware and networks that help in the collection. legitimate. They add value to the distribution function and enable channel members to integrate different channel functions. Continuous Replenishment Program (CRP). retailing applications. Quick Response System (QR). Lengthy channels have given way to shorter and highly efficient distribution systems. which was not possible in conventional distribution systems. Many companies have developed information systems to suit their needs. stored and transmitted between channel members. The basic ideas that one should acquire -Sources of Conflict Goal Incompatibility Differing Perceptions of Reality Clashes over Domains -Types of Conflicts Pre-contractual and Post-contractual Conflicts Channel Level Conflicts -Conflict Management Techniques Negotiation (Bargaining) Persuasive Mechanism Problem-solving Strategies Political Strategies Co-optation -Channel Leadership Role of Leadership Power in Resolving Conflicts Channel Information Systems A Summary Information technology has made a big difference to channel operations and management. Channel information systems have also influenced the structure of distribution channels. Transaction-Based Information System (TBIS). Electronic Data Interchange (EDI) etc. distribution channels will be in a better position to satisfy the demands of target customers and maximize profits of individual channel members. Johnson & Johnson’s Cooperative Action Plus (COACT) and Abbott’s Quik Link information systems are some successful information systems.
retail inventory levels. Information systems have a profound impact on channel member relationships. Channels differ based on the type of channel members involved in cooperation and the extent to which members cooperate. The basic ideas that one should acquire -Elements of Channel Information Systems Hardware and Networks in an Information System Databases for Channel Information Systems -Impact of Information Systems on Channel Flow Transaction flow Inventory flow Distribution flow Promotional flow Negotiation flow -Impact of Information Systems on Channel Relationships Power Conflict Cooperation and Coordination With inputs from. CIS has influenced the physical distribution of products or distribution flow. Different channel systems include consensus systems. Many retailers like Wal-Mart have developed efficient information systems that offer them substantial leverage over their suppliers. Some common issues that give rise to conflicts are minimum order size. retail promotion and performance management and the issue of retailers carrying competitors’ products. Transaction flow. which allowed them to influence downstream channel members.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. Coordination and cooperation among channel members have greatly improved due to CIS. Channel cooperation and coordination have led to successful and profitable relationships at different levels in the channel – between manufacturers and suppliers. Channel Information Systems (CIS) have influenced the way in which different channel functions are performed. not to be considered a substitute of books or the source System (ARDMS) and Product Information Management System by IBM are examples of database systems developed by companies. However. EDI systems have reduced asset specificity. complexity of product specifications and coordination costs. vertical systems. intensity of conflict and the extent of cooperation and coordination among channel members. retail assortment. ICFMR’s promotional materials and various other open source as well as few authorized materials 51 of 68 . They influence the balance of power. Information is easily available to all channel members. It has streamlined operations leading to improved channel flow. horizontal systems and inter-type systems. resulting in an increase in trust and commitment. suppliers and retailers and between manufacturers and retailers. the use of channel information systems minimizes the chances of conflicts. inventory flow and negotiation flow have improved with the advent of information technology in channel management. speed of delivery. promotion flow. This has led to a shift in the balance of power among channel members. Even manufacturers like Philip Morris have conducted extensive programmes to build an exhaustive database about consumer preferences. CIS has also changed the order in which different functions are performed. CIS reduce conflicts that may arise between supplier and retailer due to differences in different channel functions. CIS has changed the dynamics of power among channel members. Channel members have opted for collective goals over individual goals and have started looking for benefits to the channel as a whole.
