Aaa - SDM

SALES MANAGEMENT
What is sales management?
Planning, organizing, leading and controlling of personal contact programs designed to achieve the sales
and profit objectives of the firm.
Process: Formulation of a sales program – Implementation – Evaluation and control.
The role of a sales manager
People Manager Customer Manager Business Manager
•Recruitment & Selection •Sales process •Connect to HQ & Field

•Retention •Servicing Customers •Alignment of sales team with
•Motivation •Leading in selling to large corporate goals
•Leadership customers •Implentation of company
•Training strategies
•Change Management •Allocation of resources
•Compensation •Compensation
•Expenses
•Company Culture
Types of CUSTOMERS and ACCOUNT RELATIONSHIPS in sales management
Intrinsic Value Transactional

Customers Relationship
Extrinsic
Consultative
Value
Relationship
Customers
Strategic
Enterprise
Value
Relationship
Customers
(a) Intrinsic value customers know the product and know how to use it. They don’t need or want any
additional help from the sales force. For them all value is intrinsic in the product - value starts and ends
with the product. Transactional selling offers the best set of selling strategies and skills for intrinsic
value customers who treat suppliers as a commodity and are mainly interested in price and
convenience.
(b) For extrinsic value customers, value is not limited to the product itself but in how the product is
used. They are looking for solutions and applications. Extrinsic value customers believe their supplier’s
sales force can be valuable if it fully understands their needs. Consultative selling fits the extrinsic value
buyer who wants more than just the product. As the name suggests, consultative selling involves giving
advice to buyers ‐‐‐ for example, helping customers understand their problems and issues
(c) Strategic value customers demand much more than advice from the supplier sales force. They want
to leverage the core competencies of the supplier itself. Strategic value customers are looking for a
partnership of equals in which the two parties join forces to develop the customer’s product. Enterprise
selling is required for strategic value customers. In enterprise selling, both the product and the sales
force are secondary. The entire supplier organization, usually through cross‐ functional teams, is
involved in contributing to the customer’s success.
EFFICIENCY V/S EFFECTIVENESS

Sales efficiency is about the prudent allocation of sales resources. These resources could be anything
from a financial budget to a computer network, but without question the most precious resource in any
sales team is time. Achieving sales efficiency is principally the challenge of maximizing the amount of
productive time that your sales team has in a day. Sample metrics of efficiency might be ‘number of
sales calls per rep’ or ‘frequency of customer contact.’
Sales effectiveness is not about how you allocate your sales force’s resources — it’s about how potently
you utilize them to achieve your goals. If you can find a way to squeeze in 20 additional prospecting
phone calls for your reps each week, then you’ve accomplished the aforementioned feat of
improved efficiency. How skilled your reps are at executing those phone calls is a sure measure of
their effectiveness. A more effective salesperson might produce ten qualified opportunities from those
20 calls, while a less effective seller might only create five.
Efficiency is about knocking on as many doors as possible; Effectiveness is about what you do when
the doors open
COMPARING GO-TO-MARKET ALTERNATIVES
Mass
Advertising
E Direct Mail
F
F
I Internet
C
I Telesales
E
N Sales Force
C
Y
Specializ
ed Sales
Force
EFFECTIVENESS
THE 8 STEP SELLING PROCESS
Coordinating Nurturing
Opening the Making the
resources & the account
process presentation
personnel relationship
Qualifying Developin Organising

Closing
the g the sales the
the sale
prospect strategy justification
Market Potential > Sales Potential > Sales Forecast

Market Potential is the highest possible expected industry sales of a good or service in a specified
market segment for a given time period.
Sales Potential refers to an individual firm’s market share of the market potential, where market share
is defined as the percentage of market controlled by a particular company or product.
Sales Forecast is the sales estimate the company actually expects to obtain, based on the market
conditions, company resources and the firm’s marketing plan. It is less than sales potential since it is
based on a realistic set of circumstances.
Sales Forecasting Procedures

There are 3 steps in sales forecasting process:
1) Preparing a forecast for general economic conditions

Measuring GDP, stock market fluctuations, personal income, level of employment, CPI etc.
2) Preparing a forecast of industry sales

Firms either rely on industry estimates (trade associations and government sources) or more
sophisticated quantitative techniques
3) Preparing a forecast of the product or company sales

Using qualitative and/or quantitative methods
TYPE PRODUCT GENERALIST CUSTOMER FUNCTIONAL
SPECIALIST SPECIALIST
Definition Area of Area of Area of Area of

responsibility responsibility responsibility responsibility
defined by defined by defined by defined by sales
product/product assigned territory customer process: inside
group groupings sales, account
managers, product
specialists, etc.
Advantages Product knowledge, Low cost, no Deeper customer Effectiveness in

control over geographic knowledge, performing selling
product emphasis overlap, no control over activities
customer overlap customer
emphasis
Disadvantages Low geographic Limited product High cost, less Coordination,
efficiency, customer line and customer product Geographic and
and geographic knowledge, lack of knowledge, more customer
duplication management geographic duplication
control over duplication,
product/customer difficult
emphasis coordination with
product managers.
TYPES OF BUYING CENTRES
I Economic Buying Influence
Role: Asks ‘why’, gives final approval
Characteristics: Access to money, can release money, veto power
Focus: Total organization, Bottom line, The future
II User Buying Influence
Role: To decide on how a purchase will affect job performance
Characteristics: Implementation oriented, use or supervise use of product or service
Focus: Tactical, the job to be performed
III Technical Buying Influence
Role: To eliminate alternatives, to recommend
Characteristics: Focuses on quantifiable aspects of product/service, serves as the gatekeeper, can only
say ‘no’ not ‘yes’
Focus: Product specifications, Asks ‘what’ not ‘why’

