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### Sdm

1. 1. BEHAVIOURAL EQUATION THEORY <ul><li>J A HOWARD FORMULATED THE THEORY </li></ul><ul><li>FOUR ESSENTIAL ELEMENTS OF THE LEARNING PROCESS INCLUDED IN STIMULUS-RESPONSE MODEL ARE </li></ul><ul><li>DRIVES: STRONG INTERNAL STIMULI THAT IMPELS THE BUYER TO RESPOND. THERE ARE TWO KINDS – </li></ul><ul><li>INNATE DRIVE: STEMS FROM PHYSIOLOGICAL NEEDS </li></ul><ul><li>LEARNED DRIVES: SUCH AS STRIVING FOR STATUS OR SOCIAL APPROVAL, ARE ACQUIRED WHEN PAIRED WITH SATISFYING OF INNATE DRIVES </li></ul><ul><li>2. CUES: WEAK STIMULI THAT DETERMINE WHEN THE BUYER WILL RESPOND </li></ul><ul><li>TRIGGERING CUES: ACTIVATE THE DECISION PROCESS FOR ANY GIVEN PURCHASE </li></ul><ul><li>NON-TRIGGERING CUES INFLUENCE THE DECISION PROCESS BUT DO NOT ACTIVATE IT. TWO KINDS – </li></ul>
2. 2. CONTD… <ul><li>PRODUCT CUES: EXTERNAL STIMULI RECEIVED FROM THE PRODUCT DIRECTLY. (PACKAGE, WEIGHT, PRICE) </li></ul><ul><li>INFORMATIONAL CUES: EXTERNAL STIMULI THAT PROVIDE INFORMATION ABOUT THE PRODUCT. MAY COME FROM ADVERTISING, PERSONAL SELLING ETC. </li></ul><ul><li>SPECIFIC PRODUCT AND INFORMATION CUES MAY ALSO ACT AS TRIGGERING CUES </li></ul><ul><li>3. RESPONSE: WHAT BUYER DOES </li></ul><ul><li>4. REINFORCEMENT: ANY EVENT THAT STRENGTHENS THE BUYER’S TENDENCY TO MAKE PARTICULAR RESPONSE </li></ul><ul><li>HOWARD INCORPORATES THESE FOUR ELEMENTS INTO AN EQUATION: </li></ul><ul><li>B=P X D X K X V </li></ul><ul><li>B= RESPONSE (PURCHASING THE BRAND/PATRONISING THE SUPPLIER) </li></ul><ul><li>P= PREDISPOSITION (INWARD RESPONSE TENDENCY) </li></ul><ul><li>D= PRESENT DRIVE LEVEL (AMOUNT OF MOTIVATION) </li></ul><ul><li>K= INCENTIVE POTENTIAL (VALUE OF PRODUCT OR ITS POTENTIAL SATISFACTION TO THE BUYER) </li></ul><ul><li>V= INTENSITY OF ALL CUES </li></ul>
3. 3. CONTD… <ul><li>THE RELATION AMONG THE VARIABLE IS MULTIPLICATIVE. THUS, IF ANY INDEPENDENT VARIABLE HAS ZERO VALUE, B WILL ALSO BE ZERO AND THERE IS NO RESPONSE. </li></ul><ul><li>BUYER-SELLERS DYAD AND REINFORCEMENT </li></ul><ul><li>BY PROVIDING THE PRODUCT TO THE BUYER </li></ul><ul><li>BY GIVING SOCIAL APPROVAL </li></ul><ul><li>SALESPERSONS INFLUENCE PROCESS </li></ul><ul><li>THE PROCESS IS EXPLAINABLE IN TERMS OF EQUATION </li></ul><ul><li>B= P X D X K X V </li></ul><ul><li>SALESPERSON INFLUENCES P DIRECTLY </li></ul><ul><li>SALES PERSON ALSO INFLUENCES D, WHICH ULTIMATELY AFFECTS K </li></ul><ul><li>FINALLY THE SALES PERSON VARY THE INTENSITY OF HIS EFFORTS, SO MAKING DIFERNCE IN V </li></ul><ul><li>SALESPERSON’S ROLE IN REDUCING BUYER’S DISSONANCE: FOUR TYPES OF CASES INVOLVING THE SALESPERSON’S ROLE. </li></ul><ul><li>AN ESTABLISHED PRODUCT: AN ONGOING SALESPERSON’S-CLIENT RELATIONSHIP </li></ul><ul><li>AN ESTABLISHED PRODUCT: A NEW SALESPERSON-CLIENT RELATIONSHIP </li></ul><ul><li>A NEW PRODUCT: AN ONGOING SALESPERSON-CLIENT RELATIONSHIP </li></ul><ul><li>A NEW PRODUCT: A NEW SALES PERSON-CLIENT RELATIONSHIP </li></ul><ul><li>HOW TO REDUCE BUYERS DISSONANCE </li></ul><ul><li>TO EMPHASIZE THE ADVANTAGES OF PRODUCTS PURCHASED </li></ul><ul><li>BY PROVIDNG THE INFORMATION THAT PERMITS THE BUYER TO RATIONALIZE THE DECISION </li></ul>
4. 4. FORMULATION OF PERSONAL SELLING STRATEGIES <ul><li>PURE COMPETITION </li></ul><ul><li>NO SINGLE BUYER/SELLER IS SO LARGE THAT AFFECTS THE PRODUCT TOTAL DEMAND/SUPPLY </li></ul><ul><li>ALL SELLERS PRODUCTS ARE IDENTICAL </li></ul><ul><li>NO ARTIFICIAL RESTRAINTS ON PRICE EXISTS </li></ul><ul><li>ALL BUYERS ARE INFORMED ABOUT SELLERS PRICE </li></ul><ul><li>PERSONAL SELLING STRATEGY </li></ul><ul><li>UNREALISTIC ASSUMPTIONS, THEREFORE, NO PERSONNEL SELLING STRATEGIES </li></ul><ul><li>MONOPOLISTIC COMPETITION </li></ul><ul><li>LARGE NUMBER OF SELLERS OF GENERIC PRODUCT BUT EACH PRODUCT IS DIFFERENTIATED </li></ul><ul><li>EASY ENTRY CONDITIONS </li></ul><ul><li>BUYERS ARE NOT FULLY INFORMED ABOUT THE OFFERING OF COMPETING SELLERS </li></ul><ul><li>PERSONAL SELLING STRATEGY </li></ul><ul><li>SELLERS DIFFERENTIATE THEIR MARKET OFFERINGS THROUGH INDIVIDUALIZING ONE OR SEVERAL COMPONENTS OF OVERALL MARKETING STRATEGY. </li></ul>
5. 5. OLIGOPOLISTIC COMPETITION <ul><li>FEW & LARGE COMPETITORS </li></ul><ul><li>ENTRY BARRIERS </li></ul><ul><li>CHANGING OF MARKETING STRATEGY OF ONE COMPETITOR HAS DIRECT REPURCUSSIONS ON OTHER </li></ul><ul><li>PERSONAL SELLING STRATEGIES </li></ul><ul><li>PLAYS IMPORTANT ROLE IN BUILDING AND MAINTAINING DEALER COMPETITION, IN SERVICING THE DISTRIBUTION NETWORK AND IN GATHERING INFORMATION ON COMPETITOR’S ACTIVITIES. </li></ul><ul><li>NO DIRECT COMPETITION </li></ul><ul><li>NO DIRECT BUT INDIRECT COMPETITION EXISTS. </li></ul><ul><li>PERSONAL SELLING STRATEGIES </li></ul><ul><li>SELLING STRATEGIES REQUIRED TO STIMULATE PRIMARY DEMAND </li></ul><ul><li>REQUIREMENT OF DISTRIBUTION STRATEGY </li></ul><ul><li>REQUIREMENT OF PRICING STRATEGY </li></ul><ul><li>INTEGRATION OF PRODUCT, DISTRIBUTION, PRICING STRATEGIES IN OVERALL MARKETING STRATEGIES </li></ul>
