1

Chapter 1
Introduction to Sales
Management

2
 Personal selling strategies
1. Willingness to go to bat for the buyer within the supplier firm
2. Thoroughness and follow through
3. Knowledge of the sales person’s product line
4. Market knowledge and keeping the buyer posted
5. Applying his product and services to buyer’s needs
6. Knowledge of the buyer’s product line
7. Preparation for sales calls
8. Regularity of Sales calls
9. Diplomacy in dealing with operating departments
10. Technical education

3
Evolution of personal selling
Partnership
Business Strategies
Consultative Manageme
Negotiation Selling nt
Persuasion

4
 Marketing concepts

1) Production concept
2) Product concept
3) Selling concept
4) Marketing concept
5) Societal concept

5
Societal marketing concept

Production Sales Customers

(Sales Orientation)

Customer Production Sales

Needs

Emphasis on
(Marketing Orientation) Seller’s
Needs

Emphasis on
Custom
er Needs

6
 Nature and role of sales
management
 The determination of sales force objective and
goals
 Sales force organization, size, territory, and quota
finalization
 Sales forecasting and budgeting
 Sales force selection, recruitment, and training
 Motivating and leading the sales force
 Designing compensation plan and control systems
 Designing career growth plans and building
relationship strategies with key customers
7
 Types of personal selling

• Industrial selling
• Retail selling
• Services selling

8
 Types of selling

• Order taker sales people

• Order creators
• Order getters

9
 Types of Selling
Inside Order Taker

Order
Takers Delivery Sales
People

Outside Order
Takers
Selling Order Missionary Sales
Function Creator People
s New Business
Sales
People
Front Line Organizational
Sales People Sales People

Order Getters Consumer

Sales People

Sales Technical Support

Suppor sales People
t
Sales Merchandisers
people
10
Difference between sales and marketing
Starting
Focus Means Ends
point
Selling and Profits though
Factory Factory promoting sales volume

Selling concept

Market Customer Coordinated Profits through

needs marketing customer
satisfaction

Market concept

11
 MARKET ANTICIPATION

Marketing mix
• Product
Producer
• Price Consumer
Marketer
• Place
• Promotion

Exchange offer of value

Marketing management process

12
 Sales management process

Formulation of a strategic sales programme

Implementation of the sales programme

Evaluation and control of sales force performance

13
 Technology

Emerging trends
Customer orientation in sales
Relationship selling
management
Technology

Global and ethical Diversity

Issues

New selling methods

Emerging trends in sales management

14
 Chapter 2
Selling Skills and Strategies

15
 Selling and buying styles
9 (1,9) People Oriented (9,9) Problem Solving Oriented

I am customer’s friend, I consult with the customer so as to

inform myself of all the needs in
8
Concern for the customers

I want to understand him and his situation that my products can

respond to his feelings and satisfy. We work towards a sound
7 interests so that he will like
me. It is the personal bond
purchase decision on his part,
which yield him the benefits he
6 that leads him to purchase
(5,5)from
Salesme.
technique Oriented
expects from it.

5 I have tried an effective routine

for getting a customer to buy.

4 It motivates through a blended

personality and product (9,1) Push the product Oriented
emphasis
3 (1,1) Take it or Leave it I take challenge of the customer
and hard sell him, polling on

2
I place the product before the all the pressure it takes to
customer and it sells itself as make him buy
and when it comes.
1 2 3 4 5 6 7 8 9
16
 Selling situations

 Sales task and function

 Maintenance selling

 Developmental selling

17
 Selling skills

Effective
Problem
communication
solving
skills
skills

Selling Skills

Listening Skills

Negotiation
and
bargaining
skills
Conflict management and
resolution skills
18
 Communication process
Feedback
Intended Perceived
Message Message

Encoding Decoding
Noise

Received
Sent Message Message
Channel
Sender Receiver
19
 Communication process
contd.

Managing body language:

 Personal Appearance
 Posture
 Gestures
 Facial Expressions
 Eye Contact
 Space Distancing

20
Process of listening
Attendance

Interpretation

Remembrance

Evaluations

Response Action

21
Levels of listening
Feedback

Paraphrasing

Clarifications

Emphatic listening

Active Listening

Barriers to Listening !
22
 Conflict management skills
 Models of conflict
 Components of conflict
 The conflict resolution process:
- lumping
- avoidance
- coercion
- meditation
- conciliation
- arbitration
- adjudication
- negotiation

23
 Conflict management process
Stage I Stage II Stage III Stage IV Stage V
Potential Cognition & Intentions Behaviour Outcomes
opposition or
Personalization
Incompatibil
ity

Increased
group
Perceived Conflict handling performan
Conflict Intentions ce
Antecedent Overt Conflict
Conditions Competing Party’s
behaviour
Communication Collaboration Others
reaction
Personal Felt Conflict Compromising
Decreased
Variables Avoiding group
Structure Accommodating performan
ce
24
 Negotiation skills
• Situation and timing for negotiations
• Formulation for a bargaining strategy
• The theory and strategy of principle
negotiations
- separate the people from the problem
- focus on interests, not on positions
- invent options for mutual gains
- insist on objective criteria

25
 Problem solving skills
• Habit I: be proactive
• Habit 2: begin with an end in mind
• Habit 3: put first things first
• Habit 4: think win–win
• Habit 5: seek first to understand, then to
be understood
• Habit 6: synergize
• Habit 7: renewal

