Salesmanship

What is Sales?

Sales refers to the exchange of goods/ commodities against money or service. It is the
only revenue generating function in an organization. It has formed an important part in
business throughout history. Even prior to the introduction of money, people used to
exchange goods in order to fulfill the needs, which is known as the barter system.
 Example of Barter System
 A has 100 kg of rice and B has 50 kg of wheat. Here, A needs wheat and B needs rice.
 They agree to exchange 50 kg of rice and 25 kg of wheat upon mutual understanding.

Conditions of Sales
There are two parties involved in the transaction, the seller and the buyer.
The seller is the provider of goods or services and the buyer is the purchaser in
exchange of money.

The seller of goods has to transfer the title of ownership of the item to the buyer upon
an agreed price. A person who sells goods or services on behalf of the seller is known as
the salesman/woman.
What is personal selling?

 It is a business activity involving a person-to-person

communication process during which a salesperson
uncovers and satisfies the needs of a buyer to the
mutual, long-term benefit of both parties.
Everyone Sells

Give examples
1. As a student
2. As a graduate
3. As a teenager
What is sales management?

Sales management in an organization is a

business discipline, which focuses on the
practical application of sales techniques and the
management of a firm’s sales operation.

It is done in an efficient and effective manner

through planning, staffing, training, leading and
controlling organizational resources. Sales
management is done by Sales Managers and they
are responsible for generating sales, profits and
customer
satisfaction.
Importance of Sales Management
Sales management is very crucial for any organization to achieve its targets. In order to increase
customer demand for a particular product, we need management of sales. The following points
need to be considered for sales management in an organization:

The first and foremost importance of sales management is that it facilitates the sale of a product
at a price, which realizes profits and helps in generating revenue to the company.

It helps to achieve organizational goals and objectives by focusing on the aim and planning a
strategy regarding achievement of the goal within a timeframe.

Sales team monitors the customer preference, government policy, competitor situation, etc., to
make the required changes accordingly and manage sales.

By monitoring the customer preference, the salesperson develops a positive relationship with the
customer, which helps to retain the customer for a long period of time.

Both the buyers and sellers have the same type of relationship, which is based on exchange of
goods, services and money. This helps in attaining customer satisfaction.

Sales Management may differ from one organization to the other, but overall, we can conclude that
sales management is very important for an organization for achieving its short- and long-term goals.
Objective of Sales Management

Every organization has an objective before initializing functions. We need to understand the
goal of managing sales. Here we are discussing Sales Management in terms of its objectives.
 Sales Volume
It is the capacity or the number of items sold or services sold in the normal operations of a
company in a specified period. The foremost objective of sales management is to increase
sales volume to generate revenue.
 Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue generating
department. It can be calculated as the percentage or ratio of gain in total turnover.
 Continuing Growth
One of the main objectives of Sales Management is to retain consumers to continue growth of
the organization. There should be regular expansion of sales and demand for an item in the
market with new advanced formulation.

These are the major objectives a sales executive has to focus on in sales management.
Skills of a Sales Executive

Sales management is an art where the sales executive or the salesperson

helps the organization or individual to achieve its objective or buy a product
with their skills. The following are some skills that a sales executive needs to
possess:
>Conceptual Skills
Conceptual skill includes the formulation of ideas. Managers understand
abstract relationships, improve ideas, and solve issues creatively. The sales
executive should be well versed with the concept of the product he/she is
selling.
>People Skills
People skills involve the ability to interact effectively with people in a
friendly way, especially in business. The term ‘people skills’ involves both
psychological skills and social skills, but they are less inclusive than life skills.
Every person has a different mindset, so a sales executive should know how
to present the product depending on the customer’s mindset.
 Skills contd.
>Technical Skills
Technical skills are the abilities captured through learning and practice. They are
often job or task specific. In simple words, a specific skill set or proficiency is
required to perform a specific job or task. As a part of conceptual skills, a sales
executive should also have a good grasp on the technical skills of the product.
>Decision Skills
Decision skills are the most important because to tackle the questions from
consumers, sales executive should always have the knowledge of competitors’
products and take a wise decision.
>Monitoring Performance
Sales executives should monitor the performance of the employees and report to
higher management to improve the performance and fill the loop holes. Thus,
conceptual skills deal with ideas, technical skills deal with things, people skills
concern individuals, technical skills are concerned with product-specific skills, and
decision skills relate to decision-making.
 (insert) 1. sales management careers
 2. trends affecting sales management
 Review of Marketing
Fundamentals
Marketing Mix
is a combination of marketing tools that a company uses
to satisfy their target customers and achieving
organizational goals.

