Sales Management: An Introduction
Sales Management: An Introduction
Sales Management: An Introduction
Sales managers are responsible for organising the sales effort, both within and
outside their companies.
• Within the company the sales manager builds formal and informal
organisational structures that ensure effective communication not only
inside the sales department but ensures effective relation with other
units.
Personal Selling
Importance
• In the absence of the availability of all India media many companies find
it expedient to extensively use personal selling to achieve their
promotional objective
Qualitative:
Quantitative:
• Product Situation:
• Market Situation:
• Company Situations:
2. Company can not afford to have a large and regular advertising outlay.
Qualifying Prospects
MAN approach:
• Money- Does the prospect have the money or resources to purchase a
product or service? i.e Ability to Pay
• Authority-Does the prospect have the authority to make commitment?
• Need – Does the prospect need the product or service? Otherwise
Customer will refuse or dissatisfied with the purchase in post purchase
situation.
Preparation
It involves Two steps:
• Pre Approach: Collection of information about the prospects.
• Call Planning : It involves a specific planning sequence.
Presentation
The objective of Presentation is to explain how the product meets the
special needs of
the consumers. Types:
• Fully Automated – It is the most structured approach based on film or
slide presentation.
• Semi- Automated —Sales person reads from brochures and add
comments when necessary.
• Memorized – Here the sales person presents the prepared material
verbally and may initiate few changes.
• Organised – The most popular and the most effective sales presentation
is the organised presentation. Here sales person has complete flexibility
in verbal communication keeping in mind the company prepared outline
and checklist.
Presentation : Steps
• Approach
1. Introductory approach
2. Product approach
3. Consumer benefit approach
4. Referral approach
Handling Objections
All sales person confront sales resistance by a
prospect that postpone, hinder or prevent the
completion of sale.
• Timing: Find out the reason for delay and point out the advantage of
making decision immediately.
• Price: Point out the better quality and other advantages.
• Source: It results from negative feelings, which may be real or imagined,
that the prospect has about the product or company.
• Competition: When the present supplier is satisfactory, Prospects are
unwilling to change. Point out additional benefits the company provides.
Closing
It is the stage to ask for the order from the Prospect.
When to Close?
• Observing Buying Signals i.e Indication that the prospect is ready to buy:
° Verbal buying signal
° Body language, Facial Expressions and Physical Action of the prospect
How to Close?
• Action Close: Action is taken to complete the sale.
• Gift Close: An incentive is offered for immediate purchase.
• One more Yes Close:Restate the benefits in a series of questions that
may result in positive response by the prospect.
• Direct Close: Directly ask for a decision.
The virtual value chain, created by John Sviokla and Jeffrey Rayport, is a business model
describing the dissemination of value-generating information services throughout an
Extended Enterprise. This value chain begins with the content supplied by the provider,
which is then distributed and supported by the information infrastructure; thereupon the
context provider supplies actual customer interaction. It supports the physical value chain of
procurement, manufacturing, distribution and sales of traditional companies.
wheel of retailing
The lifecycle of retailers, moving from an entry position with low prices to gain market
share to eventually moving upscale with higher-quality products aimed at more affluent
consumers. Japanese automobile manufacturers moved along this cycle after entering
the U.S. market with inexpensive vehicles that captured market share and then
gradually moving upscale with higher-priced vehicles that offered higher margins to the
manufacturers.
Channels of Marketing
Depending on the number of intermediaries required at each level, the three major
choices of distribution available to producers are: intensive distribution, exclusive
distribution and selective distribution. Besides distribution of products, channel members
also participate in the distribution of services.
Marketing channels perform the function of facilitating the exchange process, alleviating
discrepancies, standardizing transactions, matching buyers and sellers, and providing
customer service.
Designing of the distribution channels deals with those decisions that are associated with
forming a new distribution channel or modifying an existing one. While designing a
channel, marketers need to take into consideration the utility that the channel needs to
serve. The four types of utility that marketing channels can serve include lot size utility,
convenience utility, selection utility and service utility. A firm’s selection of a specific
channel for distribution of its products or services depends on three criteria – economic,
control and adaptive. Management of marketing channels involves several issues such as
channel member selection, their training, motivation and evaluation, modifying channel
arrangement, and legal and ethical issues like dual distribution, exclusive dealing
agreement, refusal to deal, restricted sales territoriesand dealer’s rights.
