INTRODUCTION

Management of sales and distribution is generally

acknowledged to be the backbone of marketing. Selecting
a sales and distribution approach is a key element of a
successful business model.
Structuring an analysis of sales and distribution channel
options is based on the fundamental logic underlying
channel selection:

 How do sales and distribution channel choices fit into

an overall business model?
 What were traditional channel options and why
did they meet supplier and customer needs?

 How are the underlying characteristics of sales

and distribution channels changing?

 What are new options open to suppliers and how

should suppliers evaluate those options?

 How can suppliers mange transitions between

channel choices?
Distribution
An organization or set of organizations that are
involved in the process of making a product or
service available for use or consumption by a
consumer or business user.

Distribution channel
It is defined as a chain of intermediaries, each passing
the product down the chain to the next organization,
before it finally reaches the consumer or end-user.
This process is known as the 'distribution chain' or the
'channel.'
 THE SALES AND DISTRIBUTION
RELATIONSHIP

• The relationship between sales and distribution functions is unique

because it focuses on
1) Product management issues
2) Marketing channel management issues.

• The sales function assumes the responsibility for trade customer

sales and marketing, and serves the company by “dealing with
customers on a direct or face-to-face basis” and acting as “a
communication bridge between the company and the target
audience/customer”.
• The distribution function assumes the responsibility for outbound
logistics, which encompasses, “the set of decisions and processes
concerned with the flow of products and/or services from producer to
consumer”.
Why there is a need for Effective sales-
distribution relationship?
An Effective sales-distribution relationship or “ inter-
functional relationship” is needed for a firm to attain
its broader marketing objectives, which include:

 Identifying and servicing new customers

 Retaining and increasing sales to current customers

 Reducing current customer defections

Integration of sales and distribution

Sales and distribution management constitutes

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

Achievement of volume and • Physical movement and

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

Width and depth of distribution. • Push all products, brands,

packs in each outlet.
• Sell more than competitors.
• Focus on slow movers.

Managing institutional business • Getting orders and execution.

and key accounts. • Extending credits as
necessary.
• Keeping high stock pressure
to avoid entry of competition.

Competition tracking and action • Regular oral and confirmed

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

Handling customer and • First level of interface with

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

Participation in promotional • Organize and participate in

events fares, exhibitions and melas
• Take initiative to sales
management
• Spend on the event and
then claim reimbursement

Local advertising – websites, • Fix responsibilities of

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

Specify
Select Determine
the role of Choose
type of appropriate
distribution specific
distribu- intensity
within the channel
tion of distri-
marketing members
channel bution
mix
Distribution channels are usually of two types. They are-
1. Direct Marketing Channel – This type of channel has no
intermediaries. In this distribution system, the goods go
from the producer directly to the consumer. e.g., Eureka
Forbes.

2. Indirect Marketing Channel - This may further be classified

in to the following categories:
a) One level channel- In this of channel there is only one
intermediary between producer and consumer.

Producer Retailer Consumer

Example-Producers such as Sony, Panasonic, Canon etc. sell

their goods directly to large retailers such as Comet, Dixons
and Currys which then sell the goods to the final consumers
b)Two level channel- This channel has two
intermediaries, namely wholesaler and retailer.

Producer Wholesaler Retailer Consumer

Example- Distribution of food grains like rice or wheat

c)Three level channel - This type of channel has three

intermediaries, namely distributor, wholesaler and
retailer.
Producer Distributor Wholesaler Retailer

Consumer
 Number of Channel Levels
Channel Level - Each Layer of Marketing Intermediaries that Perform
Some Work in Bringing the Product and its Ownership Closer to the Final
0-level channel Buyer.

Producer Consumer

1-level channel
Producer Retailer Consumer
2-level channel
Producer
Wholesaler Retailer Consumer
3-level channel
Producer Wholesaler  Jobber  Retailer Consumer
 Intensity of Distribution

INTENSIVE SELECTIVE EXCLUSIVE

Distribution Distribution Distribution
through every through multiple, through a single
reasonable but not all, wholesaling
outlet in a reasonable middleman
market outlets in a and/or retailer
market in a market

15 - 18
Example- Distribution network of medicine companies

Therefore, we can say that distribution is a complete

process involved in making a product available for
being used or consumed by the consumer where as
sales is a small process which is involved at each and
every step when the product is passed from one
intermediary to another in the process of distribution.
Hence sales and distribution strategies are very highly
integrated and cannot work without each other.
 CASE STUDY
Central Marketing Organization
Central Marketing Organisation ( CMO ) is
India’s largest industrial marketing set-up. It
markets carbon steel produced by the five
integrated steel plants of SAIL. Headquartered in
Kolkata, it transacts business through its network
of 37 Branch Sales Offices spread across the four
regions, 25 departmental Warehouses equipped
with mechanised handling systems, 42
Consignment Agents and 26 Customer Contact
Offices.
 CMO’s domestic marketing effort is
supplemented by its ever widening network of
rural dealers who meet the demands of the
smallest customers in the remotest corners of
the country. With the total number of dealers
crossing 2,000, SAIL's wide marketing spread
ensures availability of quality steel in virtually
all the districts of the country.
 CMO (Headquartered at Kolkata)

Eastern Western Southern

Northern
(Kolkata) (Mumbai) (Chennai)
(Delhi)

Branch Sales Branch Sales Branch Sales

Branch Sales
Office(BSO) Office(BSO) Office(BSO)
Office(BSO)
Distribution channels of SAIL can be
summarized as :

 Direct dispatch from steel plant to big consumers -

There are large number of big customers receiving
supply directly from steel plants.

 Sale of steel to the consumers through the stockyards

at different branch offices - Branch offices receive
material from steel plants to the stockyards and sell from
there to the large number of customers of all type.
 Retail network - There is large number of dealers
network established by SAIL in the country to cater
the needs small and retail buyers. These dealers
network receive materials from stockyards with
whom they are attached to.