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Name Roll No. Learning Centre Subject
: : : :
RAKESH KUMAR SINGH
510910259 Systems Domain (2779)
Sales, Distribution and Supply Chain Management
Set – I (MK0001) 2010
Date of Submission :
510910259 2 Rakesh Kumar Singh
MBA Semester 3 MK0001 – Sales, Distribution and Supply Chain Management Assignment Set- 1
Q.1 a. What is personal selling? Discuss its benefits and limitations (8 marks)
Ans: Personal selling is a promotional method in which one party (e.g. salesperson) uses skills and techniques for building personal relationships with another party (e.g. those involved in a purchase decision) that result in both parties obtaining value. In most cases the “value” for the salesperson is realised through the financial rewards of the sale while the customer’s “value” is realised from the benefits obtained by consuming the product. However, getting a customer to purchase a product is not always the objective of personal selling. For instance, selling may be used for the purpose of simply delivering information. Because selling involves personal contact, this promotional method often occurs through face-to-face meetings or via a telephone conversation, though newer technologies allow contact to take place over the Internet including using video conferencing or text messaging (e.g., online chat). Advantages of Personal Selling One key advantage personal selling has over other promotional methods is that it is a two-way form of communication. In selling situations the message sender (e.g., salesperson) can adjust the message as they gain feedback from message receivers (e.g., customer). So if a customer does not understand the initial message (e.g., doesn’t fully understand how the product works) the salesperson can make adjustments to address questions or concerns. Many non-personal forms of promotion, such as a radio advertisement, are inflexible, at least in the short-term, and cannot be easily adjusted to address audience questions. The interactive nature of personal selling also makes it the most effective promotional method for building relationships with customers, particularly in the business-to-business market. This is especially important for companies that either sell expensive products or sell lower cost but high volume products (i.e., buyer must purchase in large quantities) that rely heavily on customers making repeat purchases. Because such purchases may take a considerable amount of time to complete and may involve the input of many people at the purchasing company (i.e., buying centre), sales success often requires the marketer develop and maintain strong relationships with members of the purchasing company. Finally, personal selling is the most practical promotional option for reaching customers who are not easily reached through other methods. The best example is in selling to the business market where, compared to the consumer market, advertising, public relations and sales promotions are often not well received. Disadvantages of Personal Selling Possibly the biggest disadvantage of selling is the degree to which this promotional method is misunderstood. Most people have had some bad experiences with salespeople who they perceived were overly aggressive or even downright annoying. While there are certainly many salespeople who fall into this category, the truth is salespeople are most successful when they focus their efforts on satisfying customers over the long term and not focusing own their own selfish interests.
510910259 3 Rakesh Kumar Singh A second disadvantage of personal selling is the high cost in maintaining this type of promotional effort. Costs incurred in personal selling include:
High cost-per-action (CPA) – As noted in the Promotion Decisions tutorial, CPA can be an important measure of the success of promotion spending. Since personal selling involves person-to-person contact, the money spent to support a sales staff (i.e., sales force) can be steep. For instance, in some industries it costs well over (US) $300 each time a salesperson contacts a potential customer. This cost is incurred whether a sale is made or not! These costs include compensation (e.g., salary, commission and bonus), providing sales support materials, allowances for entertainment spending, office supplies, telecommunication and much more. With such high cost for maintaining a sales force, selling is often not a practical option for selling products that do not generate a large amount of revenue. Training Costs – Most forms of personal selling require the sales staff be extensively trained on product knowledge, industry information and selling skills. For companies that require their salespeople attend formal training programs, the cost of training can be quite high and include such expenses as travel, hotel, meals, and training equipment while also paying the trainees’ salaries while they attend.
A third disadvantage is that personal selling is not for everyone. Job turnover in sales is often much higher than other marketing positions. For companies that assign salespeople to handle certain customer groups (e.g., geographic territory), turnover may leave a company without representation in a customer group for an extended period of time while the company recruits and trains a replacement.
b. Explain the term “sales quotas” with examples.
