SALES AND DISTRIBUTION MANAGEMENT

01 & 02 Introduction to Sales Management

Selling is Everywhere
We are selling all the time. Everybody is selling something to someone. Salespeople are called by various names such as Salesman, Saleswoman, Sales Representative, Sales Executive or Customer Contact Executive.

Evolution of Sales Management

The history of salesmanship is as old as human civilization. The techniques of modern sales management and selling techniques were refined by John Henry Patterson, widely known as the father of modern sales management. Today a sales person is no longer an order taker or information provider but is viewed as a consultant. The sales managers job is not only limited to sales but also includes recruiting, training, selecting, motivating, forecasting, controlling and administering salespeople while performing the primary responsibility of revenue generation and profitability for the firms.
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Evolution of Personal Selling

1950s Marketing Era Consultative Selling Era X X 1970s 1980s` 1990s

Strategic Selling Era Relationship Selling Era

X
X

Prior to the 1950s, peddling, or pushing products was the primary style of Personal Selling.
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Evolution of Personal Selling

Evolution of Personal Selling (1950 to Present)
Marketing Era Organizations determined needs and wants of target markets and adapted themselves to delivering desired satisfaction. Product orientation was replaced by customer orientation. Selling Emphasis Organizations recognised that the salesperson could collect product, market, and service information regarding the buyers needs.

Middle 1950s1960s

Evolution of Personal Selling

Evolution of Personal Selling (1950 to Present)
Consultative Selling Era Salespeople became diagnosticians of customers needs as well as consultants Late 1960soffering well1970s considered recommendations. Mass markets were breaking into target markets. Selling Emphasis Buyer needs were identified through two-way communication. Informationgiving and negotiation tactics replaced manipulation.

Evolution of Personal Selling

Evolution of Personal Selling (1950 to Present)
Strategic Selling Era The evolution of a more complex selling environment and greater emphasis on market niche created the need for greater structure and more emphasis on planning. Selling Emphasis Strategy was given as much attention as selling tactics. Product positioning was given more attention.

1980s

Evolution of Personal Selling

Evolution of Personal Selling (1950 to Present)
Relationship Selling Era Salespeople are encouraged to think in the context of longterm, high-quality partnership with individual customers. Sales force automation provides specific customer information. Selling Emphasis Customer supplants the product as the driving force in 1990ssales. present Greater emphasis is placed on strategies that create customer value.

Personal Selling in the Information Age

Major Developments (1960-2020) Major advances in information technology Information is a strategic resource Business is defined by customer relationships Sales success depends on creating and adding value for the customer

INCREASE IN RELATIONSHIP SELLING AND RELATIONSHIP MARKETING

Industrial Economy 1860-1960

Information Economy 1960-2020

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What is Personal Selling?

Personal selling refers to personal communication with an audience through paid personnel of an organization or its agents in such a way that the audience perceives the communicators organization as being the source of the message.

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What is Personal Selling?

Personal Selling involves person-to-person communication with a customer or prospect. It is a process of developing relationships, discovering needs, matching appropriate products to these needs and communicating benefits through informing, persuading and reminding.

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What is Sales Management? Sales management is defined as the planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force.

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What is Sales Management?

Sales Management is defined as the management of a firms personal selling function while distribution is the management of the indirect selling effort, that is, selling through extra corporate organizations which form the distribution network of the firm. The sales management task thus includes analysis, planning, organizing, directing and controlling of the companys sales effort.

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Distribution Management
Distribution (or place) is one of the four elements of marketing mix. An organization or set of organizations (gobetweens) involved in the process of making a product or service available for use or consumption by a consumer or business user is part of the distribution management. Distribution Management comprises management of channel institutions as well as physical distribution functions.
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Nature and Importance of Sales Management

Sales management helps in achieving the organizational objectives. The principal objective is that the products should be sold at such a price that realizes profits. Buyer and seller have business relationship that is based on exchange of goods and/or services and money. Salesperson develops a positive relationship with the customers. The role of sales team is interdependent and success of one team member depends on the other. The sales team continuously monitors the customer preference, competitorssituation, government policy and other regulatory bodies.
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Need for Relationship Selling

Relationship selling centres on all activities directed toward establishing, developing and maintaining successful exchanges with customers and other constituents. A business marketer may begin a relationship with a buyer as a supplier (one of many), move to a preferred supplier status (one of a few) and ultimately enter a collaborative relationship with the buyer (sole source for particular items). At one end of the relationship range is the transactional exchange or relationship and at the other end, the relationship is called collaborative exchange or partnering.