26
Problem solving process
Define the problem

Generate alternative solutions

Decide the solution

Implement the solution

Evaluate the solution

27
 Problem definition techniques
Dunker’s
Statement diagram 4
and Present
Restateme desired
nt5 state
3 analysis
Problem
Definition
Techniques
Evaluate
problem Explore the
statemen6 problem
t 2
Find out origin of the
problem 1

28
 Dunker’s diagram
Achieve the desired state
General Solution

Possible path to the desired state

Path 1 Path 2 Path 3 Functional Solution

Solutions to implement & paths to desired solutions

Specific Solution
Solution 2 Solution 3
Solution 1

29
Statement restatement technique

Relax Perceived problems Generalize

Constraints

Make an Re Statement
Opposite
Statement

Re Statement

Final problem Statement

30
Components of a decision on the
future course of action

Situation analysis

Potential problem
Problem analysis Analysis
Past Decision analysis Future
What is the fault How to prevent future
faults?

31
Solution implementation process

Decision on the best solution I

M
P
L
Approval E
M
Planning E
N
T
Carry through A
T
Follow up I
O
N
Evaluation

32
 Chapter 3

The Selling Process

33
 Stages in the selling process

Pre-
Pre-sale approach Approach to
preparati Prospecting before the the
on interview customer

Handling
Customer Sales
Follow up Closing the
Objection Presentat
action Sale
s ion

34
 Prospecting
Successful prospecting

50 potential prospects 50 potential prospects

15 Qualified prospects 25 Qualified prospects
6 Interviews 17 Interviews
1 sale 7 sales

No Yes

Successful prospecting

35
Process of prospecting

Identify and define prospects

Search for sources of potential

accounts

Qualify the prospects from the

suspects

36
 Methods of prospecting
 Cold canvassing
 Endless chain customer referral
 Prospect pool
 Centers of influence
 Non competing sales force
 Observation
 Friends and acquaintances
 Lists and directories
 Direct mail
 Telemarketing
 Trade shows and demonstrations

37
 Selling process
• Pre approach to selling
• Approach to the customer
• Sales presentation
- approach to sales presentation
- attracting customer attention
- creating interest
- arousing desire and building conviction
• Methods of sales presentation
- canned presentation
- organized presentation
- tailored presentation

38
 Handling customer objections
Suggested by SMITH

• Start with your highest expectations

• Avoid conceding first
• BE sure the customer understands the value of a
concession
• Make concessions in small amounts
• Admit mistakes and make corrections willingly
• BE prepared to withdraw a concession
• Avoid ‘split the difference’ strategy
• Do not advertise willingness to concede
39
Methods of handling customer
objections
 Superior feature method
 Yes…But method
 Reverse English method
 Indirect denial method
 Pass out method
 Comparison method
 Direct denial method
 Another angle method
 Narrative method
 Testimonial method
 Question or WHY method
40
 Closing the sale

• Methods of closing the sale

• Follow-up action
• B2B selling

41
 Chapter 4

Managing Sales Information

42
 Forecasting market demand
It is the estimated rupee or unit sales for a specific future time
Period based on the company’s marketing plan and an assumed
marketing environment.

Price/ Price/ Total

Price/
Un Un Market
Un
it it deman
it Qty d
Qty per
per Un Qty per Unit ©
Uni it
t D D1 (B) D D1
P1 (A)
P2 Price / Price/
Price / Un Un
D D2 D D2
Un it it
Q1
it Q2 Qty per Unit (f)
Qty per Unit (E)
Qty per Unit (D)
Market demand curve
43
 Market demand function
QD = F (P, I, P0, T)
QD = B + aP P + a1I + a0P0 + aTT
Linear form of the demand
equation QD = B + aP P
P- Price of the product
I- Consumer Income
T- Consumer preference
P0 Price of other goods and
services
aP,, a I, a0, aT represents the one
unit change in quantity
associated with the variables.
B represents the combined influence
of all the other determinants of the
demand
44
 Market demand forecasting

• marketing decision support system

- an MDSS is an ongoing future-oriented information structure
designed to collect, collate, categorize, edit, store, and retrieve
information on demand to aid decision making in an
organization’s sales and marketing programme

45
Marketing decision support system

TRANSACTIONAL SYSTEMS USERS

MDSS

46
 Forecasting process
The forecasting process is defined as the series
of decisions and actions taken by a business
organization in:
 identifying the forecasting objectives
 determining the independent and
dependent variables
 developing a forecasting procedure
 using the available data in the
selected method to estimate the sales in
future

47
 Forecasting process
contd.

Determine
Develop forecasting independent and Forecast objectives
procedure dependent
variables

Select forecasting Evaluate performance

analysis method results against the
forecasts
Comprehend total
forecasting
procedure Present all the
assumptions Make and finalize
Collect, collate, about data the forecast
gather and
analyze data
48
 Popular methods in forecasting
Qualitative methods

Sales force Delphi

Expert opinion Survey of buyer’s
composite technique
expectation

History analogy

Quantitative methods

Naïve method Trend method

Test marketing

Exponential
Moving average Regression method smoothening
49
 Trend forecast of Sales
Observed sales Forecasted sales

Sales

Time

50
 Naïve method
Sales (at the period t) = Sales T+1

The following formula shows how to adjust the naïve method

to account for a
change in rate of sales levels. The formula is stated this way:
Next Year’s Sales = This Year’s Sales X This Year’s Sales
Last Year’s Sales
Freehand Method

