• “Sales management is the attainment of sales force goals in an effective and efficient manner through planning, training, leading, and controlling organizational resources” • Sales management is planning, direction and control of personal selling. This essentially includes recruiting, selecting, equipping, asg, supervising, compensating and motivating the sales force • Objectives of Sales Management  Generate sales and earn revenue  Providing Profitability  Improving Market Share  Improving Corporate Image  Selling concept proposes that customer will not buy enough of an organization's products unless they are persuaded to do so through selling effort. Where as Marketing concept proposes that to achieve success, the focus should be on organization's ability to create, communicate and deliver a better value proposition 1

Introduction to Sales Management Major Differences between Selling and Marketing

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Sales management involves the execution of the following tasks:  Setting personal selling objectives  Formulating sales policies.  Structuring the sales force.  Deciding the size of the sales force.  Deg / Demarcating / developing sales territories.  Developing the sales forecasts and sales budgets.  Fixing sales targets for individual sales territories /salesman.  Creating the sales force 3

Introduction to Sales  Managing theManagement sales force - compensation, motivation, sales coaching/supervision evaluation/appraisal, training/development  Building the sales organization.  Managing the marketing channels.  Ensuring growth and developing new s.  Sales communication and reporting.  Sales coordination and sales controlling including sales expense control.  Creating and maintaining right image for the company and its products in the market.  Co-ordination with marketing management in the areas like, product mix, pricing, distribution, advertising and sales promotion.  Building relationship strategies with key customers 4

Introduction to Sales Management  Personal selling:    

Personal selling is one of the forms of ‘Promotion’. Other forms being advertising, sales promotion and publicity. It is the art of successfully persuading customers to buy a product or services from which they can derive suitable benefits, thereby increasing their total satisfaction. Personal selling is a face to face transaction, a personal correspondence or a personal telephonic conversation between a salesman and a prospective customer. A well trained salesman can be a very effective communication medium. Personal selling involves:  Persuasion  Flexibility of approach  Supply of information 5  Mutual benefit

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Introduction to Sales Management The importance of personal selling from the point of view of manufactures as well as consumers. 

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From manufacturer’s point of view  It creates demand for products both new as well as existing ones.  It creates new customers and, thus help in expanding the market for the product.  It leads to product improvement. While selling personally the seller gets acquainted with the choice and demands of customers and makes suggestions accordingly to the manufacturer.  Builds long term relationship. From customer’s point of view  Personal selling provides an opportunity to the consumers to know about new products introduced in the market. Thus, it informs and educates the consumers about new products. 6

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Introduction to Sales Management It is because of personal selling that customers come to

know about the use of new products in the market. The sellers demonstrate the product before the prospective buyers and explain the use and utility of the products.  Personal selling also guides customers in selecting goods best suited to their requirements and tastes as.  It involves face-to-face communication.  Personal selling gives an opportunity to the customers to put forward their complaints and difficulties in using the product and get the solution immediately. Limitations of personal selling  Can not reach mass audience  Expensive per  Many sales calls may be needed to generate a single sale  Labor intensive

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Introduction to Sales Management selling  Types of Personal

 Industrial selling / B2B selling  Selling to resellers like wholesaler, retailer etc.  Selling to business s. Eg:- reliance sells plastic

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granules plastic film manufacturers.  Institutional selling. Eg;- Johnson & Johnson selling surgical equipments to hospitals.  Selling to Government organizations – the buying process often is different from that in public sector. Retail selling  Retail selling involves direct selling to the end/ ultimate consumer for personal use or consumption. The word retail is derived from the French word ‘Retallier’ which means breaking the bulk or ‘cutting to pieces’. The retailer buys in bulk from the Industrial seller and then sells the goods in smaller assortments as per the demand of the consumer. Eg: Wal-Mart, Kmart, Big Bazar, Shopper’ Stop, Spencer’s etc. 8

Introduction to Sales Management

 Services selling:  Services selling involves selling of intangible goods.

Services have some unique characteristics which distinguish them from physical goods such as intangibility, simultaneity of production and consumption, non storability etc. Examples of services industry are hospitality, health care, insurance, airlines etc.

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Types of selling function:

 Different buying situations call for different types of

selling function.  Broadly selling function can be categorized as follows  Order takers – they respond to existing customers.  Order creators – they attempt to influence the specifiers rather than customers.  Order getters – They are the front line sales people or sales personnel 9

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Introduction to Sales Management Order takers can be classified as  Inside order takers: these are retail sales assistants.

They perform the role of completing the transaction. They receive payment and es the goods to the consumer : EG:- salespersons in Big Bazar.  Delivery sales persons : They deliver the products to customers as in the case of orders received on phone. Eg:- Delivery boy in Dominos pizza.  Outside order takers:- They make sales call and take orders from customers. They do not deliver anything at customer’s place. Eg:- Sales people from Eureka Forbes.

 Order creators Missionary salespersons: They do not close a sale but persuade the customers to promote a sellers brand . Eg:Medical representatives persuade the doctors to prescribe. 10

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Introduction to Sales Management

Order Getters are classified as:

 Front line salespersons  Organizational salespersons – they are the

industrial sellers who try to establish long time relationship with organizational buyers.  Consumer salespersons are the door to door salesmen. Eg:- insurance agents, carpet sellers, sellers of spices etc.  Sales sales persons:  Technical salespersons – Render to frontline sales people when the product or the services being sold is complex.  Merchandisers: provide sales in retail and wholesaling situations.

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Personal Selling Skills  Selling skills:

The essential selling skills of a sales persons are:  Communication skill.  verbal  non-verbal.  Listening skills.  Content listening – Understanding and retaining the message  Critical listening – Understanding and evaluating the speaker’s logic, intentions, motives etc. Active listening – understanding speaker’s feelings, needs etc.

  Conflict management and resolution skills.  Conflict exists with in every organization/ department. There can be

Interest conflicts, Emotional conflicts, Value conflicts. Conflict need to be resolved.

 Negotiation skills

 Successful negotiation involves an attempt by two parties to reach a mutually acceptable solution (preferably a win-win situation).

