Sales Distribution Management[1]

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Q-5. Explain the process of recruitment and selection of salespersonnel, including the source of recruits and prerecruitingcriteria as if you work the sales manager of an Organisationselling personal computers.

Ans.Recruitment means finding potential job applicants telling them about thecompany and getting them t o apply. It is the process of finding goodpeople and ultimately selecting them for the organisation. The entiresales organisation ultimately depends on a successful recruiting approach.It is the discovering of potential applicants for actual on anticipatedorganizational vacancies. It is the linking activity of those with job andthose seeking job.

The recruitment process consists of various steps which are as follows:-

1. Job Analysis : It is conducted to identify the duties, requirements,responsibilities and conditions involved in the job. It is most essentialto give a complete idea of the job profile to the applicants so that they

dont have any problem in accepting that profile in future. It involvesthese steps :

Analysis of the environment in which the sales person is going towork

Determining the duties and responsibilities expected from thesales person.

Observing and recording the various tasks of job actuallyperformed.

SALES & DISTRIBUTION MANAGEMENT (Page 1)

Identify Sales

Job

Qualification

Prepare Job

Description

Conduct Job

Analysis

Attract Pool

Of SalesRecruits

Select Best

Recruits


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2. Job Description : Job description is the result of a formal job analysis.It is the most important tool in managing the sales force. It helps infollowing ways:

Preparing description of sales person duties.

Developing training programs to help them perform better.

Developing compensation plans.

In supervision and motivation.

Help the management to decide whether each salesman has areasonable work load.

3. Identify sales job qualification : Job description should beconverted to the job qualification a recruit should have in order toperform the sales job satisfactorily. Qualification a sales person needsto perform satisfactorily are following :

Personality traits such as self-confidence, aggressiveness, jobcommitment, persistence, etc.

Level of qualification such as ability to make decisions understress, specific product knowledge, little work experience, etc.

4. Attract pool of sales recruits : Companies with a large sales forceneed to identify, locate and attract potentially effective candidates.

The recruitment process always furnishes the organisation with a poolof organisation from where to choose. The most frequent used sourcesare:

Persons within the company : Some of the organisations oftenrecruit sales people from the non-selling section of the salesdepartment or from other departments.

Competitions : Sales people recruited from the competitors firm

are already trained in selling the similar product and dont needmuch of training.

Non-competing companies : Non competing firms can provide awell-trained sales force. The only thing required is to train themin the product range.

Educational institutions : High schools, evening classes, businesscolleges and universities are all excellent sources of salesrecruits.

Advertising and Employment agencies , etc.

5. Select the best recruits : The importance to assess a candidatesselling skills and technical background, hiring decision is also based ontemperament, suitably to our culture, creativity, ability to visualize,ambition, etc. The selection process involves choosing the candidateswho best meets the qualification and have greatest aptitude for the

job. There are no. of tools that can be used for the selection processlike application forms, In-depth interviews, reference checks, etc.

Procedures followed in selection of a sales person are as follows :



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1. Initial Screening Interviews : It should be brief just to eliminateundesirable recruits.

2. Application Forms : It is the most widely used selection tool. It is aneasy means of collecting information necessary for determining anapplicants qualification. It gives an initial impression of the applicant.

3. In-depth interviews : It is used to help determine if a person is right forthe job or not. It can bring out the personal characteristics and alsoserves as a two way channel of communication, which means both thecompany and applicant can ask questions and learn about each other.

4. Reference Checks : A company cannot be sure it has all the informationon an applicant until references have been thoroughly checked. Itallows a company to secure information not available from othersources.

5. Physical examination : It require a degree of physical activity andstamina. Poor physical condition can hinder a sales persons jobperformance, therefore, a company should insist on thorough medicalexamination.

6. Tests : these are the most controversial tool used in the selectionprocess. Test profile data can be useful to management in process ofselecting and classifying sales applicants who are likely to be highperformers. Different types of tests can be used in selection processlike intelligence test, knowledge test, etc.

