SALES AND DISTRIBUTION MANAGEMENT

Prepared By: Abhishek J. Frederick Asst.Professor

Introduction
Sales management originally referred exclusively to the direction of sales force personnel. Later the term took on the broader significance-in addition to the management of personnel selling.

Definition
Sales management meant management of all marketing activities including advertising, sales promotion, marketing research, physical distribution, pricing and product merchandising.

 According to American Marketing Association sales management means the planning, direction and control of personnel selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force.

Evolution of Sales Management

Situation before industrial revolution in U.K. (1760AD) Situation after industrial revolutions in U.K., and U.S.A. Marketing function splits into sales and other functions like market research, advertising, physical distribution

Situation before industrial revolution in U.K. (1760 A D)

Prior to Industrial revolution Sales were not a problem for the sellers. Main problem which used to trouble was Production Customers were generally the Locals. Mostly an Individual in the concern were delegated the responsibility of manufacturing and selling. Major emphasis was on the Manufacturing Process and its problems. Selling was a part-time affair.

Situation after industrial revolutions in U.K.and U.S.A.

Need arise to search for new markets to sell the products. New factories and latest technology improved the speed of production of goods of various description. Continued operation of these units demanded great expansions in the area of sales coverage, due to unabsorbtion of the products in the adjacent market.

Problems related to after industrial revolution

Hiring of large number of workers. Acquisition of land for erecting plant and machinery. Requirement of huge funds.

To solve the problems of Post Revolution

Transferred to corporate house.

Evolution of sales management

Traditionally, marketers focused on Developing Methods and Practices to enhance Sales Force Productivity and Efficiency focusing on Individuals Performance
Now focus is on the Process (Formulating Strategies and Methods for improving Selling Approach) involved in the Enhancement of Performance
Sales Force Downsizing Application of Information Technology Enhance use of Telemarketing The use of Independent Sales Organizations Electronic Data Interchange Cross Functional Team Selling

Sales Management As a Composite Function of Marketing, it has evolved into key area of Marketing Expertise and Knowledge It focuses on: Development of Sound Sales and Distribution Strategy Management of Marketing Channels Sales Force Management of an Organization

Sales Management
Traditionally, marketers focused on Developing Methods and Practices to enhance Sales Force Productivity and Efficiency focusing on Individuals Performance Now focus is on the Process (Formulating Strategies and Methods for improving Selling Approach) involved in the Enhancement of Performance
Sales Force Downsizing Application of Information Technology Enhance use of Telemarketing Key Account Management The use of Independent Sales Organizations Electronic Data Interchange Cross Functional Team Selling

Evolution of Sales Management

Marketings Early Development
Marketing was the natural outgrowth of Production Surpluses Trading was the beginning of Modern Marketing System After purchasing goods, Traders resold them in other Geographical Locations Traders were chiefly Responsible for the Physical Distribution of Goods Town Economy: Medieval Economic Organizations in which commercial activities were concentrated in the Local Population Centers Agricultural Middleman: Early businessperson who purchased Staple Products from the countryside and transported them to Local Market for resale Guild System (Association of Craftsmen): The Guild System provided the background from which First Industrial Society emerged

Evolution of Sales Management

Marketings Early Development
Bagman: Eighteenth Century Salesperson who sold Goods produced by the Developing Factory System Bagman emerged in Late Eighteenth Century during Englands Industrial Revolution Bagman are the first True Salespersons as they sold Goods for Firms in which they did not have any Ownership They are called Bagman as they sold their Goods from Sample Bags Sometime after 1810, there developed Two Methods of Personal Selling Horse-Drawn Wagons called Wagon Peddlers Retailing: Result of Strict Licensing requirements impose on Peddlers

Evolution of Sales Management

Marketings Early Development Credit Investigators: Supplier Employed people who evaluated Retailers Credit and developed Good Will. Commercial Traveler : Credit Investigators later on started to sell Merchandise to Retailer Greeters: Supplier Employed Sales Reps who Solicited Business from Retailers on buying Trips Rural and Small Town Retailers both made annual Trips to Cities to buy Merchandise They shifted their base to Railroad Stations