 Problem solving skills.

 Problem solving process involves 1. Define the problem 2. Generate alternatives 3. Decide 4. Implement 5. Evaluate the solution.

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Personal Selling Process 

The sales process is a sequential series of actions:  Pre-sale preparation.  Prospecting  Pre-approach before the interview  Approach the customer  Presentation  Handling the customer’s objections  Trial close  Close  Follow-up and service. 13

Personal Selling Process  Pre-sale preparation: by the salesman to equip himself with Product knowledge  Types  Features  Benefits / Limitations  Price  Company knowledge  History  Management  Size  Finances  Policies and procedures  Competitor’s knowledge:  Industry structure  Products  Market share  Policies

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Personal Selling Process

 Prospecting: involves locating and qualifying prospects. It is

the process of seeking and identifying prospective buyers or ‘leads’. Qualifying prospects means to determine whether the prospect is able to buy. Few methods of prospecting are:  Cold canvassing: goes door to door in an identified area.  Customer referrals: Requesting customers to provide a list of possible customers.  Prospect pools: Gathered from telephone directory or mailing list.  centers of influence: They are people in a position to influence others by the virtue of their power, popularity etc. Their referrals carry certain level of authority.  Net working  Non competing sales force.  Telemarketing.  Direct mailing  Using internet.  Trade shows and demonstrations at exhibitions 15

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Pre-approach before selling: The pre-approach

takes place prior to meeting the qualified prospect. In this stage the salesperson must decide how to best initiate a face to face meeting. This includes analysis of available information about the prospect’s buying behaviour and evaluation of competitor’s products. Approach: This takes place when the seller first meets the prospective buyer. It is necessary to fix an appointment with the customer at their desired place and time, before meeting him. The goal at this stage is to gain the interest and attention of the buyer. Careful pre-approach planning is needed to achieve this. Presentation: the presentation of the sales message may take the form of a prepared (‘canned’) presentation or take an interactive (needs-satisfaction) approach. The message is intended to persuade buyers to purchase the product based on it’s attributes and benefits. During sales presentation there are basically three approaches used– attracting attention, creating interest and arousing desire / conviction building. 16


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Handling objections: This needs considerable sales skill. Well prepared salesmen anticipate objections and are prepared to handle them. Commonly used objection handling methods are  Boomerang methods - Converting objections in to reasons for buying.  Compensation – Used when objections are valid but there are factors which compensate or outweigh the objections  Forestalling - With his experience anticipates and counters the possible objections at the presentation level itself.  Feel, felt, found – Salespeople express their understanding of how prospects feel, indicate that it is possible to feel that way because others have also felt that way but have found their fears to be unfounded.  Head on – It is used when the objections are based on incorrect information. Salespeople in such a situation

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politely but firmly deny the validity of the objections.  Indirect denial: This is when a head on approach is better avoided. Here the approach is not to tell the buyer directly that he is wrong but yet manage to correct the impression by stating the facts. Closing the sale : This the stage at which the seller tries to gain a purchase commitment from the prospect. Salespersons who are uncertain that it is an appropriate time to close the deal may use a trial close. If a trial close seems to be going well , it can be pursued to a complete close. If not, it can be withdrawn with out detracting reducing the effectiveness of the meeting. Follow-Up: This step in the process represents the salesperson’s efforts to assume customer satisfaction after the sale. These efforts provide an important basis for building goodwill and future sales. It may be used to suggest additional sales of the product or related goods. 18

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Sales Forecasting Sales forecasting is estimating what a company's future sales

are likely to be in the future. It is a projection into the future of expected sales, given a stated set of environmental conditions. Sales forecasting plays a vital role in sales planning, budgeting and decision making. Forecasting in marketing is partly art and partly science. The blend of the two is fundamental for successful forecasting. The amount of each varies from one situation to another.  The contribution of science comes from application of various statistical techniques used to analyze past data about a market  The contribution of art lies in an ability to link experience of, and feel for, a market with the results of various analyses, plus the ability to assess the significance of factors which can not yet be included in the statistical analysis and the effects of which may not yet have been experienced. 19

Sales Forecasting 

Importance of Sales forecasting and its role can be understood from the following:  Sales forecasts are vital to the efficient operation of the firm and can aid managers on such decisions / areas such as:  Future investments in new ventures, capacity expansion, resource allocation to functional areas, cash flow projections etc.  Material requirement planning, inventory to carry.  Personnel requirement planning.  Planning marketing and sales programs and to allocate resources among the various marketing activities such as advertising, distribution etc.  Deciding on proper price to charge, and the 20 salaries to pay salespeople.

Sales Forecasting 

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Sales / demand forecasting can be classified as  Short range forecast  Long range forecast  Perspective forecast Short range forecasts are made for one year and reviewed monthly, quarterly or half yearly. They are used for projecting cash flows, planning marketing activities such as personal selling, advertising, warehousing. They are also used for other functional areas like Production, Human resources and Materials. Long range forecasting is made for 5 to 10 years. This is used for expansion, diversification and other investment decisions. Long term forecasting is relatively difficult because of uncertainties involved Perspective forecasting is still longer term forecasting. It may be a forecast of 15 to 20 years. 21


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Characteristics of Forecasts  Forecasting is a difficult process because of the uncertainties involved. More the number of factors influencing a situation more complex and inaccurate the forecasting tends to be. The difference between the forecast and the actual is the ‘forecast error’. The objective is to minimize it.  Long term forecasts are more error prone than short term forecasts.  Aggregate forecasts are more accurate than disaggregate (individual) forecasts. In today’s business scenario, due to globalisation consumers have more product choices. They also demand greater product diversity and innovation. This is aided by rapid technological advancement. Because of this dynamics forecasting is becoming increasingly difficult. 22

Sales Forecasting  There can be two approaches to sales forecasting: 

- Break down approach and Build up approach. In Break down approach the company’s internal and external environments are studied to determine the significant factors that influence the sales.

