Sales & Distribution Management - Class PPTs - Student Version

Introduction to Sales Management
Personal selling strategies

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Willingness to go to bat for the buyer within the supplier firm Thoroughness and follow through Knowledge of the sales persons product line Market knowledge and keeping the buyer posted Applying his product and services to buyers needs Knowledge of the buyers product line Preparation for sales calls Regularity of Sales calls Diplomacy in dealing with operating departments Technical education
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Evolution of personal selling

Negotiation Persuasion Consultative Selling Business Management Partnership Strategies
Marketing concepts
1) 2) 3) 4) 5) Production concept Product concept Selling concept Marketing concept Societal concept
Societal marketing concept
Production
Sales
Customers
(Sales Orientation)
Customer Needs
Production
Sales
(Marketing Orientation)
Emphasis on Sellers Needs
Emphasis on Customer Needs
Oxford University Press 2005, All rights reserved.
Nature and role of sales management

The determination of sales force objective and goals Sales force organization, size, territory, and quota finalization Sales forecasting and budgeting Sales force selection, recruitment, and training Motivating and leading the sales force Designing compensation plan and control systems Designing career growth plans and building relationship strategies with key customers
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Types of personal selling

Industrial selling Retail selling Services selling
Types of selling
Order taker sales people Order creators Order getters
Types of Selling
Inside Order Taker Order Takers Delivery Sales People
Outside Order Takers

Selling Function Order Creators Missionary Sales People New Business Sales People Front Line Sales People Order Getters Organizational Sales People Consumer Sales People Sales Support Sales people Technical Support sales People Merchandisers
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Difference between sales and marketing

Starting point
Factory
Focus
Factory
Means
Selling and promoting
Ends
Profits though sales volume
Selling concept
Market Customer needs Coordinated marketing Profits through customer satisfaction
Market concept
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MARKET ANTICIPATION Marketing mix
Producer
Marketer
Product Price Place Promotion
Consumer
Exchange offer of value
Marketing management process

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Sales management process

Formulation of a strategic sales programme Implementation of the sales programme
Evaluation and control of sales force performance
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Technology
Customer orientation
Emerging trends in sales management

Technology
Relationship selling
Global and ethical Issues
Diversity
New selling methods
Emerging trends in sales management

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Selling Skills and Strategies
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Selling and buying styles

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Concern for the customers
(1,9) People Oriented
(9,9) Problem Solving Oriented I consult with the customer so as to inform myself of all the needs in his situation that my products can satisfy. We work towards a sound purchase decision on his part, which yield him the benefits he expects from it.
I am customers friend,
8 7
6
5 4 3
I want to understand him and respond to his feelings and interests so that he will like me. It is the personal bond that leads him to purchase from me. (5,5) Sales technique Oriented
I have tried an effective routine for getting a customer to buy. It motivates through a blended personality and product emphasis
(9,1) Push the product Oriented I take challenge of the customer and hard sell him, polling on all the pressure it takes to make him buy
(1,1) Take it or Leave it

I place the product before the customer and it sells itself as and when it comes.
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Selling situations
Sales task and function

Maintenance selling Developmental selling
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Selling skills
Problem solving skills Effective communication skills
Selling Skills
Listening Skills Negotiation and bargaining skills Conflict management and resolution skills
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Communication process
Feedback Intended Message Perceived Message
Encoding
Decoding
Noise
Sent Message
Received Message
Channel
Sender
Receiver
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Communication process
contd. Managing body language:

Personal Appearance Posture
Gestures
Facial Expressions Eye Contact Space Distancing
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Process of listening
Attendance Interpretation
Remembrance
Evaluations Response Action
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Levels of listening
Feedback Paraphrasing
Clarifications
Emphatic listening
Active Listening
Barriers to Listening !
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Conflict management skills

Models of conflict Components of conflict The conflict resolution process:

- lumping - avoidance - coercion - meditation - conciliation - arbitration - adjudication - negotiation
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Conflict management process

Stage I
Potential opposition or Incompatibility
Stage II
Cognition &
Personalization
Stage III
Intentions
Stage IV
Behaviour
Stage V
Outcomes
Antecedent Conditions Communication Personal Variables
Perceived Conflict
Conflict handling Intentions Competing Collaboration
Increased group performance

Overt Conflict
Felt Conflict
Compromising
Avoiding Accommodating
Partys behaviour Others reaction
Structure
Decreased group performance

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Negotiation skills
Situation and timing for negotiations Formulation for a bargaining strategy The theory and strategy of principle negotiations
separate the people from the problem focus on interests, not on positions invent options for mutual gains insist on objective criteria
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Problem solving skills
Habit I: be proactive Habit 2: begin with an end in mind Habit 3: put first things first Habit 4: think winwin Habit 5: seek first to understand, then to be understood Habit 6: synergize Habit 7: renewal
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Problem solving process

Define the problem Generate alternative solutions
Decide the solution

Implement the solution Evaluate the solution
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Problem definition techniques

Statement and Restatement 5 Dunkers diagram 4 Present desired state analysis 3
Problem Definition Techniques

Evaluate problem 6 statement Find out origin of the problem 1
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Explore the 2 problem
Dunkers diagram
Achieve the desired state
General Solution
Possible path to the desired state
Path 1
Path 2
Path 3
Functional Solution
Solutions to implement & paths to desired solutions
Solution 1
Solution 2
Solution 3
Specific Solution
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Statement restatement technique
Relax Constraints
Perceived problems
Generalize
Make an Opposite Statement
Re Statement
Re Statement
Final problem Statement

