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SALES

& DISTRIBUTION
Paras Bajaj
KIAMS
TYPES OF SALESPERSONS
THE SELLING
FUNCTION

ORDER ORDER ORDER


TAKERS CREATORS GETTERS

MISSIONARY
SALES
PEOPLE

FRONT SALES
INSIDE DELIVERY OUTSIDE
LINE SUPPORT
ORDER SALES ORDER
TAKER PEOPLE TAKERS

NEW
INDUSTRIAL CHANNELS
BUSINESS

TECHNICAL
2 SUPPORT
MERCHANDISER
Types of Company-Employed
Salespeople
§Sells at a company’s facilities, either by
Inside
telephone or in person. Example Retail
Order Taker Sales Person

Order §Promotes to people who normally prescribe


Creators or recommend a product but do not buy it

Order Getter §Sells at the customer’s location

§Sells to channels in the supply chain


Trade Rep normally distributors and retailers
3
Sales Jobs
The complexity and difficulty of sales job
categories increase as they move left to right.

INSIDE ENTRY LEVEL CREATIVE


OUTSIDE SALES
ORDER CONSUMER MISSIONARY SALES OF
CREATIVE SALES OF INTA
DELIVERY ENGINEER TANGIBLES
TAKER GOODS

ORDER ORDER
4 TAKERS GETTERS
Activities of Sales People

5
Sales Executive vs.
Sales Manager Duties
Activity Sales Executive Sales Manager
Plan Set overall sales targets for Set quotas for each
each product salesperson for each product

Organize Decide what type of people to Interview and hire specific


hire for sales positions people for sales positions

Implement Determine the compensation Identify each person’s


plan motivators and find ways to
reward good performance for
each person

Monitor Track sales by region; take Observe each salesperson’s


corrective action such as actions in the field and offer
additional training if sales are suggestions for their
too low improvement
6
Sales Force Management

7
Sales Management Trends
Fro T
Transactions Relationships
m o
Individuals Teams

Sales Volume Sales Productivity

Management Leadership

8 Local Global
Traits of Successful Salespeople

Ambitious towards goals


Analytical approach
Drive/Enthusiasm
Good Communicators
Empathy
Ethical/Integrity
Initiative
Killer Instinct
Patience and perseverance
Personal Charisma
Persistent and Persuasive
Relationship Oriented
Resilience to bounce back from failures
9
Linking Sales and Distribution

 Distribution Management provides ‘time’, ‘place’, and


‘possession’ utility to the consumer
 It takes care of the availability and visibility
 Sales and distribution are highly inter-linked

10
SHARING RESPONSIBILITIES
Sales Management Task Distribution Management Task

Achievement of volume and market share Stock pressure and shelf visibility

Coverage of markets and outlets Beat plan and extension of credit

Width and depth of distribution Move all products and ensure visibility

Managing institutional business Using local contacts

Competition tracking Regular reporting

Market feedback and reporting Market practices of competition

Inventory management Maintain stocks as per norms

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SHARING RESPONSIBILITIES
Sales Management Task Distribution Management Task

Managing distribution channels Manage downstream channels

Recruitment and training Conducting training programmes for


retailers and influencers

Product launches and merchandising Full involvement in Company programmes

Handling customer complaints Handle fast and to customer satisfaction

Promotion Organise and participate in exhibitions,


Fairs and melas
Local advertising on hoardings, wall
paintings

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Customer Relationship Selling
Process
1.Prospecting. Identifying and qualifying prospects.
2.Pre approach. Obtaining interview. Planning: determining sales call
objective, developing customer profile, customer benefit program, and
sales presentation strategies.
3.Approach. Meeting prospect and beginning customized sales
presentation.
4.Need Assessment . Discover, assess and understand the buyer’s needs
5.Presentation. Further uncovering needs; relating product benefits to
needs using demonstration, dramatization, visuals, and proof
statements.
6.Objections. Uncovering and meeting objections.
7.Close. Bringing prospect to the logical conclusion to buy.
8.Follow-up and service. Serving customer after the sale.

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Principles of Personal Selling

 Negotiation
 When to negotiate
 When factors bear not only on price,
but also on quality of service
 When business risk cannot be accurately
predetermined
 When a long period of time is required to produce the
items purchased
 When production is interrupted frequently because of
numerous change orders
 Win-Win
 Both sides should be willing to make concessions
 Items which have low cost to you and high value to
the other side
 BATNA
 ZOPA

14
Selling Success Factors

1. Listening skills
2. Follow-up skills
3. Ability to adapt sales style to situation
4. Tenacity
5. Well organized
6. Verbal communication skills
7. Able to interact with people at all levels of an
organization
8. Ability to overcome objections
9. Closing skills
10.Personal planning and time management skills
11.

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16
17
18
SBU Objectives and
the Sales Organization
Market Sales
Share Organization Primary Compensatio
Objectives Objectives Sales Tasks n System

Build Build sales Prospective Salary plus


vol. and new incentive
Secure accounts
distribution Provide high
service levels
particularly
pre-sales
service
Product/mark
et feedback
19
SBU Objectives and
the Sales Organization
Market Sales
Share Organization Primary Compensatio
Objectives Objectives Sales Tasks n System

Hold Maintain sales Call on targeted Salary plus


vol. current accounts commission
Consolidate Incr. service levels or bonus
market position to current
through accounts
concentration Call on new
on targeted accounts
segments
Secure
additional
outlets
20
SBU Objectives and
the Sales Organization
Market Sales
Share Organization Primary Compensatio
Objectives Objectives Sales Tasks n System

Harvest Reduce selling Service most Salary


costs profitable plus
Target accounts bonus
profitable eliminate
accounts unprofitable
accounts
Reduce service
levels
Reduce
inventories
levels
21
SBU Objectives and
the Sales Organization
Market Sales
Share Organization Primary Compensatio
Objectives Objectives Sales Tasks n System

Divest or Minimize Dump Salary


Liquidate selling costs inventory
and clear out Eliminate
inventory service

22
Analysis of Sales Behaviour

Identify a possible key


Record behaviour
level used by salespeople inClassify each call
large sample as
Compare the level of key behaviour in

23
Stages of a Sales Call

Demonstrating Obtaining
Preliminaries Investigating
Capability Commitment

First Impression Asking Presentation Check you


Less influence for questions and have covered
Offering
large sales collecting data key concerns
solutions to
about
Get down to problems Summarise
customers,
business quickly the benefits
their FAB
Do not talk about businesses Propose an
solutions too soon and their appropriate
needs level of
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Concentrate on commitment
questions Most
important of
What is the Goal of Questioning?