 The internal factors studied are:  Pricing  Product changes  Distribution  Promotion  Resources available – finance, facilities, material, labour.  Management skills  Technology.  The external factors studied are:  General economy  Industry related activities  Competition  Government laws and regulations.

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The steps in Break down methods are:

1. 2. 3. 4. 5.

General environment forecast Industry sales forecast Company sales forecast Sales forecast for product lines Individual product forecasts.

 In Buildup approach, estimated sales figures for individual products/market segments are totaled up to arrive at forecast figures. This can be rather cumbersome process if the organisation has many product varieties serving multiple markets. 24

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Sales Forecasting

Sales forecasting methods: 

Qualitative methods Expert’s opinion method  Delphi method  Sales force composite method  Survey of buyer’s expectation method / expectation method / End-use method 

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Quantitative methods (statistical methods) Extrapolation method  Moving Average method  Exponential Smoothening method  Time series analysis  Regression analysis  Test marketing. 

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Market Research methods

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Sales Forecasting

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Expert’s opinion method: This a commonly used method. In this the estimates of experts with versatile experience and sound knowledge such as marketing professionals, distributors, marketing consultants are sought. One way is taking the average and another way is in which the group meets, each one presents his estimate then a group consensus is arrived at. Delphi method: In this of experts are formed from within or outside the organisation. A coordinator interacts with experts. The experts work separately, so that they can not influence each other. They give their opinions individually in written form. The coordinator compiles, processes and sends back for revision. This goes on for several rounds as long as a final forecast does not evolve. Sales force composite method: This forecast is done by the sales force of the organization. Sales men are in direct with the market so it is assumed that they are well informed about the market trends. The individual forecasts of salesmen are combined to form the overall demand forecast of the organization. But the result can be biased because of self interests, ignorance of broad changes taking 26 place in the market place etc.


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Survey of buyer’s expectation method: This is also called expectation method or End-use method. In this a sample of potential buyers is taken and then the information regarding their likely consumption of the product and their buying plan are collected. The information is then extrapolated to get the total demand forecast. But often there is a difference between the stated and the actual demand. Extrapolation method: This is a simple inexpensive method and can be adopted in market situations where little changes occur. It involves plotting of the sales figures of past years and then extending the line to forecast the future demand. Moving average method: This an averaging method in which the past data beyond a certain period is considered irrelevant. The period needs to be selected judiciously. In a weighted moving average method, weightages are assigned to the data of different time periods by the analyst depending upon his perception of their importance. 27

Sales Forecasting

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Exponential Smoothening method: It is essentially a modified version of the weighted moving average technique. Here we have a smoothening constant. Example – Say the old forecast for present period = 100 but the actual observed for the period was= 80. To get the forecast for the next period if the smoothening constant =0.3 then it means the weightage given to old forecast is 0.7 and the weightage given to the actual is 0.3. The forecast for the next period is = 100 x 0.7 + 80 X 0.3 = 94. In effect it considers all past data but places heaviest weightage to the most recent data and the weightage lessens as the data ages. Time series analysis: This statistical method is used to identify systematic cyclical / seasonal variations that repeats itself as a pattern. Regression analysis: This is a form of correlation technique. A correlation basically the degree of linear association between two variables where one is treated as dependent variable and the other dependent variable. In regressin analysis attempt is 28


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to relate sales to those variables that influence sales. They may be economic factors, price etc. Test marketing: This is a method often used for measuring consumer acceptance of a new product. The outcomes of a test market are mathematically extrapolated to forecast future sales. Here a limited number of cities/ towns with representative population are chosen for test marketing. Effectiveness of promotion campaign can be measured by the difference in sales between ‘test market’ and ‘control market’. Market research methods: Marketing research methods adopted for sales forecast are basically of two types -Market testing (– focus group technique is used) and Market survey (– interviews, Questionnaires etc are used). 29

Forecast Error 

Different measures of forecast errors are: –

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Mean squared error (MSE) :- This estimates the variance of forecast error. Mean absolute deviation (MAD) :- Average of the absolute deviation. Mean absolute percentage error ( MAPE):- First absolute percentage deviation is calculated by subtracting forecast from actual and then dividing it by actual value. The MAPE is expressed as average mod percentage value over selected time zone. MAPE does not differentiate between positive and negative error but it does have reference to the quantum of the value. Bias :- It is the average of the deviations (with signs +/considered ). It is calculated as - the sum of all errors ( signs +/- considered) divided by the number of periods. It shows under/over estimates of demand. 30

Setting Personal Selling objectives 

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As a first step it is important for the sales management to precisely determine the role of personnel selling in the marketing mix. Setting the personal selling objectives  clarifies the role of the sales force  facilitates the determination of the size and the quality of the sales force  forms the basis of setting goals ( or targets) and the evaluation of the performance of the sales force The objectives will vary from organisation to organisation depending on:  Overall objectives of the organisation  Nature and type of the products  Nature of the market  Nature of competition  Distribution channel, etc. 31

Setting Personal Selling objectives 

Objectives of personal selling need to be set in the following areas:  Sales volume (overall and product wise)  Sales growth ( overall and product wise)  Market share ( overall, product wise and territory wise)  Profits ( overall, product wise and territory wise)  Selling costs  Key customers ( volume, growth, share, profit contributions etc)  New customers  Expansion of channels, new dealers etc.  Collection of dues (sales proceeds)  Ratio of cash to credit sales  Service level – pre and post sales.  Training of dealers / customers as needed  Gathering and communicating market information.  Involvement in promotional activities of the company 32

Sales Organisation 

What is an organisation? 

