Sales & Distribution Management ( 1.Y.B.M.

S )
M.S.) (Sem.M
agreement' with the doctor who prescribes drugs which are bought and sola Market Analysis & Selling
nd sold by
5
retailers. im to
him place an order, This is an
innovative
The final close in such cases depends on timely follow-up, abilities to
to pursue
example, a co
consumer may be interested in approach because the suggestions. For
and persistence. The salesperson/ sales team should try to score on as
as many
ilful salesperson may suggest that the purchasing a window air conditioner. The
ather than a window airconditioner.
prospect may rather buy a split airconditioner
possible and close the sale at the most appropriate time. rathe There are
evaluative criteria as
shsolutely noiseless, it will not block any window,many benefits in this. Like, it will be
ab
5The Objection Close repa work will be done from outside and
installation and any
maintenance
room privacy will not be
In this method, the salesperson uses an objection by a prospect, or, rather
9. Side Close
disturbed.
an
answer to an objection to conclude a sale. The answer to the objection is utilised
a stimulus for decision making or to buy. If the sale presentation is progres.
Often, it happens that even after the
sales presentation, the seller and the
Ssing fail to agree on
many points. This may include the basic
buyer
to be a major hindrance
smoothly but an objection raised by the buyer appears the or points like features, colour, size, delivery,
product itself and side issues
salesperson may handle it tactfully. payment schedule etc. These apply to
FMCGs, consumer durables and finished industrial
6rial Close products or office equipment. The
salesperson realises that the differences on the side points are
As the name indicates, a trial close is not the final close; it actually means 'tryine
overshadowing the
decision on purchase of the product. He, therefore, concentrates on those
ying asks inviting questions.
points and
to sale even before the sales presentation is complete. This is a kind of
close' a pre
emptive closure, i.e., an effort to close the sale when the presentation has made good When the side points or issues settled
are or closed, the sale may also be closed.
progress so that the prospect may not raise any further objection. The salesperson should always focus those side
on
points which may convince or

The advantage of thismethod is that if the prospect raises further objection, the satisty the buyer sooner.
presentation can still continue with the intention to close the sale. The objective of a 10, Alternative Close
trial close is to try to get a clear signal from the prospect at an appropriate time and The alternative close is similar to, and can also be called an extension of, the
not
to prolong the presentation. side close. This method is used when the prospect is
willing to buy the product but is
(7Concession Close indecisive about a few related points or issues quality, features,
delivery
etc. TTo
lead to decisions on these
points, the salesperson suggests two alternatives to choose
This is of the
one
straightforward and commonly used methods of closing a
more
from. Suggesting too many alternatives may confuse the prospect and again push him
salegiving a final concession to seal a deal. A concession is actually an inducement
to the
into indecision.
buyer to buy. Therefore, this method of closing is also known as the
inducement close'. A more common This prospect is guided to choose one of the alternatives and this should lead to
way of giving a concession is price discount.
After the sales closing the sale. This is one of the commonly used methods. The buyer gets the
presentation is over and most of the relevant issues have been
discussed and the prospect has shown some satisfaction that he got the choice/alternative he preferred.
willingness to buy, the salesperson may
try to convince him by offering some concession.
Concession or inducement need not be only in terms of REASONS FOR UNSUCCESSFUL CLOSING
various other forms as well like deferred price; it can be in

payment or credit with attractive interest Every salesperson aspires to close every sale successfully. But, in practice, it does
rate, free home delivery product, the form o, extended warranty not happen. We have just mentioned about the success rate in closing. There can be
or
guarantee etc.
Depending on the nature of the product, the form of concession or inducement may many reasons for failure or unsuccessful closing. Other important reasons that are

vary. interrelatedare
8 Suggestive Close 1.Wrong attitude
is vital tactor in the failure of a close.
Sometimes, a salesperson may not give a direct concession, but indirectly ofter The attitude of a salesperson a success or

AS the positive attitude is likely to make a close successful, the wrong or negative
inducements in the form of suggestions which may appeal to the
buyer and induce
 em - & Selling
he attitude or apnr Market Analysis
make it unsuccessful.
attitude is more likely to
wrong and negativn
oach of ell informed, 53
salesperson sets the tone of a sales talk, or presentation. e their minds and
can be worse. Even positive remarks or statemenis or a prospect atitudk
may b
lo
quickly. But the
salesperson
fast decision makers. They
may think that he
wish to close the

misunderstood, and this may easily affect the outcome. presentation

meticulously
before close. This is must go
through the entire
ind. The prospect may teel that it
mind
is
a
wrong reading of the prospect's
wrong
2. Incomplete preparation or presentation wastage of time and the
another factor recu
to close on time. He
may ultimately abandon the salesperson lacks Skill
entire sales
Incomplete preparation presentation can be
or in
proposition disgust.
unsuccessful close. Some salespeople do not prepare
their sales talk or
heir sales or pres.

in their presentation. All stages ofpresentation

the
THEORIES OF SELLING
well or thoroughly and this reflects
presentation, handling obiees.
selling Theories of
selling are essentially behavioural
process like introducing or prospecting, ections theories. Three
and executed step-by-sten generally distinguished major theories are
demonstration etc. should be carefully planned in
logical sequence. If this is not done,
there may be discontinuity or lanse 1. Stimulus Response Theory
-

affect the outcome.

Thi
disrupts the attention of the prospect and may ultimately 2. Product Orientation Theory
3. External interruption 3. Need Satisfaction
Theory
Sometimes discontinuity or lapse may creep in a sales presentation because of 1. Stimulus Response Theory
external interruption. The sales presentation may be progressing smoothly and th
According to the stimulus response theory, if the
of salesperson uses the right
salesperson might have even taken the prospect to the point closing. At this stage strength, the buyer will respond the way the salesperson wants, that is, buy the
suddenly an interruption occurs in the form of visit of relative or friend of
a a
th product.
prospect or family, and there maybe discontinuity or break. The prospect may not b
More common stimuli the salespersons use or offers are:
in a mood to close the sale immediately and may even ask the salesperson to com
some other time.
Personality projection: Physical appearance, mannerism, skills, etc.
Product campaign: to present the company's product as leading or with the
4. Misinterpreting the prospect price (but not overdoing it).
Some salespeople misunderstand or misinterpret the prospect during the sale
Competitor killing: To bury the competitors products/brands skilliully
talk or presentation. Prospects may make observations, make
observations, mak
statements or ask questions. These should be understood in the Price concession: Sales people generally do not have much discretion to
right perspective. The concessions, but some leverage is available with them.
salesperson may try and get a positive indication or signal.
5. Eagerness to close Preferential treatment to selected customers: Special treatment to
Customers buying volumes, making timely payment, showing loyalty to the
Sometimes, misinterpretation of the prospect occurs because of too much company, etc.
eagerness to close sale. Some
a
salespeople do not have the patience Stimulus Response Theory assumes that if the salesperson makes the right
perseverance to lead the presentation through to final closing. At the slightes presentation he positive response trom the prospect. The sales person does
positive response from the prospect, the sales-person tries to hurry through t
can get a

of the without knowing the needs of the prospect he gives detailed

closing. This may
most taking,
easily misfire because the
prospect might think that the decision He tries
explanation of the product and then asks the prospect to buy the product.
an

being forced on him. alternative way to sell in case the prospect does not agree to buy the product.

6. Untimely close door to door sales person, training

This method is used by telemarketing people,
is non-technical and the time for presentation is
The eagerness to close often leads to untimely close or salespeople, when the product
early close. If the sale new
favourable.
not closed at the appropriate moment, it is most However, giving the same presentations to all prospects will not be
likely to be unsuccessi0 Snort.

Sometimes, untimely close may also mean delayed close. Some prospects may
54 M.d.) (Sem
Market Analysis & Selling
Drawback of Stimulus Response Theory
a) The salesperson does not find out the needs of the prospects by askin. 3. Need Satisfaction Theory 55
king hin
questions and listening. AcCording to the need
satisfaction theory, the
b) The sales person provides complete information about the product ss mutual satistaction, i.e. both the
selling process is expected to lead
uch the theory, unlike the other two buyer and the seller get satisfied.
features, benefits which may not be useful to the prospect and he maui In other words,
lo0 theories, is based on a win-win
interest in buying the product. According to the need
satisfaction theory, the assumption
prospect's needs and salesperson should ascertain the
The stimulus response theory assumes a passive role of the buyer in the expectations
chould caretully note the buyer's before he or she proposes
selling pro-cess. And because of this, in many cases, the theory may not workentin
oses a sale. The
T salesperson
points and objections, if any, and then
in to the
1ueries
qu to satisty him. The buyer or the answer
customer may give salesperson at a particular moment due to lact prospect has a much bigger role than the
awareness. The customer may be pressurised momentarily. But this may or may salesperson in the
interactive process
-major part of the conversational time is
give any long-term sustenance. consumed by the buyer. Still, the salesperson has
explanation skills are visible at this stage to satisty him. Presentation and
2. Product Orientation of selling.
Theory This method is
challenging and creative form of
presentation in which the salespersons starts with selling.
This theory assumes that the buyer is not aware of It is an interactive sales
new technologic
developments and it is for the salesperson to make the buyer aware. In doing so, h asking situational, problem identification, understanding buyers need by the
or she would be able induce the buyer to buy or use his or her
to problem impact, solution value and
product. Unli confirmation questions. After understanding the needs and
clearly, the salesperson gives a written proposal to show howproblems
stimulus response theory, which should be generally of the buyer
aggressive in style, the sales
person in product orientation theory relies more on presentations and can solve buyers problem better than a
a
product or service
He can sometimes
explanationg competitor. This is done in the following
apply subtle psychological pressure. This selling approach is mon ways
commonly used for pharmaceutical products, computers and project marketing. a) Feature
Manufacturers work on the assumption that
products, when produced in The salesperson describes the characteristics about the
product, service or
sufficient quantities and at the correct
price, generate consumer demand. When sale market offerings.
fall, the response is therefore simply to lower further through increase
prices b) Advantages
productivity. It is
simple philosophy and highly effective in situations whert
a

demand exceeds the supply. The salesperson describes how the feature help
can or give advantage to the
prospect.
The limitation of the
product orientation theory become apparent as the marke c)Benefits
becomes complex, competition intensifies, and
customer awareness increases abou
direct and indirect substitutes. Because the The salesman describes how the feature or advantage makes the details clear
the
salesperson is not always able to relat that
product or
product concept to the buyer's complete
new are expressed by the prospects.
understanding, he or she is often confronted with product or knowledge This method is mostly accepted by the prospects as it focuses on customers
buyers with no brand price objections unlike stimulus response that focuses on the salesperson. It has a high level of sales
loyalty.
The production orientation ettectiveness.
centres
around mass production of the product management
of the marketing functio
This theory envisages relationships that lead to a happy and satisfied customer.
itself, continuous cost reduction and
innovation forming the basis of produg This approach emphasises the need to develop 'professional partnership between
marketing strategy. Such an approach is ven the buyer and the seller. Many feel that, only through this, buyer-seller relationship
effective where demand far exceeds
supply, but the techniques employed are
duplicated by competitors and the tactic is vulnerable eas can yield profits to the company.
to
problems of consumer-product "fit". marketing myopia an
 Sem
Sales & Dstrivu