IV Advocate
Role: Helps guide the sale
Characteristics: Maybe inside or outside of the buying organization, furnishes and interprets information
Focus: Success
TYPES OF PURCHASES IN AN ORGANIZATION

Straight Rebuy Modified Rebuy New Buy
Product has been previously Product has NOT been
Product has been previously previously purchased
purchased
purchased
Changes are required Extensive processes of
No change required selection are involved
Evaluation of options is
Purpose is to replenish Value can be added by
extensive
inventory handling the stages of
Value can be added by Need Identification,
Value can be added by making
presenting options well Evaluation of Options,
the rebuy process easier and
hassle-free Decision Makers: Decison Making.
Multifunctional group Decision Makers: Multifunctional
Decision Makers: Purchasing group
Dept
SALES FORCE SIZING METHODS

1) Breakdown Method:
Number of sales personnel needed = Sales Volume/Productivity
2) Workload Method:
Number of sales personnel needed = (Number of accounts*Frequency of sales
calls*Length of a sales call) / Selling time available for one sales person.
3) Incremental Method:
This method suggests that sales representatives should be added as long as the
incremental profit produced by their addition exceeds the incremental cost.
4) Chain Ratio Method:
Breaking down a problem into component parts and building it up to achieve the
objectives.
Sales Force Training and Consulting
Evolution of Sales What is sales insight?
• Technology changing the way organizations buy.

• With the proliferation of information and advice on the
internet, a client is already 60% of the way through their
buying decision by the time they reach out to a
salesperson.
• As a result, they don't need information from a
salesperson, they need insight.
Product Consultative Solutions Sales • According to a recent study, 53% of client loyalty is a
Pusher Order Taker Expert Insight function of the salesperson's ability to deliver insight that
challenges the way the client thinks about the world.
The focus areas for training are: The training need is at the:
Induction, Funnel Management, Account

Management, Conversation Ratio, Operational
Forecasting Efficiency, Communication Level
Individual
Skills, Channel Management, Meeting Organizatio
Level
Plans, Rewards and Recognition and n Level
Presentation Skills
Territory & Time Management

Territory - Grouping of customers and prospects assigned to an individual salesperson
Entities in a geographic area that are assigned to an individual salesperson:
• Customers
• Distribution outlets
Reasons for Establishing Sales Territories:
• Better coverage - salespeople cannot cherry pick; territory assignments constrain salespeople to
work with less profitable customers or prospects as well as the most desirable accounts.
• Controlling selling costs - assigning responsibility to a single salesperson ensures there are no
overlaps; customers and prospects are called upon by only one salesperson.
• Improved customer service - assigning responsibility to a single salesperson helps to ensure that
all customers and prospects receive adequate servicing
• More accurate evaluation of performance - if territories are relatively equal with regard to
workload and potential, then salesperson performance can be compared on an equal basis; if
territories are unequal in a known way, then adjustments can be made
• Contributes to sales force morale - effort and reward are correlated, convenient to cover and
reasonable work load
• To aid in coordination of personal selling and advertising efforts - POP and Dealer briefings can
be coordinated prior to launch of new products
When Not To Establish Sales Territories:
• Sales coverage is far below sales potential e.g., a new company wants to cherry pick for the
most profitable prospects first
• The sales force is highly specialized e.g., when the salesforce is organized along the lines of
product specialty rather than along the lines of customer location
• Sales are made on the basis of personal contacts and by referrals
Territory Decisions:
• Number and type of Salespeople to cover accts
• Location and boundaries of territories
• Assigning Salespeople
Territory Design: Reasons for Realignment
• A change in sales force size • Demographic shifts
• A change in sales force structure • New Products
• Mergers and acquisitions • Need to shake things up
• Shifts in market opportunities
Benefits of Good Territory Alignment
• Rewards and Morale - Reducing disparities in earnings by avoiding incentives for territories
Study incentive payouts of salespeople and assess whether ability alone can cause huge
differentials. Do not reward the territory, reward the salesperson
• Reduction of Travel - Time Reduction in costs and availability of time Increase in morale due to
more time at home Remote areas covered by other channels
Territory Alignment Process
Step 1: Alignment criteria
• such as "balance workload" and
• "minimize disruption" are selected
Alignment Criteria
• balance workload across territories so that sales force coverage of customers and prospects is
optimized,
• balance potential across territories to allow fair salesperson evaluation and rewards,
• minimize disruption of relationships to facilitate a smooth transition to the new alignment,
• build geographically compact, workable territories to minimize travel time and travel costs, and
to improve coverage
Step 2: Database development
• Includes customer and prospect locations, travel time data, and
• Alignment attributes such as market potential, sales, and workload.
Step 3: Sales Territory centers determination
Optimal sales territory centers (or salesperson locations) are determined centrally, based on business
needs.
Step 4: Territory centers are audited and finalized by the national arid regional managers
At the end of this step, management can start hiring salespeople (if an expansion is planned), decide who
stays with the sales force (if a downsizing is anticipated), or decide who is relocated (if several sales
forces merge and are integrated)
Step 5: Regional alignments are developed centrally, based on well-defined, objective criteria.
Step 6: The regional alignments are audited and finalized, again by the national and regional managers.
Step 7: Optimal territory alignments are developed centrally.
Step 8: Alignments are audited and finalized with the help of first-line sales managers (managers who
manage the salespeople directly; they usually report to the regional managers.
Sales Targets (Quotas)