To uncover needs:


Implicit need – a statement of a buyer’s
problem, dissatisfaction or difficulty with a
current situation

Explicit needs – a clear statement of a buyer’s
want, desire or intention to act
In larger sales, implied needs do not predict

success and sales persons have to probe for


explicit needs

25
The SPIN Technique


SITUATION - Facts


PROBLEMS – Difficulties or
dissatisfactions


IMPLICATIONS of the Problems


NEED PAYOFF
26
The SPIN Model
Situation Questions
About the existing
customer situation

To establish context so that you can


ask
Implied Needs
Problem Questions
Customer statement of
About customer So that the buyer
problems with the
problems, difficulties reveals
existing situation
or dissatisfactions
Implication DO NOT jump in with solutions here
Questions
About the effects or
You then develop
consequences of
problems using
customer problems
Which make the buyer feel the problem more clearly
leading to
Need Payoff Explicit Needs
Questions Customer statements of
About the value or Leading to clear wants and desires
importance of a solution which your
to the customer’s product/service can
problems meet
So that the attractiveness of your solution is
increased Allowing
Benefits
27 Showing how your
you to
make
product/service
meets an explicit
need
Key Account Management
 Strategy by suppliers to target and serve high
sales potential customers with complex
needs with special treatment
 More likely with customers willing to enter
into long term alliances
 Approach is to foster partnerships rather than
an adversarial approach
 A key account is more than just a large
customer

28
What is a Partnership?

 A partnership is an agreed-upon relationship between two or more


parties who choose to cooperate in an enterprise and share its
risks and rewards
 Helps salespeople and buyers work together to achieve mutual
and individual goals
 Partnering requires a degree of cooperation that transcends
preferred supplier status
 Openness
 Trust

29
Trust Among Partners

 Trust comes from performance


 Performance can only occur over some period of time
 Requisite skills
 Each member must rely on the other to perform the skills
needed to ensure the success of the partnership
 Equity
 Partners must learn to trust the other partners' intentions

30
Key Account Management Features

 Special treatment for key accounts in areas of products, prices,


services, coordination of distribution and workflow, and
information sharing
 Dedicated Key Accounts Managers who may actually be
positioned in the customer premises
 A multi-functional approach to selling involving areas important
to the customer

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Key Responsibilities

 Planning and developing relationships in customer firm


 Mobilisation of personnel in own firm
 Coordination, motivation and communication of field
force activities

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Transaction to Key
Accounts
Transactional Key Account
Selling Management
Overall objective Sales Preferred supplier
status
Sales skills Probing, presenting, Building trust,
handling objections, closing providing optimum
service
Nature of Short, Intermittent Long, intense
relationship
Salesperson goal Get order Relationship
management
Nature of sales One on one Multifunctional team
force
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Advantages of Key Account
Management

 Close working relationship with buyers


 Improved communication and coordination
 Better follow up on sales and service
 Buying decisions can be pulled rather than be pushed
 Higher sales
 Promotion avenues for sales staff
 Lower costs through value engineering, demand forecasting
 Co-operation on Rand D and joint promotion

34
Disadvantages of Key Account
Management

 Dependence on few customers


 Pressure on profit margins
 Ever increasing demands on service and attention
 Neglect of smaller accounts with high long term potential
 Sales people are individualistic in approach and may not like to
work in teams

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The key customer matrix

Definitely Decided
A Key Case By
High Account Case
Attractiveness
Relationship

ü ?
Decided Probably
Case By Not A Key
Low

Case Account
? û
High Low
Financial Attractiveness
Criteria for Selecting Key
Accounts

37
KAM Relationship Development
Model
D D
I I
From
R Marketing Marketing R
E E
C Operations Operations C
T T
OInformation O
Sales Purchasing Information
RSystems Systems R
S S

Supplier Customer
38

www.oxlearn.com
Key account strategies
Interdependent KAM
Integrated KAM

Exploratory KAM Invest


Invest in Joint in tailoring product
High information Basic KAM Invest in
Attractiveness

systems and building relationships


focus teams
Customer

Cooperative KAM Invest


in
improving processes
Invest in
Vigilance devolved Basic KAM
Low and relationships
motivation Co-operative KAM
Maintenance &
Consistency

Stage of KAM relationship

Adapted from: “Key Account Management”, Cranfield University School of Management, 1996
The total value of the key
account
Has three elements:
1.Customer lifetime value
2.Other benefits from the relationship
3.The risk of the key account
―the probability of securing (1) and (2)

Total Customer
Relationship Economic
Value of = Lifetime + 
Benefits Risk
Customer Value
Managing key relationships
profitably
• Implement key account management strategies based on
lifetime value: LIFETIME REVENUES
● Hig Low
COST
MANAGE:
h REDUCTION:

Cost reduction if Reduce costs to
● High appropriate e.g. serve, visit
frequency,
buy over
● cheaper
Internet. Discuss channels. Then,
● COSTS costs with increase
TO customers. revenue.
● RETAIN:
SERVE Possibly, divest
Defend from

competition, INVESTIGATE:
erect barriers to Increase share of
● Low exit, share data, spend. If not
● longer-term possible, contain
contracts, costs to serve.
● relationship
pricing
●Manage defection of profitable customers
•Manage acquisition of unprofitable customers
Key account risk

 Defection or migration
 Volatile purchasing patterns
 Negative word of mouth
 Default / fraud / litigation
 Slow payment

 Then, there are the PROFIT LEAKS: the things that
suppliers themselves cause:
 Using lots of our valuable time (sales, service,
technical)
 Using lots of our valuable services (that we offered
them)
 Demanding emergency support at peak times
 Sorting out the errors we made (and not paying our
invoices meantime)
Building Relationships with Key
Accounts

 Personal trust
 Keep promises
 Swift replies
 Arrange factory/site visits
 High frequency of contact
 Socialize
 Give advance warning of problems
 Technical support
 Research and development
 Service
 Training
 Helping key accounts to sell
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Building Relationships with Key
Accounts

 Resource support
 Provide credit
 Help in financing
 Joint promotions
 Counter trade
 Service levels
 Delivery as per schedule
 Just in time
 Computerized reorder systems
 Quote to the right level

44
Building Relationships with Key Accounts

 Risk reduction
 Free demonstrations
 Low cost trial period
 Product and delivery guarantees
 Preventive maintenance contracts
 Proactive follow ups
 Suppliers should look at the cost benefit analysis for all the
relationship building measures and work swiftly on those
where costs are low but benefits are high

45
Key Account Managers
Essential Skills and Qualities

1. Intrapreneurial ability
2. Business Awareness
3. Planning and organisational skills
4. Communication skills
5. Negotiation skills
6. Analytical skills
7. Selling skills
1.

