Sales and Distribution Management

BBGM402
BBA – 4th Sem. (L-1)
 Introduction to Sales and Distribution Management

Sales And Distribution Management

Sales management includes the means and methods by which a
sales force, sales techniques and sales operational strategies are
built. Distribution describes the manner by which a product or
products are made available to the consumer.

Conditions of Sales

Every sale includes a primary seller, who provides the service or

product, and a buyer who purchases the service or product.

Direct Distribution
Using this type of distribution strategy, goods are sold by the
manufacturer directly to consumers.

Indirect Distribution
Indirect distribution involves at least one third party, often a
retailer, who purchases goods from a manufacturer and then sells
them to customers. This type of distribution can also include
wholesalers and distributors who purchase product from
manufacturers at a discount price and then resell to retailers at a
slightly higher number.

Sales refers to the exchange of goods/ commodities against

money or service. It is the only revenue generating function in an
organization. It has formed an important part in business
throughout history. Even prior to the introduction of money,
people used to exchange goods in order to fulfill the needs, which
is known as the barter system.
Example of Barter System
A has 100 kg of rice and B has 50 kg of wheat. Here, A needs
wheat and B needs rice. They agree to exchange 50 kg of rice
and 25 kg of wheat upon mutual understanding.
Conditions of Sales
 There are two parties involved in the transaction,
the seller and the buyer.
 The seller is the provider of goods or services and the buyer
is the purchaser in exchange of money.
The seller of goods has to transfer the title of ownership of the
item to the buyer upon an agreed price. A person who sells goods
or services on behalf of the seller is known as the
salesman/woman.
Distribution is the process of making a product or service
available for use or consumption to the end consumer or
business.
Sales Management and the Environment
Sales management in any organization is affected by environmental
factors. Such factors affecting sales could be behavioral, technological
or managerial in nature.
Behavioral Factors :
The consumer today has become more conscious of the environment,
and sales must adjust to a variety of influences. Like rising consumer
expectations, expanding power of major buyers, customer avoidance of
buyer—seller negotiations, globalization of markets, fragmented
markets.
Technological Factors :
The major technological factors that affect sales are sales force
automation, virtual sales offices, and electronic sales channels. Sales
force automation includes laptop and palmtop computers, mobile
telephones, fax, e-mail and more advanced sales software that aid
account planning, and the recruitment, selection and evaluation of the
sales personnel. Electronic data interchange (EDI) provides computer
links between manufacturers and resellers (retailers, wholesalers and
distributors), allowing direct exchange of information. Technological
innovations have facilitated desktop videoconferencing, enabling sales
meetings, training and customer interaction without the need for
people to leave their office. Technological innovation leads to cost and
time saving and enhanced job satisfaction for salespersons.
Managerial Factors :
Managers respond to the change in the environment by developing
new strategies and tactics to enhance sales effectiveness. They employ
direct marketing techniques, improve cooperation between sales and
marketing, and look after the training and development needs of the
sales people. Sales management responds to new challenges by
recognizing the importance of professional qualifications.

Sales Management: Objectives, Nature & Scope

BBA -4th Sem. (L-2)
 Sales management objectives
A sales manager’s responsibility is to set long-term goals and objectives for their
team. By understanding how sales objectives fit into the organization, you’ll better
understand the big picture and can communicate better with senior management.
Some of the main objectives of sales management include:
 Revenue generation
 Increased sales volume
 Sustained profits
 Sales department growth
 Market leadership
 Prospect conversions
 Motivating the sales force

Sales management tactics that help you form a

successful department
You’ll need to have a solid sales strategy to have a successful sales team.  Here are
some sales management tactics that shape an effective sales department.

Set realistic tactics for sales.

People typically want to achieve their best every day, but the reality is that we all
have good and bad days at work. When setting sales targets for your team, ensure
you include an element of flexibility. Realistic targets should be achievable but
challenging.

Find and choose your team.

Once you have set your realistic team goals, find the right people for your team. You
need to find motivated and enthusiastic people who like and appreciate your products
or service. If you can find people who are genuinely interested in what they’re selling,
this will make your job much easier. Good salespeople tend to be resilient, empathic,
enthusiastic, confident, and adaptable. A competency-based recruitment framework
can increase the effectiveness of your recruitment process.