6. 6. DETERMINING THE KIND OF SALES PERSONNEL <ul><li>PRODUCT MARKET ANALYSIS </li></ul><ul><li>PRODUCT SPECIALIST </li></ul><ul><li>MARKET SPECIALIST </li></ul><ul><li>COMBINATION OF BOTH </li></ul><ul><li>2. ANALYSIS OF SALES PERSONNEL ROLE IN SECURING THE ORDER: CHOICE OF BASIC SELLING STYLE </li></ul><ul><li>TRADE SELLING: </li></ul><ul><li>DEVELOPING AND MAINTAING LONG-TERM RELATIONSHIP WITH STABLE CUSTOMERS </li></ul><ul><li>LOW KEY SELLING, LITTLE OR NO PRESSURE, JOB IS DULL & ROUTINE </li></ul><ul><li>ADVETISING & OTHER PROMOTIONAL MEASURES ARE PREFERRRED THAN PERSONAL SELLING </li></ul><ul><li>SALES PERSON ROLE IS TO BUILDUP VOLUME BY PROVIDING PROMOTIONAL ASSISTANCE </li></ul><ul><li>B) MISSIONARY SELLING </li></ul><ul><li>LOW KEY AND DOES NOT REQUIRE HIGH-LEVEL TECHNICAL TRAINING OR ABILITY </li></ul><ul><li>SALESPERSON JOB IS TO PERSUADE INDIRECT CUSTOMERS TO BUY FROM THE COMPANY’S DIRECT CUSTOMERS </li></ul>
7. 7. CONTD… <ul><li>C) TECHNICAL SELLING </li></ul><ul><li>SALES PERSON DEALS WITH COMPANY’S ESTABLISHED ACCOUNT & PERFORM ADVISORY FUNCTION </li></ul><ul><li>SALES PERSON SELLS DIRECTLY TO THE INDUSTRIAL USERS & OTHER BUYERS </li></ul><ul><li>SALES PERSON SPECIALIZE BY EITHER PRODUCT OR MARKET </li></ul><ul><li>THE ABILITY TO IDENTIFY, ANALYZE & SOLVE CUSTOMERS PROBLEM IS IMPORTANT </li></ul><ul><li>NEW BUSINESS SELLING </li></ul><ul><li>SALES PERSONS ROLE IS TO CONVERT PROSPECTS INTO CUSTOMER </li></ul><ul><li>SALES PERSON SHOULD UNUSUALLY CREATIVE, INGENIOUS AND POSSESS A HIGH DEGREE OF RESOURCEFULNESS </li></ul>
8. 8. DETERMINING THE SIZE OF SALES FORCE <ul><li>THE WORKLOAD METHOD: ALL SALES PERSONS SHOULD SHARE EQUAL WORKLOAD </li></ul><ul><li>CLASSIFY CUSTOMERS INTO SALES VOLUME POTENTIAL CATEGORY </li></ul><ul><li>DECIDE ON LENGTH OF TIME PER SALES CALL AND DESIRED CALLS FREQUENCIES ON EACH CLASS </li></ul><ul><li>CALCULATE THE TOTAL WORKLOAD </li></ul><ul><li>CALCULATE TOTAL WORKTIME AVAILABLE PER PERSON </li></ul><ul><li>DIVIDE TOTAL WORKTIME AVAILABLE PER PERSON BY TASK </li></ul><ul><li>CALCULATE THE TOTAL NO. OF SALES PERSON NEEDED </li></ul><ul><li>LARGE FIRMS LIKE IBM & AT&T HAS USED THIS APPROACH </li></ul><ul><li>BASIC FLAW – DISREGARD PROFIT AS AN EXPLICIT CONSIDERATION </li></ul><ul><li> - ALL SALES PERSON WILL UTILIZE THEIR TIME WITH EQUAL EFFICIENCY </li></ul>
9. 9. CONTD… <ul><li>THE SALES POTENTIAL METHOD </li></ul><ul><li>PERFORMANCE OF THE SET OF ACTIVITIES CONTAINED IN THE JOB DESCRIPTION REPRESENTS ONE SALES PERSONNEL UNIT </li></ul><ul><li>DOES NOT CONSIDER THE LEAD TIME </li></ul><ul><li>ASSUMES SALES POTENTIAL ARE IDENTICAL IN ALL TERRITORIES </li></ul><ul><li>ESTIMATE OF SALES PRODUCTIVITY OF ONE UNIT SALE & TURNOVER IS CRUCIAL & RELIES ON ACCURACY </li></ul><ul><li>N = S/P+T(S/P) OR N=S/P(1+T) </li></ul><ul><li>N = NO. OF SALES PERSONNEL UNITS </li></ul><ul><li>S = FORECASTED SALES VOLUME </li></ul><ul><li>P = ESTIMATED SALES PRODUCTIVITY OF ONE SALES PERSONNEL UNIT </li></ul><ul><li>T = ALLOWANCE FOR RATE OF SALES TURNOVER </li></ul>
10. 10. CONTD… <ul><li>3 . INCREMENTAL METHOD </li></ul><ul><li>BEST APPROACH TO DETERMINE SALES FORCE SIZE </li></ul><ul><li>BASED ON PROPOSITION: NET PROFITS WILL INCREASE WHEN ADDITIONAL SALES PERSONNEL ARE ADDED IF THE INCREMENTAL SALES REVENUES EXCEEDS THE INCREMENTAL COSTS INCURRED </li></ul><ul><li>CONCEPTUALLY MOST CORRECT BUT MOST DIFFICULT TO APPLY </li></ul><ul><li>IT IS DOUBTFUL THAT THE METHOD IS APPROPRIATE WHERE PERSONAL SELLING IS NOT PRIMARY MEANS OF MAKING SALES </li></ul><ul><li>IT FAILS TO ACCOUNT FOR POSSIBLE COMPETITIVE REACTIONS AND LONG TERM INVESTMENT EFFECT OF PERSONAL SELLING </li></ul>
11. 11. STEPS IN PERSONAL SELLING PROSPECTING PRESENTATION & DEMONSTRATION HANDLING OBJECTIONS APPROACH PRE-APPROACH CLOSE
12. 12. PROSPECTING <ul><li>THE PLANNING WORK WHICH IS ESSENTIAL IN ELIMINATING NON-BUYERS </li></ul><ul><li>STEPS IN PROSPECTING </li></ul><ul><li>FORMULATING PROSPECTS DEFINITION </li></ul><ul><li>SEARCHING OUT POTENTIAL ACCOUNTS </li></ul><ul><li>QUALIFYING PROSPECTS & DETERMINING PROBABLE REQUIREMENTS </li></ul><ul><li>RELATING COMPANY PRODUCT’S TO EACH PROSPECT’S REQUIREMENT </li></ul>
13. 13. CONTD… <ul><li>METHODS OF PROSPECTING </li></ul><ul><li>ACQUINTANCE REFERENCES </li></ul><ul><li>COLD CALLING </li></ul><ul><li>CENTRE OF INFLUENCE METHOD </li></ul><ul><li>PERSONAL OBSERVATION METHOD </li></ul><ul><li>DIRECT MAIL/ TELEPHONE METHOD </li></ul><ul><li>COMPANY’S RECORD </li></ul><ul><li>NEWSPAPERS </li></ul><ul><li>RETAILERS </li></ul><ul><li>ANY OTHER </li></ul>
14. 14. APPROACH <ul><li>DIRECT CONTACT BETWEEN SALES PERSON & PROSPECT </li></ul><ul><li>IMPORTANCE OF SUCCESSFUL APPROACH </li></ul><ul><li>ENHANCES SALES & THUS IMPORTANT FOR RUNNING BUSINESS </li></ul><ul><li>ENLIGHTENS THE CUSTOMER </li></ul><ul><li>FAILED APPROACH GIVES OPPORTUNITY TO RIVALS </li></ul><ul><li>KEY TO SUCCESSFUL APPROACH </li></ul><ul><li>MEET PROSPECT WITH PRIOR APPOINTMENT </li></ul><ul><li>PROFESSIONALISM, CONFIDENCE & COMPLETE INFORMATION </li></ul><ul><li>MAKE PROSPECT FEEL RELAXED </li></ul><ul><li>RESPECT THE VIEWS & CRITISM OF PROSPECTS </li></ul><ul><li>EFFECTIVE PRESENTATION WITH THE USE OF SALES FIGURE </li></ul>