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“An organisation in general can be defined as the rational coordination of the activities of a number of people for the achievement of some common explicit purpose or goal, through division of labour and function, and through hierarchy of authority and responsibility.” The important portions of the definition are:-

1. Coordination of activities 2. Group of people 3. Achievement of common goal 4. Division of labour 5. Hierarchy of authority and responsibility and responsibility.3333


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A sales organisation is a team of individuals working together to achieve the set sales objectives. A sales organisation operates within a organisational / corporate framework. A sales organisation ought to have a well defined structure to operate efficiently and effectively. A well designed organisational structure does the following:  Defines jobs - roles, responsibilities and duties of the personnel  Clarifies authority and power at each level.  Promotes specialisation  Avoids duplication of work  Facilitates coordination and communication  Facilitates adaptation – by being flexible to the changing environmental needs.  Facilitates growth 34


The factors considered while deg a sales organisation structure are  Nature of the product and services factors: For example the sales organisation structure in case of FMCG products like soaps, shampoos, toothpaste (the customer base is large and the frequency of purchases is also high) is very different from selling technical products like machine tools or computers.  Organisational related factors: Size, volume, product range, geographical expanse of business etc influence the sales structure.  Marketing mix related factors: The type of distribution channel, pricing policy, marketing communication influence the sales structure.  External factors: Nature of competition for instance. 35


Major principles based on which the sales organisation is designed:  Span of control: It refers to the number of subordinates a manager can effectively manage. A narrow span of control permits a more effective and close supervision but results in more number of layers which means higher cost, communication time, larger gap between the top management and customers. A wider span has fewer levels of supervision. The process of communication takes shorter time.  Centralisation and Decentralisation: Centralisation of authority refers to the relative concentration of authority for decision making especially at top level. In a highly centralised sales organisation most of the decisions are made at the corporate level and very few at the field 36

Sales Organisation manager’s level. Consistency in the marketing plan, uniformity in product and service delivery, uniformity in compensation packages of the sales force, integration of the sales force are the essential features of centralised structure. But to be more competitive organizations are preferring to go in for more decentralised structures. A decentralised structure helps in making the organisation more responsive to the market and regional demands. In many organisations combination of centralised and decentralised organisational structures are used. In Titan Watches for instance decentralised service centers are under field managers but the training is provided by the corporate office. In Modi Xerox recruitment of sales force at the ground level is done by field managers but the regional training center provides the training. 37


Organisations adopt different kinds of structures 

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To assure that all necessary activities are performed To define authority To achieve coordination and control To permit the development of specialists To economize on execution time

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BASIC TYPES OF SALES ORGANISATIONS Line Sales Organization General Manager

Sales Manager

Assistant Sales Manager Div. 1


Salespeople


Salespeople

Assistant Sales Manager Office

Salespeople

Office Staff

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BASIC TYPES OF SALES ORGANISATIONS

Line and Staff Sales Organization President VP (Marketing) Advertising Manager

General Sales Manager

Manager (Marketing Research)

Director (Sales and Training) Sales Personnel Director Assistant General Sales Manager District Sales Managers Branch Sales Managers

Sales Personnel

Assistant to General Sales Manager Sales Promotion Manager Director of Dealer and Distribution Relations

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Functional Type of Sales Organization Director of Sales istration

Installation and Service Manager

Manager of Sales Training

Salesperson

Salesperson

Manager of Sales Supervision

Salesperson

Manager of Sales Promotion

Salesperson

Manager of Dealer and Distribution Networks

Salesperson

Manager of Sales Personnel

Salesperson

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Geographic Division of Line Authority General Sales Manager Sales Personnel Director

Eastern Division Sales Manager

Director of Sales and Training

Central Division Sales Manager

Director of Sales Promotion

Western Division Sales Manager

Branch Sales Managers



Sales Personnel

Sales Personnel

Sales Personnel

Director of Sales Analysis

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Product Division of Line Authority General Sales Manager

Sales Manager Product 1

Sales Personnel Product 1

Sales Director of Personnel Sales and Training Director

Director of Sales Promotion

Director of Sales Analysis



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Customer Division of Line Authority General Sales Manager Director Product R and D

Manager, Lumber Industry Sales

Director of Sales Planning

Manager, Construction Industry Sales

Director of Sales Training

Manager, Mining Industry Sales




Sales Personnel

Sales Personnel

Sales Personnel

Director of Sales Promotion and Advertising

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Marketing Channel Division of Line Authority General Sales Manager Sales Personnel Director

Director of Sales Planning

Sales Manager Chain Store Sales Sales Personnel

Sales Promotion Manager

Sales Manager Wholesale Sales

Sales Personnel

Advertising Manager

Sales Manager Institutional Sales Sales Personnel

Director of Customer Relations

Export Sales Manager

Sales Personnel

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Sales Territories 

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Sales territory is a geographical grouping of existing and potential customers allocated to  an individual  a group of salespersons.  a branch  a dealer  a distributor  A marketing organisation Essentially deg territory means to divide the market into convenient clusters. Sales territory must be designed to meet certain criteria such as easy istration, accessibility, optimisation of travel time. Deg of sales territories can be done by Equal 46 Workload Method or Equal Potential Method.

Sales Territories 

Deg of sales territory has various advantages:  Better market coverage  Better work load distribution  Improves the performance of salespersons  Reduces loss of sales (opportunities)  Reduces sales expenses  Increases individual attention to key customers  Advantages of segmentation can be gained. As characteristics of different territory can be different.  More effective planning, implementation and control.  Helps in asg responsibilities to salespersons. ability is better. 47

Sales Quotas

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Sales quota is the target or goals assigned to sales units (such as sales person, dealer, distributor, territory) to be achieved in a specific period of time. Sales quotas (quantified objectives) may be expressed either in monetary or in volume . These quantified objectives should be realistic. The basis for fixing the sales quota should not only be potential of the territory and the past data but also factors such as territory’s importance to the company, the market share expected from it and the profitability of sales in that territory. Participative approach while fixing the sales quota is desirable. The objective of fixing Sales quotas are :  Motivating the sales force  To bring in the right focus (products to be given importance)  These form an important basis for , evaluation of and reward for the performance of a sales unit.