McCarthy classified all these marketing tools under four

broad categories: Product , Price , Place, Promotion.
These four elements are the basic components of a
marketing plan and are collectively called 4 P’s of
marketing.
Product

This refers to the goods and services offered by the

organization. A pair of shoes, a plate of rice, a lipstick, all are
products.
All these are purchased because they satisfy one or more of
our needs. We are paying not for the tangible product but for
the benefit it will provide.
So, in simple words, product can be described as a bundle of
benefits which a marketer offers to the consumer for a
price.

While buying a pair of shoes, we are actually buying comfort

for our feet, while buying a lipstick we are actually paying for
beauty because lipstick is likely to make us look good.
Product contd.

The range of products offered by an organization is called

the product mix.

Motor car manufacturer- cheap, basic family runabouts,

medium prices family saloons, estate cars, executive
saloons, and sports cars.

Within most of these product lines, various refinement

can be offered e.g. two door and four door function of
the family saloons, variations in the engine size and of
course a range of colors.
 Product contd.
It is important to note that people generally want to acquire the
benefits of the product, rather than its features.
For example for buying a motor car a person is buying such thing as
luxury or speed or economy or status.
The facts that these benefits are achieved by differences in engine
size suspension design or paintwork is really of secondary interest. All
the organizations are selling benefits of the product to their
customers.
 Questions in considering a product

•What does the customer want from the product/service? What needs does it satisfy?
•What features does it have to meet these needs?
•Are there any features you've missed out?
•Are you including costly features that the customer won't actually use?
•How and where will the customer use it?
•What does it look like? How will customers experience it?
•What size(s), color(s), and so on, should it be?
•What is it to be called?
•How is it branded?
•How is it differentiated versus your competitors?
•What is the most it can cost to provide and still be sold sufficiently profitably? (See also Price,
below.)
 Price
Price is the amount charged for a product or service.

It is the second most important element in the marketing mix.

Fixing the price of the product is a tricky job. The factors to be kept in mind
while pricing a product are: demand for a product, cost involved, consumer’s
ability to pay, prices charged by competitors for similar products, government
restrictions etc.

The activities of competitors have an important bearing on pricing decision.

The most obvious example is when a competitor’s raises or lowers his prices. If
your product can offer no particular advantages over his, then if he drops his
price, you will have to follow suit.
 Promotion
If the product is manufactured keeping the consumer needs in
mind, is rightly priced and made available at outlets
convenient to them but the consumer is not made aware about
its price, features, availability etc., its marketing effort may
not be successful.
Promotion is done through means of personal selling,
advertising, publicity and sales promotion. It is done mainly
with a view to provide information to prospective
consumers about the availability, characteristics and uses
of a product.

Advertising: Advertising is the process of communication, persuasive information about the product
to target market by means of the written and spoken word, and by visual material. There are six
principal media of advertising as follows: The press- newspaper, magazines, journals etc. ;
Commercial Television; Direct mail; Commercial radio; Outdoor- transport advertisements, and
social media etc.
The aims of advertising are given
below:
>Increase customer familiarity with a product;
>Inform customers about specific features of a
product;
>Inform the customers about the key benefits of
a product;
>Establish the creditability of a product;
>Encourage potential customer to buy the
product;
>Maintain loyalty of existing customers.
Aims of Advertising
 To support sales increases
 To create awareness
 To inform about a feature or benefit
 To remind
 To reassure
 To create an image
 To modify attitudes
 To encourage trial
Promotion (Personal Selling)

Personal selling is the promotion activity consists of face to

face meeting between the buyer and seller or his repetitive.

Advertising creates the interest and the desire, but personal

selling clinches the deal.

Personal selling is the most expensive from of promotion.

Companies which utilize an aggressive sales policy, based on

personal selling, are said to be adopting a push strategy. By
comparison firms which rely more heavily on advertising are
described as adopting a pull strategy.
Sales representative’s tasks:

 After sales servicing (dealing with technical quires, deliveries matters etc.)
 Gathering information (feedback on customers reactions, competitors
activities etc.
 Communicating regular information to customers and prospective buyers.
 Prospecting (Looking out new selling opportunities)

The effectiveness of sales representatives can be measured in a number of

different ways. Typical evaluation criteria include:

 Net sales achieved (per product, per customer etc.)