15. 15. CONTD… <ul><li>NEED IDENTIFICATION </li></ul><ul><li>SALES PERSON CONFIRMS THAT PERSON HAS A NEED TO PURCHASE </li></ul><ul><li>IDENTIFICATION OF DECISION PROCESS ELEMENT FACING THE CUSTOMER (AUTHORITY) </li></ul><ul><li>GAINING PRE-COMMITMENT </li></ul><ul><li>METHODS OF APPROACH </li></ul><ul><li>CASHING ON BRAND NAME OR COMPANY’S REPUTATION </li></ul><ul><li>CUSTOMER BENEFIT APPROACH </li></ul><ul><li>INNOVATIVE PRODUCTS OPEN THE DOOR TO SALESMAN </li></ul><ul><li>THE PREMIUM APPROACH </li></ul><ul><li>THE SHOCK APPROACH </li></ul><ul><li>THE APPROACH OF MAKING PROSPECT FEEL IMPORTANT </li></ul><ul><li>THE SURVEY APPROACH </li></ul><ul><li>THE INTERACTIVE APPROACH </li></ul>
16. 16. PRESENTATION & DEMONSTRATION <ul><li>REQUIREMENTS OF GOOD PRESENTATION </li></ul><ul><li>QUICK PRESENTATION OF PRODUCTS </li></ul><ul><li>ATTRACTIVE, DECORATED & WELL ORGANIZED PACKAGES </li></ul><ul><li>EXPLAINATION OF PRODUCT FEATURES IN SIMPLE & EASY TERMS </li></ul><ul><li>SHOW THE KIND OF QUALITY DEMANDED BY SALES PERSON </li></ul><ul><li>PRODUCT APPEAL TO CUSTOMER SENSES </li></ul><ul><li>ADVANTAGES OF DEMONSTRATION </li></ul><ul><li>SHOWS PRODUCT FEATURES CLEARLY </li></ul><ul><li>REINFORCEMENT OF BUYING DECISIONS </li></ul><ul><li>GIVES CUSTOMER OPPORTUNITY TO COMPARE PRODUCTS </li></ul><ul><li>INCREASES CONFIDENCE OF CUSTOMER </li></ul><ul><li>SPEAKS LOUDER THAN SALESMAN </li></ul>
17. 17. HANDLING OBJECTIONS <ul><li>TYPES OF OBJECTIONS </li></ul><ul><li>OBJECTIONS ON PRICE </li></ul><ul><li>OBJECTIONS ON QUALITY </li></ul><ul><li>OBJECTIONS ON PAYMENT </li></ul><ul><li>OBJECTIONS ON AFTER SALE SERVICE </li></ul><ul><li>OBJECTIONS ON TIMING TO BUY </li></ul><ul><li>PROCEDURE FOR HANDLING OBJECTIONS </li></ul><ul><li>GIVE OPPORTUNITY TO PROSPECT TO RAISE OBJECTION </li></ul><ul><li>ADMIT VALID OBJECTIONS AND ACCEPT IN POSITIVE SPIRIT </li></ul><ul><li>NEVER OFFEND PROSPECT BY OVERRULING OBJECTION </li></ul><ul><li>CONVINCE PROSPECT TO VIEW PROBLEM FROM DIFFERENT ANGLE </li></ul><ul><li>GIVE BETTER DEAL TO CUSTOMER TO COUNTER OBJECTION </li></ul>
18. 18. THE SALES CLOSE <ul><li>CONVINCE THE CUSTOMER TO BUY APRODUCT </li></ul><ul><li>REASONS FOR FAILURE TO CLOSE </li></ul><ul><li>PROSPECT NOT FULLY CONVINCED </li></ul><ul><li>PRESSURIZED BY SALESMAN TO BUY PRODUCT </li></ul><ul><li>PROSPECTS WANT TO POSTPONE PURCHASE </li></ul><ul><li>SALESMAN NOT RECOGNIZING HIS NEEDS/PREFERENCES </li></ul><ul><li>SALESMAN NOT FULLY AWARE </li></ul><ul><li>PROPER PLANNING, PRESENTATION & DEMONSTRATION IS NOT THERE </li></ul>
19. 19. SALES ORGANIZATIONS <ul><li>PURPOSE OF SALES ORGANIZATIONS </li></ul><ul><li>TO PERMIT THE DEVELOPMENT OF SPECIALIST </li></ul><ul><li>TO ASSURE THAT ALL NECESSARY ACTIVITIES ARE PERFORMED </li></ul><ul><li>TO ACHIVE COORDINATION OR BALANCE </li></ul><ul><li>TO DEFINE AUTHORITY </li></ul><ul><li>TO ECONOMIZE ON EXECUTIVE TIME </li></ul>
20. 20. SETTING UP A SALES ORGANIZATION <ul><li>DEFINING THE OBJECTIVE </li></ul><ul><li>SET BOTH QUANTITATIVE AS WELL AS QUALITATIVE OBJECTIVES </li></ul><ul><li>QUALITATIVE OBJECTIVES ARE INDISPENSABLE FOR LONG-RANGE PLANNING, THUS, KEPT IN MIND IN SHORT RANGE PLANNING ALSO </li></ul><ul><li>QUANTITATIVE OBJECTIVES ARE REQUIRED AS OPERATING GUIDEPOSTS </li></ul><ul><li>DELINEATING THE NECESSARY ACTIVITIES </li></ul><ul><li>DETERMINING THE NECESSARY ACTIVITIES & THEIR VOLUME OF PERFORMANCE IS BASED ON QUALITATIVE & QUANTITATIVE OBJECTIVES </li></ul><ul><li>ALSO HELPS IN DETERMINING WHICH ACTIVITIES TO BE PERFORMED IN WHAT VOLUME </li></ul>
21. 21. CONTD… <ul><li>GROUPING ACTIVITIES INTO ‘JOBS’ OR ‘POSITIONS’ </li></ul><ul><li>ACTIVITIES IDENTIFIED ARE ALLOCATED TO DIFFERENT POSITIONS </li></ul><ul><li>ACTIVITIES ARE GROUPED SO THAT CLOSELY RELATED TASKS ARE ASSIGNED TO SAME POSITIONS </li></ul><ul><li>EACH POSITION MUST ALSO CONTAIN SOME VARIATIONS </li></ul><ul><li>ASSIGNING PERSONNEL TO POSITIONS </li></ul><ul><li>WHETHER TO RECRUIT SPECIAL INDIVIDUALS TO FILL THE POSITIONS OR TO MODIFY THE POSITIONS TO FIT THE CAPABILITIES OF AVAILABLE PERSONS </li></ul><ul><li>PROVIDING FOR COORDINATION AND CONTROL </li></ul><ul><li>SALES EXECUTIVES REQUIRE MEANS TO CONTROL THEIR SUBORDINATES & TO COORDINATE THEIR EFFORTS </li></ul><ul><li>THEY SHOULD NOT BE OVERBURDENED NOR SHOULD HAVE TOO MANY SUBORDINATES </li></ul>
22. 22. CONTD… <ul><li>COORDINATION & CONTROL IS OBTAINED THROUGH BOTH FORMAL & INFORMAL MEANS </li></ul><ul><li>FORMAL INSTRUMENTS OF ORGANIZATIONAL CONTROL: </li></ul><ul><li>WRITTEN JOB DESCRIPTION </li></ul><ul><li>REPORTING RELATIONSHIPS </li></ul><ul><li>JOB OBJECTIVES, DUTIES & RESPONSIBILITIES </li></ul><ul><li>PERFORMANCE MEASUREMENTS </li></ul><ul><li>AN ORGANIZATION CHART </li></ul><ul><li>REDUCES CONFUSION ABOUT INDIVIDUALS ROLE </li></ul><ul><li>DELINEATES FORMAL RELATIONSHIP </li></ul><ul><li>ORGANIZATIONAL MANUALS </li></ul><ul><li>EXTENSION OF ORGANIZATION CHART </li></ul><ul><li>CONTAINS CHART FOR BOTH THE COMPANY & THE DEPARTMENT </li></ul>
