Sales and Distribution Management

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Sales DistributionManagement
Dr. ANANDA KUMAR Professor, Department of
Management Studies, Christ College of Engg.
Tech., Puducherry, India. Mobile [phone]
42433 E-mail searchanandu_at_gmail.com
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Sales DistributionManagement
A. ANANDA KUMAR Department of Management
Studies, Christ College of Engg.
Tech., Puducherry, India. Mobile [phone]
42433 E-mail searchanandu_at_gmail.com
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MARKET MARKETING

• total demand of potential
  buyers
• all activities aimed consumer satisfaction
• place or area (covers exchange functions)
  where buying selling take place
• other facilitating functions (financing, risk
  bearing, after sales services etc.)

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SELLING MARKETING

• Starting Focus
  Means Objectives
• point
• Selling
• Concept
• Market
• -ing
• Concept

Factory Product
Selling Profit through

Promotion Sales Volume
Target Customer
Integrated Profit
through Market needs
market customer satisfaction
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SELLING MARKETING
Sl. No SELLING MARKETING
1. Selling begins with the seller and the emphasis is on the product. Marketing starts with the consumer and the emphasis is on the needs of the customers.
2. Narrow in scope. Considers business as a consumer satisfying process.
3. Considers business as a goods producing process Considers business as a consumer satisfying process.
4. The product that is to be offered is determined by the seller. The product that is to be offered determined by the buyer.
5. Packaging is considered as a mere protection or a mere container for the goods. Packaging is designed to provide the maximum satisfaction and convenience to the customer.
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Sl. No SELLING MARKETING
6 Price is determined on the basis of cost. Price is determined by the consumer.
7 Production is the central function and sales is a secondary function. Marketing is the central function. The whole concern is organized around the marketing function.
8 Internal, company orientation External, marketing orientation.

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MARKETING MIX 4 PS
Product
Price
Marketing Mix
Place
Promotion
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The Marketing Mix
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PRODUCT

• 1. Brand
• 2. Style
• 3. Color
• 4. Design
• 5. Product Line
• 6. Package
• 7. Warranty
• 8. Service

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PRICE

• 1. Price Strategy
• 2. Pricing Policy
• 3. Basic Price
• 4. Terms of Credit
• 5. Discount
• 6. Allowances

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PLACE

• 1) Distribution Channels
• 1. Wholesalers
• 2. Retailers
• 3. Mercantile Agents
• 2) Physical Distribution
• 1. Transport
• 2. Warehouse
• 3. Inventory

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PROMOTION MIX

• 1. Personal Selling
• 2. Advertising
• 3. Publicity
• 4. Sales Promotion

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Personal Selling

• Personal selling is the process in which a
  salesperson has a face-to-face interaction with
  the customer for the purpose of selling a product
  or service. Personal selling is one of the tools
  in a companys promotional mix. It has greater
  significance than any other form of promotion as
  it allows the sales person to converse in detail
  with the customer about the product or the
  service.

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Personal Selling

• Personal Selling is oral presentation in a
  conversation with one or more prospective
  purchasers for purpose of making sales. It
  includes in-person sales presentations and
  telesales, sales meetings, samples. We have
  already referred to personal selling as a tool of
  marketing communication. Personal Selling is
  communicating directly with the target audience
  through paid personnel of the company or its
  agents.
• - American Marketing Association

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Personal Selling

• Personal Selling is the process effecting the
  transfer, with the profit to buyer and seller, of
  goods services that gives such lasting
  satisfaction that the buyer is predisposed to
  come back to the seller for more of the same.
• - E.F. Schumakar
• Personal Selling consists of contracting
  prospective buyers of a product personally.
• - Richard Buskirk

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Objectives of Personal Selling

1. To keep customers informed to changes in the
   product line.
2. To assist customers in selling the product line.
3. To serve the existing customers.
4. To secure and maintain customers co-operation in
   stocking and promoting the product line.
5. To handle the sales personnel of middlemen.

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Objectives of Personal Selling

• 6. To collect and report market information on
  interested matters to company management.
• 7. To provide advice and assistance to middlemen
  whenever needed.
• 8. To provide technical advice and assistance to
  customers.
• 9. To search out and obtain new customers.
• 10. Its goal is to actually make a sale.

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Advantages of Personal Selling

1. Personal Selling reduces the cost of production
2. It minimizes waste
3. It helps to reduce marketing costs.
4. It carries the advantage of flexibility
5. It facilitates consumption
6. It provides immediate clear-cut feedback
7. It is a two-way communication
8. It helps to introduce new products innovation
   to the market.

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Limitations Of Personal Selling

1. Personal selling accommodates only a limited
   number of consumers at a given time.
2. It is quite expensive.
3. It is especially on retail level, has poor image
   in the eyes of a number of customers.
4. It is not an effective tool for obtaining
   consumer awareness about a product.
5. Good and competent sales persons are not easily
   found.

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Personal Selling Tools

• 1. Sales presentations
• 2. Sales meetings
• 3. Incentive programs
• 4. Samples
• 5. Fairs and trade shows

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Personal Selling Process
Pre-sale Preparation
Pre approach
Prospecting and Qualifying
Approach
Handling Objections
Presentation demonstration
Follow up and Maintenance
Closing
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A) Pre-sale Preparation

• It involves all the preparations for getting
  ready for the selling process by the salesmen.
  The salesman has to be familiar with the product,
  the market, the techniques of selling and
  organization. He would be successful if he is
  aware of the unsatisfied needs and problems of
  the customers. He should prepare himself by
  knowing himself and his company, competition and
  market environment.

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B) Prospecting and Qualifying

• The potential customer is known as a prospect and
  the method of finding he potential customer is
  known as prospecting. Prospecting involves a
  significant amount of time, effort and money.
  Although the company will give the leads, the
  salesmen have to develop their own leads.