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Sales Quotas 

Types of sales quota: 

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Sales volume quota: These are basically of three kinds  Monetary sales volume quota  Unit sales volume quota ( resorted to because rupee value may vary – price may vary)  Point sales volume quota ( followed in multi product situations. Relative weightage. An unit of a product may higher points than another product) Sales Budget quota: These quotas are set with the objective of controlling expenses, increasing gross margin / profit. Profit quotas are set. By this the salesmen are encouraged to sell more profitable products. Expenses are often controlled by setting an expense budget as a percentage of the territory sales. Sales activity Quota: Activity quotas are fixed for salesmen in addition to sales quotas. 49

Sales Quotas 

As an example the activity quota may be set for number of  sales call to be made  number of dealer s  number of product demonstrations to be made  number of new s to be created

 Methods for fixing sales quota:

Sales quotas can be fixed based on  Sales potential / forecast  Average of Past sale  Executive judgment  Judgment of salesmen 50

Recruitment and selection of sales Persons  

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Creating an effective sales force is essential. The first step in creating a sales force is recruitment followed by selection. The recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation whereas selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. The importance of right recruitment and selection process can never be over-emphasised. High turnover of sales persons can be very damaging to the organisation for more many reasons - the cost of hiring a salesman and training them is high, customer dissatisfaction, loss of company information etc. So the recruitment process and selection process should 51 be sound.

Recruitment and selection of sales Persons  The following steps need to be undertaken for

recruitment  Job analysis  Locating prospective candidates / Sources

 Job analysis: Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further categorized into following sub components. 1. Job position: This refers to the designation of the job and employee in the organization. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. 52

Recruitment and selection of sales Persons

2. Job description: It refers to the activities that an employee has to do in a particular job position. It describes the roles and responsibilities attached with the job position. It states the key skill requirements, the level of experience needed, level of education required, etc. It also helps in benchmarking the performance standards. 3. Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is also known as job evaluation. Job description is used to analyze the job worthiness. It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is determined that how much the job is worth, it becomes easy to define the compensation strategy for the position. 53

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Recruitment and selection of sales Persons Locating the candidates ( sources) There are two categories Internal sources: The internal sources can be  Lateral and upward moves (Transfers, promotions etc.)  Interns  Employee referral ( existing salesmen as talent scouts)  External sources: The external sources can be:  Competitor company  Other industries ( may be from customers’ or suppliers’ industry)  Educational institutions  By advertising  Employment agencies / HR consultants  Networking  Internet / Web sources 

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Recruitment and selection of sales Persons

Selection Process comprises of the following steps:  Screening the candidates – this generally includes receiving and screening of application forms  Personal interviews  Reference check  Physical examination  Psychological and other tests like Intelligence tests, Aptitude tests, Personality tests etc.  Negotiating / fixing the of services  Appointment Screening applicants for an interview: The job analysis done previously helps in short listing candidates. The job description specifies the competencies required for a job position, hence this forms the guideline for short listing the applicants. The application form gives the details regarding the applicant’s qualifications, experience, previous compensation, employment history, reasons for leaving previous organizations, health history, references etc. References should be used, in a discerning /judicious manner, to information provided. 55

Recruitment and selection of sales force Scientific and psychological tests related to intelligence, ability,

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personality etc helps to gain insights about the candidates. Selecting Applicants: Personal interview is carried out for this. The following needs to be done:  Preparation for the interview: An interview needs to be conducted effectively hence it needs preparation. The purpose is to effectively gather information about the candidate from the candidate himself. Behavioral interview is a popular method adopted for this purpose. Behavior based interviewing focuses on experiences, behaviors, knowledge, skills and abilities that are job related. It is based on the belief that past behavior and performance predicts future behavior and performance.  Managing the interview: Broad based questions should be followed by specific questions. Questions should be posed in a manner so that it calls for long responses. Loaded or leading questions should not be asked. Interviewer should be a good listener and be able to sort out relevant / important information related to the job from the irrelevant/ unimportant ones. 56

Orientation and socialization 

Orientation Programs: Effective orientation programs are

designed to introduce new employees to a company's mission so that they begin to feel they are a vital part of the team. These are key to early productivity and improving employee retention. They need to be designed with the following in mind - Make new employees feel welcome and valued as key players on the team. - Explain the mission/purpose of the company and the job so employees can see the big picture. - Familiarize employees with rules, policies and procedures. - Help employees adapt to their new surroundings, learn who all the players are and how they work together. - Establish friendly relationships among co-workers managers. - Ensure new employees have all the information and tools they need to do their jobs. - Develop the long-term commitment to the organization.

57

Training the sales force Training

is a process of learning a sequence of programmed behavior and application of knowledge. It gives people awareness of the rules and procedures to guide their behavior. It attempts to improve their performance on the current job or prepare them for an intended job. Types of training:

58

Training the sales force

• ON THE JOB TRAINING ( OJT) :  





This is the most common method of training. On- the- job training (OJT) is conducted at the work sites and in the context of the actual work. This method is basically learning by doing, while working. In this method the employee is placed in to the real work situation and shown the job and the method of work by an experienced employee or the supervisor. The trainee is placed on the job and the manager or mentor shows the trainee how to do the job and receive immediate . To be successful, the training should be done according to a structured program that uses task lists, job breakdowns, and performance standards as a lesson plan. 59

Training the sales force On the job training methods:  Job Instruction Training  Coaching  Mentoring  Job Rotation  Job Instruction Training :  Job instruction training (JIT) is a systematic approach to the job training. This is a proven and systematic method to teach workers how to do their current jobs. The method also called ‘training through step –by- step learning’ involves:  Preparation of the trainees for the instruction.  Presentation of trainees for instruction.  Performance of the job by the trainee.  Motivating the trainee to follow up the job regularly 60

Training the sales force 

Coaching:  Coaching is a continuous process of learning by doing. In this, the superior guides his sub-ordinates & gives him/her job instructions. The superior points out the mistakes & gives suggestions for the improvement. Merits  It requires the least centralized staff coordination as every executive can coach his subordinates.  Periodic and evaluation gives immediate benefits to an organisation . Demerits  The training atmosphere free daily duties is not available.

from worries of the

61


Mentoring:  Mentoring is a relationship in which a senior manger in an organisation assumes the responsibility for grooming a junior person. Technical, interpersonal and political skills are generally conveyed in such a relationship from the more experienced person. Mentors help employees solve problems both through training them in skills and through modeling effective attitudes and behaviors. Merits  There is an excellent opportunity to learn.  Constant guidance helps the mentee to be on track, using facilities to good advantage. Demerits  It may create feeling of jealousy among other workers who are not able to show equally good performance.  If mentors form overly strong bonds with trainees, unwarranted favoritism may result. This can have a demoralising effect on 62 other workers.


