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MK0001 (2 credits) Set 1 Marks 30 SALES, DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT Q1. Briefly discuss the five objectives of promotion that are met with personal selling. Ans: Personal selling involves two-way communication with prospects and customers that allows the sales personal to address the special needs of the customer. It is often the job of a salesperson to uncover the special needs of the customer. When customers have questions or concerns, the salesperson is there to provide appropriate explanations. Furthermore, personal selling can be directed to qualified prospects, whereas a great deal of advertising and sales promotions is wasted because many people in the audience have no use for the product. Perhaps the most important advantage of personal selling is that it is considerably more effective than advertising, public relation, and sales promotion in identifying opportunities to create value for the customer and gaining customer commitment. There are the five objective of promotion:
Building Product Awareness – Several sales promotion techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way sales promotion can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts. Creating Interest – Marketers find that sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry an appealing sales promotions can significantly increase customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the number of website visitors. Another important way to create interest is to move customers to experience a product. Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost. Providing Information – Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a feebased online service for free for several days. This free access may include receiving product information via email. Stimulating Demand – Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales. Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty (see loyalty programs below). Many companies, including airlines and retail stores, reward good or “preferred” customers with special promotions, such as email “special deals” and surprise price reductions at the cash register.
Q2. Explain the nine steps used to build a winning sales organization. Ans: Step 1: Do nothing Do nothing. When you first arrive on the scene of a sales office in distress, don't do anything. Take the time to understand your organization's situation, gather information about the people involved, and…. Step 2: Analyze your problem(s) Analyze your problems. My main problem was that my salespeople didn't believe in themselves. They hadn't yet experienced success, and there was no role model, a salesperson of whom others can say, "there's somebody like me who's successful."You may be thinking, "Hey, isn't it my role as a sales manager to set a leadership example?" And, of course, the answer is "yes." But the example you set for your people is not enough, because many salespeople emulate the actions of their peers. Since many salespeople play "follow the leader," you've got to ask yourself which salespeople do your less experienced salespeople look up to? And, what kind of example are these "leaders" setting? You can get peak performance out of average producers if you can get average producers to emulate the success habits demonstrated by a leading salesperson. Clearly, I needed to find a leader. Fast. Step3:Find your success role model In sports, when a player assumes more of a leadership role on a team, it's called "stepping up." Hopefully, you already have a few players capable of stepping up. If so, talk to them. Help them see the importance of their success example, and ask them to share more of their knowledge and experience with less experienced salespeople. Unfortunately, I had to recruit a new salesperson to be my success model because nobody else on my team was capable of leadership. I knew that my next hire could play an important role in reversing the downward performance trend. I had my new leader when hired Bill Zeeb. I told Bill, "if you stick with me, do exactly as I teach you to do, you will succeed." Bill knew that I was counting on him, and he didn't let me down. In his fourth month, he produced 200 percent of quota. Overnight, the attitude in the office changed from one of making excuses for poor performance to "what's that Bill Zeeb doing?" Bill's performance forced others to take a hard look in the mirror. That's the day when they finally accepted responsibility for their own poor performance. Step 4: Don't tolerate mediocre sales performance You've got to decide - you won't tolerate mediocre sales performance. Far too often, poorly performing salespeople are allowed to continue their lackluster ways. A manager may not want to face the hassle of recruiting a replacement, or the manager may want to avoid confrontation. This is a big mistake. A successful sales manager doesn't tie the ship to a poor performer's anchor. Instead, successful managers take a "hands-on" role with more performers by providing the coaching and training the poor performer needs to improve performance.