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C) Pre Approach

• It involves finding out the needs, problems,
  preferences habits, attitudes, nature and
  interests of the prospects. The salesman should
  set best approach, which might be a personal
  visit, a phone call, or a letter. The best timing
  should be thought out because many prospects are
  busy at certain times and finally the sales
  presentation strategies are planned.

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d) Approach

• The initial few minutes of the sales talk are
  known as the approach to the prospect. The
  purpose of the talk is to arouse and sustain the
  customers attention. Before the talk, the
  salesman should introduce himself by using the
  telephone, by obtaining introduction from a
  customer and by handling his business card. In
  the first contact, he should attract the
  attention of the customers.

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d) Approach

• Reference approach that involves reference of the
  product by the friends of the prospects,
• 2) Benefit approach that indicates the benefits
  of the products,
• 3) Sample approach that involves giving samples
  to the
• prospect and
• 4) Mutual approach that considers the prospect
  supreme.

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E) Presentation and Demonstration

• It refers to the presentation of the product to
  the customer or prospect, a demonstration of its
  features and benefits to the prospect and showing
  how the product meets the customers needs. It
  stimulates the buyer by using right stimulus
  words, pictures, terms and actions. Sales
  demonstrations can be improved by using
  demonstration aids such as booklets, flip charts,
  slides, movies, audio, video and actual product
  samples.

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F) Handling Objectives

• The customers almost always pose objections
  during presentations or when asked for the order.
  The resistance can be psychological such as
  interference, preference for established supply
  or brands, relevance to give up something. The
  resistance can also be logical such as objections
  to price, delivery schedule or certain product or
  company characteristics.
• To handle these objections, the salesman has to
  maintain a positive approach, by classifying the
  objectives with valid reasons and turning
  objectives into reasons for buying.

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G) Closing

• The sales person should try to close the
  presentation at the earliest possible moment to
  avoid the emergence of any reaction to the
  product. He should be expert enough to close the
  sales talk at the right moment and including
  physical actions, statements and comments.

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H) Follow up and Maintenance

• Follow up action begins when the prospect signs
  the order and asks for delivering the salesman
  arranges for the dispatch and delivery of the
  product, facilitates grant of credit and
  reassures the buyer about the wisdom of his
  decision. This step is necessary to ensure
  customer satisfaction and repeat business. The
  sales person has to develop an account
  maintenance plan to make sure that the customer
  is not forgotten or lost.

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Personal Selling Classification

• 1. Industrial Selling
• a. Resellers
• b. Selling to Business users
• c. Institutional Selling
• d. Selling to Government
• 2. Retail Selling
• 3. Service Selling

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Personal Selling Types

• 1. Relationship Selling
• 2. Tele Marketing
• 3. Team Selling
• 4. System Selling

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1. Relationship Selling

• Developing a mutually beneficial relationship
  with selected customer on a regular basis over
  time is relationship selling. It may an
  extension of team selling or it may be developed
  by individual sales representative in their
  dealing with customer.
• In relationship selling, a seller discontinues
  the usual territorial practice of covering many
  accounts. Instead the seller attempts to develop
  a deeper, long lasting relationship built on
  trust with key customers usually large buyers.

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2. Telemarketing

• Telemarketing is the innovative use of
  telecommunication equipments and systems as part
  of the going to the customer category of
  personal selling. Both field selling and over
  the counter selling sometimes utilize the
  telephones in such activities as prospecting for
  new customers and following up with existing
  customer. The telephone is also the basis for a
  third approach to personal selling that is
  telemarketing in which selling is conducted
  entirely by telephone.

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2. Telemarketing

• (a) Outbound Telemarketing It involve a
  sales force that use only the telephone to
  contact customer. This approach is designed to
  reduce the substantial cost entitled in making
  personal visits to customers home or business.
• (b) Inbound Telemarketing It typically
  involve toll free hundred of number that customer
  can call to obtain information and make
  purchases.

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3. Team Selling

• The sales person is joined by specialist from
  other functional areas of the firms during the
  selling process. In other words, a sales team
  (also called selling center) is a group of people
  representing the sales department as well as
  other functional areas in firm such as finance
  production, distribution and research and
  development.

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3. Team Selling

• Example, i.e., relation to selling washing
  machine to a large buyer, a firm may assemble a
  team of sales people an engineers to educate such
  large buyers buying team in order to match the
  expertise on the buying side especially in
  industrial market. A growing number of firms on
  the selling has become the standard for
  successful selling, especially to large and
  important customers.
• Team selling is expensive and is use therefore
  only when there is potential for high sale volume
  and profit. Each team is assigned to cover large
  retailer including a large multinational firm.

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4. System Selling

• The concept of system selling means selling a
  total package of related goods and services
  (i.e., system) to solve a customers problem.
  The purpose is that the system (i.e., the total
  package of goods and services) will satisfy the
  buyers need more effectively than selling
  individual products separately.

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Sales Force Structures

• The sales force strategy will have implications
  for structuring the sales force. If the company
  sells one product line to one end using industry
  with customers in many locations, the company
  would use a territorial sales force structure. If
  the company sells many products to many types of
  customers, it might need a product or market
  sales force structure.

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Alternative Structures for the Sales Force

• a) Territorial structured sales force
• b) Product structures sales force
• c) Market structured sales force
• d) Complex sales force structures

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a) Territorial structured sales force

• In the simplest sales organization, each sales
  representative is assigned an exclusive territory
  in which to represent the companys full line.
  This structure has a number of advantages. First
  it results in a clear definition of the sales
  persons responsibilities. As the only sales
  person working the territory, he or she bears the
  credit or blame from area sales. Secondly the
  territorial responsibility increases. Thirdly,
  travel expenses are relatively small, since the
  sales representative travels within a small
  geographical area.