new product development. demographic factors. Depending on the product ownership and services offered. In the process of distributing the manufacturer’s products to other intermediaries. Present day wholesalers are keen on using IT to meet their information and communication needs. This depends on the number and type of customers. IT has a profound impact on the way wholesalers conduct their business. agents etc. The future of wholesaling will be dominated by consolidations. With inputs from. The wholesaler has thus evolved from being an intermediary using traditional methods of distribution to one who is IT savvy. place. sales management. technology. product positioning. and making competitive marketing information available to suppliers and retailers. competition. order processing. These are further comprised of various types of wholesale organizations. wholesalers can be classified into merchant wholesalers. customized pricing and credit policies.. Wholesalers have evolved into big corporate organizations due to better regional coverage. if they are not properly planned and controlled. and transporting them. extending credit to customers. inventory replenishment. etc. The wholesaler also has to take decisions pertaining to the products to offer. agents and brokers. who act as intermediaries in the distribution of goods and services from the producer to the endconsumer. there has been a growth in the business of wholesaling. are inventory management. pricing. retailers. The use of IT has not only hastened communication and information sharing but its role in the business processes like assortment planning. Wholesalers have overcome various limitations of the past but they still have more challenges to overcome in the near future. has made these processes faster and efficient. Changes in the business environment after the opening up of the economy have caused wholesalers to adapt to these changes and modify their operations. and restructuring and will be strongly influenced by e-commerce and Internet technologies. There is a critical need for organized and stored information for taking any business decision. storing. and globalization have changed the wholesaling scenario the world over. and financial planning and management. These functions involve buying the products from the manufacturer. not to be considered a substitute of books or the source Wholesaling A Summary A distribution channel comprises various channel members like wholesalers. promotion management. grading the products according to quality. Some major areas of concern that can adversely affect the profitability of a wholesaler.. and facilitating in nature. better service to the customers and erosion of functional boundaries. A wholesaler’s functions can be transactional. wholesalers have to take several strategic decisions. assorting.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. in India too. and promotional activities. etc. ICFMR’s promotional materials and various other open source as well as few authorized materials 52 of 68 . Wholesalers form a critical link in the distribution channel and help manufacturers in making their products available to the consumers in adequate quantity at the right time and place. logistical. A wholesaler has to decide on the target market he wishes to serve. Information sharing plays a dominant role in a distribution channel due to the number of intermediaries involved and complexity of the channel structure. A changing lifestyle. and manufacturer’s wholesalers. As elsewhere in the world.
Based on the type of store strategy. Retailing is an emerging sector in India and has a lot of potential. conventional supermarkets. franchise retailers. not to be considered a substitute of books or the source The basic ideas that one should acquire Wholesaling and its importance -Types of Wholesalers Merchant Wholesalers Agents and Brokers Manufacturer’s Wholesalers -Strategic Issues in Wholesaling Target Market Decisions Marketing Mix Decisions -Trends Shaping Wholesale Distribution Functional Overlap Increased Services Pricing and Credit Regional Coverage Organizational Form and Size Impact of Information Technology on Wholesaling -Challenges in Wholesaling Inventory Management Sales Management Promotion Management Financial Planning and Management Wholesaling in India Future of Wholesaling Retailing A Summary Retailing consists of all activities that involve selling goods or services to the final consumer for personal consumption. With inputs from.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. ICFMR’s promotional materials and various other open source as well as few authorized materials 53 of 68 . Retailing plays an important role in national development.developed nations. membership clubs. retailers are primarily divided into food retailers and general merchandise retailers. combination and limited-line stores. Based on the extent of ownership. They can also be classified based on extent of ownership. leased department and consumer cooperatives. intense competition. full-line discount stores. warehouses. Retailing also acts as a means for distribution of essential commodities to people in far. thrift stores and ―flea‖ markets. superstores. Food retailers include convenience stores. Retailers can be classified according to the kind of products and services they sell and the different strategies they adopt. innovation through technological development and the concepts of regression and assimilation. Many major developments have led to the development of various retail formats. These include the Industrial revolution. The retail environment has evolved over the years. off-price chains. type of store strategy. variety stores. retailers are classified as independent retailers. department stores. type of goods and services provided. chain stores. General merchandisers include specialty stores.flung areas in under. Another important role of retailing is that it acts as a means to provide a range of products to satisfy the ever-changing demands of consumers. It is a source of employment to many people. non-store based retailers and non-traditional retailing.
