PPTs_Sales and Distribution Mgmt

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Chapter 1

Introduction to SalesManagement



1. Willingness to go to bat for the buyer within thesupplier firm

2. Thoroughness and follow through

3. Knowledge of the sales person’s product line

4. Market knowledge and keeping the buyer posted5. Applying his product and services to buyer’s needs

6. Knowledge of the buyer’s product line

7. Preparation for sales calls

8. Regularity of Sales calls

9. Diplomacy in dealing with operating departments10. Technical education

Personal selling strategies



Persuasion

Consultative

Selling

Partnership

StrategiesBusiness

Management

Negotiation

Evolution of personal selling



Marketing concepts

1) Production concept

2) Product concept

3) Selling concept4) Marketing concept

5) Societal concept



Customer

Needs

Sales Customers

Emphasis on

Seller’s Needs

Production

Production

Sales

Emphasis onCustomer

Needs

Societal marketing concept

(Sales Orie

ntation)

(Marketing Orientation)



Nature and role of sales

management The determination of sales force objective and

goals

Sales force organization, size, territory, and quota

finalization

Sales forecasting and budgeting

Sales force selection, recruitment, and training

Motivating and leading the sales force

Designing compensation plan and control systems

Designing career growth plans and building

relationship strategies with key customers



Types of selling

• Order taker sales people

• Order creators

• Order getters



Selling

Function

Order

Takers

Order Getters

Order

Creators

Outside Order

Takers

Inside Order Taker

Merchandisers

Delivery Sales

People

Missionary Sales

People

New BusinessSales People

Organizational

Sales People

Consumer

Sales People

Technical Support

sales People

Front Line

Sales People

Sales

Support

Sales

people

Types of Selling



Factory FactorySelling and

promotingProfits though

sales volume

Selling concept

Market concept

Market Customer

needs

Coordinated

marketing

Starting

point Focus Means Ends

Profits through

customer satisfaction

Difference between sales and marketing



Marketing management process

MARKET ANTICIPATION

Exchange offer of value

Producer

MarketerConsumer

Marketing mix

•Product

•Price

•Place

•Promotion



Formulation of a strategic sales programme

Implementation of the sales programme

Evaluation and control of sales force performance

Sales management process



Technology

Relationship sellingCustomer orientation

Global and ethical

Issues

New selling methods

Diversity

Emerging trends

in sales

management

Emerging trends in sales management

Technology



Chapter 2Selling Skills and

Strategies



Selling and buying styles

9

8

7

6

5

4

3

2

1 2 3 4 5 6 7 8 9

Concernfor

thec u

stomers

(1,9) People OrientedI am customer’s friend,

I want to understand him and

respond to his feelings and

interests so that he will like me. It

is the personal bond that leads him

to purchase from me.(5,5) Sales technique Oriented

I have tried an effective routine for

getting a customer to buy. It

motivates through a blended

personality and product emphasis

(1,1) Take it or Leave it

I place the product before the

customer and it sells itself as and

when it comes.

(9,1) Push the product Oriented

I take challenge of the customer

and hard sell him, polling on all

the pressure it takes to make him

buy

(9,9) Problem Solving Oriented

I consult with the customer so as to

inform myself of all the needs in his

situation that my products can satisfy.

We work towards a sound purchase

decision on his part, which yield him

the benefits he expects from it.



Selling situations

Sales task and function

Maintenance selling

Developmental selling



e ng s s

Selling Skills

Listening Skills

Conflict management and

resolution skills

Negotiation

and bargaining

skills

Problem

solving skills

Effective

communication

skills



Communication process

Noise

Channel

Feedback

Intended

Message

Sent Message

Encoding

Perceived

Message

Received

Message

Decoding

Sender Receiver



Communication processcontd.

Managing body language:

Personal Appearance

Posture Gestures

Facial Expressions

Eye Contact Space Distancing



Process of listening

Attendance

Interpretation

Evaluations

Remembrance

Response Action



Levels of listening

Feedback

Paraphrasing

Emphatic listening

Clarifications

Active Listening

Barriers to Listening !



Conflict management skills

Models of conflict Components of conflict The conflict resolution process:

- lumping

- avoidance- coercion

- meditation

- conciliation

- arbitration- adjudication

- negotiation



Stage I

Potentialopposition or

Incompatibility

Stage II

Cognition &Personalization

Stage III

Intentions

Stage IV

Behaviour

Stage V

Outcomes

Antecedent

Conditions

Communication

Personal

Variables

Structure

Perceived

Conflict

Felt Conflict

Conflict handling

Intentions

Competing

Collaboration

Compromising

Avoiding

Accommodating

Overt Conflict

Party’s

behaviour

Others

reaction

Increasedgroup

performance

Decreased

group

performance

Conflict management process



Negotiation skills

•Situation and timing for negotiations•Formulation for a bargaining strategy

•The theory and strategy of principle

negotiations- separate the people from the problem

- focus on interests, not on positions

- invent options for mutual gains

- insist on objective criteria



Problem solving skills

• Habit I: be proactive• Habit 2: begin with an end in mind

• Habit 3: put first things first

• Habit 4: think win–win• Habit 5: seek first to understand,

then to be understood

• Habit 6: synergize

• Habit 7: renewal



Define the problem

Generate alternative solutions

Decide the solution

Implement the solution

Evaluate the solution

Problem solving processProblem solving process

t h i



ProblemDefinition

Techniques

Find out origin of the

problem

Explore theproblem

Present

desired state

analysis

Evaluate

problemstatement

Statement

and

Restatement

Dunker’s

diagram

techniques

1

2

35

4

6



Dunker’s diagramDunker’s diagram

Achieve the desired state

Possible path to the desired state

Path 1 Path 2 Path 3

Solutions to implement & paths to desired solutions

Solution 1Solution 2 Solution 3

General Solution

Functional Solution

Specific Solution

S



F u z z y M e

s s

Perceived problems

Re Statement

Re Statement

Final problem Statement

Relax

Constraints

Make an

Opposite

Statement

Generalize

Statement restatement techniqueStatement restatement technique



Components of a decision on the

future course of action

Components of a decision on the

future course of action

Situation analysis

Problem analysis

PastWhat is the fault

Decision analysis

Potential problem

Analysis

FutureHow to prevent future

faults?