Evolution of Sales Management

Marketings Early Development Drummers: 19th Century Salespeople who journeyed to merchants places of business Increase competition made Greeters to travel Outside the City The term Greeter was replaced by Drummer There are Two Views about the Term Drummer They Drummed up Sales for Manufactures and Wholesalers which they represented The trunks which were used for carrying Samples, Personal Items were shaped like Drums

Evolution of Sales Management

Selling in 20th Century From Production to Sales At first, Selling was overshadowed by tremendous growth of Manufacturing (Industrial Revolution) Focus was on Production rather than Selling

Production Surpluses resulted in Re-emergence of Sales Era until WWII Great Depression >> Aggressive Selling >> Need for Successful Marketing Creation and Rapid Growth of Corporate Departments designed to Support Sales Effort e.g. Marketing Research Postwar Era >> Modern Sales Era >> Professional Salespeople >> Greater Emphasis on Educated Sales People and Extensive Sales Training

Evolution of Sales Management

Selling in 20th Century
Traditional Sales Approaches During the Modern Sales Era Traditional Sales Function called Salesmanship Approach Emerged Salespeoples behavior was considered the Key Ingredient in Sales Process Success or Failure of a Sales Call was depended on how the Salesman handled a Prospect

There were Three Variations of Traditional Sales Approaches: Canned Sales Presentation Stimulus Response Theory Selling Formulas

Evolution of Sales Management

Selling in 20th Century
Traditional Sales Approaches Canned Sales Presentation A prepared, Structured Sales Script memorized by Salespeople First used in Door to Door Selling and Now in Telemarketing Company considers the Best Way to Sell Major Weakness Prospect is treated as essentially Passive

Stimulus Response Theory

If the Salesperson Says or Does the Proper thing (Provides the Right Stimulus) then Prospect will respond to the Stimulus by buying Good or Service

Evolution of Sales Management

Selling in 20th Century
Traditional Sales Approaches Canned Sales Presentation A prepared, Structured Sales Script memorized by Salespeople First used in Door to Door Selling and Now in Telemarketing Company considers the Best Way to Sell Major Weakness Prospect is treated as essentially Passive

Stimulus Response Theory

If the Salesperson Says or Does the Proper thing (Provides the Right Stimulus) then Prospect will respond to the Stimulus by buying Good or Service

Evolution of Sales Management

Selling in 20th Century
Traditional Sales Approaches Selling Formulas Salespeople has to lead Prospects through various Steps in a Persuasive manner Arthur Fredrick Sheldon Selling Course AIDR: Attention, Interest, Desire, Resolve are four progressive Identifiable Stages before making Purchase Decision AIDA: Attention, Interest, Desire, Action

Evolution of Sales Management

Selling in 20th Century
Emergence of the Marketing Concept During 1950s and 1960s, The Marketing Concept emerged as a Framework for Business Philosophy of Customer Orientation The formation of Technically Qualified Sales Support Departments aided in Professionalization of Field Sales Force

Major Changes under Customer Orientation Philosophy are:

Problem Solving Role of Salesperson

Helping customers to buy rather than attempting to sell them something Building Long Term Relationships Questioning and Need Analysis has replaced Sales Presentations

Objectives of Sales Management

Sales volume Contribution to profits Continued growth

Sales executive do not carry full burden of the effort to reach these objectives but they make major contributions. Top management has the final responsibility because it is accountable for the success and failure of the entire enterprise
.

Ultimately top management is accountable for supplying an ever increasing volume of socially responsible products that final buyers want at satisfactory prices

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

Roles and Skills of a Modern Sales Manager

Some of the important roles of the modern sales manager are:
A member of the strategic management team A member of the corporate team to achieve objectives A team leader, working with salespeople Managing multiple sales / marketing channels Using latest technologies (like CRM) to build superior buyer-seller relationships Continually updating information on changes in marketing environment

Skills of a Successful Sales Manager

People skills include abilities to motivate, lead, communicate, coordinate, team-oriented 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

Types of Sales Managers / Levels of Sales Management Positions

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

E.G. A company wants to increase sales of electric motors by 15 percent, as one of the sales objectives. (see next slide)

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

Good Selling Process

Good selling implies:1) Identifying the right customer 2) Communicating the product benefits to the customers and 3) Exchange of goods/ services for money

Sales are the culmination of all the marketing efforts and in a nut shell, it is the exchange of good and services, for money. It may be said that marketing is all the activities conducted to prepare for sales. Sales are all the activities required to close the deal.

