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Sales And Distribution Management

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  • 1. Sales and Distribution Management Dr. Prashant Mishra prashant@iimcal.ac.in
  • 2. Nature of Personal Selling • Most salespeople are well-educated, well- trained professionals who work to build and maintain long-term relationships with customers. • The term salesperson covers a wide spectrum of positions from: – Order taker (department store salesperson) – Order getter (someone engaged in creative selling) – Missionary salesperson (building goodwill or educating buyers)
  • 3. What is Personal Selling? Involves Two-Way, Personal Communication Between Salespeople and Individual Customers Whether: face to face, by telephone, through video conferencing, or by other means.
  • 4. The Role of the Sales Force • Personal selling is effective because salespeople can: – probe customers to learn more about their problems, – adjust the marketing offer to fit the special needs of each customer, – negotiate terms of sale, and – build long-term personal relationships with key decision makers.
  • 5. The Role of the Sales Force Sales Force Serves as a Critical Link Between a Company and its Customers Since They: Represent Customers to the Company to Produce Customer Satisfaction Represent the Company to Customers to Produce Company Profit
  • 6. Characteristics of Personal Selling Flexibility • Identify best prospects • Adapt to situations • Engage in dialogue Builds Relationships • Long term • Assure buyers receive appropriate services • Solves customer’s problems
  • 7. Personal Selling Limitations • Can not reach mass audience • Expensive per contact • Numerous calls needed to generate sale • Labor intensive
  • 8. Personal Selling Tasks Order taking • Routine – writing up orders – checking invoices – assuring prompt order processing • Suggestive selling
  • 9. Personal Selling Tasks Order getting • Seeking out customers • Creative selling • Pioneering • Account management
  • 10. Personal Selling Tasks • Missionary – Detailer – Goodwill – “Closers” • Cross-functional • Account service rep
  • 11. Some Traits of Good Salespeople
  • 12. Step 1. Prospecting and Qualifying Step 1. Prospecting and Qualifying Identifying and Screening For Qualified Potential Customers. Steps in the Selling ProcessSteps in the Selling Process Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Step 2. Pre-approachStep 2. Pre-approach Step 3. ApproachStep 3. Approach Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Step 4. Presentation/ Demonstration Step 4. Presentation/ Demonstration Telling the Product “Story” to the Buyer, and Showing the Product Benefits. Telling the Product “Story” to the Buyer, and Showing the Product Benefits.
  • 13. Steps in the Selling ProcessSteps in the Selling Process Step 5. Handling ObjectionsStep 5. Handling Objections Step 6. ClosingStep 6. Closing Step 7. Follow-UpStep 7. Follow-Up Seeking Out, Clarifying, and Overcoming Customer Objections to Buying. Asking the Customer for the Order. Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business.
  • 14. Alternative Steps: Find ’emFind ’em Grab ‘emGrab ‘em Show ‘emShow ‘em Answer ‘emAnswer ‘em Sell ‘emSell ‘em Keep ‘emKeep ‘em
  • 15. Identify and Qualifying Prospects • Prospecting: Identifying likely new customers – Leads • Qualifying: Evaluating a prospect’s potential Identify and Qualifying Prospects • Prospecting: Identifying likely new customers – Leads • Qualifying: Evaluating a prospect’s potential Creative Selling Process
  • 16. Approaching the Prospect • Contact • Rapport • “Only one chance to make a first impression” Approaching the Prospect • Contact • Rapport • “Only one chance to make a first impression” Creative Selling Process
  • 17. Sales Presentation • Persuasive communication • Attention • Interest • Desire • “Tell the product’s story” Sales Presentation • Persuasive communication • Attention • Interest • Desire • “Tell the product’s story” Creative Selling Process
  • 18. Handling Objections – Questions – Reservations • Understand Concern • Counterarguments • Acknowledge concern • Clues to process Handling Objections – Questions – Reservations • Understand Concern • Counterarguments • Acknowledge concern • Clues to process Creative Selling Process
  • 19. Closing the Sale • Closing signals • Trial close • Ask for the sale Closing the Sale • Closing signals • Trial close • Ask for the sale Creative Selling Process
  • 20. Following Up • Commitments met – Shipment – Performance • Reinforce relationship • Satisfied customers rebuy & recommend Following Up • Commitments met – Shipment – Performance • Reinforce relationship • Satisfied customers rebuy & recommend Creative Selling Process