46
Selling Situation Contingencies
Customer and Product Determinants
of Sales Force Specialization

Customer Needs Different

Market- Product/Market-
Driven Driven
Simple Specialization Specialization Complex
Product Range of
Offering Products
Geography- Product-
Driven Driven
Specialization Specialization

47 Customer Needs Similar


Key Account Structures
Use Existing
Assign Execs Create Separate
Force
§Sales force structure is §Assigning sales and §Create separate sales
simplified marketing executives structures to serve
§All accounts are to manage key most important
managed under a accounts makes sense customers
single organizational for smaller firms that §Integrates marketing
structure cannot afford and sales for key
separate sales effort accounts under one
organizational
structure
CONs CONs CONs

§Reps may take short- §Can take a lot of time, §Establishing distinct
term view leaving less time for sales channels for
§Reps may not other duties, like major acc’ts is more
understand broader, managing sales force costly
overall needs of key §Duplication of effort
acc’t §Financial viability if key
48
acc’ts lost
Adding Independent Sales Reps
to the Sales Structure
§Sell on behalf of mfgs or other sellers in
Clients territories where no company sales force is
present

§Receive commission for all sales they make


Commission
within an assigned geographical territory

Ownership §Do not take ownership of the product

Inventory §Do not maintain an inventory

§Traditionally sells several related, noncompeting


Sales product lines
49
5 Steps of a Comprehensive
Recruiting and Selection Process

1 Determine the number of salespeople


needed
2
Identify unique skills, knowledge, and attitudes salesperson
needs
3 Attract sufficient number of
applicants
4Conduct interview process that accurately assesses
qualifications
5 Offer position to one or more
applicants
50
Sources of Sales Force Recruits
Current
Other
company Referrals
Companies
employees

Employmen Recruiting Part Time


t Agencies Sources Workers

The Educational Advertiseme


Internet Institutes nts

51
Also from job fairs
Recruiting Sources of Sales Reps
Source Comment
Referrals Advantage of known person. This is also
rewarded
Current Employees They are known and know the company
and the products
Other Companies Especially competitors, suppliers and
customers know your company and
products
The Internet Web page recruiting; Internet recruiting
sites; Resume search services
Educational Institute Cost effective; building relationships
Advertisements Maximum response and cost; quality
questionable
Employment Agencies Advantage of initial screening
Part time workers Specialist companies like MAFOI
Voluntary applicants Unsolicited applications
52
Recruiting Evaluation Matrix

Evaluation Criteria
Recruitin Consisten Percen
g sources t with t Rep’s
strategic Number Numbe retaine Cost Frequenc per-
planning? recruits r hired d after y of use formance
3 years after 2
Within company:
yrs.
Sales force
Other departments
Other companies:
Competitors
Customers
Noncompetitor
s
Educational institutions
Advertisements
Employment agencies
Voluntary applicants
53
Computerized databases
5 Stages of the Selection Process

1
Having candidate complete application
form
2
Testing
candidate
3
Interviewing
candidate
4
Verifying candidate’s background
info
5
Conducting physical exam (if
necessary)
54
An Excerpt from Xerox Campus Interview-
Evaluation Report
EVALUATION (Does Not Meet (Meets Xerox (Exceeds Xerox
(Circle Level) Xerox Standards) Standards) Standards)
Aggressiveness and 1 2 3 4 5
Enthusiasm
Communication Skills 1 2 3 4 5

Record of Success 1 2 3 4 5

Rational Thought Process 1 2 3 4 5

Maturity 1 2 3 4 5

Overall Evaluation 1 2 3 4 5

Summary of Applicant’s Qualifications


Apparent Strengths:
Apparent Weaknesses:
55
Areas Requiring Clarification:
Testing

Types of tests
Psychological test
Personality tests
Intelligence tests
Ability tests
Aptitude tests
Emotional intelligence tests
Must ensure test is valid
in case challenged
Should be confirming
factor, not eliminating
56
Model for Selecting New Salespeople

57
Avoiding Common Hiring
Mistakes
Conduct Proper Generate Enough
Don’t Rush to Hire
Job Analysis Applicants
§Wrong rep hired §Identify essential skills, §Have a large enough
§Backgrounds not knowledge, and group of qualified
diverse activities that new hire individuals from which
should possess to to select best
succeed applicants to interview
and hire

Conduct Thorough Complete


Plan the Interview
Interview Background Check
§Don’t interview “off the §Too often, sales mgrs §Up to 20% fabricate
cuff” ask a few questions facts and
§Coordinate multiple and think their accomplishments
interviewers experience as a rep §Failing to check
allows them to make increases likelihood of
accurate hiring hiring someone with
58 decisions on the spot dubious character
Salesforce Deployment
Sales Force deployment decisions can be viewed as providing
answers to three interrelated questions.

1.How much selling effort is needed to cover accounts and


prospects adequately so that sales and profit objectives will
be achieved?

2.How many salespeople are required to provide the desired


amount of selling effort?

3.How should territories be designed to ensure proper coverage


of accounts and to provide each salesperson with a
reasonable opportunity for success?

59 35
Interrelatedness of
Sales Force Deployment Decisions

How much selling effort is needed to cover


Allocation
Allocation of
of
Selling accounts and prospects adequately so that
Selling Effort
Effort
sales and profit objectives will be achieved?

Sales
Sales Force
Force How many salespeople are required to
Size
Size provide the desired amount of selling effort?

How should territories be designed and


salespeople assigned to territories to ensure
Territory
Territory
Design
Design
proper coverage of accounts and to provide
each salesperson with a reasonable
60 opportunity for success?
35
Sales Territory Design

Determine
location Set up Evaluate
Select Determine Assign sales territorial
and basic people to effectiveness
a potential coverage of design
control territories territories plans
of
unit customers

61 35
Basic Control Units

State
PIN Code

Sales territory
District Control unit

Colony

City

62 35
Sales Territory Design

 Build up Method

Combine
 Desirabl Total calls
Total calls Control Units
Modify
e call needed in
till calls needed
territories as
 pattern each control possible per needed
sales person = total calls
group possible



 Break down Method
Combine
Determine Sales Control Units
Sales Modify
company volume till total sales
potential in expected territories as
potential =
sales each control needed
from each expected sales
potential unit sales person volume
63 35
Managing the Sales Training
Process
Assess Sales Training Needs

Set Training Objectives

Evaluate Training Alternatives

Design Sales Training Program

Perform Sales Training

64 Conduct Follow-Up and Evaluation


Developing and Conducting a Sales Training
Program
Establish program objectives
Identify who should be trained?
Training Identify training needs and specific
assessmen goals
t How much training is needed?

Who should do the training?

When should the training take place?


Progra
m Where should the training be done?
design
What should be the content of training?

What should be the teaching methods?


