MM02 Sales & Distribution Management

Assignment No.I
Assignment Code: 2011MM02B1 Last Date of Submission: 30th Sept 2011 Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A Ques.1 Briefly describe the personal selling process. How would the sales presentations differ in the following cases:(i)Selling a life insurance policy (ii)Selling office computers (iii)Presenting a new drug to physicians How do a sales manager plans for expansion of his sales team in coordination with HR Department of an organization? What are sales territories ? Why it is important to have sales territories ? How does sales manager decides and allocates sales territories to sales executives ? (5+7+8 marks) Ques.4 If the product is right and the sales presentation is right, there is no need to close the sale. Discuss. Section-B Case Study Vishal Julkas Dilemma Mr Vishal Julka works in a company that manufactures quality writing pens called Victoria and markets them in India through its own sales force and retail channels. It is already 7 p.m. but he is still in his office tying up loose ends of his work with a hope that tomorrow will be a better day for him in the office. He is the regional sales manager of the company and looks after the western Indian market. He has to see a few files and answer a few phone calls that have come over the day and he has not been able to respond due to his office work. He wonders whether, being a middle level manager, it is his job to promote sales, travel a lot, and also plan for the sales staff. He has to meet his clients and also talk to regional distributors regarding market expansion. Today is not an exception to any of the days in office. He went early to office to meet Sandeep Singh, the regional sales manger of south India, to finalize a joint sales forecast that they are planning to prepare for the coming year. Working with Mr Sandeep is not an easy job. He is a hard task master and does not compromise a bit in his work.

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He also called up the production managers of two of the plants located in Goa to find out the reasons for delay in the supply of the new range of pens to the west Indian market. The production people are not normally responsive to the market demands and they do not realize that the retail outlets have to keep a higher inventory level at this time of the year as educational institutions are going to open by June 15 across western India. The new product lines were test marketed last December and showed a big promise for the market. The phone calls were taking more than the normal time but he was able to speak to the production people by 11 a.m. Vishal was able to concentrate on the major projects he had planned for the day. After perusing for weeks he was able to collect the sales call reports of the sales representatives of his area for calculating total sales generated by each salesperson and find out the productivity and profitability of each salesperson in his territory. He has a strong feeling that the productivity of the salesperson can be improved by redesigning the territories and adjusting each salespersons area and quota for the territory so that they have to travel less and attend to the retailers more often than in the previous design. This is a major project and he needs to present his restructuring plan in the next meeting with the vice president (sales). Vishal went out of the office to the nearest Dominos Pizza point for a little longer than the normal lunch break. When he came back to office, he found a long list of phone calls he had to attend to immediately, including a phone call from vice president (sales). When he called the vice president (sales), he came to know that he had to allocate a major part of next days time to present a new incentive programme at the area sales officers meeting to be held at Hotel Taj, Mumbai. He wondered how many hours he would have to travel as there would be heavy traffic and it would take him more than an hour to reach the hotel to be in time for the presentation. The VP (sales) assured that all the material would arrive at his desk by late evening from his office and the presentation had to be prepared the same evening for next days meeting. After attending a few phone calls he cold come to the territory redesign project by 3.30 p.m. Just after that he had an appointment with one area sales manager (ASM) and had to spend at least an hour discussing the problems of his area and suggest some corrections in the sales promotion programme carried out in the area for the retailers. Then he had to collect the daily market reports over phone from two of his area sales managers. Mr Vishal looked at his watch and a write-up on the wall. The write-up read `so much to do, so little time. He took a breather and closed his eyes for a moment. It was about 7 p.m. and he realized there was no point in making official calls to the warehouse as most of the people in the warehouse must have left for home.

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The whole day had slipped out of his hand. He remembered that he had promised his wife to take her for dinner tonight as he had missed her birthday due to official engagements last week, but it seemed that he would cut a sorry figure again this time. He still had the material from the VP (sales) for review and a presentation to make next day. He had to find out a way to motivate the field sales force through the reward system and achieve the additional sales that had been planned for the new product line. The redesign of the territory was just a small assignment. He thought what else he could do in the evening so that the coming day would be better organized. He was thinking of calling home and saying sorry to his newly married wife Salinee. It had been more than three weeks and he had not been able to take his wife out for dinner. He thought that the only time he really had no work was when he went to the pizza corner across the road for his lunch. Many a day he feels so tired that he sleeps without dinner and the latest health report says that his cholesterol levels are alarmingly high. Case Questions 1. 2. Analyse Vishals job. Is it worth doing so much, at the cost of so many things? How is Vishals life similar to any salespersons life in general? What difference did you find between your life and that of Vishal? 3. What managerial skills are described in this case? Which skill is more important for Vishal to possess? Why? 4. 5. Why do you think that Vishal is handling too much (if you think so)? Is there a way out? Can Vishal manage his life in the long run? If so, please give suggestions. (4 marks each)

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MM02 Sales & Distribution Management