51
 Method of semi-averages
In this method available data are divided into two parts, usually with
equal number of years on both the parts
Year Sales
1993 102
1994 105
1995 114
1996 110
1997 108
1998 116
1999 112
The average of the first three years will be:
102+105+114 321
----------- = -------- = 107
3 3
Similarly, for the last three years,
108 + 116 + 112 336
---------------------- = --------- = 112
3 3 52
 Method of moving averages
The 3-yearly moving average can be computed with the
following formula:
a+b+c b+c+d c+d+e d+e+f
--------- , ----------- , ---------- , --------- , ………….
3 3 3 3

Method of Least Square

The least squares method is a formalization of the eyeball-
fitting or graphical technique. It is used to mathematically
project the trend line to the forecasting period with the
time as the independent variable that influences the
dependent variable i.e sales.
Decomposition method
It is a time series method in which seasonality is taken in to
account while doing demand forecasting. This method
consists of three essential steps which are illustrated below.
53
Exponential smoothing method (contd.)
• It is similar to the moving- average forecasting method
• The forecaster is allowed to vary the weights assigned to
past data points
• It allows consideration of all past data, but less weight is
placed on data as it ages
• Exponential smoothing is basically a weighted moving
average of all past data
• The method is used to forecast only one period in the
future
• Exponential smoothing techniques vary in terms of how
they address trend, seasonality, cyclical and irregular
influences

54
 Exponential smoothing method contd.
Next Year’s Sales = a (This Year’s Sales) + (1 – a) (This Year’s
Forecast)

Autoregressive moving averages

It uses a different procedure than the other models explained
above in identifying the proper number of past
observations to be included in the analysis and the weights
that should be attached those observations

55
 Correlation analysis
• a correlation is basically the degree of linear
association between two variables where one variable
is treated as independent variable and sales as the
dependent variable
• sales managers look for variables that correlate with or
relate to sales
• correlation analysis involves the determination of whether
a
relation exists, and if it does, then measuring it, testing
whether it is significant, and establishing the cause and
effect relation
• the degree of relationships between the variables is called
co-efficient of correlation
56
 Regression analysis
• regression analysis is another form of correlational
technique
• reveals average relationship between two variables
and
this makes possible estimation or prediction
• a statistical method used to incorporate independent
factors that are thought to influence sales into
forecasting procedures

Sales
Sales

Population Population

(Liner Relationship) (Curvilinear Relationship)

57
Market factor indices methods
•the most commonly used market factor index
method is Buying Power Index Method (BPI)
•BPI is used to predict sales for specific
geographic regions for retailer and FMCG
sector such as clothing, food, auto, and other
consumer items
•BPI is also used to determine sales quota by
many multinational organizations
•applications are limited in Indian
organizations as we do not have data bases to
support this method at different levels of the
market
58
 Market factor indices methods
contd.

Econometric techniques
Econometric techniques uses multiple independent variables
where the assumption is that of a liner equation between the
dependent variable (sales) and independent variables

59
 Market factor indices methods
contd.
Factors affecting selection of a forecasting technique

• data availability
• cost
• variability
• consistency of the data
• the degree of detail necessary
• time horizon
• technical sophistication
• ability of the method to capture the level of risk and
variability
• the level of accuracy of the forecast
• fundamental change indicators
60
MAPE (Mean Absolute Percentage Error)
• level of accuracy is an explanation of the gap
between
the actual and predicted sales
• techniques with lower level of gap are more accurate
• statistic used to calculate the level of accuracy of a
forecast is called MAPE (Mean Absolute Percentage
Error)
• MAPE is the average percentage forecast error and is
a
popular way to measure accuracy

61
 Chapter 5

Sales Organization

62
 Sales organization

• an organization of individuals either working together

for the marketing of products and services manufactured
by an enterprise or for products that are procured by the
firm for the purpose of reselling

• a sales organization defines duties, roles, rights, and

responsibilities of sales people engaged in selling
activities meant for the effective execution of the sales
function

63
 Sales organization
contd.

• a structural body through which the functions of

sales management are carried out

• sales organization always makes efforts to increase sales,

thereby achieving the principle of profit maximization,
which contributes to the overall growth of enterprise

64
 Factors influencing structure
• product and service related factors

• organization related factors

• marketing mix related factors

• external
factors:
- the speed of market change
- reduction in the number of vendors per
buyer
- closer to customer relationships
- changes in regulations and international
practices

65
Organizational principles

 span of control

 unity of command
 hierarchy of authority
 stability and continuity
 coordination and integration
 homogeneity
 objectivity
 specialization

66
 Organizational design
- formal and coordinated task
- assigning territories
- establishing flows of communication and responsibilities
of sales groups and individuals to customers effectively
Mr. Ratnakar Shetty
Line organization President / Owner

Mr. Chandrakant
VP (Sales)

Five sales people

67
 Typical structure of a line organization

Consumer Institutional Corporate

market market market

National
Distribut Direct
Direct to
ors marketi Distributors Bundling Gifting
Home
ng

Regional Consumer
Distributors

Retailers

Consumers
68
 Design by territory
VP Marketing

National Sales
Manager

Divisional Manager Divisional Manager Divisional Manager

(East) (North) (West)

Regional Sales Regional Sales Regional Sales

Manager Manager Manager

District Sales District Sales District Sales

Manager Manager Manager

Sales Staff Sales Staff Sales Staff

(City wise) (City wise) (City wise)
69
 Design by management function
Mr. Dara singh,
VP
(Marketing)

