SALES

AND
DISTRIBUTION
MANAGEMENT
 Sales Management
Sales Management
Decision
Decision Areas
Areas
Set Objectives
Determine Select
Sales Force Planning Organizing Territories,
Size Recruiting
Selecting

Customer
Needs/wants
Evaluate
& control
Training
Controlling Directing &
developme
Motivate Compensation
nt
 Sales Force Management
• Establishing Sales Force Objectives
– Sales Volume
– Market Share
– Profit

• Determining Sales Force Size

Vs.
 Sales Management
• Organize Sales Territory
Customer Type
Product Line
Selling Task
Geographic

• Manage Sales Territories

– Routing and Scheduling

Salespeople
Geographic Division
Vice-President
Marketing

Regional Sales Regional Sales

Manager Manager

District Sales District Sales District Sales District Sales

Manager Manager Manager Manager

Sales Rep Sales Rep Sales Rep Sales Rep

California Pacific NW Southeast Northeast
 Customer Type

Vice-President
Sales

New Accounts Existing Accounts

Manager Manager

New Account New Account Existing Existing

#1 #2 Account #1 Account #2
 Product Line

Vice-President
Sales

Snack Foods Beverages

Sales Manager Sales Manager

Sales Rep Sales Rep Sales rep Sales Rep

Eastern Region West’n Region Eastern Region West’n Region
Sales Force Management
❧ Recruiting and selecting salespeople
Sales Person
Traits
• Self-imposed standards
• Dealing with failure
• Moderate risk-taking
• Taking initiative
• Drive and energy
• Outside resource persons

• Key point: “YOU ARE THE

PRODUCT”
EXCHANGE PROCESS
It is the sale and delivery of
goods/services from the manufacturer to
the consumer can be consummated
directly i.e. by the firm itself through
its own sales force or indirectly through
a network of middleman such as
wholesalers and retailers
SALES & DISTRIBUTION MANAGEMENT:
Sales management has been defined as the
management of a firm’s personal selling function
while distribution is the management of the indirect
selling effort i.e.selling through extra corporate
organizations which form the distribution network of
the firm. The sales management task thus includes
analysis, planning, organizing, directing and
controlling of the company’s sales effort.
 SALES MANAGEMENT
“ THE PLANNING, DIRECTION AND
CONTROL OF PERSONAL SELLING,
INCLUDING RECRUITING, SELECTING,
EQUIPPING, ASSIGNING, ROUTING,
SUPERVISING, PAYING AND
MOTIVATING
DISTRIBUTION MANAGEMENT

• Distribution (or place) is one of the four

elements of marketing mix. An
organization or set of organizations (go-
betweens) involved in the process of
making a product or service available for
use or consumption by a consumer or
business user.
• Distribution Management comprises
management of channel institutions as well
as physical distribution functions.
KEY DECISION AREAS
• THE TYPE & QUALITY OF SALES PERSON
• THE SIZE OF SALES FORCE
• THE ORGANISATION OF SALES DEPARTMENT
• THE TERRITORY DESIGN
• THE RECRUITMENT AND TRAINING PROCEDURE
• COMPENSATION OF SALES FORCE
• PERFORMANCE APPRAISAL AND CONTROL SYSTEM
• FEEDBACK MECHANISM
• MANAGING CHANNEL RELATIONSHIP
• LOGISTICS
 Essential tasks need to be performed
in order to consummate successful exchange

• Contact- finding and communicating with prospective

buyer
• Prospecting- Bringing together the marketers offering
and the prospective buyer
• Negotiation- Reaching an agreement on price and other
terms of the offer so that ownership and possession
can be transferred.
• Promotion- Of the marketers offerings, and his
satisfaction generating potential
• Physical distribution- Actual transfer of possession
• Collection- Of relevant consumers information and
revenue in exchange of goods or services
 Interdependence of Sales
and Distribution
• All organizations use their own sales force or
distribution network to reach out to their
customers.Activities of the sales organization would
have to be coordinated with channel operations if
sales goals have to be effectively realized.
• The decision of the organization to allocate certain
responsibility in the exchange process to its channel
members would define the scope of responsibility of
its own sales force and thereby would determine the
type of personnel and training required.
Interdependence of Sales
and Distribution
• Even though, an organization may decide to deal
directly with its wholesaler, semi wholesaler,
retailer or consumer,it is required to decide upon
the type of help it will provide to the first and
subsequent level of intermediaries.
• The choice before an organization to have direct
distribution, indirect distribution or a combination
of the two is of strategic importance and depends
upon factors such as the degree of control,
flexibility, costs and financial requirements
etc.The scope of distribution would define that of
the other.
Interdependence of Sales
and Distribution
• To implement overall marketing strategy, the
manufacturers need the cooperation of distribution
outlets in terms of adequate stock maintenance, in-
store displays, local advertising, point of purchase
promotion.Within the corporation, the sales
organization is the initiator as well as the
implementer of these dealer support
operations.This would mean that the sales
management has the responsibility of structuring
organizational relationship within their own
department and with interacting organizational
entities.
 Key decision areas in
Sales Management relevant to
strategy formulation
• Deciding upon type and
quality of sales
personnel required • Compensation of sales force
• Performance appraisal
• Determination of the Feedback mechanism
•
size of the sales force Managing channel
•
• Organization and relationship
design of the sales • Coordination with other
Marketing department
department
• Territory design
• Recruitment & training
procedures
• Task allocation
Strategic Formulation Process
Step1-Assessment of the competitive
situation and the corporate goals to
determine the output that sales
management is expected to give.
Step2-Define sales management objectives
in terms of delivering these outputs both
quantitative and qualitative.
Step3-Design sales strategy by deciding
upon: type of sales effort required, type
of sales personnel required, size of the
sales force, territory design, channel
support & coordination
 Framework for joint decision making
in sales and distribution management

Achievement of sales
Distribution channels
Goals through
Company’s sales force

Personal & Distribution channels

Prospecting
through Company’s sales force

Distribution channels
Personal & Non-personal
Promotion through Company’s sales force
 Framework for joint decision making
in sales and distribution management

Maintaining
Distribution channels
Inventory through
Corporate organization

Accounts Distribution channels

Receivables
through
Corporate sales organization

Distribution channels
Information feedback
through Company’s own sales force
Emerging trends in sales
management
• REVOLUTION IN TECHNOLOGY
• GLOBAL PERSPECTIVE
• CRM
• SALES FORCE DIVERSITY
• TEAM SELLING APPROACH
• MANAGING MULTI CHANNELS
• ETHICAL AND SOCIAL ISSUES
• SALES PROFESSIONALISM
Customers can shop online at Calyx and Corolla or
ask for a catalog and shop by phone
 Technology