23. 23. BASIC TYPES OF SALES ORGANIZATION STRUCTURE <ul><li>FACTORS AFFECTING THE ORGANIZATIONAL STRUCTURE </li></ul><ul><li>TYPES OF ORGANIZATION STRUCTURE </li></ul><ul><li>THE CUSTOMERS </li></ul><ul><li>THE MARKETING CHANNELSTHE COMPANY SIZE </li></ul><ul><li>THE PRODUCT OR PRODUCT LINE </li></ul><ul><li>THE PRACTICES OF COMPETITORS </li></ul><ul><li>PERSONALITIES & ABILITIES OF PERSONNEL </li></ul><ul><li>LINE SALES ORGANIZATIONS </li></ul><ul><li>OLDEST & SIMPLEST STRUCTURE </li></ul><ul><li>WIDELY USED IN SMALLER FIRMS OR FIRMS WITH SMALL NUMBERS OF SELLING PERSONNELS, LIMITED GEOGRAPHICAL AREA OR NARROW PRODUCT LINE </li></ul><ul><li>CHAIN OF COMMAND RUN FROM TOP TO DOWN </li></ul><ul><li>ALL EXECUTIVES EXERCISE LINE AUTHORITY & EACH SALES PERSON IS RESPONSIBLE TO NEXT IN THE HIERARCHY </li></ul>
24. 24. LINE SALES DEPARTMENT ORGANIZATION GM SM SALES PEOPLE SALES PEOPLE SALES PEOPLE OFFICE STAFF ASSISTANT SM DIV-1 ASSISTANT SM DIV-2 ASSISTANT SM DIV-3 ASSISTANT SM OFFICE
25. 25. CONTD… <ul><li>NO CROSS COMMUNICATION BETWEEN PERSONS AT SAME LEVEL </li></ul><ul><li>GREATEST USE IN COMPANIES WHERE ALL SALES PERSONS REPORT DIRECTLY TO THE CHIEF SALES EXECUTIVES </li></ul><ul><li>ADVANTAGES: </li></ul><ul><li>PROBLEMS OF DISCIPLINE & CONTROL ARE SMALL </li></ul><ul><li>AUTHORITY & RESPONSIBILTY ARE CLEAR </li></ul><ul><li>SAVES TIME IN MAKING POLICY CHANGES </li></ul><ul><li>DEVELOPMENT OF CLOSE RELATIONSHIP BETWEEN SUPERIOR & SUBORDINATE </li></ul><ul><li>ADMINISTRATIVE EXPENSES ARE LOW </li></ul><ul><li>DISADVANTAGES </li></ul><ul><li>TOO MUCH DEPENDENCE ON DEPARTMENT HEAD </li></ul><ul><li>INSUFFICIENT TIME FOR POLICY MAKING & PLANNING </li></ul><ul><li>INAPPROPRIATE FOR RAPIDLY GROWING FIRMS </li></ul><ul><li>OFFERS LITTLE OPPORTUNITY TO SUBORDINATES TO ACQUIRE MANAGEMENT SKILLS </li></ul>
26. 26. CONTD… <ul><li>LINE & STAFF SALES ORGANIZATIONS </li></ul><ul><li>FOUND IN LARGE & MEDIUM-SIZED FIRMS EMPLOYING NUMBER OF SALES PERSONS, SELLING DIVERSIFIED PRODUCT LINES OVER WIDE GEOGRAPHIC AREAS </li></ul><ul><li>PROVIDE TOP SALES EXECUTIVES WITH GROUP OF SPECIALISTS TO ASSIST </li></ul><ul><li>STAFF HELPS IN CONSERVING THE TIME & FREES EXECUTIVES FOR OTHER WORKS </li></ul><ul><li>STAFF SPECIALISTS INCREASES OVERALL EFFECTIVENESS OF DEPARTMENT </li></ul><ul><li>STAFF DO NOT HAVE AUTHORITY TO ISSUE ORDERS OR DIRECTIVES </li></ul>
27. 27. LINE & STAFF SALES DEPTT. ORGANIZATION PRESIDENT ADVERTISING MANAGER VP MARKETING SALES PERSONEL DIRECTOR DIRECTOR TRAINING ASSISTANT GM SALES MANAGER MARKET RESEARCH ASSISTANT TO GM SALES GM SALES SALES PROMOTION MANAGER DISTRICT SALES MANAGER BRANCH SALES MANAGER SALES PERSONNEL
28. 28. CONTD… <ul><li>ADVANTAGES </li></ul><ul><li>SPECIALIZATION </li></ul><ul><li>PLANNING ACTIVITIES ARE DIVIDED AND APPORTIONED TO STAFF MEMBERS </li></ul><ul><li>EXECUTIVES CONCENTRATE ON COORDINATION & CONTROL </li></ul><ul><li>DISADVANTAGES </li></ul><ul><li>INCREASE IN ADMINISTRATIVE EXPENSES </li></ul><ul><li>DIFFICULT TO PREVENT SOME PERSONS FROM EVADING UNWANTED RESPONSIBILITIES </li></ul>
29. 29. CONTD… <ul><li>FUNCTIONAL SALES ORGANIZATION </li></ul><ul><li>EACH INDIVIDUAL IN AN ORGANIZATION SHOULD HAVE FEW DISTINCTIVE DUTIES AS POSSIBLE </li></ul><ul><li>PRINCIPLE OF SPECIALIZATION IS UTILIZED TO ITS FULLEST EXTENT </li></ul><ul><li>SALES PEOPLE RECEIVE INSTRUCTIONS FROM SEVERAL EXECUTIVE BUT AT DIFFERENT ASPECTS OF THEIR WORK </li></ul><ul><li>ADVANTAGES </li></ul><ul><li>IMPROVED PERFORMANCE </li></ul><ul><li>DISADVANTAGES </li></ul><ul><li>NOT FEASIBLE FOR SMALL & MEDIUM SIZED FIRMS </li></ul><ul><li>SUITABLE FOR LARGE FIRMS WITH STABLE OPERATIONS & WITH OPPORTUNITY FOR CONSIDERABLE DIVISION OF LABOUR </li></ul>
30. 30. CONTD… <ul><li>COMMITTEE SALES ORGANIZATION </li></ul><ul><li>NEVER A SOLE BASIS FOR ORGANIZING A SALES DEPTT. </li></ul><ul><li>METHOD OF ORGANIZING THE EXECUTIVE GROUPS FOR PLANNING & POLICY FORMULATION </li></ul><ul><li>THE AGENDA MUST BE PLANNED & CONTROLLED TO AVOID WASTING TIME </li></ul><ul><li>ADVANTAGES </li></ul><ul><li>PROMOTE COORDINATION </li></ul><ul><li>COLLECTIVE DECISION MAKING </li></ul><ul><li>PROVIDE FOCAL POINT FOR DISCUSSION & FOR SUGGESTIONS </li></ul>
31. 31. SALES TERRITORIES <ul><li>A SALES TERRITORY IS A GROUPING OF CUSTOMERS AND PROSPECTS ASSIGNED TO AN INDIVIDUAL SALES PERSON </li></ul><ul><li>REASON FOR ESTABLISHING OR REVISING SALES TERRITORIES </li></ul><ul><li>TO PROVIDE PROPER MARKET COVERAGE </li></ul><ul><li>TO CONTROL SELLING EXPENSES </li></ul><ul><li>TO ASSIST IN EVALUATING SALES PERSONNEL </li></ul><ul><li>TO CONTRIBUTE TO SALES FORCE MORALE </li></ul><ul><li>TO AID IN THE CO-ORDINATION OF PERSONAL SELLING AND ADVERTISING EFFORT </li></ul>
32. 32. PROCEDURE FOR SETTING UP OR REVISING SALES TERRITORIES <ul><li>FOUR STEPS </li></ul><ul><li>SELECTING A BASIC GEOGRAPHICAL CONTROL UNITS: THE MOST COMMONLY USED CONTROL UNITS ARE – </li></ul><ul><li>COUNTIES: SMALLEST UNIT FOR WHICH GOVT. OFFICIALS REPORT DATA </li></ul><ul><li>ZIP CODE AREAS: GENERALLY REFLECTS ECONOMIC CHARACTERISTICS OF AREA </li></ul><ul><li>CITIES: USED WHEN SALES POTENTIAL IS LOCATED IN URBANIZED AREAS </li></ul><ul><li>METROPOLITAN STATISTICAL AREAS: GEOGRAPHICAL AREA WITH LARGE POPULATION NUCLEUS TOGETHER WITH ADJACENT COMMUNITIES </li></ul><ul><li>TRADING AREAS: THE GEOGRAPHICAL REGION SURROUNDING THE CITY THAT SERVES AS DOMINANT RETAIL OR WHOLESALE CENTER OR BOTH FOR THE REGION </li></ul><ul><li>STATES: USED WHEN COMPANY WITH SMALL SALES FORCE COVERING THE MARKET EXTENSIVELY RATHER INTENSIVELY OR WHEN COMPANY IS FIRST USING THE NATIONAL DISTRIBUTION , WHICH ASSIGNS ITS SALES PERSON TERRITORIES WITH 1 OR MORE STATES AS TEMPORARY EXPEDIENT AND AS SOON AS FEASIBLE A CHANGE IS MADE TO A SMALL CONTROL UNIT </li></ul>
