BBA 310 – Sales &

Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
 LETS GET GOING
1. 2.

3. 4.

4
 Famous Personalities
1. Howard Schultz - Howard Schultz is the CEO, and chairman of Starbucks,
world’s largest coffee chain. Prior to Starbucks, Howard worked as a
salesman at XEROX and then as an appliance salesman at Hammarplast. A
few years later, he joined Starbucks as a Director of Marketing, fascinated
by their homely feel. He later acquired Starbucks in 1987 and became CEO.
“I am convinced that most people can achieve their dreams and beyond if they
have the determination to keep trying.” ―Howard Schultz

2. Warren Buffett - He undertook one of his first business ventures selling

chewing gum, Coca-Cola bottles and weekly magazines door-to-door.
Other childhood ventures like working as a paperboy and selling a horse-
racing tip sheet helped to inform Buffett’s first adult job after college,
selling securities at Buffett-Falk & Co in the early 1950s. His sales
background helped propel his career forward. With communication skills
and business knowledge gained from sales, in less than 20 years Buffet
became a CEO.
“The most important investment you can make is in yourself.” ―Warren Buffett

5
 Famous Personalities
3. William C. Weldon - William C. Weldon started his career as a Sales rep at
Johnson and Johnson in Pharmaceutical division. He became head of
pharmaceutical operations by 1998 and in 2002, he became the CEO.
Despite many challenges, he was able to increase the revenue of the
company during his term. He retired as the chairman in 2012.
“The values expressed in our credo are the heart of our culture.” - William C.
Weldon

4. John Paul deJoria – He is the co-founder of John Paul Mitchell Systems,

producer of professional hair care products. To help support his family at
only nine years old, he began selling Christmas cards and newspapers
with his older brother. He worked as a door-to-door encyclopedia
salesman as well as an insurance salesman. He sold Redken hair products
and earned $600 per month. Finally, in 1980, he along with his friend,
started their own company with just a couple of products. With no
revenue, they struggled a lot during their early stages but never lost
hope. At present, their company has an estimated sales of more than 1
billion dollars.

“The biggest hurdle is rejection… When 10 doors are slammed in your face, go
to door number 11 enthusiastically, with a smile on your face.” ―John Paul
DeJoria

6
 1.1 Introduction to Sales
Management
▪ Only department in an organisation that generates revenue

▪ Thorough professional, sales executive would formulate

personal selling objectives and strategies which are in sync
with the organisation vision and objectives

▪ Responsibilities of sales executives include obtaining sales

volume, providing profit contributions and continuing
business growth

▪ Important link between customer and organisation

7
1.2 Evolution of Sales Management
▪ Before the industrial revolution in 1760, small-scale
manufacturers dominated the economic scene

▪ The focus was on the manufacturing rather than selling

▪ After the industrial revolution, situation reverses as the big

industries started building huge quantities which could not be
sold only to the customers who are close bye

▪ The organisations started involving intermediaries like

wholesalers and retailers

8
Typical Marketing Orgnisation
Structure

Marketimg

Market Customer
Sales Advertising Merchandising
Research Service

9
 Sales Management

According to American Marketing Association:

Sales management means the planning, direction, and

control of personal selling, including recruiting,
selecting, equipping, assigning, routing, supervising,
paying, and motivating as these tasks apply to the
personal salesforce.
1.3 Scope and Importance of Sales
Management
•Integration with Marketing Management
•Relationship Selling
•Varying Sales Responsibilities

11
 Integration with Marketing
Management
•Marketing Team consists of:
a) Field Selling or Personal Selling Team –
Directly contact existing and prospective
customers in their territories (branches or
regions)
b) Head-Quarter Marketing Team – Performs
support and service functions or activities to
assist or help field sales people in their jobs

12
 Relationship Selling

•Every relationship is an exchange, which is the

process of obtaining, a desired product or
service from someone by offering something
in return.
•Range of relationship is:
i) Collaborative Relationship
ii) Value-added Relationship
iii) Transactional Relationship

13
 Varying Sales Responsibilities
• Deliverer – SP whose main responsibility is the delivery of
a product to household or business customers
• Order Taker – SP acts mainly as an inside order taker, who
responds to customer demands
• Missionary Salespeople – SP is expected to build goodwill
and educate the decider, instead of the user or purchaser
of product
• Technical Sales Support – SP with a high level of technical
knowledge, often acts as a consultant
• Demand Creator or Order-getter – SP who actively seek
ordered and use creative and problem-solving selling
• Solution Vendor – SP whose expertise is in solving of a
business customer’s problem with the company’s products
and services

14
1.4 Role of Modern Sales Manager

•Playing a strategic role in the company

•Working as a member of the sales team
•Working as a team leader
•Managing multiple sales channels
•Using latest technologies for sales
•Continually updating information and
understanding changes in marketing
environment