Customer Relationship
orientation Emerging selling
trends in
sales
management

Global and Diversity

ethical
Issues
New selling
methods

Emerging trends in
sales management 25
 KELLOG’S
BY ADAPTING TO LOCAL CULTURAL
HABITS, THE KELLOGG’S BRAND
WAS ABLE TO SUCCEED.
IT DEVELOPED WHEAT AND RICE
CEREALS AS WELL AS HOT CEREALS
WITH FLAVORS THAT APPEALED TO
THE INDIAN PALATE.
 MCDONALD’S
WHEN MCDONALD’S REPLACED ITS BEEF-BASED BIG MAC WITH
THE MUTTON-BASED MAHARAJA MAC IN INDIA, SKEPTICS
SHOOK THEIR HEADS. MCDONALD’S FACED A DILEMMA:
HOW TO SELL HAMBURGERS IN A CULTURE WHERE THE COW
IS SACRED
THE MUTTON BURGER WAS A TREMENDOUS HIT. IN ADDITION
TO THE MAHARAJA MAC, THE COMPANY NOW SELLS
COTTAGE CHEESE WRAPS AND POTATO PATTIES TO ITS
GROWING HINDU CLIENTELE. THIS SUCCESS HAS ALLOWED
MCDONALD’S TO SHAPE AND GROW THE INDIAN FAST FOOD
MARKET WHILE CAPTURING A LARGE SLICE OF THE
GROWING PIE.
 PIZZA HUT

WHEN PIZZA HUT STARTED DOING

BUSINESS IN INDIA, MOST INDIANS
WERE UNFAMILIAR WITH TRADITIONAL
ITALIAN PIZZA TOPPINGS. BUT BY
OFFERING PIZZA TOPPINGS TAILORED TO
THE INDIAN PALATE, AND SELLING THE
PRODUCT AT AFFORDABLE PRICES, THE
COMPANY SUCCEEDED IN PUTTING PIZZA
ON THE TABLE IN INDIA.
 LG

MODIFIED PRODUCTS ACCORDING TO

INDIAN CUSTOMERS
TRANSACTIONAL SELLING RELATIONSHIP SELLING

DO THE DEAL AND DISAPPEAR NEGOTIATE A WIN-WIN SALE

SITUATION AND STAY AROUND, BEING
A RESOURCE FOR BETTER RESULTS.

SHORT-TERM THINKING AND ACTING LONG-TERM THINKING AND ACTING

BUILD THE BUSINESS ON DEALS BUILD THE BUSINESS ON

RELATIONSHIPS.
GETTING NEW CUSTOMERS KEEPING ALL CUSTOMERS AND CLIENTS

SELLING FOCUSED RELATIONSHIP FOCUSED FOR RESULTS.

INCENTIVE FOR DOING THE DEAL INCENTIVE FOR LONG-TERM

RELATIONSHIP AND INTERVIEW.
AFTER-SALES SUPPORT AND SERVICE POOR- AFTER-SALES SUPPORT AND SERVICE
SEEN AS COST. SEEN AS AN INVESTMENT IN THE
RELATIONSHIP.
PRODUCT FOCUSED. PEOPLE EXPECTATIONS AND
PERCEPTION FOCUSED.
THE SALE-JUST THE BEGINNING.
THE DEAL IS THE END. PURSUIT OF LONG-TERM RELATIONSHIP
AND RESULTS.
EVOLUTION OF SALES
MANAGEMENT
• BEFORE INDUSTRIAL
REVOLUTION
• AFTER INDUSTRIAL REVOLUTION
INDUSTRIAL REVOLUTION
 BEFORE INDUSTRIAL REVOLUTION
• ECONOMIC SCENE DOMINATED BY SMALL-SCALE &
HOUSE HOLD INDUSTRIES
• PRODUCTION CONFINED TO FOUR WALLS OF THE HOUSE
• DIRECT RELATIONSHIP BETWEEN THE PRODUCER &
CONSUMERS
• WHATEVER WAS PRODUCED WAS SOLD
• NO INTERMEDIARIES IN BETWEEN
 AFTER INDUSTRIAL
REVOLUTION
• INDUSTRIAL REVOLUTION CHANGED THE TINY WORLD OF
SMALL-SCALE PRODUCTION TO LARGE SCALE PRODUCTION
• PRODUCTION IN ANTICIPATION OF DEMAND
• BIG FIRMS WITH HUGE CAPITAL INVESTMENT
• MANUAL METHODS REPLACED BY MECHANICAL METHODS
• MASS PRODUCTION PAVED WAY FOR MORE MARKETS
• SPECIAL SELLING EFFORT WAS REQUIRED
• SALESMANSHIP BECAME HIGHLY VALUED & SPECIALIZED
ACTIVITY
 CONCEPTS OF
MARKETING
 THE EXCHANGE CONCEPT
 THE PRODUCTION CONCEPT
 THE PRODUCT CONCEPT
 THE SALES CONCEPT
 THE MARKETING CONCEPT
 THE SOCIETAL MARKETING
CONCEPT
EXCHANGE CONCEPT
EXCHANGE OF A PRODUCT
BETWEEN SELLER AND BUYER
THE PRODUCTION CONCEPT
■CONSUMER’S PREFERENCE TO WIDELY
AVAILABLE & INEXPENSIVE PRODUCTS
■HIGH PRODUCTION EFFICIENCY, LOW
COSTS & MASS DISTRIBUTION
■MARKET EXPANSION FOCUS
 THE PRODUCT CONCEPT
PRODUCT’S QUALITY, PERFORMANCE &
INNOVATIVE FEATURES
FOCUS ON MAKING SUPERIOR
PRODUCTS AND IMPROVEMENT
LITTLE OR NO CUSTOMER INPUT
INTERNAL FOCUS
MARKETING MYOPIA
 MARKETING MYOPIA

Prof. Theodore Levitt

COLOURED PERCEPTION ABOUT MARKETING,
SHORT-SIGHTEDNESS ABOUT BUSINESS
EXCESSIVE ATTENTION TO PRODUCT OR
PRODUCTION AT THE COST OF CUSTOMER &
HIS ACTUAL NEEDS
LEADS TO INADEQUATE UNDERSTANDING OF
THE MARKET
 THE SELLING CONCEPT
AN AGGRESSIVE SELLING AND
PROMOTION EFFORT
PREMISE THAT CONSUMERS SHOW
BUYING INERTIA
EFFECTIVE SELLING & PROMOTION TOOLS
LEAD TO MORE BUY
SELL WHAT THEY MAKE RATHER WHAT
MARKET WANTS
RISK OF DISSATISFIED CUSTOMERS
 THE MARKTING
CONCEPT
“INSTEAD OF HUNTING, MARKETING IS
GARDENING”
“THE KEY TO ACHIEVING
ORGANISATIONAL GOALS CONSISTS OF
THE COMPANY BEING MORE EFFECTIVE
THAN COMPETITORS IN CREATING
DELIVERING, & COMMUNICATING
SUPERIOR CUSTOMER VALUE TO ITS
CHOSEN TARGET MARKET”
 THE MARKTING CONCEPT
CUSTOMER CENTERED : SENSE &
RESPOND PHILOSOPHY
RIGHT PRODUCTS FOR YOUR CUSTOMERS
ORGANIZATIONAL GOALS BY CREATING,
DELIVERING & COMMUNICATING
SUPERIOR CUSTOMER VALUE IN TARGET
MARKETS
FOUR PILLARS: TARGET MARKET,
CUSTOMER NEEDS, INTEGRATED
MARKETING & PROFITABILITY
SELLING CONCEPT Vs.
MARKETING CONCEPT
Starting Focus Means Ends
point
Factory Products Selling & Profits Through Sales
promoting Volume