33. 33. CONTD… <ul><li>DETERMINING SALES POTENTIALS IN CONTROL UNIT </li></ul><ul><li>SALES POTENTIAL REPRESENTS THE MAXIMUM POSSIBLE SALES OPPORTUNITIES OPEN TO A SPECIFIC COMPANY SELLING A GOOD OR SERVICES DURING A STATED FUTURE PERIOD TO A PARTICULAR MARKET SEGMENT </li></ul><ul><li>3. COMBINING CONTROL UNITS INTO TENTATIVE TERRITORIES </li></ul><ul><li>DECIDES ON NUMBER OF TERRITORIES, ASSUMING THAT ALL SALES PERSONNEL ARE OF AVERAGE ABILITY </li></ul><ul><li>ANALYSIS OF PAST SALES EXPERIENCE HELPS IN DETERMINIG THE % OF TOTAL SALES POTENTIAL THAT AN AVERAGE SALES PERSON SHOULD REALIZE </li></ul><ul><li>ESTIMATE THE SALES PRODUCTIVITY PER SALES PERSONNEL UNIT AND DEVIDES IT INTO THE TOTAL ESTIMATED SALES POTENTIAL = NO. OF SALES PERSONNEL UNITS - & TERRITORIES REQUIRED. </li></ul><ul><li>THE NEXT STEP IS TO DECIDE THE TERRITORY SHAPE, WHICH AFFECTS SELLING EXPENSES & EASE OF COVERAGE </li></ul>
34. 34. CONTD… <ul><li>4. ADJUSTING FOR COVERAGE DIFFICULTY AND REDISTRICTING TENTATIVE TERRITORIES – REDISTRICTING TO ADJUST FOR COVERAGE DIFFICULTY IS A SEVEN STEP PROCEDURE – </li></ul><ul><li>DETERMINE NO., LOCATION & SIZE OF CUSTOMERS & PROSPECTS IN EACH TENTATIVE TERRITORY </li></ul><ul><li>ESTIMATE TIME REQUIRED FOR EACH SALES CALL </li></ul><ul><li>DETERMINE LENGTH OF TIME BETWEEN CALLS, THAT IS AMOUNT OF TIME REQUIRED TO TRAVEL FROM ONE CUSTOMER TO ANOTHER </li></ul><ul><li>DECIDE CALL FREQUENCIES </li></ul><ul><li>CALCULATE THE NO. OF CALLS POSSIBLE WITHIN A GIVEN PERIOD </li></ul><ul><li>ADJUST THE NO. OF CALLS POSSIBLE DURING A GIVEN PERIOD BY THE DESIRED CALL FREQUENCIES FOR THE DIFFERENT CLASSES OF CUSTOMERS & PROSPECTS </li></ul><ul><li>CHECK OUT THE ADJUSTED TERRITORIES WITH SALES PERSONNEL WHO WORK OR WHO HAVE WORKED IN EACH AREA, AND MAKE FURTHER ADJUSTMENT AS REQUIRED </li></ul>
35. 35. SALES QUOTAS <ul><li>QUOTAS ARE QUANTITATIVE OBJECTIVES ASSIGNED TO SALES ORGANIZATIONAL UNITS. </li></ul><ul><li>ALL QUOTAS HAVE TIME DIMENSION – THEY QUANTIFY WHAT MANAGEMENT EXPECTS WITHIN A GIVEN PERIOD </li></ul><ul><li>QUOTAS ARE DEVISES FOR DIRECTING & CONTROLLING SALES OPERATION </li></ul><ul><li>ACCURATE DATA ARE IMPORTANT TO THE EFFECTIVENESS OF QUOTA SYSTEM </li></ul><ul><li>JUDGEMENT & ADMINISTRATIVE SKILLS ARE REQUIRED OF THOSE WITH QUOTA SETTING RESPONSIBILITIES. </li></ul>
36. 36. OBJECTIVES IN USING QUOTAS <ul><li>TO PROVIDE QUANTITATIVE PERFORMANCE STANDARD – </li></ul><ul><li>DETERMINE WHICH SALES PERSONNEL/SALES ORGANIZATION/DISTRIBUTIVE OUTLET ARE DOING BELOW AVERAGE, AVERAGE OR ABOVE AVERAGE JOB </li></ul><ul><li>COMPARISION OF QUOTA WITH SALES PERFORMANCE IDENTIFY WEEK & STRONG POINTS </li></ul><ul><li>TO OBTAIN TIGHTER SALES & EXPENSE CONTROL </li></ul><ul><li>TO MOTIVATE DESIRED PERFORMANCE </li></ul><ul><li>QUOTAS SHOULD BE ATTAINABLE GOALS, ACHIEVABLE WITH JUSTIFIABLE PRIDE </li></ul><ul><li>MOTIVATION DECLINES WITH EASILY ATTAINABLE QUOTAS </li></ul><ul><li>TO USE IN CONNECTION WITH SALES CONTEST </li></ul><ul><li>COMPANIES FREQUENTLY USE “PERFORMANCE AGAINST QUOTA” AS THE MAIN BASIS OF MAKING AWARDS IN SALES CONTEST </li></ul><ul><li>SALES CONTEST IS A POWERFUL INCENTIVE IF ALL PARTICIPANTS FEEL THEY HAVE EQUAL CHANCE OF WINNING </li></ul>
37. 37. TYPES OF QUOTAS <ul><li>SALES VOLUME QUOTA </li></ul><ul><li>OLDEST & MOST COMMON TYPE </li></ul><ul><li>COMMUNICATES – “ HOW MUCH FOR WHAT PERIOD” </li></ul><ul><li>SET FOR GEOGRAPHICAL AREAS, PRODUCT LINES OR MARKETING CHANNELS OR COMBINATION </li></ul><ul><li>THE SMALLER THE UNIT, THE MORE EFFECTIVE THE QUOTA FOR CONTROLLING SALES OPERATION </li></ul><ul><li>DOLLAR SALES VOLUME QUOTA </li></ul><ul><li>COMPANIES SELLING BROAD PRODUCT LINES SET SALES VOLUME QUOTAS IN DOLLARS RATHER THAN IN UNITS OF PRODUCT </li></ul><ul><li>ADVANTAGE: RELATE EASILY TO OTHER PERFORMANCE DATA </li></ul><ul><li>UNIT SALES VOLUME QUOTA </li></ul><ul><li>USED IN TWO SITUATIONS – </li></ul><ul><li>PRICES FLUCTUATE CONSIDERABLY </li></ul><ul><li>NARROW PRODUCT LINES SOLD AT STABLE PRICES </li></ul><ul><li>POINT SALES VOLUME QUOTA </li></ul><ul><li>COMPANIES USE POINT SALES VOLUME QUOTA BECAUSE OF PROBLEM IN USING \$ OR UNIT VOLUME QUOTA </li></ul>
38. 38. PROCEDURE FOR SETTING SALES VOLUME QUOTA <ul><li>SALES VOLUME QUOTAS DERIVED FROM TERRITORIAL SALES POTENTIALS – THIS APPROACH IS APPROPRIATE WHEN </li></ul><ul><li>TERRITORIAL SALES POTENTIAL ARE DETERMINED IN CONJUNCTION WITH TERRITORIAL DESIGN </li></ul><ul><li>BOTTOM UP PLANNING AND FORECASTING PROCEDURES ARE USED IN OBTAINING THE SALES ESTIMATE IN THE SALES FORECAST </li></ul><ul><li>HOWEVER, IN BOTH THE CASES FURTHER ADJUSTMENT IS NEEDED </li></ul><ul><li>SALES VOLUME QUOTA DERIVED FROM TOTAL MARKET ESTIMATE – HERE, MANAGEMENT HAS NEITHER STATISTICS NOR SALES FORCE ESTIMATES OF TERRITORIAL SALES POTENTIAL. MANAGEMENT MAY EITHER </li></ul><ul><li>BREAKDOWN THE TOTAL COMPANY SALES ESTIMATE, USING VARIOUS INDEXES OF RELATIVE SALES OPPORTUNITIES IN EACH TERRITORY, AND THEN MAKE ADJUSTMENTS TO ARRIVE AT TERRITORIAL SALES VOLUME QUOTAS </li></ul><ul><li>CONVERT THE COMPANY SALES ESTIMATE INTO A COMPANY WIDE SALES QUOTA AND THEN BREAK DOWN THE COMPANY VOLUME QUOTA, BY USING AN INDEX OF RELATIVE SALES OPPORTUNITIES IN EACH TERRITORY </li></ul>