Staff Function Line Function

Mrs. Chitra Mohanty Mr. Chandra De

Mr. Dibya Behera Manager
(Advt / Sales (Sales Manager) (MR)
Promotion Mgr)

20 Sales People

70
 Design by product

President,
Marketing

Product Manager (A)

Manager Manager Manager

(Sales) (Training) (Promotion)
Product Manager (B)

Manager Manager Manager

(Sales) (Training) (Promotion)

71
 Design by customer
President
(Marketing)

Vice President
(Marketing)

Sales Manager Sales Manager Sales Manager

Industrial Relations Wholesalers Retail Sales

Sales People Sales People Sales People

72
 President

Functional Vice President Vice President Vice President

(Production) (Marketing) (HRD)

Geographic
Marketing Manager Combined Marketing Manager
India International
Sales Org. Design
G.M G.M G.M
Consumer care International Sales International Sales
Customer
Divisional Manager Divisional Manager Divisional Manager
Soaps Paper Food Product

Eastern Sales Western Sales Northern Sales

Division Division Division

Europe Division America Division Gulf Division

73
 Sales Organization
Key account sales
- focus on CRM
- customer profitability and value analysis
- the few accounts give incremental returns
- national accounts

Sales process automation

- EDI – Electronic Data Exchange

74
 Emerging organizational design
• agency and distribution
selling
• shared sales force
• telemarketing
• TQM and team-based selling
Customer

Technical
Sales Marketing Manufacturing
Support

Supplier selling team

75
 Number of sales people
• determined by:
- territories vary in their demand structure for prospecting
- product mix demands
- levels and types of prospecting
- nature of the customer segments

Affordability method (based on sales budget)

Incremental method
Workload method (Number
(Number of (Ideal (Length of
Number of sales people = existing X of
X frequenc X a call)
customers Potent y of
) ial calls)
custo
Ideal selling time mers)
available for a salesperson
76
 Chapter 6

Management of Sales Territory

77
 Sales territory

• a group of present and potential customers assigned to

an individual

• sales person, a group of sales person, a branch, a

dealer,

a distributor or a marketing organization at a given

period of time

78
 Sales territory (contd.)

Advantages of designing a sales territory :

 it ensures better market coverage

 effective utilization of the sales force
 efficient distribution of workload among sales
people
 it is convenient to evaluate the performance of
sales people
 to control over the direct and indirect costs of the
sales function
 optimum utilization of sales time by sales people

79
 Designing sales territories
Factors
influencing
the
modificatio Select the basic geographic
control units
ns of a
territory: Decide on the criteria for
• mergers allocation
• market
consolidation Decide on the starting point
• split in Modify
Combine control units territorial
division
adjacent to starting point boundarie
• sales force Compare territories on
turnover s to
allocation criteria and balance
• customer conduct workload analysis
relocations workload
Assign sales force to new and
• product life territories
cycle change potential
• product line
change 80
 Territory shapes

circle Clover leaf

wedge

81
 Strategic Planning Matrix
Opportunity
The account offers a good opportunity.
H It has high potential and the sales
organization has a differential
i advantage in serving it.
g Strategy
Strategy
h Commit high levels of sales resources to
take advantage of the opportunity.
L Opportunity
The account offers stable opportunity since
o the sale organization has differential
advantages to serving them.
w organization is at a competitive
Strategy
Allocate a moderate level of resources to
maintain current advantage.
Strong
Opportunity
The account may represent a good
opportunity. The sales organization
needs to overcome its competitive
disadvantages and strengthen its
position to capitalize on the
opportunity.
Either direct a high level of sales
resources to improve the position
and to take advantage of the
opportunity or shift resources to
other accounts.
Opportunity
The account offers little opportunity. Its
potential is small and the sales
disadvantage in serving it.
Strategy
Either commit a minimal level of
resources to the account or consider
abandoning the account altogether.
Weak 82
 Sales territories

New Territories..?

Use of Information Technology

 IT enabled services
 computer programmes
 simulation techniques

83
 Chapter 7

Management of Sales Quota

84
 Sales quota
• a quota is an expected performance objective
• a quota is a sales assignments or goal to be
achieved in a specific period of time
• it is routinely assigned to the sales units (e.g.
departments, divisions, and individuals)
• sales units proceed to reach quotas in their
respective domains
“A sales quota is the sales goal set for a product line,
company division, or sales representative. It is
primarily a managerial device for defining and
stimulating the sales effort.”. … Kotler
85
 Principles of quota setting
• setting of sales quotas is a challenge to the sales
manager and should be handled with precision
and adequate skill
• objectivity to be observed while fixing quotas
and should be based on facts and figures drawn
from the market
• it must be simple to understand both to
the
• manager andabove
quotas set the sales people
the achievable limit often
demotivate and result in high turnover in the
organization
86
 Principles..
contd.
• flexible to the prevailing and emerging market
conditions
• there should be a level of definiteness in the quota
set for a salesperson
• it should be fixed either in terms of geographic
territory, on money value, or on the basis of units of
product(s)
• a participatory quota setting procedure followed
jointly by the sales manager and sales people together
serves as a tool of motivation and leads to the
realization of the organizational sales goals
87
S M A R T
P E T R I
E A T E M
SPECIFIC
C S A A E
I U I L
F R N I
I A A S
B B T SBO…
C
L L I MBO in the Sales
E E C domain?
88
 Organization of the sales job
Defining annual objectives
Procedure for setting sales quota
Individual Goal setting form