Decision on the best solution

Approval

Planning

Carry through

Follow up

Evaluation

I

M

P

L

E

ME

N

T

A

TI

O

N

Solution implementation processSolution implementation process



Chapter 3

The Selling Process



Stages in the selling process

Pre-sale

preparation

Sales

Presentation

Handling

Customer

Objections

Closing the

SaleFollow up

action

Approach to

the customer

Pre-

approach

before the

interview

Prospecting



Prospecting

Successful prospecting

50 potential prospects

15 Qualified prospects

6 Interviews

1 sale

50 potential prospects

25 Qualified prospects

17 Interviews

7 sales

Successful prospecting

No Yes



Process of prospecting

Identify and define prospects

Search for sources of potential

accounts

Qualify the prospects from the

suspects



Methods of prospecting

Cold canvassing

Endless chain customer referral

Prospect pool

Centers of influence

Non competing sales force

Observation

Friends and acquaintances

Lists and directories

Direct mail

Telemarketing

Trade shows and demonstrations



Selling process

• Pre approach to selling

• Approach to the customer

• Sales presentation

- approach to sales presentation

- attracting customer attention

- creating interest- arousing desire and building conviction

• Methods of sales presentation

- canned presentation

- organized presentation- tailored presentation



Handling customer objections

• Start with your highest expectations

• Avoid conceding first

• BE sure the customer understands the value of a concession

• Make concessions in small amounts

• Admit mistakes and make corrections willingly

• BE prepared to withdraw a concession

• Avoid ‘split the difference’ strategy

• Do not advertise willingness to concede

Suggested by SMITH



Methods of handling customer

objections

Superior feature method Yes…But method Reverse English method

Indirect denial method Pass out method Comparison method Direct denial method

Another angle method Narrative method Testimonial method Question or WHY method



Closing the sale

• Methods of closing the sale

•Follow-up action

• B2B selling



Chapter 4

Managing Sales Information

Forecasting market demand



Forecasting market demandIt is the estimated rupee or unit sales for a specific future time

Period based on the company’s marketing plan and an assumed

marketing environment.

Price/

Unit

Price /

Unit

Price/

Unit

Price/

Unit

Price/

Unit

Price /

Unit

Qty per Unit (E)Qty per Unit (f)

Qty per Unit ©

Qty

perUnit

(B)

Qtyper

Unit

(A)

Qty per Unit (D)

Total

Market

demand

P1

P2

Q1Q2

D D1

D D2

D D1

D D2

Market demand curve



Market demand function

QD = F (P, I, P0, T) P- Price of the productI- Consumer Income

T- Consumer preference

P0 Price of other goods and

servicesQD = B + aP P + a1I + a0P0 + aTT

aP,, a I, a0, aT represents the one unitchange in quantity associated

with the variables.

QD

= B + aP

P

Linear form of the demand

equationB represents the combined influence

of all the other determinants of the

demand



• marketing decision support system

- an MDSS is an ongoing future-oriented information structure

designed to collect, collate, categorize, edit, store, and retrieve

information on demand to aid decision making in an organization’s

sales and marketing programme

Market demand forecasting



MDSS

TRANSACTIONAL SYSTEMS USERS

Marketing decision support system



Forecasting process

The forecasting process is defined as theseries of decisions and actions taken by abusiness organization in:

identifying the forecasting objectives

determining the independent anddependent variables

developing a forecasting procedure using the available data in the

selected method to estimate the sales infuture

F i



Develop forecasting

procedure

Forecasting processcontd.

Select forecastinganalysis method

Comprehend total

forecasting procedure

Collect, collate,

gather and analyze

data

Determineindependent and

dependent variables

Present all theassumptions about

data

Forecast objectives

Evaluate performanceresults against the

forecasts

Make and finalize

the forecast

Popular methods in forecasting



Qualitative methods

Expert opinion Survey of buyer’s

expectation

Sales force

composite

Delphi

technique

History analogy

Quantitative methods

Test marketing Naïve method Trend method

Moving average Regression methodExponential

smoothening

Popular methods in forecasting

Trend forecast of Sales



Observed salesForecasted sales

T r e n d l i n

e

Time

Sales

Trend forecast of Sales



Naïve methodSales (at the period t) = Sales T+1

The following formula shows how to adjust the naïve methodto account for achange in rate of sales levels. The formula is stated this way: Next Year’s Sales = This Year’s Sales X This Year’s Sales

Last Year’s Sales

Free Hand Graphic Method

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10

Years

S a l

Series1

Freehand Method



Method of semi-averages In this method available data are divided into two parts, usually with

equal number of years on both the parts

Year Sales

1993 102

1994 105

1995 114

1996 1101997 108

1998 116

1999 112

he average of the first three years will be:

102+105+114 321

----------- = -------- = 107

3 3



The 3-yearly moving average can be computed with thefollowing formula:

a+b+c b+c+d c+d+e d+e+f --------- , ----------- , ---------- , --------- , ………….