Educate your salespeople. 

Sales training has to be a consistent part of your strategy. If you’re unsure what to
train your team on, look back at the last six months of sales reports and identify
trends in customer buying behavior and objections. Analyze the behaviors and
performance of individual salespeople and the team. Complete a skills gap analysis.
Use this information to create new sales training to plug competency gaps, overcome
customer objections, model effective behaviors, and close more deals.

Reward good performance.

A highly-effective way to motivate your sales team is to reward them for achieving
their goals. If they know you’ll compensate them for results, they’ll be more motivated
to do what it takes to get them. You must understand what motivates your team
members and build fair, equitable, and motivating sales incentives. Alternatively, you
could ask them to pick their own rewards.

Measure progress on all key metrics.

To measure progress ensure you track all key metrics related to your team’s
performance. This includes quota attainment, average deal size, close rates, average
call times, and pipeline velocity. This data informs you of where your salespeople
need more coaching or other resources that will help them succeed.

Nature of Sales Management

To understand the concept of sales management clearly, we must go through its
following characteristics:
  Goal-Oriented: Similar to other management activities, sales management
also have a specific purpose and intended for the achievement of specified
goals or objectives.
 Continuous Process: The sales manager needs to perform sales
management functions regularly, and this process is never-ending.
 Systematic Approach: It is an organized way of handling the sales function
of the company where every problem has a defined and proven solution.
 Relationship Selling: The salespeople make efforts to build a strong
customer relationship to sell the products or services effectively.
 Marketing Management Integration: Marketing is a broader concept;
marketing management includes all the activities related to sales
management.
 Different Sales or Job Position: It is the combined efforts of the whole
sales team, including salesperson, sales executive, sales head, sales
manager and after-sales service personnel.
 Pervasive Function: It is a universally applicable concept which has been
adopted and tested by every kind of business organizations.

Sales Management Scope

Sales management is a field which has emerged from marketing management;

however, the latter is a broader concept.

Let us now learn about the extent to which sales management is applicable in
business organizations:

Sales Planning or Forecasting: The sales-related activities need to be planned

well in advance through anticipation of future sales prospectives.
Sales Budgeting: The sales manager needs to determine or estimate the sales
budget, i.e., the expenses which will be incurred in carrying out the sales
activities.

Determining Structure and Size of Sales Organization: The department of a

company which is solely responsible for all the sales-related functions is termed
as a sales organization.

Sales management provides for determining the size, composition and structure
of a sales organization.

Human Resource Planning: The sales management ensures a proper

estimation of sales personnel requirement in the organization.

Hiring Sales Personnel: It initiates the recruitment and selection of efficient and
suitable candidates for various vacant sales positions.

Training and Development of Salespeople: It also includes providing training

and orientation to the selected candidates to develop their skills and knowledge
to match those required for the job position.

Developing Salesperson’s Objectives: The sales manager set up achievable

objectives or goals for the salespeople appointed under him/her.

Fixing Sales Quotas: Also, the sales quota (monthly, quarterly or yearly) is
fixed, either in terms of volume or value of sales to set targets for the sales team.

Determining Sales Territories: Every sales team or salesperson is given a

particular region or area as a target market, where they need to penetrate for
selling products or services.

Motivating Sales Personnel: It also emphasizes on reviewing the work of

salespeople and driving them frequently to perform better.

Compensation and Remuneration of Salespeople: It ascertains appropriate

salary, remuneration, allowance, commission and other benefits to the
salespeople.

Sales Environment
BBA -4th Sem. (L-3)
The sales environment is the habitat culture that you cultivate in your team
of sales. It encloses the mode you physical organization of your sales office.

Furthermore, the emotional ambiance you keep for the presentations or

meetings. 

And the way you encourage your sales reps.

The concept of the sales environment is vague. It differs from one company

to another company. 

It is sure that an environment where people are happy and motivated to

work hard, stay longer in their jobs and make their enterprise more
successful.

On the other way, a toxic sales environment can break down morale and
negative results. So, a sales environment is the deciding factor of how
successful your company is going to be.