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b) Product structures sales force

• The importance of sales representatives knowing
  their products, together with development of
  product divisions and product management has led
  companies to structure their sales forces along
  product lines. Product specialization is
  particularly warranted where products are
  technically complex, highly unrelated or very
  numerous.

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C) Market structured sales force

• Companies often specialize their sales forces
  along industry or customer lines. Separate sales
  forces can be setup for different industries or
  even for different customers. The advantage of
  market specialization is that each sales force
  can become knowledgeable about specific customer
  needs. The major disadvantages of structured
  sales forces arise when the various type of
  customers are scattered throughout the country as
  this requires extensive travel by each sales
  force.

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d) Complex sales force structures

• When a company sells a wide variety of products
  to many types of customers over a broad
  geographical area, if often companies several
  principles of sales force structure. A sales
  representative might then report to one or more
  line managers and staff managers.

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Market / Sales Potential

• A sales potential is an estimate of the maximum
  possible sales opportunities present in a
  particular market segment open to a specified
  company selling a good or service during a stated
  future period.

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ANALYZING MARKET POTENTIAL

1. Market Identification
2. Market motivation
3. Analysis of Market Potential

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Sales Forecast

• A sales forecast is an estimate of sales, in
  dollars or physical units, in a future period
  under a particular marketing program and as
  assumed set of economic and other factors outside
  the unit for which the forecast is made. A sales
  forecast may for a single product or for an
  entire product line. It may be for a
  manufacturers entire marketing area, or for any
  subdivision of it.

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Sales Forecast

• Accurate sales forecasting is essential for a
  firm to enable it to manufacture the required
  quantities at the right time and arrange well in
  advance for the various factors of production
  e.g., raw materials, equipments, machine
  accessories etc. Forecasting helps a firm to
  access the probable demand for its products and
  plan its production accordingly.

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Importance of Sales Forecast

• Helpful in deciding the number of salesmen
  required to achieve the sales objective.
• Determination of sales territories.
• To determine how much production capacity to be
  built up.
• Determining the pricing strategy.
• Helpful in deciding the channels of
  distribution and physical distribution decision.
• To decide to enter a new market or not.
• To prepare standard against which to measure
  performance.

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Factors Affecting Sales Forecast

• 1. Purchasing power of customers
• 2. Demography
• 3. Price
• 4. Replacement demand
• 5. Credit Conditions
• 6. Conditions within the industry
• 7. Socio economic conditions

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Methods of Sales Forecast

• 1. Survey of buyers intentions/opinion survey
  method
• 2. Sales force composite method/collective
  opinion survey method
• 3. Executive judgment/jury of executive opinion
  method
• 4. Delphi method
• 5. Time series analysis
• 6. Market test method
• 7. Correlation method

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1. Survey of buyers intentions/opinion survey
method

• Customers may be asked to communicate their
  buying intentions in a coming period. This
  requires identifying potential buyers and asking
  them if they intend to buy a certain product
  during a specific future time period and if so,
  how many units and from whom will they buy.
  Survey of this type is used especially for
  industrial products sales forecasting.

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2. Sales force composite method/collective
opinion survey method

• In this method, the sales men are required to
  estimate expected sales in their respective
  territories in a given period. Then the
  individual sales force forecasts are combined to
  produce the total company forecast. This method
  is used based on the assumption that sales
  persons are closest to the customers and have
  direct contact with them.

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3. Executive judgment/jury of executive opinion
method

• It involves combining and averaging the sales
  projections of executives in different
  departments to come up with a forecast. If they
  are experienced and knowledgeable about the
  factors that influence the sales, and if they
  have up to date knowledge of current market
  developments.

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4. Delphi method

• It consists of an attempt to arrive at a
  consensus in an uncertain area by questioning a
  group of experts repeatedly until the responses
  appear to converge along a single line. The
  participants are supplied the responses to
  previous questions from others in the group by
  the coordinator. The coordinator provides each
  expert with the responses of the others including
  their reasons. Each expert is given the
  opportunity to react to the information or
  considerations advanced by others.

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5. Time series analysis

• Time series analysis is based on extrapolation,
  which is the process of projecting a past trend
  or relationship into the future on the belief
  that history will repeat itself. Unfortunately,
  this is not always the case, especially in the
  longer term.

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6. Market test method

• In a market test the firm distributes the product
  in one or more markets to total potential
  customer response to the marketing mix. The
  market test measures actual sales, not intentions
  to buy. If test markets are selected wisely and
  the test is conducted properly, the marketer can
  generalize test experience to the entire market
  and develop a sales forecast.

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6. Correlation method

• The method is based on historical sales data.
  When there is a close relationship between sales
  volume and a well-known economic indicator,
  correlation method can be used. The marketer
  could develop a mathematical formula that
  describes the relationship between sales and
  independent variable.

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Direct Marketing

• Most companies rely primarily on advertising,
  sales promotion, and personal selling to move
  their products and services. They use advertising
  to create awareness and interest, sales promotion
  to provide an incentive to buy, and personal
  selling to close the sale. Direct marketing
  attempts to compress these elements to lead to a
  direct sale without using an intermediary.

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Direct Marketing

• Direct marketing is the use of consumer-direct
  channels to reach and deliver goods and services
  to customers without using market middlemen.

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Direct Marketing - Methods

• The mail (Direct Mail).
• Telephone (Telemarketing).
• Humans (Door-to-Door Selling, Party Plan
  Selling).
• E-mail (E-mail Marketing).
• Internet (Behavioral Targeting)
• Mobile phones.