Analysis & Seling

In fact, Market 51
each other.
exclusive to in reality
are not Communication Checkist
selling in combina.
ne three theories on

times, use all the

three
theories
ination f The salesperson should use
Siespersons may, many a communication checklist for the proper
ouelopment of communication. The checklist should be in the form of questions
successtul completion of a sale.
askedby the salesperson to himself to ensure that the communication is on the right
track. The checklist can be as follows
SELLING SKILLS
selling skills are ren. al Do l agree or disagree with what others say?
tor every form of selling and at every stage of selling.
are the types of sellino.
equired
The tollowing skil b) Is any of my behaviour will annoy people?
The skills difter from situationto
situation.
c)Do find it difficult to start a coversation?
thatthe salesperson should possess
d Aml conscious about the language?
Communication
e) Do I respect other people's time and interest?
Skill
Listening The answers to these questions reflect the salespersons attitude, approach,
Contlict Management Skills discipline and bias in communication process.
Skills
Trust building 2Listening Skill
Problem Sovling Selling
Skills Skill
Skill Good listening skill is an essential part for effective communication. During the
sales process, too much of sales talk may result into a negative image as it depicts the
salesperson's eagerness to convince the customers without attending to their
Negotiation problems. Listening skills not only means patiently listening but also implies the
Skill
ability or capacity to remember the content of communication. In selling, there
should be follow-up meetings, discussions. It is found that people often mix the
to be taken. The listening
1. Communication Skill sequence and content of communication where care needs
Communication skill or the ability to communicate is a basic requirement process to be followed as under
every form of business, more so in selling. In order to have successful sales, the sals a) Attention

people should communicate on regular basis with the customers, intermediaries such This is the first step in which the customer initiates or reacts to salespersons talk
as retailers customers. distributors, etc. Communication with the customers is the offer, presentation,etc. The salesperson makes a note of it or pays attention to it.
most important
b)Interpretation
Communication Process said. It tries to
It involves the meaning to what the customer
assigning
Every
salesperson should understand clearly the communication process betore understand what is told by the customers.
developing its own system. Communication process is defined as
exchange of ideas c)Remembrance
thoughts or information between two individuals or parties. The communicatio reierence by
or contents for the follow-up use or
process begins with the objective of It means storing the messages
achieving sales. During the communication both the salesperson and the customer.
process care should be taken by the
salesperson to use easy language and avoi
double talks in order to avoid miscommunication d) Evaluation
between the salesperson and th
customer. In case the technical In this salesperson evaluates the overall perception of the customers through
language is used by a salesperson he should ensue
that the meaning or the same is clear to the
customers. queries, opinions, interests, etc

TY.BMS - Sales & Disnbunon Management (Sem -

 Sales&Distribution Management (T.Y.B.M.S)
Sem- Market Analysis
& Selling
59
58
Negotiation Skill
responds expressing hie 4.
e)Response
listening to the customers,
the salesperson
opinion
the date and plan
and This is
specialised skill.
a
Negotiation
is common in the business of industrial
After price, conveying
the companies nroducts whether at national or global level. There are different strategies of
making an offer or accepting
detailed sales. negotiation. During negotiation of business and use of a particular strategy, the
negor
ICcess depends on the skills of members of the negotiating team. It involves both
suc
Types of Listening
skills and strategies.
a) Content listening feedback. The salecn.
feedback. salesperso 5. Problem Solving Skill
reaction or
most passive
without any
This is the customer. The listener receive
makes a
communication to the potential the Sales manager and salespeople may be good in building trust and relationship
him and makes a
note of the content. does
He does not read
not.
with its customers. No salesperson can develop a perfect relation with every
information conveyed to
interested in the message. Example: listening to salesm.
sman
immediately as he is not customer. Even if the relationships are good problems such as simple operational
vacuum cleaner.
at the door for selling a technical problem
who comes problem, or financial problem
arise. There should be a
can
solution to the problem for which problem solving skill is required. There are seven
b) Empathetic listening
habits that can help in becoming better problem solvers, they are as under
This is the positive listening as the listeners response is active. It understands th
The listener may or may not be interested in th a) Be proactive rather than reactive, be positive rather than negative, take
meaning of the talk and its feelings.
content, but shows the sales person that
he is not interested as a result the sale initiatives with new ideas and solutions.

person does not proceed with the process further. b) Begin with an end in mind. The objective should be clear.

c)Criticallistening c)Put first things first. Give priority to emerging problems.

It is the most active listening. The listener takes interest in understanding and d) Think win-win and not win-lose that may cause many problems.
evaluating the speakers message: nd its implication for him. This involves interaction e) Seek first to understand then be understood.
between two parties, i.e. the speaker and the listener. Sales presentationsf
fBringout the best in everyone.
industrial products, customer durables, FMCG products involve critical
listening.
3. Trust Building Skill 8 Renew the four dimensions of personality l.e. physical, mental, spiritual and
social.
Trust like
relationship is important in selling. Trust and relationship go together.
6. Conflict Management Skill
Salesperson should
develop special skills to build trust between them and customers
Development of trust between a buyer and a seller mostly depends on the In sales organizations contlicts are unavoidable. This can be positive and
factors following negative. In sales conflicts can arise due to disagreement of targets, objectives and
a) priorities etc.
Competence level of the seller to build trust as it reflects the
the
product, capability as a salesperson and resources knowledge d Conilicts can also arise between a customer and a salesperson or a company and
at his company
disposal. its channel intermediaries.
b) Truth of words used Types of Conflicts in Sales
by salesperson is established by the
communication and commitments made credibility Conflicts can be of different forms or types. It can be at various levels. At the
by the salesperson.
c) Predictability of seller's action. organizational level, i.e. among the managers, conflicts can be of five diferent types:
d) Mutual commonness between 1. Task Conflict
the parties.
e) Putting buyers interest on the disagreements between the managers
These the content of the
par with the sellers
interest.
are over job,
may be among sales managers at different levels.
 Sales &Distribution Management (T.Y.B.M.S
60 S.) Sem-V
Analysis & Selling
2. Market
Process Conflict
This is a Conflict over how best to pertorm a task a
hoice
cho
betweeen SELLING STRATEGIES 6

the
alternatives. selling strategies convert sales efforts into
3. Relationship Conflicts OurCes, both tinancial and results. Sales plans may be made,
managerial, may be
deployed, and then the strategies
These among sales managers, peers,
seniors and subordinates required
are
to convert all
these into actual
sales or
are common
ategies required
strate tor
achieving the particular targets performance. There are specitic
4. Functional Conflict There and also for different sales
cituations. are common
strategies that can be used by
This relates to a professional class among different functions or operations
like The following
are the different types of organizations for selling.
between marketing and finance.
selling strategies
5. Dysfunctional Conflict
Hard-sell Vis. Soft Sell
t is negative conflict and aifects the functions, operations and performance.
Strategy
Methods to Resolve Conflicts
Conflicts, whenever arise, should be resolved on time, in the larger interest o
business and sale. Nader and Todd have identified eight methods for handling Negotiation Selling Client-Centered
Skill
resolving the conflicts: Strategies Strategy
1. Lumping
Win-win Product-Price
t is the
inability or lack of desire of one party to pursue the complaint. The Strategy Strategy
problem is ignored and the relationship continues.
Avoidance
1. Hard-sell V/s. Soft-sell Strategy
It refers to exit from the relationship between the two parties. In strategic selling the focus is on customer or company. Focus on customer
3. Coercion
means toCus on company because the ultimate purpose of selling is to serve the
It is
imposing the decision or view interest of the company. These are the only two approaches or strategies for
point of one party on another. Usually the
weaker party accepts the decision. selling:
4. Negotiation a) Focus on company
It recognises the role of both the parties It is a hard-sell strategy. which ismore like a pushstrategy. It is doing things
in settlement of conflicts. The settlement
of the issue is
acceptable or satisfactory to both the parties. during a sales effort or presentation for pushing the product.
5. Meditation Features of Hard-sell strategy
This the resolution of conflict
means I t has concern tor the company.
by third party who helps the two parties
reach a settlement. I t is a one way presentation.
6. Arbitration I t tocuses on talking than listening.
There is a third party, who is a arbitrator. He is I t pushes the product.
his decision is accepted by both the
appointed on mutual consent and
parties. I t describes the features of
the product.
7. Adjudication It advocates without acknowledging.

legal process for dispute settlement. The adjudicator

It is a
has the to
authority
intervene and give a decision that is binding on both the
parties.
 Management Y.B.M.S.) (Sem.-
(T. Y.B.M.S.)
& Selling
62
Sales &Distribution Market
Analysis
63
Efforts are put on research and development by the seller.
b) Focus on Customer the
which is like
a pull strategy.
It induces
customers
custon-