Name
Output
Year
Your territory
Results expected
Pessimistic Realistic Optimistic Results
1. Volume per month
2. Expenses per month
3. Gross margin per month
4. Market share per month
5. Key account coverage per
month

Conferencing with each sales person

89
Types of sales quota

• sale volume
quota quota
• sales budget

• sale activity
quota
• combination quota

90
 Methods of setting sales quota
Quotas are based on…
• sales forecasts and potentials

• forecast

• past sales and experience

• executive judgment

• sales people judgment

• compensation

91
Problems in setting sales quota
1. There is a high level of individual difference in every
organization
2. A perfect quota is a combination of selling and non-
selling activities

3. Often sales people do not give proper attention to the

non-selling activities (e.g. searching for prospects,
handling customer objections, and creating market for
probable entry of new products)

92
 Chapter 8

Recruitment and selection of

the sales force

93
 The sales manager
• performs sales management +HR
management !
• recruits, selects, trains, motivates,
leads,
controls, and compensates sales teams
• selection and recruitment of efficient sales
people is always a process of building competitive
advantage for an organization

94
Turnover Strategic position Job qualification
analysis
Establish
hiring Decide on the number of Job description
objectiv people to hire
Organizational
es Identify best sources of
Planning characteristi
recruitment: cs,
internal and external sources company image
Recruitment Generate database of and climate,
candidates styles of
Evaluate candidates
supervision,
compensatio
Selection Select and induce n, and
candidates to accept motivation
positions
Socialization of the
Socialize company

The hiring process

95
Challenges in sales force
selection
• personality types matching to job profiles
• one of the measures that the organization
looks in an employee is:
- the ability to perform by an employee
= ability x motivation
• level of motivation

96
 Planning for recruitment
1. Strategic position analysis
2. Turnover
3. Job analysis
• gathering and organization of
information
• concerning the tasks, duties and
responsibilities of a specific job
3. Task inventory analysis and KSA matrix
• job qualification
• job description

97
 Sales force recruitment
• recruitment is an act of inducing qualified and
appropriate people to get interested in and apply
for a salesperson’s position within a sales
organization
• internal sources
- existing employees
- lateral and upward moves
- interns and cooperative students
- employee referral programmes
• external sources
- industry sources
- educational institutions and campus
recruitments
- employment exchanges
- placement consultants
- walk in interviews
98
External sources contd...
- networking referrals
- web consultants
- responses to direct open advertisements

Selection procedure
- inviting application forms
- personal interviews
- reference checks
- physical examinations
- psychological tests
- intelligence
- personality
- aptitude and skills
- determination of terms of service
- appointment
- initial orientation
99
 Socialization process
• process of orienting a new salesperson to the
sales organization, territory, or division in which
he or she will be working
• three stages

Anticipatory stage

Encounter stage

Settling stage

100
 Chapter 9

Training the Sales Force

101
 Challenges in sales training
 Will the training programme be effective in solving a
problem?
 Will the investment in it be justified?
 Will it produce the desired or intended results?

102
 Role of the trainer

• The success of the training programme depends on

the ability, skill, and motivation of the sales trainer

103
 The training process

Training need assessment

Design and conduct of a training programme

Evaluation of a training programme

104
Training need assessment phase

Organizational level analysis

Task level analysis

Individual level analysis

105
 Training needs
Identification of specific problems
Anticipating impending and future problems
Management requests
Interviewing and observing the personnel on the
job
Performance appraisal
Questionnaire survey
Checklist
Attitude survey
Interpersonal skill test

106
 Designing and conduct phase

Location
Job Instruction Training (JIT)
Presentation options

107
 Types of training

Cross-functional training
Team training
Creativity training
Literacy training

108
 Training methods
Didactic method
- structure the lecture
- reinforce the Message
- aid concentration
- material used for the lecture
- make it memorable for the participants
- deliver with dynamism
- use questions
Visual support
Participative
Conferences
109
 Training methods contd..

Seminars
Discussions
Role play
Case study
Fishbowl
Workshops
Sensitivity training
Transaction analysis
In-tray exercises
Transcendental meditation
110
Deciding a sales training programme
 Aim
Content
Contents
Knowledge
Proficiencies
Location
Evaluation

111
 Process of socialization

• Anticipatory socialization

• Accommodation stage

• Outcome stage

112
 Chapter 10

Sales Force Motivation

113
Process of motivation

Motive

Behaviour Tension
reduction

Goal

114
 Motives

 Primary
 General

 Secondary

115
 Motivational drives
 Principles
 Security

 Achievement

 Approval

 Loyalty

 Advancement

 Leadership

 Human behaviour

116
 Theories of motivation

• Content
• Process
• Reinforcement

117
 Content theories

• Need hierarchy theory

• Hertzberg’s two factor theory
• Alderfer’s ERG theory
• McGregor Theory X and Y
• Z theory of William Ouchy

118
Maslow’s hierarchy of needs

Self actualisation need

Esteem need

Social need

Security need

Physiological need

119
 Process theories

• Equity theories
• Expectancy theories

120
 Reinforcement theories

• Hull’s drive theory

• Skinner’s reinforcement theory

121
Factors influencing the motivation of the
salesperson

• Personal characteristics

• Environmental conditions

• Organizational policies

122
 Designing a motivational programme
• Programme objective
• Motivational tools
• Individual methods
• Group methods
• Communication
• Auxiliary environment
• Feedback
123
 Chapter 11