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Direct Mail

• Direct marketers send single mail pieces-letters
  flyers, foldouts, and other salespeople on
  wings. Some direct marketers have been mailing
  audiotapes, videotapes and even computer
  diskettes

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Telemarketing

• Telemarketing is the innovative use of
  telecommunication equipments and systems as part
  of the going to the customer category of direct
  marketing. Both field selling and over the
  counter selling sometimes utilize the telephones
  in such activities as prospecting for new
  customers and following up with existing
  customer.

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The Internet

• Provides buyers with infinite selection
• Available for access 24/7
• Buyers chose when to interact with information
• Similar to catalogues
• Services can become sales arms with
  manufacturer handling fulfillment
• Presentation improves as broadband expands

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Mobile Marketing

• Mobile marketing can also be defined as the use
  of the mobile medium as a means of marketing
  communication, the distribution of any kind of
  promotional or advertising messages to customer
  through wireless networks. More specific
  definition is the following using interactive
  wireless media to provide customers with time and
  location sensitive, personalized information that
  promotes goods, services and ideas, thereby
  generating value for all.

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Characteristics Of Direct Marketing

• 1) Non Public The messages are addressed to
  specific person and do not reach others.
• 2) Customized The message can be customized to
  appeal to the addressed individual.
• 3) Up to date A message can be prepared very
  quickly for delivery to an individual.

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Relationship Marketing

• The principles of personal selling and
  negotiation as described are transaction
  oriented that is, their aim is to help
  salespeople close a specific sale with a
  customer. But in many cases, the company is not
  seeking simply a sale it has targeted a major
  customer account that it would like to win and
  serve. The company would like to demonstrate to
  the account that it has the capabilities to serve
  the accounts needs in a superior way,
  particularly if a committed relationship can be
  formed.

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Salesmanship

• W.G.Cater - Salesmanship is an attempt to induce
  people to buy goods
• Knox, T.S. Salesmanship is the power or
  ability to influence people to buy at a mutual
  profit that which we have to sell but which they
  may not have thought of buying until we call
  their attention to it. Salesmanship is the
  ability to persuade people to want what they
  already need.

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Characteristics of Salesmanship

1. Salesmanship is an educative process.
   Salesmanship educates people about their needs.
   Sometimes people are not aware of their needs or
   the way in which they could satisfy them. The
   salesman performs the function of educating the
   customers about their needs and their
   satisfaction.
2. Ideal salesmanship aims at serving the producer,
   distributor and consumer. The salesman helps the
   producer in disposing off his goods at a profit.
   While, for the distributor the salesman makes the
   distribution process smooth and easy for the
   consumer, the salesman assists to buy wisely.

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Characteristics of Salesmanship

• 3. Salesmanship aims at winning the buyers
  confidence. Modern salesmanship does not use
  doubtful methods to influence buyers.
• The person involved in selling must possess skill
  and ability to convince another. Salesmanship
  involves the ability to influence or persuade
  people. It is the art of persuasion, not
  pressure which is highly essential.
• Modern salesmanship does not sell duplicate, fake
  products to customers.
• The price of the product or service must be
  reasonable for both the buyer and the seller. In
  fact, salesmanship should benefit both the buyer
  and the seller.

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Characteristics of Salesmanship

1. Salesman always acts as a link between two
   parties, the seller and the consumer and looks
   after the benefit of both the parties.
2. Salesmanship creates satisfied customers, not
   just cast producing sales. For a sale once made
   is end but a satisfied customer once made is the
   beginning. Modern salesmanship expects to
   create permanent customers and aims at repeat
   orders.

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Functions of Salesmanship

1. To introduce products to the customers.
2. To help the customer to make buying decisions
3. To see how the customers needs are transformed
   into wants and demand
4. To negotiate and conduct effective selling at
   least cost
5. To gather information about markets and
   competitors products and transmit it to the
   company

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Sales Force Management

• kind of personnel management
• centralized direction of their activities
• provides limited opportunities for face to face
  contact
• efficiency of sales people
• prime concern of the sales manager to field
  sufficient sales people to serve the needs of the
  prospecting customers for the company tasks
• complex problems make task of recruitment and
  selecting sales people more difficult than other
  employees.
• covering wide geographical area markets
• suitable to market

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SALES FORCE MANAGEMENT
Training Supervision
Selection
Job Specification
JOB ANALYSIS
Job Evaluation
Recruitment
Performance Evaluation
Job Description
Compensation Motivation
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Sales Force
Sales Force
Recruitment
Selection
Training
Supervision
Motivation
Evaluation
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Functions of Sales Force Mgt.

• 1. Setting sales Force objectives
• 2. Designing Sales Force strategy
• 3. Recruitment Selection
• 4. Training
• 5. Supervision
• 6. Motivation
• 7. Compensation
• 8. Monitoring or controlling
• 10. Performance Evaluation

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Objectives / Goals of Sales Force Management

• 1. Maintaining continual growth
• 2. Achieving sufficient sales volume
• 3. Providing sufficient contribution to profits.

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Sales Force Compensation

• Compensation is the amount received by
  salespeople in exchange of the work or services
  performed by them. Compensation is the form of
  salaries or commissions enables the sales people
  to meet their needs and those of their families.
  Financial compensation is a vital source of
  satisfaction.
• A proper compensation structure not only retains
  competent and efficient sales personnel but
  also attracts others from outside the
  organisation. An appropriate compensation
  package gives employees a sense of satisfaction
  and motivates them to strive more and more to
  achieve the set objectives.