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Need for Relationship Selling

Transactional Exchange or Relationship focuses on timely exchange of a basic product for a competitive price between the customer and the supplier. Value-added Exchange or Relationship focuses on complete understanding of the present and future needs of the customer and meeting those needs better than competitors so as to obtain a maximum share of the customers business. Collaborative or Partnering Exchange or Relationship focuses on building strong social, economic, service and technical ties with the buying firm over a long period of time.

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Responsibilities of the Sales Manager

Prepare sales plans and budgets Set sales force goals and objectives Estimate demand and forecast sales Determine the size and structure of the sales force organization Recruit, select and train sales people Design sales territories, set sales quotas and define performance standards Compensate, motivate and lead the sales force Conduct sales volume, cost and profit analysis Evaluate sales force performance Monitor the ethical and social conduct of the sales force

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Types of Salespersons
ORDER GETTERS Current customers New customers ORDER TAKERS Inside Order Takers (via mail, telephone, internet) Outside Field Sales SUPPORT PERSONNEL Missionary Salespersons Trade Salespersons Technical Salespersons
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Personal Selling
Salespeople have many names
Agents Sales consultants Sales Representatives Account Executives Sales Engineers District Managers Marketing representatives Account Development Representatives
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Positions of Salesperson
What products are delivered by a salesperson where his or her job is predominantly to deliver the product? Milk, bread, oil, gas, etc What is the position or designation of a salesperson where he or she is just an internal order taker? The counter sales clerk What is the position or designation of a salesperson where he or she is not expected or permitted to take an order but only builds goodwill or educates an actual or potential user? The medical representative
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Positions of Salesperson
What products are sold by a salesperson predominantly based on technical knowledge? Engineering or computer equipment What tangible products are sold by a salesperson? Vacuum cleaners, refrigerators, etc What intangible products are sold by a salesperson? Insurance, advertising, education

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Contributions of Personal Selling

Salespeople help stimulate the economy

Salespeople help with the diffusion of innovation

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Contributions of Personal Selling

Salespeople generate revenue Salespeople provide market research and customer feedback Salespeople become future leaders in the organization

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Contributions of Personal Selling

Salespeople provide solutions to problems Salespeople provide expertise and serve as information resources Salespeople serve as advocates for the customer when dealing with the selling organization

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Why Personal Selling Has Evolved

Increasing sophistication of products and services Increased competition Increased customer demand for quality, value, and service

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Difference between Selling and Marketing

Selling has a product focus. The emphasis is on price reduction for closing the sale. The short-term focus does not consider building up the brand and winning competitive advantage through a large set of loyal customers. The key objective is maximizing profits through sales maximization. When the focus is on selling, the task is to sell whatever is manufactured. Aggressive sales methods are employed. Customers satisfaction is taken for granted. Selling converts the product in to cash for the company in the short run.
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Difference between Selling and Marketing

While selling revolves around the needs and interest of the manufacturer, marketing revolves around that of consumer. Marketing consists of all those activities that are associated with product planning, pricing, promoting and distributing the product or service. The task commences with identifying consumer needs and does not end till feedback on consumer satisfaction is received. The activity comprises production, packing, promotion, pricing, distribution and then the selling. Consumer needs become the guiding force behind all these activities. Profits are not ignored but they are built up on a long run basis.
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Difference between Selling and Marketing

Mind share is more important than market share. A truly marketing firm tries to create value satisfying goods and services which the consumers will want to buy. What is offered for sale is determined not by the seller but by the buyers. The seller takes the cues from the buyer and the product becomes the consequence of the marketing effort. Selling does not bother about the value satisfaction. Marketing views the entire business as consisting of a tightly integrated effort to discover, create, arouse and satisfy customer needs.