• Goals assigned to salespeople
• Apply to specific periods and may be expressed in rupees or physical units
• Tool for sales managers’ planning and controlling field selling activities and results
• Benchmark for evaluating sales effectiveness
• Motivate sales people
Using Goals to Guide and Manage Performance of a Sales Force
Motivate Sales •Achievable goals can help motivate the sales force
•Goals serve as benchmarks to help gauge how repsare doing
Force Focus Selling •Goals help direct efforts toward certain sales activities
Efforts •Example: growing markets
•Ensure the effort put into selling products earns good return
Achieve ROI
•When sales are short of expectations, may need to revise marketing mix variables
Comparing results helps determine what factors cause sales to be lower or higher in one area than
Compare Results another e.g., competition, customer demographics , etc.
• Example: competition, customer demographics, etc.
Characteristics of a Good Target
Attainable Easy to understand Complete Timely
Different Types of Goals or Quotas
Input-Based Goals Output-Based Goals

(Activity-Based Quotas) (Outcome-Based Quotas)
•Relate to the observable •Selling results a rep is expected to
sellingefforts a salesperson must achieve
make •• Number of orders received
•• Number of sales calls •• Revenue generated
•• Number of presentations •• Sales volumes
•• Number of proposals •• Profits
•• Number of new clients contacted
•Ensure the reps are performing
core selling activities
Sales Volume Targets
• Often based on past sales.

• Related directly to market potential, thus credible and easily understood.
• May be expressed in Rs., physical units , or points.
Activity Targets
• Reflect territorial conditions
• Require a detailed analysis of the work required for effective territorial coverage
• Customers influence activity quotas through:
o Account and order size
o Purchasing patterns
o Support required for satisfaction
Financial Targets
• Reflect the financial goals of the firm
o Sales volume
o Gross margin
o Intended profit margin
o Additional sales potential
o Cost of support and service
Compensating Salespeople
Why the incentive culture?

• Importance of the sales force. Sales force goals are actually company goals in terms of volume
and profits.
• Sales force goals are measurable - hence good performers can be identified.
• Sales force requires higher motivation than other functions in the organisation.
• Variable pay helps ensure that salespeople (who are largely unsupervised) produce results.
• Variable pay acknowledges a salesperson's success.
Compensating Salespeople
Components Needs
SALARY
• Motivate effort on non-selling activities
• Adjust for differences in territory potential
• Reward experience and competence
COMMISSIONS
• Motivate a high level of selling effort
• Encourage sales success
INCENTIVE PAYMENTS
• Direct effort toward strategic objectives
• Provide additional rewards for top (Bonus) performers
• Encourage sales success
SALES CONTESTS
• Stimulate additional effort targeted at specific short- term
objectives
PERSONAL BENEFITS
• Satisfy salespeople's security needs
• Match competitive offers
Formulation of a Compensation plan - Key Considerations
• Level of pay - how do labour market forces, company profitability, and job - related factors
affect compensation levels?
• Salary versus incentive - What factors determine the right mix?
• Performance measures - Should salespeople be paid on the basis of results or activity? Should
they be paid when the order is taken or when money is collected? Should they be paid for high
customer satisfaction?
• Performance – pay out relationships - How should payment vary with measured performance?
Should the plan include goals? Bonuses? Commissions? Should the plan be capped? Should the
plan use multiple measures? Should it be based on individual or team performance? How
frequently should payment occur?
Sales Force Analytics

Five tests for determining whether you have the right sales force size?
1. Customer Test
2. Sales Force Morale Test
3. Selling Activities Test
4. Competitive Position Test
5. Financial Test
Sales and Distribution Management
About the Tutorial

Sales management is an art where the sales executive or the salesperson helps the
organization or individual to achieve its objective or buy a product with their skills.
This is a brief introductory tutorial that explains the functions in sales and distribution
management. This tutorial also throws light on the strategies applied in distributing tasks
to the sales personnel and their performance.
Audience
This tutorial will be useful for those who wish to understand sales and distribution
management as an art to increase customer demand for a particular product. This
tutorial will help those who wish to apply sales techniques and manage a firm’s sales
operation.
Prerequisites
To understand this tutorial, it is advisable to have a foundation level knowledge of
management. However, general students who wish to get a brief overview of sales and
distribution management may find this tutorial quite useful.
Disclaimer & Copyright

