Salesmanship

Mr. Leonidas Arzaga Cañete

Instructor
 What is Sales?

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.
 What is personal selling?
• It is a business activity involving a person-to-
person communication process during which a
salesperson uncovers and satisfies the needs
of a buyer to the mutual, long-term benefit of
both parties.
 Everyone Sells

Give examples
1. As a student
2. As a graduate
3. As a teenager
 What is sales management?
Sales management in an organization is a business discipline,
which focuses on the practical application of sales techniques
and the management of a firm’s sales operation.

It is done in an efficient and effective manner through planning,

staffing, training, leading and controlling organizational
resources. Sales management is done by Sales Managers and
they are responsible for generating sales, profits and customer
satisfaction.
 Importance of Sales Management
Sales management is very crucial for any organization to achieve its targets. In order to increase customer
demand for a particular product, we need management of sales. The following points need to be considered
for sales management in an organization:

The first and foremost importance of sales management is that it facilitates the sale of a product at a price,
which realizes profits and helps in generating revenue to the company.

It helps to achieve organizational goals and objectives by focusing on the aim and planning a strategy
regarding achievement of the goal within a timeframe.

Sales team monitors the customer preference, government policy, competitor situation, etc., to make the
required changes accordingly and manage sales.

By monitoring the customer preference, the salesperson develops a positive relationship with the customer,
which helps to retain the customer for a long period of time.

Both the buyers and sellers have the same type of relationship, which is based on exchange of goods, services
and money. This helps in attaining customer satisfaction.

Sales Management may differ from one organization to the other, but overall, we can conclude that sales
management is very important for an organization for achieving its short- and long-term goals.
 Objective of Sales Management
Every organization has an objective before initializing functions. We need to
understand the goal of managing sales. Here we are discussing Sales Management in
terms of its objectives.
• Sales Volume
It is the capacity or the number of items sold or services sold in the normal operations
of a company in a specified period. The foremost objective of sales management is to
increase sales volume to generate revenue.
• Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue
generating department. It can be calculated as the percentage or ratio of gain in total
turnover.
• Continuing Growth
One of the main objectives of Sales Management is to retain consumers to continue
growth of the organization. There should be regular expansion of sales and demand
for an item in the market with new advanced formulation.

These are the major objectives a sales executive has to focus on in sales management.
 Skills of a Sales Executive
Sales management is an art where the sales executive or the salesperson helps the
organization or individual to achieve its objective or buy a product with their skills. The
following are some skills that a sales executive needs to possess:
>Conceptual Skills
Conceptual skill includes the formulation of ideas. Managers understand abstract
relationships, improve ideas, and solve issues creatively. The sales executive should be
well versed with the concept of the product he/she is selling.
>People Skills
People skills involve the ability to interact effectively with people in a friendly way,
especially in business. The term ‘people skills’ involves both psychological skills and
social skills, but they are less inclusive than life skills. Every person has a different
mindset, so a sales executive should know how to present the product depending on
the customer’s mindset.
Skills contd.
>Technical Skills
Technical skills are the abilities captured through learning and practice. They
are often job or task specific. In simple words, a specific skill set or proficiency
is required to perform a specific job or task. As a part of conceptual skills, a
sales executive should also have a good grasp on the technical skills of the
product.
>Decision Skills
Decision skills are the most important because to tackle the questions from
consumers, sales executive should always have the knowledge of
competitors’ products and take a wise decision.
>Monitoring Performance
Sales executives should monitor the performance of the employees and
report to higher management to improve the performance and fill the loop
holes. Thus, conceptual skills deal with ideas, technical skills deal with things,
people skills concern individuals, technical skills are concerned with product-
specific skills, and decision skills relate to decision-making.
• (insert) 1. sales management careers
• 2. trends affecting sales management
 Review of Marketing Fundamentals
Marketing Mix
is a combination of marketing tools that a company uses to
satisfy their target customers and achieving organizational goals.

McCarthy classified all these marketing tools under four broad

categories: Product , Price , Place, Promotion. These four
elements are the basic components of a marketing plan and are
collectively called 4 P’s of marketing.
 Product

This refers to the goods and services offered by the

organization. A pair of shoes, a plate of rice, a lipstick, all are
products.
All these are purchased because they satisfy one or more of
our needs. We are paying not for the tangible product but for
the benefit it will provide.
So, in simple words, product can be described as a bundle of
benefits which a marketer offers to the consumer for a price.

