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Sales &distribution notes

  1. 1. SALES AND DISTRIBUTION (MBA MK 03)<br />UNIT 1<br />LEC.1<br />INTRODUCTION TO SALES MANAGEMENT- SELLING AS A PART OF MARKETING<br />Sales management originally reffered exclusively to the direction of the sales force personnel. Sales management meant management of all marketing activities , including advertising , sales promotion , marketing research , physical distribution, pricing and product merchandising.<br />According to the committee of the American Marketing Association, “the sales management meant , the planning, direction and control of personal selling , including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal salesforce.” Sales Management is a respectable function today, and its professional status is high as any other business function.<br />Sales management provide critical inputs for the key marketing decisions like budgeting , quotas and territory management.<br /><ul><li>From the company viewpoint , there are three general objectives of sales management :
  2. 2. Sales volume
  3. 3. Contribution to profit
  4. 4. Continuing growth</li></ul>Top management delegates to marketing management, which then delegates to sales management , sufficient authority to achieve the three general objectives. <br /><ul><li>Purpose of sales force in any organization
  5. 5. To facilitate the development
  6. 6. Coordination and balance
  7. 7. Interdepartmental conflicts
  9. 9. A motivated sales team always achieve profitable goal for their organization. In today’s globalized world the success of the organization depend on the success of its employees. Whole management of sales can be improve by the process and different steps of sales management, which is as follows:
  10. 10. Planning and Control:
  11. 11. “It reduces hesitancy and false steps”-Henry fayol
  12. 12. Planning is looking ahead on the basis of the present and the immediate past. And Control operates on everything – things, people, actions.
  13. 13. Reports:
  14. 14. i)daily report
  15. 15. ii)weekly report
  16. 16. iii)tour programme
  17. 17. Monthly Performance Review:
  18. 18. Each sales rep to report personally to the branch office once in a month.
  19. 19. Sales Training:
  20. 20. Presentation techniques
  21. 21. Techniques to prompt and handle participation
  22. 22. The methodology of role-playing, which can be valuable assistance in developing sales skills.
  23. 23. The use of training films.
  24. 24. Presentational techniques:
  25. 25. This section is designed to highlight key factors which can be used to make your presentation more effective.
  26. 26. Ensuring that learning takes place:
  27. 27.
  29. 29. A successful sales manager must posses administrative , conceptual , technical , and human relation skill which a salesman may not possess. Of course, selling experience is an asset because a sales meneger manages the sales force that performs the selling job. But both these are two different aspects. A successful salesman may not always make a successful sales manager.
  30. 30. A sales manager jobs has two dimensions ----- planning & operating
  31. 31. Planning function includes the following:
  32. 32. Design a sales programme.
  33. 33. Establish and manage a sales organisation.
  34. 34. Control the sales performance.
  35. 35. Set the sales goals, formulate the sales policies, and design the sales strategies.
  36. 36. Prepare a sales plan to implement the sales objective.</li></ul> The operating functions include:<br /><ul><li>Manage the sales force.
  37. 37. Interact with other departments.
  38. 38. Interact with the trade and customers.
  39. 39. Interact with the marketing department and report to the marketing manager.
  40. 40. Characteristics of Sales managers
  41. 41. A sales manager must visualize.
  42. 42. A sales manager must do the right selection.
  43. 43. He should do the proper time management.
  44. 44. He should be an effective leader.</li></ul>LEC. 3<br />CONCEPT OF PERSONAL SELLING<br />Personal selling is a part of the total promotional activity of the firm, which along with product, price, and place management, goes a long way in meeting the overall marketing objectives of the organization. The ultimate objective of the marketing function is to increase the sales of want-satisfying products and services, thus leading to a healthy bottom line. Of the several tools available to stimulate sales, one more important tool is personal selling.<br />WHAT IS PERSONAL SELLING<br />It is a method of communication----- a sales person communicates on an individual basis with a prospect. Personal selling is person to person communication. It is also possible to get immediate feedback in personal selling by observing the reaction of the prospect, and thus communication can be modified on the spot. Advertising may be receive by those who are not our target audience . Personal selling is focused directly on our target audience.<br /><ul><li>Situations in personal selling:-
  45. 45. Establish product & ongoing relationship with the sales executive.