15
 Skills of a Sales Manager

•People Skills
•Managing Skills
•Technical Skills

16
1.5 Types of Sales Managers
CEO/
President
V.P. Sales/ V.P.
Marketing
National Sales
Manager
Regional/Zonal/Divisional
Sales Manager

Branch/Area/District Sales Manager

Sales Trainee/ Sales Person/ Sales

Representative

17
 Top Level (Strategic Sales
Managers)
• Highest level in sales management includes
President, Vice President, National Sales Manager
• Part of top management team
• Responsible for long-term marketing or sales
planning, including scanning external environment,
setting long-term and short-term objectives,
developing strategies, implanting strategies and
controlling performance

18
 Middle Level (Tactical Sales
Managers)
• Mostly carry the title of regional, zonal or divisional
sales manager
• Responsible for managing several branches or
districts and implementing the strategies and action
plans approved by top management

19
 First-line (Operational Sales
Managers)
• First level of sales management with titles such as
branch sales managers, area sales managers or
district sales managers
• Directly responsible to achieve sales goals and
objectives
• Implement the procedures and rules decided by
higher levels of management

20
 Staff Sales Management Positions
• To arrange assistance or help to the lines sales
managers and salespeople
• Includes positions like sales training manager,
customer service manager or sales co-ordination
manager

21
 1.6 Personal (Professional)Selling
The process of:

• Developing customer relationships,

• Discovering customer needs,
• Matching appropriate products with these
needs, and communicating benefits.

22
 Benefits of Personal Selling
• High degree of personal attention
• Sales message can be customized
• Respond directly and promptly to customer questions
and concerns
• Good way of getting across large amounts of
technical or other complex product information
• Face-to-face sales - gives the sales force chance to
demonstrate the product
• Opportunity to build good long-term relationships
 Salesmanship
• Art of successfully persuading customers to buy
products or services from where they can derive
suitable benefits, thereby increasing their total
satisfaction

• Earlier, the emphasis in salesmanship was wholly on

persuasion , today – it is on benefits attractive to
prospects and customers

• Advertising is ‘salesmanship in print’

 Buyer Behaviour Model

Buyer’s
Stimulus (Sales Response (Buy
Decision
Presentation) or no buy)
Making Process
Conceptual Model of “Salesperson-Buyer” Dyadic Relationships
 1.7 Theories of selling

• AIDAS
• Right set of circumstances
• Buying-formula
• The behavioral equation
• SPIN selling
 AIDAS

• Securing Attention
• Gaining Interest
• Kindling Desire
• Inducing Action
• Building Satisfaction
 Right Set of Circumstances

• Also known as ‘Situation-Response’ theory

• If the salesperson is able to handle the set of
circumstances, the response would be
predictable
• Circumstances are dependent upon the internal
and external factors
• The stimuli can be internal or external
 ‘Buying-Formula’ theory of selling

• Need Solution Purchase

• Need Solution Purchase Satisfaction

• Need Product/service and/or trade name Purchase Satisfaction

Adequacy

• Need Product/service and/or trade name Purchase Satisfaction

Pleasant
Feelings
 ‘Behavioral Equation’ Theory

• Based upon Stimulus-Response Model proposed

by J A Howard
• Four elements included in this model are Drives,
Cue, Response and Reinforcement
• Drives are the strong internal stimuli that impel
the buyer’s response
• Cues are the weak stimuli that determine when
buyer will respond
• Response is what the buyer does
• Reinforcement is any event that strengthens the
buyer’s tendency to make a particular response
 ‘Behavioral Equation’ Theory

• Howard incorporates these four elements into an

equation:
• B=PxDxKxV
Where, B = Response
P = Predisposition or habit
D = Drive
K = Incentive Potential i.e., potential
satisfaction to the buyer
V = Intensity of all cues
 SPIN Selling

• Proposed by Neil Rackman

• Suggests the significance of asking right questions in
the sales process
• Proposes four types of questions:
1. Situation
2. Problem
3. Implication
4. Need-payoff
 1.8 Buying Situations

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between Behavior Behavior
brands
Few Dissonance- Habitual
differences Reducing Buying Buying
between Behavior Behavior
brands

34
 1.8 Buying Situations

• Proposed by Neil Rackman

• Suggests the significance of asking right questions in
the sales process
• Proposes four types of questions:
1. Situation
2. Problem
3. Implication
4. Need-payoff
 1.9 The Sales Process

Eight steps of the Sales Process:

1. Prospecting and Qualifying

2. Pre-approach and Planning
3. Need identification
4. Presentation
5. Handling objections
6. Closing/Gaining commitment
7. Follow up
8. Maintaining the Relationship
The Sales Process

• Prospecting: personal-selling function of identifying

potential customers

• Qualifying: determining that a prospect has the

needs, income, and purchase authority necessary for
being a potential customer
The Sales Process

• Pre-Approach: The salesperson tries to learn

everything he can about the account

• Pre-call Planning: Use of information collected

during the prospecting and qualifying stages and
during previous contacts with the prospect to tailor
the approach and presentation to match the
customer’s needs
 The Sales Process
• Approach: Opening statement must get buyer’s
attention

• Presentation: Salesperson describes product and

how it meets buyer’s needs
 The Sales Process
Need-identification stage

Asking probing questions to the prospective customer

to determine needs.