Job Rotation:  This involves the movement of trainee from one job to another. The trainee is given several jobs in succession, to gain experience of a wide range of activities. Merits  Improves participant’s job skills, job satisfaction.  Provides valuable opportunities to network with in the organisation.  Offers faster promotions and higher salaries to quick learners. Demerits  Increased workload for participants.  Constant job change may produce stress and anxiety.  Mere multiplication of duties do not enrich the life of a trainee.  Development costs may shoot up when trainees commit mistakes handle tasks less optimally. 63

Training the sales force

• OFF - THE- JOB TRAINING:  “Off-the-job training” simply means that training is not a part of everyday job activity. The actual location may be in the company, class-room or in place which are owned by the company in universities or associations which have no connection with the company.  Some methods of Off-the –job Training are:  Lectures  Conferences  The Case Study  Role Playing  In-Basket Method 64

Training the sales force  LECTURES: 

Lecture are regarded as one of the most simple ways of imparting knowledge to the trainees, especially when facts, concepts or principles, attitudes, theories and problem solving s abilities are to be taught. Merits: Presenting basic material that will provide a common background for subsequent activity.  Illustrating the application of rules, principles, reviewing, clarifying and summarizing.  The main advantage of the lecture system is that it is simple and efficient and through it more material can be presented within a given time than by any other method. 65

Training the sales force  THE CONFERENCE METHOD : 



In this method, the participating individuals confer to discuss the points of common interest to each other. A conference is a formal meeting, conducted in accordance with an organized plan, in which the leader seeks to develop knowledge and understanding by obtaining a considerable amount of oral participation of the trainees. There are three types of conference methods.

1. Directed discussion :- The trainer guides the discussion so that the facts, principle or concepts are explained. 2. Training conference :- The instructor gets the group to pool its knowledge and past experience and brings different points of view to bear on the problem. 3. Seminar conference problem :- The instructor defines the problem, encourages and ensures full participation in the discussion.

66

Training the sales force  CASE STUDY 

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  

The individual is expected to study the information given in the case and make decisions based on the situation. if the student is provided a case involving an actual company, he is expected to research the firm to gain a better appreciation of its financial condition and corporate culture. Typically, the case method is used in the class room with an instructor who serves as a facilitator. Analytical, problem-solving and thinking skills are most important. The KSAs (Knowledge, Skills, Abilities) required are complex and participants need time to master them. Active participation is required. The process of learningis as important as content. Team problem solving and interaction are possible. 67

Training the sales force  ROLE PLAYING 





It is a technique in which some problems –real or imaginary involving human interaction is presented & spontaneously acted out. Participants assume roles of specific organizational in a given situation & then act out their roles. It develops interpersonal skills among participants. They learn by doing things. Immediate helps them corrects mistakes, change & reorient their focus in a right way. On the negative side, realism is sometimes lacking in role-playing, so the learning experience is diminished. It is not easy to duplicate the pressures & realities of actual decision-making on the job; & individuals, often act very differently in real life situations than they do in acting out a simulated exercise. 68

Training the sales force  IN-BASKET METHOD 

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The participant is given a number of business papers such as memoranda, reports & telephone messages that would typically cross a managers desk. The papers, presented in no particular sequence, call for actions ranging from urgent to routine handling. The participant is required to act on the information contained in these papers. Asg a priority to each particular matter is initially required. If the trainee is asked to decide issues with in a time frame, it creates a healthy competition among participants. On the negative side, the method is somewhat academic & removed from real life situations. 69

Compensation plan for sales force 



A motivated sales force is essential for sales performance. A good well structured and balanced compensation plan is required to attract and retain a quality sales force and keep it motivated. An effective compensation plan (characteristics):  Directs the sales force toward activities that are consistent with overall marketing objectives.  Connects efforts, performance and rewards  Helps to attract and retain competent sales persons.  Is based on the principles of equity.  Helps to stimulate sales persons to put in their best efforts  Has two components, one as an assured income another as an additional income for superior performance.  Is flexible to adjust to changes in the environment.  Is simple to understand and ister. 70



Compensation plan for sales force Deg the compensation plan involves following steps: Consider Job analysis, job evaluation and overall compensation structure of the company  Consider Industry practice ( What competitors offer?)  Decide compensation level after discussions.  Decide compensation mix:  Financial  Direct payment like salary.  Indirect payment - medical care, paid vacation, LTA etc.  Non financial  Promotions, better designation etc.  Recognition  Decide on weightage of different elements in the mix.  Implement , evaluate / review and improve. 

71

Compensation plan for sales force



Types of compensation plans:    



Straight salary Straight commission Salary plus group commission. Salary plus commission

Straight salary plan: Merits   

Simple and easy to design and ister. Gives a sense of security. Is suitable when  the company adopts a ‘pull’ strategy.  the product/ territory is new  efforts and actual sales are loosely correlated.  Negotiation and purchase cycle is long (Eg: technical projects)

Demerits  

Is not a stimulant to increase sales Cost of fixed salary is to incurred even if the sales is poor.

72

Compensation plan for sales force 

Straight commission plan: Merits   



Incentive to perform better. Commission is a variable cost and is linked with volume/ profits. It is suitable when:  Company has adopted a ‘push’ strategy.  Not much of non-selling activities are involved.  Market is highly competitive and sales effort is directly linked with sales results.

Demerits    

 

Often difficult to design and ister. May be ineffective when there are many new salesmen. May lead to unhealthy rivalry/ jealousy among salesmen. May lead to unhappiness when market is down due to external reasons. Income of salesmen can be unstable. 73 Overaggressive salesmanship might dissatisfy customers.