  • 21. PlanningPlanning OrganizingOrganizing DirectingDirectingControllingControlling Setting objectives Organizing activities Recruit, select, train, develop, manage, & motivate Motivate, evaluate, & control Sales Management
  • 22. Organizing Sales ActivitiesOrganizing Sales Activities Sales Territory: • Geographic divisions • Customer types • Product lines • Selling task Sales Territory: • Geographic divisions • Customer types • Product lines • Selling task
  • 23. Geographic DivisionGeographic Division Sales Rep California Sales Rep Pacific NW Sales Rep Southeast Sales Rep Northeast District Sales Manager District Sales Manager District Sales Manager District Sales Manager Regional Sales Manager Regional Sales Manager Vice-President Marketing
  • 24. Customer TypeCustomer Type New Account #1 New Account #2 Existing Account #1 Existing Account #2 New Accounts Manager Existing Accounts Manager Vice-President Sales
  • 25. Product LineProduct Line Sales Rep Eastern Region Sales Rep West’n Region Sales rep Eastern Region Sales Rep West’n Region Snack Foods Sales Manager Beverages Sales Manager Vice-President Sales
  • 26. Directing the Sales Force • Recruiting and selecting • Training & develop • Compensating • Motivating
  • 27. Compensation MethodsCompensation Methods StraightStraight salary orsalary or wagewage StraightStraight salary orsalary or wagewage Salary plusSalary plus commissioncommission Salary plusSalary plus commissioncommission StraightStraight commissioncommission StraightStraight commissioncommission CommissionCommission with drawwith draw CommissionCommission with drawwith draw Quota-bonusQuota-bonus planplan Quota-bonusQuota-bonus planplan
  • 28. Evaluation and Control • Required reports • Measurement against plan or sales standards • Expense control • Productivity • New account development
  • 29. Ethical Issues • Kickbacks, bribes and “gifts” • Price discrimination • Cheating on expense accounts • Misrepresentation
  • 30. Distribution Channel Design and Management
  • 31. Distribution’s Function • The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost. • The “when and where” is the function of Distribution
  • 32. What is a Distribution Channel? • A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. • Marketing Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision.
  • 33. Why are Marketing Intermediaries Used? • The use of intermediaries results from their greater efficiency in making goods available to target markets. • Offer the firm more than it can achieve on it’s own through the intermediaries: – Contacts, – Experience, – Specialization, – Scale of operation. • Purpose: match supply from producers to demand from consumers.
  • 34. Distribution P R O D U C E R C O N S U M E R DISTRIBUTION
  • 35. Distribution ChannelDistribution Channel FunctionsFunctions Distribution ChannelDistribution Channel FunctionsFunctions OrderingOrdering PaymentsPayments CommunicationCommunicationTransferTransfer NegotiationNegotiation FinancingFinancingRisk TakingRisk Taking Physical Distribution Physical Distribution InformationInformation
  • 36. Typical Channels of Distribution ANUFACTURE R ONSUME R HOLESALER ETAILER GENT
  • 37. Business-to-Business Channels Direct Wholesaler Agent
  • 38. Business-to-Business Channel Trends Infomediaries & Vertical Exchange
  • 39. Conventional Distribution Channel vs. Vertical Marketing Systems VerticalVertical marketingmarketing channelchannel Manufacturer Retailer ConventionalConventional marketingmarketing channelchannel Consumer Manufacturer Consumer Retailer Wholesaler Wholesaler
  • 40. Types of Vertical Marketing SystemsTypes of Vertical Marketing Systems Corporate Common Ownership at Different Levels of the Channel Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreement Among Channel Members Contractual Contractual Agreement Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members Administered Leadership is Assumed by One or a Few Dominant Members
  • 41. Vertical Marketing Systems • Corporate systems - total ownership • Administered - strong leadership • Contractual - legal relationships
  • 42. Planning the Channel of Distribution • Determining the structure – Marketing mix strategy – Organizational resources – External environmental factors – Market characteristics – Consumer preferences and behavior – The nature and availability of Intermediaries – Other environmental factors
  • 43. Customers’ Desired Service Levels • Lot size • Waiting time • Spatial convenience • Product variety • Service backup
  • 44. Steps in Distribution Planning
  • 45. Intensive Distribution Intensive Distribution Exclusive Distribution Exclusive Distribution Selective Distribution Selective Distribution Distribution Intensity Distribution Intensity Choosing a Distribution System