3 3 3 3

Method of moving averages

Method of Least Square

The least squares method is a formalization of the eyeball-fitting or graphical technique. It is used to mathematicallyproject the trend line to the forecasting period with the timeas the independent variable that influences the dependentvariable i.e sales.

It is a time series method in which seasonality is taken in to

account while doing demand forecasting. This method consists

of three essential steps which are illustrated below.

Decomposition method

Exponential smoothing



Exponential smoothingmethod (contd.)

• It is similar to the movingaverage forecasting method• The forecaster is allowed to vary the weights assigned to

past data points• It allows consideration of all past data, but less weight is

placed on data as it ages• Exponential smoothing is basically a weighted movingaverage of all past data

• The method is used to forecast only one period in thefuture

• Exponential smoothing techniques vary in terms of howthey address trend, seasonality, cyclical and irregularinfluences

Exponential smoothing



Exponential smoothingmethod contd.

Next Year’s Sales = a (This Year’s Sales) + (1 – a) (This Year’sForecast)

Autoregressive moving averages

It uses a different procedure than the other models explained

above in identifying the proper number of past observations

to be included in the analysis and the weights that should be

attached those observations



Correlation analysis • a correlation is basically the degree of linear

association between two variables where one variableis treated as independent variable and sales as thedependent variable

• sales managers look for variables that correlate with or

relate to sales

• correlation analysis involves the determination of whether arelation exists, and if it does, then measuring it, testingwhether it is significant, and establishing the cause and

effect relation• the degree of relationships between the variables is calledco-efficient of correlation

Regression analysis



Regression analysis

• regression analysis is another form of correlationaltechnique

• reveals average relationship between two variables and

this makes possible estimation or prediction

• a statistical method used to incorporate independent

factors that are thought to influence sales intoforecasting procedures

Population

Sales

Population

Sales

(Liner Relationship) (Curvilinear Relationship)



•the most commonly used market factor indexmethod is Buying Power Index Method (BPI)

•BPI is used to predict sales for specific

geographic regions for retailer and FMCG

sector such as clothing, food, auto, and otherconsumer items

•BPI is also used to determine sales quota by

many multinational organizations

•applications are limited in Indianorganizations as we do not have data bases to

support this method at different levels of the

market

Market factor indices methods



Econometric techniques

Econometric techniques uses multiple independent variables

where the assumption is that of a liner equation between the

dependent variable (sales) and independent variables

Market factor indices methodscontd.



Factors affecting selection of a forecasting technique

• data availability

• cost

• variability

• consistency of the data

• the degree of detail necessary

• time horizon

• technical sophistication

• ability of the method to capture the level of risk andvariability

• the level of accuracy of the forecast

• fundamental change indicators

Market factor indices methodscontd.



• level of accuracy is an explanation of the gap between

the actual and predicted sales

• techniques with lower level of gap are more accurate

• statistic used to calculate the level of accuracy of aforecast is called MAPE (Mean Absolute PercentageError)

MAPE (Mean Absolute Percentage Error)

• MAPE is the average percentage forecast error and is a

popular way to measure accuracy



Chapter 5

Sales Organization



Sales organization

• an organization of individuals either working together

for the marketing of products and services manufactured

by an enterprise or for products that are procured by the

firm for the purpose of reselling

• a sales organization defines duties, roles, rights, and

responsibilities of sales people engaged in selling

activities meant for the effective execution of the salesfunction



Sales organization

contd.

• a structural body through which the functions of

sales management are carried out

• sales organization always makes efforts to increase sales,thereby achieving the principle of profit maximization,

which contributes to the overall growth of enterprise



Factors influencing structure

• product and service related factors

• organization related factors

• marketing mix related factors

• external factors:

- the speed of market change

- reduction in the number of vendors per

buyer- closer to customer relationships

- changes in regulations and international

practices



Organizational principles

span of control

unity of command

hierarchy of authority

stability and continuity

coordination and integration

homogeneity

objectivity

specialization



Organizational design

- f ormal and coordinated task

- assigning territories

- establishing flows of communication and responsibilities

of sales groups and individuals to customers effectively

Line organization Mr. Ratnakar ShettyPresident / Owner

Mr. Chandrakant

VP (Sales)

Five sales people

Typical structure of a line organization



Consumermarket

Institutionalmarket

Corporatemarket

National

DistributorsDirect to

Home

Direct

marketing Distributors Bundling Gifting

ConsumerRegional

Distributors

Retailers

Consumers

Typical structure of a line organization

D i b t it



Design by territory

VP Marketing

National Sales

Manager

Divisional Manager

(East)

Divisional Manager

(North)

Divisional Manager

(West)

Regional Sales

Manager

District SalesManager

Sales Staff

(City wise)

Regional Sales

Manager


Sales Staff

(City wise)

Regional Sales

Manager


Sales Staff

(City wise)

D i b t f ti



Design by management function

Mr. Dara singh,

VP(Marketing)

Mrs. Chitra Mohanty

(Advt / Sales

Promotion Mgr)

Staff Function Line Function

Mr. Dibya Behera

(Sales Manager)

Mr. Chandra De

Manager

(MR)

20 Sales People

D i b d t



Design by product

President,

Marketing

Product Manager (A)

Product Manager (B)

Manager

(Sales)

Manager

(Training)

Manager

(Promotion)