An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input, not to be considered a substitute of books or the source
In non-store retailing, traditional retail stores are not used to sell products. Non-store retailers use direct marketing (catalogue marketing and direct mail), direct selling (person-to-person selling, party plans, multi-level marketing) and automatic vending machines to sell products to consumers. Nontraditional retailers use new channels such as the Internet, video kiosks, and video catalogues to promote and sell products. Another type of classification divides retailers into goods-based and services-based retailers depending upon whether they sell merchandise or services to consumers. Retailers must address certain strategic issues to succeed in the highly competitive retail sector. Store location, store image, store size, promotional aspects and private store branding can be the cause of success or failure. Over the years, the retail industry has witnessed many trends linked to environmental changes. These include competitive, consumer, technological and economic trends. These in turn have led to other retail trends like micro-marketing, global retailing, ethnic retailing, retail diversification and the emergence of new retail formats. The future of retailing holds a lot of promise for the Indian economy. The Indian retail market is estimated at Rs 8,00,000 crores by 2005. Over the past decade, some retailers have successfully established their operations in India. Market observers predict that the Indian market can easily handle retailers worth $ 1 billion. Due to the enormous costs involved in developing the necessary infrastructure and logistics, the extent of future growth, especially the organized sector, which is only 2 percent of the total industry, depends on the measures and support offered by the government. The basic ideas that one should acquire
-Retailing and its Importance Importance to Consumers Source of Employment -Evolution of Retailing Wheel of Retailing Industrial Revolution Competition and Trade-up Regression and Assimilation Innovation -Classification of Retailers Classification Based on Type of Ownership Store-based Retailers Non-store Based Retailing Non-Traditional Retailing Service Vs Goods Retail Strategy Mix -Strategic Issues in Retailing Store Location Retail Store Image Store Sze Promotion Role and Impact of Private Brands on Power of Retailers Trends in Retailing -Future of Retailing Global Retailing Retailing in India
With inputs from, ICFMR’s promotional materials and various other open source as well as few authorized materials
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Ethical and Social Issues in Sales & Distribution Management
Everyone, at some time or the other, must surely have been sold a product that he or she did not need. Selling is a profession that has been widely criticized for the unethical dimensions associated with it. Ethics is the set of rules or standards that govern the conduct of a person or members of a profession. Ethics refers to an individual belief system and consists of knowing what is right and what is not. It forms a very important part of sales and is essential for lending integrity to a salesperson’s behavior. No discussion on ethics is complete without a reference being made to social responsibility. Social responsibility exemplifies ethical behavior and is defined as an individual’s or institution’s concern for the consequences of his/its actions as these might affect the interests of others in the society. Companies doing business with no regard to social responsibility run the risk of attracting the attention of environmental groups, earning negative publicity, and losing the goodwill of society. Therefore, companies try to instill a sense of ethics in their employees and conduct business in a socially responsible way. Indian companies are now more concerned with corporate social responsibility than ever before. Companies in the past were concerned more about making profits than anything else. But in recent times, firms have realized the importance of corporate social responsibility. Corporate social responsibility has been defined as the commitment made by businesses to contribute to sustainable economic development, to work with employees, their families, the local community, and society at large to improve the quality of life. CSR is a process that helps a firm to function ethically and make a positive contribution to the welfare of society. All companies are expected to imbibe values pertaining to corporate social responsibility in their mission and make CSR a part of the organizational policies. In order to fulfill their social responsibility, companies need to effectively communicate to the public about the company’s ethical policies, set high ethical standards for themselves, and evaluate themselves on ethical performance from time to time through means of ethical audits. Several countries have passed declarations and policies regarding CSR. The Indian Government has amended the Indian Companies Act, 1956, making it mandatory for companies to conform to certain provisions of this law in order to be accepted as responsible corporates. Although Indian companies have been indulging in philanthropic activities of some kind or the other, corporate social responsibility is a totally different field altogether. There is a much wider scope for corporate social responsibility in the Indian corporate scenario with its coverage extending to human rights, labor standards, as well as environmental issues. Companies in the current scenario are operating in an intensely competitive environment. Especially during the past 20 years, competition has been rapidly increasing due to globalization. According to the US Chamber of Commerce, companies may conduct business on any of the following four levels of social responsibility – obeying the law, meeting public expectations,
With inputs from, ICFMR’s promotional materials and various other open source as well as few authorized materials
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anticipating new social demands, and leading the way. The ethical behavior of an individual is influenced by that individual’s stage of moral development. An individual passes through three levels of moral development -- preconventional, conventional, and principled. In organizations, the management is largely responsible for the ethical or unethical behavior of its employees. A sales manager faces ethical issues that cover the ethical dilemmas of his sales people as well as the ethical aspects pertaining to his decisions regarding hiring and evaluating of salespersons, assigning territories, etc. The ethical issues facing a sales manager may be studied with regard to the sales manager’s relationship with his subordinates, the company, customers, and competitors. On the other hand, the ethical issues facing a salesperson pertain to the salesperson’s accountability to the top management, and his relationship with other salespeople and with customers. The basic ideas that one should acquire
Ethics in Business What is Social Responsibility? Evolution of Corporate Social Responsibility (CSR) -Levels of Social Responsibility Obeying the Law Meeting Public Expectations Anticipating New Social Demands Leading the Way -What Influences Ethical Behavior? Individual’s Role Organization’s Role -Management’s Ethical Responsibilities Ethical Issues Facing a Sales Manager Ethical Issues Facing a Salesperson
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not to be considered a substitute of books or the source Some key concepts With inputs from. ICFMR’s promotional materials and various other open source as well as few authorized materials 57 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
not to be considered a substitute of books or the source With inputs from. ICFMR’s promotional materials and various other open source as well as few authorized materials 58 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. ICFMR’s promotional materials and various other open source as well as few authorized materials 59 of 68 . not to be considered a substitute of books or the source With inputs from.