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Table of Contents
About the Tutorial .................................................................................................................................. i
Audience ................................................................................................................................................ i
Prerequisites .......................................................................................................................................... i
Disclaimer & Copyright ........................................................................................................................... i
Table of Contents .................................................................................................................................. ii
1. SDM — INTRODUCTION ..................................................................................................... 1
Skills of a Sales Executive....................................................................................................................... 2
Importance of Sales Management ......................................................................................................... 3
Objective of Sales Management ............................................................................................................ 4
2. SDM — SALES MANAGEMENT STEPS ................................................................................. 5
Set Objective ......................................................................................................................................... 5
Develop Sales Strategy .......................................................................................................................... 5
Develop Tactics...................................................................................................................................... 6
3. SDM — PROCESS ............................................................................................................... 7
Planning ................................................................................................................................................ 7
Staffing .................................................................................................................................................. 8
Training ................................................................................................................................................. 9
Leading .................................................................................................................................................. 9
Controlling ........................................................................................................................................... 10
Performance ........................................................................................................................................ 12
4. SDM — SALES METHODS ................................................................................................. 13
Electronic Sales .................................................................................................................................... 16
Request for Proposal ........................................................................................................................... 17
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5. SDM — TECHNIQUES OF SALES........................................................................................ 18
Conceptual Selling ............................................................................................................................... 18
Sales Negotiation ................................................................................................................................ 19
Sales Negotiation Strategies ................................................................................................................ 20
Negotiation Outcomes ........................................................................................................................ 20
Reverse Selling .................................................................................................................................... 21
Take away ........................................................................................................................................... 22
Sales Outsourcing ................................................................................................................................ 22
Advantages of Sales Outsourcing ......................................................................................................... 23
6. SDM — SALES ORGANIZATION ......................................................................................... 24
Characteristics of a Sales Organization ................................................................................................ 24
Significance of Sales Organization ....................................................................................................... 25
Types of Sales Organization ................................................................................................................. 25
Functional Type ................................................................................................................................... 26
Product Type ....................................................................................................................................... 27
Consumer Specialization Type ............................................................................................................. 28
Area Type ............................................................................................................................................ 30
7. SDM — SALES QUOTA ...................................................................................................... 32
Objectives............................................................................................................................................ 32
Types of Sales Quota ........................................................................................................................... 32
Methods for Setting Sales Quota ......................................................................................................... 33
8. SDM — SALES TERRITORY ................................................................................................ 35
Reasons for Establishing Territories ..................................................................................................... 35
Procedure for Designing ...................................................................................................................... 37
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Select Control Point ............................................................................................................................. 37
Making an Account Analysis ................................................................................................................ 38
Developing a Salesperson Workload Analysis ...................................................................................... 38
Combining Geographical Control Units into Sales Territories............................................................... 39
Territory Shape .................................................................................................................................... 39
Assigning Sales Personnel to Territories .............................................................................................. 40
9. SDM — PERSONAL SELLING ............................................................................................. 41
Objectives of Personal Selling .............................................................................................................. 41
Relevant Situation for Personal Selling ................................................................................................ 42
Diversity of Selling Situation ................................................................................................................ 43
10. SDM — STEPS IN PERSONAL SELLING............................................................................... 46
Prospecting.......................................................................................................................................... 46
Train/Educate the Prospects................................................................................................................ 47
Preparation for the Sale of Product ..................................................................................................... 47
Presentation ........................................................................................................................................ 48
Handling Objections ............................................................................................................................ 49
Closing the Sale ................................................................................................................................... 50
Follow-up ............................................................................................................................................ 51
11. SDM — SALES MANAGEMENT BUDGET ........................................................................... 52
Objective of Sales Budgeting ............................................................................................................... 52
Methods of Sales Budgeting ................................................................................................................ 52
Preparation of Sales Budget ................................................................................................................ 53
Communicating Overall Objectives ...................................................................................................... 54
Selling the Sales Budget to Top Management ...................................................................................... 54
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12. SDM — MARKETING CHANNEL ........................................................................................ 55
Wholesale ........................................................................................................................................... 55
Retail ................................................................................................................................................... 56
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1. SDM — Introduction Sales and Distribution Management
Sales refers to the exchange of goods/ commodities against money or service. It is the
only revenue generating function in an organization. It has formed an important part in
business throughout history. Even prior to the introduction of money, people used to
exchange goods in order to fulfill the needs, which is known as the barter system.
Example of Barter System

A has 100 kg of rice and B has 50 kg of wheat. Here, A needs wheat and B needs rice.
They agree to exchange 50 kg of rice and 25 kg of wheat upon mutual understanding.
Conditions of Sales
 There are two parties involved in the transaction, the seller and the buyer.
 The seller is the provider of goods or services and the buyer is the purchaser in
exchange of money.
The seller of goods has to transfer the title of ownership of the item to the buyer upon
an agreed price. A person who sells goods or services on behalf of the seller is known as
the salesman/woman.
Distribution is the process of making a product or service available for use or

consumption to the end consumer or business.
Distribution could be of the following two types:
Direct Distribution
It can be defined as expanding or moving from one place to another without changing
direction or stopping. For example, Bata has no distribution channel; it sells its products
directly to the end consumers.
Indirect Distribution
It can be defined as means that are not directly caused by or resulting from something.
For example, LG sells its product from the factory to the dealers, and it reaches the
consumers through dealers.
The following image shows the end-products stored at a warehouse, ready for shipment
to the dealers/consumers.
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Sales management in an organization is a business discipline, which focuses on the

practical application of sales techniques and the management of a firm’s sales operation.
It is done in an efficient and effective manner through planning, staffing, training,
leading and controlling organizational resources. Sales management is done by Sales
Managers and they are responsible for generating sales, profits and customer
satisfaction.
Skills of a Sales Executive

Sales management is an art where the sales executive or the salesperson helps the
organization or individual to achieve its objective or buy a product with their skills.
The following are some skills that a sales executive needs to possess:
Conceptual Skills
Conceptual skill includes the formulation of ideas. Managers understand abstract
relationships, improve ideas, and solve issues creatively. The sales executive should be
well versed with the concept of the product he/she is selling.
People Skills
People skills involve the ability to interact effectively with people in a friendly way,
especially in business. The term ‘people skills’ involves both psychological skills and
social skills, but they are less inclusive than life skills.
Every person has a different mindset, so a sales executive should know how to present
the product depending on the customer’s mindset.
Technical Skills
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Technical skills are the abilities captured through learning and practice. They are often
job or task specific. In simple words, a specific skill set or proficiency is required to
perform a specific job or task. As a part of conceptual skills, a sales executive should
also have a good grasp on the technical skills of the product.
Decision Skills
Decision skills are the most important because to tackle the questions from consumers,
sales executive should always have the knowledge of competitors’ products and take a
wise decision.
Monitoring Performance
Sales executives should monitor the performance of the employees and report to higher
management to improve the performance and fill the loop holes.
Thus, conceptual skills deal with ideas, technical skills deal with things, people skills
concern individuals, technical skills are concerned with product-specific skills, and
decision skills relate to decision-making.
Importance of Sales Management