Probing Questions
- Open Ended
- Close Ended
 The Sales Process

Handling Objections

• Objections are expressions of sales resistance by the

prospect.

• Salesperson should approach the objection as a sign

of interest on the part of the prospect, and provide
information that will ensure the prospect’s
confidence in making the purchase.
 The Sales Process

Closing

The salesperson must ask the customer for an order

• Good closing
• Reinforce decision to buy
• Confirm implementation schedule
• Thank the customer and ask for referrals
 The Sales Process

Follow-up

• The salesperson should complete any agreed upon

post-sales actions.

• Helps build mutually beneficial long-term

relationships
 The Sales Process

Maintaining the Relationship with the customers

• Satisfied customers can become loyal customers

• Defensive marketing to protect customers
• Customer wants supplier they can trust and who will be there when problems
arise
 BBA 310 – Sales &
Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
 1.6 Personal (Professional)Selling
The process of:

• Developing customer relationships,

• Discovering customer needs,
• Matching appropriate products with these
needs, and communicating benefits.

4
 Benefits of Personal Selling
• High degree of personal attention
• Sales message can be customized
• Respond directly and promptly to customer questions
and concerns
• Good way of getting across large amounts of
technical or other complex product information
• Face-to-face sales - gives the sales force chance to
demonstrate the product
• Opportunity to build good long-term relationships
 Salesmanship
• Art of successfully persuading customers to buy
products or services from where they can derive
suitable benefits, thereby increasing their total
satisfaction

• Earlier, the emphasis in salesmanship was wholly on

persuasion , today – it is on benefits attractive to
prospects and customers

• Advertising is ‘salesmanship in print’

 Buyer Behaviour Model

Buyer’s
Stimulus (Sales Response (Buy
Decision
Presentation) or no buy)
Making Process
Conceptual Model of “Salesperson-Buyer” Dyadic Relationships
 1.7 Theories of selling

• AIDAS
• Right set of circumstances
• Buying-formula
• The behavioral equation
• SPIN selling
 AIDAS

• Securing Attention
• Gaining Interest
• Kindling Desire
• Inducing Action
• Building Satisfaction
 Right Set of Circumstances

• Also known as ‘Situation-Response’ theory

• If the salesperson is able to handle the set of
circumstances, the response would be
predictable
• Circumstances are dependent upon the internal
and external factors
• But the proponents of this theory stresses on the
importance of the external factors and believe
that salesperson can control the selling situation
 ‘Buying-Formula’ theory of selling

• Need Solution Purchase

• Need Solution Purchase Satisfaction

• Need Product/service and/or trade name Purchase Satisfaction

Adequacy

• Need Product/service and/or trade name Purchase Satisfaction

Pleasant
Feelings
 ‘Behavioral Equation’ Theory

• Based upon Stimulus-Response Model proposed

by J A Howard
• Four elements included in this model are Drives,
Cue, Response and Reinforcement
• Drives are the strong internal stimuli that impel
the buyer’s response
• Cues are the weak stimuli that determine when
buyer will respond
• Response is what the buyer does
• Reinforcement is any event that strengthens the
buyer’s tendency to make a particular response
 ‘Behavioral Equation’ Theory

• Howard incorporates these four elements into an

equation:
• B=PxDxKxV
Where, B = Response
P = Predisposition or habit
D = Drive
K = Incentive Potential i.e., potential
satisfaction to the buyer
V = Intensity of all cues
 SPIN Selling

• Proposed by Neil Rackman

• Suggests the significance of asking right questions in
the sales process
• Proposes four types of questions:
1. Situation
2. Problem
3. Implication
4. Need-payoff
 1.8 Buying Situations

High Low
Involvement Involvement
Significant Complex Variety-
differences Buying Seeking
between Behavior Behavior
brands
Few Dissonance- Habitual
differences Reducing Buying Buying
between Behavior Behavior
brands

16
 1.9 The Sales Process

Eight steps of the Sales Process:

1. Prospecting and Qualifying

2. Pre-approach and Planning
3. Need identification
4. Presentation
5. Handling objections
6. Closing/Gaining commitment
7. Follow up
8. Maintaining the Relationship
The Sales Process

• Prospecting: personal-selling function of identifying

potential customers

• Qualifying: determining that a prospect has the

needs, income, and purchase authority necessary for
being a potential customer
The Sales Process

• Pre-Approach: The salesperson tries to learn

everything he can about the account

• Pre-call Planning: Use of information collected

during the prospecting and qualifying stages and
during previous contacts with the prospect to tailor
the approach and presentation to match the
customer’s needs
 The Sales Process
• Approach: Opening statement must get buyer’s
attention

• Presentation: Salesperson describes product and

how it meets buyer’s needs
 The Sales Process
Need-identification stage

Asking probing questions to the prospective customer

to determine needs.