Types of Sales Environments

In-Office Sales Environment

This is the type of environment with which we are most familiar. This is the physical
office where you personally manage your team.
In-office sales environment should be transparent and positive.

Here is how you organize such an environment in your office:

 To keep transparency in the office by adopting an “open-door” policy. It allows the

sales reps to freely walk up to their managers or any sales leader to discuss
anything that they would like
 Encourage everyone in your sales office to express their concerns freely with their
managers or directly with you. This brings an environment of transparency, trust,
and compassion in the office.

Remote Sales Environment

This kind of sales environment has had popularity since the start of COVID. As a lot of
companies have moved to the work-from-home mode.

Although you can’t physically manage your remote sales team, here are some ways to
create an effective remote sales environment:

 First, be sure to equip your team with the software to collaborate with each other
from home. It includes CRM and other sales enablement tools.
 Encourage transparency and communication in weekly virtual stand-up meetings.
 Encourage an “open-door” policy over tools like Messenger or email where people
can reach out to anybody by simply sending a message.
 Adapt virtual coffee term where the remote team gets a chance to hang out with
each other in a virtual informal meeting.

B2B Sales Environment

In a B2B sales environment, sales reps have fewer customers, longer sales cycles, and
more significant deals.

So, here you need to inspire your sales teams to engage in consultative selling, where
they create long-term, mutually beneficial sales relationships with customers.

B2C Sales Environment

B2C sales environments have more transactional trading. Here the sales reps sell lower-
priced products, and they are not always needed to maintain long-term customer
relationships.

However, you need to encourage them to build rapport with and delight their users, even if
they’re one-time customers.

Incentive-Based Sales Environment

Every sales management environment operates with some sort of incentive planning. An
incentivized sales environment cultivates healthy competition and motivates the sales reps to
meet or exceed their sales goals.

Sales Planning
BBA -4th Sem. (L-4)
Sales planning is the process of defining sales targets and creating a
strategy that meets goals and achieves sales and marketing results. The
sales plan works in collaboration with the marketing plan and the business
plan. The marketing plan details the strategies while the business plan sets
the initial intentions for the company. Annual or quarterly sales plan
updates ensures the plan stays on course and allows for changes.

Like marketing and business plans, sales plans are living documents that
evolve over time. Past experience often dictates the desired achievements
of the sales plan, allowing for alterations as the plan is put into action.
Ideally, sales planning addresses six factors that encompass a winning
sales strategy:

1. Create a situational analysis

By gathering data and analyzing trends, sales plans assess the current
situation to outline strategies based on historical data. Data and trend
analysis can identify obstacles and build on the strengths of the sales plan.
These actions provide the blueprint for designing new strategies.

2. Identify objectives and goals

Effective sales planning defines company sales targets to include the

interests of both the consumer and the business. Sales goals aim to
increase revenue, launch a new product or increase brand awareness.
Examples of sales goals are:

 Increase monthly or annual revenue

 Lower costs and increase profit margin
 Boost customer value
 Increase sales leads

3. Set a strategy

When setting a strategy, sales teams outline individual roles and

responsibilities based on team member strengths and abilities. For
example, assign the team member who excels at social media posts to
oversee that sales channel. Strategies should integrate with finance and
operations to set and achieve targets and improve sales forecasting.

4. Set a sales budget

Sales planning defines the budget(s) for the project and outlines how and
when revenue is spent or generated. Setting and adhering to a budget
allows sales teams to use resources effectively while keeping the company
within its financial constraints.

5. Develop communication and engagement

Effective sales teams understand the objectives of the company and the
goals of the sales plan to carry out tasks according to expectations.
Communication provides clear direction for sales teams and engages team
members to meet their specific goals or milestones. Involve stakeholders in
the sales planning process to ensure sales plans are comprehensive and
integrate relevant departments.
 6. Set controls and measurements

Controls and measurements determine the direction a company is moving,

or whether it's time to change strategies and consult past sales data for
insight. Controls determine the metrics used to gauge success, while
monitoring the progress of the sales plan promotes strategic improvement.

Why is sales planning important?

