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Integration of Sales and Distribution Strategies Final 2003(1)

Integration of Sales and Distribution Strategies Final 2003(1)

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Published by: Sukesh Kumar on Nov 26, 2011
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INTRODUCTION
Management of sales and distribution is generally acknowledged to be the backbone of marketing. Selecting a sales and distribution approach is a key element of a successful business model. Structuring an analysis of sales and distribution channel options is based on the fundamental logic underlying channel selection:

 How do sales and distribution channel choices fit into an overall business model?

 What were traditional channel options and why did they meet supplier and customer needs?  How are the underlying characteristics of sales and distribution channels changing?  What are new options open to suppliers and how should suppliers evaluate those options?  How can suppliers mange transitions between channel choices? .

before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel. each passing the product down the chain to the next organization.Distribution An organization or set of organizations that are involved in the process of making a product or service available for use or consumption by a consumer or business user.' . Distribution channel It is defined as a chain of intermediaries.

• The distribution function assumes the responsibility for outbound logistics. . and serves the company by “dealing with customers on a direct or face-to-face basis” and acting as “a communication bridge between the company and the target audience/customer”. • The sales function assumes the responsibility for trade customer sales and marketing. “the set of decisions and processes concerned with the flow of products and/or services from producer to consumer”. which encompasses.THE SALES AND DISTRIBUTION RELATIONSHIP • The relationship between sales and distribution functions is unique because it focuses on 1) Product management issues 2) Marketing channel management issues.

Why there is a need for Effective salesdistribution relationship? An Effective sales-distribution relationship or “ interfunctional relationship” is needed for a firm to attain its broader marketing objectives. which include:  Identifying and servicing new customers  Retaining and increasing sales to current customers  Reducing current customer defections .

Therefore. Sales management has been defined as the management of a firm’s personal selling functions while distribution is an indirect function. .Integration of sales and distribution Sales and distribution management constitutes one of the most important areas of customer satisfaction. integration is required between sales and distribution functions.

• Keeping high stock pressure at all selling points. •Making each customer call productive. . • Follow plan designed by the sales management using ‘milkrun’ principles.SHARING RESPONSIBILITIES Sales Management Task Achievement of volume and market shares Distribution Management Task • Physical movement and storage of products closest to the markets. Coverage of markets and outlets. • Extending required level of credit. • Ensuring high shelf visibility.

• Keeping high stock pressure to avoid entry of competition. • Regular oral and confirmed reports. . brands. • Follow up on competition. Managing institutional business and key accounts. Competition tracking and action to protect market shares. • Sell more than competitors.Sales Management Task Width and depth of distribution. • Getting orders and execution. Distribution Management Task • Push all products. • Focus on slow movers. • Extending credits as necessary. • Promotion and sales incentives for corrective action. packs in each outlet.

Sales Management Task Market feedback and reporting. Managing distribution channels – recruitment. • Retain stocks upto norms. • Disposal of damaged stocks. . • Report on good practices on other non-competing companies. development. • Order at the replenishment level. Finished goods inventory management at C&FAs and distributors. evaluation and exit if necessary. • Each channel member has to manage his downstream channel. • Conducting training programs. Distribution Management Task • Both of own products and competitors.

Distribution Management Task • First level of interface with customers and hence prompt action is expected. Implementing marketing plans – product launching. merchandising • Ensure wide and equitable distribution • Ensure high visibility • Make every promotion a success in terms of set objectives • Ensure success of new products or packs launch . consumer and trade promotion. • Bringing to notice of sales management if any problem encountered.Sales Management Task Handling customer and customer complaints. • Quickly remove complaint/damaged stocks from the market.

exhibitions and melas • Take initiative to sales management • Spend on the event and then claim reimbursement Participation in promotional events Local advertising – websites.Sales Management Task Distribution Management Task • Organize and participate in fares. shop boards • Fix responsibilities of distribution channels • Spend on task then claim reimbursement. . hoardings.

As competition in the market place intensifies and new technologies evolve. . As a result.Selecting an appropriate structure for distribution channel is a major strategic concern for any firm with a product to sell. Some of the major distribution channels direct distribution channel and indirect distribution channel. many types of distribution channels have come into being ranging from the traditional retail channel to the direct sales model and each of these distribution channels has sales involved at each and every step showing the integration between sales and distribution strategies. the firms are taking fresh looks at their distribution channels to squeeze out inefficiencies.

The Well-Designed Distribution Strategy Specify the role of distribution within the marketing mix Select type of distribution channel Determine appropriate intensity of distribution Choose specific channel members .

Indirect Marketing Channel . Dixons and Currys which then sell the goods to the final consumers .Distribution channels are usually of two types.g.. Eureka Forbes. Direct Marketing Channel – This type of channel has no intermediaries. Canon etc. In this distribution system. Panasonic. e.In this of channel there is only one intermediary between producer and consumer. Producer Retailer Consumer Example-Producers such as Sony. 2.This may further be classified in to the following categories: a) One level channel. They are1. the goods go from the producer directly to the consumer. sell their goods directly to large retailers such as Comet.

Producer Distributor Wholesaler Retailer Consumer .This type of channel has three intermediaries.b)Two level channel. Producer Wholesaler Retailer two Consumer Example. namely wholesaler and retailer.Distribution of food grains like rice or wheat c)Three level channel . namely distributor. wholesaler and retailer.This channel has intermediaries.

Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer.Number of Channel Levels Channel Level . 0-level channel Producer 1-level channel Producer 2-level channel Producer Wholesaler  Retailer Retailer Consumer Consumer  Consumer  3-level channel Producer Consumer Wholesaler  Jobber  Retailer   .

18 .Intensity of Distribution INTENSIVE Distribution through every reasonable outlet in a market SELECTIVE Distribution through multiple. reasonable outlets in a market EXCLUSIVE Distribution through a single wholesaling middleman and/or retailer in a market 15 . but not all.

.Example.Distribution network of medicine companies Therefore. Hence sales and distribution strategies are very highly integrated and cannot work without each other. we can say that distribution is a complete process involved in making a product available for being used or consumed by the consumer where as sales is a small process which is involved at each and every step when the product is passed from one intermediary to another in the process of distribution.

25 departmental Warehouses equipped with mechanised handling systems. It markets carbon steel produced by the five integrated steel plants of SAIL. it transacts business through its network of 37 Branch Sales Offices spread across the four regions. 42 Consignment Agents and 26 Customer Contact Offices.CASE STUDY Central Marketing Organization Central Marketing Organisation ( CMO ) is India’s largest industrial marketing set-up. . Headquartered in Kolkata.

.000.CMO’s domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country. With the total number of dealers crossing 2.

CMO (Headquartered at Kolkata) Eastern Northern (Kolkata) (Delhi) Western (Mumbai) Southern (Chennai) Branch Sales Branch Sales Branch Sales Office(BSO) Office(BSO) Office(BSO) Branch Sales Office(BSO) .

Branch offices receive material from steel plants to the stockyards and sell from there to the large number of customers of all type.  Sale of steel to the consumers through the stockyards at different branch offices .Distribution channels of SAIL can be summarized as :  Direct dispatch from steel plant to big consumers There are large number of big customers receiving supply directly from steel plants. .

These dealers network receive materials from stockyards with whom they are attached to. Retail network .There is large number of dealers network established by SAIL in the country to cater the needs small and retail buyers. .

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