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Sales and Distribution Management


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Title: Sales and Distribution Management

Sales DistributionManagement
Dr. ANANDA KUMAR Professor, Department of
Management Studies, Christ College of Engg.
Tech., Puducherry, India. Mobile 91 99443
42433 E-mail
Sales DistributionManagement
A. ANANDA KUMAR Department of Management
Studies, Christ College of Engg.
Tech., Puducherry, India. Mobile 91 99443
42433 E-mail
  • total demand of potential
  • 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.)

  • 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
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.
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.

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

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

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

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

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

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
  • - American Marketing Association

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

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.

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
  • 9. To search out and obtain new customers.
  • 10. Its goal is to actually make a sale.

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.

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

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

Personal Selling Process
Pre-sale Preparation
Pre approach
Prospecting and Qualifying
Handling Objections
Presentation demonstration
Follow up and Maintenance
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.

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.

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.

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.

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

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

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.

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.

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.

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

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

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.

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.

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

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

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.

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.

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.

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

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.

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

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

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.

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.

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

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.

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.

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

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

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

1. Survey of buyers intentions/opinion survey
  • 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.

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.

3. Executive judgment/jury of executive opinion
  • 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

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.

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.

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.

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.

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.

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

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

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

  • 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

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

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.

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.

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

  • 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.

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
  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.

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.

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

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

Sales Force Management
  • kind of personnel management
  • centralized direction of their activities
  • provides limited opportunities for face to face
  • 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
  • covering wide geographical area markets
  • suitable to market

Training Supervision
Job Specification
Job Evaluation
Performance Evaluation
Job Description
Compensation Motivation
Sales Force
Sales Force
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

Objectives / Goals of Sales Force Management
  • 1. Maintaining continual growth
  • 2. Achieving sufficient sales volume
  • 3. Providing sufficient contribution to profits.

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
  • 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.

  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
  3. It should ensure the full support of the sales
  4. It should enable the firm to attract, retain and
    develop a contented, efficient and loyal sales
  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.

  • 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)

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.

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.

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.

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

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

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.

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.

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.

  • 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.

  • 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.

  • 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.

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
  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.

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

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.

Importance of Motivating the Sales Force
  • Good Human Relations
  • Low Absenteeism and Turnover
  • Good Corporate Image
  • Higher Efficiency

Methods of Motivating Sales Force
  • Sales contest
  • Convention and meetings
  • Recognition and honour
  • Personal meet
  • Promotion
  • Personal Communication
  • Freedom
  • Timely Information

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.

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.

Objectives of Control of Salesman
  • 1. Spotting out negative performance
  • 2. Measurement of Sales performance

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.

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

Territory Sales Force
  • According to Philip Kotler, by sales territory
    is meant the geographical area assigned to a
    salesman for his operations or selling
  • 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

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

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
  • 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.

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

Page - 3
  • 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.

Page - 4
  • 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

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

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

Materials management
Physical distributionmanagement
Inbound Logistics
Outbound Logistics
Logistics Management
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.
  • 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.

Elements / Functions of PD
Material Handling
Locational Analysis
Customer Services
Physical Distribution
Order processing
Inventory Control
Ware Housing
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.

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.

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.

  • 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.

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.

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

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.

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

  • 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?

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.

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.

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

Levels of Channels
  • Direct Marketing Channels/Zero Level Channel

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

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

Wholesaler/ Distributor
  • Four Level Channel

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

Channel Structure
Factors Influencing the Channel Selection Decision
  • 1. Product or Market Characteristics Factors
  • a. Number of customers and frequency of
  • 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

  • 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

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
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

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

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

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

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.

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.

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.

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.

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.

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

  • Exclusive Selective

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
Distribution Intensity
Exclusive Distribution
Intensive Distribution
Selective Distribution
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.

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
  • Selective distribution benefits middlemen by
    limiting the number of rival outlets that carry
    the brand. This often helps build co-operation
    among channel members.

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
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