  • 46. Intensive DistributionIntensive Distribution Seeks to obtain maximum product exposure at the retail level Seeks to obtain maximum product exposure at the retail level ProducerProducer RetailerRetailer RetailerRetailerRetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer
  • 47. Selective DistributionSelective Distribution Product is soldProduct is sold in a limitedin a limited number ofnumber of outletsoutlets Product is soldProduct is sold in a limitedin a limited number ofnumber of outletsoutlets ProducerProducer RetailerRetailer RetailerRetailerRetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer
  • 48. Product is sold inProduct is sold in only one outlet inonly one outlet in a given areaa given area Product is sold inProduct is sold in only one outlet inonly one outlet in a given areaa given area ProducerProducer RetailerRetailer Exclusive Distribution
  • 49. Developing Distribution Tactics Selecting Channel PartnersSelecting Channel Partners Reward or Coercive Power Reward or Coercive Power Legitimate Power Legitimate Power Economic Power Economic Power Managing the Channel of Distribution Channel Leader Power Managing the Channel of Distribution Channel Leader Power Distribution Channels & the Marketing MixDistribution Channels & the Marketing Mix
  • 50. Materials Handling Moving Products Into, Within, and Out of Warehouses Materials Handling Moving Products Into, Within, and Out of Warehouses Warehousing Number Needed Where What Type Warehousing Number Needed Where What Type Inventory Control When to order How much to order Inventory Control When to order How much to order Order Processing Received Processed Shipped Order Processing Received Processed Shipped Physical Distribution FunctionsTransportation Rail, Water, Trucks, Air, Pipeline, Internet Physical Distribution
  • 51. Rail Cost-effective for shipping bulk products, piggy-back, fishyback, birdyback. Rail Cost-effective for shipping bulk products, piggy-back, fishyback, birdyback. Water Low cost for shipping bulky, low-value, non perishable goods, slowest form. Water Low cost for shipping bulky, low-value, non perishable goods, slowest form. Truck Most important carrier for consumer goods, flexible. Truck Most important carrier for consumer goods, flexible. Air High cost, ideal when speed is needed or distant markets have to be reached Air High cost, ideal when speed is needed or distant markets have to be reached Pipeline Carry petroleum based products, very low cost, requires little energy. Pipeline Carry petroleum based products, very low cost, requires little energy. Transportation Modes Internet Web sites have products available, used especially for services. Internet Web sites have products available, used especially for services.
  • 52. Channel Relationships • Cooperation • Conflict • Power – Coercive – Expert – Legitimate
  • 53. Decision Making Framework Prospects of Destructive Conflict Importance of threatened channel in terms of current or potential volume or profitability High Low High (FIRE) Act to avert or address conflict Allow threatened channel to decline Low (Smoke) Look for opportunities to reassure threatened channel and leverage your power Do nothing
  • 54. Channel Conflict: Identifying Threats • First, are the channels really attempting to serve the same end users? • Second, do channels mistakenly believe they are competing when in fact they are benefiting from each other's actions? • Third, is the deteriorating profitability of a griping player genuinely the result of another channel's encroachment? • Fourth, will a channel's decline necessarily harm a manufacturer's profits?
  • 55. Managing Channel Conflict WHEN TWO OR MORE CHANNELS TARGET THE SAME CUSTOMER SEGMENT • Differentiate the Channel offer • Define Exclusive Territories • Enhance or Change the Channels Value
  • 56. Managing Channel Conflict CHANNEL ECONOMICS DETERIORATE • Change the channels economic formula: (Grant rebates if an intermediary fulfill certain requirements; Adjust margins between products to support different channel economics; and Treat channels fairly to create level playing field) • Create Segment Specific Programs (certain services not available via direct channels) • Complement value proposition of the existing channel by introducing a new channel • Foster consolidation among intermediaries in a declining channel
  • 57. Managing Channel Conflict THREATENED CHANNEL STOP PERFORMING OR RETALIATE AGAINST THE SUPPLIER • Leverage Power (eg. Strong Brand) against the channel to prevent retaliation • Migrate volume to winning channel • Back off
  • 58. Other Distribution Management Issues • Reverse distribution One Coca Cola Distributor One thousand retailers OK Difficult • Ethical, Political, & Legal