Manager

(Sales)

Manager

(Training)

Manager

(Promotion)

D i b t



Design by customer

President(Marketing)

Sales Manager

Wholesalers

Sales Manager

Retail Sales

Sales People

Sales Manager

Industrial Relations

Vice President

(Marketing)

Sales People Sales People

President



Functional

Geographic

Customer

Combined

Sales Org. Design

President

Marketing Manager

International

G.M

International Sales

Marketing Manager

India

Vice President

(Marketing)

G.M

Consumer care

G.M

International Sales

Vice President

(HRD)

Vice President

(Production)

Divisional Manager

Soaps

Divisional Manager

Food

Divisional Manager

Paper

Eastern SalesDivision

Western SalesDivision

Northern SalesDivision

Europe Division America Division Gulf Division

Product

S l O i ti



Key account sales

Sales process automation

- focus on CRM

- customer profitability and value analysis

- the few accounts give incremental returns

- national accounts

- EDI – Electronic Data Exchange

Sales Organization

Emerging organizational design



Emerging organizational design

• agency and distribution selling

• shared sales force

• telemarketing

• TQM and team-based selling

Customer

Sales MarketingTechnical

SupportManufacturing

Supplier selling team





Chapter 6

Management of Sales Territory



Sales territory



Sales territory (contd.)

Advantages of designing a sales territory :

it ensures better market coverage

effective utilization of the sales force

efficient distribution of workload among sales

people

it is convenient to evaluate the performance of

sales people

to control over the direct and indirect costs of thesales function

optimum utilization of sales time by sales people

Designing sales territories



Designing sales territories

Select the basic geographiccontrol units

Decide on the criteria for

allocation

Decide on the starting point

Combine control units

adjacent to starting pointCompare territories on

allocation criteria and

conduct workload analysisAssign sales force to new

territories

Factors

influencing the

modifications

of a territory:• mergers

• market

consolidation• split in division

• sales force

turnover

• customer

relocations

• product life

cycle change

• product line

change

Modify

territorial

boundaries to

balanceworkload

and potential

Territory shapes



Territory shapes

circlewedge

Clover leaf

Strategic Planning Matrix



Strategic Planning Matrix

Opportunity

Strategy

Opportunity

Strategy

Strategy

StrategyAllocate a moderate level of resources to

maintain current advantage.

Either commit a minimal level of

resources to the account or consider

abandoning the account altogether.

The account offers stable opportunity since

the sale organization has differential

advantages to serving them.

Opportunity

Opportunity

The account offers little opportunity. Its

potential is small and the sales organization

is at a competitive disadvantage in serving

it.

The account offers a good opportunity.It has high potential and the sales

organization has a differential

advantage in serving it.

Commit high levels of sales resources to

take advantage of the opportunity.

The account may represent a good

opportunity. The sales organization needs

to overcome its competitive disadvantages

and strengthen its position to capitalize on

the opportunity.

Either direct a high level of sales

resources to improve the position and totake advantage of the opportunity or

shift resources to other accounts.

Strong Weak

H

i

g

h

L

o

w

S l t it i



New Territories..?

Use of Information Technology

IT enabled services computer programmes simulation techniques

Sales territories



Management of Sales Quot

Chapter 7

Sales quota



Sales quota

• a quota is an expected performance objective

• a quota is a sales assignments or goal to be

achieved in a specific period of time

• it is routinely assigned to the sales units (e.g.departments, divisions, and individuals)

• sales units proceed to reach quotas in theirrespective domains

“A sales quota is the sales goal set for a product line,company division, or sales representative. It is

primarily a managerial device for defining and

stimulating the sales effort.”. … Kotler

Principles of quota settingPrinciples of quota setting



Principles of quota settingPrinciples of quota setting

• setting of sales quotas is a challenge to the sales

manager and should be handled with precision

and adequate skill

• it must be simple to understand both to themanager and the sales people

• objectivity to be observed while fixing quotas

and should be based on facts and figures drawn

from the market

• quotas set above the achievable limit oftendemotivate and result in high turnover in theorganization



S M A R T



S M A R TP

ECIFI

C

E

ASU

R AB

LE

T

TAI

NAB

LE

R

EAL

IST

IC

I

ME SPECIFIC

SBO…

MBO in the Salesdomain?

Organization of the sales job



Organization of the sales job

Defining annual objectives

Procedure for setting sales quota

Conferencing with each sales personIndividua

lGoalsettin

gform

OutputName

Year

Your territory

Results expected

Pessimistic Realistic Optimistic Results1. Volume per month

2. Expenses per month

3. Gross margin per month

4. Market share per month

5. Key account coverage per

month

Types of sales quota



Types of sales quota

• sale volume quota• sales budget quota

• sale activity quota

• combination quota

Methods of setting sales q ota



Methods of setting sales quota

Quotas are based on…

• sales forecasts and potentials

•forecast

• past sales and experience

• executive judgment

• sales people judgment

• compensation



Problems in setting sales quota

1. There is a high level of individual difference in every

organization

2. A perfect quota is a combination of selling and non-

selling activities

3. Often sales people do not give proper attention to the

non-selling activities (e.g. searching for prospects,

handling customer objections, and creating market forprobable entry of new products)



The sales manager



• performs sales management +HR management !