Sales planning is an important aspect of business that identifies current

issues, such as a lack in sales, and seeks to find solutions or develop
strategies. Sales planning takes advantage of new opportunities, such as
when a company develops a new product, to create brand awareness or
interest. Sales plans address various sales opportunities and the plan's
objectives may vary depending on whether the company sells directly to
the consumer, or to another business.

 Define targets
 Creates strategies
 Identifies tactics
 Motivates teams
 Sets budgets to achieve targets
 Reviews goals and suggests improvements

Strategic role of sales management

BBA -4th Sem. (L-5)

Sales Management Strategy

Creating a sales management strategy is one of the easiest ways to increase your
revenue and profitability.

Sales management is about leading the people and process your company uses to sell
to prospects and convert them into customers. Responsibilities include:

 Building the right sales strategy

 Hiring the right team

 Creating the right compensation plans, territories and quotas

 Setting the right projections

 Motivating your team

 Tracking revenue against goals

 Resolving conflicts

 Training and coaching sales reps

 Managing processes

 Getting the sale!

Why is there a sales management strategy chapter in a marketing process article?

 Sales and marketing serve one purpose: to generate revenue. They should be
completely aligned in their understanding of customer needs, their messages, and in the
process they use to identify, sell, close and manage prospects and customers. They
should work together as a unit, providing valuable feedback to each other to improve all
of their strategies.

 If you’re B2B, your sales team is the voice of your company. In fact, your reps may be
the only people with direct customer interaction. They may be responsible for
prospecting, selling and managing existing customers. They control the dialogue with
your market, gather feedback, and deliver on your value proposition and brand promise.

 The sales team will make or break your marketing efforts. Even if you’re not personally
responsible for the sales team, it’s important to understand their role and draw on that
knowledge to create better marketing programs.

 When departments aren’t aligned, your company wastes time and opportunity. For
example, when salespeople rewrite literature and tools to their liking, your messages
are diluted and salespeople are doing something other than selling.
Small improvements in your team’s skills and processes can often produce substantial
results. Even great salespeople can benefit from a good sales management strategy
and coaching; if your team is struggling, there’s room for improvement. And with the
right attention to your pipeline and goals, you can make sure you’re on track to hit your
numbers and make adjustments as needed.

Sales Management Strategy Concepts &

Steps
Before you begin
Your sales team should support your positioning and brand strategy, contributing to the
experience that you wish to deliver and the mindshare that you wish to own.

This is accomplished by good hiring, training and strong sales management strategy. Have your
team represent the personality traits of your brand, and look to hire people that fit them well.

Create the right compensation plan and tie it to your

revenue goals
Great salespeople want to make money. Tie the plan to your revenue goals and make sure that
you’re compensating your reps for the right things. For example, if your reps don’t earn
commission for managing “house” accounts, they’ll spend their time going after new business
and you could lose valuable existing customers.

Set realistic quotas

Be realistic about what a salesperson can accomplish in a set timeframe. Good salespeople can
be demotivated by unrealistic quotas, which can lead to turnover.

Hire the right people

To build a great team, start with a strong recruiting effort. Create a detailed job description so
you know exactly what you need in your candidates. Cast a wide net, use a thorough interview
process, and go after the candidates you really want.

Coach and provide feedback

A good manager actively works with the sales team. Train your reps thoroughly and coach them
to improve their skills. Go on calls, establish performance measurements, and provide feedback.
If a rep has trouble in a particular area, create an action plan and measure improvement.
Generate good reports
You’ll need good sales reports to measure team and individual progress. Yet you don’t want your
sales reps to spend valuable sales time creating manual lists and reports. Instead, develop
automated reporting processes – for example, create reports in your CRM system. With good
reports, you can see problems much earlier and take action more quickly.

Motivate!
Good sales reps want to get better – encourage them to read, attend seminars, network, and keep
refining their skills.

Marketing Channels: Functions and Significance, Structure

BBA -4th Sem. (L-6)
Marketing channels refer to an organized network of
interconnected organizations and agencies involved in the process
of making a product or service available to consumers.
Important functions of the channels are as follows:

1. Facilitation – Bringing the buyers and sellers together and

facilitating both the parties in closing the deal.