SELLING CONCEPT

Target Customer Integrated Profits through

Market Needs Marketing Customer Satisfaction

MARKETING CONCEPT
 THE SOCIETAL
MARKETING
“THE ORGANISATION’S TASK IS TO
DETERMINE THE NEEDS,WANTS,AND
INTERESTS OF THE TARGET MARKET AND
TO DELIVER THE DESIRED
SATISFACTIONS MORE EFFECTIVELY AND
EFFICIENTLY THAN COMPETITORS IN A
WAY THAT PRESERVES OR ENHANCES THE
CUSTOMER’S AND SOCIETY’S WELL BEING”
 THE SOCIETAL MARKETING

BUILD SOCIAL AND ETHICAL

CONSIDERATIONS INTO
MARKETING PRACTICES
BALANCE B/W COMPANY PROFITS,
CONSUMER WANT SATISFACTION,
AND PUBLIC INTEREST
 MARKETING Vs
SELLING
MARKETING SELLING
• Broader concept One aspect of marketing
• Focus on customers Focus on sellers needs
needs
• Concerned with Concerned with transfer of
customer satisfaction goods and services
• Converts needs into Converts goods into cash
products
• External company Internal company
orientation orientation
 MARKETING Vs
SELLING
MARKETING SELLING
 Views customer as Views customer as last link
very purpose of business
 Main emphasis on Main emphasis on sales
relationship management sales maximisation
 Means obtaining Means moving the product
customers
 Aims at profit through Aims at profit through
customer satisfaction sales
 TYPES OF SELLING
SELLING FUNCTION
• ORDER TAKERS
• ORDER CREATORS
• ORDER GETTERS
 ORDER TAKERS
• INSIDE ORDER TAKER
• DELIVERY SALES PEOPLE
• OUTSIDE ORDER TAKER
INSIDE ORDER TAKER
“INSIDE ORDER TAKERS ARE RETAIL
SALES ASSISTANTS”
 DELIVERY SALES
PERSON
“ A SALESPERSON WHOSE MAIN
RESPONSIBILITY IS DELIVERY OF A
PRODUCT TO HOUSEHOLD CONSUMERS OR
TO BUSINESS CUSTOMERS.”
 OUTSIDE ORDER
TAKER
THE OUTSIDE ORDER TAKERS VISIT THE
CUSTOMERS REGULARLY AND THEIR
PRIMARY CONCERN IS TO RESPOND TO THE
CUSTOMERS CALLS RATHER THAN SEEK
NEW CUSTOMERS.
 ORDER CREATORS
•MISSIONARY SALESPEOPLE
 MISSIONARY
SALESPEOPLE
MISSIONARY SALESPEOPLE ARE THE SALES
STAFF WHO NORMALLY DO NOT CLOSE A
SALE BUT PERSUADE THE CUSTOMERS TO
PROMOTE A SELLER’S BRAND.
 ORDERGETTERS

THESE ARE THE SET OF PEOPLE WHOSE

OBJECTIVE IS TO PERSUADE THE CUSTOMERS TO
MAKE A DIRECT PURCHASE.
 ORDER GETTERS
• FRONT LINE SALES PEOPLE
• SALES SUPPORT SALES PEOPLE
 FRONT LINE PEOPLE
• NEW BUSINESS SALESPEOPLE
• ORGANISATIONAL SALES PEOPLE
• CONSUMER SALES PEOPLE
 NEW BUSINESS
SALESPEOPLE

“THE FUNCTION OF NEW BUSINESS SALES

PEOPLE IS TO PERSUADE NEW BUYERS
AND NON-USERS TO BUY COMPANY’S
PRODUCTS & SERVICES”
 ORGANISATIONAL
SALES PEOPLE
“ORGANISATIONAL SALESPEOPLE ARE
INDUSTRIAL SELLERS WHO TRY TO
ESTABLISH LONG-TERM RELATIONSHIP
WITH ORGANISATIONAL BUYERS”
 CUSTOMERS
SALESPEOPLE
Customers salespeople comprise the door to
door salesperson who sell spices, eatables,
encyclopedia, insurance, and other personal
products for individual consumption.
 SALES SUPPORT
SALES PEOPLE
• TECHNICAL SUPPORT SALESPEOPLE
• MERCHANDISERS
 TECHNICAL SUPPORT
SALESPEOPLE

THE TECHNICAL SUPPORT SALESPEOPLE WHEN THE

PRODUCT IS TECHNICALLY COMPLEX OR IT NEEDS
NEGOTIATIONS DEMANDING FINANCIAL
ATTENTION OF THE COMPANY.
 
 MERCHANDISERS
THE MERCHANDISERS PROVIDES SALES SUPPORT IN RETAIL AND
WHOLESALE SELLING SITUATIONS.
 
 SALES STRATEGIES
• RELATIONSHIP STRATEGY
• THE DOUBLE WIN STRATEGY
• INSTANT SERVICE
• HARD VS. SOFT SELL STRATEGY
• INTEGRATED SALES STRATEGIES
• CLIENT- CENTERED SELLING
STRATEGY
METHODS OF SELLING
• TELEMARKETING
• SALES ON INTERNET
•MAIL ORDER SALES
•SALES
LEVELS IN SALES
MANAGEMENT

CEO/
PRESIDENT

V.P SALES/V.P
MARKETING

NATIONAL SALES
MANAGER

REGIONAL/ZONAL/DIVISIONAL
SALES MANAGER

BRANCH/AREA/DISTRICT SALES
MANAGER

SALES TRAINEE/SALES PERSON/SALES

REPRESENTATIVE
WHAT IS PERSONAL SELLING?

INVOLVES TWO-WAY, PERSONAL

COMMUNICATION BETWEEN SALESPEOPLE AND
INDIVIDUAL CUSTOMERS WHETHER:

FACE TO FACE,
BY TELEPHONE,
THROUGH VIDEO CONFERENCING,
STEPS
STEPS IN
IN THE
THE SELLING
SELLING PROCESS
PROCESS

Step Identifying and Screening

Step1.1. Prospecting
Prospectingand
and For Qualified Potential
Qualifying
Qualifying Customers.

Learning
LearningAsAsMuch
MuchAsAsPossible
Possible
Step
Step 2.
2. Pre-approach
Pre-approach About
AboutaaProspective
ProspectiveCustomer
Customer
Before
BeforeMaking
MakingaaSales
SalesCall.
Call.

Knowing
KnowingHowHowtotoMeet
Meetthe
theBuyer
Buyer
Step
Step3.
3. Approach
Approach to
toGet
Getthe
theRelationship
RelationshipOff
Off
to
toaaGood
GoodStart.
Start.