Determine how training will be
Reinforcement reinforced?
What outcomes will be measured?
Evaluation
65 What measures will be used?
Identifying Knowledge, Skills, and
Abilities (KSAs)
Sources of Training Needs Information

Sources: Based on Erffmeyer, Robert C.; Russ, Randall K. and Joseph F. Hair, Jr. (1991). “Needs
Assessment and Evaluation in Sales-Training Programs,” Journal of Personal Selling & Sale Management
661, pp. 18–30; and Honeycutt, Earl D., Jr. (1996). “Conducting a Sales Training Audit,” Industrial
(11)
Marketing Management 25, pp. 105–113).
Typical Sales Training Needs
 Sales Techniques:

“how to sell”
 Product Knowledge:

Product benefits, applications, competitive strengths,
and limitations
 Customer Knowledge:

Customer needs, buying motives, buying procedures,
and personalities.
 Competitive Knowledge:

Competitive offerings in terms of strengths and
weaknesses.
 Time and Territory Management:

For maximum work efficiency.

67

Training Content and Methods
Matrix
Lectures Discussion Demonstration Mentoring On Role Audio Videos Web
s s the playing Cassettes Based
job Training
Company
knowledge * * * *
Product
Knowledge * * * * * * * *
Market
Knowledge * * * * * * *
Selling
Skills * * * * * * * * *
Time
Management * * * * * *

68
Value to Individual

§Trainee feedback, training staff comments,


supervisory feedback
Reaction §Most frequently used method
§Don’t show if anything was really learned and
applied

§Measuring the amount of information


participants mastered during the program
Learning
§Doesn’t necessarily reflect if material can be
applied productively back in the field

69
Value to Organization

§Identifies to what degree trainees applied


training principles and techniques to their
jobs (learning transfer)
Behaviors §Research shows this level of evaluation has
only a few shortcomings and is particularly
useful

§Whether or not an organization achieved


objectives it sought by conducting training
§More sales, fewer complaints, higher svc
rating?
Results §Difficult to tell if results are because of training
or other factors
§Utility analysis: looking at economic impact
the training had by examining cost-benefit
70 trade-offs of training program
Leadership, Management and
Supervision

Leadership:


The use of influence with other people through
communications processes to attain specific
goals and objectives

Management:

The attainment of organizational goals in an
effective and efficient manner through
planning, organising, staffing, directing and
controlling
Supervision:


The day-to-day control of the sales force under
routine operating conditions
71
Leadership Characteristics and Skills

 Personal Characteristics
 Self-Confidence
 Initiative
 Energy
 Creativity
 Maturity
 Managerial Skills to:
 anticipate problems and solve them
 seek and obtain substantive feedback
 diagnose problems and opportunities
 select an appropriate leadership behavior and match it to
the situation
 communicate effectively

72
Basic Leadership Styles


Transactional Transformational

 Looking at the basic


values, beliefs, and
 For day-to-day operation attitudes of
salespersons to
and control of the
redefine the bar.
sales force.
 Articulating a vision
 Clarifying rules
 Fostering group
 Providing verbal
goals
feedback
 Role modeling
 Task orientation
 Providing
individualized

support
People
Task

Tell Persuade Participate Delegate Oriente
Oriente
73 s s s s d
d
5 Challenges for Future Leaders
1
Incorporate globalization/internationalization of leadership
concepts
2 Increase the integrity and character of
leaders
3 Incorporate new ways of thinking about
leadership
4 Integrate
technology
5 Demonstrate return on
investment

74
Leadership
HIG
H
Styles

PARTICIPATES PERSUADES
Sales Manager and Salespersons
Sales Manager
decide jointly
Decides with discussions on Why

PEOPLE ORIENTATION

DELEGATES TELLS
Salespersons take decisions
Sales Manager takes unilateral decision

TASK ORIENTA
75 LOW HIG
Examples of appropriate and inappropriate H

situations in each quadrant?


Tools and Techniques of Leadership

 Personal contact – what to check?


 Sales reports – a control or a planner?
 Laptops and/or mobiles for
 Better customer and industry information
 Selling assistance
 Sales support
 Reporting responsibilities
 Communication
 Printed aids
 Meetings – How to handle them?
 Indirect supervisory aids
 Compensation plans
 Territories
 Quotas
 Expense accounts
 Sales analysis procedures
76
Sources of Power: Formal Power
§Power given to a particular position
§Power to make decisions regarding issues of
Legitimate employment, budgeting, etc., to accomplish the
tasks under their responsibility
§Ability to distribute rewards
§Provide more desirable territories, different
Reward compensation levels, gifts, benefits, promotions,
job titles, and accoutrements related to work
environment
§Ability to withhold rewards
Coercive §Typically builds resentment and resistance on the
part of the recipient(s)

Information §Derived from ability to access and control


information others don’t have
al §More effective organizations share information
77
Sources of Power: Informal
Power
§Based on a person’s knowledge, skills, and
Expert expertise

§Based on the degree to which a person is liked


Referent due to personality and interpersonal skills

§When an individual is strongly admired based on


Charismatic personality, physical attractiveness, and other
factors

78
How Will You Handle?
Sales Behavio Nonverb Looking Strengths Problems
Person
Grandstand ur
Aggressive al
Exuberant for
Big
Awards
Great
Closer
Overpowering
At times
George
Fearful Fred Low
Enthusiasm
Signals
Scared Support Honesty Low Sales
Volume
Slumped Sally Burned Depressed Coaching Past success Pessimistic
Out
Excited Eddie High Wired Exotic New Poor Follow-
Enthusiasm Incentives Territories up
Disorganised Inconsistent Frustrated Meaning Team Unfinished
Debbie Player Business
Perfectionist Overconfident Rigid Control Detail Lack of
Pete Oriented Flexibility
Worried Low Hesitant Stability Amiable Starts rumours
Walter Enthusiasm

79
5 Challenges for Future Leaders
1
Incorporate globalization/internationalization of leadership
concepts
2 Increase the integrity and character of
leaders
3 Incorporate new ways of thinking about
leadership
4 Integrate
technology
5 Demonstrate return on
investment

80
Job Satisfaction
•Sometimes called individual morale
•An individual salesperson’s emotional and
evaluative feelings toward various
dimensions of the job, including feelings
toward…
•Pay
•Promotions
•Job Security
•Benefits
•Co-workers
•The Sales Manager (or Leader)

81 •Individual salespeople must first each be


satisfied with his or her job in order for high
Importance of Motivation

Changes in marketing environment


Economic, technology, legal
Diversity in Company goals
Sales volume
Profits
Customer satisfaction
Unique nature of the sales job
Lonely, rejected, demanding customers, aggressive competitors
Individuality of salespeople

82
Maslow’s Hierarchy of Needs
F: self actualisation
M: Special projects, more
responsibility and authority

F: Status, recognition
M: title change,
promotion
F : Affiliation , friendship ,
acceptance
M : team selling , sales
meetings , mentoring
programs , social functions
F : Job security , safety , income
security
M : Mutually agreed performance
standards , insurance , retirement
benefits
Fulfilled through Food, shelter,
clothing
Managerial action : Compensation
83 packages
Motivational Conditions