  46. 46. Established product & new relationship.
  47. 47. New product & ongoing relationship.
  48. 48. New product & new relationship.</li></ul>SALES MANAGEMENT AND SALESMANSHIP<br />Sales management , is the direction of the personal selling effort . Mostly, this is accomplished through salesmanship . A salesperson’s job has many activities , including salesmanship. A sales manager has to understand these. <br /> A sales person faces many problems, some of which are related to salesmanship. A salesmanager must understand these and provide the right solutions.<br />Salesmanship is defined by Shapiro as the art of persuation which motivation the customers to buy products which provide them suitable benefits. Salesmanship is initiated by the seller and provides information to the prospective buyers about the products and their benefits so as to persuade and motivate them to opt for them. <br />LEC. 4 <br />PROCESS OF PERSONAL SELLING<br />There are six stages in Selling process , which are as follows:<br />Prospecting & Qualifying<br />Pre- approach & Approach<br />Sales Presentation & Demo<br />Handling Objections<br />Closing<br />Follow Up & Maintenance<br />LEC. 5<br />QUALITIES OF A SUCCESSFUL SALESMAN <br /> There are different qualities of a successman salesman :<br /><ul><li>Personality
  49. 49. Mental qualities
  50. 50. Sociability
  51. 51. Vocational skills
  52. 52. Communication ability
  53. 53. Patience
  54. 54. Determination
  55. 55. Dependability</li></ul>LEC. 6<br />GOALS IN SALES MANAGEMENT: GOAL SETTING PROCESS IN SALES MANAGEMENT<br /> There are three main goals in sales management. They are:<br /><ul><li>Adequate sales volume to be achieved
  56. 56. Maximum contribution to profits
  57. 57. Continuing growth
  58. 58. To fulfill these goals and objectives the top management delegates power to marketing management which further pass it to sales management which finally set the future operations.
  60. 60. The duty of a sales manager is to look after and managing the company’s personal selling for achieving this goal he has to adopt sales management goal setting process which is as follows:
  61. 61. Analysis :
  62. 62. (a)to analyse the sales records
  63. 63. (b)reports of sales people
  64. 64. (c) knowing market trends
  65. 65. (d) other environmental factors
  66. 66. Planning :
  67. 67. (a) formulating goals for the company’s sales efforts
  68. 68. (b)developing sales strategies and policies for achieving those goals
  69. 69. Organization :
  70. 70. (a)formation of sales force
  71. 71. (b)delegation of authority for achieving company’s goal
  72. 72. Direction :
  73. 73. (a)to supervise and implement the plans properly and in the direct direction
  74. 74. (b)for this proper communication motivation and right leadership is required
  75. 75. Control :
  76. 76. (a)to find out the difference between actual and targeted results
  77. 77. (b)to find out the cause of deviation , if any
  78. 78. (c) ultimately taking corrective action to solve them</li></ul> <br /> LEC. 7<br /> ANALYZING MARKET DEMAND AND SALES POTENTIAL<br />According to Philip Kotler, “ Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program.”<br />MARKET DEMAND : In it the firm need to assess :<br /><ul><li>Current market demand (ii) future market demand
  79. 79. Current market demand : it consist of two types of assessment which are:
  80. 80. Total market demand : this can be calculated by sales forecasting.
  81. 81. Area market demand :
  82. 82. (i)It refers to the demand within a particular area which can be either a district, state or country.
  83. 83. (ii)It has two methods
  84. 84. (a) Market build up method: It identifies :
  85. 85. (i)the quantity of potential buyers in each market and
  86. 86. (ii)to estimate the quantity of their potential buying
  87. 87. (b)Market factor index method : It identifies :
  88. 88. (i)those market factors which have coordination with market potential and
  89. 89. (ii)then these factors unite them with a weighted index
  90. 90. Future market demand includes the following:
  91. 91. (i)forecasting total demand and
  92. 92. (ii)forecasting area demand which depends upon the forecasting total demand.</li></ul> SALES POTENTIAL:<br />According to Still and Cundiff, “ A sales potential is an estimate of the maximum possible sales opportunities present in a particular market segment open to a company selling a good or service during a stated future period.”<br />A sales potential represents sales opportunities available to a particular manufacturer while a market potential indicates sales opportunities available to an entire industry.<br />The sales potential is larger than the sales forecast as:<br /><ul><li>Some firms lack sufficient production capacity to achieve the full sales potential.