Selling tactics are influenced by the past

is a soft-sell strategy,
competition and current situation performance of product,
to ask for the product.
b) Client centric selling:
Features of Soft-sell strategy
customer.
I t emphasises on knowledge level of client.
for the
I t is concerned
listening
than on talking. The efforts of the seller is on research and development of relationships
on
It focuses more
with clients.
opportunities.
It provides buying Sales
benefits. representatives raises clients expectations of personal excellence.
presenting the product
It emphasises on Strategies and tactics are directed to future growth and developments in
needs.
It acknowledges the the clients world.
Soft-sell Strategy
Hard-sell Strategy 3. Product -price Strategy
Concern for the customer
The general principle of selling is higher the quality of the product, higher the
Concern for the company
Providing buying opportunities price and vice-versa. Products like Ray-Ban, BMW, Swiss watch have high prices.
Pushing the product
Welcoming questions The customers are willing to pay high price for these products due to the high
One-way Presentation
such as
Listening than talking quality. On the other hand, there are low priced and low quality products
Talking than listening Chinese where the quality is low.
Presenting product benefits detergents,oils, biscuits, local brands, products
that is
Narrating product features low income group Customer may buy low priced or low quality products,
Acknowledging needs quality. The golden rule of
Advocating without acknowledging affordability and he accepts or compromises on

buy consumer goods

Distribution Management, Excel Books, New

affordability and acceptability is whether the majority buyers
of
Source: 5. L. Gupta, Sales and or industrial goods. This is the product priced strategy.
Delhi, 2005. P. 5 (Fig. 1.3)]
4. Win Win Strategy
If enough
win-win there must be satistaction of both the parties.
strategies
In
2. Client-centred Strategy customer he feels satisfied. The salesperson
also becomes happy
value is created for
In real life situations win-win situations
do
Client centred strategy is more customer-oriented ten the soft-sell strategy. It as he made the sale with desirable profit.
cannot be found.
This strategy applies to industrial products combination
assumes that the customer is the supreme. not occur automatically because the product price
of their
where each dlient is identified clearly and some of them can be very large buyers. not able to correct quality positioning
This happens as companies are factor also correct
These buyers require constant attention from the seller for new orders, delivery of is not one. At times due to cost
product and appropriate pricing
should try to solve these problems
and strive for right
goods, payment related issues, after sale service, maintenance service, etc. pricing is not done. Companies
a successful
win-win strategy. Win-Win strategy also
The sales company has to ensure them that they always with them and for the product price combination and
services they require. In case of conventional selling, the approach is product requires a win-win approach.
oriented, in this it is client centred. The sales executives should orient themselves to Features ofwin-win approach are:
shift in focus. It can be of two types and customers are equally impotant.
a) Both the company
a) Product centric selling:
b) They are positive in approach.
I t emphasis on product knowledge and feature. blames.
problems that
causes
C)They fix the
The sales representatives seeks to be accepted reliable respecting others.
as source o d) They believe in
information.
 64
Oem.
Market Analysis & Selling
them.
eThey make commitments and keep
and plan for the future ii) Compromising
in the present
D
They learn from the past, live 65
and helpothers to solve them too. tassumes that win-win solution is not
8 They solve problems negotia sotiating strategy that possible. The
unable to adopt this strategy end up with win-loose approach involves a little bit compromiser adopts the
Companies ted by persuasion and of
dominated
winning and losing. This
Features of win-lose approach: acceptableotable solution which understanding. The
objective is to find
strategy 15

may not
fully but partially
a
mutually
a) For them company comes first and then customers. appranrOach means that both parties satisfy the parties. This
adopt mini-win-mini-lose
b) They have a negative approach. iv) Controlling strategy approach.
In this strategy the
c)They fix the blame. necessary steps are taken to ensure
d) They have respect only for
themselves. obiective is fulfilled irrespective of mutual that the controllers
a win or lose, with winning relationship. The negotiationviewed as is
e) They make false commitments.
being equal to status and
uses the power or ag8ression competence. The controller
They live in the past. necessary for winning.
appropriate to defend the position that is believed to be
g) They see problems in selling. v)Avoiding
5. Negotiation Strategy It implies evasiveness that may result into frustration for both the
Negotiation strategies are used in business to business selling. The larger the Personal or
corporate goals are not parties.
met nor are the
maintained. It is interpersonal relationship
individual transaction, the more important is the role of negotiation strategy diplomatically, diverting an issue till a better time. It
simply
Successful negotiations end in win-win situation. In reality, one sides gain is othe withdraws it from the
threatening situation. It is a lose-win posture in which the
sides loss. But they are not always visible as they are shadowed by the overall avoiders stance is to leave-lose
allowing the other party to win.
outcome that satisfies both the parties.
There are five negotiation strategies:
DIFFERENCE BETWEEN CONSUMER SELLING AND ORGANIZATIONAL SELLING
i)Accomodating CONSUMER SELLING ORGANIZATIONAL SELLING
This involves
maintaining relations between the two parties at any cost. This
1. Consumer goods
receives high priority. The outcome of
negotiation or achievement of goal will
are general, the(In case of organizational selling, the |
receive second priority. The right ways of salesperson should have the salesperson must have complete detailed
protecting relationships with the other knowledge about special features or knowledge
party are giving in, appealing and avoiding conflicts. This is the about the product
yield or lose-in attributes. specitications, quality and suitability to
strategy in which the accommodators strategy towards conducting
negotiation o the buying organization.
managing the relationships is to yield-lose, allowing the other party to win.
i) Collaborating 2. For consumers the product or brand The salesperson has more knowledge|
It is important and not the company. about the company than required for
manages the negotiation by maintaining inter personal relationship and ensure The knowledge of
that both the parties achieve their personal corporate selling to consumers.

goals.
Both the parlie company is essential.
recognise that differences exist, but both the sides
skills
apply appropriate negotiation
to manage the situations. It is a
co-operative approach that implies to both
3. The salesperson only has to assess The salesperson should closely study the
parties, a win-win stance. For settlement the only the mood or behaviour pattern buyer-concerned divisions or units and
positive attitude of collaborators are
important. of the buyer on the spot and decide people to be successful.
his course of action.
66 Sales & Distribution
Management (T.
M.S.) rs.(Sem-
Y.B.M.S.)
Analsis & Selling
Market
4. The interaction procesS betwebn
ne interaction process between the the are 67
salesperson and the buyer is compley Agents
normally local
salesperson and the buyer is simple. companies or Agents
individuals or as a play an
important role, they act
takes place in all sales catalyst for product
Negotiation is short and confined to Negotiation o
organization They can be promotion or
schedules, payme big market
price.
price, delivery
mechanisms, etc.
international operators. development.
6. They have free access.

sale. Relationship building is long term, They are regulated by the

6. Relationship building is sale to
information or trading blocks. regional
useful. Marketing intelligence skill is essential
Marketing intelligence skill is
follows "credit and carry" schem
8. It follows "cash and carry" schemes. It emes QUESTIONS
Credit facility can be tor 3-6
Cash payment is on spot. month 1. Explain in
brief the market analysis.
h salesperson should be well
verse 2, What is sales
with different modes of payment sucha forecasting? Explain the methods of sales
(Refer Pg. no. 31, 33) forecasting.
cheques, demand draft, letter of credit
3. Discuss the types of sales quota. November 2016
9 Sale closes on the spot as the Sale closes much after the actual sale a 4. What are the factors
aument and delivervy takes place sale is compiere Ony
determining fixation of sales quota?
dile dEVEry 5. How is assigning territories to sales
people?
made and payment is realised.
simultaneously. What is
selling? Explain the process of selling.
6.
10. They do not require after sale service After sale service is required
the methods of 7. What are
except for consumer durables. Salesperson has to be the focal person closing a sale?
8. Explain the reasons for unsuccessful
rendering satisfactory service after sale. closing.
9 Discuss Stimulus Response Theory
10. Discuss the Product Orientation
Theory.
DIFFERENCEBETWEEN NATIONAL SELLING AND INTERNATIONAL SELLING 11. Discuss the Need Satisfaction
Theory.
12. Explain the Selling skills in detail.
(Refer Pg. no. 56) November 2016
NATIONAL SELLING INTERNATIONAL SELLING 13. Discuss briefly, the
selling strategies.
1. National business id limited to the The international business is sprea 14. Difference between Consumer Selling and Organization Selling.
domestic territory. 15. Difference between National
globally Selling and International Selling.
2 The competition is restricted to The 16. Explain the following concepts
competition is on global level. i)Win Win Strategy (Refer Pg. no. 63)
national or local or regional level. November 2016
ii) Activity Quotas (Refer Pg. no. 38)
November 2016
3. The national business is conducted
in local currency which is stable.
The international business is conducte
in foreign
currency that implies th
exchange rate fluctuations. OBJECTIVE QUESTIONS
I. Fill in the Blanks
4. Risk and uncertainty is more
Risk and uncertainty is unpredictable. 1. Information can be collected through sources such as government,
predictable. on
the
trade association reports, industry, sales tax department, etc.

affects profitability.
 68 Sales&Distribution Management (T. Y.B. M.S
.) Sem. Analysis & Selli
Market
. sales enables a company to
make intormed business deri..
forecasting
medium term lona.
isiony 10.
The stimul response thed
Sumes 69
A. can be for immediate future or for short term, or
long term selling process.
a
passive role of the
buyer in the
market survey or research method. entire
. method is also known as

6. The manager makes his own estimate. True: 1, 3, 5, 6, 8, 9, 10

ANSWERS
data.
7. is a smoothing technique oftime series False: 2, 4, 7

3 are the sales goals set by the company for its marketing units for
for aa certain
duration of time. II. Match the columnns
9. .
is defined as: Sales Value Cost of Goods Sold.
A
10. are carried out when the salespeople not only have to carry out sel.