Channel dynamics involves the study of the impact of environmental forces such as
economic, legal, political, social, technological and competitive forces on marketing
channels. In order to reduce costs, achieve economies of scale, stabilize supplies,
achieve coordination among themselves and overcome conflicts, the various channel
members need to integrate their functions under the directions of a channel leader,
either horizontally or vertically. This gives rise to the horizontal marketing system and
vertical marketing systems. A horizontal marketing system is the process of sharing
resources amongst two or more unrelated businesses at the same level of operations to
attain common benefits. The vertical marketing system (VMS) is a process in which
producers, wholesalers and retailers perform the marketing activities jointly. The various
types of vertical marketing systems are corporate, administered and contractual vertical
marketing system. Contractual vertical marketing systems are again of three types –
retailer-sponsored cooperative organizations, wholesaler sponsored voluntary
organizations and franchise organizations.
Multichannel marketing is where a single firm uses two or more marketing channels to
reach one or more market segments. This process is also known as ‘dual distribution.’
Although additional channels increase the market coverage of the firm, they also result
in greater conflict between the channel members, especially if the members are vying for
the same market segments.
Conflicts arise between marketing channel members when one member of the marketing
channel thinks that another member is preventing or impeding it from achieving its
marketing goals. Channel conflicts can be of three types – vertical, horizontal, and
multichannel conflicts.
Conflicts may arise due to various reasons such as a difference in the aim of producer
and channel members, lack of clearly defined roles and responsibilities and both
manufacturer and channel members fighting for the same market.
The various methods for solving and managing conflicts include negotiation, problem-
solving strategies, persuasive mechanisms, legalistic strategies, and climate
management. Obtaining the cooperation and coordination of the channel members helps
firms leverage their limited resources to achieve organizational objectives through the
combined efforts of the channel members.
Logistics management is one of the major concerns of business firms today. Logistics is
the process of delivering products and services to the desired locations at the required
time. Managers across the globe are developing strategies to leverage the benefits of
effective logistics management. Effective logistics management helps organizations
ensure superior customer service by meeting customer expectations of delivery of
consignment on time with maximum accuracy, and without any damage to the products.
All the business transactions that take place with the intermediaries are called wholesale
transactions. Classification of wholesalers and retailers is done on the basis of who the
purchasers are and not on the amount of purchase that has been made. A simple
method of classifying is, if more than 50 percent of the total sales are made to other
intermediaries, then the seller is termed as a wholesaler, and if more than 50 percent of
the sales are made to the final customers, then the intermediary is called a retailer.
Normally, there are two types of wholesalers, merchant wholesalers and functional
wholesalers. The different market decisions that are to be taken in the wholesaling
process pertain to the target market, price, promotion, and place decisions.
Retailing
Retailing involves selling of products/services to customers for their non-commercial
individual or family use. Normally, retailing is the last stage of the distribution process.
The Indian retail market has seen immense transformation in the post-liberalization era.
With the vast increase in the availability of product varieties and the purchasing power of
consumers, companies achieving economies of scale with superior supply chain
management and a world-class customer service, the Indian retail market is witnessing
tremendous growth.
However, in India, the government is still protecting the retail sector and foreign direct
investment is not allowed. However, once this sector opens up to foreign competition
like other sectors, it will witness substantial changes and the Indian consumer will be the
benefited the most. Generally retailers are classified based on ownership, the extent of
product lines handled, the service vs. goods retail strategy mix, and non-store based
retailing.
Channel Power
Strong channel partners often wield what’s called channel power and are referred to as
channel leaders, or channel captains. In the past, big manufacturers like Procter & Gamble
and Dell were often channel captains. But that is changing. More often today, big retailers
like Walmart and Target are commanding more channel power. They have millions of
customers and are bombarded with products wholesalers and manufacturers want them to
sell. As a result, these retailers increasingly are able to call the shots. In other words, they get
what they want.
Category killers are in a similar position. Consumers like you are gaining marketing channel
power, too. Regardless of what one manufacturer produces or what a local retailer has
available, you can use the Internet to find whatever product you want at the best price
available and have it delivered when, where, and how you want.
Channel Conflict
A dispute among channel members is called a channel conflict. Channel conflicts are
common. Part of the reason for this is that each channel member has its own goals, which are
unlike those of any other channel member. The relationship among them is not unlike the
relationship between you and your boss (assuming you have a job). Both of you want to serve
your organization’s customers well. However, your goals are different. Your boss might want
you to work on the weekend, but you might not want to because you need to study for a
Monday test.
All channel members want to have low inventory levels but immediate access to more
products. Who should bear the cost of holding the inventory? What if consumers don’t
purchase the products? Can they be returned to other channel members, or is the organization
in possession of the products responsible for disposing of them? Channel members try to
spell out details such as these in their contracts.