Sales management is very crucial for any organization to achieve its targets. In order to
increase customer demand for a particular product, we need management of sales.
The following points need to be considered for sales management in an organization:
 The first and foremost importance of sales management is that it facilitates the
sale of a product at a price, which realizes profits and helps in generating revenue
to the company.
 It helps to achieve organizational goals and objectives by focusing on the aim and
planning a strategy regarding achievement of the goal within a timeframe.
 Sales team monitors the customer preference, government policy, competitor

situation, etc., to make the required changes accordingly and manage sales.
 By monitoring the customer preference, the salesperson develops a positive

relationship with the customer, which helps to retain the customer for a long
period of time.
 Both the buyers and sellers have the same type of relationship, which is based on
exchange of goods, services and money. This helps in attaining customer
satisfaction.
Sales Management may differ from one organization to the other, but overall, we can
conclude that sales management is very important for an organization for achieving its
short- and long-term goals.
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Objective of Sales Management

Every organization has an objective before initializing functions. We need to understand
the goal of managing sales. Here we are discussing Sales Management in terms of its
objectives.
Sales Volume
It is the capacity or the number of items sold or services sold in the normal operations of
a company in a specified period. The foremost objective of sales management is to
increase sales volume to generate revenue.
Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue
generating department. It can be calculated as the percentage or ratio of gain in total
turnover.
Continuing Growth
One of the main objectives of Sales Management is to retain consumers to continue
growth of the organization. There should be regular expansion of sales and demand for
an item in the market with new advanced formulation.
These are the major objectives a sales executive has to focus on in sales management.
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2. SDM — Sales Management Steps Sales and Distribution Management
Companies use sales strategies and tactics in order to make a consumer buy their
products or services. Before we processed further, we should know the meaning of sales
strategies and tactics. Although they go hand in hand, they are distinct.
Set Objective
The very first step in sales management is setting goals and objectives. The senior
management of a firm needs to sit together and reach a mutual decision regarding what
the vision and resolution of the firm is.
This may sound quite easy but setting objective acts as a framework for designing a
company. If efficient decisions are made and objectives are set according to the
company’s potential and the market demand, the company progresses wonderfully.
However, if the objectives are poorly set, then the company might not prosper.
Develop Sales Strategy

After the objectives are set for the company to achieve, a strategy needs to be designed.
Sales strategy can be defined as how a company markets or wants to sell its products or
services. It can be a concept of how the company meets the desired objectives and
marketing goals; it also clarifies what the sales executives do.
Strategy includes various components. following are a few of the components:
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 Knowledge of the company’s brand history and consumer market
 The way marketing is going to influence overall business
 Competitors’ performance
 Pros and cons of the plan
Develop Tactics
A strategy explains the purpose of the company whereas tactics explain the process to
move forward and implement the plan. Sales strategy is important as compared to the
individual tactics. But after the strategy is designed, we need to develop tactics to follow
the strategy.
Sales tactics can be defined as the action taken by the company to impose its sales
strategy to bring it to life. There are different modes in which the company delivers the
message to the consumers such as websites, brochures, advertisements in social media,
etc.
An investor or lender will invest in the company if they know about the objective and the
strategy of the company; else, it becomes difficult for the company and the lenders to
make or justify a decision of whether to invest in the company.
The company has to know that investment by lenders is very much required for the
marketing campaign. If the tactics are excellent but the strategies are not defined in a
proper manner or defined poorly, it does not help the company to grow.
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3. SDM — Process Sales and Distribution Management
Sales management in an organization is a business discipline, which focuses on the

practical application of sales techniques and the management of a firm’s sales operation.
It is done in an efficient and effective manner through planning, staffing, training,

leading and controlling organizational resources. Now we will explain each of these
processes.
Planning
Planning can be defined as the process of decision-making in a systematic manner
regarding the goals and the objectives of an organization. In short, it is a process an
individual or group will undertake in the future and the resources required for attaining
them.
Sales planning includes strategy, setting profit-based sales targets, quotas, sales
forecasting, demand management and the screening, writing and execution of a sales
plan.
A sales plan is a strategic document that outlines the business targets, resources and
sales activities. It basically follows the lead of the marketing plan, the strategic plan and
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the business plan with more precise detailing on how the goals and objectives can be
achieved through the actual sale of products and services.
Staffing
Staffing is the process of capturing, deploying, and retaining a workforce of optimal
quantity and quality to create a positive impact on the firm’s effectiveness.
Staffing consists of the following three components:
 Acquisition: It involves human resource planning to select what the organization

requires in terms of the numbers of employees needed and their attributes such
as knowledge, skills and abilities, in order to effectively meet job requirements.
 Deployment: It includes decisions regarding how those recruited will be assigned

to specific roles according to the business demands. It also concerns the frequent
appointment to more advanced jobs through internal recruitment, promotion or
reorganization.
 Retention: It is concerned with the management of the outflow of employees

from an organization. It combines both managing voluntary practices like
resignation and controlling involuntary measures whereby employees are handled
out of the organization through redundancy programs or other types of dismissal.
Staffing is basically used in the sphere of employment. It is applicable to more than one
aspect of the working surrounding. Staffing is also used in a specific sense to refer to the
management of employee schedules.
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Training
The training program in sales management provides frontline sales managers with
proven skills, knowledge and tools they need to drive margin line performance.
This in-depth program involves self-assessments and covers the following four crucial
sales management abilities:
 Managing sales performance
 Sales coaching
 Recruiting
 Selecting sales "STARs"
 Sales leadership
After the sales personnel are recruited, the company ensures the training, i.e., off the
job and on job training related to the skills, knowledge and job culture, which helps to
meet the selling performance and goals.
Leading
Leading is done by the person who possesses the leadership quality, the ability to
motivate other people and get the work done. Leading is an effective sales management
force that invites the sales management executive to use practical tools and cutting-
edge concepts to create an effective sales management model.
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This model is derived after a thorough research and consulting experience through
cases, group discussions, problem-solving exercises, computer-aided workshops, and
communicative case presentations.
The managers need to explore various perspectives on what does and does not work,
and why. A leader also monitors the work and explains the pro and cons as well as the
ways to complete a task effectively and efficiently.
Controlling
The task assigned to the sales personnel is monitored to find out whether the
organization is achieving its target or the goals as per the planning. Controlling is a
process, which defines the scope of and leads the actual performance against the
planned goals of the organization.
Controlling dwells in verifying whether everything happens in conformity with the