Motivating the sales force 



The mettle of a sales manager lies in his ability to motivate his sales force. The greater is this ability greater are the chances of his success. The elements of the motivational mix are:  Compensation plan  Recognition (like trophies, certificates, praise encouragements, job enrichment )  Promotions  Fair and transparent performance evaluation  Good forecasting, budgeting, Fair quotas/territory definition.  Good sales coaching and supervision  Regular sales meeting and conventions  Sales contest  Effective training programmes 74  A good leadership style.

DISTRIBUTION MANAGEMENT

75

Distribution Management 



Distribution management “is concerned with management of physical movement of goods from the production center to the consumer through different distribution channels, involving transportation, warehousing, inventory, and information system order processing and documentation”. Distribution management comprises of two distinct sections  Physical distribution  Distribution channels 76

Physical Distribution

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Physical distribution is related to “Place” of the marketing mix. It provides ‘Place utility’ and ‘Time utility’ to a product by ensuring that it is available to the at the right place and at the right time. It becomes all the more important where the distance between the production centers and the consuming centers (market) is large and time consuming. A good physical distribution or availability at the right place and time increases sales and helps to build a customer base/network. Distribution cost forms a substantial part of the total cost. With so many alternatives available, it is an area with high cost reduction potential. The distribution function is undergoing a tremendous change because of technological developments in communication, transportation and Information 77 technology.




The factors considered for deg physical distribution system are : 

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 

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

The distribution objectives and the minimum service level desired. Expectations of the customer in the product delivery (lead time, meeting emergencies etc) Finding out what the competitors do? Optimising cost which means incurring lowest cost without sacrificing the minimum service level. Ensuring flexibility of the system.

Functions involved in physical distribution are:      

Transportation Inventory management Warehousing Order processing Packaging Material handling 78

Physical Distribution 

Transportation 

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Transportation and delivery add approximately 10 percent to product costs. Classes of carriers include common carriers, contract carriers, and private carriers. Major transportation modes include railroads, motor carriers, water carriers, pipelines, and air freight. Intermodal operations: Combination of transport modes such as rail and highway carriers (piggyback), air and highway carriers (birdy back), and water and air carriers (fishy back) to improve customer service and achieve cost advantages. Freight forwarders and supplemental carriers consolidate shipments to gain lower rates and faster 79 delivery service for their customers.


Warehousing 

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Ware houses are basically of two types  Storage warehouse—holds goods for moderate to long periods to balance supply and demand for producers and purchasers.  Distribution warehouse —assembles and redistributes goods, keeping them moving as much as possible. Automated warehouse technology can cut distribution costs and improve customer service. Decisions regarding warehouse locations are influenced by:  warehouse building costs  materials handling costs  delivery costs from warehouses to customers. Questions that arise are – 1. private or a public warehouse ? 2. How many warehouses? Where should they be located ? 80


Inventory Control systems 

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Companies must balance customer demand with costs of carrying excess inventory. Firms use just-in-time delivery systems, RFID technology or vendor-managed inventory to help manage costs.

Order processing 



This is a set of procedures for receiving , handling and filling orders promptly and efficiently. Directly affects firm’s ability to meet customer service standards. Includes four major activities:  Conducting a credit check.  Keeping a record of the sale.  Making appropriate ing entries.  Locating orders, shipping them, and adjusting inventory records.

81


 

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 

Protective packaging  Packaging costs and form of packaging is influenced by mode of transport and material handling equipment's. Vice versa the selection of particular mode of transport determines the characteristics (form, design etc.) of packaging Material handling Materials handling system— activities for moving products within plants, warehouses, and transportation terminals. Unitizing—combining as many packages as possible into each load that moves within or outside a facility. Containerizing—combining several unitized loads. Proper material handling system helps to 1. Decrease material damage, maintain quality of storage, facilitate order processing, move right material at right time to make them available to right customers. 82




The concept of physical distribution system has the following components: 

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Total cost perspective  TDC (total distribution cost) = Transport cost + Facilities cost + Communication cost + Inventory cost + Protective packaging cost + Distribution management cost Trade off :  An integrated approach towards reducing the total cost needs to be adopted otherwise decreasing cost in one area can lead to increase (may be higher) in another area. For example an attempt to reduce transportation cost can lead to an increase in the inventory cost thus offsetting the advantage. Because of this a tradeoff is required. The main purpose of doing trade off is to achieve a net gain. Total system perspective : (Supply chain management). It involves channel partnership and strategic alliances.

83


Tradeoffs can be of four types Intra-activity tradeoff: Eg:- Whether to use public carrier or own private carriers.  Inter-activity tradeoff: Eg: Increasing transport cost might reduce inventory cost and warehousing cost. Xerox in US found air freighting the spares cheaper than storing them in warehouses without affecting customer service level.  Inter functional tradeoff : Eg:- Packaging a product might be best in protecting the product but may not be good for promotion or transportation purposes.  Inter organizational : This is a tradeoff between manufactures and the channel partners. Manufacturer should ensure excellent relationship with the channel partners and should examine all external organization's and thus capitalize on 84 tradeoff opportunities. 

Distribution Channel



What is distribution channel?  “A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business ”. - Stern 

 

The main function of a distribution channel is to provide a link between production and consumption. It is the Supply chain’s front end. The use of Distribution channels may not be limited to movement of physical products alone. They may be used for moving a service from producer to consumer in certain sectors. For instance, hotels may sell their services (booking of rooms) directly or through travel agents, tour operators, airlines etc. 85

Marketing intermediaries What are the uses of marketing intermediaries?

•Physical flow •Title flow •Payment flow •Informati on flow •Promotio

86

Functions of a Distribution Channel 

Channel organisations perform many key functions :-

Information: Gathering and distributing market research and intelligence - important for marketing planning  Promotion: Developing and spreading communications about offers  : Finding and communicating with prospective buyers  Matching: (presales service) Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging  Negotiation: Reaching agreement on price and other of the offer  Physical distribution: Transporting and storing goods  After sales services: This may include installation and maintenance.  Financing: Acquiring and using funds to cover the costs of the distribution channel  Risk taking: Sharing commercial risks. E.g. holding stock 

87

Types of marketing Channels 

Typical marketing channels:

88

Types of intermediaries 

Following are the types of intermediaries in a marketing channel:  Sole 

It is a large marketing intermediaries with large resources. Operates in an extensive territory. Works on commission basis. Usually chosen when a manufacturer prefers to stay out of marketing and distribution task.