Probing Questions
- Open Ended
- Close Ended
 The Sales Process

Handling Objections

• Objections are expressions of sales resistance by the

prospect.

• Salesperson should approach the objection as a sign

of interest on the part of the prospect, and provide
information that will ensure the prospect’s
confidence in making the purchase.
 The Sales Process

Closing

The salesperson must ask the customer for an order

• Good closing
• Reinforce decision to buy
• Confirm implementation schedule
• Thank the customer and ask for referrals
 The Sales Process

Follow-up

• The salesperson should complete any agreed upon

post-sales actions.

• Helps build mutually beneficial long-term

relationships
 The Sales Process

Maintaining the Relationship with the customers

• Satisfied customers can become loyal customers

• Customer wants supplier they can trust and who will be there when problems
arise
 BBA 310 – Sales &
Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
 1.10 Sales Forecasting
•Sales Forecast is estimated units or rupees
sales for a specific future time period based
on an assumed marketing environment and a
proposed marketing plan
•Acts as a forerunner to all planning activities
in an organisation
•Used by other functions such as
manufacturing or production; finance;
purchase and human resource

4
 Types of Sales Forecast

Product Level
* All (Total) Sales
* Industry Sales Time Period Geographic Area
* Company Sales * Long Range * Nation
* Product Line Sales * Medium Range * Region
* Product Variant (Form) Sales Short Range * Territory
* Product Item Sales * Customer
 Basic Terms in Forecasting
• Market Potential – Estimate of the maximum
possible sales opportunities present in a particular
market segment and open to all sellers of good or
service during a stated future period
• Sales Potential - Estimate of the maximum possible
sales opportunities present in a particular market
segment and open to a specified company of good or
service during a stated future period
 Forecasting Approaches

• Top-down/Break-down Approach
• Bottom-up/ Build-up Approach
Sales Forecasting Methods
Qualitative Methods
• Executive Opinion
• Delphi Method
• Sales Force Composite
• Survey of Buyers’ Intentions
• Test Marketing
Quantitative Methods
• Moving Averages
• Exponential Smoothing
• Decomposition
• Naïve/Ratio Method
• Regression Analysis
• Econometric Analysis
 Executive Opinion Method

• Oldest, simplest and most widely used method

• It included getting the views of top executives of
the company regarding future sales
• Advantages are forecasting can de done quickly
and easily; less expensive; quite popular among
small companies
• Disadvantages are unscientific and subjective
 Delphi Method
• Selection of panel of experts from within and outside the
organization
• Each expert separately make a forecast and anonymously
submit it to the coordinator
• Coordinator summarizes all the forecasts and submit the
report again to all the experts
• Experts are then asked to make the forecasts again
keeping in mind the summarized report
• The process is repeated until some consensus is arrived
• Advantages are that this approach is more objective and
is useful for technology, new product and industry sales
forecast
• Disadvantages are difficulty in getting the panel of
experts and longer time for getting consensus
 Salesforce Composite Method
• Involves salespeople to estimate their future sales
• Also called grass-roots approach
• Often used by B2B marketing
• Salesperson makes the estimate in consultation with
consumers and sales supervisors, and/or based on their
experience and intuition
• Advantages are involvement of salesperson who is closest
to the market and sales estimate can be broken down to
product, customer or territory
• Disadvantages are that they are not trained in forecasting
and can be either optimistic or pessimistic in their
approach; not given good results if incentive schemes are
linked with it
 Survey of Buyers’ Intention Method

• Also called market research or market survey

• Includes asking existing and potential customers
about their likely purchase of the company’s product
and service for the forecast period
• Advantages include helping the company to make
effective decisions in marketing as well as
production and development area
• Disadvantages are sometimes buyers are unwilling
to share the information
 Test Marketing Method

• Useful for forecasting sales for a new product, which has no

historical sales figures.
• Can also be used for estimating sales for an established
product in the new territory
• In industrial-product marketing, Alpha testing and Beta
testing methods are used
• Advantages are to give an indication about the sales figures
to the organisations about their new products
• Disadvantages are that the competitors would know about
the organization’s plans before the full-blown launch of the
product
 Moving Average Method

• Develops a company forecast by calculating the average

company sales for previous years

• Sales forecast for next year= Actual sales for past 3 years
Number of years (3 years)