2. Information – Giving the information about the

products/services to the customers.

3. Promotion – Promoting the products/services, i.e., building

and promoting the producers’ brands.

4. Negotiation – Negotiations on behalf of the manufacturer with

the customers on the prices, terms of delivery, etc.

5. Transfer of the title and ownership – They help in transfer of

the title or ownership from one party, i.e. sellers to other party,
i.e. buyers.
6. Holding inventory and sharing risk – Channels hold the stock
of ready products with them, thus they share the risk and cost
associated with holding the inventory.

7. Finance – Channels keep deposit with the manufacturers, book

the orders in advance, and keep the stock of ready products. Thus
they reduce the manufacturers’ financial burden.

8. Providing pre-sale and post-sale services – Channels provide

pre-sale and post-sale services, maintenance services, etc. to the
customers on behalf of the producers as they cannot personally
reach to the individual customer.

9. Change agents – Channels inform the customers about the

changes in product and price. They tell the customers about the
new or additional features introduced. They can create a positive,
favourable opinion about these changes among the customers, as
they are closer to customers and they directly and regularly
interact with their customers. Thus, they act as ‘Change Agents’.

10. Warehousing and transportation – Channels provide the

warehousing facility and arrange transport facility from the
warehouses to the markets/retailers/end users.

11. Market feedback and intelligence – Channels provide valuable

and authentic information about the customers, competitors,
market changes and trends and market conditions to the
manufacturers. They also maintain the sales records and database
of the customers, which can be useful to the manufacturers in
future decision-making.

Types Of Marketing Channels

Marketing channels can be categorised into direct and indirect
channels depending on the structure of the channel. The indirect
channels are further divided into three types: one-level, two-level, and
three-level channels based on the number of intermediaries present.

Direct Channel or Zero Level Channel

Producer → Customer

A direct or zero-level channel is one in which the manufacturer sells

directly to the end-user with no intermediaries involved. This type of
channel is often used by businesses that produce perishable goods,
expensive goods, or whose target market is small and concentrated.

An all-new D2C model in which the manufacturer sells directly to the

customer through its online branded channels is being followed by a
lot of companies these days.

Indirect Channel
Producer → Intermediaries → Customer

When the manufacturer takes the help of one or more intermediaries

to reach the end-user, it is known as an indirect channel.

One-Level Channel
Producer → Retailer → Consumer

A one-level channel has only one intermediary – the retailer –

between the manufacturer and the end-user. In this type of channel,
the manufacturer sells directly to a retailer, who then sells the product
to the consumer. This type of channel is often used for shopping
goods like clothes, food, and home furnishings.

Two-Level Channel
Producer → Wholesaler → Retailer → Customer
A two-level channel has two intermediaries – the wholesaler and the
retailer – between the manufacturer and the end-user. In this type of
channel, the manufacturer sells to a wholesaler who, in turn, sells to
the retailer who then sells to the consumer.

The wholesaler’s role is to break the bulk and deliver the product to
the retailer. The retailer’s role is to reach the end consumer.

Goods that are sold in two-level channels are usually durable, have a
long shelf life, and target an audience that isn’t limited to a confined
area. These include goods like home appliances, FMCG products,
and automobile part

Three-Level Channel

Producer → Agent/Broker → Wholesaler or Retailer → Customer

A three-level channel has three intermediaries – the agent, the

wholesaler, and the retailer – between the manufacturer and the end-
user. In this type of channel, the manufacturer sells to an agent whose
role is to break bulk for a wholesaler or retailer. The agent then sells to
the wholesaler throughout the country or region.

The wholesaler’s role is to distribute the product to the retailer who

sells it to the consumer. The agent in this channel often provides
services like credit, financing, and market information.

Marketing Channels: Vertical and Horizontal, Symbiotic

BBA -4th Sem. (L-7)

Businesses often struggle with marketing strategies.
While most people presume marketing is an easy
concept, the approach has to be suited for the specific
business and the target market. There are various
approaches that can be incorporated in a bid to attract
the right consumer hence maximizing on profits.
These include horizontal and vertical marketing
systems.  Although both are marketing systems, the
approach to the market is different.