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OBJECTIVES OF SALES FORCE COMPENSATION

1. It should stimulate the salesmen to put forth his
   best efforts in the accomplishment of his tasks
   by establishing visible correlation between
   efforts plus results and rewards.
2. It should help in the early elimination of the
   men who do not fit into the long run plans of the
   firm.
3. It should ensure the full support of the sales
   force.
4. It should enable the firm to attract, retain and
   develop a contented, efficient and loyal sales
   force.
5. It should enable the firm to control and direct
   the activities of the salesmen.
6. It should provide for extra benefits for doing
   duties other than selling.

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TYPES OF SALES FORCE COMPENSATION

• Monetary compensation is the single most
  important factor to affect efficiency of
  salesman. Efficiency of salesman has direct
  relation with the method of remuneration adopted
  by the company. There are number of methods of
  rewarding salesmen, it can, however, be brought
  under the following three basic types of
  compensation plans.
• 1. Straight Salary method
• 2. Straight commission method
• 3. Combination of Salary and commission (other
  variable elements)

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Commission
Salary
Combination
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1. Straight Salary Method

• The most common form of rewarding a salesperson
  is to put him on a straight fixed monthly salary.
  This ensures that the salesperson takes home a
  fixed income every month and hence he can plan
  his living accordingly. It also ensures that the
  firm knows its financial commitment and that even
  the non-selling jobs like information gathering
  and customer service get adequate attention. The
  salesperson will not necessarily put all efforts
  in selling fast moving items.

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2. Straight Commission method

• A straight commission plan is like a straight
  piecework plan in that the salespersons earnings
  are in direct proportion to his or her sales. It
  is probably the oldest form of compensation
  program for sales personnel.
• In this method, salesmen only get a fixed
  percentage of the sales of profit volume.
  Naturally, his earnings are in direct proportion
  to his input and the results. This type of
  scheme is particularly popular while selling
  insurance, operating as agents to overseas
  suppliers, selling real estate etc.

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3. Combination of Salary Commission

• The limitations of the above two methods of
  compensation are sought to be overcome through
  combination plans. In these plans, a base salary
  is determined which the sales person will carry
  home each month, no matter what the sale or
  profits are in that month. This enables him to
  plan the monthly living.
• Normally, this is adequate enough to take care of
  the essential needs of the salesperson like food,
  clothing, childrens education and his other
  commitments like monthly rent etc.

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Various Other Schemes

• 1. Sales contests and prizes
• 2. Promotion
• 3. Bonus
• 4. Profit sharing plan

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1. Sales Contests and Prizes

• Some companies use sales contests and offer
  prizes to boost the competitive spirit of the
  salesmen. As a result to win sales contest,
  salesmen make special efforts to increase sales
  volume. Special quotas are fixed or special
  targets are set and salesmen who are able to
  reach those targets are properly rewarded. These
  rewards may be in the form of cash or other
  benefits.

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2. Promotions

• Sometimes salesmen are given incentive by way of
  promotion. Those salesmen who have performed
  exceptionally well or who are able to sell beyond
  a limit are given special promotions. Sometimes
  junior salesmen are also promoted for special
  efforts to increase sales.

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3. Bonus

• Bonus is paid to salesmen who put extra efforts
  to increase the sales volume. This amount is
  given in recognition of services and talent of
  salesman, as it is paid over and above the
  regular income. They are used to reward salesman
  for performing tasks.

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4. Profit Sharing Plan

• Some firms disburse a portion of their divisible
  profits amongst their sales men thus in effect
  given a share in the profits earned by them to
  their salesmen. The amount to be disbursed may
  be calculated on the basis of over all profits of
  the firm or the profits earned on sales in a
  given sales territory.

90
EXPENSES REIMBURSEMENT

• Salespeople should have an economic incentive for
  controlling their expenses and for using expenses
  money productively and efficiently. If no
  economic incentives exist because expenses are
  open-ended, salespersons use them as an
  additional form of compensation. Similarly,
  management cannot ask its salespeople to pay for
  expenses when this would lower their total
  compensation to an unacceptable level.

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FRINGE BENEFITS

• Fringe benefits include mandatory items such as
  Social security, medical care and unemployment
  insurance, plus expected items such as health,
  life, and disability insurance, vacations and
  retirement plans and optional items such as
  profit sharing, stock options, education
  reimbursement, clubs, dental/vision insurance,
  and moving expenses.

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SALES FORCE TRAINING

• Training is the act of increasing the knowledge
  and skills of an employee for doing a particular
  job. It is the responsibility of the employee to
  develop his skills by giving him adequate
  training concerning his job. The programme
  should particularly concentrate on understanding
  the behaviour of different kinds of people
  because a sales man has always to be in touch
  with the prospective and present customers.

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Objectives of Training Programme

1. A salesman is to be prepared for the various
   types of buyers he will meet and give him an
   insight into their problems and ideas so as to
   enable him to vary his methods of approach
   behaviour and sales talk to suit the particular
   type of buyers. They are given training in sales
   technique.
2. A salesman must acquaint himself with the
   business principles of his firm and to make it
   clear to him just what product or service the
   firm offers to its customers, and at what price?
3. A salesman should be given a frank and true
   statement regarding the competition he has to
   face and the strong and weak points of the goods.

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Training Methods

1. Refresher Training
2. Orientation / Induction Training
3. Conference Training
4. Promotion Training
5. Remedial Training
6. On the job Training
7. Study Material
8. Vestibule School
9. Role Playing
10. Discussion Method

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Motivating the Sales Force

• Motivation is an important factor which
  encourages persons to give their best performance
  and help in reaching enterprise goals. A strong
  positive motivation will enable the increase
  output of employees but a negative motivation
  will reduce their performance.