Q-7 Short Notes:

Ans-7(a) REQUIREMENT OF A GOOD SALES COMPENSATION PLAN:

Sales Compensation Plan is an essential part of the total sales program tomotivate roles personnel. A properly designed sales compensation planfulfills a companys special needs and problems and from it flowsattractive returns for both the company as well as the sales personnel. Agood sales compensation plan meets the following requirement:

It provides a living wage in form of a secure income so that theindividual concentrate more on the job rather than on the financialgains.

It does not conflict with the other motivational factors.

It does not penalize personnel on factors, which are beyond theircontrol. The plan must be same for all the personnel for the similarperformance.

It must be easily understood by the sales personnel so that they arealways aware of their earnings.

The plan must adjust change in pay on the basis of the performance ofsales personnel.



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The plan is economical to administer. It should not incur much cost.

It helps in attaining the objectives of sales organisation.

Ans-7(c) SALES QUOTAS

A Sales Quota is a quantitative goal assigned to the sales personnel to

figure out his achievements at any moment. They are basically used toplan, control and evaluate various sales activities. They provide specificgoals to the sales person and also a way to manipulate their financialgains or incentives. It also helps in having a better control on the market.

The most commonly used quota is the sales volume quota measuredeither in terms of Rs or in terms of physical units. There are differentprocedures for setting sales volume quotas.

First one is the basic method in which the sales quotas are decided onthe basis of previous years sales figures and then adjusting thosefigures according to the different market conditions and the presentmarket scenario.

Another method is based on the territorial sales potentials. As we arewell aware that sales potential is the attainable amount under idealconditions but they are difficult to achieve. Hence, some adjustmentsare made in those figures first by the territory or the branch manager,on the basis of sales persons skills and physical conditions, and thenby the country manager, on the basis of future price fluctuations andnew product offerings.

One more important method to set the sales quotas is on the basis ofestimates of total market. In this case the individual quotas are set onthe basis of employees sales potential.

In some of the companies sales person are allowed to set their own salesquotas as they are best aware of their territorys potential. The quotamust be fairly and objectively determined. And also it must be easilyunderstood and administered.

Ans-7(e) METHODS OF MOTIVATING THE SALES PERSONNEL:

Motivation plays an important role in the performance of the sales person.A motivated sales person always gives better results as he put his deep-hearted efforts to achieve the targets. Motivation doesnt always means

incentives or money but sometimes appreciation letters and other suchkind of non-financial rewards also act as major motivators. There are twomajor ways to motivate the sales personnel:

1. Non-Financial incentives2. Financial incentives

Non-financial incentives: These are the techniques for specificand special effort situation like recognition by honours and awards.

This can be done bySALES & DISTRIBUTION MANAGEMENT (Page 4)


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1. Sales Contests : In this case certain prizes are awarded forachieving specific sales targets.

2. Sales meetings: in this case a monthly or quarterly gatheringis organised for the sales force of a particular office or aparticular region. It gives the confidence to the sales personthat they are working as a team.

3. Sales Conventions : Annual or semi-annual gathering of thetotal sales force of all the branches also acts a greatmotivator among the sales personnel.

Financial Incentives: These are the techniques in which thefinancial gains motivate the person. Financial gains are alwaysdesirable at each and every level. They can be:

1. Direct monitory payments like salaries and wages

2. Indirect rewards with financial benefits like paid vacations,

insurance plans, etc.

Q-10. Explain various steps in selection of a sales person. Pointout the importance of each step.

Ans.Sales Personnel is the link between the company and the customer. Andthus it is the area of special concern for any industry. Selection of salespersons plays an important role in any organisation as they are the peoplewho will represent the company in front of the customer. It gives an imageof the company and its stand in the market.

Various steps involved in selection of any sales person are as follows:


Preliminary

Interview

Formal

Application

References and Credit

Checks

Interview (S)

Psychological Testing


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Preliminary Interviews and Screening: It is for the purpose ofeliminating the unqualified applicants. It may be on the basis ofapplicants basic qualification, education, etc. In these interviewscompany may just ask to fill a small interview application form. It isbasically the rejection round and not the selection round. It means thecandidates not fulfilling the basic criteria for selection are out in thestart. This is important because selection process also incurs somecost and this round can be easily handled by a low paid clerk andhence lowest cost selection step. Also it is difficult to process thepapers of all the applicants for the whole selection procedureunnecessarily.