Telling
Tellingthe
theProduct
Product“Story”
“Story”
Step
Step4.
4.Presentation/
Presentation/ to
tothe
theBuyer,
Buyer,and
andShowing
Showingthe
the
Demonstration
Demonstration Product
ProductBenefits.
Benefits.
 STEPS
STEPS IN
IN THE
THE SELLING
SELLING
PROCESS
PROCESS
Seeking Out, Clarifying,
Step and Overcoming
Step5.
5. Handling
HandlingObjections
Objections
Customer Objections to
Buying.

Asking the Customer

Step
Step 6.
6. Closing
Closing for the Order.

Following Up After the Sale to

Step
Step7.
7. Follow-Up
Follow-Up Ensure Customer Satisfaction
and Repeat Business.
 ALTERNATIVE STEPS:

Find ’em
Find ’em
Grab ‘em
Grab ‘em

Show ‘em
Show ‘em

Answer ‘em
Answer ‘em

Sell ‘em
Sell ‘em
Keep ‘em
Keep ‘em
Creative Selling Process

• Prospecting: Identifying likely

new customers
– Leads
– Developing lists of Potential
Customers
 PROSPECTING

       ACQUAINTANCE REFERENCES

       COLD CALLING
       CENTRE OF INFLUENCE METHOD
       PERSONAL OBSERVATION METHOD
       DIRECT MAIL OR TELEPHONE METHOD
       COMPANY’S RECORDS
       NEWSPAPERS
      RETAILERS
      OTHER METHODS
 PREAPPROACH
SIGNIFICANCE
• SALESMAN CONCENTRATES ON
PROSPECT
• GAINS ALL POSIIBLE INFORMATION
ABOUT PROSPECT
• MAKES EFFECTIVE SALES
PRESENTATION
• PRESENTATION IS FOCUSSED AND
MEANINGFUL
Approaching The Prospect
HOW DO WE MAKE THE
INITIAL CONTACT & BUILD
RAPPORT

There is only one

time to make a first
impression
SUCCESSFUL APPROACH
- PRIOR APPOINTMENT
- TIMING
- COMMAND
- RELAX ATMOSPHERE
- OPEN MINDEDNESS
- COURTESIES
- EFFECTIVE PRESENTATION
- FOLLOW UP
 METHODS OF
APPROACH
CASHING IN ON BRAND NAME OR THE
COMPANY’S REPUTATION
CUSTOMER BENEFIT APPROACH
INNOVATIVE PRODUCT OPENS THE DOOR TO THE
SALESMAN
THE PREMIUM APPROACH
THE SHOCK APPROACH
THE SURVEY APPROACH
 PRESENTATION
• ATTRACTIVE PACKAGING AND DISPLAY
• CONSPICUOUS PLACEMENT OF THE
PRODUCT IN DISPLAY WINDOW
• PRESENTATION THROUGH MODELS,
SLIDES, PICTURES,VIDEOS ETC.
 DEMONSTRATION

DEMONSTRATION IS AN EXERCISE TO PROVE THE

CHARACTERISTICS OF THE PRODUCT
Overcoming Objections
IF HE HADN’T TOLD
ME WHAT HIS
OBJECTION
WAS, I NEVER WOULD
HAVE BEEN
ABLE TO HELP!
 Objection handling
• Agree and counter
• Question the objection
• Comparison method
• Testimonial method
• Forestall the objection
• Straight denial
Closing the Sale
• Closing signals
 Closing techniques

• Trial close
• Alternative – choice close
• Minor points close
• Assumptive close
 Following Up
• Commitments met
– Shipment
– Performance
• Satisfied customers rebuy &
recommend
 PERSONAL SELLING-
ADVANTAGES
• TWO WAY COMMUNICATION
• IMMEDIATE FEEDBACK
• PRESENTATION IS TAILORED TO INDIVIDUAL
NEEDS
• ABILITY TO CULTIVATE RELATIONSHIP
• ABILITY TO GET IMMEDIATE ACTION
 PERSONAL SELLING-
DISADVANTAGES
• HIGH COST PER CONTACT
• INABILITY TO REACH SOME
CUSTOMERS EFFECTIVELY
 HEORIES OF PERSONAL SELLING

- AIDAS Theory Of Personal Selling

“Right Set Of Circumstances” Theory

“Buying Formula” Theory

 IDAS THEORY

EEKING ATTENTION

AINING INTEREST

KINDLING DESIRE
 BUYING FORMULA THEORY

NEED SOLUTION PURCHASE SATISFACTION

BEHAVIORAL EQUATION THEORY
Four Elements…….

 DRIVE

 CUES
 RESPONSE
 REINFORCEMENT
 ITUATIONS CONDUCIVE TO
PERSONAL SELLING...

roduct Situation

)When a product is of high unit value, e.g.,

Refrigerator, TV, etc.

) When a product is in the introductory

stage of its PLC.
 arketing Situation

.When a company is selling to a small

number of buyers who are buying a
product of high value.

. When a company sells in small local

markets or government or institutional
 ompany Situation

ersonal selling is more effective and

economical when

. The company is not in a position to

identify and make use of any
communication media.
 onsumer Behaviour Situation

Personal selling is more effective when

 
. Goods purchased are of high value and less
frequently purchased.
 

. Consumer needs instant answers to his

 OBJECTIVES OF
SALES MANAGEMENT
• SALES MAXIMISATION
• PROFIT MAXIMISATION
• ATTAINMENT OF CONTINUED
GROWTH
 OBJECTIVES OF SALES
MANAGEMENT
To retain & capture market share
To obtain new accounts
To keep expenses within specified limits
To service existing accounts
To assist the dealer in selling the product
To provide technical advice wherever necessary
To assist in training of middleman’s sales personnel
To collect & report market information to company
management
 Sales quotas
• Sales quota is a quantitative goal assigned to a specific sales unit
such as territory, department, division ,product line or individuals.
• Expected sales performance expressed in value or volume of sales
• Part of company’s total market share that is assigned to the sales
person in each territory , a branch, a distributor, a selling agent, a
dealer or any other selling unit as a target to be achieved in
specific future period.
 Importance of sales
quota
• Provide performance targets
• Provide standards
• Provide control
• Motivational tool
• Management by exception
Types of sales quotas
• Sales volume quota
• Profit quota
• Expense quota
• Activity quota
• Quota combinations
 Sales volume quota
• Include sales in rupees or product
units for a specific period of time
• Are first set for the entire year and
then for shorter time periods such as
three months, six months, nine
months ,etc.
 Sales volume quota
• Product line
• Product range
• Sales division
• Sales territories
• Sales districts
• Sales force (individual)
 Profit quotas
• Are particularly useful in multi
product companies where different
products contribute to varying levels
of profits.
 Expense quota
• Are related to selling costs within
reasonable limits
• Sales person receives an expense
budget that is percentage of
territory’s sales volume
 Activity quotas
• Activity quotas set objectives for
job related duties useful for
attaining sales people’s performance
targets.
 Types of activity quotas
• Number of sales presentations made
• Number of service calls made
• Number of dealers visited
• Number of calls made for recovery
• Number of new accounts opened
Methods of setting quota
• Quotas based on sales forecasts and
potentials
• Quotas based on past sales or experience
• Quotas based on executive judgments
• Quotas based on salespeople judgment
• Quotas based on compensation
 Sales Territory
• A sales territory represents a group
of present and potential customers
assigned to an individual sales person,
a group of sales persons, a branch , a
dealer, a distributor or a marketing
organisation at a given period of
time. .
 WHAT IS A SALES TERRITORY?