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Components of a decision on the future course of action

Situation analysis
Problem analysis Past What is the fault
Decision analysis
Potential problem Analysis Future How to prevent future faults?
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Solution implementation process

Decision on the best solution
I M P L E M E N T A T I O N
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Approval
Planning
Carry through
Follow up
Evaluation
The Selling Process
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Stages in the selling process

Preapproach before the interview
Handling Customer Objections
Pre-sale preparation
Prospecting
Approach to the customer
Follow up action
Closing the Sale
Sales Presentation
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Prospecting
Successful prospecting
50 potential prospects 15 Qualified prospects 6 Interviews 1 sale 50 potential prospects 25 Qualified prospects 17 Interviews 7 sales
No
Successful prospecting
Yes
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Process of prospecting
Identify and define prospects
Search for sources of potential accounts
Qualify the prospects from the suspects

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Methods of prospecting
Cold canvassing
Endless chain customer referral Prospect pool Centers of influence Non competing sales force Observation Friends and acquaintances Lists and directories Direct mail Telemarketing Trade shows and demonstrations
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Selling process
Pre approach to selling Approach to the customer Sales presentation - approach to sales presentation
- attracting customer attention - creating interest - arousing desire and building conviction
Methods of sales presentation

- canned presentation - organized presentation - tailored presentation
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Handling customer objections

Suggested by SMITH
Start with your highest expectations
Avoid conceding first BE sure the customer understands the value of a concession Make concessions in small amounts Admit mistakes and make corrections willingly BE prepared to withdraw a concession Do not advertise willingness to concede
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Methods of handling customer objections

Superior feature method YesBut method Reverse English method Indirect denial method Pass out method Comparison method Direct denial method Another angle method Narrative method Testimonial method Question or WHY method
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Closing the sale

Methods of closing the sale Follow-up action
B2B selling
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Sales Organization
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Sales organization
an organization of individuals either working together for the marketing of products and services manufactured by an enterprise or for products that are procured by the firm for the purpose of reselling a sales organization defines duties, roles, rights, and responsibilities of sales people engaged in selling activities meant for the effective execution of the sales function
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Sales organization
contd.
a structural body through which the functions of sales management are carried out sales organization always makes efforts to increase sales, thereby achieving the principle of profit maximization, which contributes to the overall growth of enterprise
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Factors influencing structure

Product and service related factors Organization related actors Marketing mix related factors
External factors:
-Sales Organisation design based on Team performance - Trend towards elimination of sales force (bazee.com) - Market driven strategy (customer segmentation strategy) vs. Customer driven strategy (partnership strategy) - The speed of market change (higher decentralisation) - Reduction in the number of vendors per buyer - Closer customer relationships - Changes in regulations and international practices
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Organizational principles
Span of control Centralisation vs. decentralisation Unity of command Hierarchy of authority Stability and continuity Coordination and integration (Marico & P &G for rural)
Homogeneity
Objectivity Specialization
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Organizational design
- Formal and coordinated task - Assigning territories - Establishing flows of communication and responsibilities of sales groups and individuals to customers effectively
Line organization
Mr. Ratnakar Shetty President / Owner Mr. Chandrakant VP (Sales)
Five sales people
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Typical structure of a line organization

Consumer market National Distributors Institutional market Corporate market
Direct to Home
Direct marketing
Distributors
Bundling
Gifting
Regional Distributors
Consumer
Retailers
Consumers
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Design by territory
VP Marketing National Sales Manager
Divisional Manager (East) Regional Sales Manager
Divisional Manager (North) Regional Sales Manager
Divisional Manager (West) Regional Sales Manager
District Sales Manager
Sales Staff (City wise)

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Design by management function

Mr. Dara singh, VP (Marketing)
Staff Function
Staff Function
Mrs. Chitra Mohanty (Advt / Sales Promotion Mgr)
Mr. Dibya Behera (Sales Manager)
Mr. Chandra De Manager (MR)
20 Sales People
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Design by product
President, Marketing
Product Manager (A)
Manager (Sales) Product Manager (B)
Manager (Training)
Manager (Promotion)
Manager (Sales)
Manager (Training)
Manager (Promotion)
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Design by customer
President (Marketing) Vice President (Marketing)
Sales Manager Industrial Relations
Sales Manager Wholesalers
Sales Manager Retail Sales
Sales People
Sales People
Sales People
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President
Functional
Vice President (Production)
Vice President (Marketing)
Vice President (HRD)
Geographic Marketing Manager

India G.M Consumer care
Marketing Manager Combined International Sales Org. Design G.M International Sales Divisional Manager Food
Customer
G.M International Sales Divisional Manager Paper
Divisional Manager Soaps
Product
Eastern Sales Division
Western Sales Division
Northern Sales Division
Europe Division
America Division
Gulf Division
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Sales Organization
Key account sales
- focus on CRM - customer profitability and value analysis - the few accounts give incremental returns - national accounts
Sales process automation

- EDI Electronic Data Exchange
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Emerging organizational design

agency and distribution selling shared sales force telemarketing TQM and team-based selling
Customer
Sales
Marketing
Technical Support
Manufacturing
Supplier selling team