• recruits, selects, trains, motivates, leads,

controls, and compensates sales teams

• selection and recruitment of efficient sales

people is always a process of building competitive

advantage for an organization

The sales manager

Strategic positionTurnover Job qualification



analysis

Decide on the number of

people to hireIdentify best sources of

recruitment:

internal and external sources

Generate database of

candidates

Evaluate candidates

Select and induce

candidates to accept

positions

Socialize

Establish

hiring

objectives

Job qualification

Job description

Organizational

characteristics,

company image

and climate,styles of

supervision,

compensation,

and motivation

of the company

Selection

Socialization

Recruitment

Planning

The hiring process

Challenges in sales force



Challenges in sales forceselection

• personality types matching to job profiles

• one of the measures that the organization

looks in an employee is:

- the ability to perform by an employee

= ability x motivation

• level of motivation

Planning for recruitment



Planning for recruitment

1. Strategic position analysis

2. Turnover

3. Job analysis

• gathering and organization of information• concerning the tasks, duties and

responsibilities of a specific job

3. Task inventory analysis and KSA matrix

• job qualification

• job description

Sales force recruitment



Sales force recruitment

• recruitment is an act of inducing qualified and

appropriate people to get interested in and applyfor a salesperson’s position within a sales

organization

• internal sources- existing employees- lateral and upward moves- interns and cooperative students- employee referral programmes• external sources- industry sources

- educational institutions and campusrecruitments

- employment exchanges- placement consultants- walk in interviews

External sources contd...



- networking referrals

- web consultants

- responses to direct open advertisements

Selection procedure

- inviting application forms

- personal interviews

- reference checks- physical examinations

- psychological tests

- intelligence

- personality

- aptitude and skills- determination of terms of service

- appointment

- initial orientation

Socialization process



p

• process of orienting a new salesperson to the

sales organization, territory, or division in whichhe or she will be working

• three stages

Anticipatory stage

Encounter stage

Settling stage



Chapter 9

Training the Sales Force



l f h i



Role of the trainer

The success of the training programme depends on theability, skill, and motivation of the sales trainer

The training process



The training process

Training need assessment

Design and conduct of a training programme

Evaluation of a training programme



Training needs



g

Identification of specific problemsAnticipating impending and future

problemsManagement requests

Interviewing and observing thepersonnel on the jobPerformance appraisalQuestionnaire survey

ChecklistAttitude surveyInterpersonal skill test

Designing and conducth



phase

Location

Job Instruction Training (JIT)

Presentation options

T f t i i



Types of training

Cross-functional training

Team training

Creativity training

Literacy training

Training methods



g

Didactic method- structure the lecture

- reinforce the Message

- aid concentration

- material used for the lecture

- make it memorable for the participants

- deliver with dynamism

- use questions

Visual supportParticipativeConferences



Training methods contd..

SeminarsDiscussionsRole playCase study

FishbowlWorkshopsSensitivity training

Transaction analysisIn-tray exercisesTranscendental meditation

Deciding a sales trainingprogramme



programme

Aim

Content

Contents

Knowledge

Proficiencies

Location

Evaluation

P f i li ti



Process of socialization

Anticipatory socialization

Accommodation stage

Outcome stage



Chapter 10

Sales Force Motivation

Process of motivationProcess of motivation



Motive

Behaviour

Goal

Tension

reduction

Process of motivationProcess of motivation



Primary General Secondary

Motives

Motivational drives



Principles Security Achievement

Approval Loyalty Advancement

Leadership Human behaviour

Theories of motivation



Theories of motivation

ContentContent

ProcessProcess

ReinforcementReinforcement

Content theories



Content theories

Need hierarchy theory

Hertzberg’s two factor theory

Alderfer’s ERG theoryMcGregor Theory X and Y

Z theory of William Ouchy

Maslow’s hierarchy of needs



Physiological need

Security need

Social need

Esteem need

Self actualisation need

y

Process theories



Process theories

Equity theories

Expectancy theories

Reinforcement theories



Reinforcement theories

© Oxford University Press 2005, All rights

reserved.

Hull’s drive theory

Skinner’s reinforcement theory

Factors influencing the



gmotivation of the salesperson

Personal characteristics

Environmental conditions

Organizational policies

Designing a motivational



programme

Programme objective

Motivational tools

Individual methods Group methods

Communication

Auxiliary environment

Feedback



Chapter 11

Sales Force Compensation

Factors influencing the design



Factors influencing the designof a compensation plan

Financial stability

Size of the market

Nature of the product

Types of compensationplans



plans

Financial compensation

Non-financial compensation

Fi i l i



Financial compensation

Straight salary plan

Straight commission plan

Bonus and incentive

Salary plus incentive (combination plan)

Drawing account and commission plan

Allied methods

Non-financialcompensation



compensation

Promotions

Recognitions programmes

Fringe benefits

Expense accounts

Perks

Sales contests

Steps in designing a



Steps in designing acompensation plan

Determine sales force and compensation

objectives

Determine major compensation issues Implement long-term and short-term

compensation plans

Relate rewards to performance

Measurement of performance

Appraise the compensation plan



Deciding on the criteria for

measuring performance



Deciding in the conduct of the

performance appraisal

Deciding on the evaluation of

individuals and teams

Comparison of actualperformance with standards

Deciding on the frequency of

the performance appraisal

The external variables and

their influences

Sales force performance appraisal process

Sales force performance appraisalprocess



• Appraisal criteria

• Relative and absolute judgments• Trait-based

• Outcome-based

• Behaviour-based

• Performance rating• Force choice scales

• Behavioural observation scales

• Call reports

• Silent call monitoring scores

• Activity reports

• Combinational methods

Conduct of performance and individual vs

team appraisal



pp

Example of a Role result Matrix Position Developing a new business

Servicing existing customers

Key account manager

Regional sales managerApplication engineer

Customer service staff

Technical support staff

Installation and quality engineer

Financial staff



Chapter 13

Distribution channel

management - anintroduction

Chapter 13

Distribution channel

management - anintroduction

Role of distributionchannels



• To adjust the discrepancy of assortment through the

process of sorting, accumulation, allocation, and

assorting

• To minimize the distribution costs through

routinising and standardizing transactions to make

exchange more efficient and effective• To facilitate the searching process of both buyers

