ISSUES IN SELLING

Introduction:

The five emerging themes evident in markets today include the following:

1. The connected knowledge economy

The internet enables companies to mine data and then use the knowledge gained to develop
products and services for consumers.

2. Globalizing, converging and consolidating industries

Globalization is a key trend in the business world today. The evolution of supply, demand, and
environmental factors is driving companies toward operating as if a homogeneous worldwide
market exists in their industries.
Convergence is a process of gradual boundary loss that results in a binary divide ceasing to exist
between two previously discrete areas of activity, industrial processes or technology applications.
This means many technologies, processes and skills will span a wider and wider range of
applications.
Industry consolidation is a situation in which separate companies become one. It is sometimes
described as a merger, although technically these are two different situations. In a merger, a new
business is formed when one company absorbs the other; in a consolidation, companies join
forces on relatively equal terms to form one new company.

3. Fragmenting and frictionless markets

A fragmented market is where no one company can exert enough influence to move the industry
in a particular direction. The market consists of several small to medium-sized companies that
compete with each other and large enterprises.
A frictionless market is a theoretical trading environment where all costs and restraints associated
with transactions are non-existent.

4. Demanding customers
Today, customers are more demanding than ever. They have more power than they used to. They
are smarter and have higher expectations than ever before. This is because customers today are
educated about what great customer service looks like. Due to availability of information, they
know what kind of products and services are available worldwide.

5. Adaptive organizations.
An adaptive enterprise (or adaptive organization) is an organization in which the goods or
services’ demand and supply are matched and synchronized at all times. Such an organization
optimizes the use of its resources (including its information technology resources) by always
using only those it needs and paying only for what it uses, yet ensuring that the supply is adequate
to meet demand.
In such an environment, one of the challenges for marketing is to take a leadership role in the successful
management of inter-functional interfaces they put forward. The bottom line of any business is to enhance
profits through better sales. This is essentially where the ‘sales department’ of a company comes into play.
At the onset of each financial year, the marketing, the sales, the production, the finance and the supply
chain heads meet to review the previous year and to set targets for the upcoming one. This activity is
fundamentally where the promotional budgets are decided against sales targets.

In most companies, annual sales targets are reviewed each quarter to identify strengths and weaknesses of
the marketing strategy. In FMCGs, choices are made between Advertising, BTL and Trade Offers. Often
enough, sales managers and marketing managers have compelling arguments for advertising and trade
incentives. While the finance manager keeps stressing on ‘the bottom line,’ the right mix is agreed upon
whilst keeping the category and the intensity of competition in mind.

The sales function varies in its importance from company to company. In most B2C businesses, it is the
marketing department that takes the lead role and the sales department provides support. On the other hand,
in most B2B companies, it is the Sales Department that is considered instrumental in driving company
success. The sales department, in such a scenario, is not only responsible for identifying prospects and
closing sales but, in some cases, also responsible for after sales service i.e.; customer relationship
management. The role of sales department in today’s competitive environment cannot be overstressed. In
an Industrial Goods Company, where customization is greatly sought, it is the salesperson that is responsible
for consultative selling (co-creation of value). He not only needs to be a master of his product offering but
must also understand the increased diversity in industrial applications.

Marketing & Sales

As mentioned previously, the marketing department performs a key function in most organizations.
Realizing the benefits of focused marketing has compelled a number of pharmaceutical organizations in
Pakistan to separate their marketing and sales functions. Marketing, that used to be a core function only
with MNCs, is today a focal point in most previously sales-oriented organizations. However, marketers’
success not only depends on their own functional excellence, but also requires cross-functional process
competence to ensure the implementation of marketing ideas. The sales department is most important in
helping marketing achieve its goals.

Some of the factors affecting Sales can be understood with the help of the diagram below:

*Advertising refers to all promotional activities undertaken by the brand such as ATL, BTL, Trade Offers,
POP merchandising, etc.

