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Sales and Distribution Management 1
Sales and Distribution Management 1
BBGM402
BBA – 4th Sem. (L-1)
BY- DIVYANSHU PANDEY
(Assistant Professor)
Conditions of Sales
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.
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 management provides for determining the size, composition and structure
of a sales organization.
Hiring Sales Personnel: It initiates the recruitment and selection of efficient and
suitable candidates for various vacant sales positions.
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.
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.
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.
This is the type of environment with which we are most familiar. This is the physical
office where you personally manage your team.
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.
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 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.
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:
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.
3. Set a strategy
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.
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.
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 is about leading the people and process your company uses to sell
to prospects and convert them into customers. Responsibilities include:
Resolving conflicts
Managing processes
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.
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.
Motivate!
Good sales reps want to get better – encourage them to read, attend seminars, network, and keep
refining their skills.
Indirect Channel
Producer → Intermediaries → Customer
One-Level Channel
Producer → Retailer → Consumer
Two-Level Channel
Producer → Wholesaler → Retailer → Customer
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
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
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:
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.
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.
generators.
industrial product is new in the market. Agents are middlemen who have
markets.