• Advantages include simple, easy and effective in capturing the

cyclical variations of the industry
• Disadvantages are unable to predict long-term sales forecast
and can’t be used for new products
 Exponential Smoothing Method

• Forecaster decides the value of smoothing constant(L) based

on review of sales data; knowledge and observation about
conditions in the forecasted period and intuition
• Sales forecast for next year= (L) (Actual Sales this year) +
(1-L) (This year’s sales forecast)
• Advantages include useful when sales data have a pattern and
it is used as an immediate response to a upturn or downturn in
sales
• Disadvantages include the arbitrary nature of smoothing
constant.
 Decomposition Method
• Company’s previous periods’ data is broken down
(or decomposed) into four major components such
as trend, cycle, seasonal and erratic events
• These components are then recombined to produce
sales forecast
• Advantage is that it is conceptually sound method
and include the components which get overlooked
in other methods
• Disadvantage is that difficult and complex
statistical methods are needed to break down and
then recombine the various components
 Naive/Ratio Method
• Time series method of forecasting, which is based on
the assumption that what happened in the
immediate past will continue to happen in the future.
• Sales forecast for next year =
Actual sales of this year x Actual sales of this year
Actual sales of last year
• Advantages are simple to calculate and is good for
short-term forecast
• Disadvantages include cannot be used for long-term
periods and new products and does not take sales
fluctuation in the past into account
 Regression Analysis

• Statistical forecasting method to predict sales in which

company identifies causal relationship between
company sales and independent variables (factors),
which influence sales
• If there is only one factor then it is called linear (or
simple) regression. In case of multiple factors it is called
multiple regression analysis
• Advantages include high forecasting accuracy and
objectivity in the method
• Disadvantages include technically complex method
which is more time consuming
 Econometric Analysis

• Many regression equations are built to forecast

industry sales, general economic conditions or
future events
• A number of regression equations were developed
to find out the variables or factors which are
influencing sales and the interrelationships between
these factors. Forecast is proposed by selling these
equations on the computer
• Advantage is that this is the most accurate way of
forecasting
• Disadvantage is that a large volume of data is
required
Ways to improve forecasting accuracy

• Use multiple forecasting methods

• Identify suitable methods
• Develop a few factors
• Obtain a range of forecasts
• Use computer hardware and software tools
 BBA 310 – Sales &
Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
 1.11 Sales Territory
•Sales Territory is a grouping of existing and
potential customers and prospects assigned to
an individual salesperson
• Breaking down the total market into smaller
units makes control of sales operations more
effective
•It may or may not be the geographical
territory

4
 Reasons for Establishing Sales
Territories
•Providing proper market coverage
•Controlling selling expenses
•Better evaluation of sales force
performance
•Increasing sales force effectiveness and
morale
•Aiding in coordination of personal selling
and advertising
Procedure for Designing Sales Territories

• Selecting a basic geographical control unit

• Determine sales potential in each control unit
• Decide basic territories
 Selecting a Basic Geographical
Control Unit
• First step in territory design is to select a geographical
territorial base, called control unit
• Commonly used control units are countries, zip code
numbers, states, metros, cities, districts etc
• In general, smallest control unit is selected by the
organisations because a) it helps in calculate the control
unit’s market potential and company’s sales potential and
b) adjustments (additions or deletions) of control units
should be possible when tentative territory boundaries
are modified to make final territories
 Determining Sales Potential in
each Control Unit
• Sales Potential - Estimate of the maximum possible sales
opportunities present in a particular geographical
market segment and open to a specified company of
good or service during a stated future period
• To identify the final consumer, specifically in industrial
marketing, is desirable
• Companies sometimes do the market research to identify
the final consumer, specifically in case of new products
• After the identification of the customers, the total sales
potential for all customers in the control unit is estimated
• For this, first the market potential of the control unit is
estimated (based upon the forecasting techniques) and
then the market share of the company is estimated
 Decide Basic Territories

• It can be done by using either build-up method or

breakdown method.
• Build-up method equalises the workload of
salespeople and is commonly used by manufacturers
of industrial products and services or by companies
that want selective distribution strategy
• Breakdown method equalises the sales potential of
territories and is commonly used by manufacturers
of consumer products and services or by companies
that want intensive distribution strategy
 Build-up Method

Step 1
• Decide Call Frequencies

Step 2
• Calculate Total Number of Calls in each CU

Step 3
• Estimate Workload Capacity of a Salesperson

Step 4
• Make tentative Territories

Step 5
• Develop Final Territories
 Breakdown Method
• Estimate Company Sales Potential for Total Market
Step 1

• Forecast Sales Potential for each CU

Step 2

• Estimate Sales Volume expected from each Salesperson

Step 3

• Make tentative Territories

Step 4

• Develop Final Territories

Step 5
 Assigning Salespeople to Territories

• Interactions of salespeople with potential and

existing customers are affected by social and cultural
characteristics
• The two criteria on the basis of which the sales
territories are assigned to the sales people are:
a) Relative Ability of Salespeople
b) Salesperson’s effectiveness in a Territory
 BBA 310 – Sales &
Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
UNIT II- SALES FORCE
MANAGEMENT

4
 2.1 Sales Organization
•Group of individuals striving jointly to reach
qualitative and quantitative objectives, and
bearing formal and informal relations to one
another.
•Its not an end in itself but rather the vehicle
by which individuals achieve given ends.
•It defines the relationship among jobs, and
amongst people, in a company.