No matter how “airtight” their contracts are, there will still be points of contention among
channel members. Channel members are constantly asking their partners, “What have you
done (or not done) for me lately?” Wholesalers and retailers frequently lament that the
manufacturers they work with aren’t doing more to promote their products—for example,
distributing coupons for them, running TV ads, and so forth—so they will move off store
shelves more quickly. Meanwhile, manufacturers want to know why wholesalers aren’t
selling their products faster and why retailers are placing them at the bottom of shelves where
they are hard to see. Apple opened its own retail stores around the country, in part because it
didn’t like how its products were being displayed and sold in other companies’ stores.
Channel conflicts can also occur when manufacturers sell their products online. When they
do, wholesalers and retailers often feel like they are competing for the same customers when
they shouldn’t have to. Likewise, manufacturers often feel slighted when retailers dedicate
more shelf space to their own store brands. Store brands are products retailers produce
themselves or pay manufacturers to produce for them. Dr. Thunder is Walmart’s store-brand
equivalent of Dr. Pepper, for example. Because a retailer doesn’t have to promote its store
brands to get them on its own shelves like a “regular” manufacturer would, store brands are
often priced more cheaply. And some retailers sell their store brands to other retailers,
creating competition for manufacturers.
The conflicts we’ve described so far are examples of vertical conflict. A vertical conflict is
conflict that occurs between two different types of members in a channel—say a
manufacturer, an agent, a wholesaler, or a retailer. By contrast, a horizontal conflict is
conflict that occurs between organizations of the same type—say, two manufacturers that
each want a powerful wholesaler to carry only its products.
Horizontal conflict can be healthy because it’s competition driven. But it can create
problems, too. In 2005, Walmart experienced a horizontal conflict among its landline
telephone suppliers. The suppliers were in the middle of a price war and cutting the prices to
all the retail stores they sold to. Walmart wasn’t selling any additional phones due to the price
cuts. It was just selling them for less and making less of a profit on them.
Channel leaders like Walmart usually have a great deal of say when it comes to how channel
conflicts are handled, which is to say that they usually get what they want. But even the most
powerful channel leaders strive for cooperation. A manufacturer with channel power still
needs good retailers to sell its products; a retailer with channel power still needs good
suppliers from which to buy products. One member of a channel can’t squeeze all the profits
out of the other channel members and still hope to function well. Moreover, because each of
the channel partners is responsible for promoting a product through its channel, to some
extent they are all in the same boat. Each one of them has a vested interest in promoting the
product, and the success or failure of any one of them can affect that of the others.
Flash back to Walmart and how it managed to solve the conflict among its telephone
suppliers: Because the different brands of landline telephones were so similar, Walmart
decided it could consolidate and use fewer suppliers. It then divided its phone products into
market segments—inexpensive phones with basic functions, midpriced phones with more
features, and high-priced phones with many features. The suppliers chosen were asked to
provide products for one of the three segments. This gave Walmart’s customers the variety
they sought. And because the suppliers selected were able to sell more phones and compete
for different types of customers, they stopped undercutting each other’s prices.[142]
Achieving Channel Cooperation Ethically
What if you’re not Walmart or a channel member with a great deal of power?
How do you build relationships with channel partners and get them to cooperate
with you? One way is by emphasizing the benefits of working with your firm.
For example, if you are a seller whose product and brand name are in demand,
you want to point out how being one of its “authorized sellers” can boost a
retailer’s store traffic and revenues.
Sometimes the shoe is on the other foot—retailers have to convince the makers
of products to do business with them instead of the other way around.
Beauty.com, an online retailer, is an example. Selling perfumes and cosmetics
online can be difficult because people want to be able to smell and feel the
products like they can at a department store. But Beauty.com has been able to
convince the makers of more than two hundred upscale cosmetic brands that
selling their products on its Web site is a great deal and can increase their
revenues. To reassure sellers that shoppers can get personalized service,
Beauty.com offers the site’s visitors free samples of products and the ability to
chat live online with skin and hair care consultants.
Franchises are another type of vertical marketing system. They are used not
only to lessen channel conflicts but also to penetrate markets. Recall that a
franchise gives a person or group the right to market a company’s goods or
services within a certain territory or location.[147] McDonald’s sells meat, bread,
ice cream, and other products to its franchises, along with the right to own and
operate the stores. And each of the owners of the stores signs a contract with
McDonald’s agreeing to do business in a certain way.