plans adopted, instructions issued and principles authorized. Controlling assures that
there is effective and efficient utilization of organizational resources so as to achieve the
planned goals and objectives.
Controlling judges the deviation of actual performance from the standard

performance, notices the causes of such deviations and helps in taking corrective
actions.
The following figure depicts sales management with its functions and explains the
role of each function. All the roles are inter-related. An individual function cannot relate
to work without the help from other.
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Resources
Resources are one of the important parts of sales management, as, without resources,
the planned process cannot be implemented. Resources include the following:
Human Resource
Human resources can be defined as that section of a business or organization that deals
with the hiring, administration, and training of staff. In sales management, we can say it
is the salesperson responsible for selling/marketing of products or services.
Financial Resource
Financial resource is the capital available to a business for investing in the form of cash,
liquid securities and credit lines. Before going into business, a businessman needs to
secure sufficient financial resources.
This is required in order to be able to function efficiently and sufficiently well to promote
success. It includes the finance that the company needs to perform the activities like
campaign, advertisement etc.
Materials
They are assets in the form of material possessions. Here, by assets, we mean anything
of material value or usefulness that is owned by an individual or a company. It includes
the source from where the raw material could be procured in low cost.
Technology
It is the application of science, especially to industrial or commercial goals and
objectives. it also includes the scientific technique and material used to achieve a
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commercial or industrial objective as well as the machinery and the techniques that the
organization uses for the end product.
It will now be clear why resources are important in managing sales.
Performance
Performance is the completion of a given task measured against known preset standards
of accuracy, completeness, cost, and speed. In a contract, performance is assumed to be
the fulfillment of accountability in a manner that releases the performer from all
liabilities under the contract.
The last function is to review the performance. In this function, the leader reviews the
past performance and advises the Sales Personnel regarding the improvements required.
It also involves checking that all the functions are working in a proper way and there is
no deviation in achieving the goals.
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4. SDM — Sales Methods Sales and Distribution Management
Sales method can be explained as one of several techniques used to recognize revenue
specifically when revenue and expense are recognized at the time of cash collection
rather than at the time of sale.
Thus, we can say that Sales Methods are the different ways to sell the product or
service. The Sales Personnel help to sell the end products to the consumer. Some sales
methods are given below.
Direct Sales
Direct sale is the sale of good/services involving person contact. It can be defined as the
most important method that is used, as most of the consumers prefer to purchase goods
through a direct contact with the seller, during which they understand the features and
get to know about the needs and benefits.
The above illustration depicts the seller in the middle as A. Buyers are seen reaching out
to the seller. It is an example of direct sales where the buyers (in green) are
approaching the seller in orange.
Example: Boeing airlines sells it air buses directly to the consumer with no intermediary
involved.
Pro forma Sales

The term pro forma is a Latin word, which means, "as a matter of form" or "for the
sake of form". It is commonly used to describe a practice or document that is provided
as a courtesy and that satisfies limited requirements, conforms to a norm or doctrine,
tends to be performed perfunctorily and/or is considered a formality.
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Pro forma financial statements are fashioned to reflect a proposed change, like a merger
or acquisition or to emphasize certain figures when a company issues an earnings
announcement to the public.
It can be termed as the practice or document that is provided as a courtesy or satisfies

the minimum requirements which contain the details of the buyer and the receiver. It
can also be termed as an invoice of the product.
Agency-based Sales
In agency-based sales, the organization hires an agent on contract basis. That sales
agent acquires the right to negotiate the sale of the organization’s goods or services in
exchange of a fixed commission or fee. The commission is calculated on the basis of the
percentage of the sales generated. Example: Insurance Policy, opening of bank accounts
etc.
Door to Door
In door to door sales, the sales executive walks from the door of one house to another to
sell the product or service. For this type of sale, the sales agent should be versatile and
capable of quickly creating a relationship with the customers.
The following are some major duties of sales personnel for door to door sales:
 Striking a conversation with a stranger.
 Getting the form filled and completing the administrative tasks.
 Getting the payments processed from customers.
 Building rapport with customers.
 Providing training to new team members.
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These are some of the major responsibilities that a door to door sales executive needs to
manage in order to maintain or increase productivity.
Hawking
Hawking is associated with a hawker (seller) who sells the goods that can be easily
transported. A hawker sells not-so-expensive goods on the streets by shouting in loud
voice and chitchatting with the passers-by to develop rapport and convince them to buy
his goods.
In the above figure, we can see hawkers selling products on the roadside. In India, there
are 10 million street vendors, Mumbai and Delhi contributing the most to the number.
Many consumers also prefer street shopping because of the low price of the products.
B2B
B2B selling is known as Business to Business selling. It refers to a situation where one
business makes a transaction with another.
B2B occurs where:
 Factory produces goods and sells them to wholesalers.