Formal Application: It serves as a central record for all informationcollected during the selection process. It may be filled by the applicant

personally or by the interviewer during the interview from hisresponses. Ideally the application form must be different for differentindustries as no two companies can have the same informationrequirement. But in case of a small sales force the company can go forthe standard form of some other company also. These companiesobtain the additional information if required during the interview. Thisis important as it gives the complete data about the applicant to theinterviewer even before he interviews the candidate. It helps theinterviewer to prepare his questionnaire for the interview.

Interview(s): This is the most widely used selection step and in somecompanies, it comprises the entire selection system. It is an effective

way to obtain the information about the applicant. But through out theinterview, a pleasant rapport must be maintained between theinterviewer and the candidate so as to make the interview successful.

There are many other questions, which arises from this, like whoshould take the interview or techniques to be followed during theinterview and many more. This step is an important tool in selection ofthe sales person as in this case the interviewer and the candidate areface to face and hence the details, which remained hidden in theapplication form, can be explored and a better decision can be taken.

References: These provide information on the applicant not availablefrom other sources. Personal contact is the better way to obtain

information than facial expressions or voice intonations. There is atendency for references to be biased in favor of the applicant. Theseare partially offset by contacting persons not listed as references, butwho know the applicant. This is an important tool as it helps to revealthe background of the applicant. The information kept hidden by theapplicant during interviews also comes into picture.

Testing: Psychological tests are one of the last steps in the selectionprocess because of its high cost. The task of validating tests iscomplicated because different sets of attributes can lead to successful


Physical Examination


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job performance. Because of this, separate validity tests should beperformed for different ethics groups. Apart from this test consistencyis also important. Other criteria for educating tests are cost, time andease of administration. This test is also important in case to check thestability of the candidate. It also helps to check the habitualcharacteristics and ability of the applicant.

Physical examination: Good health is important in success of anysales person but this step is costly, hence it is avoided by the most ofthe companies. Because of its high cost, this is the last step if followed.It is also an important step as the person who is physically fit is able toperform better. And sales person needs to travel a lot so he must bephysically fit to avoid any kind of problem in traveling.

SECTION-II DISTRIBUTION MANAGEMENT

Q-1. What are the channels of distribution? What are the advantagesof having adequate channels of distribution? Suggest and justify

suitable channels for the distribution of

a. Cosmeticsb. Medicinesc. Personal Computersd. Generators

Ans:Distribution means to distribute the material in the market so that it is ineasy approach of the consumer. Distribution Network is a continuouschain starting from supplier to the consumer i.e. end users. It can involvevarious steps in between like distributor, wholesaler, stockiest, dealer,

retailer, etc. The number of steps involved in any distribution networkvaries depending on various other factors.

Distribution channel is the path followed by the product to reach theconsumer. There are different channels of distribution depending on therequirement of the consumers. The different channels of distribution areas follows:

Type 1

Type 1 : This type of distribution channel is generally used forconvenience products. In this case the goods first of all goes to thedistributor, who in turn distributes the goods to the various dealers orretailers according to their demand and then finally it is purchased by theconsumer from the retailers. This type of distribution channel is normallyadopted for daily consumables. As in that case the requirements of theconsumer is small but the no. of consumers are more. In this case theconvenience of purchase is the most important factor. But in this case asmall cost is added at each level. This additional cost is justified by saving


Producer Distributor Retailer Consumer


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in traveling time and no need of unnecessary inventory. This is also usedfor some of the industrial product where the requirement of the customeris small.

Type 2

Type 2 : This is the method of distribution channel generally used forspecially products. This type of distribution channel is adopted when thepurchases are not that frequent like consumer durables for e.g. washingmachines, etc. This is adopted because it is difficult for the manufacturerto approach each and every area. Also it may not be economical. As thedistributor is more closer and in approach to the consumer, he can caterthe better services and that too more promptly and effectively.