5
 Purpose of Sales Organization
•To permit the development of specialists
•To assure that all necessary activities are
performed
•To achieve coordination or balance
•To define authority
•To economize on executive time
Basic Concepts in Sales Organization

• Degree of Centralization
• Degree of Specialization
• Line or Staff Position
• Marketing Orientation
• Effective Co-ordination
• Span of Control
 Basic Types of Sales
Organizational Structures
• Line Sales Organization
• Line and Staff Sales Organization
• Functional Sales Organization
 Line Sales Organization
Head-
Marketing

Sales Manager

Area Sales Area Sales Area Sales

Manager -1 Manager -2 Manager -3

Salespeople Salespeople Salespeople

 Line & Staff Sales Organization
Head-
Marketing

Marketing Marketing
Services Research Promotional
Sales Manager
Manager Manager Manager

Area Sales Area Sales Area Sales

Manager -1 Manager -2 Manager -3

Salespeople Salespeople Salespeople

Functional Sales Organization
Head-
Marketing

Marketing Marketing
Services Research Promotional
Sales Manager
Manager Manager Manager

Area Sales
Manager -2

Salespeople
SCHEMES FOR DIVIDING LINE
AUTHORITY IN THE SALES
ORGANISATION

12
Geographic-Based Structure
Product-Based Structure
Sales Department with Line Authority Subdivided
by Products Utilizing Duplicate Staffs
Sales Department with Line Authority
Subdivided by Type of Customer
Sales Department with Line Authority
Subdivided by Marketing Channel
 2.2 Size of the Salesforce
•After determining the sales organisation
structure, company would determine the size
of the salesforce
•It has to decide how many salespeople are
required to meet company’s sales volumes
and profit objectives
•Optimum size of salesforce is required

18
 Methods to Determine Salesforce
Size
• Workload Method – It is based on the
assumption that all salespeople will have equal
workload which would include customer size,
sales volume potential and travel time
• Sales Potential/Breakdown Method – It is based
on the assumption that sales forecast is accurate
and average salesperson would have the same
productivity
• Incremental Method – It is based on the
assumption that profits will increase when
additional salespeople are added, provided sales
revenue exceed the incremental costs

19
 BBA 310 – Sales &
Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
UNIT II- SALES FORCE
MANAGEMENT

4
 2.3 Recruitment & Selection
•Important part of implementing personal-
selling strategy
•It is dependent upon the company size,
executives’ personalities and departmental
structure
•It can be done by the personnel manager or
by the top management, in case of technical
selling. But the local applicants can also be
hired by district or regional sales offices to
reduce cost and time

5
 Recruitment
•Includes activities to get individuals who
will apply for the job
•To get the pool of candidates from where
the company selects the right person for
the job
 Steps for Recruitment and Selection

• To find or identify the sources of sales recruits

• Evaluating and recruiting the selected sources
• To select those who have the highest probability
of success
 Sources of Sales Force Recruits

Internal Sources External Sources

• Employee Referral Programme
• Current Employees
• Promotions and Transfers
• Advertisements
• Internet
• Educational Institutions
• Employment Agencies
• Other Companies (Competitors,
Customers, Non-Competitors)
• Job Fairs
 Evaluation of Recruiting Sources
• After the identification of sources, the organisation evaluates
the various sources based on their past database.
• Evaluation of recruiting sources is dependent on three factors:
a) Performance rating of sales force at the end of two years of
working
b) Percentage retained (after 2 years working with the
organisation)
c) Cost of recruiting

9
 Selection Process
• Consists of number of steps which act like filters
which enables the organisations to drop the
applicants from further consideration
• Major steps in the selection process are:
a) Screening Resumes
b) Application Blank
c) Initial Interview
d) Intensive Interview
e) Testing
f) Reference Check
g) Physical Examination
10
 Screening Resumes
• It is used in case the company receives a
large number of resumes based on
advertisements or educational institutions
•Many a times, it is done by the employment
agencies or somebody else.