Example – Food products manufacturers, shoes, bags, etc.
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 Organization outsources its process to other companies to reduce the labor cost.
Example – BPO (Business Process Outsourcing)
 Company purchases raw materials from another company to make the final
product.
Example – Tata Steel purchases goods from its ancillary companies.
Electronic Sales
Electronic sales or e-Commerce is known as trading of goods or services through the
internet. The figure given below depicts how e-Commerce works. We can conclude that
the e-commerce business has been increasing day by day due to easy access and
simplicity.
E-commerce businesses may employ some or all of the following:
 Online shopping web sites for retail sales direct to consumers.
 Providing or participating in online marketplaces, which process third-party

business-to-consumer or consumer-to-consumer sales.
 Business-to-business buying and selling.
 Gathering and utilizing demographic data through web contacts or social media.
 Marketing to prospective and established customers by e-mail or fax (for

example, with newsletters).
 Engaging in prevailing market for launching new products and services.
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Thus, e-commerce can be defined as the business conducted through the application of
computers, telephones, fax machines, barcode readers, credit cards, automated teller
machines (ATM) or other electronic appliances (whether or not using the internet)
without the exchange of paper-based documents.
Request for Proposal

Request for proposal is a type of bidding procedure by a company who is interested in
procurement of goods or services from potential suppliers to submit business proposals.
Given below are the salient features of a Request for Proposal.
 It informs the suppliers that a company is looking to solicit and inspire them to
make their best effort.
 The company has to provide specifications regarding the proposal to purchase

and if the analysis regarding the requirement is prepared, accordingly it can be
easily integrated into a Request document.
 It also signals suppliers that the selection process is competitive.
 It ensures that suppliers respond factually to the identified requirements.
 The selection process is structural so that there is no partiality in the process.
Thus, a request for proposal is a proposal that a company ensures for procurement of
products. The above points enlist the functions of a general request for proposal used by
a company.
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5. SDM — Techniques of Sales Sales and Distribution Management
Sales techniques are techniques for selling a product or service for marketing success. In
layman terms, it’s a combination of talking to the right people and finding out what they
actually want to buy; it depends on consumer choice and preference.
A salesperson using sales techniques doesn’t just sell the products. In fact, he looks at
the customer’s need or want and then offers the product after explaining its advantages
and disadvantages.
This helps the customer to differentiate among available products, making the decision
easy for the customer. This way of selling is more impressive than sampling delivering
the product.
It also helps to build a rapport between the customer and the salesperson who
understands how much the product is worth to the customer.
Conceptual Selling
Conceptual selling is a type of sales technique, which requires the salesperson to first
understand their customer’s issues, i.e., what they are trying to accomplish, fix or avoid.
Then the salesperson applies his expertise to find a solution for the customer.
By applying this approach, its helps to build trust with customers and the solution found
becomes difficult for the competitors to replicate. Conceptual selling is like introducing a
new technology, a revolutionary delivery method, a different way of serving customers
and finding a new way to resolve old problems.
Conceptual selling is classified into the following four categories:
 Perceptual
 Change
 Emotional
 Fundamental need
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Perceptual
Perception is the way a person looks at something. It differs from person to person and
it is also possible for the perception of two people to be alike. This psychological proposal
asks the consumer to change the attitudes towards something or view it in a different
way from the existing point of view.
In other words, the seller requests the buyer to view things from a different perspective.
Change
Change is vital and a thing cannot be the same for a long period of time. The first step
itself relates to change. Most of the times, the first step is conceptual selling. The buyer
should be interested in listening to new ideas and seriously apply himself to something
different.
Emotional
While the seller describes the product to the consumer, he wants an emotional relation
with the consumer. The seller should be passionate and eager; it plays a major role in
selling. This helps to increase credibility with the consumer and also helps to retain the
consumer for a long period of time.
Fundamental need
The fundamental need of a product satisfies a conceptual sale. The assumption is that
the product serves as a catalyst for the change that the seller petitions. In case the
consumer does not understand that this fundamental need, he will not buy the product.
Sales Negotiation
Sales negotiation refers to the mutual discussion between the buyer and the seller for a
transaction or agreement. The negotiation can be a formal event at a specific date and
time. It can also be an ongoing process at different points in sales process.
Why does a salesperson negotiate? The answer is because of a customer’s attitude

towards the product or service. A customer’s attitude can be categorized in four
categories:
Objection
In this category, the customer shows an opposition to the product or service. The
customer is not satisfied with the product and opposes and raises a query against the
product.
Indifference
The customer is not interested or shows less interest in the product; the reason could be
no perceived need for its benefits.
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Skepticism
The customer has the perception of the product and its benefits but is in dilemma if the
product offered can really provide any benefit.
Acceptance
In this category, the customer agrees with the benefits as advised by the salesperson
and has no objections or negative feedback towards the product.
Thus, we can conclude that negotiation skills are required to change a customer’s
perception towards a product or service.
Sales Negotiation Strategies

A salesperson needs to practice some negotiation strategies to deal with customers. The
best way is to draw them into a problem-solving partnership. The initial step is to focus
on the issues where the salesperson and the customer have the most agreement.
The salesperson has to take a stiff position initially so that when he compromises, the
customer feels that he has negotiated a bargain. The motive should be to concentrate on
solving the issues that satisfies the needs of both the buyer and the seller. Solutions of
the issues should be certain for both the parties to work on.
It’s very important to keep a record of the issues resolved in the process of discussion
and to request recaps to confirm the progress being made. This helps to roll up the
discussion and easily arrive at the final conclusion.
Negotiation Outcomes
The following are the four types of negotiation outcomes:
Seller Win – Buyer Win

In this outcome, there is a Win-Win situation for both the buyer and the seller. Out of
the four, this is the only outcome that leads to long term success for both the parties.
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Seller Win – Buyer Lose

In this case, the seller wins but the buyer loses. If the customer is not satisfied, the
business relationship is in trouble, as it may affect the reputation of the company.
If the customer feels that he is not satisfied or has been manipulated regarding the
product description, he may refuse to have something. If his nature is aggressive, he
may take action against the salesperson.
Seller Lose – Buyer Win