and sellers by structuring the information essential

to both the parties

• To provide a place for both parties to meet eachother and reducing uncertainty



Discrepancies in theprocess of exchange



process of exchange

Spatial discrepancy

Temporal discrepancy

Need to break the bulk

Need to provide assortment

The cost and control aspects of



intermediation

Direct Distribution Indirect distribution

Control

Cost

efficiency

s r u on c annestrategy



• Setting distribution objectives in terms of the customer

requirements• Finalizing the set of activities that are required to be

performed to achieve the channel objectives

• Organizing the activities so that the responsibility of

performing the activities is shared among the entities

who are meant to perform these activities

• Developing policy guidelines for the smooth

functioning of the channel on a day to day basis

s r u on c annemanagement (contd.)



• Distribution channel managementencompasses all activities dealing with the

distribution function of the firm

• The distribution strategy provides

guidelines for decision making

• The distribution management function can

be viewed as happening in two phases: the

ex ante phase and the ex poste phase

management (contd.)



• The ex ante phase involves all the activities

that are associated with the design and

establishment of the distribution channel.

These activities actually take place before thedistribution channel actually starts functioning.

• The exposte phase involves managing the day

to day activities of the channel wherein the

behavior of the individual channel members

are coordinated

Channel Managementtasks



tasks

Distribution Channel Strategy•Channel Objective

•Activity Finalization•Organizing the activities•Developing Policy Guidelines

Design of the

channel structure

Establishing the

channel

Motivating

Channel Members

Resolving Conflicts

among channel

members

Ex ante

Phase

Ex Poste

Phase

Chapter 14



p

Designing customer-oriented

marketing channels

Channel Design The channel design is normally meant to give a



The channel design is normally meant to give aclear idea about:

The number of channel entities in the channelnetwork,

The way in which they are linked,

The roles and responsibilities of the entities in thenetwork

The rewards for participating in the activities andalso

Clear cut guidelines for the major activities to beperformed during the normal functioning of thechannel.

a are e serv ceoutputs



Waiting time

Breaking the bulk

Spatial convenience

Assortment

Distribution channel design



To consumea product

Service outputs

have to be delivered

Channels

Participates in

channel flows

Activities have

to be performed Thus performs activities

Example of a service outputdelivered template



Sl.No. Service dimension Service output delivered

1. Bulk-Breaking Units are delivered in ones

2. Spatial convenience There is at least one outlet for almost every3 km radius excluding of course thinlypopulated areas

3. Waiting time Not more than 2 days for any model

4. Assortment Other consumer goods items including thatof other competitors are available at all theoutlets where the products are otherwiseAvailable

5. Installation support Available

6. After sales support Free for first two years, but available onpayment afterwards. Also available at everycity from where the product was bought.

7. Consumer financing Available

Flow Directcontribution

Indirectcontribution

Othercontribution

Physical Spatial convenience Assortment

Channel flows and contribution toservice outputsChannel flows and contribution toservice outputs



PhysicalPossession

Spatial convenience,bulk breaking, waitingtime

Assortment

Ownership Spatial convenience

Promotion Spatial convenience Is a service output initself

Negotiation Spatial convenience,bulk breaking

Assortment

Risk taking Waiting time, bulk breaking, spatialconvenience

Financing Spatial convenience,waiting time, bulk breaking

Assortment

Ordering Bulk breaking, spatial

convenience, waitingtime

Payment Bulk breaking, spatialconvenience, waitingtime

Channel design effortd i i



decisions

The service output levels

The flows or activities that areassociated with the achievement of the

service output levels The type of entity who would be

entrusted with the performance of eachof these flows

Parameters for comparingh l d i



channel designs

Efficiency

Effectiveness

EquityScalability

Flexibility



Plan….. Contd.

Details about the various channel constituents who will



Details about the various channel constituents who willbe performing these tasks

The cost of performing the activities The designated roles and responsibilities of the channel

constituents

The proposed remuneration for performing these rolesand responsibilities

Standards for measuring the performance Procedures for reporting and information sharing

Monitoring mechanisms

Criteria for appointing the channel members



Chapter 15Chapter 15

Customer-orientedCustomer-oriented

logistics managementlogistics management

Logistics strategy



g gy

Cost reduction

Capital reduction

Service improvement

Inventory Management Transportation decisionsf

Logistics Planning



Location decisions•Number, size and location of facilities

•Assignments of stocking points to sourcing points

•Assignment of demand to stocking points

•Inventory levels

•Deployment of inventories

•Control methods

•Modes of transport

•Carrier routing/scheduling

•Shipment size /consolidation

Customer

Service

goals

Generic types of outbound logistics strategies



Direct shipment

Warehousing

Cross-docking

Functions of warehousing operations



Movement

Storage

Information transfer

•ReceivingReceiving

•TransferringTransferring•Order picking/selectionOrder picking/selection

•ShippingShipping

•Stock keeping locationsStock keeping locations

•Inbound and outboundInbound and outbound

shipmentsshipments

•Facility space utilizationFacility space utilization•Order fulfillment dataOrder fulfillment data

Relationship between logistics, cost,and number of warehouses



Total cost

Inventory cost

Transportationcost

Warehousing

cost

Number of warehouses

Total

cost

Why Inventories?