  93. 93. Other firms lack distributive networks to reach every potential customer .
  94. 94. Others do not consider their total sales potential due to lack of their financial resources
  95. 95. Still others are more profit oriented rather sales oriented.
  96. 96. Thus the estimate for sales potential shows how much a firm can sell if it had all necessary requirements and ready to use them.
  97. 97. </li></ul>Lec. 8<br />Techniques of Sales Forecasting<br />The following methods and techniques are used for forecasting sales of a company:<br /><ul><li>Jury method/executive opinion method</li></ul>Most common and prevalent method. The base of this method is judgement hence also called executive opinion method. In this method all the participants give their judgement and opinions. The final forecast is determined by averaging these opinions. <br /><ul><li>The Delphi method
  98. 98. It is also a kind of expert opinion which is used for broad based future estimates. It this method a sequence of questionnaires are put on a panel of experts in this field. All members provide their individual information to others in the panel. Then panel is asked to check the questions which are important to the forecast. Their answers and reactions are analysed and if there is any sharp differences in opinions, it is again discussed and final forecast is formulated.
  99. 99. Sales force composite method
  100. 100. The sales forecasting is done by sales force and is also a judgement based method. In it each salesman predict the forecast for his territory. All such forecasts are then consolidated at regional level and the sum of all these forecasts develops into the firm’s forecast . It is thus called a grass root method as the judgement of the are nearest to the market place forms the basis of the forecast.
  101. 101. User Expectation method/survey of consumer’s opinion method
  102. 102. The sales forecasting is done after surveying the buyer’s intentions. A list is demand forecast is consolidated.
  103. 103. Thus, the survey of buyer will provide-
  104. 104. The total likely consumption of the product.
  105. 105. The consumer’s buying plan.
  106. 106. The market share for the enterprise.
  107. 107. Market share method
  108. 108. The company first chalk out the industry forecast and then applies the market share factor of the company forecast. The market share factor is prepared from company’s past trends, present position, plans for future and brand preference etc. It requires great expertise to correctly assess through marketing intelligence, its competitors plans, policies and activities.
  109. 109. Analytical and statistical methods/Trend analysis
  110. 110. Under this method of sales forecasting , the past data of sales of the enterprise are analysed and the trend is established. Forecasting for the future are made on the basis of this trend.
  111. 111. Market survey method
  112. 112. This method is most suitable for the sales forecasting of the new product. Under this method , some certain segments are selected and the product is introduced in these segments only. The result of sales in these segments are collected and analysed and on the basis of these results, the sales forecasts are made for the whole market.
  113. 113. Sales Budget:
  114. 114. Sales budget is an important part of sales forecasting. A sales budget is a forecasting of a new product or of an enterprise for a certain period of time. Sales budget is prepared after preparing sales forecast. Sales budget is considered to be a most impotent budget of an enterprise budget because all other budgets, such as –production budget, Raw Materials budget, labour budget, plant budget, overheads budget etc. A sales budget is prepared by sales manager or marketing manager with the help of marketing research manager, regional sales manager, branch manager and salesman.
  115. 115. Factors to be considered while preparing a sales budget:
  116. 116. There are many factors which must be considered while preparing a sales budget. It can be divided into following two parts-
  117. 117. Internal factors:
  118. 118. Important internal factors which affecting the sales budget are as under-
  119. 119. Volume of sales of the enterprise
  120. 120. Trend of the sales of the enterprise
  121. 121. Long term trend of the sales of the enterprise
  122. 122. Profitability of different products of the enterprise
  123. 123. Production capacity of the enterprise
  124. 124. Expansion programme of the plant of the enterprise
  125. 125. Plan of new products
  126. 126. Product diversification
  127. 127. Plan or product development
  128. 128. Seasonal fluctuations
  129. 129. Selling and distribution channels
  130. 130. Possibilities of marketing research
  131. 131. Price policy
  132. 132. Advertisement and sales promotion policy
  133. 133. Ability and efficiency of salesman,etc.
