Sales and Distribution Management

Dr. Prashant Mishra prashant@iimcal.ac.in

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

What is Personal Selling?
Involves Two-Way, Personal Communication Between Salespeople and Individual Customers Whether:
face to face, by telephone, through video conferencing, or by other means.

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

The Role of the Sales Force
Represent the Company to Customers to Produce Company Profit Sales Force Serves as a Critical Link Between a Company and its Customers Since They: Represent Customers to the Company to Produce Customer Satisfaction

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

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

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

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

• Suggestive selling

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

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

• Cross-functional • Account service rep

Some Traits of Good Salespeople

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

Step 2. Pre-approach

Step 3. Approach

Step 4. Presentation/ Demonstration

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

Step 6. Closing

Asking the Customer for the Order.

Step 7. Follow-Up

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

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

Sell ‘em Keep ‘em

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

• Qualifying: Evaluating a prospect’s potential

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

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

Creative Selling Process
Handling Objections
– Questions – Reservations

• • • •

Understand Concern Counterarguments Acknowledge concern Clues to process

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

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

• Reinforce relationship • Satisfied customers rebuy & recommend

Sales Management
Setting objectives

Planning

Organizing Organizing activities

Motivate, evaluate, & control

Controlling

Directing

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

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

Geographic Division
Vice-President Marketing

Regional Sales Manager

Regional Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

Sales Rep California

Sales Rep Pacific NW

Sales Rep Southeast

Sales Rep Northeast

Customer Type
Vice-President Sales

New Accounts Manager

Existing Accounts Manager

New Account #1

New Account #2

Existing Account #1

Existing Account #2

Product Line
Vice-President Sales

Snack Foods Sales Manager

Beverages Sales Manager

Sales Rep Sales Rep Eastern Region West’n Region

Sales rep Sales Rep Eastern Region West’n Region

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

Compensation Methods

Straight salary or wage Salary plus commission Straight commission

Quota-bonus plan

Commission with draw

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

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

Distribution Channel Design and Management

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

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

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

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

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

DISTRIBUTION

Distr ibution C hannel Functions
Information Transfer Payments Physical Distribution Risk Taking Communication Negotiation

Ordering Financing

Typical Channels of Distribution

ANUFACTURE R GENT ETAILER

ONSUME R

HOLESALER

Business-to-Business Channels

Direct

Wholesaler Agent

Business-to-Business Channel Trends

Infomediaries & Vertical Exchange

Conventional Distribution Channel vs. Vertical Marketing Systems
Conventional marketing channel Manufacturer Vertical marketing channel Manufacturer Wholesaler Retailer Consumer

Wholesaler Retailer Consumer

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

Administered
Leadership is Assumed by One or a Few Dominant Members

Contractual
Contractual Agreement Among Channel Members

Vertical Marketing Systems
• Corporate systems - total ownership

• Contractual - legal relationships

• Administered - strong leadership

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

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

Steps in Distribution Planning

Choosing a Distribution System
Intensive Distribution

Exclusive Distribution

Distribution Intensity

Selective Distribution

Intensive Distribution
Producer

Seeks to obtain maximum product exposure at the retail level

Retailer Retailer Retailer Retailer Retailer

Retailer Retailer Retailer Retailer Retailer

Retailer Retailer Retailer Retailer Retailer

Selective Distribution

Producer

Product is sold in a limited number of outlets

Retailer

Retailer

Retailer

Retailer

Retailer

Retailer

Exclusive Distribution

Product is sold in only one outlet in a given area

Producer Retailer

Developing Distribution Tactics
Selecting Channel Partners Managing the Channel of Distribution
Channel Leader Power Reward or Coercive Power

Economic Power

Legitimate Power

Distribution Channels & the Marketing Mix

Physical Distribution
When to order How much to order

Inventory Control

Order Processing
Received Processed Shipped

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

Physical Distribution Functions
Materials Handling
Moving Products Into, Within, and Out of Warehouses

Number Needed Where What Type

Warehousing

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

Rail

Water

Truck

Air

Pipeline

Internet

Channel Relationships
• Cooperation

• Conflict • Power
– Coercive – Expert – Legitimate

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

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

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

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

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

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

Other Distribution Management Issues
• Reverse distribution
One Coca Cola Distributor

• Ethical, Political, & Legal

Difficult

OK

One thousand retailers

Sign up to vote on this title
UsefulNot useful