39. 39. CONTD… <ul><li>SALES VOLUME QUOTA BASED ON PAST SALES EXPERIENCE ALONE </li></ul><ul><li>COMPANIES ASSUME NOT ONLY THAT PAST AND FUTURE SALES ARE RELATED BUT THAT PAST SALES HAVE BEEN SATISFACTORY </li></ul><ul><li>COMPANIES PERPETUATE PAST ERRORS </li></ul><ul><li>AVERAGE SALES LAG BEHIND ACTUAL SALES DURING LONG PERIODS OF RISING OR FALLING SALES </li></ul><ul><li>SALES VOLUME QUOTAS BASED ON EXECUTIVE JUDGEMENT ALONE </li></ul><ul><li>JUSTIFIED WHEN THERE IS LITTLE INFORMATION TO USE IN SETTING QUOTAS </li></ul><ul><li>QUTAS CAN BE OF NO HIGHER QUALITY THAN THE JUDGEMENT OF THOSE SETTING THEM </li></ul><ul><li>SALES VOLUME QUOTAS RELATED ONLY TO COMPENSATION PLAN </li></ul><ul><li>BASED SOLELY UPON THE PROJECTED AMOUNTS OF COMPENSATION THAT MANAGEMENT BELIEVES SALES PERSONNEL SHOULD RECEIVE </li></ul><ul><li>POOR STANDARDS FOR APPRAISING SALES PERFORMANCE </li></ul>
40. 40. BUDGET QUOTAS <ul><li>SET FOR VARIOUS UNITS IN SALES ORGANIZATION TO CONTROL EXPENSES, GROSS MARGINS, OR NET PROFIT </li></ul><ul><li>EXPENSE QUOTAS </li></ul><ul><li>EXPENSE QUOTAS ARE USED MOST OFTEN IN COMBINATION WITH SALES VOLUME QUOTA </li></ul><ul><li>MANAGEMENT PROVIDE SALES PERSONNEL WITH FINANCIAL INCENTIVES TO CONTROL THEIR OWN EXPENSES </li></ul><ul><li>TO REDUCE ADMINISTRATIVE BURDEN AND MISUNDERSTANDINGS, EXPENSE QUOTAS ARE GENERALLY EXPRESSED AS % OF SALES </li></ul><ul><li>PROBLEMS – </li></ul><ul><li>VARIATIONS IN COVERAGE DIFFICULTY & OTHER ENVIRONMENTAL FACTORS, MAKE IT IMPRACTICAL TO SET IDENTICAL EXPENSE % FOR ALL THE TERRITORIES </li></ul><ul><li>DIFFERENT SALES PERSON SELLS DIFFERENT PRODUCT MIXES, SO SOME INCUR HIGHER EXPENSES THAN OTHERS </li></ul><ul><li>ADVANTAGES – </li></ul><ul><li>MAKES SALES PERSONNEL MORE COST CONSCIOUS </li></ul><ul><li>AWARENESS TOWARDS EXPENSE CONTROL </li></ul>
41. 41. CONTD… <ul><li>GROSS MARGIN OR NET PROFIT QUOTAS </li></ul><ul><li>APPROPRIATE WHEN THE PRODUCT LINE CONTAINS BOTH HIGH & LOW MARGIN ITEMS </li></ul><ul><li>PROBLEMS – </li></ul><ul><li>SALES PERSONS DO NOT SET THE PRICE AND HAVE NO ROLE ON THE MANUFACTURING COST.THUS, NOT RESPONSIBLE FOR GROSS MARGIN </li></ul><ul><li>CERTAIN SELLING EXPENSES ARE BEYOND THE SALESPERSON’S INFLUENCE </li></ul><ul><li>INCREASED CLERICAL & ADMINSTRATIVE COSTS </li></ul><ul><li>ACTIVITY QUOTAS </li></ul><ul><li>DEFINE THE IMPORTANT ACTIVITIES SALES PERSON PERFORM; THEN SET TARGET PERFORMANCE FREQUENCY </li></ul><ul><li>APPROPRIATE WHEN SALES PERSONNEL PERFORM IMPORTANT NON-SELLING ACTIVITIES </li></ul><ul><li>CONTROL & RECOGNITION OF SALES PERSON PERFORMING NON SELLING ACTIVITIES </li></ul><ul><li>REWARD SALES PERSON ON QUANTITY OF WORK; IRRESPECTIVE OF QUALITY </li></ul><ul><li>PROBLEM IN INSPIRING THE SALES FORCE </li></ul>
42. 42. COMBINATION & OTHER POINT SYSTEM QUOTA <ul><li>1. COMBINATION QUOTA </li></ul><ul><li>COMBINATION QUOTAS CONTROL PERFORMANCE OF BOTH SELLING & NON-SELLING ACTIVITIES </li></ul><ul><li>OVERCOME THE DIFFICULTY OF USING DIFFERENT MEASUREMENT UNITS TO APPRAISE DIFFERENT ASPECTS OF PERFORMANCE </li></ul><ul><li>BECAUSE PERFORMACES ARE COMPUTED AS %, KNOWN AS PONI SYSTEMS, THE POINTS BEING % POINTS. </li></ul><ul><li>SUMMARIZE OVERALL PERFORMANCE IN A SINGLE MEASURE </li></ul><ul><li>PROBLEMS </li></ul><ul><li>SALES PERSONS MAY HAVE DIFFICULTY IN UDERSTANDING & APPRAISING THEIR OWN ACHIEVEMENTS </li></ul><ul><li>DESIGN IMPERFECTION MAY CAUSE SALES PERSONNEL TO PLACE TOO MUCH EMPHASIS ON ONE COMPONENT ACTIVITY </li></ul><ul><li>FULL LINE QUOTA </li></ul><ul><li>DESIGNED TO SECURE SOME DESIRED BALANCE OF SALES AMONG VARIOUS PRODUCTS </li></ul>
43. 43. ADMINISTERING THE QUOTA SYSTEM <ul><li>ACCURATE, FAIR & ATTAINABLE QUOTAS </li></ul><ul><li>DEPENDS NOT ONLY ON THE QUALITY OF MANAGEMENTS JUDGEMENT BUT ON THE CAPABILITIES & MOTIVATIONA OF THE SALES FORCE </li></ul><ul><li>SECURING & MAINTAINING SALES PERSONNELS ACCEPTANCE OF QUOTAS </li></ul><ul><li>PARTICIPATION BY SALES PERSONNEL IN QUOTA SETTING </li></ul><ul><li>KEEPING SALES PERSONNEL INFORMED </li></ul><ul><li>NEED FOR CONTINUOUS MANAGERIAL CONTROL </li></ul><ul><li>REASONS FOR NOT USING SALES QUOTAS </li></ul><ul><li>IN CERTAIN INDUTRIAL GOODS, ITS DIFFICULT TO OBTAIN ACCURATE SALES ESTIMATE </li></ul><ul><li>SINCE QUOTA REQUIRES STATISTICAL TECHNIQUE, FEAR IS THAT SALES PERSONNEL WILL NOT ACCEPT QUOTA PREPARED BY HARD TO EXPLAIN TECHNIQUES </li></ul><ul><li>PLACE TOO MUCH EMPHASIS UPON MAKING SALES – LEGITIMATE CRITICISM OF SALES VOLUME QUOTA </li></ul><ul><li>IF PRODUCT IS IN SHORT SUPPLY, QUOTAS ARE NOT APPROPRIATE </li></ul>
44. 44. AN ANALYTICAL FRAMEWORK FOR CHANNEL DESIGN & IMPLEMENTATION <ul><li>THE CHANNEL MANAGEMENT PROCESS IS DEFINED AS A SET OF ACTIVITIES ASSOCIATED WITH THE CREATION AND MAINTENANCE OF DISTRIBUTION CHANNEL </li></ul><ul><li>THE CHANNEL MANAGEMENT GIVES A CLEAR IDEA ABOUT – </li></ul><ul><li>THE NUMBER OF CHANNEL ENTITIES IN THE CHANNEL NETWORK </li></ul><ul><li>THE WAY IN WHICH THEY ARE LINKED </li></ul><ul><li>THE ROLES AND RESPONSIBILITIES OF THE ENTITIES IN THE NETWORK </li></ul><ul><li>THE REWARDS FOR PARTICIPATING IN THE ACTIVITIES </li></ul><ul><li>THE NORMAL ACTIVITIES TO BE PERFORMED DURING THE NORMAL FUNCTIONING OF THE CHANNEL </li></ul>