A sales territory is composed of a group of customers or

a geographic area assigned to a salesperson.
WHO IS RESPONSIBLE FOR
TERRITORIAL DEVELOPMENT?

Development of sales territories is usually the

responsibility of the sales manager overseeing
the larger sales units within the organization.
 Territory management
• Territory management includes the
market potential, number of
customer accounts, the firms
experience and market share in the
territory, the capability of sales
person assigned and frequency of
calls made.
 Territory management
• Trade relations/dealer relations
• Potential business
• Territory size
• Portfolio of accounts
• Selling techniques
• Customer satisfaction
WHY ESTABLISH TERRITORIES
To obtain entire coverage of market
•
To establish salesperson’s responsibility
•
To evaluate performance
•
To improve customer relations
•
To reduce sales expenses
•
To allow better matching of sales person to customer
•
To benefit salespeople and the company.
•
WHY SALES TERRITORIES MAY
NOT BE DEVELOPED
• Salespeople may be more motivatedif
they are not restricted.
• The company may be too small.
• Management may not want to take the
time, or have the know-how.
• Personal friendship may be the basis for
attracting customers.
 Allocation of sales
territories
ADVANTAGES TO CUSTOMERS
• Prompt and efficient after sales service
• Quick disposal of complaints
• Customer satisfaction due to regular visits
 Allocation of sales
territories
ADVANTAGES TO SALES PERSONS
• Freedom of choice in serving customers
• Transparent system for performance
evaluation
• Efficient reward system based on
performance
Size of sales territories
• Nature and demand of the product
• Mode of physical distribution
• Selling process
• Transport and communication facilities
• Government regulations
• Density of population
• Market potential
• Level of competition
• Ability of the sales person
 FACTORS TO CONSIDER WHEN
DESIGNING SALES TERRITORIES

Sales force objectives may be based on

factors such as contribution to profits,
return on assets, sales/cost ratios, market
share, or customer satisfaction.
FACTORS TO CONSIDER WHEN DESIGNING TERRITORIES

S e l e c t B a sA i c n a l y z e D e t e r m i n e
C o n t r o l U W n oi t r k l o a T d e r r i t o r i e s

E v a l u a t e , C R u es vt oi s m e e r A s s i g n t
i f N e e d e dC o n t a c t P Tl a e n r r i t o r i
SELECT BASIC CONTROL UNITS
• States
• Counties
• Cities and zip-code areas
• Metropolitan statistical areas
• Trading areas
• Major accounts
• A combination of two or more
factors
ANALYZE SALESPEOPLE’S WORKLOADS

Workload is the quantity of work expected

from sales personnel. Three of the main
influences on workload involve the nature
of the job, intensity of market coverage,
and type of products sold.
Intensity of Market Coverage

Distribution methods:
• Intensive distribution
• Selective distribution
• Exclusive distribution
DETERMINE BASIC TERRITORIES

The breakdown approach uses factors

such as sales, population, or number of
customers.

Forecasted Sales
Sales Force Size = Average Sales per Salesperson
TABLE 6.1 SIX STEPS TO CONSIDER WHEN DETERMINING A FIRM’S
BASIC TERRITORIES

1. Forecast sales and determine 4. Tentatively establish

sales potentials. territories.

2. Determine the sales volume 5. Determine the number of

needed accounts
for each territory. for each territory.
3. Determine the number of 6. Finalize the territories, and
territories. draw the
boundary lines.
Equalized Workload
This method uses the number, location, and size
of customers and prospects to determine the
frequency of sales calls and amount of time a call
takes by using such data as:
• Time required for each sales call.
• Frequency of sales calls per given customer.
• Time intervals between sales calls.
• Travel time around territories.
• Nonselling time.
ASSIGN TO TERRITORIES
Some salespeople can handle large territories
and the travel associated with them; some can’t.
Some territories require experienced
salespeople; some are best for new people.
Some people want to live in metropolitan areas;
others prefer territories with smaller cities.
CUSTOMER CONTACT PLAN

The customer contact plan involves

scheduling sales calls and routing a
salesperson’s movement around the
territory.
Scheduling refers to establishing a fixed
time when the salesperson will be at a
customer’s place of business.

In theory, strict formal route designs enable the

salesperson to:
1. Improve territorial coverage.
2. Minimize wasted time.
3. Establish communication between
management and the sales force in terms of
the location and activities of individual
salespeople.
FIGURE 6.2 THREE BASIC ROUTING PATTERNS

S t r a i g h t - L i n e P a t t e r n
F i r s t C a l l
B a s e c
c c c c W o r k B a c k

C l o v e r l e a fc P a t t e r n M a j o r - C i t y P a t t e r n
c c

2 3
c c
c c c c
1
c B a s e c
5 4
c c c c
c c c c

c c
1 - D o w n t o w
c
E a c h L e a f O u t a n d
B a c k S a m e D a y
Using the Telephone for Territorial
Coverage

1. Sales generating
• Selling regular orders to smaller
accounts.
• Selling specials, such as offering
price discounts on an individual
product.
• Developing leads and qualifying
prospects.
Using the Telephone for Territorial
Coverage continued

2. Order processing
• Ordering through the warehouse.
• Gathering credit information.
• Checking if shipments have been
made.
Using the Telephone for Territorial
Coverage continued

3. Customer service
• Handling complaints.
• Answering questions.
Most people can benefit from adopting the
following practices:

• Satisfying part of the service needs of accounts

by telephone.
• Assigning smaller accounts to telephone selling.
• Doing prospecting, market data gathering, and
call scheduling by telephone.
• Carefully scheduling visits to distant accounts,
replacing some with telephone calls.
EVALUATION AND REVISION OF SALES
TERRITORIES

Territorial control is the establishment of

standards of performance for the individual
territory in the form of qualitative and
quantitative quotas or goals.
 THE SALES TERRITORY IS A
BUSINESS

THE RIGHT SALESPERSON PAYS OFF

OPEN SALES TERRITORIES

Open sales territories are those left vacant until

new salespeople are assigned to them. Vacant
territories experience the following:
• Lost sales due to the vacancy.
• Lost sales due to the time needed for the
new salesperson to build sales productivity.
Sales leakage refers to the lost sales due to
both the vacancy and the time required for
the new salesperson to produce at average.
 THE BOTTOM LINE
According to salespeople, managing time and territory is the
most important factor to be considered when carrying out their
selling duties.
Developing sales territories has advantages as well as certain
disadvantages.
Sales force objectives are usually converted into individual sales
territorial goals.
The three main influences affecting the sales personnel’s
workload are nature of the job, intensity of market coverage, and
products sold.
 THE BOTTOM LINE continued