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Number of sales people

determined by:
- territories vary in their demand structure for prospecting - product mix demands - levels and types of prospecting - nature of the customer segments
Affordability method (based on sales budget)
Incremental method Workload method Number of sales people =
(Number of existing customers)
(Number of Potential customers)
(Ideal X frequency of calls)
(Length of X a call)
Ideal selling time available for a salesperson
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Management of Sales Territory
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Sales territory
A group of present and potential customers assigned to an individual sales person, a group of sales persons, a branch, a dealer, a distributor or a marketing
organization at a given period of time.
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Objectives of Sales Territory

To formulate sales plans, policies, strategies around companys products/services, designed for a territory. Analyze territory sales potential & plan marketing programs & key potential customers for a territory. Analyze strengths & weaknesses of competitors & work out strategies to subvert competition for a territory. Identification & classification of accounts according to their potential & chalk out call plans for a territory. Organize sales force, allocate sales efforts, implement sales plans more effectively for a territory. Review performance of sales force at regular intervals for a territory Redesign sales plans, policies, strategies in case of changes in 58 market trends/business environment for a territory.
Sales territory
(contd.)
Advantages of designing a sales territory :

It ensures better market coverage Effective utilization of the sales force Efficient distribution of workload among sales people It is convenient to evaluate the performance of sales people To control over the direct and indirect costs of the sales function Optimum utilization of sales time by sales people
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Designing sales territories

Factors influencing the modifications of a territory:
mergers market consolidation split in division sales force turnover customer relocations product life cycle change product line change Select the basic geographic control units Decide on the criteria for allocation Decide on the starting point Combine control units adjacent to starting point Compare territories on allocation criteria and conduct workload analysis Assign sales force to new territories
Modify territorial boundaries to balance workload and potential
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Territory shapes
circle
wedge
Clover leaf
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Strategic Planning Matrix

Opportunity
Opportunity
The account may represent a good opportunity. The sales organization needs to overcome its competitive disadvantages and strengthen its position to capitalize on the opportunity.
H i g h
The account offers a good opportunity. It has high potential and the sales organization has a differential advantage in serving it.
Strategy
Commit high levels of sales resources to take advantage of the opportunity.
Strategy
Either direct a high level of sales resources to improve the position and to take advantage of the opportunity or shift resources to other accounts.
L o w
Opportunity
The account offers stable opportunity since the sale organization has differential advantages to serving them.
Opportunity
The account offers little opportunity. Its potential is small and the sales organization is at a competitive disadvantage in serving it.
Strategy
Allocate a moderate level of resources to maintain current advantage.
Strategy
Strong
Either commit a minimal level of resources to the account or consider abandoning the account altogether.
Weak
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Sales territories
New Territories..?
Use of Information Technology IT enabled services computer programmes simulation techniques
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Decide Basic Territories: Market Build-Up Method

Management must determine:
Desirable call pattern (call frequency per account per year)

Total calls needed in each control unit
Workload capacity
Tentatively set territorial boundary lines combining control units until, total calls needed = total calls possible Modify territories as needed
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Workload approach: Example-I.

Customer Call frequency / annum No. of customers No. of calls / annum No. of customers No. of calls / annum Total no. of calls / annum (in both units)
Control Unit - 1 Major Moderate Minor 8 6 4 100 150 600 800 900 2400 4100
Control unit - 2 150 250 700 1200 1500 2800 5500 9600
Workload= No of working days x av. no. of calls / day 240 working days x 4 calls per day = 960 Required no. of sales persons = 9600 960 = 10 (for 2 control units)
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Workload approach: Example- II.

Customer Type
Major (250) Moderate (500) Minor (800) Total
Time / call
60 min. / call 30 min. / call 20 min. / call
Calls / annum
40 30 18
Hours / annum
40 hrs. 15 hrs. 6 hrs.
Total hours / annum

10,000 (250x 40 hrs.) 7,500 (500 x 15 hrs.) 4,800 (800 x 6 hrs.) 22,300 hrs.
No. of working days / annum = 273 (Sundays+holidays+Training days+ meeting days+ conference days+ sickness days) 273 x 8 hrs. per day = 2184 hrs. Selling activities = 40% of selling hours (2184) = 873.6 hrs. Non-selling activities = 60% of selling hours (2184) = 1310.4 hrs. No. of sales persons needed = 22,300 874 = 25 sales persons.
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Decide Basic Territories: Sales Break-Down Method
Management must determine: Company Sales Potential Sales potential in each control unit Sales volume expected from each sales person Tentative territorial boundary lines by combining control units until total sales potential = expected sales volume Territorial modifications as needed
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1. Company Sales Potential S = NVP N = No. of prospective buyers of firm V = Estimated sales units (through sales forecasting) P = Price per unit 2. Forecast sales potential of each control unit = Total sales potential x Market Index of each unit (e.g., B= Buying Power Index) For PCs, B = f (I,E,D) where I=Income, E = Education, D = No. of Distributors in that unit. 3. Estimate sales volume expected from each salesperson (how much of sales potential). Profit (20% of sales) = Sales (cost of products sold + distribution cost) (50% of sales) direct selling cost (Rs.6,00,000).
0.20Y = Y 0.50 Y Rs.6,00,000. 68 Y = Rs.20,00,000 = av. volumePress 2005, All rights reserved. of sales, a salesperson should achieve Oxford University
Sales Potential Method