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Importance of Motivating the Sales Force

• Good Human Relations
• Low Absenteeism and Turnover
• Good Corporate Image
• Higher Efficiency

97
Methods of Motivating Sales Force

• Sales contest
• Convention and meetings
• Recognition and honour
• Personal meet
• Promotion
• Personal Communication
• Freedom
• Timely Information

98
Evaluating Salesman Performance

• Evaluating salesmans performance is a complex
  task not only because salesmen are required to
  perform a variety of activities, but also because
  different types of selling situations require
  different kinds of selling skills which may not
  lend themselves to equitable comparisons.
• In addition, salesmen differ in terms of selling
  acumen and personal qualities. Then, territories
  differ and they are required to spend a large
  part of their time away from their immediate
  manager. A good monitoring system becomes a
  basis for developing an evaluation system.

99
Control of Sales Force

• The success of planning depends greatly on
  supervision and control. Control of sales
  activities has gained much importance in modern
  competitive world. In fact, planning and
  controlling are two sides of a coin of all the
  problems of the sales management.
• Controlling is the act of checking and verifying
  an act to know whether everything takes place in
  accordance with the predetermined plan. In other
  words, control covers the direction and
  guidelines towards securing desired objectives.

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Objectives of Control of Salesman

• 1. Spotting out negative performance
• 2. Measurement of Sales performance

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Sales Quota

• Sales quota, may be defined as the estimated
  volume of sales that a company expects to secure
  with in a definite period of time. Quota is the
  amount of business, in terms of value or in terms
  of units sales, which is fixed for every
  salesman. It may be fixed for a geographical
  area to be achieved with in a definite period of
  time, a month or a year.

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Objectives of Sales Quota

1. To motivate salesman
2. To provide quantitative performance standards
3. To use in connection with sales contest
4. To obtain an effective budgetary control over
   sales

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Territory Sales Force

• According to Philip Kotler, by sales territory
  is meant the geographical area assigned to a
  salesman for his operations or selling
  activities.
• Seles territories may be planned either on
  geographical basis or on the basis or on the
  basis of number or nature of customers. Once the
  territories are defined, personal selling
  resources as well as other marketing resources
  can more easily be allocated, monitored and
  controlled.

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Benefits/Advantages of Sales Force Territories

1. To evaluate performance
2. Benefit to salespeople and the company
3. To improve customer relations
4. To obtain thorough coverage of the market
5. To reduce sales expense
6. To allow better matching of sales person to
   customers needs
7. To establish sales persons responsibilities

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Sales Audit

• The sales audit is an objective total evaluation
  of marketing efforts including policies,
  objectives and even personnel. Sales audit is
  an important function of modern marketing
  executives.
• It has been defined as a systematic, critical,
  unbiased review and appraisal of the basic
  objectives and policies of the marketing function
  and of the organisation, methods, procedures and
  personnel employed to implement those policies
  and to achieve those objectives.

106
Case Studies

• ABC electronics is a seven year old company which
  manufactures power generating equipment and sells
  directly to customers as well as through
  distribution network. The sales force was
  recently expanded to cover several regions. The
  marketing manager felt an urgent need to
  institute a sales incentive programme so as to
  motivate sales managers to increase sales
  revenues at least by 30 over the previous year.
  The power generating equipment business was
  extremely competitive. Although ABC had an
  approved price list, sales managers would
  frequently come to their supervisors to allow
  lower pricing than approved price list. The
  marketing manager spent considerable amount

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• of time reviewing pricing exceptions. He thought
  that in the long run this had to stop. The only
  way to discourage sales personnel from seeking
  exceptions was to give their clients a price that
  would win business. But then he had to devise a
  disincentive plan to sales personnel from
  arbitrarily dropping prices to generate larger
  revenues and obtain incentive bonus. The larger
  revenues at lower prices would have negative
  impact on the corporate bottom line. After many
  discussions with management, the marketing
  manager instituted the incentive programme as
  follows.

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• Sales personnel had price flexibility and could
  quote lower prices if in their judgment it was
  the only way to win the business.
• At the lowest end of the discretionary price
  authority the incentive would be very minimal.
  The incentive would increase as the quoted price
  increased above the minimum price level. The
  incentive increased exponentially which meant
  much larger incentives at higher price levels.
• The marketing manager presented this incentive
  scheme to the sales force expecting an
  enthusiastic support. However, there was
  virtually no reaction from the sales force.

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• Questions
• Do you feel the incentive programme so devised
  will achieve the results as desired by the
  marketing manager? Justify your answer.
• Suggest an alternative sales incentive programme
  to motivate the sales force.
• What types of training can be provided to the
  sales force of ABC electronics to achieve their
  targets?

110
MARKETING MIX
Distribution Mix
Promotion Mix
Product Service Mix
Physical Distribution
Channels of Distribution

• Retailer
• Wholesaler
• (Middleman)

• Transportation
• Inventory Mgt
• Materials Movement
• Communication
• Order Processing

• Advertising
• Personal Selling
• Publicity
• Public Relations
• Sales Promotion

• Brand
• Trademark
• Service
• Product Line
• Style
• Colour
• Design
• Warranty
• Guarantee

111
Physical Distribution

• Physical distribution involves planning,
  implementing and controlling the physical flows
  of materials and final goods from point of origin
  to point of use to meet customer requirements at
  a profit. - Philip Kotler
• Physical distribution (also called market
  logistics) involves planning, implementing, and
  controlling the physical flow of materials and
  final goods, from points of use, to meet customer
  requirements at a profit.
• - Kotler Armstorng

112
Materials management
Physical distributionmanagement
Manufacturer
Inbound Logistics
Outbound Logistics
Logistics Management
113
Physical Distribution Logistics
1.Management of movement, inventory control, protection and storage of raw materials and of processed or finished goods to and from the production line. 2.Narrow scope than of logistics. 3.Concerned with creation of time and place utilities. 4.Deals with outbound activities only. 1. Process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw material, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of confirming customer requirements. 2. Larger scope. 3. Creates time, place, form and possession utilities. 4. Deals with both inbound and outbound activities.
114
SUPPLY CHAIN MANAGEMENT

• Supply chain is the network of organized
  activities that are co-ordinated, or in other
  words, upstream and downstream linkages of
  different processes and activities, so as to
  distribute the products, through channels,
  ultimately to the consumers.
• For example, a shirt manufacturer is a part of a
  supply chain that extends upstream through the
  weavers of fabrics to the manufacturer of fibers
  and downstream through distributors and retailers
  to the final consumers.