While buying a pair of shoes, we are actually buying comfort

for our feet, while buying a lipstick we are actually paying for
beauty because lipstick is likely to make us look good.
Product contd.
The range of products offered by an organization is called the
product mix.

Motor car manufacturer- cheap, basic family runabouts, medium

prices family saloons, estate cars, executive saloons, and sports
cars.

Within most of these product lines, various refinement can be

offered e.g. two door and four door function of the family
saloons, variations in the engine size and of course a range of
colors.
Product contd.
It is important to note that people generally want to acquire the benefits of
the product, rather than its features.
For example for buying a motor car a person is buying such thing as luxury or
speed or economy or status.
The facts that these benefits are achieved by differences in engine size
suspension design or paintwork is really of secondary interest. All the
organizations are selling benefits of the product to their customers.
 Questions in considering a product

•What does the customer want from the product/service? What needs does it satisfy?
•What features does it have to meet these needs?
•Are there any features you've missed out?
•Are you including costly features that the customer won't actually use?
•How and where will the customer use it?
•What does it look like? How will customers experience it?
•What size(s), color(s), and so on, should it be?
•What is it to be called?
•How is it branded?
•How is it differentiated versus your competitors?
•What is the most it can cost to provide and still be sold sufficiently profitably? (See also Price,
below.)
 Price
Price is the amount charged for a product or service.

It is the second most important element in the marketing mix.

Fixing the price of the product is a tricky job. The factors to be kept in mind
while pricing a product are: demand for a product, cost involved, consumer’s
ability to pay, prices charged by competitors for similar products, government
restrictions etc.

The activities of competitors have an important bearing on pricing decision.

The most obvious example is when a competitor’s raises or lowers his prices.
If your product can offer no particular advantages over his, then if he drops
his price, you will have to follow suit.
 Promotion
If the product is manufactured keeping the consumer needs in mind, is rightly
priced and made available at outlets convenient to them but the consumer is
not made aware about its price, features, availability etc., its marketing effort
may not be successful.
Promotion is done through means of personal selling, advertising, publicity
and sales promotion. It is done mainly with a view to provide information to
prospective consumers about the availability, characteristics and uses of a
product.

Advertising: Advertising is the process of communication, persuasive

information about the product to target market by means of the
written and spoken word, and by visual material. There are six
principal media of advertising as follows: The press- newspaper,
magazines, journals etc. ; Commercial Television; Direct mail;
Commercial radio; Outdoor- transport advertisements, and social
media etc.
 The aims of advertising are given below:
>Increase customer familiarity with a product;
>Inform customers about specific features of a
product;
>Inform the customers about the key benefits of
a product;
>Establish the creditability of a product;
>Encourage potential customer to buy the
product;
>Maintain loyalty of existing customers.
 Aims of Advertising
• To support sales increases
• To create awareness
• To inform about a feature or benefit
• To remind
• To reassure
• To create an image
• To modify attitudes
• To encourage trial
 Promotion (Personal Selling)

Personal selling is the promotion activity consists of face to

face meeting between the buyer and seller or his repetitive.

Advertising creates the interest and the desire, but personal

selling clinches the deal.

Personal selling is the most expensive from of promotion.

Companies which utilize an aggressive sales policy, based on

personal selling, are said to be adopting a push strategy. By
comparison firms which rely more heavily on advertising are
described as adopting a pull strategy.
 Sales representative’s tasks:
 After sales servicing (dealing with technical quires, deliveries matters etc.)
 Gathering information (feedback on customers reactions, competitors
activities etc.
 Communicating regular information to customers and prospective buyers.
 Prospecting (Looking out new selling opportunities)

The effectiveness of sales representatives can be measured in a number of

different ways. Typical evaluation criteria include:

 Net sales achieved (per product, per customer etc.)