 Call rate(no. of calls given in a period)
 Values of sales per call
 No. of new sales/new customers
 Sales expense in proportion to sales achieved
 Sales Promotion
Sales promotion activities are a form of indirect advertising designed to stimulate
sales mainly by the use of incentives.
Sales promotion activities are organized and funded by the organization’s own
resources. They can take a no. of different forms, as, for example:

Customer oriented:
 Free samples
 Twin pack bargains
 Temporary price reductions
 Point of sale demonstrations

Trade Oriented
 Special discounts
 Place

Goods are produced to be sold to the consumers. They

must be made available to the consumers at a place
where they can conveniently make purchase.
So, it is necessary that the product is available at shops in
your town.
This involves a chain of individuals and institutions like
distributors, wholesalers and retailers who constitute
firm’s distribution network (also called a channel of
distribution).
The channel through which the products are distributed to
the final customer are known as channel of distribution
 Most Common Channels of Distribution
Channel A represents a direct marketing channel. Manufacturers of goods
such as tools, computers, ships and other large expensive items tend to move
them direct to the buyer without involving middleman or inter middleman.
e.g.: ship/plane

Channel B represents the typical chain for mass marketed consumer goods.
Manufacturers selling a wide range of products over a wide geographical area
to a market. Middlemen are important links in this channel.

Wholesalers, for example buy on bulk from the manufacturers, store the
goods, break them down into smaller quantities, and undertake advertising
and promotional activities.
The role of the retailer is to make products available at the point of sale.
Individual customers need accessibility and convenience from their local
sources of consumable products. They also need to see what is available, and
what alternatives are offered. e.g:
Channel C represents one of the shorter indirect channels,
where the retailers are omitted.
This kind of operation can be found in mail order business,
and in cash and carry outlets.
Wholesaler buy from manufacturers, store and
subsequently distribute direct to customers on a nation-
wide basis. e.g.: steel, cement, imported items.

Channel D is another version of a shorter, indirect channel.

In this case, it is the wholesaler who is removed from the
scene. Not, surprisingly, the retailers who dominate this
channel are powerful chains or multiples in their own right.
e.g: Tiles
 Market Segmentation
 Markets are made up of different types of customers i.e. within each total market;
there exist sub-markets which express distinctive product preferences compared
with each other.

 Market segmentation can be defined as the sub- division of a market into

identifiable buyers- groups, or sub markets, with the aim of reaching such group
with a particular marketing mix. Similarly, market segmentation is a marketing
strategy that involves dividing a broad target market into subsets of consumers who
have common needs, and then designing and implementing strategies to target
their needs and desires using media channels and other touch-points that best
allow to reach them.
Segmentation contd.
 Process of dividing the market according to similarities that exist among
the various subgroups within the market.

 The similarities may be common characteristics or common needs and

desires. Market segmentation comes about as a result of the observation
that all potential users of a product are not alike, and that the same
general appeal will not interest all prospects.

 Therefore, it becomes essential to develop different marketing tactics

based on the differences among potential users in order to effectively
cover the entire market for a particular product. There are four basic
market segmentation strategies: Behavior, Demographic; Geographic; and,
Psychographic.
Behavior Segmentation

Behavior segmentation:
 Purchasing behavior –
 The “Price-conscious” buyer is a bargain hunter looking for the
lowest possible price.
 The “Smart” buyer is a thorough, meticulous researcher who
wants to understand every intricate factor, before committing to
any single one.
 The “Risk-averse” buyer is a cautious, economically-careful
shopper, who struggles to pull the trigger on a purchase without
the proper insurance, such as a good, hassle-free return policy.
 The “Needs-proof” buyer is a shopper who needs confirmation
that the product is popular and backed up by claims of her peers.
 The “I’ll get it later” buyer is a shopper who lacks urgency.
 The “Persuadable” buyer is an impulse shopper that is highly
susceptible to cross-sell offers.
 Benefits sought
A simple example is consumers who buy toothpaste for different
reasons:
 Whitening purposes
 Sensitive teeth
 Flavor
 Price