115
Elements / Functions of PD
Material Handling
Transportation
Locational Analysis
Customer Services
Physical Distribution
Order processing
Packaging
Inventory Control
Ware Housing
116
Order Processing

• Time to complete the activities of the order
  cycle is at the very heart of customer service.
  It has been estimated that the activities
  associated with order preparation, transmittal,
  entry, and filling represent 50 per cent to 70
  per cent order cycle time in many industries. Due
  to this, activities involved in processing
  company's orders are receiving more and more
  management attention. As it is closely related to
  sale and production, order processing should also
  be a part of physical distribution department.

117
Industrial Packaging

• Packaging cost is a part of the total cost of
  production. Container manufacturers, carriers,
  trade associations and government agencies are
  continuously working for improvements in
  packaging techniques. Physical distribution
  department, in order to fulfill this function,
  has to work in cooperation with sales and
  manufacturing department, and deliver the
  products in their best quality and condition in
  the consumer hands.

118
Inventory Management

• Inventory (or stockholding) can be described as
  the accumulation of an assortment of items today
  for the purpose of providing protection against
  what may occur tomorrow. An inventory is
  maintained to increase profitability through
  manufacturing and marketing support.
  Manufacturing support is provided through two
  types of inventory system
• An inventory of the materials for production
• An inventory of spare and repair parts for
  maintaining production equipment.

119
Warehousing

• Warehousing refers to storing products while they
  wait to be sold. This function is necessary, as
  production and consumption functions rarely
  match. Organizations use either warehouses or
  distribution centers to process their products.
  The choice is made in regard to the
  transportation cost, amount of customer service
  and level of inventories.

120
Material Handling

• Efficient and careful material handling methods
  in factory and distribution warehouses can
  contribute much to customer satisfaction. Proper
  material handling helps
• 1. Decrease the damage
• 2. Maintain the quality of storage
• 3. Facilitate order processing and
• 4. Move right goods at right time to make them
  available to right customers.

121
Locational Analysis

• With the continuing growth of individual units of
  economic activity, there is greater expansion of
  organization, and new plant locations must be
  carefully chosen. Moreover, trend of
  decentralization of industries have further
  increased emphasis upon the site location that
  best fulfills the needs of the customers and
  companies. Physical distribution performs this
  function after analyzing aspects like market
  area, transportation facilities, transportation
  rates, and public and private warehouse
  facilities.

122
Logistics Management

• Logistic Management is a field of management
  which primarily deals with the coordination of
  resources in an organisation. These resources
  may be in the form of men, money, materials,
  machines and time and requires most efficient use
  of existing organisation resources. Many
  projects in developing countries do not succeed
  due to lack of attention in coordination logistic
  function. As such there are delays in completion
  of projects.

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Case Studies

• Pratap has an outstanding track as a sales person
  at Everest Electric Company. His behaviour
  towards customers is excellent and can serve as a
  role model. But with his peers and even with the
  sales groups manager is best described as
  offensive even though his ideas are good ones.
  He never actually hears what others are proposing
  or suggesting. He is argumentative and downright
  unpleasant in the way he interacts with the
  group. He laughs at the quotas set for him by
  the company. He says the company does not know
  customers and their potential. His sales group
  has

124
Cont

• Spent immeasurable amount of time and energy
  trying to persuade him to consider other options
  and approaches to problems whose solutions are
  vital to the sales group. The groups resentment
  towards Pratap is interfering with its group and
  development as a team.
• Questions
• If you were the Prataps manager, what would you
  do about his behaviour?
• What alternatives would you consider and which
  course of action would you select?

125
The Environment of PD

• 1. Demand characteristics
• a) Population
• b) Income
• c) Demand variations
• 2. Product characteristics
• a) Value of the product
• b) Seasonality of the product
• c) Product line
• 3. Dynamic environment.

126
Distribution Channel

• Distribution channel comprises a group of people
  and firms involved in the transfer of title of
  ownership (of the product), as the product moves
  from producer to ultimate consumer or a buyer. A
  channel of distribution includes producer,
  consumer as well as many middlemen such as
  retailers and wholesalers.

127
Channels of Distribution

• A channel of distribution or marketing channel,
  is the structure of intra company organisation
  units and extra company agents and dealers,
  wholesale and retail through which a commodity,
  product or service is marketed. - American
  Marketing Association
• Marketing channels are the combination of
  agencies through which the seller, who is often,
  though not necessarily the manufacturer, markets
  his product to the ultimate user. - John
  A. Howard

128
Levels of Channels

• Direct Marketing Channels/Zero Level Channel

Producer
Consumer
129

• 2. Indirect Marketing Channels
• a. One-Level Channel

Producer
Consumer
Retailer
Producer
Consumer
Distributor
130

• b. Two Level Channel
• c. Three Level Channel

Producer
Wholesaler/ Distributor
Retailer
Consumer
Producer
Distributor
Wholesaler
Retailer
Consumer
131

• Four Level Channel

Producer
Agent
Distributor
Wholesaler
Retailer
Consumer
132
Functions / Role of Marketing Channels