Before designing sales territories, managers must consider six

factors.
The customer contact plan includes scheduling sales calls and
routing salesperson’s movement around the territory.
Territorial control allows actual performance to be compared
with standards of performance for evaluation purposes.
 COMPENSATION
“COMPENSATION STANDS FOR THE
MONETARY AND NON-MONETARY
REWARD GIVEN BY THE FIRM TO ITS
SALES-FORCE IN RETURN FOR THE
SERVICES RENDERED.”
 SIGNIFICANCE OF
SOUND COMPENSATION
  TO ATTRACT BEST SALESMEN
  TO KEEP SALES-FORCE CONTENED
   TO HAVE LONGING LOYALTY
   TO HAVE SOUND EMPLOYER-
EMPLOYEE RELATIONS
 
REQUIREMENTS OF SOUND
COMPENSATION PLAN

IT IS SIMPLE
IT IS ADEQUATE
IT IS FLEXSIBLE
IT IS FAIR EQUITABLE
IT IS ECONOMICAL
IT IS EASY TO ADMINISTER
IT IS INCENTIVE ORIENTED
IT IS TIMELY
 METHODS OF
COMPENSATION
STRAIGHT SALARY METHOD
STRAIGHT COMMISSION METHOD
SALARY PLUS COMMISSION METHOD
BONUS METHODS
 FACTORS GOVERNING
COMPENSATION LEVEL
SALES COMPETENCE
EXTENT OF ADVERTISING
THE DEGREE OF TRAINING
FINANCING VIABILITY
BARGAINING POWER
METHODS OF COMPENSATION
 BONUS
“ A BONUS IS A SUM PAID FOR EXTRA
EFFORTS OR RESULTS BEYOND
NORMAL EXPECTATION”
 FRINGE BENEFITS
•     SUBSIDISED EDUCATION ALLOWANCE
•       TRAVELLING ALLOWANCE
•       OVERTIME PAY
•       ACCIDENT COMPENSATION
•       MEDICAL AND SURGICAL AID
•       LEAVE TRAVEL GRANT
•       SUBSIDISED HOUSING
•       SUBSIDISED CANTEEN FACILITIES
•       HOUSE RENT ALLOWANCE
•       CITY COMPENSATORY ALLOWANCE
•       SELF AND FAMILY PENSION
•       PROVIDENT FUND
•       GRATUITY
 ETHICS
“ETHICS IS THE RULE OF CONDUCT
THAT REFLECTS THE CHARACTER
AND SENTIMENT OF THE COMMUNITY”
 
“ETHICS CAN ALSO BE VIEWED AS A
PERSONS ADHERENCE TO THE PRINCIPLES
OF HONESTY AND FAIRNESS.”
 
 
“A WRITTEN CODE HIGHLY PUBLICIZED
THROUGHOUT THE COMPANY AND
FORCED WITHOUT EXCEPTION CAN
BE A POWERFUL FORCE IN
PREVENTING UNETHICAL
BEHAVIOUR.”
 PRIMARY AREAS SERVED BY
ETHICS IN SALES
MANAGEMENT

COMPANY POLICIES AND PRACTICES

SHARING CONFIDENTIAL INFORMATION

BRIBERY

GIFT GIVING
SOME GUIDELINES FOR
PERSONAL
CODE OF ETHICS …… 

   USE AN HONEST APPROACH

   PUT YOUR CUSTOMER INTEREST FIRST
   AVOID MISLEADING STATEMENTS
   AVOID ATTACKING COMPETITORS
AVOID MISUSE OF COMPANY RESOURCES
  PRACTICE HONESTY AFTER SALES
 
  
MOTIVATION

“MOTIVATION IS A PSYCHOLOGICAL
ASPECT AND HELPS THE SALESMAN TO
A GOAL DIRECTED BEHAVIOUR.”
 MAIN OBJECTIVES
• TO STIMULATE THE SALESMEN TO IMPROVE THEIR
EFFICIENCY.

• TO ESTABLISH CORDIAL RELATIONSHIP BETWEEN

THE MANAGERS AND SALESMEN.

• TO MAINTAIN HIGH MORALE AMONG THE SALES

TARGET.
 NEED FOR
MOTIVATION 

THE SALESMAN HAS NO LIFE AS HE IS ALWAYS ENVELOPED IN THE

MARKET AND THE TRADERS.

CUTE COMPETITION FROM COMPETITIVE PRODUCTS.

HE ACTIVITIES OF A SALESMAN ARE REPETITIVE.

E IS UNDER PRESSURE BOTH FROM THE CUSTOMER AND HIS

SUPERVISOR

O MUCH OF TRAVELLING AND KEEP AWAY FROM HOME LEADS TO

HEALTH PROBLEMS.

O BUILD THE MORALE OF THE SALESMAN.

 FINANCIAL
TECHNIQUES

IGHER SALARY

ORE COMMISSION

ROFIT SHARING

RAVELLING ALLOWANCE

ONUS
NON-FINANCIAL MOTIVATIONAL
TECHNIQUES

MEETING BETWEEN MANAGER AND SALES FORCE

CLARITY OF JOB
SALES TARGET OR QUOTAS
SALES CONTESTS
SALES CONVENTIONS AND CONFERENCES
LEADERSHIP STYLE OF THE MANAGER
FREEDOM TO WORK
REWARD AND RECOGNITION
 SALES CONTESTS

“ASALES CONTEST IS A SPECIAL SELLING

CAMPAIGN OFFERING INCENTIVES IN
THE FORM PRIZES OR AWARDS BEYOND
THOSE IN THE COMPENSATION PLAN”
SPECIFIC OBJECTIVES OF
SALES CONTESTS

TO OBTAIN NEW CUSTOMERS

TO SECURE LARGER ORDERS
TO PUSH SLOW MOVING ITEMS, HIGH-MARGIN
GOODS, OR NEW PRODUCTS
TO OVERCOME A SEASONAL SALES SLUMP
TO GET REORDERS
TO PROMOTE SPECIAL DEALS TO DISTRIBUTORS,
DEALERS, OR BOTH
 CONTEST PRIZES
CASH
 MERCHANDISE
TRAVEL
SPECIAL HONOURS AND
PREVILEGES
MANAGERIAL EVALUATION
OF CONTESTS

THE CONTEST VERSUS ALTERNATIVES

SHORT – AND LONG TERM EFFECTS
DESIGN
FAIRNESS
SALES FORCE MORALE
OBJECTIONS TO SALES
CONTESTS
• SALES PERSONS ARE PAID FOR THEIR SERVICES UNDER
PROVISIONS OF COMPENSATION PLAN AND THERE IS NO
REASON TO REWARD THEM FURTHER FOR PERFORMING
REGULAR DUTIES
• CONTESTS LEAD TO UNDESIRABLE AND
UNANTICIPARED RESULTS
• CONTESTS CAUSE SALESPERSONS TO BUNCH SALES
DURING THE COMPETITION AND SALES SLUMPS OCCUR
BEFORE AND AFTER THE CONTEST
• DISAPPOINTMENT SUFFERED BY CONTEST LOSERS
 SALES MEETINGS
DEFINING THE SPECIFIC TRAINING AIMS
DECIDING MEETING CONTENT
DETERMINING METHODS OF CONDUCTING
THE MEETING
DECIDING HOW TO EXECUTE (HOLD) THE
MEETINGS
DECIDING HOW TO EVALUATE THE
RESULTS
A-C-M-E-E APPROACH