 Customer journey stage - Building behavioral segments by customer

journey stage allows you to align communications and personalize
experiences to increase conversion at every stage. Moreover, it
helps you discover stages where customers are not progressing, so
you can identify the biggest obstacles and opportunities for
improvement. (Awareness, education, consideration, purchase,
adoption, retention, expansion, and, advocacy)
Usage – How often (and how much) are customers using your
product or service? How are they using it?
Heavy Users (or “Super Users”) are customers that spend the
most time using your solution and/or purchase most
frequently. These tend to be your most avid and engaged
customers, that can also often rely most on your
product/service.
 Average or Medium Users are customers that semi-
regularly use or purchase, but not very frequently. Often
these can be time or event-based.
 Light Users are customers that use or purchase much less
in proportion to other customers. Depending on your
business, this could even mean one-time users, but again,
it depends on the relative usage to the rest of your
customer base.
 Occasion or timing;
 customer satisfaction;
 customer loyalty;
 Interest;
 engagement level;
 user status.
 demographic segmentation,
 geographic segmentation, and
 psychographic segmentation (lifestyle; activities,
interests, & opinions; values, attitudes; social class;
and, personality)
Distribution Management and
Distribution Channels
 Distribution management is the management of all
activities which facilitate movement and co-ordination
of supply and demand in the creation of time and place
utility in goods.
 It is the art and science of determining requirements,
acquiring them, distributing them, and finally
maintaining them in an operationally ready condition
for their entire life.
Distribution Management and
Distribution Channels …cont’d
 According to Stern and Ansary, distribution channels are
sets of interdependent organizations involved in the
process of making a product or service available for use
or consumption.
 Whether selling products or services, marketing channel
decisions play a role of strategic importance in the
overall presence and success a company enjoys in the
marketplace.
Distribution Channels

Are intermediaries or middlemen

 Exist because producers cannot reach all their
consumers
 Multiply reach and provide efficiency to the marketing
process
 Facilitate smooth flow and create time, place and
possession utilities
 Have the core competence and reach
 Provide contact, experience, specialization and scales
of operation
Types of Channels

 Sales channel motivates buyers, shares information

between company and its consumers, negotiates fair
bargains for consumers and finances the transactions

 Delivery channel meant only for physical part of the

distribution

 Service channel – performs after sales service

Listing of Channel Members

 Company own sales team

 C&FAs and CSAs
 Distributors, dealers, stockists, value-added re-sellers
 Agents and brokers
 Franchisees
 Electronic channels
 Wholesalers
 Retailers
C&FAs / C&SAs

 C&FA: carrying and forwarding agent

 C&SA: carrying and selling agent
 Both are on contract with a company
 Both are transporters who work between the company
and its distributors
 Collect products from the company, store in a central
location, break bulk and dispatch to distributors against
indents
 Goods belong to the company
 C&SA also sells the goods on behalf of the company but
remits proceeds after sale
Distributors, Dealers, Stockists, Agents
 Name denotes the extent of re-distribution done by them
 Distributors invest in the products – buy products from the
company
 Are on commission, margins or mark-up
 May or may not get credit – but extend credit
 Distributors cover the markets as per a beat plan. All others
merely finance the business.
 Distributors could be exclusive for a company
 Agents bring buyer and seller together
Wholesalers
 Operate out of the main markets
 Deal with a number of company products of their choice
 Are not on contract with any company
 Sell to other wholesalers, retailers and institutions
 Negotiate about 15 days credit from company
distributors – also provide credit to their customers
 Operate on high volumes and low margins
Retailers
 The final contact with consumers
 Operate out of their shops and sell a large assortment
and variety of goods
 Located closest to consumers
 Buy from company, distributors or wholesalers
 Highest margins in the network
 Provide personalized services to their customers
Industrial Products

Customers may also directly purchase from company sales

force.
Consumer Products

Retailers may also direct from company sales force.

Patterns of Distribution
 Determines the intensity of the distribution
 Intensity decides the service level provided

Types of distribution intensity:

 Intensive
 Selective
 Exclusive
Intensive Distribution
 Distribution through every reasonable outlet available
– FMCG
 Strategy is to make sure that the product is available in
as many outlets as possible
 Preferred for consumer, pharmaceutical products and
automobile spares
Selective Distribution
 Multiple, but not all outlets in the market
 A few select outlets will be permitted to keep the
products
 Outlets selected in line with the image the company
wants to project
 Preferred for high value products
 Tanishq jewelry
 Keeps distribution costs lower
Exclusive Distribution
 Highly selective choice of outlets – may be even one
outlet in an entire market - car dealers
 Could include outlets set up by companies – Titan, Bata
 Producer wants a close watch and control on the
distribution of his products.
Distribution Channel Strategy
 Derived from the corporate strategy and the marketing
strategy
 Steps for designing the distribution strategy are:
 Defining customer service levels
 Distribution objectives and steps
 Structure of the network required
 Policy and procedure to be followed
 Define Key performance indicators
 State Critical success factors
Distribution Objectives
 Influenced by the customer expectations
 Defines the extent of time, place and possession utility
which the customer can expect out of the channel
network
Channel Functions
 Information gathering about potential customers and using
that information to segment the market and generate demand
 Consumer motivation
 Bargaining with suppliers - Agree on level of financial commitments
by the channel partners.
 Placing orders
 Financing
 Inventory management
 Risk bearing - Since most of the channels buy the products
beforehand, they also share the risk with the manufacturers and do
everything possible to sell it.
 After sales support
Factors Determining the Choice
of Distribution Channels