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Managing the Sales Force

Successful sales force management means: the right organisation and aggregation of product lines and geographies the right strength and qualification the right compensation and incentive system

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Steps in Designing and Managing the Sales Force

Objective Setting Training for Sales Policies Designing Sales Force: Structure and Size Deciding Sales Force Compensation Recruiting and Selecting Sales Force Guiding and Motivating Sales Force Performance Rating of Sales Force

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Challenges of Sales Management

Designing and Managing Sales Force Actual supervision of, and guidance to, individual salesmen is also a sine qua non of a successful and responsible Sales Manager Sales Force Authority Sales force requires delegation of authority with respect to the following: Changing or fixing prices Credit facilities to old and existing customers Assurance regarding quality and after-sale service Payment terms and settlement of claims
Cont .

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Challenges of Sales Management

Target-setting Sales targets are fixed on the basis of past experience, time period and brand positioning in the market. The targets should be fixed in such a manner that they are achievable. Sales Forecasting Sales forecasts must change as conditions change. Accuracy depends on meticulous planning and dynamic strategies.
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Hard Sell Versus Soft Sell Strategy

Hard Sell Concern for self Canned presentation Talking Pushing product Presenting features Advocating without acknowledging Soft Sell Concern for customer Questions for discussion Listening Providing buying opportunities Presenting benefits Acknowledging needs

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Sales Manager

RM (North)

RM (South)

RM (East)

RM (West)

RM (Staff)

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

Field Staff

Field Staff

Field Staff

Field Staff

Field Staff

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Types of Compensations
Organization uses two types of compensations: Financial Financial includes compensation, salary, incentives and fringe benefits Non-financial Non-financial includes motivation implications to sales management

and

its

Monetary compensation is one of the most direct and least ambiguous ways of communicating to sales people about their performance.
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Reasons for Providing Financial Compensation

The compensation plan is undoubtedly to reward the salesman for his performance.

The plan should provide a regular income at least at minimum level. In addition to this regular income, it should provide adequate incentive to induce minimum performance from the salesman. The plan should be simple and easy to understand for the salesman. It should be economical and should induce competition among salesmen. It should be fair to both the sales force and management.
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Timken India Limited

In keeping with global standards the first state-of-the-art manufacturing facility was set up by Tata Timken in Jamshedpur in 1987. Since then, Timken has led the industry with significant breakthroughs in bearing technology. Timken offers friction management solutions that maximize performance, fuelefficiency and equipment life. Wherever parts move and turn, you will find Timken products and services making things run a little smoother, safer and more efficiently.

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Timken India Limited

Timken India Limited was incorporated in 1987 as Tata Timken Limited (TTL), a joint venture between Tata Iron and Steel Company (TISCO) and The Timken Company, USA. It commenced commercial production at its Jamshedpur plant in March 1992. The Timken Company is a world leader in tapered roller bearings and a leading producer of quality alloy steel. Tata Steel is the world's 10th largest steel manufacturer. TISCO and TIMKEN each held 40% equity stake in the company and the public held the rest. In 1999, Timken acquired from Tata Steel its 40% stake in Tata Timken Limited. The name of the Company was changed to Timken India Limited on July 2, 1999. Timken markets heavy equipment ball bearings in India. They had a countrywide sales network of 120 salespeople but the sales were stagnant and the organization was in the red.
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Timken India Limited

As a restructuring exercise, the company decided to follow a different selling model and fired the entire sales staff. They appointed 55 independent manufacturers representatives. Manufacturers representatives were not employed in the company and they sold goods of other companies as well. The representatives sold various other items with the ball bearing equipment. The sales picked up, old customers came back to the company and new customers also started buying. What reasons can be attributed to this development? What were the advantages and disadvantages of appointing manufacturers representatives compared to the companys salespeople?