AIMS
CONTENT
METHOD
EXECUTION
EVALUATION
 SALES MEETINGS
NATIONAL SALES MEETINGS
REGIONAL SALES MEETINGS
LOCAL SALES MEETINGS
REMOTE-CONTROL AND TRAVELING SALES MEETINGS
∀ •       CLOSED CIRCUIT TELEVISION
∀ •       SALES MEETINGS BY TELEPHONE
∀ •       SALES MEETINGS AT HOME
∀ •       TRAVELING SALES MEETINGS
 

 
•
Distribution Channel Design
and Management
What is a Marketing
Channel?
THIS IS A SET OF
INTERDEPENDENT
ORGANIZATIONS INVOLVED IN
THE PROCESS OF MAKING A
PRODUCT OR SERVICE
AVAILABLE FOR USE OR
CONSUMPTION
 INTERMEDIARIES INVOLVED
IN THIS PROCESS
• AGENTS – ACTING ON BEHALF OF
BUYER OR SELLER BUT DO NOT
TAKE TITLE OF THE GOODS
• FACILITATORS – TRANSPORTERS,
C&FS, BANKS, AD AGENCIES
 Advantages of a
distribution system
• Key external resource
• Takes years to build
• Significant corporate commitment to
a large no. of firms
• Commitment to a set of policies that
nourishes long term relationships
 Why would a
manufacturer not like to
do his own distribution?
• Lacks the financial resources to do direct
marketing
• Cannot have the infrastructure to make the
product widely available and near the customer
• Trading profits could be less than
manufacturing profits
Manufactures
Manufactures typically
typically
produce
produce aa large
large
quantity
quantity of
of aa limited
limited
variety
variety of
of goods
goods

Consumers usually desire a small

quantity of a wide variety of goods
If all manufacturers tried
to reach all consumers

M1 C1

M2 C2

M3 C3
 If they tried to go
through an intermediary

M1 C1

M2 D1 C2

M3 C3
 Channel functions
• Gathers information on customers, competitors
and other external market data
• Develop and disseminate persuasive
communication to stimulate purchases
• Agreement on price and other terms so that
transfer of ownership can be effected
• Placing orders with manufacturers
 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?

• 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?
• 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.
 Distribution

P C
R O
O N
D S
U DISTRIBUTION U
C M
E E
R R
 Distribution
Distribution Channel
Channel
Functions
Functions
Information
Information
Transfer
Transfer Communication
Communication

Payments
Payments Negotiation
Negotiation
Physical
Physical
Distribution
Distribution Ordering
Ordering
Risk
Risk Taking
Taking Financing
Financing
Distribution
Distribution Channel
Channel Functions
Functions
These Functions Should be Assigned to the Channel Member Who Can
Perform Them Most Efficiently and Effectively to Provide Satisfactory
Assortments of Goods and Services to Target Customers.

Risk
Risk Taking
Taking
Information
Information

Financing
Financing
Promotion
Promotion

Physical
Physical
Distribution Contact
Contact
Distribution

Negotiation Matching
Matching
Negotiation
 Typical Channels of
Distribution

ANUFACTURE ONSUME
R R

GENT

ETAILER

HOLESALER
Business-to-Business
Channels

Direct

Wholesaler

Agent
 Business-to-Business Channel
Trends

Infomediaries & Vertical Exchange

 Conventional Distribution Channel vs.
Vertical Marketing Systems
Conventional Vertical
marketing marketing
channel channel

Manufacturer
Manufacturer

Wholesaler
Wholesaler

Retailer Retailer

Consumer Consumer
Types
Types of
of Vertical
Vertical Marketing
Marketing Systems
Systems
Corporate
Corporate
Common
Common Ownership
Ownership at at Different
Different
Levels
Levels of
of the
the Channel
Channel

Administered
Administered
Leadership
Leadership is
is Assumed
Assumed by
by One
One or
or
aa Few
Few Dominant
Dominant Members
Members

Contractual
Contractual
Contractual
Contractual Agreement
Agreement Among
Among
Channel
Channel Members
Members
 Vertical Marketing
Systems
Corporate systems - total ownership
•

• Contractual - legal relationships

• Administered - strong leadership

 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

• Lot size
• Waiting time
• Spatial convenience
• Product variety
• Service backup
Steps in Distribution
Planning
 Choosing a Distribution
System

Intensive
Intensive
Distribution
Distribution

Exclusive
Exclusive Distribution
Distribution Distribution
Distribution Intensity
Intensity

Selective
Selective
Distribution
Distribution
Intensive Distribution

Producer

Seeks
Seeks to
to obtain
obtain Retailer Retailer Retailer
maximum
maximum product
product
exposure
exposure at
at the
the retail
retail Retailer Retailer Retailer
level
level
Retailer Retailer Retailer

Retailer Retailer Retailer

Retailer Retailer Retailer

 Selective Distribution

Producer

Product
Product is is sold
sold Retailer Retailer Retailer
in
in aa limited
limited
number
number of of Retailer Retailer Retailer
outlets
outlets
 Exclusive Distribution

Producer
Product
Product is
is sold
sold in
in
only
only one
one outlet
outlet in
in
Retailer
aa given
given area
area
Developing Distribution Tactics

Selecting
Selecting Channel
Channel Partners
Partners

Managing
Managing the
the Channel
Channel of
of Distribution
Distribution
Channel
ChannelLeader
LeaderPower
Power

Reward
Reward or
or
Economic
Economic Legitimate
Legitimate Coercive
Coercive
Power
Power Power
Power Power
Power

Distribution
Distribution Channels
Channels &
& the
the Marketing
Marketing Mix
Mix
 Physical
Distribution
Inventory
Inventory Order
Control OrderProcessing
Processing
Control Received
Received
When
Whento
toorder
order Processed
How Processed
Howmuch
muchto
toorder
order Shipped
Shipped

Physical
Distribution
Transportation Functions Warehousing
Warehousing
Rail, Water, Number
NumberNeeded
Needed
Trucks, Air, Where
Where
Pipeline, Internet What
WhatType
Type
Materials
MaterialsHandling
Handling
Moving
MovingProducts
ProductsInto,
Into,
Within,
Within,and
and
Out
Outof
ofWarehouses
Warehouses
 Transportation
Modes
Rail
Rail
Cost-effective
Cost-effectivefor
forshipping
shippingbulk
bulkproducts,
products,
piggy-back,
piggy-back,fishyback,
fishyback,birdyback.
birdyback.
Water
Water
Low
Lowcost
costfor
forshipping
shippingbulky,
bulky,low-value,
low-value,
non
nonperishable
perishablegoods,
goods,slowest
slowestform.
form.
Truck
Truck
Most
Mostimportant
importantcarrier
carrierfor
forconsumer
consumer
goods,
goods,flexible.
flexible.
Air
Air
High
Highcost,
cost,ideal
idealwhen
whenspeed
speedisisneeded
neededor
or
distant markets have to be reached
distant markets have to be reached
Pipeline
Pipeline
Carry
Carrypetroleum
petroleumbased
basedproducts,
products,
very
verylow
lowcost,
cost,requires
requireslittle
littleenergy.
energy.
Internet
Internet
Web
Websites
siteshave
haveproducts
productsavailable,
available,used
used
especially
especiallyfor
forservices.
services.
 Channel Relationships
• Cooperation