11
 Application Blank
•Also known as formal application form or
personal history record
•All the relevant information (e.g. education,
work experience etc)of the candidates are
presented in the same format which helps in
comparison
•It becomes the basis for asking questions in
interview

12
 Interviews
•Most widely used selection tool to decide a
person’s fitness for a job
•It helps to understand if a match exists
between what a company is offering to the
applicant and what the applicant is offering to
the company
•The interviews can be structured (guided),
unstructured (non-directed) or semi-
structured
•Some employees take behaviour and
performance based interviews as well
13
 Initial Interviews
•The purpose of initial interview is screening
candidates
•The basic questions regarding the
qualifications and experience are asked
•Some companies conduct this over the phone
or by using computer-assisted interviewing
•Computer indicates applicants’ strengths,
weaknesses and other areas that need further
investigation

14
 Intensive Interviews
•The purpose of intensive interview is to get in-
depth view of the candidate
•These interviews are generally taken by
multiple people either together or
sequentially
•Interviewer conducts stress interviews to find
out how the applicant might cope with stress
while selling

15
 Testing
•To decide whether applicants have traits or
characteristics that lead to success in sales job
•Selection tests are designed to measure
aptitude, intelligence, interest, knowledge and
personality of salespeople
•These tests should not be the sole criteria for
rejecting or selecting an applicant but should
be able to identify areas for further close
investigation in the final interview

16
 Reference Check
•References are the names of person from
whom information can be obtained on an
applicant’s ability and character
•An organisation may check an applicant’s
references by e-mail, letter, telephone or
personal visit
•Mostly applicants give the list of references of
the people who are likely to give positive
reference
•Background investigations are also carried out
by some investigating agencies
17
 Physical Examination
•Objective is to find any physical problem that
may prevent the job performance of the
applicant
•As the costs of physical examinations are high,
they are usually done towards the end of the
selection process

18
 Selection Decision
•For making a selection decision, the sales
manager should decide the important
selection criteria, which are necessary for
performing the duties of sales job
•Sales manager should then evaluate each
applicant’s qualification and potential in
relation to selection criteria

19
 BBA 310 – Sales &
Distribution Management
Dr. Shalini Gautam
s.gautam@dme.ac.in
Syllabus
 Suggested Readings

•Still, K.R., Cundiff, E.W., Govoni, N.A.P. & Puri,

S. (6th Ed., 2014). Sales & Distribution
Management, Pearson Education, New Delhi.
•Havaldar, K.K. & Cavale, V.M. (2nd Ed., 2012).
Sales & Distribution Management: Text &
Cases, Tata McGraw Hill, New Delhi.

3
UNIT II- SALES FORCE
MANAGEMENT

4
 2.4 Training
•Sales Training is the effort an employer makes
to provide salespeople with job-related
knowledge, skills, attitudes and culture that
should result in improved performance on
sales, productivity and profits
•The effective training helps to reduce the
turnover of the sales personnel and the cost
of recruitment and selection
•It helps to improve the sales force
effectiveness by maintaining better continuing
relations with established accounts and
making better impressions on prospects
5
 Assessing Sales Training Needs

Methods used for assessing training Popular sales training needs

needs
• Sales Manager’s Observations • Product Knowledge
• Salesforce Survey • Customer Knowledge
• Customer Survey • Competitive Knowledge
• Performance Testing • Sales Techniques (Selling Skills)
• Company Knowledge

• Capability gaps need to be identified proactively. It arise when the salesforce

does not have the required knowledge, skills or capabilities to become
successful on the job
• Training needs for both newly hired sales trainees and experienced
salespeople need to be assessed
 Building Sales Training Program
(ACMEE)
•Defining Training Aims
•Deciding Content
•Selecting Training Methods
•Executing Sales Training Programme
•Evaluating the Results of Training
Programme
 Defining Training Aims
• Training aims would be derived after assessing
and understanding the specific needs of the sales
people. Some of the common objectives/aims
are:
1) Increase sales productivity
2) Increase sales, profits or both
3) Lower salesforce turnover rate
4) Improve customer relations
5) Introduce new markets, products and
promotional programmes
6) Improve salesforce morale
7) Improve teamwork and co-operative efforts
 Deciding Content
• Content of the sales training program derives from the
specific aims that that are formulated after anlaysing training
needs
• Initial training programmes are broader in scope as compared
to continuous training programmes
• Content is dependent upon the company policies, trainees’
abilities and experience, organisational size, kind of products
it is dealing with
• Usually the content incudes company knowledge, product
knowledge, customer knowledge, competitor knowledge,
selling skills, negotiation skills, sales presentation skills, team-
selling skills, time and territory management skills etc

9
Selecting Training Methods
Classroom/Conference
Behavioural Learning
Training
* Role-playing
* Lectures
* Case Studies
* Demonstrations
* Simulation Games
* Group Discussion

Online Training
Absorption Training/Self
* Electronic Performance Study
Support System (EPSS)
* Manuals, Books
* Interactive Multimedia
CD-ROM
Training

On-the-Job Training
* Mentoring
* Job Rotation

10
 Executing Sales Training
Programme
• It requires five important organisational
decisions
1) Who will be the trainees?
2) Who will conduct the training?
3) When should the training take place?
4) Where should the training be done?
5) What will be the budgeted expenditure for
the training?