YES YES YES


the rewards
Does
worth
better
theperformance
effort? Does
lead to
more
greater
effort
rewards? GREATER
lead to better performance? EFFORT

NO NO
NO

THE SAME OR LESSER EFFORT

84
Vroom’s Expectancy Theory
 A person’s motivation to exert efforts depends on his
expectations of success
 Expectancy – A person’s perception of relationship between
efforts and performance


Value

EFFORT Expectancy
PERFORMANC
E
Instrumentality REWARD Valence of
 Rewar
d
 Instrumentality – Relationship between performance and
reward
 Valence – Value placed on a particular reward by a sales
person
 Higher the motivation, greater the effort leading to superior
performance

85
Career Stages
Exploration
Primary concern is finding a suitable occupation
Underdeveloped skills and knowledge
Many drop out or are terminated
Low expectancy, instrumentality, high valence for personal growth
Establishment
Primary concern is improving skills and performance
Lack of promotion may cause disengagement or quitting
New commitments make pay important
High expectancy instrumentality, high valence for promotion and pay
Maintenance
Primary concern is maintaining position, status, and performance
Have highest sales volumes and percentage of quota and pay
High valence for recognitions, respect, and pay
Low valence for promotion
Disengagement
Primary concern is preparing for retirement and/or developing outside interest
Low valence for higher order and lower order rewards
Low instrumentality

86
Sales Person’s Perceived Reasons for Failure
and Motivational Impacts
Perceived Reasons Motivational Impact
Positive Negative
Ability Seek help from others Become frustrated and
Get additional training discouraged
Effort Behaviour Work harder
Increase effort No
Givechange
up in behaviour
Make more calls
Strategy Behaviour Change selling
Work longer strategy
hours No change in behaviour
Task Difficulty Work harder Become frustrated and
Change strategies discouraged
Luck No change
Seek help in behaviour Change
Give up the situation

87
What Motivates Your Employees?
Motivational Factors Rank Rank
Employees Managers
Interesting work 1 5
Appreciation of work done 2 8
Being well informed 3 10
Job Security 4 2
Compensation 5 1
Growth and promotion opportunities 6 3
Good working conditions 7 4
Personal loyalty to employees 8 6
Tactful discipline 9 7
Help with personal problems 10 9
88
Causes of Plateauing

No clear career path


Not managed adequately
Bored
Burned out
Economic needs met
Discouraged with company
Overlooked for promotion
Lack of ability
Avoiding risk of management job
Reluctance to be transferred

89
Leadership Model for Sales Management

Goals & Situation


Objectives Time Constraints
Individual Nature of Tasks
Organizational History and Norms

Sales
Manag
Power er’s
Needs
Sales Manager Leader Salespeople
ship Other People
Effectiv
eness
Leadership
Skills
Power Anticipation
Salespeople Diagnostic
Other People Selection
Communication
90 -Influence Strategy
-Communications
Mechanisms
A SITUATIONAL MODEL OF LEADERSHIP FOR SALES
PERSONNEL
Sales Manager
•Personal Characteristics
•Needs and Motives
•Power
•Past Experience and
•Reinforcement
Salesperson
•Personal Characteristics
•Needs and Motives
•Performance Level Sales Manager's Behavior
•Past Experience Salesperson’s
and Activities
Behavior
•Tells •Supervision
Influence •Performance
•Persuades •Coaching
•Satisfaction
Sales Group •Participates •Counseling
•Turnover
•Characteristics •Delegates
•Expectations
•Norms
•Sales Culture
Situation
•The Task Being Faced
•Organizational Factors
•Problem Faced
•Time Pressures
91
Sales Organization Effectiveness
vs. Salesperson Performance
Environmenta Salesforce
Salesforce
Environmenta
ll Control
Control
Factors System
System
Factors

Salesforce
Salesforce Sales
Sales
Salesforce
Salesforce
Salesforce
Salesforce Selling
Selling Organization
Organization
Outcome
Outcome
Characteristics
Characteristics Behavioral
Behavioral Effectivenes
Effectivenes
Performance
Performance
Performance
Performance ss

Salesforce
Salesforce
Nonselling
Nonselling
Behavior
Behavior
Organizational
Organizational Performanc
Performanc
Factors
Factors ee
Sales Organization Audit Framework
SALES ORGANIZATION SALES ORGANIZATION
ENVIRONMENT PLANNING SYSTEM
Extra-organizational Factors Objectives
•Economic-Demographic Sales Management Program
•Political-Legal Implementation of the Program
•Technological
•Competitive
• Market
•Customer

Sales force Management Auditor
Intra-organizational Factors
SALES MANAGEMENT
FUNCTIONS
•Company Organization
Sales force Organization
•Sales-Marketing Department Links
Recruitment and Selection
•Sales-Other Department Links
Sales Training
•Marketing Mix
Compensation and Expenses
Supervision, Morale, and Motivation
Sales Forecasting
Budgeting
Quotas
SALES MANAGEMENT Territories and Routing
EVALUATION Sales Analysis
Adequacy of Sales Managers Cost/Profitability Analysis
Adequacy of Management Practices Sales force Evaluation
Benchmarking

Benchmarking is an ongoing measurement


and analysis process that compares an
organization’s current operating practices
with the “best practices” used by world-class
organizations.
Benchmarking Process
Analyze & Communicate
Plan
•Determine current performance gap.
ntify what to benchmark.
•Project future performance levels.
ntify comparative companies or sales
s. •Communicate benchmark findings and gain
acceptance.

Implement & Control to


Gather Data Improve Performance
mine data collection method and collect data. •Establish functional goals.
•Develop action plans.
•Implement specific action plans and monitor progress
•Recalibrate benchmark.
Sales Organization Effectiveness
Framework

Sales Profitability
Analysis Analysis
Sales Organization
Effectiveness
Cost Productivity
Analysis Analysis
Sales Analysis Framework
Sales Analysis

Organizational
Level of Analysis Type of Sales Type of Analysis

Comparisons with
Forecasts
Sales quotas
Previous period
Same Period Last Year
Comparisons within Sales Organization
Comparisons with Industry/Competitors
Allocation of Functional Expenses
Function Basis of Allocation of Expenses
Personal Selling Direct to Sales Territories
Selling time for each segment/product

Number of sales calls multiplied by time spent


Advertising and Sales By circulation of media in each territory

Promotion Media space devoted to each product

Direct for sales promotion

Warehousing and Inventory Space occupied


Inventory carried

Order Processing Number of orders


Administration Equal charges to each sales person



Profitability Analysis:
Activity-Based Costing (ABC)

 Allocates costs to individual units on the


basis of how the units actually expend
or cause these costs.