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Methods of Remuneration
The sales force can be remunerated in the following ways:

A straight salary A straight commission on sales Salary and commission on sales Salary and commission on sales above a certain amount Salary and different rate of commission on varying totals or for different types of goods Salary and share in the profits

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Expense Accounts
The major sales expense accounts are categorised as follows:

Salary accounts Commission accounts Bonuses Meals and entertainment Air travel Automobiles rentals Lodging Travel accounts Tour expenses accounts (Advance accounts) Communication and services expenses accounts
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Fringe Benefits
Types of fringe benefits are: Company Car Supplemental life insurance and medical insurance Personal tax and financial planning Low or no interest loans Supplemental retirement benefits Air travel and First class A.C. for Train Travel Relocation allowance Laundry benefits, while on the tour Special perquisites for outstanding performance Medical expenses Special business associations membership
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Managing the Sales Force

Evaluating Salespeople Several tools can be used Sales reports Call reports Expense reports

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Salesperson Attributes

The Sales Process

Initiating Customer Relationships

Developing Customer Relationships

Enhancing Customer Relationships

Prospecting

Preapproach Presentation Planning Approaching the Customer

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Salesperson Attributes

The Sales Process

Initiating Customer Relationships

Developing Customer Relationships

Enhancing Customer Relationships

Sales Presentation Delivery

Earning Customer Commitment

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Salesperson Attributes

The Sales Process

Initiating Customer Relationships

Developing Customer Relationships

Enhancing Customer Relationships

Adding Value through Follow-up, Self-leadership, and Teamwork

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Importance of Personal Selling and Sales Management

The only function / department in a company that generates revenue / income The financial results of a firm depend on the performance of the sales department / management Many salespeople are among the best paid people in business It is one of the fastest and surest routes to the top management

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Skills of a Successful Sales Manager

People skills include abilities to motivate, lead, communicate, coordinate, teamoriented relationship, and mentoring Managing skills consist of planning, organizing, controlling and decision making Technical skills include training, selling, negotiating, problem-solving, and use of computers

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Types of Sales Managers / Levels of Sales Management

CEO / President V. P. Sales / V. P. Marketing

Top-Level Sales Managers / Leaders

National Sales Manager

Regional / Zonal / Divisional Sales Managers

District / Branch / Area Sales Managers

Middle-Level Sales Managers First / Lower Level Sales Managers

Sales Trainee / Sales Person / Sales Representative

Sales Objectives, Strategies and Tactics

The main components of planning in a company are objectives, strategies and tactics. Their relationship is shown below
Decide / Set Objectives Develop Strategies
Evolve Tactics / Action Plans

Let us say, Crompton Greaves wants to increase sales of electric motors by 15 percent, as one of the sales objectives.

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To illustrate the relationship between sales objectives, strategies and tactics, consider:
Sales Goals / Objectives Marketing Strategy Sales and Distribution Strategy Tactics / Action plans

Increase sales volume by 15 percent

Enter export markets

Identify the countries

Decide distribution channels

Marketing / sales head to get relevant information Negotiate and sign agreements in 3-5 months with intermediaries

Penetrate existing domestic markets

Review and improve salesforce training, motivation and compensation Use effective and efficient channels

Add channels and members Train salespeople in deficient areas Train field salesmanagers in effective supervision Link sales volume quotas to the incentive scheme of the compensation plan

Emerging Trends in Sales Management

Global perspective Revolution in technology Customer relationship management (CRM) Salesforce diversity Team selling approach Managing multi-channels Ethical and social issues Sales professionalism
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Linking Sales and Distribution Management

Either sales management or distribution management cannot exist, operate or perform without each other To achieve the sales goals of sales revenue and growth, the sales management plans the strategy and action plans (tactics), and the distribution management has the role to execute these plans

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Role of Distribution Management for some of the Sales Management Actions / Tasks
Sales Management Actions / Tasks
Strategy for effective coverage of markets and outlets Strategy for handling customer complaints

Distribution Management Role

Follow call plan / beat plan Make customer call productive Use multi-channel approach Prompt action at the customer interface level If the problem persists, involve senior sales and service people Co-ordination with distribution channels Responsibility of execution with distribution channels Expenses are shared between the company and intermediaries

Planning of local advertising and sales promotion

A Key to Success Stay Close to Your Customer and LISTEN!