• Conflict

• Power
– Coercive
– Expert
– Legitimate
 Decision Making
Framework
Prospects of Importance of threatened
Destructive channel in terms of current or
Conflict potential volume or profitability
High
Low
High (FIRE) Act to avert or Allow threatened
address conflict channel to
decline

Low (Smoke) Look for opportunities Do nothing

to reassure
threatened channel
and leverage your
 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?
TYPES OF CONFLICTS

 VERTICAL CHANNEL CONFLICTS

 HORIZONTAL CHANNEL
CONFLICTS
 MULTI CHANNEL CONFLICTS
 CAUSES OF
CONFLICTS

 GOAL INCOMPATIBILITY.
 DIFFERENCES IN PERCEPTION.
 DEPENEDENCY OF
INTERMEDIARIES ON
MANUFACTURER.
 Managing
Channel
The basic reasons for channel conflict
1
Goals

Convergent Misunderstood Harmonious

Relationship Relationship
Criteria for harmonious
Processes Relationship marketing
By
Acrimonious Mismanaged Jagdish N. Sheth
Relationship Relationship
Divergent

Divergent Convergent
 Managing
Channel
Examples of channel conflict (Goal )

Service franchisee : Daily conflict on small service related aspects

but rarely serious. Operational issues resolved routinely. Examples:
Routine calls not completed, repeat visits due to improper repairing.

Dealer network: Complaint on pricing, undercutting, promotional

Support Vs returning of stocks, not achieving targets regularly.

Distributor: Complaint of lack of compensation for freight, poaching,

Over stocking, competitors deals etc Vs discussion on viability of
Business or not servicing particular less profitable areas etc.
 Managing
Channel
Concept of power in distribution channel

Manufacturer  Distributor  Retailer  Customer

1. There is a service effort provided by each member of the channel.

2. There is total profit which gets distributed in the channel.
3. The bone of contention is : maximization of (profit / effort) of
each member rather than the overall distribution system.
4. All channel members do not have equal share.

Power is the ability of one channel member to get another channel

member to do what it otherwise would not have done. It is obtained
through the possession & control of resources that are valued by
the other party.
 Managing
Channel
Example of sources of power & their use:

Sources:
1. HLL – Brand, diverse product line & turnover.
2. Asian paints – Brand, product quality ( for the segment ).
3. LG – Brand, diverse product portfolio.

Usage:
1. Low margins on per unit basis.
2. Low credit norms.
3. Higher ability to monitor and influence distributor operation.
In terms of market coverage, price control.
4. Exclusivity of brand handled.
 Managing
Channel
Example of sources of power & their use:

Sources:
1. Vijay Sales – Retail presence, volume of business, customer base,
negotiating skill & payment capability.
2. Shoppers stop – Customer base, Image of outlet.
3. Panda Enterprises – Customer base, Retail presence, After sales
Service.
Usage:
1. Higher margins on per unit basis ( compared to other dealers ).
2. Higher credit norms ( compared to other dealers ).
3. Higher promotional support.
4. Higher sales service.
 Managing
Negotiation Channel

The concepts which are important:

1. Pure economics
2. Fairness / Spirit of the deal.
3. Best Alternative to a Negotiated Agreement ( BATNA )
- For yourself
- For the other party

Negotiators myopia – all people do not think alike.

 Resolving Channel Conflict

1. Use of different types of power.

2. Remove the root cause.
3. Negotiate into a win win situation.
4. Keeping the foot in the door (keep the door open)
5. Amicable parting of ways.
 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
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
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
• Reverse distribution
One Coca Cola
Distributor
Difficult
• Ethical, Political, & OK
Legal

One thousand
retailers
 Nature
Nature and and
Importance
Importance of of
•
Marketing
Marketing
customers Logistics
Involves getting the right product to the right
Logistics
in the right place at the right time.
• Companies today place greater emphasis on logistics
because:
– customer service and satisfaction have become the
cornerstone of marketing strategy.
– logistics is a major cost element for most companies.
– the explosion in product variety has created a need
for improved logistics management.
– information technology has created opportunities for
major gains in distribution efficiency.
Goals
Goals of of the
the Logistics
Logistics
System
System
• Provide a Targeted Level of Customer Service at
the Least Cost.
• Maximize Profits,
Profits Not Sales.
Higher Distribution Costs/
Higher Customer Service Levels

Lower Distribution Costs/

Lower Customer Service Levels
 Major
Major Logistics
Logistics
Functions
Functions
Costs Costs Order Processing Order Processing
Minimize
MinimizeCosts
Costsofof Received
Received
Attaining
AttainingLogistics
Logistics Processed
Processed
Objectives
Objectives Shipped
Shipped

Logistics
Transportation Functions Warehousing
Warehousing
Rail, Truck, Storage
Storage
Water, Pipeline, Distribution
Distribution
Air
Inventory
Inventory
When
Whento toorder
order
How
Howmuch
muchto toorder
order
Just-in-time
Just-in-time
Transportation
Transportation Modes
Modes
Rail
Rail
Nation’s
Nation’slargest
largestcarrier,
carrier,cost-effective
cost-effective
for
forshipping
shippingbulk
bulkproducts,
products,piggyback
piggyback
Truck
Truck
Flexible
Flexiblein
inrouting
routing&&time
timeschedules,
schedules,efficient
efficient
for
forshort-hauls
short-haulsof
ofhigh
highvalue
valuegoods
goods
Water
Water
Low
Lowcost
costfor
forshipping
shippingbulky,
bulky,low-value,
low-value,
non
nonperishable
perishablegoods,
goods,slowest
slowestform
form
Pipeline
Pipeline
Ship
Shippetroleum,
petroleum,natural
naturalgas,
gas,and
andchemicals
chemicals
from
fromsources
sourcestotomarkets
markets
Air
Air
High
Highcost,
cost,ideal
idealwhen
whenspeed
speedis
isneeded
neededoror
distance
distancemarkets
marketshave
haveto
tobe
bereached
reached
Choosing
Choosing Transportation
Transportation
Modes
Modes
Checklist for Choosing
Transportation Modes
1. Speed
2. Dependability
3. Availability
4. Costs
5. Others
 Integrated
Integrated LogisticsLogistics
Management
Management
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs Requires
Teamwork,
Teamwork Both Inside the Company and Among All
the Marketing Channel Organizations.

Cross-Functional
Cross-Functional Teamwork
Teamwork inside
inside the
the Company
Company

Building
Building Channel
Channel Partnerships
Partnerships

Third-Party
Third-Party Logistics
Logistics