 Places greater emphasis on more


accurately defining unit profitability by
tracing activities and their associated
costs directly to a specific unit.
Profitability Analysis: Return on
Assets Managed Analysis (ROAM)

 Calculations provide an assessment of


profitability and useful diagnostic
information.

 ROAM is determined by both profit


contribution percentage and asset
turnover.

ROAM = Profit contribution as percentage of sales X Asset turnover rat


= `Profit contribution / Sales) X (Sales / Assets managed)
Productivity Analysis

 Compares profits and asset investments


 Expressed in terms of ratios of inputs to


output

 Productivity improvements are obtained in


one of two basic ways:
1.Increasing output with the same level of
input
2.Maintaining the same level of output but
using less input
Perspectives on Salesperson
Performance Evaluation

Behavior-Based
Outcome-Based

 Considerable monitoring
 Little monitoring of of salespeople
people  High levels of
 Little managerial managerial direction
direction of of salespeople
salespeople  Subjective measures of
 Straightforward salesperson
objectives characteristics,
measures of results activities, and
strategies
Dimensions of Salesperson
Performance Evaluation

Behavioral
Behavioral Results
Results

Salesperson
Salesperson
Performance
Performance

Professional
Professional Profitability
Profitability
Development
Development
Performance Evaluation Output Base

 Sales Volume
 In value
 Units
 Compared to quota
 Compared to Last Year
 Market share
 Accounts
 New accounts
 Number of lost accounts
 Orders
 Hit rate Orders / Number of Calls
 Size of Order Sales / Orders


Performance Evaluation Activity Base
 Customer Calls
 Number
 Number per day
 Number per customer
 Non-selling
 Reports Sent
 Number of customer complaints
 Dealer/Influencer meetings held
 Overdue payments collected
 Prospects found
 Direct Selling
 As a percentage of sales
 As a percentage of quota


Performance Evaluation
Effort/Activity Base
Personal efforts/skills
 Communication
 Time management
 Planning ability
 Knowledge
 Product
 Competition
 Pricing
 Company policies
 Personality and Attitude
 Enthusiasm
 Initiative
 Appearance and Health


Performance Evaluation Methods
Behaviorally Anchored Rating Scales (BARS)
 Links behaviors to
specific results
 Salespeople are used to
develop performance
results and critical
behaviors
 Positive feedback about
behaviors may be
more affective than
positive output
feedback
Functions of Marketing
Channels

 Demand Side factors


§ Facilitation of Search both for the manufacturer and the end user
▪ Example – Bond paper vs. fancy stationery
§ Adjustment of Assortment Discrepancy
▪ Sorting heterogeneous supply into relatively homogeneous sets –
grading
▪ Accumulation – from various suppliers, variety
▪ Allocation – breaking bulk
▪ Assorting for resale in association with each other – breakfast table

108
Functions of Marketing
Channels

 Routinisation of transactions
 Each purchase transaction involves ordering, valuating
and paying for goods/services
 Routinisation of these transactions lead to higher
efficiencies and standardisation of goods
 Electronic Data Interchange
 Continuous Replenishment Programmes

109
Functions of Marketing
Channels
 Reduction in Number of
Contacts by
Manufacturers
 Manufacturer also wants to
take advantage of bulk
packs to reduce
transaction and
distribution costs
 Lot sizes, frequency of
delivery, payments and
communications
routinised through
channels
110

Other Channels

 Door to door
 Individual on site
 Route selling
 Home party
 Multi-Level marketing
 Buyer Initiated
 Co-operative stores
 Buying group

111
Other Channels

 Point of consumption
 Vending machines/kiosks
 ATMs/Computer access information
 Third party influencer
 Company sponsored programmes
 Premium and gift market
 Co-branded cards

112
Other Channels

 Catalogues and technology based


 Specialty catalogues
 Business to business catalogues
 Third party catalogues
 DRTV
 Trade shows
 Database marketing
 Internet

113
End Users

 Business
 Individual – The onset of mass merchandisers has
changed the buying patterns of this group making
them part of the various processes

114
Mutual Fund Marketing Channel

Mutual Fund
Custodian
MF Investment Adviser Mutual Fund
Holds the fund
assets, Management Company Transfer Agent
maintaining them Manages the funds portfolio Processes orders to
separately to according to the objectives in buy and redeem
protect the prospectus units
shareholder
interests

Mutual Fund Mutual Fund


Distributor Retailer
Sell directly or through Bank branches,
retailers brokerages, investment
advisers

115
INVESTORS
Marketing Flows in Channels

Physical Physical Physical


Possession Possession Possession
Ownership Ownership Ownership

Promotio Promotio Promotio


n n n

Negotiatio Negotiatio Negotiatio


n n n

Financin Financin Financin


g g g

S RELI ATE R
Risking Risking Risking

S RE MUS NOC
EL ASEL OH W
T C AF U NA M

Ordering Ordering Ordering

116 Payment Payment Payment


Marketing Flows in Channels


Marketing Flow 
Cost represented
 Physical possession  Storage and delivery costs
 Ownership  Inventory carrying costs
 Promotion  Personal selling, Advertising, Sales
 Promotion, Publicity, PR
 Negotiation  Time and legal costs
 Financing  Credit terms, terms and conditions of
sales
 Risking
 Price guarantees, warranties, insurance,
 repairs and after sales service
 Ordering  Order processing costs
 Payment  Collections, bad debt costs
117
Distribution Strategy

Define Customer Service Levels

Setting Distribution Objectives

Set of Objectives

The Distribution Organisation

Policy and Procedures

Key Performance Indicators

118 Critical Success Factors


C
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119
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Channel Management Decisions
An Analytic Framework or Channel
Design and Implementation

 Channel Design
▪ Segmentation
▪ Positioning
▪ Targeting
▪ Establish new Channels or Re-design Existing Channels
 Implementation
▪ Identifying Power Sources
▪ Identifying Channel Conflicts
▪ The Goal of Channel Coordination
 Channel coordination

120
B2B Channel Segments for a new High
Technology product
Possible Service Output Priorities Lowest total Responsive Full Service References
References and credentials cost/Presales
5 Support/
4 Post Relationship
6 and
25
Info Segment sales Segment Segment Credentials
Financial stability and longevity 4 4 5 16
Segment
Product demonstrations and trials 11 10 8 20
Proactive advice and consulting 10 9 8 10
Responsive assistance during problem 14 9 10 6
solving
One stop solution 4 1 18 3
Lowest price 32 8 8 6
Installation and training support 10 15 12 10
Responsive problem solving after sale 8 29 10 3
Ongoing relationship with a supplier 1 11 15 1
Total 100 100 100 100
% Respondents 16% 13% 61% 10%