What is Vertical Marketing

System?
This is a marketing system that aims to attract and reach
businesses operating in the same industry. The three
components of the vertical marketing system include the
manufacturer, wholesaler and the retailer whereby the role of
the wholesaler is to purchase the products from the producer
and distribute to the retailer.  These three work together with
the intention of profit maximization. For instance,
a water pumps manufacturer sells the goods to water pumps
contractors as well as installers.

The vertical marketing system is divided into:

 Corporate vertical marketing system- This is a system whereby
one member of the distribution chain manages all the elements
of production and distribution, hence owning all the members.
 Contractual vertical marketing system marketing- Common in
franchising, this is a system whereby every member works
independently, integrating activities on a contractual basis.
Profits are hence earned while working in isolation.
 Administered vertical marketing system- Activities are
influenced by the power and size of the members. The powerful
member hence dominates activities of the others.

What is Horizontal Marketing

Systems?
This is a marketing system whereby businesses which are at the
same level join together to gain economies of scale. The
businesses combine resources such as marketing, distribution,
production and even human resource in a bid to maximize their
profits.  With increased market competition, this marketing
system has in the recent past gained popularity.
Horizontal marketing system can be a collaboration between
manufacturers, wholesalers, and retailers. Examples of
companies engaging in horizontal marketing system are
Johnson & Johnson and Google whereby the two have joined
hands with the intention of creating a robotic-assisted surgical
platform. An advantage of the horizontal marketing system is
that it focuses on broader audiences as opposed to specific
niches. It is also time-saving as less time is spent on creating
content, as it is not personalized.

Differences between Vertical

and Horizontal Marketing
System
Definition

Vertical marketing system refers to a marketing system that

aims to attract and reach businesses operating in the same
industry.
On the other hand, horizontal marketing system refers to a
marketing system whereby businesses which are at the same
level join together to gain economies of scale.
Players

Players in vertical marketing system include manufacturers,

wholesalers, and the retailers whereby the three works together
with the intention of profit maximization. On the other hand,
players in horizontal marketing system can either be
manufacturers, wholesalers and retailers.
Demographic
While businesses using vertical marketing system seek to appeal
to a specific demographic, businesses using horizontal
marketing system appeal to a wide demographic that is not
specific.
Partnership opportunities

Vertical marketing systems do not provide a partnership

environment. On the other hand, horizontal marketing systems
provide more opportunities for partnerships. 

Role of marketing channels in the dynamic market place

BBA -4th Sem. (L-8)
The strategic role of marketing channel

The marketing channel plays an important role in order to make

and choose the floor of the product in the ever-growing market.

1. Enhance efficiency- A proper system of distributing channels

will not be less efficient. In this way, the organization will
work.
2. Smooth flow of commodities- This helps in the flow of
commodities from creating possession, time, and place
utility.
3. Reducing cost- Like the terms and conditions of purchase,
sales and payments hear this will lead to a reduction in cost
during a transaction.
4. Facilitate search- This function is carried forward by the
agents where buyers and sellers search for each other for
the exchange of commodities. 5.Proximity to consumers-
This helps in reducing the burden of the producer as the
 middlemen are close to the end-users of product which helps
to gather the necessary information and reaction. 

Working of the supply chain in marketing channel:

Supply chain works as the connection between the producer and the
buyer this might include different activities, people, entities,
information, and resources. This is an important aspect of the business
so it can reduce its cost and manage the time. This also includes product
development, marketing, operations, distribution, finance, and customer
service. When the supply chain of any company is effective, it helps in
decreasing costs and increasing profitability. 