Type 3

Type 3: This is the type of distribution channel adopted for bulk supplies.In this case, the producer to the consumer without any intermediarydirectly supplies the goods. This pattern can only be adopted whenpurchases are large enough or customer and the producer are so locatedto each other that there are distinct cost advantages. For e.g. the vendorsupplying the shafts and other parts to Maruti Udyog Limited to assemblethe car.

Advantages of having adequate channels of distribution:

Goods are easily available whenever required.

Time in traveling is saved due to availability at nearby locations.

Cost incurred in traveling to purchase that good is saved.

Less need for storage space is required as the goods are easilyavailable.

Fewer funds are required to stock the material as it can be purchasedin the required quantity from the nearby areas.

Fresh stocks of goods are more frequently available.

Almost all requirements of the customer are available at as singlesource.

More of choice is there for the customer because of the varietiesavailable at the same location.

Selection of suitable channels of distribution for the following items:

a) Cosmetics: Suitable channel for the distribution of cosmetics is ofType 1. As this is the item more frequently required by the ladies. Andeven they cannot stock this item, as everyday more and more varietieskeep on coming into the market. Also it is not possible for each lady totravel; to the distributor of that area to purchase any cosmetic. The


Producer Distributor Consumer

Producer Consumer


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number of customer for this product is large but the requirement ofeach customer is small.



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b) Medicines: Suitable channel for this product is also of Type 1. As thisis the item always required in urgency. The more important is time incase of this product for the customer rather than the price of theproduct. It has to be readily available to serve the customer better.

c) Personal Computers: The distribution channel Type 2 can beselected for this product. The reason being the product is neverrequired in urgency but needs some after sales service at the time ofproblem. And it will be difficult for the producer to reach each andevery location as it wont be economical.

d) Generators: The distribution channel Type 2 is appropriate for thisproduct. This is because the product is never required by large groupof customers and also it is not possible for the manufacturer to have itsestablishment at each and every location.

Q-2. What are the factors to be taken into consideration in theselection of proper channels of distribution?

AnsChannels of distribution means the paths followed to make the goodseasily available to the consumer. Distribution channel is a continuouschain starting from supplier to the consumer i.e. end users. It can involvevarious steps in between like distributor, wholesaler, stockiest, dealer,retailer, etc. The number of steps involved in any distribution networkvaries depending on various other factors.

Factors to be considered for the selection of proper channel of distributionare as follows:

Quantity of goods that will be normally purchased by theconsumer at a time: If the quantity of goods required at a time issmall then it must be available at more outlets so that it is easilyavailable whenever required. These are the items that lie under thecategory of daily consumables.

Number of people that may be requiring the similar product ata time: if a large group of customer may require the similar product ata time, then it must be available at more than one outlets.

Type of commodity: If the commodity is fashionable like clothes,shoes, etc then the customer is not going to stock it. And it will be

required by the customer at very short intervals with the changingfashions.

Urgency of the product to the customer at a particular time : ifthe product is always urgently required like medicines then it must bereadily available and that too at number of locations.

Cost added due to intermediaries will be acceptable to thecustomers: if the cost added due to intermediaries is small as



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compared to that incurred in traveling to a distant place, then it hardlymatters to the customers.

Whether the customer can stock the commodity: It depends onhow frequently the need for that commodity is going to arise for thecustomer.

Price of the good: if the price of the good is high, the customer will

try to purchase the commodity whenever required rather than blockingthe funds available.

Life of the product: if the life of the product is small then it must beavailable at more no. of outlets because in that case nobody is going tostock that material. They are going to purchase it whenever theyrequire it and only in that quantity.

Conclusion: The selection of proper channel of distribution is a criticalfactor for the proper sale of any commodity. The proper channel ofdistribution always helps in promoting the sales of any product. All the

factors must be thoroughly considered before selecting the channel ofdistribution.