121

= Greatest discriminating attribute = Additional important attributes


Efficiency Template
Flow Weights for Flows Proportionate Flow Performance
TOTAL
Costs Benefit Final Manufacturer Retailer End User
Potential Weight
Physical 100
possession
Ownership 100
Promotion 100
Negotiation 100
Financing 100
Risking 100
Ordering 100
Payment 100
TOTAL N/A N/A N/A N/A
122 Profit N/A
Normative N/A N/A 100
Share
Coverage vs. Assortment

 Higher the coverage, higher the sales especially for


convenience goods
 Low brand choice at small retail points add to the
domination
 Intensive distribution however kills the outlet’s
uniqueness
 For medium and high priced items, intensive distribution
leads to lower MOP
 This increases pressure on manufacturers to increase
margins which drop MOP further

123
Coverage vs. Assortment

 Except for very strong brands, this leads to dropping of


brands:
 Overtly by a brand that is not so intensively distributed
 Discontinue the entire product category especially if the
category is not essential
 Carry limited stocks of the original brand but convert to
another brand
 Bait and switch
 Concept of free riding

124
Selectivity vs. Intensive

 Selective distribution may lead to complacency amongst the


channel members and hence drop in performance
 Low involvement products cannot afford stock-outs and hence lead
to intensive distribution
 Higher the involvement, higher the selectivity. This should not
however be confused with mediocrity in channel selection
 High quality positioning may also lead to selective/exclusive
distribution

125
Sources of Power

 Rewards
 Coercion
 Expertise
 Reference
 Legitimacy
 Support
 Competition

126
Influencer Strategies

 To convert latent power to exercised power


 Strategies are used to influence channel counterparts

127
Continuum of Vertical Integration

Conventional Marketing Vertical Marketing


Channels Systems
Independent Unified

Separate, autonomous Linked as a single competitive unit


members

Aggressive intrachannel One clear leader with legitimate or


negotiations contractual power

Conflict not controlled Conflict controlled; stable structure


and membership

128
Sometimes fail to see big Channelwide perspective
picture
Continuum of Vertical Integration
FUNCTION Classical Quasi-Vertical Vertical
Marketing Integration Integration
Contract
Selling Manufacturer’s Captive Sales Direct Sales
Representative Agency Force

Wholesale Independent Distribution Distribution


Wholesaler Joint Venture Arm of
Producer
Retail Independent Franchise Company Store
Store

129
in
m
d
A
r
te
s
130
d
a
e
L
ip
h
rs
A
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tra
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tra
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o
Cu
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s Degree of
n
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tD
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C
i.S
n r
Systems
Types of Vertical Marketing
Types of Vertical Marketing
Systems
Vertical
Vertical
Marketing
Marketing
Systems
Systems (VMS)
(VMS)

Corporate
Corporate Contractual
Contractual Administered
Administered
VMS
VMS VMS
VMS VMS
VMS

Wholesaler
Wholesaler Franchise
Retailer
Retailer Franchise
Sponsored
Sponsored Organizations
Cooperatives
Cooperatives Organizations
Voluntary
Voluntary Chain
Chain
Manufacturer-
Manufacturer- Manufacturer-
Manufacturer- Service-Firm-
Service-Firm-
Sponsored
Sponsored Sponsored
Sponsored Sponsored
Sponsored
131 Retailer
Retailer Wholesaler
Wholesaler Franchise
Franchise
Franchise
Franchise Franchise
Franchise System
System System
System
System
System
Major Logistics Functions
Costs
Costs Order
Minimize Order
Minimize Costs
Costs Processing
of Processing
of Received
Attaining Received
Attaining Processed
Logistics Processed
Logistics Shipped
Objectives Shipped
Objectives
Logistics
Transportation Warehousin
Warehousin
Rail, Truck,
Functions gg
Water, Pipeline, Storage
Storage
Air, Intermodal Inventory Distribution
Distribution
Inventory Automated
When
When toto Automated
order
order
How
How much
much toto
132 order
order
Just-in-time
Just-in-time
Logistics Strategy

Pull Supply Chain
Merchandise
shipped to stores
based on sales and
inventory levels in
the stores

Push Supply
Chain
Merchandise
shipped to the (c) Brand X Pictures/PunchStock

stores based on
forecasted sales
rate
133
Activities Performed by Distribution
Center
 Managing inbound transportation
 Receiving and checking merchandise
 Storing or cross docking merchandise
 Preparing merchandise for the sales
floor
 Ticketing and marking
 Putting on hangers
 Shipping merchandise to
stores
 Managing outbound
transportation
134
Ryan McVay/Getty Images
Key Logistics Activities

 Customer Service
 Demand Forecasting
 Distribution communication
 Inventory control
 Materials handling
 Order processing
 After sales parts and service support
 Plant and warehouse site location
 Procurement
 Packaging
 Returned goods handling
 Reverse logistics
 Salvage and scrp disposal
 Traffic and transportation
 Warehousing and storage

135
SCM Framework

136
IMPLEMENTATION
Benefits of Efficient Supply Chain
Management


Fewer stockouts – merchandise will be
available when the customer wants them


Tailoring assortments – the right
merchandise is available at the right
store

Ryan McVay/Getty Images



Customers respond to the convenience
as evidenced by increased sales

137
WHY GO INTERNATIONAL?
 Limited growth in home market
 Overseas markets offer large profitable
opportunities
 The WTO agreement has resulted in opening up of
new areas for freer trade (Textiles, Services &
Agricultural products)
 It has also forced the opening up of markets like
China, Russia, India & the East European
countries.
 Domestic competition has increased especially
from imports.
 Global Sourcing in manufacturing and services has
increased due to cost pressures & improvement
in infrastructure.
138
CHOOSING THE MARKET

 Factors to be borne in mind while choosing


markets:
 Size of the market
 Language & Culture of the market
 Competition in the market
 Proximity of the market
 Political and Financial stability of the country
 Ease of doing business

139
The Complex Environment
Behavioral
Behavioral processes
processes in
in
international channels
international channels

Environment
Environment
of
of Designing
international Designing
international international
international
channel
channel channels
management channels
management

Motivating
Motivating international
international
channel
channel members
members
Designing International Channels

Phase 1 Recognize that a channel design


decision must be made.
Phase 2 The design will need to reflect whether
the firm’s distribution objectives
specify reaching overseas markets.
Phase 3 The firm must examine carefully the
kinds of tasks that need to be performed
to successfully meet the firm’s
distribution objectives.
Phase 4 Develop a set of channel structure
alternatives for the specific international
environment.
ENTRY STRATEGIES

 Exporting through local agent


 Exporting through foreign agent
 Exporting to foreign importer / distributor
 Setting up local office / representative
 Licensing / Franchising
 Setting up Joint ventures for distribution /
manufacture
 Setting up wholly owned manufacturing
facilities