1. Buying
2. Carrying Inventory
3. Selling
4. Transporting
5. Financing
6. Promoting
7. Negotiating
8. Marketing Research
9. Servicing

133
CHANNEL STRUCTURE
Channel Structure
Direct
Multi-Channel
Vertical
Indirect
Horizontal
134
Factors Influencing the Channel Selection Decision

• 1. Product or Market Characteristics Factors
• a. Number of customers and frequency of
  purchase
• b. Cost of the product
• c. Level of service required
• d. Technical nature of the product
• e. Geographical concentration of the market
• f. Type of the product
• Company Characteristics factors
• a. Degree of channel control desired
• b. Financial position of the company

135
Cont.

• c. Propensity of assumed risk
• d. Ability of Management
• Middlemen consideration
• a. Services provided by middlemen
• b. Financial position of the company
• c. Attitude of middlemen towards
  manufacturers policies
• 4. Environment Characteristics factors

136
Channel Selection Process / Designing
distribution Channels
Identify Target Customer
Determining Consumer buying habits for the type
of goods
Locate Potential Customer Geographically
Pinpoint Channel Alternatives
Evaluate Channel Alternatives
Select Channel Members
137
Selecting Channel Members - Variables

• Financial strength of the prospective partner
• Sales strength
• Product lines
• Reputation of the intermediary
• Market coverage
• Sales performance
• Management strength
• Equipment and facilities
• Ordering and payment procedures

138
Functions of Intermediaries

• 1. Information
• 2. Promotion
• 3. Physical Possession
• 4. Financing
• 5. Retail
• 6. Consumers

139
Types of Intermediaries

• Merchant Wholesaler
• Brokers and Agents
• a. Manufacturers Agents
• b. Selling Agents
• c. Purchasing Agents
• d. Commission Agents

140
1. Merchant Wholesaler

• A wholesaler or distributor is an independent
  commercial establishment that purchases products
  from various manufacturers for stock and offers
  complete assortments of special merchandise for
  resale to the retail store. A merchant wholesaler
  provides the widest variety of marketing
  functions an services. They are independently
  owned, and take title to merchandise. Merchant
  wholesalers can be further divided into full
  service wholesalers and limited service
  wholesalers.

141
2. Brokers and Agents

• Brokers and agents do not take title to the
  products, and offer their customers a very
  limited number of services. Brokers are middlemen
  who bring the buyer and seller together and
  assist in price, product and delivery
  negotiations. Agents are wholesalers contracted
  to represent the producer or the buyer. These are
  of several types.

142
a. Manufacturers agents

• These are independent agents who usually
  represent two or more manufacturers who produce
  complementary products. They usually represent
  the manufacturer with whom they have entered into
  a contract. This contract usually contains
  details concerning pricing policies, territories,
  order handling procedures, delivery service and
  warranties and commission rates. These are firms
  composed of highly skilled sales people who are
  contracted by the small firms who cannot afford
  to have an extensive sales force of their own.

143
b. Selling agents

• These are intermediaries who are contracted by
  the manufacturer to sell the entire production
  output. This type of agents are taken on by
  companies incapable of employing individual
  fulltime sales force.

144
c. Purchasing agents

• Agents adopted by the customers are purchasing
  agents. These agents are able to get best goods
  and prices for the customer and also provide
  consultative services.

145
d. Commission agents

• These are intermediaries who purchase goods from
  the manufacturer and then sell it in the market
  for the best possible price. After deducting
  their fee and miscellanies, the balance is on to
  the manufacturer.

146
Channel Distribution Strategies and Polices

• After deciding the channel of distribution, the
  manufacturer has to decide how many middlemen
  should be there in the channel i.e., the
  intensity of distribution to be used at the
  wholesaling and retailing levels in the channels
  has to be decided.
• A major channel of distribution decision is
  determining the intensity of distribution. It is
  referred to as the extent to which company wants
  to saturate existing outlets with the product.
  It is usually measured by the percentage of all
  potential outlets that a firm wants to carry its
  products. There are three basic coverage
  strategies

147

• INTENSITY OF DISTRIBUTION
• Exclusive Selective
  Intensive

Distribution through multiple, but not all,
reasonable outlet in the market
Distribution through single wholesaling middlemen
in a market
Distribution through every reasonable outlet in
market
148
Distribution Intensity
Exclusive Distribution
Intensive Distribution
Selective Distribution
149
1. Intensive Distribution

• It means maximum market coverage. Under this
  strategy, a marketer sells its product(s) through
  every available outlet in a market where the
  consumer might look for it. Marketers of
  convenience products like cigarettes, chewing
  gum, salt, biscuits, bread, soaps, detergents and
  soft drinks want intensive distribution.
• A manufacturers ability to achieve intensive
  distribution depends a great deal on the
  willingness of relevant middlemen to stock the
  product. Trade promotions such as big discounts
  may be introduced to motivate middlemen to push
  the product.

150
2. Selective Distribution

• Here the manufacturer sells its product through
  multiple, but not all-possible outlets. It is
  the distribution in the geographical area
  restricted to middlemen on the basis of their
  performance capability. Selective distribution
  is appropriate for consumer shopping products
  such as various types of garments, appliances
  etc.
• Selective distribution benefits middlemen by
  limiting the number of rival outlets that carry
  the brand. This often helps build co-operation
  among channel members.

151
3. Exclusive Distribution

• The most restrictive form of market coverage is
  exclusive distribution. It is an extreme form of
  selective distribution one outlet in a
  geographical area. Exclusive distribution is
  frequently used in the marketing of consumer
  specialty products. Exclusive distribution is
  also attractive to middlemen. The manufacturers
  promotion effort benefits middlemen exclusively
  in their market areas.
• In this policy the crux of the matter is the
  exclusivity in mutual loyalty betwee