 Call rate(no. of calls given in a period)
 Values of sales per call
 No. of new sales/new customers
 Sales expense in proportion to sales achieved
 Sales Promotion
Sales promotion activities are a form of indirect advertising designed
to stimulate sales mainly by the use of incentives.
Sales promotion activities are organized and funded by the
organization’s own resources. They can take a no. of different forms,
as, for example:

Customer oriented:
 Free samples
 Twin pack bargains
 Temporary price reductions
 Point of sale demonstrations

Trade Oriented
 Special discounts
 Place

Goods are produced to be sold to the consumers. They must be

made available to the consumers at a place where they can
conveniently make purchase.
So, it is necessary that the product is available at shops in your
town.
This involves a chain of individuals and institutions like
distributors, wholesalers and retailers who constitute firm’s
distribution network (also called a channel of distribution).
The channel through which the products are distributed to the
final customer are known as channel of distribution
 Most Common Channels of Distribution
Channel A represents a direct marketing channel. Manufacturers of goods such as
tools, computers, ships and other large expensive items tend to move them direct to
the buyer without involving middleman or inter middleman. e.g.: ship/plane

Channel B represents the typical chain for mass marketed consumer goods.
Manufacturers selling a wide range of products over a wide geographical area to a
market. Middlemen are important links in this channel.

Wholesalers, for example buy on bulk from the manufacturers, store the goods, break
them down into smaller quantities, and undertake advertising and promotional
activities.
The role of the retailer is to make products available at the point of sale. Individual
customers need accessibility and convenience from their local sources of consumable
products. They also need to see what is available, and what alternatives are offered.
e.g:
Channel C represents one of the shorter indirect channels,
where the retailers are omitted.
This kind of operation can be found in mail order business,
and in cash and carry outlets.
Wholesaler buy from manufacturers, store and subsequently
distribute direct to customers on a nation-wide basis. e.g.:
steel, cement, imported items.

Channel D is another version of a shorter, indirect channel. In

this case, it is the wholesaler who is removed from the scene.
Not, surprisingly, the retailers who dominate this channel are
powerful chains or multiples in their own right. e.g: Tiles
 Market Segmentation
• Markets are made up of different types of customers i.e. within each total market; there exist
sub-markets which express distinctive product preferences compared with each other.

• Market segmentation can be defined as the sub- division of a market into identifiable buyers-
groups, or sub markets, with the aim of reaching such group with a particular marketing mix.
Similarly, market segmentation is a marketing strategy that involves dividing a broad target
market into subsets of consumers who have common needs, and then designing and
implementing strategies to target their needs and desires using media channels and other
touch-points that best allow to reach them.
 Segmentation contd.
• Process of dividing the market according to similarities that exist
among the various subgroups within the market.

• The similarities may be common characteristics or common needs

and desires. Market segmentation comes about as a result of the
observation that all potential users of a product are not alike, and
that the same general appeal will not interest all prospects.

• Therefore, it becomes essential to develop different marketing

tactics based on the differences among potential users in order to
effectively cover the entire market for a particular product. There
are four basic market segmentation strategies: Behavior,
Demographic; Geographic; and, Psychographic.
 Behavior Segmentation
Behavior segmentation:
• Purchasing behavior –
 The “Price-conscious” buyer is a bargain hunter looking for the lowest
possible price.
 The “Smart” buyer is a thorough, meticulous researcher who wants to
understand every intricate factor, before committing to any single one.
 The “Risk-averse” buyer is a cautious, economically-careful shopper, who
struggles to pull the trigger on a purchase without the proper insurance,
such as a good, hassle-free return policy.
 The “Needs-proof” buyer is a shopper who needs confirmation that the
product is popular and backed up by claims of her peers.
 The “I’ll get it later” buyer is a shopper who lacks urgency.
 The “Persuadable” buyer is an impulse shopper that is highly susceptible
to cross-sell offers.
 Benefits sought
A simple example is consumers who buy toothpaste for different reasons:
• Whitening purposes
• Sensitive teeth
• Flavor
• Price