activities but also non-selling activities.

ellin 1. Listening skill
B

a) negative conflict
ANSWERS 2. negotiation skill
b) pull strategy
1. market size 2. Competition 3. Accurate
3. Dysfunctionalconflict c)satisfaction of both the parties
4salesforecast 5. Consumer Survey 6. regional
4. hard sell strategy
7. Moving averages 8. Sales quotas 9. Margin d) cash and carry schemes
10. Activity quotas 5. softsell strategy
e)credit and carry schemes
6. win win strategy fRisk is certain
I. True or False 7. consumer selling
1. The
g Attention
specialists have in depth knowledge about the product, market and industn 8. organizational selling
2. Consumer survey method is used for branded h) act as a
catalyst
goods . 9. National selling
3. Expense quota is i) push strategy
usually fixed as a
percentage of sales so that more the sak
more can be the selling expenses. T 10. International selling
4. The future of sales
)specialized skill
quota is fixed based on the current sales.
5. Sales quota (or sales
ANSWERS
goal) for each salesperson can be decided based th (1-8), (2 -j), (3 a), (4- i),5
on
-b), (6 -c), (7 - d), (8 -e), 9-, (10
-

company's share of market potential of the h)

territory.
6. The sales
manager should judge the effectiveness of a
the salesperson's social, cultural, and
salesperson by compani
territory. physical characteristics with those of
7.
Over-projection is always helpful.
8. The final close in such
and persistence.
cases
depends on
timely follow-up, abilities to pu
9. The alternative close is similar to, and
side close.
can also be called an extension ol,
 70 y.B.M.S.) (Sem.-y
Sales & Distribution Management (T. Y.B.M.S.)
Distribution Channel Management
Bold- ppt
ISTRIBUTION CHANNEL T 71

ictribution channel (also called physical

Distr

channels) distribution channels or sales

3 or
cade
tra
ement. A
constitute
distribution channel
an
important
is
factor
the chain of
or link in
channels
effective sales
Igh which good or service passes until it
a businesses intermediaries or
reaches the end consumer.
DISTRIBUTION CHANNEL distribution channel can include
A

orsand even the internet. These wholesalers, retailers, distributors, agents,

are called intermediaries
hannels connect the producers to the ultimate
MANAGEMENT Cha middleman. or

h goods move from the

consumers it is the route
through
point of
production to the
consumption. point of ultimate
When goods reach consumers
-tdtotfetoetetetttdt+at+t*dtttotestne- through various intermediaries, it is called
lndirect selling. In indirect selling, as
goods reach final consumers
distribution channel. When the manufacturer sells
through the
called direct selling, direct selling is directly final consumer it is
to
SYNOPSIS are one level, two levels and three levels
also called as a zero level channel. Then there
channels depending upon number of
Distribution Channel intermediaries involved in the distribution channel.
Management of Distribution Channel The levels of distribution are shown in the figure
given below:
Need of Distribution Channel
Need for Channel 0-Level 1-Level 2-Level
Management 3-Level
Manufacturer Manufacturer |Manufacturer Manufacturer
Channel Partners and their Functions
Difference between Distributor and Wholesaler Wholesaler Wholesaler
Choice of Distribution System
Jobber
Distribution Strategy
Factors Affecting Effective Management of Distribution Channels Retailer Retailer
Retaile
Channel Conflict
Conflict Resolution Consumer Consumer Consumer Consumer

Motivating Channel Members

Selecting Channel Partners A distribution channel needs to be managed well. It requires constant
Evaluating Channels monitoring, motivation and control of the channel to ensure efficiency and healthy
Channel Control channel relationships.
MANAGEMENT OF DISTRIBUTION CHANNEL
The channel management service refers to how companies build tailored

DUsiness streams to more effectively manage their business within and across

nannels, setting investment priorities and key areas of operational focus; managing
 Sales&Distribution
Management
B.M.S.) (Sem.-
(T YB.M.S Distri Channel Management
73
to better and
an

Supply of Information
services

the right
products
and
more 1.
channel
conflict: bundling
for
Channels provide intormation to the company about the market new producU
protitably serve customers.

is a process by
which a company

specific
creates

channel
rmalize brand,
newnew
competitor, changes in customer preferences etc.
Channel
management
customers
within a 2 Product Promotion
servicing
for selling and the channel ution between
of distribution
programs

individual
entities
comprising Promoting products/ brands of the
company in their areas of operation is another
Number of important role of channels/intermediaries.
is called
Channel length
the distrih..
producer and same
bution
consumer

providing
entities
available tor
distri Financing of Operations
Number of different
retailer) at
different stages in a
ribution
distributor,
wholesaler, or Some channel members finance producer's operations by marking advance
function (as a
as
Channel Width.
payment for the company's products.
channel is called

DISTRIBUTION
CHANNEL (4) Maintaining Price Stability
NEED OF that the commor
needs a good distribution
channel so
nodit Intermediaries often help to maintain price stability in the market. This is done
Every organisation
right time as per his convenien.
and at the hy absorbing the whole or part of the price increase by the manufacturer.
reaches the customer at the right place
the product from manufact
functions to be carried out in moving Title of Goods
There are many often, 5.
functions each require funding and, specialie
Those
to the customer.
Many intermediaries take title of the goods from the manufactures and do selling
knowledge and expertise. in their name. This helps to distribute the market risk between the producer and the
the product and the consume
Distribution channel add value to selling or
intermediary.
time utility and possession utility.
Value addition takes place through place utility, 6. Creation of Place, Time and Form Utilities
below shows direct marketing system and a marketing system wit
Figure Distribution channel creates utilities like place, time, form and possession.
intermediaries
Goods are available at all places, all time, in various forms and sizes because of
distribution channels.
Producer C
(A) Producer A ProducerB
(7 Holding Stock
Distribution channels hold stock and break the bulk by supplying goods in
smaller quantities to the customers.
8. Promotes Efficiency
Retailer a Retailer b Retailer c Retailer d Retailer e Retailer f
Due to expert knowledge and experience the intermediaries are able to promote
(B) Producer A Producer B Producer C efficiency in their work.

NEED FOR CHANNEL MANAGEMENT

Distribution channel has to be managed well as it will lead to :
O
Retailer a Retailer b Retailer c Retailer d Retailer 1. Channel Efficiency
e Retailer f
Distribution Channels or intermediaries not An efficient channel with smooth functioning will ensure timely sales and
only add value to selling but perto
a number of other functions which
are
very useful to a company. Five such business. A channel needs to be monitored and managed continuously to se that all
are: functio
the channel objective of increased sales
partners have a common

oT.Y. B.M.S. - Sales & Distribution Management (Sem. - V)

74 Sales&Distribution Management (T.Y.B.MS.)
M.S.) (Sem.
Distribution Channel gement
2. Reduced distribution costs
Effective channel management can help in reduced distribution cost channel partner: it can
to
he depend on to 75
company. For example, through accurate forecast of demand for goods, co
osts
are sold quickly.
continuously provide it with great
inventory and storage can be reduced. Types of hannel Partners t produc
ducts that

3.Roleclarity The basic types of channel

partners are:
An efficient channel management ensures role clarity among various char 1. Wholesaler
members that there is no friction between the channel partners and each on
nanne
so
one i A
wholesaler is an
ellers ratherintermediary
in
the distribution
able to periorm their job well. and sells to
channel who buys
than to in
4Reduced channel conflict consumers. bulk
wholesalers buy and resell
Channel management also takes care that the conflicts are minimized as far iadustrial, institutional and merchandise to retailers and other
commercial merchants and to
ultimate consumers." Cundiff users, but do not sell
possible and if conflicts occur between channel members, it is sorted at the to
stages betore the conflict becomes a serious issue.
earlie & Still. in
significant amounts
The wholesaler, or the
wholesale
trader, is trader, who
5. Ensure timely delivery of goods large quantities trom manufacturers and resells a
purchases goods in
to retailers in small
A well managed channel will guarantee delivery of goods at the right time at th quantities."
right place. Wholesaling is concerned with the activities of - SE Thomas

6. Ethical practices that sell those persons

merchants, and/or industrial, establishments
to retailers and other or

Many channel partners use unethical methods commercial users, but that do not sell in institutional, and
to increase their revenue.
Fo large amounts to final consumers."
example, supermarkets require the manufacturer to pay fees that is to place
some

manufacturer's product on the store. Channel Bureau of Census

-

US
management would enable smooth Wholesale businesses sell physical
flow of goods from producer to consumer and will inputs and products to other
businesses.
help in eliminating unethica Wholesaling is closely associated with tangible
practices in channels. goods.
Wholesalers, whether freelance or
working for
principle of optimum results for their efforts, have thin companies, operate on the
CHANNEL PARTNERS AND THEIR minimise errors in operation, and maximise margins, and are expected to
FUNCTIONS service (effectiveness) and minimise
Marketing intermediaries, also known operating costs (efficiency). They buy the goods for resale,
as
middlemen, distribution intermediaries of price keep inventory, take risks
or channel partners are an
important part of the product distribution channel. Chane changes, negotiate terms with the companies, procure orders and deliver
them and even extend credit to their
partners individuals or businesses that make it
are
customers
it from the manufacturer to the possible for the product to move Functions Performed by Wholesalers in the Distribution
end user, Channel
Channel partners facilitate essentially facilitating the sales process )
the end user. They
change of title of the
products from the manufacturer Assembling Goods
place orders on the manufacturers, buy the Wholesalers are aware of the type, quality and quantity
on to the users or consumers. products and pass need and hence
of goods his customers
are able to place orders with the suppliers.
Many of the channel partners like the i) Distribution of Goods
only take distributors, wholesalers and retailers n
physical
possession of the
goods, they also pay for it. They are Wholesalers help in distribution of goods in a very convenient manner. The
for the stock or
inventory holdings in their responsibe
choose not only the best possession. Today, companies strive producer can take care of the manutacturing process and the wholesaler can
marketing channels
but also the best
channel Concentrate on selling it to the retailers.
strong channel partner like Walmart can
promote and sell
partners.
otherwise turn a profit for its products
producer. In turn, Walmart wants to
thát might n
work with stront
 Y.B.MS)
Sales&Diutribution Management (1 em Channel Managemen
Dutrbution