No of salespersons needed = N Annual Sales Forecast for company = S ( Rs.40,000,000) Est. productivity of av. salesperson = P (Rs.20,00,000) Est. percentage of annual salesperson turnover = T (10%) N = S/P + T (S/P), or, N = S/P (1+T) Therefore, N= 40,000,000 /20,00,000 (1+ 0.10) = 22 salespeople will be needed for the entire company.
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Management of Sales Quota
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Sales quota
A quota is an expected performance objective A quota is a sales assignments or goal to be achieved in a specific period of time It is routinely assigned to the sales units (e.g. departments, divisions, and individuals) Sales units proceed to reach quotas in their respective domains
A sales quota is the sales goal set for a product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating the sales effort.. Kotler
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Principles of quota setting

Setting of sales quotas is a challenge to the sales manager and should be handled with precision and adequate skill Objectivity to be observed while fixing quotas and should be based on facts and figures drawn from the market It must be simple to understand both to the manager and the sales people
Quotas set above the achievable limit often demotivate and result in high turnover in the organization
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Principles..contd.
Flexible to the prevailing and emerging market conditions There should be a level of definiteness in the quota set for a salesperson It should be fixed either in terms of geographic territory, on money value, or on the basis of units of product(s) A participatory quota setting procedure followed jointly by the sales manager and sales people together serves as a tool of motivation and leads to the realization of the organizational sales goals
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S M A R T
P E C I F I C E A S U R A B L E T T A I N A B L E E A L I S T I C
I M E S P E C I F IC
SBO MBO in the Sales domain?

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Organization of the sales job

Defining annual objectives
Individual Goal setting form
Procedure for setting sales quota

Name
Output Year Your territory Results expected Pessimistic Realistic 1. Volume per month 2. Expenses per month 3. Gross margin /month 4. Market share/month 5. Key account coverage/ month Optimistic Results
Conferencing with each sales person

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Types of sales quota

sale volume quota
sales budget quota

sale activity quota
combination quota
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Methods of setting sales quota

Quotas are based on
sales forecasts and potentials forecast past sales and experience executive judgement
sales people judgement

based on compensation
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Problems in setting sales quota

1. There is a high level of individual difference in every organization 2. A perfect quota is a combination of selling and nonselling activities 3. Often sales people do not give proper attention to the non-selling activities (e.g. searching for prospects, handling customer objections, and creating market for probable entry of new products)
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Compare the annual sales volume of the 3 salespersons mentioned below. Determine the rupee difference between their sales and quota. Calculate each persons performance index. What conclusions can you draw based on your results? Sales Quota 150,000 190,000 160,000 Actual Sales 160,000 160,000 110,000 Performance Index 107 84 69
Mr . A Mr . B Mr. C
Performance index can be calculated by dividing actual sales by quota (x 100) and then the sales manager can draw inferences about the activity of each sales man in this case. Mr C is under performing where as Mr A is doing well. Mr B can improve upon as his performance index is within an acceptable limit.
Calculate the order to sales call ratio and the average size of order for the year from the following table. Why does the salespersons performance differ? Name No. of Calls No. Of Orders Actual Sales Sales/Call Sales/Order Mr . A 1300 350 Rs 500,000 Rs. 384.6 Rs. 1428.6 Mr. B 1400 650 Rs 560,000 Rs. 400.0 Rs. 861.5 Mr. C 1600 580 Rs. 900,000 Rs. 562.5 Rs. 1551.7 Total 4300 1580 Rs. 19,60,000 Rs.455.8 Rs.1240.5 The order to sales call ratio can be found out by dividing the actual sales by calls and actual sales by orders. The average size of the order can be found out by dividing actual sales by number of orders. The sales performance differs because the calls to order ratio varies among sales people. 79 . Oxford University Press 2005, All rights reserved.
Evaluation of the Sales Force Performance
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Evaluation stands on two important factors: 1. Setting predetermined standards 2. Comparing actual performance with the set standards
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Criteria for Performance Evaluation

Systematic
Result Oriented Provide directions Understandable Realistic
Periodic
Flexible Encouraging Strategic Fitness Fair
Vision for improvement
Aim for max. accuracy
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Steps in Sales Force Evaluation Process

Set sales goals & objectives Design implementation mechanisms Establish performance standards Measure actual results
Compare results against standards

Take controlling measures
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Setting sales goals & objectives
Attainable Realistic Quantifiable / Measurable Comparable / analysable
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Designing implementation mechanisms How salespersons achieve targets? (by way of meeting customer satisfaction & companys economic interests): How quickly & accurately they apprise the potential customers How quickly they procure orders & fulfils them How precisely they can convert sales orders to monetary benefits to the company
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Establishing Performance Standards

Quantitative
Performance Standards Qualitative Performance Standards
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1. Measure actual results (sales analysis)

Sales Analysis (an integrated process) Productivity Analysis (Effectiveness & Efficiency) Profitability Analysis
Cost Analysis
2. Compare results against standards 3. Take corrective actions

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Quantitative Performance Standards

(a) Sales Volume (Rupees/ Units) i. By Products ii. By Customer Groups iii. By Territories (b) Profits i) Gross or net profit margins required By Products By Customer Groups By Territories ii) Gross Margin Ratio gross margin to total sales iii) Net Profit Ratio net profit to total sales
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Quantitative Performance Standards (contd.)