Q-3. Short Notes:

Ans-3 (a) DISTRIBUTION NETWORK:

Distribution means to distribute the material in the market so that it is ineasy approach of the consumer. Distribution Network is a continuouschain starting from supplier to the consumer i.e. end users. It can involvevarious steps in between like distributor, wholesaler, stockiest, dealer,

retailer, etc. The number of steps involved in any distribution networkvaries depending on various other factors.

Distribution Network involves a distribution chain from supplier to maindistributor, to town distributor, to wholesaler, to stockiest, to dealer, toretailer and finally to the consumer. This chain of network can vary indifferent cases depending on volume required by the consumer at thetime of purchase. If the volume is small, the number of stages will bemore because in that case bulk is being broken at each stage intoeconomic lot sizes. Distribution network is very much beneficial in anydistribution channel.

Merits of having a distribution network:

It provides continuity in distribution. It provides clarity among theconsumer about the place and time of availability of material and alsohow it can be purchased.

It facilitates growth and diversification i.e. there is sufficient businessto sustain that chain.



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It determines commissions at each level, which in turn helps indistributing even the responsibilities at each level.

It encourages teamwork and simplifies the communication betweenthe consumer and the supplier.

And many more.

CONCLUSION : Distribution Network is a two edged sword i.e. a networkis required to obtain the business in the first place and business isrequired to sustain the network. And also every point in the network is anindependent profit centre, hence will look for opportunities on their ownto improve business and profits.

Ans-3(b) CONFLICTS IN THE DISTRIBUTION CHANNEL:

Distribution Channel is a chain to supply the material from the supplier tothe consumer. It can include a number of intermediaries depending on thevolume a consumer is going to purchase at a time.

Conflicts are a part of any distribution channel. The tussle to assumeleading role leads to conflicts. The tussle to assume powers and controlsto take decisions and donating all responsibilities to others is a majorcause of this conflict in the distribution channel. Manufacture emphasizeson the consumption and the use aspects whereas retail chain emphasizeson the appearance, aesthetics, merchandising and packaging part.Conflicts also arises of who is going to take the ultimate responsibility forinventory management and delivery. It also comes into picture at the timeof deciding who is going to take the responsibility of advertising and salespromotions. Earlier this was directly handled by the manufacturer but nowa days this is also taken care of by the retailer.

CONCLUSION : Conflicts is basically to assume the leading role in thedistribution channel. It is to assume the powers to decide and control thedecisions.

Ans-3(d) LEADERSHIP REQUIREMENTS IN THE DISTRIBUTION CHANNEL

Leadership means to lead the complete distribution channel in its owndirection. Leadership implies power. Power to decide and control thedecision of other members also in their own favour. Leader is always thedecision-maker about all the points in any distribution channel whether itis for payment terms or advertising policy or any other. Earlier thedemand was more and the supply was less so whatever was produced by

the manufacturer, was automatically sold in the market. So, at that time,the manufacturers were the decision-maker or in turn the leader. This wasthe case when options in the market were limited and the products werealways in shortage. At that time the traders were totally dependent on themanufacturers. They had no option other than to accept the policies of themanufacturer. But, now a day, similar product is being offered by anumber of manufacturers and that too at competitive prices. So,leadership can only be attained now on the basis of size and demand.More the demand more is the control of that entity on the market policies.

The long retail chains are capturing role of manufacturers in the market.



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Ans-3(e) STAR PERFORMANCE

Star performance means to perform better than others in the market inone or the other way. A small unit may be able to hold its position in themarket against the large organisation only if it is a star performer. Starperformer is the one who is outstanding in its quality, delivery, reliability,after sales service, appearance, price and many more. In that case,irrespective of its size it will make its stand in the market. Achieving thisposition for any small Organisation is not an easy task and even moredifficult is to maintain this position in the market. The reason being thatthe large organisations always tries to buy off such star performing units.

These units also grow very rapidly and with growth, they are not able tomaintain their excellence. They often become complacent and arrogantand do not change with times. In present scenario it is must for anyorganisation to adapt the market conditions to survive.


Documents

Sales Distribution Management[1]