Why customers do not seek goods?

1) He/ She doesnt know that the product is available 2) May not know where the product is available 3) And have no idea of whom to contact 4) Have no clear idea of the value proposition and the benefits 5) May not be clear of the utility of the product in solving his / her problem

Sales force then plays an important role

1) To reach out to the customer and inform him/ her about the product benefits 2) Make the product easily available to the customer

The product can be made easily available by the following methods:-

1) Meeting the customer on a one-one basis and delivering the product at the doorstep. This is referred to as personal sales. 2) Make the product available at place which is easily approachable by the customer. This is refereed to Indirect or channel sales.

Sales management then begins with identifying the process of sales. The sales strategy determines the route the sales would take.

Sales Approaches
Direct sales Approach
Sales Approaches

In-Direct sales Approach

Direct sales approach may be:1) Selling to offices- (for examples, Office Automation Products) 2) Selling to Industries- (business to business B2B) 3) Door-to-door sell In-Direct sales approach 1) Company to retailer to customer 2) Company to wholesaler and then to retailer to customer 3) Company to wholesaler to distributor and then to retailer to customer

 The marketing mix consisting of various components plays an important role in establishing the market place/ dominance of a product. According to the market needs the type of product, the pricing of product, the various promotion mechanisms to be used and the type of distribution network followed (place) should be decided. Various tools of promoting a product include advertising, public relations, personal selling, sales promotion and Internet based promotions. Personal selling can be understood as the one to one oral communication between the sales personnel and the target group in such a way that both the parties benefit from each other. The oral communication could be a personal meeting, a telephone conversation or by using latest trends in technology such video conferencing

Personal selling Vs Other Promotional tools

Personal selling is used where the customer cannot be reached or communicated easily about the company product / services by other means. Business markets.

Functions of the sales manager

Charles Futrell(1998) describes the functions of the sales manager as follows:1) Planning :- Building a profitable customer oriented team 2) Staffing:- Hiring the right people to sell and lead 3) Training:- Educating sales personnel according to company objectives 4) Leading:- Guiding average people to perform at above average levels 5) Controlling:- Evaluating the past to guide the future

The outcome of these several functions would be the attainment of objectives such as
1) Achieving defined goals 2) Product sales and profits 3) Better Customer satisfaction levels 4) Efficiency and 5) Effectiveness

Chapter 1: Introduction to Sales Management

Evolution of Personal Selling Strategies

Persuasion
Negotiation Consultative Selling

Business Management
Partnership Strategies

Chapter 1: Introduction to Sales Management

Evolution of Personal Selling Strategies
1. Persuasion: The peddlers carried their inventory and their goal was to Persuade Buyers to buy goods at hand

2. Negotiation: As competition grew and buyers had a choice to opt for a particular player:

It became requirement to Understand the Needs of Customers Modification of Products, Prices and other Related Services

3. Consultative Selling (1970s): The sellers were required to identify New Needs and Uses for the existing products:
Consultative Selling required Sellers to think like Buyers

Chapter 1: Introduction to Sales Management

Evolution of Personal Selling Strategies
4. Business Management (1980s 1990s): Emphasis was put on Management of Sales Territories and Accounts as Profit Centers Salespersons were expected to have Financial Knowledge Training in Business Management and Practice of Business Management Strategies

5. Partnership Strategies:
Linking of Information Systems of Buyers and Sellers to improve Product Planning and Reducing Inventory

Information Sharing
Salespersons are trained on Data Processing, Data Warehousing & Mining, Financial Analysis and Relationship Building Strategy

Chapter 1: Introduction to Sales Management

Types of Personal Selling
1. Industrial Selling: It is basically termed as Business to Business Selling and it is grouped into Four Categories based on Consumer Base: 1. Selling to Resellers: Wholesalers or Retailers which buy Finished Goods and resells them to End Users

