Sales and Distribution

Management
Dr. Prashant Mishra
prashant@iimcal.ac.in
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?
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
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




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
Flexibility
Identify best
prospects
Adapt to situations
Engage in dialogue
Builds Relationships
Long term
Assure buyers
receive appropriate
services
Solves customers
problems

Personal Selling Limitations
Can not reach mass
audience
Expensive per contact
Numerous calls
needed to generate
sale
Labor intensive
Personal Selling Tasks
Order taking
Routine
writing up orders
checking invoices
assuring prompt order
processing
Suggestive selling
Personal Selling Tasks
Order getting
Seeking out
customers
Creative selling
Pioneering
Account management
Personal Selling Tasks
Missionary
Detailer
Goodwill
Closers
Cross-functional
Account service rep


Some Traits of Good Salespeople

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.
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.
Alternative Steps:
Find em
Grab em
Show em
Answer em
Sell em
Keep em
Identify and Qualifying
Prospects
Prospecting: Identifying
likely new customers
Leads
Qualifying: Evaluating a
prospects potential
Creative Selling Process
Approaching the Prospect
Contact
Rapport
Only one chance to
make a first impression
Creative Selling Process
Sales Presentation
Persuasive
communication
Attention
Interest
Desire
Tell the products story

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

Creative Selling Process
Closing the Sale
Closing signals
Trial close
Ask for the sale
Creative Selling Process
Following Up
Commitments met
Shipment
Performance
Reinforce relationship
Satisfied customers
rebuy & recommend
Creative Selling Process
Planning Organizing
Directing Controlling
Setting
objectives
Organizing
activities
Recruit,
select,
train,
develop,
manage, &
motivate
Motivate,
evaluate,
& control
Sales Management
Organizing Sales Activities
Sales Territory:
Geographic divisions
Customer types
Product lines
Selling task
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
New Account
#1
New Account
#2
Existing
Account #1
Existing
Account #2
New Accounts
Manager
Existing Accounts
Manager
Vice-President
Sales
Product Line
Sales Rep
Eastern Region
Sales Rep
Westn Region
Sales rep
Eastern Region
Sales Rep
Westn Region
Snack Foods
Sales Manager
Beverages
Sales Manager
Vice-President
Sales
Directing the Sales Force
Recruiting and selecting
Training & develop
Compensating
Motivating
Compensation Methods
Straight
salary or
wage
Salary plus
commission
Straight
commission
Commission
with draw
Quota-bonus
plan
Evaluation and Control
Required reports
Measurement against
plan or sales
standards
Expense control
Productivity
New account
development
Ethical Issues
Kickbacks, bribes and
gifts
Price discrimination
Cheating on expense
accounts
Misrepresentation


Distribution Channel Design
and Management
Distributions 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 its
own through the intermediaries:
Contacts,
Experience,
Specialization,
Scale of operation.
Purpose: match supply from producers to
demand from consumers.
Distribution
P
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DISTRIBUTION
Distribution Channel Functions
Ordering
Payments
Communication
Transfer
Negotiation
Financing
Risk Taking
Physical
Distribution
Information
Typical Channels of Distribution
ANUFACTURER ONSUMER
HOLESALER
ETAILER
GENT
Business-to-Business Channels
Direct
Wholesaler
Agent
Business-to-Business Channel Trends
Infomediaries & Vertical Exchange
Conventional Distribution Channel vs.
Vertical Marketing Systems
Vertical
marketing
channel
Manufacturer
Retailer
Conventional
marketing
channel
Consumer
Manufacturer
Consumer
Retailer
Wholesaler
W
h
o
l
e
s
a
l
e
r

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
Corporate systems - total ownership
Administered - strong leadership
Contractual - legal relationships
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
Intensive
Distribution
Exclusive
Distribution
Selective
Distribution

Distribution
Intensity

Choosing a Distribution System
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
Selective Distribution
Product is sold
in a limited
number of
outlets
Producer
Retailer Retailer Retailer
Retailer Retailer Retailer
Product is sold in
only one outlet in
a given area
Producer
Retailer
Exclusive Distribution
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
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
Distribution
Functions
Transportation
Rail, Water, Trucks,
Air, Pipeline,
Internet
Physical Distribution
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
Cooperation
Conflict
Power
Coercive
Expert
Legitimate
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
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
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
One thousand
retailers
OK
Difficult
Ethical, Political, &
Legal