(c) Sales Orders i. Call : Order Ratio ii. No. of orders procured (customers developed vs. volume of orders acquired) iii. Order Value (sales volume vs. expected target) (d) Accounts i. No. of old accounts held ii. No. of new accounts added iii. No. of existing accounts lost
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Quantitative Performance Standards (contd.)

(e) Selling Expense Ratios i. Selling expenses : Total Sales ii. Field selling expenses : total selling expenses iii. Average selling expenses / call (f) No. of calls / day (g) Cost / call (h) Call frequency ratio (no. of actual calls to no. of accounts held) (i) Market share analysis (% of companys sales to total industry sale in a particular territory/region etc.) (j) Sales coverage effectiveness index (no. of customers to no. of prospects in a territory) 90
Qualitative Performance Standards

(a) i. ii. iii. iv. v. Knowledge on: Products/services dealt with Company policies Competition Distribution channels Customer behaviours (c) Personal & personality factors: i. Personal appearance ii. Cooperation iii. Industriousness iv. Stability of mind v. Tact vi. Assertiveness vii. Ego drive viii. Agreeableness ix. Empathy x. Achievement motivation xi. Conscientiousness xii. Punctuality, etc.
(b) Individual skills: i. Selling skill ii. Customer relationship skill iii. Communication/presentation skill iv. Problem solving skill v. Analytical skill vi. Managerial skill vii. Interpersonal skill
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Sales Force Control

Sales Audit ( investigation of the impact of internal/external factors on sales performance) i. What decisions were taken at planning & implementation stages? ii. How these affect the sales operations? iii. What changes are to be brought in, to improve the situation? Management Information System (MIS) i. Internal reporting system ii. Marketing intelligence system iii. Marketing research iv. Analytical systems Management by exceptions Whenever significant deviations are noticed, corrective actions are taken, without delay.
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Performance Appraisal Methods

Traditional Methods
a) Ranking method b) Paired Comparison method a)
Modern Methods
Management by objectives (MBO) b) Behaviourally anchored rating scale (BARS) job analysis c ) 360 degree appraisal * MBO long term goal setting / joint short term goal setting / preparation of action plans / periodic performance review / formal appraisal.
c) Graphic Rating scale d) Checklist method (weighted / unweighted) e) Critical Incidents method f) Forced Distribution method (on various performance criteria based)
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Traditional Methods
Ranking Method: Ranked on the level of their performance, regardless of the type of work they perform. Ranking arranges salespeople in terms of best performance, next best performance till the least performing salerperson is reached. Actual degree of difference in the performance of the salespersons cannot be ascertained.
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Traditional Methods (contd.)

Paired comparison method: Two salespersons are compared at a time & compared on a common criteria. If there are 10 persons, the no of paired comparisons will be 45 : n (n-1)/2 Thus while it is better than ranking method but the procedure is very tedious, time consuming & subject to human error which will multiply with more sets of performance criteria.
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Graphic Rating Scale 1. Continuous scale: factors are evaluated continuously, marking somewhere in the continuum, on a specific factor.
1 Very high 3 High 5 Moderate 7 Low 9 Very Low
Subjective judgment bias cannot be ruled out

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Discreet Scale:
Very Good
5
Good
4
Average
3
Bad 2
Very Bad 1
based on subjective judgment can lead to bias

97

Weighted Checklist Method (range= 5 to 1):
Attributes Relative Excellent weight (5) Product knowledge Co. knowledge Selling Skill CRM Skills Motivation 0.3 0.2 0.1 0.1 0.1 Good (4) Fair (3) Bad (2) Very Bad (1) Score 1.2 0.8 0.3 0.2 0.2
Diligence
Total weight
0.2
1
0.6
3.3
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Critical Incident Method (5-point scale): The rater should record significant events, called critical incidents that happen when salespeople are involved in sales activities ( for individual salespersons). The essence- to ascertain critical events that make the difference between performance & no performance. a. Bright in prospecting b. Not smart in customer handling c. Writes call reports well d. Demo skill is exceptional, etc.
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Forced Distribution Method:
Observations of the rater
Communication skill = 25% Selling skill = 40% Persuasive skill = 50%
Performance Standards
Very Good = > 60% Good = 40 60% Average = 20 - 40% Bad = < 20% Very bad = < 10%
Personality = 30%
Emotional maturity = 30% Overall rating = 35% = Average.
It is simple to implement and can avoid bias to a large extent.
100

Field Review Method: The rater interviews field sales managers and supervisors to know how salespersons perform in the field on both quantitative as well as qualitative parameters. However validity & reliability of information so collected from the field should be checked.
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Modern Methods
Management by Objectives (MBO): Organisational goals as guidelines long term goals Joint goal setting Sales managers & salespeople establish short-term performance targets & how managers can help them achieving such targets. Preparation of action plans resource requirements & methods of selling are developed. Job responsibilities are clearly defined/modified. Performance review tracking progress of sales performance on a periodic basis. Formal appraisal performance results compared with targets & corrective actions taken/ goals redefined. 102
Modern Methods (contd.)

Behaviourally Anchored Rating Scale (BARS): a) Analyse characteristics & behavioural areas of the job. b) Identify critical behavioural areas & categorize them as most-effective to least-effective factors. c) These critical incident areas are reviewed & refined to a small group of performance dimensions & each is given right definition. d) Another group of salespeople/supervisors with experience are asked to review & rate on 1 (low effectiveness of behaviour) -10 (high effectiveness of behaviour) scale. e) Finally, few performance dimensions with individual rating scales define the BARS. 103
Modern Methods (contd.)