Your objective is to bring those that are lagging behind to what I call "the intersection of choice." By that, I mean poor performers must make a decision themselves to either a) recommit themselves to perform the necessary behaviors and activities, or b) leave the company immediately. Like my manager once told me, "There's only one thing worse than somebody who quits and leaves - and that's somebody who quits and stays." The key question is this: if you knew then what you know now, is there anybody on your team you would not have hired? If so, get "hands-on" and escort that individual to his or her intersection of choice. Step 5: Install performance standards Install performance standards. You've got to communicate your expectations. So raise the BAR on everybody with standards that consist of Behavior, Activity and Results. A behavior standard, for example, could be to arrive in the office every morning before 8 a.m. An activity standard could be to make a minimum of 25 telephone prospecting calls every day. A result standard could be that a sales rep with seven to nine months sales experience must sell a minimum of $50,000 per month. On results standards, I recommend you set two standards. One, a lower "keep your job" standard. Salespeople who fall below the minimum standard for a three-month period are placed on probation. If sales don't pick up in the next quarter, that person must be "dehired." Another standard performance is of course, a higher sales quota. Step 6: Dehire those below minimum standards Dehire those below minimum standards. Your salespeople will be wondering, "do you really mean it?" The first person you dehire will send a loud and clear message - performance standards will be enforced. If you don't enforce them, your standards are meaningless. Step 7: Coach, coach, and coach some more Coach, coach, and coach some more. Don't be a "desk jockey". Get out and work with your salespeople. If the only way to grow your people and your business. Step 8: Cultivate a better "quality of life" Cultivate a better "Quality of Life." Have more fun. We instituted a series of contests that got everybody focused on a team goal. For example, if we hit our office goal, salespeople who achieved their individual standards earned a round of golf with the others. Then there were blitzes where everyone would pair up and make a bunch of sales calls into two sales territories to generate leads. The salespeople who received the leads had to repay the group with a comedic skit. It was amazing to me how creative some of the skits were! The result: average sales per salesperson doubled, and turnover was reduced by 45 percent. Step 9: Know what each salesperson wants Know what each salesperson wants. Every person has his or her own personal motivators. Your job is to find out what they are and help the salesperson toward achievement. Sit down with each salesperson one-on-one. Try to learn something about each of them: what are their goals with your company and beyond? What is their past like? How can you help them be, have, and do more? For example, one of my salespeople wanted buy a house, while another wanted to play the top 10 golf courses in the world. Two very different goals, but both could be achieved faster by the salesperson exceeding quota.
Q4. Describe the necessity of drawing the sales territories. Ans: Aligning sales territories is an important initiative and can lead to many benefits for a business. Good territory alignment will increase sales and customer coverage, reduce travel time and associated costs, provide a competitive advantage, and foster equity and moral among sales people. • Increased sales and customer coverage:
When territories are properly aligned, issues of under- and over-capacity are reduce or eliminated. Each territory is created allowing the sales person to reach and spend time with the greatest number of high potential customers, thus increasing sales. • Reduce travel time and associated expenses:
Due to the geographic nature of sales territories, better alignment means less travel time to reach customer. Less time spent in travelling means more time spent with customer, thus more time for selling. Other associated expenses such as fuel and automobile costs are reduce as well. • Competitive advantage: This benefit of sales territory alignment is often overlooked. However, if the company has better coverage in its territories, they can reach new opportunities faster than the competitors, again leading to increased sales. • Equity and morale:
Nothing can be more discouraging to a sales person than to see an associate milking a highly profitable territory while they’re stuck servicing an area with low potential. Properly aligned territories provide a more equitable distribution of accounts, level the playing field in terms of achieving rewards, and boost morale among sales people. In addition, sales people stay longer, thus lowering the costs associated with new hiring.
MK0001 (2 credits) Set 2 Marks 30 SALES, DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT Q1. Explain the reverse logistics with examples. Ans: When considering any area of business as an opportunity for improvement, begin with having an understanding of just what you are trying to change. What is Reverse Logistics? The broader concept of logistics is described by The Council of Supply Chain Management Professionals (CSCMP) as: The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, inprocess inventory, finished goods and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Reverse logistics is the logistics process of removing new or used products from their initial point in a supply chain, such as returns from consumers, over stocked inventory, or outdated merchandise and redistributing them using disposition management rules that will result in maximized value at the end of the item’s useful life. For our purposes, reverse logistics includes all the activities that are mentioned in the definition above, with the difference that reverse logistics encompasses all of these activities as they operate in reverse. Therefore, according to authorities Dr. Dale S. Rogers and Dr. Ronald S Tibben-Lembke, reverse logistics becomes: The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, inprocess inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. To settle on a specific definition, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or achieving proper disposal to the satisfaction of the customer or consumer. Remanufacturing and refurbishment activities may be part of the procedure. Reverse logistics includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery.
For a practitioner, the disposition choice is determined by the most profitable alternative:
Reconditioning – when a product is cleaned and repaired to return it to a “like new” state Refurbishing – similar to reconditioning, except with perhaps more work involved in repairing the product.
Remanufacturing – similar to refurbishing, but requiring more extensive work; often requires completely disassembling the product
Recycle – when a product is reduced to its basic elements, which are reused – also referred to as asset recovery.
Case Examples A business printer field service and reverse logistics model helps explain how an operating system works. The process for such a firm starts when a business customer with a problem calls an original equipment manufacturer (OEM) or third party customer support contact, both of which are used in an attempt to diagnose the problem and provide problem resolution instructions if applicable. An OEM field technician or third party certified technician attempts to repair the equipment on-site. If unable to make the repair, the unit is sent to the OEM or certified third party repair facility, where a regional-based loaner or exchange program may be available. The unit is then repaired at the OEM or third party repair facility. The OEM then ships the returned unit or comparable unit back to the customer, or places the unit in used stock if an exchange is previously provided. A field technician is then scheduled to install the loaner unit, exchange units, or repair equipment at the customer site As an example, consider firms involved in the aftermarket sales and services business, and how reverse logistics plays a role. Products in this business can include accessories, replacement parts, and repair and service parts. The services could include: product and technical support, training, product documentation, warranty and claims management, and field service repairs. As an adjunct to these products and services, reverse logistics fits the definition by providing for: exchanges and in-warranty repair, out-of-warranty repair, maintenance, upgrades and retrofits, remanufacturing, and end-of-life asset recovery and hazardous material disposal.