 Selection of the perfect marketing channel is tough. It

is among those few strategic decisions which either
make or break your company.
 Even though direct selling eliminates the intermediary
expenses and gives more control in the hands of the
manufacturer, it adds up to the internal workload and
raises the fulfilment costs. Hence these four factors
should be considered before deciding whether to opt for
the direct or indirect distribution channel.
Critical Success Factors
 The distribution strategy also needs the support and
encouragement of top management to succeed
Some of the CSFs could be:
 Clear, transparent and unambiguous policy and procedure
 Serious commitment of the channel partners
 Fairness in dealings
 Clearly defined customer service policy
 High level of integrity
 Equitable distribution at times of shortage
 Timely compensation of channel partners
Distribution Channels
 Take care of the following ‘discrepancies’
 Spatial
 Temporal
 Breaking bulk
 Assortment and
 Financial support
Spatial Discrepancy
 The channel system helps reduce the ‘distance’
between the producer and the consumer of his
products.
 Consumers are scattered
 Have to be reached cost effectively
Example: companies produce products in one location even for
global needs
Temporal Discrepancy
 The channel system helps in speeding up in meeting the
requirement of the consumers
 Time when the product is made and when it is consumed is
different
 Limited number of production points but hundreds of
consumers
 Maruti plant in Gurgaon – cars and spares are available
when the consumer wants
Breaking Bulk
 The channel system reduces large quantities into
consumer acceptable lot sizes
 Production has to be in large quantities to benefit from
economies of scale
 Consumption is necessarily in small lot sizes
 India is the ultimate example in breaking bulk – you
can buy one cigarette, one Anacin, one toffee, etc.
Need for Assortment
 The channel system helps aggregate a range of products
for the benefit of the consumer – it could be made by
one company or several of them.
 For the same product, it could be a variety of brands
and pack sizes
 MICO makes fuel injection equipment, spark plugs, etc.,
in different plants but its dealer will sell the entire
range.
Financial Support
 The channel system provides critical working capital
to its customers by extending credit.
 Some channel members like stockists and wholesalers
finance the business of their customers.
 Medical diagnostic equipment to hospitals
Channel Flows
 Forward flow – company to its customers – goods and
services
 Backward flow – customers to the company – payment
for the goods. Returned goods.
 Flows both ways - information
Three Flows Recognized
The Five Channel Flows
 Physical flow of goods
 Title flow of goods (negotiation, ownership and risk
sharing also)
 Payment flows (financing and payment)
 Information flow (about goods, orders placed and orders
executed)
 Promotion flows
Channel Flows
• Some channel member/s have to perform them
• There is a cost associated with each flow
• If a channel member is discontinued, the flow has
to be performed by another
• All flows and transactions can be effective only
with timely, accurate and correct information
• The channel flow is ideally to be handled by the
most competent channel member who can deliver
best service at the lowest cost.
Direct Distribution
• Company to consumers or retailers without use of
intermediaries. Also includes reaching Institutional
buyers.
• Selling on the Internet
• If products are technically complex, this system is
preferred
• Cost is a major consideration to adopt this mode
Direct Distribution - Examples
• Banking services
• Credit cards
• Petrol / diesel – company own outlets
• Land line phone connections
• Health services
• Utilities – electricity, water
• Subsidized ration
• Education
Indirect Distribution
• Goods may move through a set of
intermediaries
• Most FMCG companies follow this route
• The intermediary has a far better reach than
the company
• The cost of operations of an intermediary like a
wholesaler / retailer is shared with many
businesses.
Role of Intermediaries
Indirect Distribution – Examples

• All FMCG, consumer durables and pharmaceutical

• Petrol / diesel / cooking gas - franchisees
• Insurance
• Mobile phones
• All kinds of passenger transport
Five Main Types of
Customers
In the retail industry, customers can be segmented into five
main types:
 Loyal customers: Customers that make up a minority of
the customer base but generates a large portion of sales.
 Impulse customers: Customers that do not have a specific
product in mind and purchases goods when it seems good at
the time.
 Discount customers: Customers that shops frequently but
bases buying decision primarily on markdowns.
 Need-based customers: Customers with the intention of
buying a specific product.
 Wandering customers: Customers that are not sure of what
they want to buy.

Source: corporatefinanceinstitute.co