360 degree appraisal
Distributors
Sales Managers
Salespeople
Peers
Themselves
104
Sales Force Compensation
105
Management judiciously
Fairness
Motivation
Sales Force Compensation Plan

Flexible Competitiveness Cost effective
106
Compensation Level
Firms Internal factors a) financial ability b) Compensation policy Firms External factors a) prevailing compensation policies in industry b) Legal conditions
c) Recruitment & selection policy

d) Promotion policy e) Job description f) Job evaluation g) An employees position & designation h) An employees relative contribution to the job
c) Economic conditions
d) Market competition e) Trade union f) Global considerations
107
Aims of a good compensation plan

a) To increase enthusiasm & motivation of salespeople b) To instill a sense of commitment in salespeople towards their job c) To inject an atmosphere of team spirit & morale within the salespeople d) To develop a stable sales force & reduce chances of attrition of sales force e) To retain efficient sales force for a long run f) To coordinate & control sales force successfully g) To attract efficient salespeople from the competing firms h) To increase loyalty of sales force to the firm i) To increase quality of interaction of salespeople with customers
j) To improve sense of confidence of customers on sales force & the firm

k) To create a dedicated sales force who leaves no stone unturned to achieve firms goals
108
Steps in developing Compensation Plan

Review job description Establish compensation objectives Establish compensation level Choose compensation method
Implement the plan
Review the entire plan
Decide on indirect compensations
109
Methods of compensation
Straight salary Straight commission Combination plans i. Salary and commission ii. Salary and bonus iii. Salary + commission and bonus
110
Straight Salary
Advantages a) Provides a sense of security Disadvantages a) It has no provision to pay incentives to salespeople. This may restrain them taking additional initiative & drive in personal selling b) Selling expenses are not related to sales volume. Selling expenses are incurred regardless of sales volume
b) Ensure stability of income
c) Helps to develop a loyal sales force c) It gives equal treatment to both high & low performing salespersons d) Prevents high turnover of salespeople e) Enhances sense of belongingness of salespeople to the company d) The scheme may not attract high performing salespeople from the competing firms e) Seriously lacks motivational push for potential & energetic salespeople
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f) Safe to new salespeople
f) May discourage salespeople to offer additional efforts for slow moving items g) Hard working salespeople may not find this method attractive
g) Simple to understand and is economical in application h) Salespeople feel more committed to their job i) Salespeople pay more attention retaining customers than generating new ones j) Salespeople can concentrate on customer satisfaction to retain customer loyalty
k) Salespeople can give more attention to non-selling activities as well

l) Sales managers can exercise close control & supervision on salespeople
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Straight Commission
Advantages a) Acts a s a great motivator Disadvantages a) Loss of control over salespersons
b) Differentiates high performing salespeople from rest

c) Unlimited opportunity to earn for efficient salespeople d) Management has no pressure to incur selling costs
b) Salespeople may not take interest in slow selling / less margin products of the company
c) Salespersons will concentrate on easy selling or high margin products d) Salespersons will try to push expensive variants of product despite availability of economical variants serving same purpose to consumers e) Salespeople may indulge in aggressive selling that may affect image of company
e) Salespeople can work freely
f) Easy to understand and economical to operate
f) Salespersons will lack sense of belonging to the company
113
g) Salespeople cannot complain for any underpayment - linked to performance
g) Salespersons can divulge valuable information of the company to outside sources
h) Salespeople will not resent against any pressure selling jobs.
h) Salespeople may not pay attention to non-selling activities

i) Salespeople may not be interested in building long term relationship with customers j) Salespeople will not be interested in a developed market
k) Since earnings are uncertain, salespersons may leave in periods of bad sales or for better job prospects
114
Combination plans
i. Salary + commission ii. Salary + bonus iii. Salary + commission + bonus
115
Combination Plan (salary+commission+bonus)

Advantages a) Stable income+ additional financial incentives Disadvantages a) Not simple to understand & difficult to operate
b) Sense of job security + financial incentives for generating more sales
b) Selling costs vary across different selling situations implementing & comparing this uniformly across selling situations is difficult
c) Sales managers find it difficult to control sales operations d) Plan require constant recording of sales turnover that may appear to be cumbersome to sales managers
c) Income varies with sales productivity, also is a flexible option d) Combination plan tackles differences in sales potential in different territories, better than single plan
e) Efficient salespeople are benefited

f) Ideal for ambitious & self motivated salespersons
e) It demands high administrative cost

f) Fixing composition of plan may be problematic & time consuming
116
g) This plan can be made flexible by suggesting different combinations for different levels of salespersons
g) Combination plans lead to unequal income of salespeople in different territories. Hence comparison of their performance on common standards is difficult. h) Salespersons may underestimate the non-selling activities
i) When sales targets are fixed at high levels for salespersons to attain, this plan will discourage them to do their best
j) Long term deferred payment of incentives may frustrate salespeople
117
Compensation schemes : non-financial approach