  134. 134. External Factors:</li></ul> External Factors affecting the preparation of a sales budget, These are as under:<br /><ul><li>General economic condition of the country
  135. 135. General atmosphere of the industrial development of the country
  136. 136. Condition of a particular industry
  137. 137. Changes in population
  138. 138. National production and per capita national income
  139. 139. Distribution of wealth in country
  140. 140. Situation of competition in the market
  141. 141. Changes in the needs , habits and tastes of consumers
  142. 142. Industrial and taxation policy of the government
  143. 143. Purchasing power of general public
  144. 144. Trade conditions in the country etc.</li></ul>LEC. 9<br />Formulating selling strategies<br />Objectives are achieved through strategies. Policies provide the guidelines. Selling strategies have two types of dimensions—what type of salesforce is needed and how many of sales people are needed. The different strategies of sales are as follows:<br />Types of sales persons:<br />It is a key question in selling strategy. The consideration are the expectations of the organization from the salesforce and the measurement of performance. Each organization has its individual requirements. Each organization has its own strengths and weaknesses in terms of product it sells. <br />Product market analysis:<br />Selling task varies from customer to customer, and market to market. To take an extreme example, a salesman may sell a single product to several different types of customers. Another extreme is to sell a diversity of products to a single types of customer . sales persons can be product specialists or market specialists or product market specialists. <br />Role in securing orders:<br />A sales person’s role in securing orders also affect the type of sales persons required. In different selling environments, the order securing process operates differently, e.g., some have to solicit orders aggressively such as computer salesman whereas some just accept orders which come their way such as a salesman of government textbooks prescribed for primary and secondary schools.<br />Basic selling styles:<br />The four basic selling styles: trade selling , technical selling, missionary selling and new-business selling. <br />Trade selling tries to establish long-term relationship with the customers. This is a routine job. In wholesale trade, this style is used extensively.<br />Technical selling aims at improving sales volume of established products by offering sound technical advice and other assistance.<br />Missionary selling assists the customers in their selling efforts. The idea is to increase the sales volume. If orders flow in, they are just incidental. A medical representative is a typical missionary. <br />New-business selling tries to identify new customers and secure orders from them. He converts the prospects into customers. Selling for him is a creative job. He should have good selling skills.<br />Size of the sales force<br />The second dimensions of selling strategy is the size of the salesforce. An organization first decides what type of sales people it requires and then how many of them are necessary so as to meet the sales and profit objectives. Too few sales people mean loss of opportunities and too many of them, unnecessary expenditure. The exact number of sales people a company must have is difficult to pin point. <br />Customer, Tailored Selling Strategies<br /> Strategy of selling ultimately is tested against interactions of the salespeople with the customers; which lead to the realization of the selling objectives. The type of sales persons required and their number are the first two key decisions taken by a company. Later the focus is on developing an individual selling style, which is mutually beneficial. All said and done, a salesman achieves success by his interactions with the customers. His behaviour may vary from customer to customer. The extent of this variation is a matter of selling skills. This calls for pre-planning and the actual performance during the call. <br />LEC. 10<br /> Designing sales territories and sales Quota<br />Sales territory <br />A geographical grouping of customers and prospects is called a sales territory . operationally it is a group of customers assigned to a sales person. In it customers are important rather than the areas in which a salesman work.<br />Designing sales territories<br />It means dividing the market into similar customers making homogeneous market area. Market data is more useful when collected and applied at the territory level. To implement planning and control the market area should be broken up into a number of well designated sales territories. <br />Definition <br />According to Still & Cundiff, “A sales territory is a grouping of customers and prospects assigned to an individual sales person.”<br />Criteria for Territory design<br />Sales territory design should be-<br /><ul><li>For easy administration and right approach
  145. 145. Feasible having equal work load and equal potential.