Ans: Sales quotas are a way of life for the sales force. All activities of the sales force revolve around the fulfilment of sales quotas. Sales quotas are targets assigned to sales personnel. They signify the performance expected from them by the organisation. Sales quotas help in directing, evaluating and controlling the sales force. They form an indispensable tool for sales managers to carry out sales management activities. Sales quotas are prepared on the basis of sales forecasts and budgets. Sales quotas serve various purposes in organisations. They provide targets for sales personnel to achieve and also act as standards to measure sales force performance and help motivate the sales force. Compensation plans are invariably linked to quotas. The commission and bonuses given to sales persons are based on their meeting quotas set for them. The four categories of sales quotas widely used are: Sales volume quotas, Expenses quotas, Activity quotas, Profit quotas. Q.2 a. Distinguish between Data mining and Data warehousing. (5 marks)
Ans: Data mining is the process of analysing data from different perspectives and summarising into useful information-information that can be used to increase revenue, cut costs or both. Data mining software is one of a number of analytical tools for analyzing data. It allows users to analyze data from many different dimensions or angles, categorize it and summarise the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases. Data mining is primarily used today by companies with a strong
510910259 4 Rakesh Kumar Singh consumer focus-retail, financial, communications and marketing organisation. It enables these companies to determine relationships among internal factors such as price, product positioning or staff skills and external factors such as economic indicators, competition and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction and corporate profits. Finally, it enables them to drill down into summary information to view detail transactional data. Data warehousing is defined as a process of centralised data management and retrieval, Data warehousing, like data mining, is a relatively new term although the concept itself has been around for years. Data warehousing represents an ideal vision of maintaining a central repository of all organisational data. Data warehouse is repository of an organisation’s electronically stored data. Data warehouses are designed to facilitate reporting and analysis. This definition of the data warehouse focuses on data storage. However, the means to retrieve and analyse data, to extract, transform and load data, and to manage the data dictionary are also considered essential components of a data warehousing system. Many references to data warehousing use this broader context. Thus, an expanded definition for data warehousing includes intelligence tools, tools to extract, transform and load data into the repository, and tools to manage and retrieve metadata.
b. Briefly explain the procedure involved in selection of sales personnel. Ans: Selection of the right sales people involves the following steps:
Researching Candidates: This covers the early stages of the selection process-often calls pre-selection. The recruitment campaign would have attracted a pool of applicants from which selectors can make their choice. If a job analysis has been conducted, the criteria or competences which are deemed necessary have been identified. These may be well defined and focussed on experience and skills, as in the right person approach; or general and related to education, intellect and personality for the cultural fit and flexible person models. Application letters/CVs/Resumes: These are typically used for initial or speculation applications. The first stage in the application will require a resume or a CV. Application Forms (blanks): Both letters and CV/resumes present a problem for a large recruitment programme; applicants may not provide all the relevant information and what is will be presented in different ways. Comparison of applicants is easier if data is presented in a standard form (blank). Interviewing: The interview is a social ritual which is expected by all participants, including applicants. It is such a normal feature of filling vacancies that candidates for a job would be extremely surprised not to be interviewed at least once. Despite the existence of alternative methods of selection most employers regard the formal selection interview as the most important source of evidence in making the final decision. A selection interview can be neatly defined as a conversation with a purpose. Preparation for interviews: Training for interviews stresses the need to put the candidate at ease, have a comfortable environment etc. The interviewer should ensure that relevant information is read beforehand-it is the first time during the interview. It is necessary to improve the interpersonal skills of the interviewer and the interviewer’s ability to make decisions without influence from non-job related information.
510910259 5 Rakesh Kumar Singh Q.3 a. As a sales manager in a retail business firm, how will you categorize your tasks and manage your sales organization? Assume that you have 4 sales teams with 12 members in each team, out of which 5 are new sales recruits. (10 marks) Ans: Sales management involves the planning, direction and control of personal selling including recruiting, selection equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force. Following are the important tasks in the success of sales management in any organisation: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi. xvii. Setting personal selling objectives, Formulating sales policies, Structuring the sales force, Deciding the size of the sales force, Designing sales territories, Developing the sales territories, Developing the sales forecasts and sales budgets, Fixing sales targets for individual sales territories/salesman, Creating the sales force, Managing the sales force, Managing the marketing channels, Ensuring growth and developing new accounts, Sales communication and reporting, Sales coordination and sales controlling including sales expense control, Building the sales organisation Co-ordination with marketing management in the areas like product mix, pricing, distribution, advertising and sales promotion, Creating and maintaining the right image for the company and its products in the market.
The function of a personnel manager usually begins with the staffing process. Someone has to be focussed on screening and interviewing persons, with an eye to placing individuals with the right skills sets in the right position within the company. Along with placement, the HR manager may also oversee or at least be involved in the creation of entry level training programs, as well as continuing education opportunities for existing employees. Determining company policies and procedures as they relate to personnel is another important aspect of the personnel management process. HR functions often include drafting vacation, sick leave, and bereavement policies that apply to all employees of the company. The personnel management team often is also responsible for managing the health care program provided to the employees as well. One aspect of company organisation that definitely requires the input of effective personnel management is the drafting of a company handbook. Establishing operation policies and procedures, requirements for employment, commendation and disciplinary procedures, guidelines for dismissals and promotions, and even something as simple as a dress code is also a part of this function.
510910259 6 Rakesh Kumar Singh Sometimes overlooked in the course of personnel management is the emotional welfare of the employees. Fortunately, this is changing, as more personnel managers understand that a welladjusted employee is an asset to the company. To this end, many in charge of personnel management will provide opportunities for employees who are in need of counselling to receive support from the company. This support often involves scheduling time during working hours for the counselling sessions, and perhaps picking up the cost if insurance does not cover counselling. As with continuing educational programs, counselling is seen as another way that the company invests in the future relationship between the employee and the employer. A good HR manager understands this and will strive to make sure this sort of support is available.
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