Career advancement through promotion job enrichment Selling expenses fix expense quota to control undue expenses by salespersons Fringe benefits medical benefits, insurance cover, LTC, retirement benefits, entertainment allowance, mob bill allowance/reimbursements, data card Perks company car, fuel charges, room furnishing allowance etc. Sales contests rewards for achieving short term goals
118
Application of compensation methods Company wants to go in for extensive prospecting drive While launching a new product in the market Easy to evaluate proficiency among sales people Company has well established brand names in the market For sales trainees or newly appointed salespeople
Specific Plan
When financial strength of company is weak

For technically complex products / products of high quality When non-selling activities are not important When company products have reached a maturity / declining stage
Company wants to get into a new geographical territory

Company wants to relate selling expenses to sales volume Company introduces a new product / product line Company wants to do overseas selling When products are sold through dealers & merchandising & display are important When company appoints part time sales people
119
Distribution channel management - an introduction
120
Role of distribution channels
To adjust the discrepancy of assortment through the process of sorting, accumulation, allocation, and assorting To minimize the distribution costs through routinising and standardizing transactions to make exchange more efficient and effective To facilitate the searching process of both buyers and sellers by structuring the information essential to both the parties To provide a place for both parties to meet each other and reducing uncertainty
121
How do distribution channels contribute
Intermediaries can improve the efficiency of the exchange process Channel intermediaries adjust the discrepancy of assortment through the performance of the sorting process Marketing intermediaries hang together in channel arrangements to provide for the routinisation of transactions Channels facilitate the searching process
122
Discrepancies in the process of exchange
Spatial discrepancy (physical distance) Temporal discrepancy (difference between time of manufacturing vs. time of consumption) Need to break the bulk (consumed in smaller quantities) Need to provide assortment (heterogeneous mix.)
123
The cost and control aspects of intermediation

Cost efficiency
Control
Direct Distribution
Indirect distribution
124
Distribution channel strategy
Setting distribution objectives in terms of the customer requirements (service output demands) Finalizing the set of activities that are required to be performed to achieve the channel objectives
Organizing the activities so that the responsibility of performing the activities is shared among the entities who are meant to perform these activities Developing policy guidelines for the smooth functioning of the channel on a day to day basis
125
Distribution channel management (contd.)

Distribution channel management encompasses all activities dealing with the distribution function of the firm The distribution strategy provides guidelines for decision making. The distribution management function can be viewed as happening in two phases: distribution process mapping & establishment + day-to-day management of channels.
126
Distribution channel management (contd.)

The ex ante phase involves all the activities that are associated with the design and establishment of the distribution channel. These activities actually take place before the distribution channel actually starts functioning.
The ex poste phase involves managing the day to day activities of the channel wherein the behavior of the individual channel members are coordinated
127
Channel Management tasks

Design of the channel structure
Ex ante
Phase
Establishing the channel
Distribution Channel Strategy Channel Objective Activity Finalization Organizing the activities Developing Policy Guidelines
Motivating Channel Members Ex Poste Phase Resolving Conflicts among channel members
128
Channels of drug distribution

Manufacturer C&F /Depot / Super Stockist
Stockist Institution Wholesaler Hospital
Retailer/ Chemist
Patient
129
Designing customer-oriented marketing channels
130
Channel Design

The channel design is normally meant to give a clear idea about: The number of channel entities in the channel network The way in which they are linked The roles and responsibilities of the entities in the network The rewards for participating in the activities and also Clear cut guidelines for the major activities to be performed during the normal functioning of the channel.
131
What are the service outputs
Convenience (availability vs. inventory cost) Breaking the bulk (Consumption of one unit at a time, at retail point) Spatial convenience ( channel intensity vs. cost) Waiting time (days / off-the shelf) Assortment (products that are bought together)
132
Distribution channel design

To consume a product Channels
Service outputs have to be delivered
Participates in channel flows
Activities have to be performed
Thus performs activities
133
Example of a service output delivered template

Sl.No. Service dimension
1. Bulk-Breaking
Service output delivered

Units are delivered in ones
2.
Spatial convenience
There is at least one outlet for almost every 3 km radius excluding of course thinly populated areas
Not more than 2 days for any model Other consumer goods items including that of other competitors are available at all the outlets where the products are otherwise Available Available Free for first two years, but available on payment afterwards. Also available at every city from where the product was bought. Available
134
3. 4.
Waiting time Assortment
5. 6.
Installation support After sales support
7.
Consumer financing
Channel flows and contribution to service outputs

Flow
Physical Possession
Direct contribution
Spatial convenience, bulk breaking, waiting time
Indirect contribution
Assortment
Other contribution
Ownership Promotion
Negotiation Risk taking Financing Ordering Spatial convenience, bulk breaking
Spatial convenience Spatial convenience

Assortment Waiting time, bulk breaking, spatial convenience Assortment
Is a service output in itself
Payment
Spatial convenience, waiting time, bulk breaking Bulk breaking, spatial convenience, waiting time Bulk breaking, spatial convenience, waiting time Oxford University Press 2005, All rights reserved.
135
Channel design effort decisions consumer durables
The service output levels The flows or activities that are associated with the achievement of the service output levels The type of entity who would be entrusted with the performance of each of these flows
136
Parameters for comparing channel designs
Efficiency (inputs vs. desired output levels) Effectiveness (zero waiting time) Equity (remuneration should reflect activities & their criticality) Scalability (channels should take higher load, as and when required) Flexibility ( should handle fluctuating demand)
137
The channel establishment plan

(contd.)