Marketing and Sales have invariably been termed as siblings and, like any siblings, the rivalry between the
two is also common. Believing in this strategy, a marketer often blames the sales for not meeting targets.
On the other hand, the salespeople often argue that the price was too high and the trade incentives were
missing. Sales department pushes marketing to define winning products while Marketing insists on keeping
prices up despite pleas for deep discounts. Sales tend to blame pricing as a sales inhibitor while Marketing
tends to counter argue that the issue is a result of poor salesmanship.

In order to minimize this frequent disagreement, goal congruence is often stressed in most organizations
today. When the two departments jointly agree on the promotion mix with respect to different products, a
better synergy is achieved. Marketing department must contribute to Sales department by providing

• Continuous support through ATL and BTL

• Coordinating with the Sales for target setting – regular revisions

• Recognition

Marketing Sales

Push vs. Pull Strategy

Another debate quite commonly experienced by managers in an organization is to decide on the right
combination of Push and Pull Strategy. Generally speaking, Pull Strategy is necessary but sales managers
also want more trade offers to enhance the ‘push’. Let us first understand what is meant by ‘push’ and
‘pull.’

PUSH:

A push strategy uses marketing channels, such as trade promotions, to "push" a product or service through
to the sales channel. Push strategy is one of several types of channel strategies. It comprises the efforts
undertaken by the company to achieve the following objectives:
 • Hit competition with better Trade Offer
• Higher retail penetration
• Greater share of shelf

PULL:

A pull strategy is where interest for a specific product or service is created within a target audience that
then demands the product from channel partners. This causes the product to be "pulled" through the
manufacturer's sales channel. It involves efforts undertaken by the company to:

• Build brand equity, reinforce the brand

• Achieve greater share of mind

What are Trade Offers (T/O)?

Trade Offers are incentives given to the retailers to motivate them to buy more of your stocks. More
commonly known as ‘Schemes,’ trade offers serve the following purposes for a company:

• Get a larger share of the outlet’s working capital for a limited period (normally 10-15 days)
• Increase retail penetration

There are two types of Trade Offers:

• Plus-unit T/O

When 1-2 “free” SKUs are given to the retailer on the purchase of a specific quantity of packs
usually 10-12, it is a Plus unit T/O. Earnings are generated only after the “tied” units are sold. Such
T/Os help order-bookers get their stocks into shops. However, the effectiveness of this strategy in
moving stocks out of the retail is debatable.

• Pack-value T/Os

Pack value T/O give the outlets Rs. X per pack of a specified SKU. Though the additional %age
mark-up is generally lower than plus-unit T/Os, such T/Os allow shop-owners to earn-as-he-sells
right from the first pack.

It is important to note that Trade Offers are different from Trade Promotions. Trade Promotions are prizes
on draws e.g.; motorcycles, or gifts on quantity e.g.; glass tumblers or clocks.

Many companies have been torn between the two choices of greater advertising for better brand
reinforcement, or T/Os for better bottom lines. However, the effectiveness of T/Os remains questionable in
the long term. Keeping a close watch on competition helps companies in maintaining market presence. It
is important to keep track of competitors’ intensity of T/Os, as well as their coverage, distribution speed
and extent of credit given to trade, etc.

Given all the effort to keep things under control and on target, there are multiple issues that are faced by
Sales Department, both in a B2B and a B2C setting. Some of these are discussed below:
Sales Force Issues

• Lack of trained professionals

Like any other field, the sales field also suffers from a serious lack of trained professionals. When
it comes to building valuable relationships, sales people are at the front line. They not only need to
know their offering intimately but must also be able to compare it with competition. A customer is
most convinced when he sees a differential advantage in using a certain product over another. While
they may say that price is a major concern, it is ultimately the selling experience which is more
important.

• Driving motivation due to lack of job diversity

The repetitive nature of the job makes a salesperson lose interest. It is then a challenge for the
company to keep them motivated by continuously recognizing their efforts in helping the business
manage its bottom-line.