45. 45. DESIGNING A CUSTOMER-ORIENTED CHANNEL <ul><li>THE CHANNEL DESIGN PROCESS </li></ul><ul><li>LIST DOWN ALL SERVICE OUTPUTS THAT CHANNEL NEEDS TO OFFER </li></ul><ul><li>THE SERVICE OUTPUT DELIVERED TEMPLATE FOR MARKETING CHANNEL SELLING A CONSUMER DURABLE TO THE MIDDLE CLASS CONSUMERS: </li></ul><ul><li>BULK BREAKING: UNITS ARE DELIVERED IN ONES </li></ul><ul><li>SPATIAL CONVEVIENCE: THERE IS ATLEAST 1 OUTLET FOR ALOMOST EVERY 3 KM RADIUS EXCLUDING THINLY POPULATED AREAS </li></ul><ul><li>WAITING TIME: NOT MORE THAN 2 DAYS FOR ANY MODEL </li></ul><ul><li>ASSORTMENT: OTHER CONSUMER ITEMS INCLUDING THAT OF OTHER COMPETITORS ARE AVAILABLE AT ALL OUTLETS WHERE THE PRODUCTS ARE OTHERWISE AVAILABLE </li></ul><ul><li>INSTALLATION SUPPORT: AVAILABLE </li></ul><ul><li>AFTER SALES SUPPORT: FREE FOR FIRST 2 YEARS: BUT AVAILABLE ON PAYMENTS AFTERWARDS </li></ul><ul><li>CONSUMER FINANCING: AVAILABLE </li></ul>
46. 46. CONTD… <ul><li>DEVELOP THE LEVELS AT WHICH EACH OF THE SERVICE OUTPUT HAVE TO BE OFFERED – THROUGH COLLECTION OF INFORMATION FROM THE CUSTOMER OR BENCHMARKING WITH THE COMPETITOR </li></ul><ul><li>CLASSIFICATION SCHEME FOR CHANNEL FLOW : </li></ul><ul><li>PHYSICAL POSSESSION: TRANSPORTATION & STORAGE OF PRODUCT IN ORDER TO PHYSICALLY DELIVER THE PRODUCT TO THE END USER </li></ul><ul><li>OWNERSHIP: NORMALLY TAKING TITLE TO THE PRODUCT SO THAT IN CASE THE PRODUCT IS DAMAGED OR LOST DUE TO ANY REASON, THE LOSS IS ACCOUNTED FOR. </li></ul><ul><li>PROMOTION:PROMOTING THE PRODUCT IN SEVERAL WAYS, ADVERTISING, DISPLAYING ETC </li></ul><ul><li>NEGOTIATING:COMING TO AN AGREEMENT ABOUT THE TERMS OF TRADE WITH THE UPSTREAM AND DOWN STREAM ENTITIES IN THE CHANNEL INCLUDING CUSTOMERS </li></ul><ul><li>FINANCING:TAKING CARE OF FINANCIAL REQUIREMENTS (MAINLY WORKING CAPITAL) OF THE CHANNEL MEMBERS </li></ul><ul><li>RISK TAKING:UNDERWRITING THE RISKS ASSOCIATED WITH THE POSSESSION OR OWNERSHIP OF THE CHANNELINCLUDING WARRANTIAS FOR AFTER SALES SERVICE </li></ul><ul><li>ORDERING: RECEIVING AND RECORDING THE ORDERS, CONSILIDATING IT AND PASSING IT ON TO THE UPSTRAEM </li></ul><ul><li>PAYMENTS: RECEIVING PAYMENTS, RECORDING IT, CONSOLIDATING IT AND PASSING IT ON TO THE UPSTREAM </li></ul>
47. 47. CONTD… <ul><li>WORKBACK FROM EACH OF THE SERVICE OUTPUT LEVELS AND CONCEIVE THE ACTIVITIES THAT HAVE TO BE PERFORMED TO FULFILL THESE SERVICE OUTPUT OBJECTIVES </li></ul><ul><li>CHANNEL ACTIVITIES & SERVICE OUTPUTS </li></ul><ul><li>FLOW DIRECT INDIRECT OTHER CONTRIBUTION CONTRIBUTION CONTRIBUTION </li></ul><ul><li>PHYSICAL SPATIAL CONVENIENCE,BULK </li></ul><ul><li>POSSESSION BREAKING, WAITING TIME </li></ul><ul><li>OWNERSHIP SPATIAL CONVENIENCE </li></ul><ul><li>PROMOTION SPATIAL CONVENIENCE IS A SERVICE OUTPUT IN ITSESLF </li></ul><ul><li>NEGOTIATING SPATIAL CONVENIENCE,BULK ASSORTMENT </li></ul><ul><li> BREAKING, WAITING TIME </li></ul><ul><li>FINANCING SPATIAL CONVENIENCE,BULK ASSORTMENT </li></ul><ul><li> BREAKING, WAITING TIME </li></ul><ul><li>RISK TAKING WAITING TIME,BULK </li></ul><ul><li> BREAKING SPATIAL </li></ul><ul><li> CONVENIENCE </li></ul><ul><li>ORDERING SPATIAL CONVENIENCE,BULK </li></ul><ul><li> BREAKING, WAITING </li></ul><ul><li>PAYMENTS SPATIAL CONVENIENCE,BULK </li></ul><ul><li> BREAKING, WAITING TIME </li></ul>
48. 48. CONTD… <ul><li>CALCULATE THE COST INCURRED FOR PERFORMING THESE ACTIVITIES </li></ul><ul><li>THE COST ASSOCIATED WITH ALL THE FLOWS ADD UP TO FORM THE COST OF DISTRIBUTION </li></ul><ul><li>WHILE DESIGNING THE IDEAL CHANNEL, IT IS IMPORTANT TO CONSIDER THE REMUNERATION OF CHANNEL MEMBERS. THE REMUNERATION HAS TO BE TUNE IN WITH </li></ul><ul><li>A. THE COST OF PERFORMING THAT ACTIVITY </li></ul><ul><li>THE CRITICALITY OF THE ACTIVITY </li></ul><ul><li>DESIGN THE IDEAL CHANNEL STRUCTURE </li></ul><ul><li>THE DESIGN EFFORT WOULD INVOLVE DECISION ABOUT: </li></ul><ul><li>A. SERVICE OUTPUT LEVELS </li></ul><ul><li>B. FLOWS OR ACTIVITIES THAT ARE ASSOCIATED WITH THE ACHIEVEMENT OF THE SEVICE OUTPUT LEVEL </li></ul><ul><li>TYPE OF ENTITY THAT WOULD BE ENTRUSTED WITH THE PERFORMANCE OF EACH OF THESE FLOWS </li></ul><ul><li>COMPARE THE IDEAL CHANNEL STRUCTURE WITH THE CHANNEL STRUCTURE THAT IS EXISTING </li></ul><ul><li>THENEED FOR LOOKING AT THE EXISTING DISTRIBUTION SYSTEM EMANATES FROM TWO REASONS: </li></ul><ul><li>THE EXISTING DISTRIBUTION SYSTEM WOULD GIVE IDEAS & INSIGHTS ABOUT THE TASKS PERFORMED BY ENTITIES AND THE PROBLEMS IF ANY RELATED TO THAT </li></ul><ul><li>THE NEED TO UNDERSTAND THE EQUILIBRIUM THAT EXISTS IN THE SYSTEM </li></ul><ul><li>THE BEST CHANNEL DESIGN PRACTICE IS TO CONCEIVE THE IDEAL DESIGN AND THEN COMPARE IT WITH THE EXISTING SYSTEM AND MAKE MODIFICATIONS WHEREEVER POSSIBLE </li></ul>