Sales Force Compensation

124
 Factors influencing the design of a
compensation plan

• Financial stability

• Size of the market

• Nature of the product

125
 Types of compensation plans

• Financial compensation
• Non-financial compensation

126
 Financial compensation

• Straight salary plan

• Straight commission plan
• Bonus and incentive
• Salary plus incentive (combination plan)
• Drawing account and commission plan
• Allied methods

127
 Non-financial compensation

• Promotions
• Recognitions programmes
• Fringe benefits
• Expense accounts
• Perks
• Sales contests

128
 Steps in designing a compensation plan

• Determine sales force and compensation objectives

• Determine major compensation issues
• Implement long-term and short-term compensation
plans
• Relate rewards to performance
• Measurement of performance
• Appraise the compensation plan

129
 Chapter 12
Evaluation of the Sales Force

130
 Deciding on the criteria for
measuring performance

Deciding in the conduct of the

performance appraisal

Deciding on the evaluation of

individuals and teams

Comparison of actual
performance with
standards
Deciding on the frequency of
the performance appraisal

The external variables and

their influences
Sales force performance appraisal process
131
Sales force performance appraisal
process
• Appraisal criteria
• Relative and absolute judgments
• Trait-based
• Outcome-based
• Behaviour-based
• Performance rating
• Force choice scales
• Behavioural observation scales
• Call reports
• Silent call monitoring scores
• Activity reports
• Combinational methods
132
 Conduct of performance and individual vs
team appraisal

Example of a Role result Matrix

Position Developing a new business
Servicing existing customers
Key account manager
Regional sales manager
Application engineer
Customer service staff
Technical support staff
Installation and quality engineer
Financial staff

133
 Chapter 13

Distribution channel management - an

introduction

134
 Role of distribution channels
• To adjust the discrepancy of assortment through the process
of sorting, accumulation, allocation, and assorting
• To minimize the distribution costs through reutilizing and
standardizing transactions to make exchange more efficient
and effective
• To facilitate the searching process of both buyers and sellers
by structuring the information essential to both the parties
• To provide a place for both parties to meet each other and
reducing uncertainty

135
How do distribution channels contribute
• Intermediaries can improve the efficiency of the
exchange process
• Channel intermediaries adjust the discrepancy of
assortment through the performance of the sorting
process
• Marketing intermediaries hang together in channel
arrangements to provide for the reutilization of
transactions
• Channels facilitate the searching process

136
 Discrepancies in the process of
exchange
• Spatial discrepancy

• Temporal discrepancy

• Need to break the bulk

• Need to provide assortment

137
The cost and control aspects of
intermediation

Cost
efficiency

Control

Direct Distribution Indirect distribution

138
 Distribution channel strategy
• Setting distribution objectives in terms of the
customer requirements
• Finalizing the set of activities that are required to be
performed to achieve the channel objectives
• Organizing the activities so that the responsibility of
performing the activities is shared among the entities
who are meant to perform these activities
• Developing policy guidelines for the smooth
functioning of the channel on a day to day basis

139
 Distribution channel management
(contd.)

• Distribution channel management encompasses all

activities dealing with the distribution function of the
firm
• The distribution strategy provides guidelines for decision
making
• The distribution management function can be viewed as
happening in two phases: the ex ante phase and the ex
poste phase

140
 Distribution channel
management (contd.)

• The ex ante phase involves all the activities that are

associated with the design and establishment of the
distribution channel. These activities actually take place
before the distribution channel actually starts
functioning.
• The exposte phase involves managing the day to day
activities of the channel wherein the behavior of the
individual channel members are coordinated

141
 Channel Management tasks
Design of the channel
structure

Ex ante
Phase
Establishing the
channel

Distribution Channel Strategy

 Channel Objective
 Activity Finalization
 Organizing the activities
 Developing Policy Guidelines Motivating Channel
Members

Ex Poste
Phase

Resolving Conflicts
among channel
members

142
 Chapter 14

Designing customer-oriented
marketing channels

143
 Channel Design
• The channel design is normally meant to give a clear
idea about:
• The number of channel entities in the channel
network,
• The way in which they are linked,
• The roles and responsibilities of the entities in the
network
• The rewards for participating in the activities and also
• Clear cut guidelines for the major activities to be
performed during the normal functioning of the
channel.
144
 What are the service outputs
• Waiting time

• Breaking the bulk

• Spatial convenience

• Assortment

145
 Distribution channel design

To consume
a product Channels

Service outputs Participates in

have to be delivered channel flows

Activities have
to be performed
Thus performs activities

146
 Example of a service output delivered
template
S.No Service dimension Service output delivered
.
1. Bulk-Breaking Units are delivered in ones
2. Spatial convenience There is at least one outlet for almost
every 3 km radius excluding of course
thinly populated areas
3. Waiting time Not more than 2 days for any model
4. Assortment Other consumer goods items including
that of other competitors are
available at all the outlets where the
products are otherwise Available
5. Installation support Available
6. After sales support Free for first two years, but available on
payment afterwards. Also available at
every city from where the product
was bought.
7. Consumer financing Available 147
 Channel flows and contribution to
service outputs
Flow Direct Indirect Other
contribution contribution contribution
Physical Spatial Assortment
Possession convenience, bulk
breaking, waiting
time
Ownership Spatial convenience
Promotion Spatial convenience Is a service
output in itself
Negotiation Spatial Assortment
convenience, bulk
breaking
Risk taking Waiting time, bulk
breaking, spatial
convenience
Financing Spatial Assortment
convenience,
waiting time, bulk
breaking
Ordering Bulk breaking,
spatial
convenience, 148
waiting time
 Channel design effort decisions
• The service output levels
• The flows or activities that are associated
with the achievement of the service output
levels
• The type of entity who would be entrusted
with the performance of each of these
flows

