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Sales and Distribution Management:

Sales and Distribution Management Dr. Prashant Mishra prashant@iimcal.ac.in

Nature of Personal Selling:

Nature of Personal Selling Most salespeople are well-educated, well-trained professionals who work to build and maintain long-term relationships with customers. The term salesperson covers a wide spectrum of positions from: Order taker (department store salesperson) Order getter (someone engaged in creative selling) Missionary salesperson (building goodwill or educating buyers)

What is Personal Selling?:

What is Personal Selling? Involves Two-Way, Personal Communication Between Salespeople and Individual Customers Whether: face to face, by telephone, through video conferencing, or by other means.

The Role of the Sales Force:

The Role of the Sales Force Personal selling is effective because salespeople can: probe customers to learn more about their problems, adjust the marketing offer to fit the special needs of each customer, negotiate terms of sale, and build long-term personal relationships with key decision makers.

The Role of the Sales Force:

The Role of the Sales Force Sales Force Serves as a Critical Link Between a Company and its Customers Since They: Represent Customers to the Company to Produce Customer Satisfaction Represent the Company to Customers to Produce Company Profit

Characteristics of Personal Selling:

Characteristics of Personal Selling Flexibility Identify best prospects Adapt to situations Engage in dialogue Builds Relationships Long term Assure buyers receive appropriate services Solves customer’s problems

Personal Selling Limitations :

Personal Selling Limitations Can not reach mass audience Expensive per contact Numerous calls needed to generate sale Labor intensive

Personal Selling Tasks:

Personal Selling Tasks Order taking Routine writing up orders checking invoices assuring prompt order processing Suggestive selling

Personal Selling Tasks:

Personal Selling Tasks Order getting Seeking out customers Creative selling Pioneering Account management

Personal Selling Tasks:

Personal Selling Tasks Missionary Detailer Goodwill “Closers” Cross-functional Account service rep

Some Traits of Good Salespeople:

Self-Confidence Some Traits of Good Salespeople Initiative Persistence Enthusiam Job Commitment

Slide 12:

Step 1. Prospecting and Qualifying Identifying and Screening For Qualified Potential Customers. Steps in the Selling Process Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Step 2. Pre-approach Step 3. Approach Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Step 4. Presentation/ Demonstration Telling the Product “Story” to the Buyer, and Showing the Product Benefits.

Slide 13:

Steps in the Selling Process Step 5. Handling Objections Step 6. Closing Step 7. Follow-Up Seeking Out, Clarifying, and Overcoming Customer Objections to Buying. Asking the Customer for the Order . Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business.

Slide 14:

Alternative Steps: Find ’em Grab ‘em Show ‘em Answer ‘em Sell ‘em Keep ‘em

Slide 15:

Identify and Qualifying Prospects Prospecting: Identifying likely new customers Leads Qualifying: Evaluating a prospect’s potential Creative Selling Process

Creative Selling Process:

Approaching the Prospect Contact Rapport “Only one chance to make a first impression” Creative Selling Process

Creative Selling Process:

Sales Presentation Persuasive communication Attention Interest Desire “Tell the product’s story” Creative Selling Process

Creative Selling Process:

Handling Objections Questions Reservations Understand Concern Counterarguments Acknowledge concern Clues to process Creative Selling Process

Creative Selling Process:

Closing the Sale Closing signals Trial close Ask for the sale Creative Selling Process

Slide 20:

Following Up Commitments met Shipment Performance Reinforce relationship Satisfied customers rebuy & recommend Creative Selling Process

Sales Management:

Planning Organizing Directing Controlling Setting objectives Organizing activities Recruit, select, train, develop, manage, & motivate Motivate, evaluate, & control Sales Management

Organizing Sales Activities:

Organizing Sales Activities Sales Territor y: Geographic divisions Customer types Product lines Selling task

Geographic Division:

Geographic Division Sales Rep California Sales Rep Pacific NW Sales Rep Southeast Sales Rep Northeast District Sales Manager District Sales Manager District Sales Manager District Sales Manager Regional Sales Manager Regional Sales Manager Vice-President Marketing

Customer Type:

Customer Type New Account #1 New Account #2 Existing Account #1 Existing Account #2 New Accounts Manager Existing Accounts Manager Vice-President Sales

Product Line:

Product Line Sales Rep Eastern Region Sales Rep West’n Region Sales rep Eastern Region Sales Rep West’n Region Snack Foods Sales Manager Beverages Sales Manager Vice-President Sales

Directing the Sales Force:

Directing the Sales Force Recruiting and selecting Training & develop Compensating Motivating

Compensation Methods:

Compensation Methods Straight salary or wage Salary plus commission Straight commission Commission with draw Quota-bonus plan

Evaluation and Control:

Evaluation and Control Required reports Measurement against plan or sales standards Expense control Productivity New account development

Ethical Issues:

Ethical Issues Kickbacks, bribes and “gifts” Price discrimination Cheating on expense accounts Misrepresentation

Slide 30:

Distribution Channel Design and Management

Distribution’s Function:

Distribution’s Function The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost. The “when and where” is the function of Distribution

What is a Distribution Channel?:

What is a Distribution Channel? A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. Marketing Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision.