11
 Evaluating the Results of Sales
Training Programme
•It is difficult to evaluate sales training
programme because of the subjectivity
involved
•Effectiveness of the sales training programme
necessary to measure to justify the
expenditure on the training programme and
to improve the design of the training
programme in future
•The outcomes of training programme can be
measured through four categories: reactions,
learning, behaviour, results

12
 2.5 Motivation
•Derived from Latin word ‘movere’ means ‘to
move’
•Desire to spend effort to fulfil a need
•Goal-directed behaviour aimed toward
achieving given results, which, in turn, provide
rewards in line with the goal
•In context of sales personnel, motivation is
the amount of effort the salesperson desires
to expend on activities associated with sales
job
13
 Dimensions of Motivation
•Intensity- Amount of mental and physical
effort that a salesperson spends on a given
task
•Persistence- How long the salesperson
continues to put forth effort
•Direction- Salesperson’s choice of direction of
effort among various tasks

14
 Importance of Motivation
•Inherent nature of the sales job
•Changes in marketing environment
•Conflicting company objectives
•Tendency towards apathy
•Maintaining a feeling of group identity

15
Motivational
Theories

16
Maslow’s Hierarchy of Needs
Herzberg Motivation–Hygiene Theory
Expectancy ModeI by Vroom
 Motivational Tools in Motivational
Mix
Non Financial
Financial Rewards/Compensation
Rewards/Compensation
• Promotion
• Salary
• Sense of Accomplishment
• Commission
• Personal Growth
• Bonus Payment
Opportunities
• Fringe Benefits
• Recognition
• Sales Contests
• Job Security
• Sales Meetings and
Conventions
• Sales Training Programmes
• Job Enrichment
• Supervision
 Guidelines for Motivating
Salespeople
•Difference between can’t do and won’t do
•Include individual needs into motivational
programmes
•Plateaued Salespeople
•Proactive Approach

21
 2.6 Compensation
•Sales Compensation is an essential part of
total program for motivating sales people
•It has three motivational roles:
1. Provide a living wage
2. Adjust pay levels to performance
3. Provide a mechanism for demonstrating the
congruency between attaining company
goals and individual goals

22
 Requirements of good
compensation plan
•To have regular and incentive income
•To have simple plan which is easy to
understand
•To have a fair payment plan
•To have competitive yet economical plan
•To have flexibility in plan

23
Designing an effective sales
compensation plan
Examine Job
Descriptions

Set up Specific
Objectives

Decide Levels of
Pay/Compensation

Develop the
Compensation Mix

Decide Indirect
Payment Plan

Pre-test, Administer
and evaluate the plan 24
 Examine Job Descriptions
•JDs are formal, written statements describing
detailed account of the job.
•They cover title of the job, reporting
relationship, types of products and services
sold, type of customers called, duties and
responsibilities, location and geographic area
to be covered
•JDs are re-examined exhaustively to know if
they provide the complete and accurate
description of the job

25
 Set up Specific Objectives
•Salesperson objective is derived from the
company’s marketing and sales objectives
•Those objectives should be chosen over which
the salesperson has the maximum control
•Objectives should be measurable

26
 Decide Levels of
Pay/Compensation
•Level of pay means the average pay/money
earned by the salespeople per year/month
•Should be competitive to attract and retain
good quality salespeople
•Pay are based on following three factors:
1) Levels of pay for similar sales position in the
industry
2) Levels of pay for the comparable jobs in the
company
3) Education, experience and skills required to
do the sales job
27
 Developing Compensation Mix
• It is the method by which salespeople will be paid
• It has four basic elements:
1) Fixed Element (Salary)
2) Variable Element (Commission, Bonus, Incentive)
3) Element covering the fringe or ‘plus factor’
(Insurance, Medical Benefits, LTA, Pension)
4) Element providing for reimbursement of expenses
(Lodging, Travelling, Customer Entertainment)
Depending upon the above, there are three types of
compensation plans, namely, straight salary, straight
commission and combination of salary, commission,
and/or bonus

28
 Decide Indirect Payment Plan
• Also known as fringe benefits, perquisites or perks range
from 25-40% of the total sales compensation package

29
 Pretest, Administer & Evaluate
•Pretesting is usually done on a sample of small
set of salesforce to get their feedback
•Compensation plans should be introduced to
the sales people well in advance. The
rationale of the modified compensation plans
should be explained clearly
•The evaluation of the new plans should be
done on a regular basis to know if the
objectives of the compensation plans have
been met or not

30