Why Inventories?

To improve customer serviceTo smoothen the operations of the

logistics systemTo reduces costsInventory procurement costsInventory carrying costsStock out costs

Cost associated with inventory

Components of inventory carrying cost

Capital cost Inventory



Inventory

carrying cost

p

Inventory

service costs

Storage space

costs

Inventory

carrying cost

Investments

Insurance and

Taxes

Warehouse rent,

maintenance

charges

Obsolescence

Damage&

PilferageShrinkage

Relocationcosts

Stockist

h l

StockistStockist

echelonechelon

Echelon inventoryEchelon inventory



RetailerRetailer

StockistStockist

SupplierSupplier

RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer

echelon

lead time

InventoryInventory

Product related factors

Factors affecting transportation costFactors affecting transportation cost



Product related factors

The density of the product Stow ability

Difficult in handling

Liability

Market related factors Intramode competition

Location of markets

Balance or imbalance of in freight traffic in and

out of the market Seasonability of the product movements



Chapter 16

Managing Channel Member Behaviour

Channel relationships



• Perceptions of organisational power

• Dependence

• Control

• Trust

• Commitment

• Co-operation

Discrete relational exchangecontinuum



Arm’s length relationship

Relational exchange relationship

Channel control



Pay–Off Pay–Off

FunctionFunction

ToleranceTolerance

FunctionFunction

Supplier authoritySupplier authority

Distributor’sDistributor’s

profit earnedprofit earned

Zone of acceptanceZone of acceptance

Role of persuasion, authority, andcoercion in channel control

Ch l bChannel members ToleranceTolerance



AuthorityAuthoritypersuasionpersuasion

Coercion

Pay –off Pay –off

functionfunction

AA BCC

Channel membersChannel members

profitprofit

ToleranceTolerance

functionfunction

controlcontrol

Components of channel offeringManufacturer sales

force incentives



Financial returnsQuality products

Competitive priceReliable delivery

National reputation

Promotionalsupport

Training

MarketresearchCompany

policies

Technical

assistance

Responsiveness

systems

Distributor

sales force

incentives

Distributor firmincentives

Capability

building

programmesChannel core

elements

Incentive

programme

InfluenceStrategy

group

Types of Influencestrategy

Explanation



Influence strategytypes (contd.)

g p

Indirectinfluencestrategies

•

Information exchange• Information control• Modeling

Where information on general businessissues and the channel program is

merely exchanged with channelmember personnel.

DirectUnmediatedStrategies

• Recommendation• Warning• Positive normative• Negative normative.

In this type of strategy theconsequences of the acceptance orrejection of the channel programme orits implementation are stressed, butthese consequences are based on aresponse from the market environment,not on the mediation of the channelPrincipal.

Reward andPunishmentStrategies

• Economic reward• Non-economic reward• Economic punishment• Non-economic punishment

In this type of strategy rewardsand punishments are directlygiven to channel members



(contd.) Influence strategytypes

Directunweightedstrategy

• Direct request This strategy involves making a

direct request to the channelmember where the Principalmainly communicates desires orwishes concerning the channelmember’s acceptance of thechannel program.

DirectMediatedstrategies

• Personal plea• Promise• Threat and• Legalistic reference.

In this type of strategy specificaction is requested; consequencesof acceptance or rejection arestressed and are based on themediation of the channelprincipal.

relationship

Attitude towards the channel progranmmeAttitude towards the channel progranmme



Reinforcement process

Behavioural

reinforcement

Moderaterationalization

Attitude change

Radicalrationalization

Attitude change

Inducement process

Behavioural change

Moderateconfrontation

Behavioural andattitudinal change

Radicalconfrontation

Behavioural andattitudinal change

PositivePositive NegativeNegativeNeutralNeutral

+ ve+ ve

- ve- ve

Attitude towards the channel progranmmett tude to a ds t e c a e p og a e

Behaviour

towards the

channel

programme

Stages in channel conflict

AttitudinalAttitudinal

sourcessources Cognitive/Cognitive/ifM if t C f iC fli t



of conflictof conflict

StructuralStructural

sources of sources of conflictconflict

ConflictConflict

resolutionresolution

Cognitive/Cognitive/

AffectiveAffective

conflictconflict

ManifestManifest

conflictconflict

ConflictConflict

outcomesoutcomes

CAUSES OF CONFLICTSCAUSES OF CONFLICTS

Attitudinal CausesAttitudinal Causes

Structural causesStructural causes

Conflict management methods at differentstages of conflict

Institutional approachesInstitutional ap

proachesi i f i iJ i t b hi f i ti



Latent conflictLatent conflict

Felt conflictFelt conflict

Manifest conflictManifest conflict

Joint membership of associationsJoint membership of associations

Exchange of executivesExchange of executivesCooptationCooptation

Dealer councilsDealer councils

Third party mechanismsThird party mechanisms

MediationMediationarbitrationarbitration

NegotiationNegotiation

Negotiationstrategies



AccommodativeAccommodative Collaborative/problemCollaborative/problem

solvingsolving

CompromiseCompromise

AvoidanceAvoidance Competitive /aggressiveCompetitive /aggressive

ConcernConcern

for thefor the

othersothers

interestinterest

HIGHHIGH

LOWLOW

LOWLOW HIGHHIGHConcern forConcern for

own interestown interest



Chapter 17

Retail ManagementRetail Management

Retail marketing mixRetail marketing mix



Merchandise characteristic

Customer service characteristic

Trading format

Customer communication

Retail marketing mixRetail marketing mix (contd.)(contd.)