  146. 146. Divided into marketing regions and district etc, to cover total marketing area.</li></ul>SALES QUOTAS<br />Quotas are quantitative objectives which are assigned to individual sales personnel or a sales unit (a district or region or territory) for a particular period of time by the sales department. These appraise the selling effectiveness of the company.<br />sales quota is a goal in terms quantity given to a sales representative, or a group of sales representatives over a period of time. Sales quota may be assigned to a region , territory, branch office. It may be assigned to a distributor too. Sales quotas are the tools of planning and control. <br />Sales quotas are based on sales forecasts and sales potentials of different markets. The more accurate the data used in formulating the sales quotas, the more effectives quotas become. Sales efforts is controlled by using quotas. It helps in appraisal. It helps in controlling expenses. Quotas provide a quantitative performance standards. Quotas are used as performance criteria in sales contests.<br />Sales forecast is the first step in setting up quotas. It leads to the sales budget. In the budget, there is a provision for setting quotas as performance standards. <br />UNIT 2<br />Lec. 11<br />Sales force Management<br /> The success of any sales organization depends upon the ability, skill and willingness of the sales force in achieving the desired sales objectives. The willingness to do the work will enhance his performance level. The willingness depends upon the motivation he gets. Thus, motivation provides willingness which is quite different from his ability or capacity in doing his job. Therefore, there are two factors in determining the performance of the salesforce which are his-<br /><ul><li>Ability and skill
  147. 147. Motivation
  148. 148. Ability and skill can be developed through education and training
  149. 149. Willingness and interest to perfect well can be achieved through proper motivation. Thus, motivation can enhance greater selling efficiency in the form of higher sales volumes.
  150. 150. A motive is an emotion within an individual which incites and encourage him to perform well.
  151. 151. Motivation can be aroused by some external stimuli or incentive.</li></ul>Lec. 12<br />Organizing the sales force:<br />The following Common approaches are used in organizing the sales force:<br /><ul><li>Customer – based organisation : The cretria for thease approch
  152. 152. Product – based organization
  153. 153. Territory based organization
  154. 154. National account based organization
  155. 155. Inside/outside sales based organization</li></ul>Lec. 13 <br />Sales force structure:<br /><ul><li>It requires when the company sells different variety of products to different types of customers over a large geographical area.
  156. 156. It combines many types of sales force structures.
  157. 157. Sales people are trained for territorial or product or market structure knowledge.
  158. 158. Then, these sales people have to report to one or more line and staff managers.</li></ul>The sales force is very important in marketing mix. Hence, companies need to carefully consider when and how to use sales representatives. For this, companies are substituting inside mail and phone based selling units to reduce field sales expenses and they are trying to increase the productivity of the remaining sales force through better selection, training, motivation and compensation. Sales personnel serve as the company’s personal link to the customer.<br />Lec. 14<br />Size of sales force:<br /><ul><li>It is the most important asset and major component of company’s promotion mix.
  159. 159. It decides the company’s fate as revenues are provided through sales.
  160. 160. Its effectiveness determines overall marketing objectives of the firm.
  161. 161. Sales force is required for various kinds of services.</li></ul>Sales force size:<br /><ul><li>A company after formulating its sales force strategy and structure start considering its sales force size.
  162. 162. It is usually fixed at the optimum level.
  163. 163. It includes expected level of sales together with the number of sales persons required for such sales.
  164. 164. Increasing the number of their sales representatives will increase both sales and costs.
  165. 165. Thus, the sales force size can be established on the number of customers they want to tackle.</li></ul>Note: It is called “work load approach” by Philip Kotler which is as follows :<br /><ul><li>The buyer’s are categorized according to their yearly sales volume.
  166. 166. Then, the call frequencies per year is established for each category.
  167. 167. The number of accounts for each category is multiplied by the call frequencies to find out the complete work load in sales call per year.
  168. 168. Through it, the number of calls a sales person can utilize per year is find out.