149
 Parameters for comparing channel
designs

• Efficiency
• Effectiveness
• Equity
• Scalability
• Flexibility

150
 The channel establishment plan (contd.)

• The main purpose of the channel to be set-up

• The profile of the customers who are the target market
for the channel
• The needs and requirements of the target market with
regard to the identified service outputs provided by the
proposed/ existing channel:
• Analysis of the operations of the existing channels that
deal in similar product/service lines
• Detailed activity chart for achieving the service output
objectives

151
 Plan….. Contd.

• Details about the various channel constituents who will

be performing these tasks
• The cost of performing the activities
• The designated roles and responsibilities of the channel
constituents
• The proposed remuneration for performing these roles
and responsibilities
• Standards for measuring the performance
• Procedures for reporting and information sharing
• Monitoring mechanisms
• Criteria for appointing the channel members

152
 Chapter 15

Customer-oriented
logistics management

153
 Logistics strategy
• Cost reduction

• Capital reduction

• Service improvement

154
 Logistics Planning
Inventory Management Transportation decisions
• Inventory levels • Modes of transport
• Deployment of inventories • Carrier routing/scheduling
• Control methods • Shipment size
/consolidation

Customer
Service
goals

Location decisions
• Number, size and location of facilities
• Assignments of stocking points to sourcing points
• Assignment of demand to stocking points

155
Generic types of outbound logistics strategies

• Direct shipment

• Warehousing

• Cross-docking

156
Functions of warehousing operations

• Movement •Receiving
•Transferring
•Order picking/selection
• Storage •Shipping

• Information transfer
•Stock keeping locations
•Inbound and outbound
shipments
•Facility space utilization
•Order fulfillment data

157
 Relationship between logistics, cost,
and number of warehouses
Total cost

Total Inventory cost

cost
Transportation
cost

Warehousing
cost

Number of warehouses

158
 Why Inventories?
• To improve customer service
• To smoothen the operations of the logistics
system
• To reduces costs
• Inventory procurement costs
• Inventory carrying costs
• Stock out costs
• Cost associated with inventory

159
Components of inventory carrying cost
Capital cost Inventory
Investments

Inventory Insurance and

service costs Taxes
Inventory
carrying cost Warehouse rent,
Storage space maintenance
costs charges

Inventory Obsolescence
carrying Damage&
cost Pilferage
Shrinkage
Relocation
costs
160
 Echelon inventory
Stockist
Stockist echelon
echelon Supplier Inventory
lead time

Stockist

Retailer Retailer Retailer Retailer Retailer

161
 Factors affecting transportation cost
 Product related factors
 The density of the product
 Stow ability
 Difficult in handling
 Liability
 Market related factors
 Intramode competition
 Location of markets
 Balance or imbalance of in freight traffic in and out of the market
 Seasonability of the product movements

162
 Chapter 16

Managing Channel Member

Behaviour

163
 Channel relationships

• Perceptions of organisational power

• Dependence
• Control
• Trust
• Commitment
• Co-operation

164
Discrete relational exchange continuum

Arm’s length relationship

Relational exchange relationship

165
 Channel control

Distributor’s Tolerance
Function
profit earned

Pay–Off
Function

Zone of acceptance Supplier authority

166
 Role of persuasion, authority, and coercion in
channel control
Channel members Tolerance
profit function
A
B
C Pay –off
function

Coercion

persuasion Authority control

167
 Components of channel offering
Manufacturer sales
force incentives

Promotional
Responsiveness
support
systems Training
Financial returns
Quality products Distributor
Technical
assistanc Reliable delivery sales force
e Competitive price Market incentives
Company National reputation
resear
policies ch

Distributor firm
Incentive incentives
Capability
programme Channel core building
elements programme
s 168
Influenc Types of Explanation
e Influence
Strategy strategy
group
Indirect  Information Where information on general
influenc exchange business
issues and the channel program
e  Information control
is
strategi  Modeling merely exchanged with channel
es member personnel.
Direct  Recommendation In this type of strategy the
 Warning consequences of the acceptance
Unmediat  Positive normative or
ed  Negative normative. rejection of the channel
Strategies programme or
its implementation are stressed,
but
these consequences are based
Influence strategy types on a (contd.)
response from the market
environment, 169
not on the mediation of the
Reward and  Economic reward In this type of strategy
Punishment  Non-economic reward rewards and punishments
 Economic punishment are directly given to
Strategies
 Non-economic channel members
punishment
 Direct request This strategy involves
Direct making a direct request to
the channel member where
unweighted
the Principal mainly
strategy communicates desires or
wishes concerning the
channel member’s
acceptance of the channel
program.
Direct  Personal plea In this type of strategy
Mediated  Promise specific action is requested;
 Threat and consequences of
strategies
 Legalistic reference. acceptance or rejection are
stressed and are based on
the mediation of the
(contd.) Influence strategy types
channel principal.