An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. ICFMR’s promotional materials and various other open source as well as few authorized materials 60 of 68 . not to be considered a substitute of books or the source Case 1 With inputs from.
ICFMR’s promotional materials and various other open source as well as few authorized materials 61 of 68 . not to be considered a substitute of books or the source Case 2 Case 3 With inputs from.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
ICFMR’s promotional materials and various other open source as well as few authorized materials 62 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. not to be considered a substitute of books or the source Case 4 Case 5 With inputs from.
not to be considered a substitute of books or the source Case 6 Case 7 With inputs from. ICFMR’s promotional materials and various other open source as well as few authorized materials 63 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
ICFMR’s promotional materials and various other open source as well as few authorized materials 64 of 68 . not to be considered a substitute of books or the source Case 8 Case 9 With inputs from.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input.
An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. ICFMR’s promotional materials and various other open source as well as few authorized materials 65 of 68 . not to be considered a substitute of books or the source Case 10 Case 11 With inputs from.
ICFMR’s promotional materials and various other open source as well as few authorized materials 66 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. not to be considered a substitute of books or the source Case 12 Case 13 With inputs from.
ICFMR’s promotional materials and various other open source as well as few authorized materials 67 of 68 .An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. not to be considered a substitute of books or the source Case 14 Case 15 With inputs from.
Almost never 4. Almost never 3. 5. Almost never 6. Almost always 4. Almost never 2. not to be considered a substitute of books or the source Student’s Evaluations of SDM Course This is to be returned to the faculty at the end of the course. Rarely 1. ………………………………………………………………………………………………………………………………. 5. Almost never 9. Sometimes 2. The methods of evaluating your work were fair. Almost always 4. Less than most courses 1. With inputs from. One of the best 4. ………………………………………………………………………………………………………………………………. Rarely 1. Sometimes 2. Sometimes 2. The instructor cleared up points of confusion for you. Almost never 7. 4. Frequently 3. Rarely 1. Almost always 4. 3. Frequently 3. Much more than most courses 4. Almost always 4. Rarely effective 1. Sometimes effective 2. ………………………………………………………………………………………………………………………………. Rarely 1. Much less than most courses 11. 5. The instructor provided useful feedback on your performance. Almost never effective 12. ICFMR’s promotional materials and various other open source as well as few authorized materials 68 of 68 . Almost never 10. 1. About average 2. One of the worst Any other suggestion for improvement of the Course 1. Almost always 4. The instructor showed a personal interest in helping you learn. Frequently 3. Rarely 1. 5. 2. 5. 5. ………………………………………………………………………………………………………………………………. Sometimes 2. Rarely 1. Sometimes 2. Overall. Almost never 5. More than most courses 3. Almost never 8. Rarely 1. Sometimes 2. Better than average 3. Frequently 3. What is your overall rating of this instructor’s teaching? 5. Almost always 4. Usually effective 3. Worse than average 1. 5.An over view of Sales and Distribution Management Pravat Surya Kar For circulation at RIMS as an academic input. The instructor was well prepared for class. how much do you feel you have learned in this course? 5. 5. 5. Rarely 1. Frequently 3. Almost always effective 4. Frequently 3. Frequently 3. The instructor explained course material clearly. 5. The instructor stimulated useful class participation. Frequently 3. Sometimes 2. The instructor used class time well. Almost always 4. Almost always 4. Rarely 1. Almost always 4. About the same as others 2. ………………………………………………………………………………………………………………………………. Sometimes 2. What is your overall rating of this course? 5. Sometimes 2. Frequently 3. The instructor inspired interest in the subject matter of this course.
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