  169. 169. By dividing the total year calls needed with the average year calls done by the sales person can determine the number of sales persons required by the company.
  170. 170. The size of sales force depends upon its structure and productivity and some other factors.
  171. 171. The size is also changeable according to the company’s market conditions.
  172. 172. The company determines the sales force size upon its affordability and its requirements for the job.</li></ul>Lec. 15<br />Recruitment of the sales force:<br />The main responsibility of any company’s sales executives is to recruit and select the executive should implement personal – selling strategy in considering both the kind and quantity of sales personnel.<br />Individual are recruited by their varying abilities, skills, education, training, experience. The scope of recruitment depends upon <br /><ul><li>Number of recruits required.
  173. 173. Size of sales company.
  174. 174. Rate of turn over and
  175. 175. Forecasted sales volume and distribution channels.</li></ul>Importance of recruitment:<br /><ul><li>It is essential to carry out the selling activities of the company to recruit the right type of sales person having all the desired qualities.
  176. 176. For this, a sound recruitment policy is required for the success of any organization.
  177. 177. The management should choose the right man for the right job or else they will become burden on them.
  178. 178. A stable and efficient work force can only achieve organizational goals and objectives in a systematic planned manner.
  179. 179. Only a right type of sales force once recruited can increase sales and profit to an organization.
  180. 180. Thus, recruitment of salesman in an endless job for any company.</li></ul>Need for continuous recruitment:<br /><ul><li>Vacancy created
  181. 181. Expansion programmes</li></ul>Sources of recruitment :<br /><ul><li>Internal sources
  182. 182. External sources
  183. 183. Advertisement
  184. 184. Employment agencies
  185. 185. Existing employees
  186. 186. Older people
  187. 187. Salesman of non-competing companies
  188. 188. Salesman of competing companies
  189. 189. Direct application
  190. 190. Wholesellers and retailer</li></ul>Lec. 16<br />Selection of sales force<br />After determining the type and number of sales persons the sales department requires, the applications for the job have been received, the company is prepared to deal with the final stage of the selection system i.e., selection process. It involves to select the individuals out of the so many applicants which best fit the needs of the company.<br />The main purpose of selection is to find out the right person for the right job in an enterprise.<br />Selection of sales personnel can be done in two ways-<br /><ul><li>Either through simple system by applying an informal personal interview
  191. 191. Or through complex system by using diverse mechanism to gather information about applicants for sales jobs.
  192. 192. A complex selection system is a set of successive screening such as
  193. 193. Applications
  194. 194. Preliminary interview
  195. 195. Qualifications
  196. 196. References
  197. 197. Testing
  198. 198. Physical conditions
  199. 199. Employment offer</li></ul>Lec. 17<br />Leading and motivating the sales force<br />Motivation is behaviour towards reaching the desired goal. The need within individual leads a person to act so as to achieve it. Thus, motivation for sales personnel is amount of effort required for his sales job i.e.,<br /><ul><li>Calling on potential customers
  200. 200. Planning sales deals and
  201. 201. Preparing reports etc.</li></ul>Need for motivation<br />There is a need for motivation for sales personnel in order-<br /><ul><li>To improve efficiency
  202. 202. To remove tension
  203. 203. Keep them satisfied
  204. 204. Provide human treatment
  205. 205. Motivation tools
  206. 206. </li></ul>Motivation and leadership<br /><ul><li>Effective sales executives act as leaders of sales personnel and get voluntary cooperation from them to reach the sales department’s goal.
  207. 207. They very well know the motives, desires and ambitions of the sales persons and use this knowledge to guide them in their activities.
  208. 208. The leadership requires to keep good relationship with the sales personnel which requires skills, experience, maturity and common sense.
  209. 209. They should treat them fairly in assigning jobs, promotions and remunerations etc. </li></ul>Lec. 18<br />Training and compensating the sales force<br />The increasing demand of demand of present world of marketing requires competent and well trained salesman as a company’s success and progress depend greatly on the efficiency of its sales force. now-a-days only proper trained sales person can improve the maximum potentiality of any organization hence, well trained sales force can be a valuable asset for it to face the modern marketing. <br />