142
ROLE OF LOGISTICS

 Very important aspect of international selling


 Logistics can make up over 15% of the cost of
the product
 Involves multiple modes of transport – land,
sea and air
 Considerable paperwork and formalities to be
completed in international trade
 Logistics providers now offer complete one
stop solution including distribution, invoicing
and collection of payment

143
PRICING AND PAYMENT TERMS

 Common pricing terms are:



 Ex Works – at the mfrs factory gate
 FOT, FOR – free on truck / rail –loaded on
truck/rail
 FAS – free along side – at port next to ship
 FOB – free on board – loaded on ship
 C&F – cost and freight – inclusive of to
destination
 CIF – cost, insurance and freight – inclusive to
destination

144
PRICING AND PAYMENT TERMS
 Payment terms can include:
 Cash in advance
 Cash on delivery – cash against documents
 Consignment basis – payable after sale
 Usance – payment … days after acceptance of
documents
 Letter of credit
 Long term credit financing – for machinery /
projects
 Each method has risks for the buyer or seller.
The LC offers safety and comfort for both


145
CURRENCY OF PRICING
 The US Dollar is the most widely used
currency for pricing international sales
 Importers in some countries may prefer
invoicing in local currencies like Japanese
Yen or Euro or Pound Sterling, Singapore
Dollars or UAE Dirhams Saudi riyals etc.
 This reduces the risk of exchange rate
fluctuations for the buyer
 Exchange fluctuation is a major risk for sellers
and can be managed by hedging the
currency.
146
PACKING AND SHIPPING

 Packing is of two types:


 Industrial packing– bulk for protection during
shipping & transport
 Consumer packing – to enhance sales appeal
 Packing could makeup up to 5% of product
costs
 Countries have laws or practices in packing
which must be understood and adhered to.
 Packing depends on the product and must be
suitable for containerized shipping and
mechanical handling.

147
CHANNELS CHANNEL LEVEL
Level 1 Company Depot State

CFA District
Level 2 Redistribution Headquarters
Stockists (May cover 2 to 4)
Redistribution District
Level 3 Stockists Headquarters
Semi
Semi Wholesalers Tehsil
Vans
Wholesalers Headquarters
Level 4
NGOs Feeder Towns
Retailers
Vans Village
Level 5 Government Haats
148
Agencies
CFAs
 Normally employed by FMCG Companies
to supplement their own depots.
 Cost of CFAs is lower than running own
depots.
 They provide space and are involved in
the order processing from
distributors/stockists.
 The orders are booked by the Company
representatives and passed on to the
CFA for execution.


Redistribution Stockists
 They are the main link between the
Company and the rural channels.
 RS are involved in all the marketing flows.
 They have vans and a sales force with PJPs
to cover the rural retailers.
 Redistribution Stockists cover about 30% of
the rural retailers and are located at
district headquarters.
 Some companies also have a next level of
sub-stockists (also called star sellers) who
are located at the tehsil (thana) level.
 HUL recently withdrew their sub-stockists.

 Wholesaling: More than 70% of rural market
Wholesalers
is still out of reach of direct distribution.
 50% of rural consumption through
wholesears located nearby. The reasons of
wholesaling in India are:
 Limited product availability to feed the
channel.
 Company focused on large number of
retailers in urban areas
 Neglect of rural market due to low density of
retail outlets & small off-take per retailer.
 Wholesalers are seen as speculators and
exploit the companies and the retailers




Retailers

 Also act as money lenders in rural areas.


They play a significant role:
 Credibility
 Influence leader
 Brand promoter
 Relationship marketer
 Harbinger of change


HAATS – THE SCOPE

 An estimated 47,000 haats are held in India


 Weekly 75%
 Bi-weekly 20%
 Daily 5%
 Each haat caters to 10 to 50 villages and draws 4000
people
 Marketers can reach 50% of rural markets by using
haats as replenishment points for wholesalers

Haats
Categories of Outlets %
 Haats – periodic markets
 A place for political, social, and cultural Agricultural products 39.5
contact
 Most of these are held once a week; Manufactured goods 24.3
others twice a week
 Total Haats – 47,000 Processed foods 13.2
 Average number of visitors – 4,600
Handlooms and handicrafts 8.4
 Average sale per day – Rs. 2.25 lakhs
 Number of stalls/ Haat – 300+ Services 3.3
 Villages covered per Haat – 15 to 20
Fish, meat and poultry 3.2
 88% are regular visitors
 77% of the participants attend 4 haats Forest products 2.1
every week
 32% own permanent shops in villages Others 6.0

Source: MART
154 study
Mandis

 Mandis – agricultural markets set up by state


governments to procure agricultural produce
 Total Mandis – 6,800
 Most agricultural areas with population more than
10,000 have Mandis
 Average population catered to each Mandi – 1.36 lakhs

155
Melas

 Melas – fairs and festivals Categories of Outlets %


 A place for entertainment and
shopping Manufactured goods 42.5
 Number of Melas
Processed foods 19.5
 500 major ones
 25,000 total Handlooms and handicrafts 15.6
 Average number of visitors – 7.5
lakhs Agricultural products 5.6
 Average number of outlets - 850
 Average sales – Rs. 2.5 crores Services 4.2
 Melas may be classified as: Entertainment 4.0
 Religious, cultural or commercial
 Local, regional or national Others 6.0
 One day, short duration or long
duration
 Source: MART
study
156
Van Operation
Eveready Example


Unique System of Rural Coverage

Exclusive , Painted van

Master Van Programme of 12 X 2 days per
month

Frequency - Weekly, Fortnightly, Monthly

50-60 avg. calls per day

Exclusive area of operation

Van Running Cost subsidized

Success lies in training, systems and controls
New Channels
 Cooperative Societies
 Over 4000 Primary Marketing Societies
 Nearly 3000 Large Agricultural Multipurpose Primary
Marketing Services
 Public Distribution System
 3.8 lakh shops in the rural segment
 Petrol Outlets – 7000 in rural
 NGOs – They work for employment and income
generation of the rural households
 Barefoot Salesmen


Designing Rural Distribution
Two Concepts:
Network

ØMPV
ØPCS

The most prevalent Rural distribution models like Van &


Super Stockist operation can be adopted effectively only
with the above studies
159
Challenges in Rural Distribution

•COST OF COVERAGE
ðViability & Frequency
ðHigh whole sale dependence
ðLogistics in coverage
ðCost of Infrastructure

•MAPPING \ ROUTE PLAN


ðIdentifying the towns and routes
ðDigitized Maps

•AVAILABILITY OF RIGHT CHANNEL PARTNERS


ðUnderstanding the channel needs in Rural, like,
ROI , Appropriate credit policy, etc
ðThrust in STR & Coverage

•160
Synergy & Scale is critical for Rural Distribution
•Appropriate hygiene in terms of Market rates is equally vital
THANK YOU