 Customer journey stage - Building behavioral segments by customer

journey stage allows you to align communications and personalize
experiences to increase conversion at every stage. Moreover, it helps you
discover stages where customers are not progressing, so you can identify
the biggest obstacles and opportunities for improvement. (Awareness,
education, consideration, purchase, adoption, retention, expansion, and,
advocacy)
Usage – How often (and how much) are customers using your product
or service? How are they using it?
Heavy Users (or “Super Users”) are customers that spend the most
time using your solution and/or purchase most frequently. These tend
to be your most avid and engaged customers, that can also often rely
most on your product/service.
• Average or Medium Users are customers that semi-regularly use or
purchase, but not very frequently. Often these can be time or
event-based.
• Light Users are customers that use or purchase much less in
proportion to other customers. Depending on your business, this
could even mean one-time users, but again, it depends on the
relative usage to the rest of your customer base.
Occasion or timing;
customer satisfaction;
customer loyalty;
Interest;
engagement level;
user status.
demographic segmentation,
geographic segmentation, and
psychographic segmentation (lifestyle;
activities, interests, & opinions; values,
attitudes; social class; and, personality)
 Distribution Management and
Distribution Channels
• Distribution management is the management
of all activities which facilitate movement and
co-ordination of supply and demand in the
creation of time and place utility in goods.
• It is the art and science of determining
requirements, acquiring them, distributing
them, and finally maintaining them in an
operationally ready condition for their entire
life.
 Distribution Management and
Distribution Channels …cont’d
• According to Stern and Ansary, distribution
channels are sets of interdependent organizations
involved in the process of making a product or
service available for use or consumption.
• Whether selling products or services, marketing
channel decisions play a role of strategic
importance in the overall presence and success a
company enjoys in the marketplace.
 Distribution Channels
Are intermediaries or middlemen
• Exist because producers cannot reach all their
consumers
• Multiply reach and provide efficiency to the
marketing process
• Facilitate smooth flow and create time, place and
possession utilities
• Have the core competence and reach
• Provide contact, experience, specialization and
scales of operation
 Types of Channels
• Sales channel motivates buyers, shares
information between company and its
consumers, negotiates fair bargains for
consumers and finances the transactions

• Delivery channel meant only for physical part of

the distribution

• Service channel – performs after sales service

 Listing of Channel Members
• Company own sales team
• C&FAs and CSAs
• Distributors, dealers, stockists, value-added re-
sellers
• Agents and brokers
• Franchisees
• Electronic channels
• Wholesalers
• Retailers
 C&FAs / C&SAs

• C&FA: carrying and forwarding agent

• C&SA: carrying and selling agent
• Both are on contract with a company
• Both are transporters who work between the company
and its distributors
• Collect products from the company, store in a central
location, break bulk and dispatch to distributors against
indents
• Goods belong to the company
• C&SA also sells the goods on behalf of the company
but remits proceeds after sale
Distributors, Dealers, Stockists, Agents
• Name denotes the extent of re-distribution done by them
• Distributors invest in the products – buy products from the
company
• Are on commission, margins or mark-up
• May or may not get credit – but extend credit
• Distributors cover the markets as per a beat plan. All others
merely finance the business.
• Distributors could be exclusive for a company
• Agents bring buyer and seller together
Wholesalers
• Operate out of the main markets
• Deal with a number of company products of their
choice
• Are not on contract with any company
• Sell to other wholesalers, retailers and institutions
• Negotiate about 15 days credit from company
distributors – also provide credit to their customers
• Operate on high volumes and low margins
Retailers
• The final contact with consumers
• Operate out of their shops and sell a large
assortment and variety of goods
• Located closest to consumers
• Buy from company, distributors or wholesalers
• Highest margins in the network
• Provide personalized services to their customers
 Industrial Products

Customers may also directly purchase from company sales force.

 Consumer Products

Retailers may also direct from company sales force.

Patterns of Distribution
• Determines the intensity of the distribution
• Intensity decides the service level provided

Types of distribution intensity:

• Intensive
• Selective
• Exclusive
Intensive Distribution
• Distribution through every reasonable outlet
available – FMCG
• Strategy is to make sure that the product is
available in as many outlets as possible
• Preferred for consumer, pharmaceutical
products and automobile spares
Selective Distribution
• Multiple, but not all outlets in the market
• A few select outlets will be permitted to keep the
products
• Outlets selected in line with the image the
company wants to project
• Preferred for high value products
– Tanishq jewelry
• Keeps distribution costs lower
Exclusive Distribution
• Highly selective choice of outlets – may be
even one outlet in an entire market - car
dealers
• Could include outlets set up by companies –
Titan, Bata
• Producer wants a close watch and control on
the distribution of his products.
Distribution Channel Strategy
• Derived from the corporate strategy and the
marketing strategy
• Steps for designing the distribution strategy are:
– Defining customer service levels
– Distribution objectives and steps
– Structure of the network required
– Policy and procedure to be followed
– Define Key performance indicators
– State Critical success factors
Distribution Objectives
• Influenced by the customer expectations
• Defines the extent of time, place and
possession utility which the customer can
expect out of the channel network
Channel Functions
• Information gathering about potential customers and using
that information to segment the market and generate demand
• Consumer motivation
• Bargaining with suppliers - Agree on level of financial commitments
by the channel partners.
• Placing orders
• Financing
• Inventory management
• Risk bearing - Since most of the channels buy the products
beforehand, they also share the risk with the manufacturers and do
everything possible to sell it.
• After sales support
 Factors Determining the Choice of
Distribution Channels
• Selection of the perfect marketing channel is
tough. It is among those few strategic decisions
which either make or break your company.
• Even though direct selling eliminates the
intermediary expenses and gives more control in
the hands of the manufacturer, it adds up to the
internal workload and raises the fulfilment costs.
Hence these four factors should be considered
before deciding whether to opt for the direct or
indirect distribution channel.
Critical Success Factors
• The distribution strategy also needs the support and
encouragement of top management to succeed
Some of the CSFs could be:
• Clear, transparent and unambiguous policy and procedure
• Serious commitment of the channel partners
• Fairness in dealings
• Clearly defined customer service policy
• High level of integrity
• Equitable distribution at times of shortage
• Timely compensation of channel partners
Distribution Channels
• Take care of the following ‘discrepancies’
• Spatial
• Temporal
• Breaking bulk
• Assortment and
• Financial support
Spatial Discrepancy
• The channel system helps reduce the
‘distance’ between the producer and the
consumer of his products.
• Consumers are scattered
• Have to be reached cost effectively
Example: companies produce products in one location
even for global needs
Temporal Discrepancy
• The channel system helps in speeding up in
meeting the requirement of the consumers
– Time when the product is made and when it is
consumed is different
– Limited number of production points but hundreds of
consumers
• Maruti plant in Gurgaon – cars and spares are
available when the consumer wants
Breaking Bulk
• The channel system reduces large quantities into
consumer acceptable lot sizes
• Production has to be in large quantities to benefit
from economies of scale
• Consumption is necessarily in small lot sizes
• India is the ultimate example in breaking bulk –
you can buy one cigarette, one Anacin, one
toffee, etc.
Need for Assortment
• The channel system helps aggregate a range of
products for the benefit of the consumer – it
could be made by one company or several of
them.
• For the same product, it could be a variety of
brands and pack sizes
• MICO makes fuel injection equipment, spark
plugs, etc., in different plants but its dealer will
sell the entire range.
Financial Support
• The channel system provides critical working
capital to its customers by extending credit.
• Some channel members like stockists and
wholesalers finance the business of their
customers.
• Medical diagnostic equipment to hospitals
Channel Flows
• Forward flow – company to its customers –
goods and services
• Backward flow – customers to the company –
payment for the goods. Returned goods.
• Flows both ways - information
Three Flows Recognized
The Five Channel Flows
• Physical flow of goods
• Title flow of goods (negotiation, ownership and
risk sharing also)
• Payment flows (financing and payment)
• Information flow (about goods, orders placed and
orders executed)
• Promotion flows
Channel Flows
• Some channel member/s have to perform them
• There is a cost associated with each flow
• If a channel member is discontinued, the flow has
to be performed by another
• All flows and transactions can be effective only
with timely, accurate and correct information
• The channel flow is ideally to be handled by the
most competent channel member who can deliver
best service at the lowest cost.
Direct Distribution
• Company to consumers or retailers without use of
intermediaries. Also includes reaching Institutional
buyers.
• Selling on the Internet
• If products are technically complex, this system is
preferred
• Cost is a major consideration to adopt this mode
Direct Distribution - Examples
• Banking services
• Credit cards
• Petrol / diesel – company own outlets
• Land line phone connections
• Health services
• Utilities – electricity, water
• Subsidized ration
• Education
Indirect Distribution
• Goods may move through a set of
intermediaries
• Most FMCG companies follow this route
• The intermediary has a far better reach than
the company
• The cost of operations of an intermediary like a
wholesaler / retailer is shared with many
businesses.
Role of Intermediaries
Indirect Distribution – Examples

• All FMCG, consumer durables and pharmaceutical

• Petrol / diesel / cooking gas - franchisees
• Insurance
• Mobile phones
• All kinds of passenger transport
 Five Main Types of Customers
In the retail industry, customers can be segmented into five
main types:
• Loyal customers: Customers that make up a minority of the
customer base but generates a large portion of sales.
• Impulse customers: Customers that do not have a specific
product in mind and purchases goods when it seems good
at the time.
• Discount customers: Customers that shops frequently but
bases buying decision primarily on markdowns.
• Need-based customers: Customers with the intention of
buying a specific product.
• Wandering customers: Customers that are not sure of what
they want to buy.
Source: corporatefinanceinstitute.com