17
16 b) for tional coverage in the same town
force
i) Provides a Trained Sales in the loral 7 ral Replacing an eristing, distríhutr
trained force
for selling the products
Wholesaler provides a
are ch
sold and reach all the
sales force
ensure
that the products hcn entering a new town with
distributror network, it is
a
hese effic ient nerenary t fir
the
assess the potential for the company busines to deride if the twn can
sustain a full
railers
fledged distributor and the number of
d distrib distributors required. The twn proiling s,
iv) Marketing and Research increase awarenes about e done
therefore, done for the choen town
also conduct marketing
activities to he including the potential and the currert
Wholesalers
conduct research to
understand the prohle competitors andtheir channels operating in the town.
wholesalers also
products. Many
the manufacturer to enable him to ma
make Once the potential is understood and it is clear that the twn can
related to sales of the product and update utors, it suppont one or
ore distribut
necesary to estimate the
of servicing the cost
required changes, if any,
in the product. marken. The co
servicing the market is to be seen in relation to the likely benefit of
)Reduces Physical Distribution Cost erving that
mar using distributors. The cot elements to be considered are
from manufacturers, thus reducing the coKted
Wholesalers buy the goods in bulk Logistics cost of serving the market.
distribution for the manufacturers.
The number of outlets to be
covered-wholesale, retail and institutions.
facilities
vi)Warehousingand Delivery Frequency of visits required for the market and the outlets
Wholesalers provide warehouse and deliver facilities to stock the goods. All the
Sales revenue likely from each visit.
risk of los due to goods is thus borne by the wholesaler. Wholesalers also deliver the
goods at various retail outlets Whether the markets are to be covered with
ready stocks or orders can be
vin Credit Facilities booked for later delivery.
Wholesalers also provide credit facility to retailers whenever required but ensure The likely connections during each visit. This takes into account the credit to
hat the product sales are not affected. be extended.

viil) Advertisement The distributor becomes the manufacture's direct

point of contact for prospective
Wholesalers also undertake advertisement and PR for the product at their level to buyers of certain products. However, distributors rarely sell a manufacture's goods
enhance sales directly to consumers. Wholesale representatives and retailers generally find
ix) Undertake Risks distributors to buy products for resale.

Wholesalers undertake risks by being Functions Performed by Distributors

responsible for theft, deterioration and
obsolescence of inventory. i) Selling
Thus there a lot of facilities
sales of the
performed by wholesalers which help in increasing
The principle function of the distributor i to make products available in more
company markets. Making it convenient for potential customers to purchase products is an
2. Distributors
important marketing function. Companies that specialize in distribution have
A distributor is Contacts and business
relationships with a wide variety of sellers and
an
another entity in the distribution
intermediary
entity between the producer of
can ensure that
channel or
a
product and the products are present in outlets visited by the targeted consumers. Increased
added reseller (VAR) or a supply chain, such as a retailer, a value market
system coverage ensures customers can purchase products whenever they need
integrator (SI). The distributor
same functions that a
wholesaler does but performs some of the them.
A distributor be
generally takes a more active role. ii) Promotion
may required under three circumstances
a) for entering
a new town. While manufacturers often arrange for general publicity via press releases or
dtucles
about their products in trade magazines, distributors can take over targeted
Pomotion. Advertising that promotes a specific product at particular retailers is often
 78 Sales&Distribution Management (T.Y.B.M.S) Sen hution Channel Management
-V)
handled more
effectively at the distributor level. Distributors can arrange for discoe
OUnt only their own products,
chases for their needs.consumer
selling 79
cOupons and in-store promotions more easily because they have the contacts an would have to
and go to many
variety of productsdifferent store
contractual relationships at the retail level. Distributors can be compensated direrl
to make

of sources and
Retailers collect a

tor such
ctly from
a
number
then offer these and services
initiatives, or increase their margin with the understanding that they wi assortment enables as an
collection to their
Offeri
their customers,
carry out local promotions. decigns, sizes, colors, and pricescustomers
brands, designs,
at one
to choose
from a wide selection of
ii) Customer Service ) Breaking Bulk
location in one store.

Distributors do not have the expertise or training to handle in-depth technical

cal king bulk is beneficial to both
Support, but they can be a good first contact for customer service. Some distributor
to manufactures and consumers.
have the personnel and communication facilities to allow them to handle
Ors prefe
ship products in bulk
quantity cartons in order to Manufacturers
custome it is more cost effective for reduce
manufacturers to package and transportation
costs
as
service calls more effectively than a manufacturer. Others are focused on distribution aer. rather than smaller quantities.
On in ship merchandise
and don't have such capabilities. A manufacturer has to decide whether they woul Consumers, in turn, prefer to
handle calls themselves, have distributor handle
orchandise
me
in smaller, more
manageable quantities. purchase
general
quantities from manufacturers and thenRetailers
customer service a
them, or oroducts in larger purchase the
outsource them to third parties. offer the
naller quantities to the consumers as per their products in
iv) Market Research bulk.
requirements. This is called
breaking
Since the distributor is closer to the market than the manufacturer, distribution ii) Holding Inventory
companies collect more market information in the course of their business. Feedback Holding inventoryis a main function of
on trends, customer satisfaction and retailers in order to keep
competitors' positioning is vital in markets that has been broken down from their bulk inventory that
change rapidly and that require responses to market events on the manufacturing packaging into user-friendly sizes so that
nroducts can be made available in smaller
side. Market information from the distributors can be used to
develop new product quantities whenever consumers want
them. This will help the consumers to easily maintain a small inventory products at
features that are demanded by the customers and phase out obsolete
products. home since they are aware that the retailers will
v)Financing always preserve an inventory of the
products which they need at the store and make the products available when they
For
large purchases, financially strong distributors often handle financing for need more. This also helps in reducing the consumers cost of
storing products.
customers. Offering advantageous rates and favorable re-payment terms can increase Consumers find this convenient since they have limited
storage space especially for
sales. Distributors, who can't afford
financing themselves, may arrange it through perishable merchandise like dairy and frozen products.
third-party financial companies iv) Providing Convenient Locations and Timings
3. Retailers
Retailers choose the locations of their stores and keep them open for
A
longer
retailer, or merchant, is an entity that timings so that they are conveniently located and available to their customers for
purchases goods through various
distribution channels and sells goods or commodities in fulfilling their requirements of goods and services as soon as they require them.
small quantities directly to
consumers, with the goal of earning a
profit. v)ProvidingServices
Functions performed by Retailers
Ketailers offer services which make it easier for consumers to buy and use
A retailer is the
key person in distribution channel. products. This could be in the form of credit to consumers so that they can use a
performed by retailers Following are the functions
product now and pay for it later. This could also involve services like providing

)Providing Assortments space required for displaying products so that consumers can see them before

Manufacturers generally concentrate in

producing specific types of products:
buying
For
example, Cadbury's makes chocolates,
Amul makes
dairy products, Kellogg makes
Ketailers may also provide additional information about the
features and

oreakfast cereals etc. If such manufacturers make a decision With multi-channel

d l i t y of products through salespeople.
to customers
to have their own stores like retail stores, web
cidling, retailers offer the flexibility of multiple retail formats
 bution C h a n n e l Manageme
(1.Y.B.M.S.) (Se
Sales&Distribution
Managemen!
Sem-V
Sites and mail-order catalogues. This provides convenience and enables customer.
ndise
les
services They act as sales
personnel for the company and thus
B0
to dermand
n
in
pay
their efforts for
t h e i r

also choose to pick merchand to

proportion t o
promoting the company's products.
Customers c a n
the day or night. 3. Customer Focus
buy anytime during
home-delivered.
also get it
up at a store or Wholesalerslesalers view retailers as their key customers.
Feedback Many wholesalers concentrate
r e t a i l ihouses. In
vi) Recording and Providing which they notic big contrast, distributors work for
and feedback
from customers
tify the producers by being actively
din actual prormotion
on

Retailers document
transactions
forecasts, delivery delav the and selling in the overall market.
in the form
f sales Distributors work
to the wholesalers and
manufacturers

inventory
turnover,
and other information hey are salaried ernployees of the producer. Producers
as
if are the primary clients of
c u s t o m e r complaints,
detective items, manufacturers to modify goods and and the distributors
wholesalers and
This feedback enables the Operation
customers and increase sales.
4. Scope of
services in order to better satisfy
Distributors have a wider scope of operatíon than wholesalers. Wholesalers
Products and Services
vii) Increasing the Value of orders frorn retailers, unlike distributors,
break bulk, hold inventory,
offer Conveniens nly rely on who supply the retailers and
assortments,
Retailers provide
services, and record
and provide feedback, thue holesalers
the
as well as look for other
the opportunities
Wholesalers in
market.
locations and timings, provide and services. rarely work with small producers since they are many in the market; distributors, on
to consumers from products
increasing the value provided
ho other hand, work indiscriminately with both small and
large producer

DIFFERENCE BETWEEN
DISTRIBUTOR AND WHOLESALER
(Source
distributors-20767,.html)
http://smallbusiness.chron.com/differences-between-wholesalers
A company's supply chain decision directly affects its marketing and promotion
decisions. It is of great importance for a producer to establish a good supply channel DISTRIBUTION SYSTEM
organizations that avail
CHOICE OF
products
for its to the market. Distribution channels involve
A distribution system should be chosen very carefully keeping in mind the
users in the market. Managers should evaluate the
products for consumption by feasibility of the company, the type of product offered for sale, brand image of the
available alternatives and consequently select one that is reliable and cost effective
company, buying behaviour towards the product etc. On the basis of such factors a
A large producer may use a sales department, but for small businesses it is costly,

distinct from each other in

distribution system may be selected under the following options.
hencethe need for distributors and wholesalers, who are

their operations and roles. The three broad options in which a company can select its distribution strategy
1. Services Offered areas follows:

A wholesaler only fulfils orders from retailers and assumes no role other than 1. Intensive Distribution

satisfying retailer demands. A distributor, on the other hand, in addition to executing Intensive distribution aims to provide saturation coverage of the market by using
passively received orders, acts as a sales representative for the producer. A distributor all available outlets. The objective is to distribute the product as extensively as
actively looks out for orders from various sources in the market, executes the orders possible. For many products, total sales are directly linked to the number of outlets
and also manages returns. Whereas distributor is used.
a
actively involved in promoting a
company's productsa wholesaler is not.
Intensive distribution is usually required where customers have a range of
2. Source of Revenue
dcceptable brands to choose from. In other words, if one brand is not available, a
A wholesaler's main source of revenue is the
They purchase products in bulk at a lower
discount charged on produc5. Customer will simply choose another. This alternative involves all the possible outlets
that can be used
price
from producers and sell them 0 to distribute the product.
retailers smaller units that attract
in
charge service fees. Distributors demand
relatively higher prices. In contrast, distributod Distribution Strategy is particularly useful in products like soft drinks where
a
percentage of the net sales for
rendering Stribution is a key success factor. Here, soft drink firms distribute their brands
O g h multiple outlets to ensure their easy availability to the customer. Hence, on
 82 3.M.S.) (Sem.-
Sales&Distribution Management (T. Y.B.M.S.) (s. hution Channel Managemen!

five star hotels and

one hand these brands are available in restaurants and on dardized roducts/brands (for
kiosks, mass 83
small soft drink stalls, sweet and leather goods markets) like read
other handthey are also available through mants f o o t w e a r ,
an
will have
extensive anymade garments,
wider customer
base, whereas distribution system or longer
tea shops, and so on. channel
to reach wider a

ade products like

2. Selective Distribution tailor-m non-standardized,
designer-ware may have selective customized, or
Selective distribution involves a producer using a limited number of outletets in 3.
Markets or customer characteristics or
exclusive distribution.
It ensures more control over the outlets
geographical area to sell products. An tomer
Markets or custon
characteristics govern
advantage approach
of this is that the producer can appropriata
choose the most
ate o cases. If the customer wants
in m a n y c a s e s , product and company
them. Selective distribut.
a
high level of characteristics
best-performing outlets and focus efforts like training on
ution have to
hat its channel
e n s u r e that
members service, the manufacturer will
for a particular brand or price are able to
works best when consumers have a preference and will have to do it. provide it or else the
company
will search out the outlets that supply.
4, Competitor characteristics
distribute its products. This alternati.
Here, the firm selects some outlets to ativ nature or intensity of The
h elps 1
the selling effort of manufacturing firms on a fewer outlets. It also enable
he sellg
competition is also related to market
n relationship and influences, to a
large extent, the distribution characteristics
the firm to establish a good working rolationship with channel memDers. Selective
with channel members. Selecti
have policy of a
market coverage and mo competitors
compeo
a
strong distribution netund
network for
avE d
company. If the
distribution can help the manufacturer gain optimum particular products,
roents,
deterge cosmetics and toiletries- the especially
control but at a lesser cost than intensive distribution. company also has to adopt a similar
anoroach. But if the company is the leader and
appro
does not
3. Exclusive Distribution articular market, it may adopt a selective face much competition ina
distribution system.
Exclusive distribution is an extreme form of selective distribution in which on 5. Intermediary or channel characteristics
one or maximum two wholesaler, retailer or distributor is used. When the fin
Intermediary or channel characteristics also influence the distribution
distributes its brand through just one or two major outlets in the market, h w pattern
through their strengths and weakness, competition to the
exclusively deal in it and not all competing brands, it is said that the firm is using a distribution, channel management and channel conflict etc. company, cost of
exclusive distribution strategy. This is a common form of distribution in products an
6. Environmental Characteristics
brands that seek a high prestigious image.
This relates to the
Typical examples are of designer ware, major domestic appliances and eve general business environment or government policy or
automobiles. By granting exclusive distribution rights, the manufacturer hopes t statutory controls that are specifically applicable to the company or its products. This
includes the local and central sales tax or other similar taxes, which
have control over the intermediary's price, promotion, credit inventory and servia may affect the
sales and distribution policy of a
policies. The fim also hopes to get the benefit of aggressive selling by such outlet company.
The choice of a particular system of distribution depends on the followin
factors
DISTRIBUTION STRATEGY
1. Company characteristics
Distribution Strategy is a plan created by the management of a manufacturing
These are the
objectives in choice of distribution. A company's distribution pa Dusiness that specifies how the firm intends to transfer its products to intermediaries,
is affected by objectives of the retailers and end consumers.
company, marketing plan of the company etc. Larger companies involved in manufacturing products
2. Product characteristics Usually have a detailed production distribution strategy to guide its entry into its

These
intended market.
are the most important
determinants of a distribution pattern/system.
nature of the product determines, to a large extent, the mode of distribution
Factors Affecting Distribution Strategy ca
intensive, selective, or exclusive. efective distribution strategy is the objective of
Development of an
any

mark
NEIng or sales strategy. There are various factors that govern the formulation of a
 Sales& Distribution Management (T.Y.B.M.S) o
84 M.S.) (Sem Distrbn Channel Manageme

while
distribution strat
trategy. Factors that should
be considered
follows
developing An l e v e l

a
ce
hand
there uld be
hand and resulting compatibility betwe 85
appropriate distribution strategy are as
Customer satisfaction ervice speed,
one
on

1. Locational Demand
cost

. pistribution Costs on the

other
efficien and
hand.
Locational demand refers to distribution or dispersion of demand in variou I trefers
e
to
to total cost of
areas or geographical locations. Dispersion of demand greatly influences the
distribution as a
factor for the proportion percentage of
marketing department.
Demand patterns change from tinatun
or
budget sales. It
and magnitude of the distribution network.
ne ad also reviewed
from time to time. Distribution spending is a

distribution cost may be 10 percentFor products of high value likeshould be

plan

time in various regions or locations. Some areas may have very high demand
machir

certain products while some might have low demand for the same product.
especially food products, the less, however for
distribution cost may
or
FMCG
laptops
The distribution network has to continually adjust to shifting demand patten
ern each element of distrit
tribution cost should be be
up to 25 to 30 percent.products
Hence
For example, more frequent and efficient distribution system should be developeied company's distribution strategy analyzed that the costs minimum. so
are
rapidly growing markets, whereas logistics may be withdrawn from areas wh
whe mentioned Only after areas.therefore rightfully depends upon the
brand is declining. taking into consideration all above
distribution strategy of a
company can be formulated this is the above
aspects a
2. Product Characteristics in all the relevant aspects. suitable to the company
Product characteristics indicate
product package weight, volume, value, ho
typ
T h c e factors afect the
planning of distribution network ana tne COst. Inaust
products and some other consumer products are heavy weight high volun FACTORS AFFECIING EFFECTIVE MANAGEMENT OF DISTRIBUTION
products. The frequency of stock replenishment for such products is also very less. The factors that affect the effective CHANNEIC
contrast FMCG products are of smaill management of distribution channels are
packets and light in weight and also regu 1. Channel Design
more frequent
replenishment because of high rate of turnover.
Planning and designing a channel
The frequency of sale of an FMCG
product is much more than that o management. A well designed channel system is the beginning of channei
consumer durable. Hence distribution enables the company to
strategies may be different for FMCG produg capabilities to compete more enhance their
and Industrial goods. effectively. The has to company
the following aspects before
designing the channel.
take
into consideration
3. Pricing Policy
.Length of the channel and
number of members
Pricing policy is the cost or profit element in the network. required in the distribution
sollows premium pricing product. Ii the compani
policy with good margin, then frequent stock Activities to be
may not be required. For replenishme períomed by channel members.
example, Dove soap, Nike sports shoes. But for
ike Suri, Tide. Lux where the produs Role and
responsibility of channel members.
product turnover is very high, the stock
also will be very
high. Hence logistics and distribution should be replenishme Relationships of channel members
according to he product types. In case of industrial worked a
goods, companies adopt FO Evaluation criteria of channel members and
ree on rail, free on
road ex-iactory pricing strategy which frequency of evaluation
distribution to the buye. passes on the logisisi Appropriate control system for managing the channel members.
4. Speed and Eficiency Steps or Stages in Channel Design
Sern et al. has
Speed and iciency relzes to suggested 14 steps ior designing oi a channel system Alhougr
speed oi delivery
Eps are in
SDee and
acouracy These actually
or
replenishrnent, order sequential order some can be undertaken simultaneusi. Some
E1ctors or issues follow a
e
rving he nees oi he imply Customer service le sequential order, íor example. channel periormance anc
cusomers
ranspomation warehousing, inentory a the right time and right place. UTO t is, thereiore advisable that the development oi a channel svstem snuid
finished are related to d
qential process. Stern et al. has sugeested 14 steps ir
custormer systern. These des eng a chann
steps are shown in Figure below
 Monagme

Sain&Debutin
Manment (T YBMS)s Market Coverage

are generally in a segen

markets
the 14 steps or to be eviced
athough all
Market Coverage
is a mame
ccording to Stem e t al simutaneously
to expedite the prnr-
industrial goods. consumer durables
w h e t h e r in
in
ind.
besic saies palic
undertaken
nd without losing muchcngour.
a n be For eample. steps 1 and steps 7-9. Steps lo
anre F C Cera
rdersome or the steps 0-14 decision
companys
hannel policy is to cover a markets woud
channelDo

stepS. the ideal chan- sod busins i e n a

conduct of prevIOUs haave to
Based on the proper o r gap betve anagement prioritize the markets are prioritized and
may

are more r i t i c a l .
But there can
be
always a divergence Tween Sales

is utilized in markets with ma

mavimum potential However
shouid be developed
c h a n n e l p o w e r

SSem management
system. This
actual designed by the present nel
arkets between channel members shouid be avoided eracping
and the the identification so ha channei
edea
in the 12"step.
Based on
and o fm e
corfics
analysis
vealed through gap 13). the optimal chann
nne
n o t o c c u r .

options (step
develapment of dimerent
altermative strategic
Channel Coverage
the 14th or final stage
designis done at
Once the markets are covered. the next step
is to determi
umber
chann members to be appointed
the markets. Once the
channe
to serve
uld be serviced regularty so that the
selected they shoule
are sales are timely and
channel member should be given a defined role to
nterrupted. Each ch
wOrksitogS auoid
charnei ews
ambiguity.
Develop a
ConduCt Assess
eartem Product Lines
near-tm
opporuniues plan
diseioUTO
SySEa ySIS
nexisng
CaaiCS
artack Product lines are products that are sold through the channels as a pat of
12- channel policy. Various companies like Nestle, P&G HUL seil different categories of
D ome Conduct Identify Design
Amalyse develop Opumal oroducts. HUL has the largest category of product lines -toothpastes, soaps
ndusuy gap. strategic channels
analogs O0drdcd analysis optionS detergent, personal care, tood products Similarly Nestle has baby food. chocolates
coffee, ice-cream etc.