2. Selling to Business Users: This means Output of one Producer enters the Production Process of another Producer to manufacture a Final Good
3. Institutional Selling: Institutional Customers use products in their Daily Operations

Products are used to Support Buyers Business rather than Producing Buyers Products
4. Selling to Government: In most countries, Government is a Leading Buyer

Chapter 1: Introduction to Sales Management

Types of Personal Selling
2. Retail Selling: Retailing is defined as defined as all the Activities directly related to Sales of Products and Services to Ultimate Consumer In Retail Environment, a customer approaches the seller 3. Service Selling: Services are Activities or Benefits provided to a consumers and Services are different from Products in 4 Areas: 1. Services are Intangible 2. Services are Produced, Sold and Consumed at the Same Time 3. Services cannot be Standardized 4. Services cannot be Stored or Inventoried

Chapter 1: Introduction to Sales Management

Types of Selling
The diverse nature of Buying Situations demand a Diverse Pattern of Selling Function and Selling Function varies according to nature of Selling Tasks: 1. Order Taker Salespeople A. Inside Order Takers are the Sales Assistants and their role is just to Complete the Transactions B. Delivery Salespeople: Their job is to Deliver Products to the consumers C. Outside Order Takers visit the customers regularly and their primary task is to Respond to Customer Calls rather than seek New Customers 2. Order Creators Missionary Salespeople are the sales staff who do not close a sale but Persuade the customers to Promote a Sellers Brand Medical Representatives

Chapter 1: Introduction to Sales Management

Types of Selling
1. Order Getters Salespeople: These are the salespeople whose objective is to Persuade customers to make a Direct Purchase. A. New Business Salespeople persuade New Buyers and Non Users to buy companys Products & Services

B. Organization Salespeople are the Industrial Sellers who try to establish and nurture long term relationships with Organizational Buyers
C. Consumer Salespeople comprise of Door to Door Salespeople who sell Products & Services for Individual Consumption D. Technical Support Salespeople support Frontline Salespeople when product is Technically Complex or needs negotiations demanding Financial Attention E. Merchandisers provide Sales Support in Retail and Wholesale Selling. The give advice on Display, Execution of Sales Promotion Programs and help in display of Point of Purchase Material and marinating Stock Levels

Chapter 1: Introduction to Sales Management

Difference between Selling & Marketing
Selling
1. Emphasis on Product 2. Product First & then Decision to sell it

Marketing
1. Emphasis on Consumer Needs and Wants 2. Understanding of Customer Needs & then a Product or Service to satisfy these Needs 3. Management is Profit Oriented 4. Planning is Long Term New Products, Tomorrow's Markets & Future Growth 5. Stressed Needs of Buyer 6. View business as Consumer Satisfying Process 7. Emphasizes on Innovation

3. Management is Sales Volume Oriented 4. Planning is Short Term todays Products & Markets 5. Stresses needs of Seller 6. Views business as Goods Producing Process 7. Emphasizes on staying with existing Technology and Reducing Costs

Chapter 1: Introduction to Sales Management

Difference between Selling & Marketing
Selling
8. Different departments work separately

Marketing
8. All departments work in Integrated manner 9. Consumer determines price, price determines cost 10. Marketing views customers as the very beginning of a Business

9. Cost determines price

10. Selling views customers as last link in Business

Mohammad mujassam

Sales Management Model

 The 1st step describing the personal selling function deals with understanding the job activities and the sales process involved in personal selling . The 2nd step Defining the strategic role of sales function will deal with the corporate, business and marketing level strategic decisions which typically provide guidelines within which the sales manager and salespeople must operate.

 The 3 rd step Designing the sales organization deals with the importance of designing an effective sales organization which is necessary to implement the strategies successfully. The 4th step Developing the sales force highlights the importance of right recruitment and selection methods and the need for proper training of the sales force personnel

 The 5 th step Directing the sales force presents that hiring the best people for sales is one thing and directing their efforts to meet the sales organization goals and objectives is another. The 6th step Determining sales force effectiveness and performance deals with monitoring the progress of sales force to determine the effectiveness and performance. Developing forecasts, assigning quotas and budgets provides necessary information for the performance evaluation.