• Practicing ethics, integrity, honor

Deciding on a sales target and meeting it are two different things. In order to minimize conflict
between Marketing and Sales, a number of companies set annual targets but continuously revisit
and revise them keeping in mind the feedback from the salesforce. Conversely, if the management
stays fixed about the annual target, then the chances of sales force indulging in cross-category and
cross-territory sales increase. A number of times, the retailers are also pre-informed by the sales
force about upcoming price increases. This leads to increased purchases at a lower rate to enjoy
better per unit profits with the new price taking effect.

• Giving adequate recognition

The Sales Department is often resentful of not getting enough recognition. It is the responsibility
of the top management to not only appreciate its role but also give it enough significance.

Customer Issues

With an explosion in the information available, it is a challenge for a sales rep to handle the
knowledgeable customer. He is not only better informed but is also fickle minded and extremely
value conscious. It is therefore important to profile customers according to the value they represent
for the company. The sales department needs to focus on the profitable ones and make them loyal
customers.
Environmental Issues

• Unstable Market Situation

The unstable political situation leads to unpredictable market events. A week with six working days
can come down to four due to political unrest, power breakdowns, etc. All of this makes the job of
sales force an even more difficult one.

• Changing retail landscape

The retail landscape in Pakistan is rapidly changing its form. Consumers who used to rely most on
the neighborhood outlets are now happily covering long distances to frequent modern-format
outlets. These outlets not only give them a superior shopping experience but also greater variety
and better value. This means that companies today need to rethink their sales strategy. The battle
today lies at the retail front.

• Competitor activity

Competition is what all companies need to closely watch out for. Sales force is the biggest source
of market intelligence. Their input gives indications on what the competitor is doing or is likely to
do in the near future.

• Diversity in the Market Place

Pakistan is a diverse and challenging market, requiring adaptability and persistence. It is often
difficult to sell in this market without a reliable local partner, thus choosing the right local partners
and careful planning are critical to success.1 For example, for a product in the food industry, an
international player cannot just enter and sell their own product. Significant understanding of the
local population and their tastes and preferences is required. This is why a lot of companies hire
consultants to understand the local marketplace.

What is Direct Selling?

Direct selling refers to selling products directly to the consumer in a non-retail environment. These
sales occur at home, work, or other non-store location. This system often eliminates several of the
middlemen involved in product distribution, such as the regional distribution center and wholesaler.
Instead, products go from manufacturer to the direct sales company, to the distributor or rep, and
to the consumer.2

The direct selling industry in Pakistan currently engages approximately 3.8 million people
nationwide who are working as distributors or direct sellers. Our estimate is that, as the market
grows with increasing numbers of consumers, this number can grow to 10 million direct sellers by
2025, which translates into a sales turnover of Rs. 100 billion by the same year. However, the direct
selling channel in Pakistan is still in its infancy, with a very small contribution to Pakistan’s overall

1
https://www.export.gov/article?id=Pakistan-Market-Challenges
2
https://www.thebalancesmb.com/what-is-direct-selling-1794391
 retail landscape. With only a few retailers present in the channel, there is an untapped market for
new players. Currently, the industry is dominated by Oriflame Cosmetics Pakistan.

Segments like wellness, cosmetics and personal care now dominate the direct selling market in
Pakistan. People in households are spending more on personal care and wellness products.3

Issues in Direct Selling:

Qualifying Prospects

Who you sell to matters. One of the main issues with direct sales is that reps try to sell to
everyone they know – friends, family, co-workers. Rather than trying to find their true customer
base, they try to reach as many people as possible. When this happens, your efforts will be met
with minimal response. The seller should take some time to understand who the customers are
and how the products/services being sold will help them address a need or solve a problem in
their life.4

3
http://www.dsapakistan.com/direct-selling-scenario-in-pakistan
4
https://www.salesforcesearch.com/blog/3-common-direct-sales-issues-solutions/