170
 Influence situations in channel
relationship
Attitude towards the channel progranmme

Positive Neutral Negative

+ ve

Reinforcement Moderate Radical

Behaviour process rationalization rationalization
Behavioural Attitude change Attitude change
towards the - ve
channel reinforcement
program Inducement Moderate Radical
me process confrontation confrontation
Behavioural Behavioural and Behavioural and
change attitudinal attitudinal
change change

171
 Stages in channel conflict
Attitudinal
sources Cognitive/
of conflict Manifest Conflict
Affective
conflict outcomes
conflict

Structural
Conflict
sources of
resolution
conflict

CAUSES OF CONFLICTS
Attitudinal Causes
Structural causes

172
Conflict management methods at different stages of
conflict
Institutional approaches
Joint membership of associations
Exchange of executives
Latent conflict
Cooptation
Dealer councils

Third party mechanisms

Mediation
Felt conflict arbitration

Manifest conflict Negotiation

173
 Negotiation strategies

HIGH Accommodative Collaborative/problem

solving

Concern Compromise
for the
others
interest

Avoidance Competitive /aggressive

LOW

LOW Concern for HIGH

own interest
174
 Chapter 17

Retail Management

175
 Retail marketing mix

• Merchandise characteristic

• Customer service characteristic

• Trading format

• Customer communication

176
 Retail marketing mix (contd.)

How merchandising functions affects profitability?

(i) the merchandise in the store affect the volume of
sales as it is primarily the merchandise that attracts
customers
(ii) since profitability is based on the turnover rate of
the inventory, the choice of merchandise and the
quantity of merchandise of each category stocked
affects the overall profitability of the establishment

177
 Factors affecting choice of retail strategy

• Company’s strategic objectives in terms of the level of

profitability desired
• Space availability
• Preferences of target customers
• Relationships with manufacturers
• Availability of trained salespeople etc.

178
Availability of stock and stock holding cost
Stock
holding
cost

+20%

Percentage of availability
80% 90% 100%
179
Financial method of merchandising

• Cost method
• Retail method

180
 Merchandise planning process

Develop a sales plan

Plan reductions

Develop a stock plan

Plan merchandise needs

Calculated planned Purchase

Plan mark –ups based on profitability targets

181
 Customer services

• Product services

• Service products

• Support activities

182
 Customer performance measuring
techniques

• Frequency or browsing visits

• Frequency of purchase visits
• Average transaction per visit
• Items purchased
• Range purchased
• Customer service facilities used
183
Purchase process for service requirement
identification
Service requirements
Search
Purchase process
Comparison
Pre-purchase phase
Product related
Augmentation of the product
Purchase phase Transaction related
Delivery
Installation
Post purchase phase Use extension
Repeat visits

184
 Attitude towards trading format
and store Shopping
environment
Attitudes
Task Oriented Pleasure Oriented

Convenient Locations Exclusive Store Merchandise

Ample Parking Wide Choice
Pre-purchase
Stage Close to Other Task Oriented
Stores Prestigious Image
Relevant Merchandise Selection
During
Ambience and Excitement
Purchase High Availability
Visual Merchandising
Competitive Pricing
In-store Facilities
Post-purchase Rapid Cash Handling Product Services Centers
Stage

Product Displays Theme Displays

Customer Advice Areas Customer Advice Areas
185
 Chapter 18

Managing the International

Channels of Distribution

186
 Factors affecting international trade

• Differences in customer expectations across

countries
• Differences in channel structure and trade
practices
• Differences in governmental policies and
regulations
• Differences in the quality of physical infrastructure

187
 Market entry strategy
Indirect exporting

C Direct exporting
O Licensing
R
N
Franchising I
T
S
R Contract manufacturing
K
O Strategic alliance
L
Joint venture
Wholly owned subsidiary

188
 Success factors in manf. – overseas distributor
relationships
Distribution Outcomes Remedies
inhibitors
Separate Divided loyalties Offering good
ownership Seller buyer incentives, helpful
atmosphere support schemes,
Unclear future frank discussions,
intentions and high levels of
interactions
Geographic, Communication Making judicious
economic, blocks ways of two way
and cultural gaps Negative attitudes visits, establishing
Problems in physical a well managed
distribution communication
programme
Differences in the Vertical trading Full compliance
legal and restrictions with law,drafting a
regulatory Dismissal difficulties strong distributor
structures agent. 189
 International logistics management

• International distribution system

• International suppliers

• Offshore manufacturing

• Fully integrated global supply chain

190
 Export procedure
1
Exporter Importer

4 2

55 Bank in exporter’s Import

Importers bank
country 3 warehouse

9
Manufacturing Customs

8
9
6 Transportation and
7
Documentation Ship Customs
formalities secured broker
Freight
forwarder Contd.
191
Contd.

Stat Process
e
1 The Sale
•Importer makes enquiry from potential supplier
•Exporter sends catalogue and price list

•Importer requests samples

•Exporter sends Proforma invoice

•Importer sends purchase order

2 Importer arranges bank financing.

3 Letter of credit send by importer’s bank
4 Exporters bank notifies that the LOC has been received
5 Exporter produces or acquires goods
6 Exporter arranges transformation and documentation
and space reserved on ship or aircraft
7 Exporter ships goods to importer
8 Exporter presents documents to bank for payment
9 Importer has goods cleared through customs and
192
delivered to the ware house
 International logistics intermediaries
• Freight forwarder
a) To forward an export shipment from the point of
origin to the ultimate destination and
b) To deal with transport carriers to get space for the
shipment.
• Customs broker

193
 Exporting documents

• Letter of credit
• Bill of lading
• Commercial invoice
• Commercial invoice
• Consular invoice
• Certificate of origin

194
Thank you

195