Why are Marketing Intermediaries Used?:

Why are Marketing Intermediaries Used? The use of intermediaries results from their greater efficiency in making goods available to target markets. Offer the firm more than it can achieve on it’s own through the intermediaries: Contacts, Experience, Specialization, Scale of operation. Purpose: match supply from producers to demand from consumers.



Slide 35:

Distribution Channel Functions Ordering Payments Communication Transfer Negotiation Financing Risk Taking Physical Distribution Information

Typical Channels of Distribution:


Business-to-Business Channels:

Business-to-Business Channels Direct Wholesaler Agent

Business-to-Business Channel Trends:

Business-to-Business Channel Trends Disintermediation Infomediaries & Vertical Exchange

Slide 39:

Conventional Distribution Channel vs. Vertical Marketing Systems Vertical marketing channel Manufacturer Retailer Conventional marketing channel Consumer Manufacturer Consumer Retailer Wholesaler Wholesaler

Slide 40:

Types of Vertical Marketing Systems Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreement Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members

Vertical Marketing Systems:

Vertical Marketing Systems Corporate systems - total ownership Administered - strong leadership Contractual - legal relationships

Planning the Channel of Distribution:

Planning the Channel of Distribution Determining the structure Marketing mix strategy Organizational resources External environmental factors Market characteristics Consumer preferences and behavior The nature and availability of Intermediaries Other environmental factors

Customers’ Desired Service Levels:

Customers’ Desired Service Levels Lot size Waiting time Spatial convenience Product variety Service backup

Steps in Distribution Planning:

Steps in Distribution Planning

Choosing a Distribution System:

Intensive Distribution Exclusive Distribution Selective Distribution Distribution Intensity Choosing a Distribution System

Intensive Distribution:

Intensive Distribution Seeks to obtain maximum product exposure at the retail level Producer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer

Slide 47:

Selective Distribution Product is sold in a limited number of outlets Producer Retailer Retailer Retailer Retailer Retailer Retailer

Exclusive Distribution:

Product is sold in only one outlet in a given area Producer Retailer Exclusive Distribution

Developing Distribution Tactics:

Developing Distribution Tactics Selecting Channel Partners Reward or Coercive Power Legitimate Power Economic Power Managing the Channel of Distribution Channel Leader Power Distribution Channels & the Marketing Mix

Physical Distribution:

Materials Handling Moving Products Into, Within, and Out of Warehouses Warehousing Number Needed Where What Type Inventory Control When to order How much to order Order Processing Received Processed Shipped Physical DistributionFunctions Transportation Rail, Water, Trucks, Air, Pipeline, Internet Physical Distribution

Transportation Modes:

Rail Cost-effective for shipping bulk products, piggy-back, fishyback, birdyback. Water Low cost for shipping bulky, low-value, non perishable goods, slowest form. Truck Most important carrier for consumer goods, flexible. Air High cost, ideal when speed is needed or distant markets have to be reached Pipeline Carry petroleum based products, very low cost, requires little energy. Transportation Modes Internet Web sites have products available, used especially for services.

Channel Relationships:

Channel Relationships Cooperation Conflict Power Coercive Expert Legitimate

Decision Making Framework :

Decision Making Framework Prospects of Destructive Conflict Importance of threatened channel in terms of current or potential volume or profitability High Low High (FIRE) Act to avert or address conflict Allow threatened channel to decline Low (Smoke) Look for opportunities to reassure threatened channel and leverage your power Do nothing

Channel Conflict: Identifying Threats:

Channel Conflict: Identifying Threats First, are the channels really attempting to serve the same end users? Second, do channels mistakenly believe they are competing when in fact they are benefiting from each other's actions? Third, is the deteriorating profitability of a griping player genuinely the result of another channel's encroachment? Fourth, will a channel's decline necessarily harm a manufacturer's profits?

Managing Channel Conflict:

Managing Channel Conflict WHEN TWO OR MORE CHANNELS TARGET THE SAME CUSTOMER SEGMENT Differentiate the Channel offer Define Exclusive Territories Enhance or Change the Channels Value

Managing Channel Conflict:

Managing Channel Conflict CHANNEL ECONOMICS DETERIORATE Change the channels economic formula: (Grant rebates if an intermediary fulfill certain requirements; Adjust margins between products to support different channel economics; and Treat channels fairly to create level playing field) Create Segment Specific Programs (certain services not available via direct channels) Complement value proposition of the existing channel by introducing a new channel Foster consolidation among intermediaries in a declining channel

Managing Channel Conflict:

Managing Channel Conflict THREATENED CHANNEL STOP PERFORMING OR RETALIATE AGAINST THE SUPPLIER Leverage Power (eg. Strong Brand) against the channel to prevent retaliation Migrate volume to winning channel Back off

Other Distribution Management Issues:

Other Distribution Management Issues Reverse distribution One Coca Cola Distributor One thousand retailers OK Difficult Ethical, Political, & Legal

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