H h di i f ti ff tH h di i f ti ff t



(i) the merchandise in the store affect the volume of (i) the merchandise in the store affect the volume of

sales as it is primarily the merchandise that attractssales as it is primarily the merchandise that attracts

customerscustomers

(ii) since profitability is based on the turnover rate of ii) since profitability is based on the turnover rate of

the inventory, the choice of merchandise and thethe inventory, the choice of merchandise and the

quantity of merchandise of each category stockedquantity of merchandise of each category stocked

affects the overall profitability of the establishmentaffects the overall profitability of the establishment

How merchandising functions affectsHow merchandising functions affects

profitability?profitability?

Factors affecting choice of retailstrategy



Company’s strategic objectives in termsof the level of profitability desired

Space availability

Preferences of target customersRelationships with manufacturers

Availability of trained salespeople etc.

Availability of stock and stock holding cost

Stock Stock



holdingholding

costcost

Percentage of availabilityPercentage of availability 80% 90% 100%

+20%

Financial method of merchandising



Cost method

Retail method

Merchandise planning process



Plan reductionsPlan reductions

Develop a stock planDevelop a stock plan

Plan merchandise needsPlan merchandise needs

Calculated planned PurchaseCalculated planned Purchase

Plan mark –ups based on profitability targetsPlan mark –ups based on profitability targets

Develop a sales planDevelop a sales plan

Customer services



Product services

Service products

Support activities

Customer performance measuringtechniques



techniques

Frequency or browsing visits

Frequency of purchase visits

Average transaction per visit

Items purchased

Range purchased

Customer service facilities used

Purchase process for servicerequirement identification

Service requirementsService requirements



Pre-purchase phase

Purchase phase

Post purchase phase

Purchase processPurchase process

q

SearchSearch

ComparisonComparison

Product relatedProduct related

Augmentation of the producAugmentation of the produc

Transaction relatedTransaction related

DeliveryDelivery

InstallationInstallation

Use extensionUse extension

Repeat visitsRepeat visits

Attitude towards trading formatand store environment

Shopping Attitudes



Pre-purchase

Stage

During

Purchase

Post-purchase

Stage

Task Oriented Pleasure Oriented

Convenient Locations

Ample Parking

Close to Other Task Oriented

Stores

Relevant Merchandise Selection

Exclusive Store Merchandise

Wide Choice

Prestigious Image

High Availability

Competitive Pricing

Rapid Cash Handling

Ambience and ExcitementVisual Merchandising

In-store Facilities

Product Services Centers

Product Displays

Customer Advice Areas

Theme Displays

Customer Advice Areas

Chapter 18



Chapter 18

Managing theInternational Channels of

Distribution



Market entry strategy

I di t tiIndirect exporting



Indirect exportingIndirect exporting

Direct exportingDirect exporting

LicensingLicensing

FranchisingFranchising

Contract manufacturingContract manufacturing

Strategic allianceStrategic alliance

Joint ventureJoint venture

Wholly owned subsidiaryWholly owned subsidiary

C

O

N

TR

O

L

R

I

S

K

Success factors in manf. – overseasdistributor relationships

Distributioninhibitors

Outcomes Remedies



inhibitors

Separate ownership Divided loyalties

Seller buyer atmosphere

Unclear future intentions

Offering good incentives,helpful support schemes,frank discussions, andhigh levels of interactions

Geographic, economic,

and cultural gaps

Communication blocks

Negative attitudes

Problems in physicaldistribution

Making judicious waysof two way visits,establishing a wellmanaged communicationprogramme

Differences in the legaland regulatorystructures

Vertical tradingrestrictions

Dismissal difficulties

Full compliance withlaw,drafting a strongdistributor agent.

International logisticsmanagement



International distribution system

International suppliers

Offshore manufacturing

Fully integrated global supply chain

Export procedure

1



ExporterExporter ImporterImporter

Bank in exporter’sBank in exporter’s

countrycountryImporters bank Importers bank

ManufacturingManufacturing

FreightFreight

forwarderforwarder

Transportation andTransportation and

DocumentationDocumentation

formalities securedformalities secured

ImportImport

warehousewarehouse

CustomsCustoms

brokerbroker

CustomsCustoms

ShipShip

1

2

3

4

5

6

5

8

79

9

Contd.

State Process1 The Sale

•Importer makes enquiry from potential supplier

•Exporter sends catalogue and price list

Contd.



•Importer requests samples

•Exporter sends Proforma invoice•Importer sends purchase order

2 Importer arranges bank financing.

3 Letter of credit send by importer’s bank

4 Exporters bank notifies that the LOC has been received5 Exporter produces or acquires goods

6 Exporter arranges transformation and documentation and spacereserved on ship or aircraft

7 Exporter ships goods to importer

8 Exporter presents documents to bank for payment

9 Importer has goods cleared through customs and delivered to theware house

International logisticsintermediaries



Freight forwarder

a) To forward an export shipment from thepoint of origin to the ultimate destination

andb) To deal with transport carriers to getspace for the shipment.

•Customs broker

Exporting documents



Letter of credit

Bill of lading

Commercial invoice

Commercial invoiceConsular invoice

Certificate of origin



Thank you

Documents

PPTs_Sales and Distribution Mgmt