Assignment No.II
Assignment Code: 2011MM02B2 Last Date of Submission: 15th Nov 2011 Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A Ques.1 What type of distribution channels are applicable to:i)Insurance services ii)Hospitality services iii)Banking services What are sales targets / quotas . What are different types of quotas available to sales persons in an organization ? Discuss. What are the various parameters around which sales budget has to be set . Analyze those parameters ? Differentiate between channel management and physical distribution management. Section-B Case Study CK Rotors Pvt Ltd. CK Rotors is a small-scale industry located in Coimbatore, Tamil Nadu, which has recently started manufacturing ceiling fans to be sold through retail outlets. The market for ceiling fans is highly fragmented with small players like CK Rotors commanding around 60% of the market share. The company has its factory in Coimbatore with a capacity of making 200 fans a day. However, due to lack of demand, hardly 60% of the capacity is presently used. The company is planning to expand this capacity once it establishes itself in the market. Presently, due to production constraints the company is only concentrating on the markets of Kerala and Tamil Nadu. It has appointed 10 distributors in Kerala and 20 distributors in Tamil Nadu. These distributors can act as wholesalers as well as retailers. Mostly, the distributors are expected to sell fans in the local market. Each distributor can supply to as many retailers as possible but it may not be practical to expect one distributor to supply to more than 20 retailers. Distributors are given a discount of 5% while the retailers are allowed to charge a margin of 15%. These rates are comparable to that of the other competitors in the industry. The gross margin to the company from each fan is around 30%. However, if the plant is producing to full capacity, the gross

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margin is expected to go up by another 10 to 15%, since a big portion of the manufacturing cost incurred by the company consists of fixed costs. The distributors are given a credit period of two weeks. The company makes 10 varieties of ceiling fans in three particular colours. Since the company produces as per the orders, the 10 varieties are not produced in equal quantities. Since most of its fans are priced less than its competitors, there is a demand for the companys products in the market. In the past five months the company has observed the demand pattern for the fans shown in Table given below. Product number 1 2 3 4 5 6 7 8 9 10 Weekly demand forecast 100 100 80 70 70 70 80 80 90 70 Weekly forecast error 12 9 13 10 9 8 10 9 8 9 350.00 420.00 430.00 450.00 470.00 490.00 510.00 530.00 560.00 575.00 Unit price (Rs) Lead days 10 12 11 14 12 10 11 12 14 14 time in

The price indicated is the price charged from the distributor by the company. The order processing is done manually. There are two clerks who are responsible for this. The order processing costs at the company is estimated to be around Rs 5.00 per order. Being a small player, the distributors are not very keen about spending their working capital on carrying the inventory of CK Rotors. Consequently, the company has noticed that at the retailers end, a lot of stockouts of some of the popular models occur. It has been observed that dealers reorder after consolidating orders from their retailers and generally are not interested in carrying minimal inventory. Once the stock reaches the distributor, it is transported to the retailer within a day. It is of course difficult to assess the level of inventory maintained at the retailers end, but since stockout occur it is assumed that they do not stock products adequately. Table given below the ordering frequently of the dealers.

Ordering frequency Twice in a week Once in a week Once in two weeks Once in three weeks

No. of dealers 4 10 10 6

Approximate no. of retailers served by these dealers 25 60 55 35

Due to intense competition, the sales lost due to stockouts are gained by the competitors. At the companys end, it is not possible to decrease the lead time unless more capacity is added to the plant. The lead time is caused due to (i) two days for order transmittal (ii) one day for order processing at the

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company, (iii) five to seven days for manufacturing, and (iv) two days for dispatch. The company engages a transporter for transporting products. The transportation cost is estimated to be 1% of the value of goods. The transportation from the distributors end to the retailers is the responsibility of the distributor. In order to avoid paying sales tax twice, the company has set up a small office in Kerala to which the goods are documented as `stocktransferred before sales. The company by keeping large amount of inventory as its factory. While the company keeps some inventory, due to working capital constraints, it is not in a position to enlarge its inventory carrying cost is forecasted to be about 25% of the inventory per annum. The company feels that if the lead time is reduced the distributors will be pressurized to sell more. This is based on the logic that while due to the small size of the company it is impossible to put pressure on the distributors to carry more inventory, a shorter lead time will ensure greater flow of goods through the chain. While this would not lead to higher levels of stock, it will certainly reduce incidents of stockouts. This is because in the present system, when the retailer does not order at the recorder level or if the market demand is greater than expected, the retailer is out of stock for more than 10 days in most instances. During this time, the customer demand is met by the other brands since the customers usually do not wait for more than two to three days for order fulfillment. There are a few options in front of the companys management. The first one is to produce to full capacity and stock goods at two warehouses: one located in the factory itself to meet the needs of the Tamil Nadu market while another in Kerala. The second option is to automate the order processing and production planning process by installing computers in the factory. This also requires order transmittal through phone or some other electronic means on the part of the dealers. Both the process entail costs to the company in terms of the fixed costs incurred as well as the variable costs. The first option is also expected to reduce the transportation costs as less than one truckload inventory will now be transported through small distances instead of long distances as the previous system used to. Case Questions 1. 2. 3. Which alternative should the company pursue and why? How are the costs of distribution interlinked? Is there any other alternative than the two presently being contemplated? (6) (7) (7)

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