Conclusion

As per the needs of today's market, channels of distribution place equal

important role as other aspects distribution analysis will play as the
competitive advantage in the market nowadays some examples who
plays of focuses on the key aspects like Dell computers NordicTrack and
others through which they compete with their competitors in order to
have a place on the top. There is an important role of channels of
distribution which we have seen how effective and how important it is in
the working marketing area
Designing the Market Channel system, Channels for Consumer goods

BBA -4th Sem. (L-9)

Designing Distribution Channels

Channel design refers to those decisions that involve in the development of new
marketing channels or modifying the existent ones. The channel design decision
can be broken down into six steps namely:

 1.              Recognizing the need for channel design decision

 2.              Setting and coordinating distribution objectives

 3.              Specify the distribution tasks

4.              Develop alternative channel structures

 5.              Evaluate relevant variables

 6.              Choose the best channel structure

 1.Recognizing the need for a channel design decision

 First and foremost task for the organization is to recognize the need for a channel
design. An organization would go in for a new channel design for the following
reasons namely
1. When a new product or product line is developed, mainly when the existing
channels are not suitable for the new line
2. When the existing product is targeted to a different target market. This is
common when an organization is used to catering the B2B, plans to enter the
consumer market
3. When there is a change in the marketing mix elements, when an organization
reduces its prices on certain offering the channel worked out will be based on the
price points, they may look in for discounters
4. When facing major environmental changes namely in economic or technological
or in legal spheres.
5. Finally when the organization opens up new geographic marketing areas

2.Setting and Coordinating Distribution Objectives

 Once a need for a design is recognized the next task for the channel manager is to
work out to develop the channel structure, either form the scratch or by modifying
the existing one. It is necessary for the channel manager to carefully evaluate the
firm’s distribution objectives. In order for the distribution objectives to be effective
and well coordinated the channel manager need to perform three tasks namely
1.Become familiar with the objectives and strategies in other marketing mix areas
and other relevant objectives and strategies of the firm. In most cases the person or
the group that sets the objectives of the other marketing mix elements will also set
the objectives for distribution as well.
2. Set the objectives and state them explicitly. A good objective is one, which is
clear, and explicit, and has a greater role in achieving the firm’s overall objectives.
Some examples of a good distribution objectives are as follows.
3. Apple Computers set a distribution objective to reach more consumers with what
it refers to as the ‘Apple experience’. So, Apple reinvigorated and reestablished
relationships with large retail chains, which it had neglected in recent years .
4. In the same way Coca-Cola seeks to broaden its penetration in schools and
college markets, as a result of which it has entered into contact with many schools
and colleges, whereby these institutions would sell only Coca-Cola products on
their campuses.
 5. Check and see if the distribution objectives set are congruent with marketing
and other general objectives and strategies of the firm. This involves verifying if
the distribution objectives do not conflict with the objectives in the other areas of
marketing mix or even to the overall objectives of the company. In order to cross
check, it is essential to examine the interrelationships and hierarchy of the
objectives of the firms.

3.Specifying the Distribution Tasks

Once the objectives are formulated, a number of functions need to be performed in
order for the distribution objectives to be met. The manager therefore has to
specify the nature of the tasks that needs to be carried out in order to meet the
objectives. The tasks need to be precisely stated so that it meets the specified
distribution objectives. For e.g. a manufacturer of a consumer product, say a high
quality cricket bats aimed at serious amateur cricket players would need to specify
distribution tasks such as gathering info on target markets shopping patterns,
promote product availability to the target, maintain inventory, and timely
availability, compile info about the product features, provide hands on experience
using the product, process and fill customers orders, transport the product, arrange
for credit provisions, provide warranty, provide repair and service, establish
product return to make the offering readily available. Sometimes these functions
may appear to be production oriented rather than distribution tasks, but when we
talking about meeting customers, they are indeed distribution tasks.

 4.Developing Possible Alternative Channel Structures

 Once the tasks have been specified by the channel manager he should find out
alternate ways of allocating these tasks. In most cases the channel manager chooses
from more than one channel to reach the consumer effectively. Britannia would
sell their biscuits thorough wholesale food distributor, departmental stores,
convenience stores and even in pharmacies. Whatever may be the channel
structure, the allocation alternatives should be in terms of (a) the number of levels
in the channel (b) the intensity at various levels, and (c) the types of intermediaries.
The number of levels can be from two level upto five levels. The channel manager
can think of going for a direct way of meeting the customers to using two
intermediaries as an appropriate way. Intensity refers to the number of
intermediaries at each level.
Generally the intensities can be classified into three categories namely intensive,
selective and exclusive. Intensive saturation means as many outlets as possible are
used at each level of the channel. Selective means that not all possible
intermediaries at a particular level are used. Exclusive refers to a very selective
pattern of distribution.