Conduct Conduct
quaiitative end- qualitaie Develop
Ideal
Different channels have to be used for different categories of products. Somee
user analysis enduser
ocus roups needs Channel channel members like wholesalers and retailers can be independent. They mav
-One-or-ones analysis System
decide which, product categories they would like to deal with. But contracted
channel members mainly distributors should work only with
companies they have
Steps or Stages in Designing a Channel Systems contractual obligations with and should not deal with competitors
products as that
(Source : LW. Stern et al., Marketing Channel (Fifth Edition), Prentice Hall of India would lead to conflict in channels.
1999, p. 189)
iv) Pricing
channel system, once
A
developed, should not generally be changed. Some roduct
companies, however, make exceptions to the system primarily because of pricing is a very sensitive issue and it is very difficult to determine
marketing
or selling pressures. correct pricing policy. This becomes more sensitive because of the channel members
involved as the
2. Channel Policy pricing policy directly affects the margins. Both the channel member
dnd the
Channel policies should be company would want maximum margins. Therefore a balance has to be
formulated along with designing of the channe struck to formulate a
system. The channel policies also good pricing policy.
govern the designing of the channel system. Somk Choice
of the major policy areas are as follows of Channel Partners
Oesalers and retailers are independent channels except company showrooms
exclusive dealerships; therefore issue of selection does not apply here. But
panies can have a policy while selecting a C&F agent, distributor, franchise
 nChanel Managemen
Management
TYB M5)
Sm
&Diat-buon d oneholesaler decides to branch its operations into
Saln
Raymonds have regior the other whejesaer
Titan
and conflict will result. If the toy manutacturer doesnt heip sive the
s dealings with both the wholesalers-- and the downstrearm prchijern
example, dge or experience
or
exclusive
dealers.
For
their
market
knowledge e
i t sb u s i n e s s
showroom
can
use retailers can
companies
exclusive dealers. The be in trouble.

selecting the
dealers or agents Multichannel Conflicts
be fran 3.
vi Termination of Channel
Partners
but a policy
should
framey el conflicts reder to
channel partners
is not
common

does not
serve as regi
quir
Multichannel
disagyeernents among mernbers separate in

Termination of
the channel partner
happens in case i
hannels. While neither strictly horizotal nor vertical, these conflicts can
mariketing chan

of the
contract in case
This usually wh
tor termination
afeect all members of every channel. For instance,
objectives of
the company.
with the comn. suppose the toy manutacturer
does not meet
the relationships par inates in two marketing channels. In the first channel, the
and develops
or

partner ties up partic. manufacturer sells its

channel
the
roducts directly to consumers via its official website. In the second channel, the
competitors anufacturer sells its products to wholesalers for resale to retailers. f the tov
manufacturers website sells the products for much lower prices than retail stores
HANNEL CONFLICTS comme have to sales in
the ond channel will reduce. The
secone
resulting conflict will
which channel
partners mpee require some
situation in for both channels.
Channel conflict
is a
sales department.
Channel conflict r solution that works
vendor's internal
another or the one another. It c .P
against one
losses as partners try
to undercut
B. Reasons for Channel Conflict
cost a company
and its partners to consider othe
and cause some partners There are many reasons for channel conflict. Some could be financial in nature
within the channel
also lower morale hurdles, problems in sales a
conflict causes unnecessary while some could be non -financial. Sometimes it could also be ego, jealousy or self
vendors. Channel
prevent channel conflict, partner interest. It is very important to know the reasons that cause channel conflict. Some of
efficiencies of the channel partners.To
reducing between manufacturer and th
sometimes enact agreements
such as deal registration the chief reasons of channel conflict are:
channel partner. 1. Role ambiguity
conflict:
There are two major aspects of channel It is the lack of role clarity between members .It is one of the reasons of channel
A. Types of conflicts conflict which commonly occurs in industrial products. Many industrial products are
B. Reasons for conflicts sold directly through sales people or in the indirect manner through dealers. In such
cases there is no clarity as to who has to contact which customers, there is no clarity
A Types of Channel Conflict
three types of conflicts regarding negotiations.
In any channel system there are

2. Goal Incompatibility
1. Vertical Level Conflicts
This occurs when the manufacturers or the channel members are very
Vertical conflicts involve a disagreement between two channel members
incompatible with each other. All manufacturers perceive their goal as increase in
consecutive levels. For example, if the toy manufacturer discovers its products at
market share or long term gains in the market. But the distributors or the wholesalers
arriving at retail stores later than scheduled, a conflict might develop between th
manufacturer and the wholesaler responsible for shipping to retailers. At the sam have a different view, they rather believe in short term gains or short term protits only
instead of a larger perspective. This is a major incompatibility between the
time, the retail stores might be in conflict with the wholesaler due to its inability!
ship products on time. Organisation long term objectives and the channel members short term profit

2. Horizontal Level Conflicts margins.

3. Mismatch of Market Perception
horizontal conflict refers
A to a
disagreement among two or more cnal and
members at the same level. For also occurs as company's perception of market is in a particular way
example, suppose a toy manufacturer has to nis

with two wholesalers, each contracted to sell products to retailers in ne channel member prospects are different. Based on analysis of the business
diTe .Y.B.M.S. - Sales & Distribution Management (Sem. - V)
 B.M.S.) (Sem.-V)
Sales&Distribation Managemen! (T.Y.B.M.S.) (Sen stribution Channel Management
product lines torecasting growth.. D. coverage is
Onment, company mav introduce more

the same or be ready to commit me

r i t o r i a

complete. This
E
channel members may not agree with

cause conflict
between the company and the chan
channel
blems may require
out the source of
appropriate strategy to become
solve the
a
major source of
conflict. Such
91

2 Finding emerging
merging issues.
wOrking capital which may
conflict is

members. is very important

nt 1
to
Itis
understand
4. Bias or Target fiving potential s
Isolutions in the right direction.where
In the
the
problem exactly It helps to is.
This problem is again a market perception
mismatch. Sales management tean unclear domain der
definition. Teritory above case the search for
be source of
the channel members, hence fiv allocation to conflict seems to
will always feel that more products can be sold by
channel members would never agree to this. Th.
es in term
of
geographical coverage; it is more often in
distributor is not
a

always strictly
unrealistic targets. However tailers ccounts (customers). The
or acco terms of sales
areas,
mismatch of interest causes a conflict between
the company and the channal
fferent perception or company and the distributorwholesalers,
members.
understanding
Domain nflict can
of the
domain, and this becomes
may have
conflict.
also be between the source o
5. Competitor Inducement membe. at horizontalntal level, say, two channel members. Different
distributors or two or
channel
This refers to efforts by the competitors who try to create a dispute between the dealers may
ors not
not clearly know which more
part of the market they are wholesalers or
At times they actually required to
company and the channel member. This is basically tactics followed by any un cover.
overlap territories to increase their
ethical competitor to create hurdles for any company which is on very good terms can become a source of conflict. sales and
margins. This also
with its channel members and is able to get its products sold very easily 3. Assessing the consequences of the conflict
Misunderstandings are created between channel members by misguiding themas
It is necessary to measure the
such creating conflicts in the channel. impact of conflict on business or sales
mpany. If the contlict is
purely operational in nature with of the
oarties concerned, this can be settled minimal stakes of the
through discussion or negotiation and no
cONFLICT RESOLUTION business or sales may be lost. But if the stakes involved
are high like chances
of sales or margins ot ether the of loss
Conflicts always arise between company and its channels but they have to be company or source channel members, the
may develop into a serious dispute. In such conflict
resolved as early as possible before they get too serious and start cases, timely and
affecting the action or method is required to resolve the conflict proper conciliatory
business. Conflict resolution is a way for both channel member and before it escalates can causes
company. They business losses to the company.
must find apeaceful solution to a disagreement among them. This is known that
conflict resolution. Though it is a difficult process, it should be resolved in a 4. Adopting appropriate conflict resolution plan or method is the final step. The
sequential and systematic manner first three steps pave the
way for this or make this step
purposeful. This is discussed below in detail.
more
meaningful or
The
following four steps may be followed in Conflict resolution
Kenneth Thomas's Five Styles of Conflict Resolution
1. Understanding the nature and intensity of the conflict
It is necessary to Channel conflicts may seem very
understand the nature and intensity of the problem because it shows meagre in nature but can cause serious impact
the level on sales of a company. Before these small conflicts escalate into serious issues,
or
significance of the
problem. Some of the issues involved
may be o
they
routine nature and these can be resolved
through mutual discussion and deliberation 3nould be sorted out. There are five styles of conflict resolution given by Kenneth
either between the homas. These range from minimum efforts and results to maximum efforts and
company and a particular channel member or between
more channel members. But two of results. The styles are:
some conflicts may be of more serious nature. tor
example, territory coverage by a distributor can be a major issue. The sales 1. Avoidance

department may feel that a distributor is not 2. Aggression

allotted to him and sales are adequately covering the sales teritory
him about this. The
suffering and the department
might have also reminde 3. Accommodation
distributor, on the other hand, may be of the view that na 4. Compromise
 Sales& Distribution Management (T.Y.B.M.S.)
S.) rcSem-
92
istribution Channel gement