In the aftermarket business, field services and reverse logistics are generally considered one of the harder areas to manage, coordinate and operate efficiently. The area is often forgotten or given little consideration regarding launch of new products, importance to overall customer satisfaction and loyalty, and company profits. In a specific case example of how complex the situation can become and how allowances are made to assure proper services are provided, we can take a look at what Microsoft did when it decided to introduce its XBOX. The details help make the point about the importance of paying attention to the full supply spectrum, including reverse logistics. Microsoft decided to have the main product manufactured by Flextronics. Accessories would be produced by a variety of manufacturers. Distributors and electronics retailers were to perform the warehousing, distribution, and end customer sales functions. Solectron was used for aftermarket warranty and customer repair services. Microsoft took the time to ensure the above capabilities were fully operational before the first XBOX was sold to an end consumer and that any returns would be processed effectively by the designated party. In another example, a cell phone reverse logistics model proved very beneficial for a firm selling such products under their brand name. This firm had the cell phones manufactured by LG Industries, Samsung, Motorola and others. Accessories were again manufactured by a variety of firms. Order taking and initial end consumer billing was performed by Amazon. Forward logistics, including warehousing, carrier service programming and order fulfillment were performed by CellStar. Cellular carriers such as Verizon and Sprint provided the monthly service. Extended warranty and product protection insurance was provided by lock/line. The customer call center service and reverse logistics was performed by CellStar. Q2. Discuss the components of supply chain with examples. Ans: The management components of SCM The SCM components are the third element of the four-square circulation framework. The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of components added to the link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more management components or increasing the level of each component can increase the level of integration of the business process link. The literature on business process re-engineering, buyer-supplier relationships, and SCM suggests various possible components that must receive managerial attention when managing supply relationships. Lambert and Cooper (2000) identified the following components:
• • • • •
Planning and control Work structure Organization structure Product flow facility structure Information flow facility structure
• • • •
Management methods Power and leadership structure Risk and reward structure Culture and attitude
However, a more careful examination of the existing literature leads to a more comprehensive understanding of what should be the key critical supply chain components, the "branches" of the previous identified supply chain business processes, that is, what kind of relationship the components may have that are related to suppliers and customers. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the highest level of joint achievement (Bowersox and Closs, 1996). A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects of financial risk, thus including primary level components (Bowersox and Closs, 1996). A secondary level participant (specialized) is a business that participates in channel relationships by performing essential services for primary participants, including secondary level components, which support primary participants. Third level channel participants and components that support the primary level channel participants and are the fundamental branches of the secondary level components may also be included. Consequently, Lambert and Cooper's framework of supply chain components does not lead to any conclusion about what are the primary or secondary (specialized) level supply chain components (see Bowersox and Closs, 1996, p. 93). That is, what supply chain components should be viewed as primary or secondary, how should these components be structured in order to have a more comprehensive supply chain structure, and how to examine the supply chain as an integrative one (See above sections 2.1 and 3.1). Reverse Supply Chain Reverse logistics is the process of managing the return of goods. Reverse logistics is also referred to as "Aftermarket Customer Services". In other words, any time money is taken from a company's warranty reserve or service logistics budget one can speak of a reverse logistics operation.
Q6. Write a note on IT enabled supply chain. Ans: we seek to better understand the value of information technology (IT) in supply chain contexts. Grounded in the resource-based theory in conjunction with transaction cost economics, we develop a conceptual model that links three IT-related resources (backend integration, managerial skills, and partner support) to firm performance improvement. The model differs from previous studies by proposing a moderating effect of competition on the resource-performance relationships. Using data of 743 manufacturing firms, our analysis indicates significant contribution of IT to supply chains, which is generated through development of the digitally enabled integration capability and manifested at the process level along the supply chain. The technological resource alone, however, does not hold the answer to IT value creation. In fact, managerial skills, which enable adaptations on supply chain processes and corporate strategy to accommodate the use of IT, are shown to play the strongest role in IT value creation. Furthermore, backend integration and managerial skills are found to be more valuable in more competitive environments. While commodity-like resources have diminishing value under competition, integrational and managerial resources become even stronger. Overall, our results shed light on the key drivers of IT-enabled supply chains, and provide insights into how competition shapes IT value.
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