5.Evaluating the variables affecting Channel structure

Once the alternative structures have been outlined, each channel structure has to be
evaluated on a number of variables. There are five basic categories namely,
Market variables - marketing management is based on the philosophy
of marketing concept, which stresses on the consumers needs and wants, the
managers have to take the cues from the market. The subcategories that have a
greater influence on the market structure are market geography, market size,
market density and market behavior
Product variables - some of the most important product variables are bulk and
weight, perishability, unit value, degree of standardization, technical vs. non-
technical and newness. Heavy and bulky products have a high handling and
shipping costs relative to their value. The manufactures of such products have to
keep in mind to ship in large lots to a fewer possible points. 

Channels for Industrial goods, and Inter dependency of Sales &

Distribution
BBA -4th Sem. (L-10)

INTERDEPENDENCE OF SALES AND DISTRIBUTION

After going through the above section you would have realised how interlinked
distribution and sales management are. Apart from the important fact that in
most organisations both sales management and the management of channels of
distribution are the responsibility of the sales manager and should be viewed as
jointly, contributing to the accomplishment of the marketing task, some other
pointers towards the interdependence of these two vital functions are as under:

a) All organisations use their own sales force or distribution network to reach
out to their customers. The emerging practice is to use own sales force to
sell to wholesalers/semi wholesalers who in turn sell to retailers. Very few
firms (unlike say Brooke Bond) use their own sales force to reach upto the
retail level). As both the sales and distribution functions are simultaneously
performed to accomplish the firm's sales objectives their dependence on
each other for the effective attainment of overall marketing goals becomes
obvious. In other words,, activities of the sales organisation would have to
be coordinated with channel operations if sales goals haves to be
effectively realised.
b) The decision of the organisation to allocate certain responsibility in the
exchange process to its channel members would define the scope of
responsibility of its own sales force and thereby would determine the type
of personnel and training required.
c) Even though, an organisation may decide to deal directly with its
wholesaler, semiwholesaler, retailer or consumer, it is required to decide
upon the type of help it will provide to the first and subsequent level of
intermediaries. Since the requirements of each of the above types of first
level contact entities are different from that of the other, the company's
sales task would have to be defined in context of first level of contact
chosen by it.
d) The choice before an organisation to have direct distribution, indirect
distribution or a combination of the two is of strategic importance and
depends upon factors such as the degree of control, flexibility, costs and
financial requirements etc. Marketing through channels implies lower
degree of control but would also mean lesser funds tied up in maintaining
inventory and lower fixed and variable costs of managing the channels.
Depending upon it own set of variables the organisation would try and
optimise the effectiveness of the exchange process through the use of
 some combination of the two. Necessarily then the scope of one (i.e.
distribution) would define that of the other (sales management).
e) To implement overall marketing strategy, the manufacturers need the
cooperation of distribution outlets in terms of adequate stock
maintenance, instore displays, local advertising, point of purchase,
promotion. Within the corporation, the sales organisation is the initiator as
well as the implementor of these dealer support operations. The effective
functioning of dealer-sales organisation relationship often becomes the key
to successful working operations within the organisation. This would mean
that the sales management has the responsibility of structuring
organisational relationship within their own department and with
interacting organisational entities so that the sales task can be performed
and co-ordinated with the overall marketing goals.

Channels for Industrial Goods include:

1. Producer to industrial user. This is a direct channel for industrial users,

commonly employed by manufacturers of large installations, such as

generators.

2. Producer to industrial distributor to industrial user. This channel of

distribution is commonly used to market accessory equipment, such as

typewriters or operating supplies which include typewriting papers, pens,

and office materials.

3. Producer to agent to industrial user. This is preferably used when an

industrial product is new in the market. Agents are middlemen who have
 market contacts and can provide sufficient information on possible

markets.

4. Producer to agent to industrial distributor to industrial user. This trade

channel is feasible when agents cannot directly sell to industrial users.

Since these agents or brokers shall render services only on demand, a regular,

fixed income can be minimized instead; commissions may be given as they

render services during season.