5. Collaboration
used in increasing order of a In reality avoidar
dance and
Kennith Thomas, these styles are
According to
and resuts.
efons conflict. However aggression
not
ommodation, compromis
are
solutions resolve to
93
lem but may
problem and collabo any kind
solving any differ due
Insisting on to oration are
lgnoring other's
Competive own position (V)
annel members and success. different degrees of
wayst o
position (D) involvement of

OTIVATING CHANNEL MEMBERs

Avoiding Compromising Collaborative
order to avoid channel
In
contlicts,
moti
te their channel members, such many companies formulate
that they strategy to
licts can be avoided
betore they
become
perform and all the
Making
Accommodating
Accepting other's
ict are lack of commitment.
conf
real ones. Most of potential
the time reasons
concessions (v) position (d) Therefore
oreat advantage in improving channel motivating channel members can forof
performance.
Companies may adopt various ways to motivate
channel
ial
high margin, extended credit members, like offering
incentives
them financial like
1. Avoidance
incentives like recognition for exceptional performance, period or non financial
Avoidance is used by the weak or disinterested members of the foreign destinations paid holidays to lndian and
channel
Members who cannot solve a problem try to avoid or
ignore the problem. Solution of Example Bajaj electrical, Parle, Philips give special
the conflict is postponed or avoided. recognition to their dealers.
Reliance and Videocon sponsor holidays to
2. Aggression foreign destinations, L&T sponsors
training programs tor its dealers tocusing on matters which
is used dealers.
are
highly relevant for
Aggression by the selfish members who only think of self gain or
motives with no care for others. personal
They continue to work in the manner they believe is French and Raven have also suggested five forms of
best in their interest without motivation for channel
bothering about the impact on other channel partners. members to make their performance more effective. The five forms of
motivation
3. Accommodation are

Accommodation is a solution through surrender. In 1. Referent Power

channel member allows the other
accommodation one
It is the image or
party to achieve goals without being concerned recognition that a company enjoys in the market. Such position
about his own interests. gives the company power of reierence. Members feel proud to be associated with
4. Compromise such a
company and it naturally motivates them to be associated with the company.
It is a situation in which both the Companies like ITC, HUL, Bisleri, Sony and many others enjoy referent power.
parties sacrifice to get a midway solution of the 2. Expert Power
problem. They call for
meetings, understand the nature of the
solution to the problem. problem and get a
Expert power refers to some skills or capability that a company possesses which
5. Collabaration can be imparted to the channel partners. Channel members can thus learn more
about the technology and business and hence get motivated to be associated with
This is the most
professional way to find a solution to any
kind of conflict. The e company. The channel members learn well about the product and businesses.
parties in conflict brainstorm the
on
problem areas and get
a solution which 5
EChnolo8y oriented companies in automobiles, electronics and
telecommunication
profitable to both the parties. It is win-win
situation where both the use this
through the approach. parties gan expert power.
 Seles&Dstrkuton Managemen! (T.Y.B.MS) (S p u t i o n Channel nagement

3. Reward Power hehavior, existence

or
propotion of
etition is also another industrial or
This is the companys willingness to reward the channel members in order
motivate them. t may be conventional reward or incentive system used
to
nd, the
significant market factor. Theorganizational
also their selection role of chan
buvers ec
differ annel members
companies for better results. Rewards can be financial, non financial or both. tition and also whether the market
on depending on the nature and
4. Legitimate Power
durables or industria customers.
is
dominated by FMCCs,imtensity i
consumer
Product factors refer
efer to
This power refers to power or authority derived by a company from any contrars
rac product characteristics physical
or agreement signed by the company with its channel partners like distributors. Th chnological aspects, life cycles, propenties, technicalalor
consumer o
perceptions,
agreement gives the company legal powers to expect the members to perform as pe
per
Product life cycle (PLC) is
channel
important factor products at themariket position
an
e
the expectations or members are obligated to do so. However the legitimate powe require
more support than at the introduction
maturity stage. This stage
should be used as a source of motivation rather than means of pressuring the channel criticality of chann members and hence, their determines the
partners to perform. Channel factors relate to ditferent
selection.
aspects, characteristics and
channel members.
ers. Five important capabilities ti
5. Coercive power aspects
or factors are :
financial trustworhiness
nnel
utation of chann members, product promotion o
Coercive power refers to use of threat by a company to make the channel
capabilities channel membe
after-sales service facilities or abilities
selling abilities, aft
of
members periorm. Large companies which are very powerful due to their strong wherever applicable, a
Enally, willingness or availability of particular channel
positions make use of these powers to ensure that the work is done through the may not, or cannot, adequately promote a
members. Many wholesalk
distributors. Coercion or threat should however be avoided as it is not a
motivating company's products, but most of them
factor. It should rather be replaced by persuasion which can get closer to motivation. sWOT analysis refers to the overall appraisal of
prospective channel
membe
heforeselection. Different channel members may exhibit diferent
in the strenghs and

SELECTING CHANNEL PARTNERS

weaknesses existing market environment, i.e., oppotunities and threats. Some
channel members like distributors
may show enough aggressiveness
Motivation of channel members become much easier if the during marke
can correct channel recessions; some other channel members may prosper only
partners selected. No during boom time. Some
are
problems would arise if the right channel partner is channel members like dealers or retailers may be
selected for distribution. effective pushing slow-moving
in
products into the market while some other channel members may be etiective in
in case of FMCG selling Industrial goods. A channel should be selected ater evaluating all the
products,
channel members like wholesalers and retailers are
already present and become part of distribution network to the company. Hence
a parameters of the available channels.
selection af channel partner pertains to distributors and
C&F agents. Selection Process
For consumer
goods like automobiles and electrical
goods, dealers have to be Various selection factors or criteria mentioned above are important indicators
selected or
appointed. To start with, number of factors or criteria should be
a that should be considered for channel selection. The selection process should take
consideredused for short listing and, finally, selecting channel members. These care of a number of other details to arrive at a proper decision.
factors can be classified under four
criteria
The first is the cost or cost structure analysis of individual channels and also as
a) Market factors
members or elements of the value chain. This also implies value creating activities of
bi Product factors
the constituent members - both to the company and to the customers. Value creation
C) Channel factors tne company actually means profitability or margin. Linkages in the value chain
d) SWOT analysis also exists among
Omean interdependence of different activities. Interdependence
for example, between
Market factors reser OUs tactors or criteria. This refers to certain trade-offs;
to the existing market
includes the process of structure of the performance efficiency and cost.
buying and
selling, consumer
product(s). This
location and
preferences ano
l: i:i
98 Sales&Distibution Management (T. Y.B.M.S.) s.
1
Sem n Channel Management
Distrbution

Contract or Agreement
This is the traditional, oldest, instrumental method of exercising co
most cising contg What doyou mean by distribution
QUESTIONSs 9
Over channel members functioning or operations. Most of the companies enter in
into the role of
channel? Discuss its
written agreement. The agreement specifies details of association between
een the na
parie Explain hannel partners in need.
and also the terms of operations the major elements covered in the
agreement.
2
ighlight the differences between
distribution channel.
a

follows area 3.
80)
Distributor a
and a
(Refer Pg.
no.
Wholesaler.
Products handled. Discuss the three types of
distribution systems
Territories handled.
4
the factors
November 2016
5.
Explain affecting distribution
Categories or types of customers. Discuss the strategy.
6. affecting effective
Selling price and margins. (ReferPg.no. 85) management of distribution
Sales the
channe
promotion responsibility of channel partner. 7. Discuss thee
factors to be considered while November 2016
Payment and credit mechanism. 8. Explain the steps in Channel Design. selecting channel members.
Inventory levels -management by the channel partner. 9. Explain the areas of Channel Policy.
2. Budgets and Reports 10. Enumerate the instruments of channel
Control
Contract or agreement is implemented in enneth Thomas five styles of
practice through budgeting av 11. Discuss
conflict resolution.
reporting from time to time. Monitoring and control become very easy and
if there is a proper
effectie
reporting system. Reports
can be weekly, monthly, quarterly (Refer Pg. no. 91)
yearly with different formats.Weekly reports can be short and precise showine
immediate results. Monthly and quarterly reports can be more into detail showing OBJECTIVE QUESTIONs
targets and planning parameters. For instance, Godrej uses reporting svsten . Fill in the Blanks
effectively.
3. Distribution Audit
1. provide information to the company
brand, about the market new product/
new
competitor, changes in customer preferences etc.
Many companies use distribution audit
means for evaluation and
as a 2. also known as middlemen, distribution intermediaries
of channel contro
partners. Distribution audit is like financial audit. The
of distribution audit is objective 3. A. is an
intermediary in the distribution channel who in bulk and
systematic analysis of activities, targets and results d to resellers rather than buys sells
a channel member. Distribution audit can to consumers.
in operations of a channel.
easily identify
any shortcoming 4. Wholesaler provides a trained force
These issues can be
for selling the products in the markets.
deliberated upon .

improvement measures can be undertaken by a 5. Wholesalers also provide credit facility

channel members on the basis of the to whenever required Dut ensure
review.
thatthe product sales are not affected.
The instruments of control 6. A is the
can be used key person in distribution channel.
none of these work,
through persuasion or
authority, and
companies may adopt a coercive method, which is almost al beneficial to both manufactures and consumers.
extreme step. In control
process, the use of persuasion and 0.

acceptance'; coercion may lead to intolerance. authority called

of tolerance/ is 'z0* are the primary clients of the distributors.