 C&F 

selling agent:

agents (CFAs)

Often manufacturers employ carrying and forwarding agents, referred to as CFAs or C&F agents. They act as branches of the manufacturer. They do not resell products but act as agent/ representative of the manufactures. 89


Wholesaler/ stockist 

A wholesaler buys in bulk ( large quantities) from the and resells the goods in sizable lots to semi-wholesalers and retailers. Usually a wholesaler does not sell directly to consumers ( except the institutional buyers). Wholesalers not only play the role of stockholders and sub-distribution, but also perform functions such as promotion, financing, market etc. They can be categorised as 1. Agent wholesaler 2. Merchant wholesaler. Agent whole saler perform all or most of of the marketing functions associated with wholesaling. Agent wholesaler unlike merchant wholesaler do not take ownership . They are primarily involved in the buying and selling of the products. They negotiate sales but do not but do not take title to merchandise. They also participate in collecting market information, promotion and receiving orders. 90


Retailer/ Dealer. 

They sell to the ultimate customers. They are at the last end of the distribution chain. In cases where the company operates a single tier distribution system, they operate directly under the company. The retailers are also sometimes referred to as dealers or authorised representatives. The stocks they keep are just operational stocks needed for immediate sale at the retail outlet.

Retailers perform much more than simply buying and selling. They add value to goods and services that they sell by creating time, place, possession and form utility. 91

Channel Strategy 

Channel selection

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Distribution intensity

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Channel integration

Channel strategy

Channel selection 

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Market factors: buyer behavior; installation and technical assistance; willingness of partner to market a product; location of buyers Producer factors: resources of partner; product mix; control of channel operations Product factors: large, complex, perishable, difficult to handle Competitive factors: Selecting a unique or a tried and tested channel.

Distribution intensity 

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Intensive distribution: using all available outlets; mass market products, heavy competition e.g. beer, chewing gum. Selective distribution: limited number of outlets; select only the best; e.g. cameras, hi-fi equipment, personal computers... Exclusive distribution: only one outlet in a geographic area, reduces competition e.g. cars

Channel integration 

Conventional marketing channels:   

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Franchising: 

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Benefits of specialization against lack of control istered vertical marketing system e.g. Procter & Gamble Shared resources and access to local knowledge against areas of potential conflict Contractual vertical marketing system e.g. Mc Donald‘s, car industry, Benetton

Channel ownership: 

 

purchasing outlets; total control over distributor against high costs; Corporate vertical marketing system e.g. Pepsi purchased Pizza Hut

Channel design Steps of channel design: 

 

Setting the objectives. Basic expectations from a channel:  Effective coverage of the target market  Cost effective and efficient physical distribution.  Convenience of the consumer.  Uninterrupted manufacturing while channel take care of the sales.  Playing ive role in financing and subdistribution tasks. Identifying the functions expected from the channel. Linking Channel design to product characteristics. Consider the following:  Industrial and consumer goods channels need different types of channels  Buying behaviour of different consumer goods are different so they need different types of channel.  Channel choice is influenced by PLC stage.

Channel design    

Evaluation of distribution environment. Evaluation of competitors channel design Matching the channel design to company resources. Evaluating the alternatives and selecting the best.  Balance cost, efficiency and risk.  Should have flexibility and controllability.

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Channel Management 

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Once channels have been designed, the challenge becomes effectively managing all the relationships The challenge is to set up a system or method for asg responsibilities, controlling behaviors, and monitoring performance Channel Management involves:  Selecting channel  Motivating, training and resolving conflicts.  Evaluating channel   Corrective actions 98


Selecting the channel : 

Factors that need to be considered while selecting a channel member are:  Financial strength  Product lines  Market coverage  Management strength  Equipment facilities  Sales strength  Willingness  Ordering and payment procedures  Compatibility – working culture 99


Motivating, training, resolving conflicts: 

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Monetary and non-monetary motivators are used to control the behaviours of channel . Under monetary motivators a manufacturer can use reward power while under non-monetary motivators manufacturers can use coercion, functional knowledge, leadership etc. A n attractive Trade margin is a major motivator. It is essential to set the dealer margin to a level that would enable the dealer to have a reasonable retained earning after meeting all the normal expenses. The firms need to collaborate with their dealers to help them in achieving a larger turnover and greater retailing productivity. A long term partnership approach needs to be adopted to build a harmonious relationship with the channel . Ideas need to be exchanged, complaints and queries need to be addressed promptly. 100

Channel Management

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Training the of the channel member is a vital activity. This involves preparing the channel to represent the firm in the best possible way. The trainees are provided complete knowledge of the firm, product, consumer, company objective and strategies. Apart from these essentials of inventory management, credit management and sales promotion may also be a part of their training programme. There are possibilities of conflicts within the channel . One channel member might perceive the behaviour of another channel member to be obstructive to its goals. These conflicts need to be resolved tactfully. Managing conflicts is an important task of the channel manager. In fact, conflict management attempts to prevent the conflicts to appear or detect it at early stage and take corrective actions. 101

Channel Management

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Evaluating the channel :  

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The purpose of performance appraisal and monitoring the same, is to improve the performance of the dealers. The channel are evaluated in of their sales quota achievement, average inventory levels, Customer delivery time, service level provided to customers co-operation in promotional and training programmes, enlistment of new , treatment of damaged goods,, market intelligence report. The performance appraisal system should be discussed in advance with the dealers.

and Corrective action:  

The performance appraisal should be discussed with the channel on a regular basis in a proactive style. Corrective actions needed should taken both at the firms and the dealer’s end. Termination of relationship should be the last alternative but a firm should not hesitate to take the extreme step when necessary. 102

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