49. 49. CONTD… <ul><li>ASSESS THE IDEAL CHANNEL DESIGN WITHIN TERMS OF THE CHANNEL SELECTION CRITERIA LIKE EFFECTIVENESS, EFFICIENCY, EQUITY, SCALABILITY & FLEXIBILITY </li></ul><ul><li>ESTABLISH THE CHANNEL ESTABLISHEMENT/MODIFICATION PLAN </li></ul><ul><li>THE MAIN PURPOSE OF THE CHANNEL TO BE SET UP </li></ul><ul><li>THE PROFILE OF THE CUSTOMERS WHO ARE THE TARGET MARKET FOR THE CHANNEL </li></ul><ul><li>THE NEEDS & REQUIREMENT OF THE TARGET MARKET WITH REGARD TO IDENTIFIED SERVICE OUTPUTS PROVIDED BY THE PROPOSED/EXISTING CHANNEL </li></ul><ul><li>ANALYSIS OF THE OPERATIONS OF THE EXISTING CHANNELS THAT DEAL IN SIMILAR PRODUCT/SERVICE LINES </li></ul><ul><li>DETAILED ACTIVITY CHART FOR ACHIEVING THE SERVICE OUTPUT OBJECTVES </li></ul><ul><li>DETAILS ABOUT THE VARIOUS CHANNEL CONSTITUENTS WHO WILL BE PERFORMING THESE TASKS </li></ul><ul><li>THE COST OF PERFORMING THE ACTIVITY </li></ul><ul><li>THE DESIGNATED ROLE & RESPONSIBILITIES OF THE CHANNEL CONSTITUENT </li></ul><ul><li>THE PROPOSED REMUNERATION FOR PERFORMING THESE RESPONSIBILITIES </li></ul><ul><li>STANDARDS FOR MEASURING THE PERFORMANCE </li></ul><ul><li>PROCEDURE FOR REPORTING AND INFORMATION SHARING </li></ul><ul><li>MONITORING MECHANISM </li></ul><ul><li>CRITERIA FOR APPOINTING THE CHANNEL MEMBERS </li></ul>
50. 50. MANAGING CONFLICT <ul><li>WHAT IS CHANNEL CONFLICT? </li></ul><ul><li>A SITUATION WHERE ONE CHANNEL MEMBER PERCEIVES THE BEHAVIOUR OF ANOTHER CHANNEL MEMBER TO BE IMPEDING THE ATTAINMENT OF ITS GOAL OR ITS EFFECTIVE FUNCTIONING </li></ul><ul><li>CHANNEL CONFLICT AS A PROCESS </li></ul><ul><li>SOURCES OF CONFLICT </li></ul><ul><li>A. ATTITUDINAL SOURCES </li></ul><ul><li>B. STRUCTURAL SOURCES </li></ul><ul><li>COGNITIVE/AFFECTIVE CONFLICT </li></ul><ul><li>MANIFEST CONFLICT </li></ul><ul><li>CONFLICT RESOLUTION </li></ul><ul><li>CONFLICT OUTCOME </li></ul>
51. 51. ATTIDUNAL CAUSES OF CONFLICT <ul><li>CAUSES WHICH ARE ASSOCIATED WITH DISAGREEMENTS ABOUT </li></ul><ul><li>CHANNEL ROLES: A SET OF PRESCRIPTIONS DEFINING THE BEHAVIOUR OF A MEMBER SHOULD BE IN A PARTICULAR SITUATION. MAY ALSO BE DUE TO LACK OF PROPER DEFINITION OF ROLES. </li></ul><ul><li>EXPECTATIONS: BELIEFS ABOUT WHAT IS GOING TO HAPPEN IN FUTURE </li></ul><ul><li>PERCEPTIONS: WHILE EXPECTATIONS ARE ABOUT THE FUTURE STATE OF AFFAIRS, PERCEPTIONS IS ABOUT THE PRESENT STATE OF AFFAIR. INTERCHANNEL CONFLICT COULD ARISE DUE TO DIFFERING PERCEPTIONS OF RELAITY ALSO </li></ul><ul><li>CHANNEL COMMUNICATIONS: LACK OF COMMUNICATION COULD ALSO LEAD TO INTERCHANNEL CONFLICT </li></ul><ul><li>NOT VERY EASY TO DETECT </li></ul>
52. 52. STRUCTURAL CAUSES OF CONFLICT <ul><li>THREE MAIN CAUSES OF STRUCTURAL CONFLICT ARE: </li></ul><ul><li>DIVERGENCE IN GOALS </li></ul><ul><li>DRIVES FOR AUTONOMY </li></ul><ul><li>FIGHTS OVER SCARCE RESOURCES </li></ul>
53. 53. COGNITIVE/AFFECTIVE CONFLICT <ul><li>IF CONFLICT IS LEFT UNATTENDED, IT COULD FESTER INTO A SPIRAL OF DISRUPTIVE ACTIVITIES WHERE EACH MEMBER WILL TRY TO OUTSMART EACH OTHER </li></ul><ul><li>MEMBERS REALLY FEEL THE CONFLICT IN TERMS OF FRUSTRATION, DISAPPOINTEMENTS, OR NEGATIVE FEELINGS TOWARDS THE RELATIONSHIP </li></ul><ul><li>LEVEL OF DISAGREEMENT CROSSES A PARTICULAR LEVEL AND AFFECTS THE EMOTIONS OF THE INDIVIDUAL CONCERENED </li></ul><ul><li>MOST OF THE CHANNEL PRINICIPALS TAKE NOTE OF THE CONFLICT AND INITIATE SOME MEASURES FOR RESOLUTION </li></ul><ul><li>IF NOT SATISFACTORILY RESOLVED, DETERIORATES INTO THE MANIFEST CONFLICT STAGE </li></ul>
54. 54. MANIFEST CONFLICT <ul><li>DISTRUCTIVE ACTIONS LIKE BOYCOTT OR TOTAL BREAKDOWN OF COMMUNICATION </li></ul><ul><li>IT IS UNADVISABLE TO ALLOW MATTERS TO DRIFT TO SUCH A STATE </li></ul><ul><li>WHEN THE CONFLICT REACH TO THIS STAGE, IT IS DIFFICULT TO COMEBACK TO FORMER RELATIONSHIP STAGE </li></ul><ul><li>AT THIS STAGE SOME RESOLUTION METHODS ARE THOUGHT ABOUT & IMPLEMENTED </li></ul>
55. 55. CONFLICT RESOLUTION MECHANISMS <ul><li>TWO BASIC METHODOLOGIES CAN BE IDENTIFIED FOR CONFLICT MANAGEMENT IN THE FIRST OF THE CONFLICT: </li></ul><ul><li>INSTITUTIONAL MECHANISMS THAT FOCUS ON STRUCTURAL CHANGES SUCH AS JOINT MEMBERSHIP IN TRADE ORGANIZATIONS, EXECUTIVE EXCHANGES,DISTRIBUTION COUNCILS ETC </li></ul><ul><li>INTERPERSONAL & THIRD PARTY MECHANISM, SUCH AS ARBITRATION & MEDIATION </li></ul>
56. 56. Latent conflict Felt conflict Manifest conflict <ul><li>Institutional approaches </li></ul><ul><ul><li>Joint membership of associations </li></ul></ul><ul><ul><li>Exchange of executives </li></ul></ul><ul><ul><li>Cooptation </li></ul></ul><ul><ul><li>Dealer councils </li></ul></ul><ul><li>Third party mechanisms </li></ul><ul><ul><li>Mediation </li></ul></ul><ul><ul><li>Arbitration </li></ul></ul>Negotiation Conflict management methods at Different stages of conflict
57. 57. NEGOTIATION AS A MECHANISM FOR RESOLVING CONFLICT <ul><li>time tested and popular approach </li></ul><ul><li>parties to the dispute set down mutual rules of engagement and work within these rules to obtain the competitve advantage over other party </li></ul><ul><li>negotiation strategies: </li></ul><ul><ul><li>competing or aggressive </li></ul></ul><ul><ul><li>collaborative or problem solving </li></ul></ul><ul><ul><li>compromising </li></ul></ul><ul><ul><li>avoiding, and </li></ul></ul><ul><ul><li>accomodating </li></ul></ul>
58. 58. NEGOTIATION STRATEGIES HIGH CONCERN FOR THE OTHER’S INTEREST LOW CONCERN FOR OWN INTEREST HIGH ACCOMODATIVE AVOIDANCE COLLABORATIVE COMPETITIVE COMPROMISE