The main purpose of the channel to be set-up. The profile of the customers who are the target market for the channel . The needs and requirements of the target market with regard to the identified service outputs provided by the proposed/ existing channel. Analysis of the operations of the existing channels that deal in similar product/service lines ideas for differentiation. Detailed activity chart for achieving the service output objectives - linking service objectives to specific activities.
138
Plan..

Contd.
Details about the various channel constituents who will be performing these tasks The cost of performing the activities
The designated roles and responsibilities of the channel constituents

The proposed remuneration for performing these roles and responsibilities Standards for measuring the performance (targets, customer satisfaction etc.) Procedures for reporting and information sharing (ERP) Monitoring mechanisms (reports, personal inspection) Criteria for appointing the channel members (investment, experience, past history etc.)
139
Managing Channel Member Behaviour
140
Channel relationships

Perceptions of organizational power Dependence Control Trust Commitment Co-operation
141
Discrete relational exchange continuum

Arms length relationship
Relational exchange relationship
142
Channel control
profit earned by channel member
Tolerance Function (lost opportunities)
PayOff Function
Zone of acceptance Supplier authority 143 Oxford University Press 2005, All rights reserved.
Role of persuasion, authority, and coercion in channel control

Channel members profit A Tolerance function B
Pay off function
Coercion
persuasion
Authority
control 144
Components of channel offering

Manufacturer sales force incentives
Promotional Responsiveness support systems Financial returns Quality products Technical Reliable delivery assistance Competitive price National reputation Company
Training
policies
Market research
Distributor sales force incentives
Incentive programme
Distributor firm incentives
Channel core elements
Capability building programmes

145
Influence Strategy group

Indirect influence strategies
Direct Unmediated Strategies
Types of Influence Strategy

Information exchange Information control Modelling
Recommendation Warning Positive normative Negative normative.
Explanation
Where information on general business issues and the channel program is merely exchanged with channel member personnel. In this type of strategy the consequences of the acceptance or rejection of the channel programme or its implementation are stressed, but these consequences are based on a response from the market environment, not on the mediation of the channel Principal.
Channel Managers Influence strategy types

146
Reward and Punishment Strategies
Economic reward Non-economic reward Economic punishment Non-economic punishment

Direct request
In this type of strategy rewards and punishments are directly given to channel members
This strategy involves making a direct request to the channel member where the Principal mainly communicates desires or wishes concerning the channel members acceptance of the channel program. In this type of strategy specific action is requested; consequences of acceptance or rejection are stressed and are based on the mediation of the channel principal.
Direct unweighted strategy
Direct Mediated strategies
Personal plea Promise Threat and Legalistic reference.
(contd.)
Influence strategy types

147
Influence situations in channel relationship

Attitude towards the channel progranmme Positive
Behaviour Reinforcement process Behavioural Reinforcement (non-economic reward) Inducement process Behavioural change (economic reward)
Neutral
Moderate rationalization Attitude change (Recommendation ) Moderate confrontation Behavioural and attitudinal change
Negative
Radical rationalization Attitude change (Recomm./warning /inf. exchange) Radical confrontation Behavioural and attitudinal change
148
towards the channel programme
+ ve
- ve
Stages in channel conflict

Attitudinal sources of conflict Cognitive/ Affective conflict Manifest conflict Conflict outcomes
Structural sources of conflict
Conflict resolution
CAUSES OF CONFLICTS Attitudinal Causes Structural causes

149
Conflict management methods at different stages of conflict

Institutional approaches
Latent conflict Joint membership of associations Exchange of executives Cooptation Dealer councils Third party mechanisms Mediation arbitration
Felt conflict
Manifest conflict
Negotiation
150
Negotiation strategies
HIGH
Accommodative Collaborative/problem solving
Concern for the others interest

Avoidance LOW
Compromise
LOW
Competitive /aggressive
Concern for HIGH own interest Oxford University Press 2005, All rights reserved.
151
Thank you
152

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Introduction to Sales Management

Personal selling strategies

Evolution of personal selling

Societal marketing concept

Emphasis on Sellers Needs

Emphasis on Customer Needs

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Nature and role of sales management

Types of personal selling

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Outside Order Takers

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Difference between sales and marketing

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MARKET ANTICIPATION Marketing mix

Product Price Place Promotion

Exchange offer of value

Marketing management process

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Sales management process

Evaluation and control of sales force performance

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Emerging trends in sales management

Global and ethical Issues

New selling methods

Emerging trends in sales management

Selling Skills and Strategies

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Selling and buying styles

(1,1) Take it or Leave it

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Sales task and function

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Personal Appearance Posture

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Conflict management skills

Models of conflict Components of conflict The conflict resolution process:

Conflict management process

Antecedent Conditions Communication Personal Variables

Conflict handling Intentions Competing Collaboration

Increased group performance

Partys behaviour Others reaction

Decreased group performance

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Problem solving skills

Problem solving process

Decide the solution

Problem definition techniques

Problem Definition Techniques

Explore the 2 problem

Solutions to implement & paths to desired solutions

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Statement restatement technique

Make an Opposite Statement

Final problem Statement

Components of a decision on the future course of action

Problem analysis Past What is the fault

Potential problem Analysis Future How to prevent future faults?

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Solution implementation process

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The Selling Process

Sales & Distribution Management - Class PPTs - Student Version

Sales & Distribution Management - Class PPTs - Student Version