The buyers win in the negotiation and the salesperson will feel short changed and try to
avoid the situation or even future negotiation. In this outcome also, the buyer and seller
relationship is in trouble.
Seller Lose – Buyer Lose

Both the buyer and seller lose and are dissatisfied. After this outcome, it is very unlikely
in future to have any negotiation between the two parties.
Reverse Selling
Reverse selling refers to a situation where the buyers get a chance to respond to the
sales negotiation or feedback regarding the product or service. If we observe keenly, in
most of the cases, the seller talks too much and is always ready to question.
Reverse selling is just the opposite. The buyers have to provide the feedback, which
helps to develop a long term relationship between the buyer and the seller. By doing
this, the company can understand the pros and cons of its products and services, which
helps to improvise and make changes accordingly.
The traditional way of selling a product used by a salesperson is that he/she pressurizes
the prospective buyer.
Questioning Strategy
Once the company has listed all the points and the required information, they need to
prepare a questionnaire. The questions should begin with broad issues and should allow
the buyer to express his/her point of view.
Engaging the Buyer

Questions can be open ended or close ended. If the questions are close ended, the buyer
will not be able to apply his own perception or points. An open ended question gives the
buyer a chance to explain an issue or to provide a proper feedback, whether positive or
negative.
Reverse Question
When a buyer evaluates a product, whether to purchase or otherwise, it gives an
opportunity to the seller to pitch in and re-confirm the perception of the buyer. It helps
improve the relationship. The seller can better understand how to deal with the situation
and what can be offered to the buyer to satisfy his/her needs.
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We can thus conclude that reverse selling has now become an important part in today’s
competitive market.
Take away
Take away selling techniques have become very famous in recent times. As the name
suggests, in this type, the buyer takes the product and moves on. In the traditional
system, the regular and take away counter used to be the same and people had to wait
for long even to take a small parcel.
In the following illustration, we can see a modern take away counter, where the buyer
can easily grab a parcel and move on. Such take away counters help the buyer to the
get the product in less time.
In a few places, we have a take away counter where the customer orders the product
from one side and the delivery is made on the other side of the road. This also saves a
lot of time for the buyer.
Sales Outsourcing
Sales outsourcing is a way by which one company outsources its process or part of the
process to the other company. The company outsources its work to increase the sales
volume without link to the sales team that carries on the sales campaigns.
The company that undertakes the process will be paid on a contract basis or the as per
the mutual understanding between both the parties. The other party is accountable and
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answerable regarding all sales activities while representing the brand to the client. That
party is responsible for all the operations associated with direct sales activities.
The main purpose of sales outsourcing is to reduce the cost of production. For example,
in London, the labor cost is high as compared to India. So the company would like to
outsource the process to India and get the work done in less cost as compared to the
home country.
Advantages of Sales Outsourcing

Sales outsourcing is cheaper as compared to fully loaded cost of employing sales
personnel. The advantage of sales outsourcing is increasing the revenue for the company
by providing the same process in a different way, i.e., by a third party.
The company may also select outsourcing as a means to access the best sales skills.
From the company’s point of view, if the work gets done in half of the cost as compared
to the previous method, it will obviously outsource.
Another reason of outsourcing relates to a company that wants to set up its market in a
new place. It would rather provide the contract to a local agency because they will
understand the need and perception of that locality. This helps the company to easily set
up the business and capture the market faster.
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6. SDM — Sales Organization Sales and Distribution Management
Sales organization is a department in company within logistics that designs the company
as per the sales requirements. Sales organization is held responsible for the sales and
distribution of goods and services.
The selling unit is represented as a legal unit. The salesperson plays a crucial role in the
sales company because he/she is answerable for many activities in the company. Some
of those activities can be listed below.
 Setting selling and profit objectives – The salesperson is involved in setting

the objectives of selling the product and generating the profit.
 Marketing policies – The salesperson has to set the marketing policies and plan
accordingly.
 Designing personal selling strategies – They also have to set up their own
strategy to generate sales and to target and retain the customers.
They co-ordinate with other departments as well, for example, advertising, sales
promotion and distribution, to chalk out a sales programme, which helps in generating
sales. It also helps to find any loop holes and fix the issues.
Characteristics of a Sales Organization

Let us now understand the characteristics of a sales organization:
 A sales organization subsists of a group of people who handle different activities

like distribution, advertising selling etc.
 It works to achieve the sales objectives, like increasing sales volume and
maximizing profit and market share of the company.
 It specifies the responsibilities and duties of the salesperson and also co-ordinates
their activities with other departments.
 It helps to develop a relationship with the other personnel in the organization by

setting up a sales programme.
 General Sales Manager is the head of the sales organization.
Thus, sales organizations help the company in achieving targets and building co-
ordination with sales personnel. Now we shall see the importance of sales organization.
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Significance of Sales Organization

Let us now understand the significance of sales organization
To plan purchase
The sales of the company depend on the sales anticipation. The sales will increase only
when the consumer purchases the goods or services. Therefore, the company has to
plan the sales according to the consumer need and want, meaning where they want the
product, what they want etc. The planning and development is done accordingly to
satisfy the need of consumer.
To create pattern of demands for products

The demand of the product is created to lead to sell in the market. When a product is
manufactured in the factory, it is not sold automatically. Salespersons push the product
to consumers. But even they cannot force the consumer to buy the product. The sale
depends on the consumer’s need and perception. This need is created by the selling
skills, promotions through advertisements, etc., which in turn help in creating demand in
market.
To handle the orders received

This is an important step where the salesperson has to answer the calls and queries of
the customers, receive orders and make the product ready as per the demand of
consumers.
Finally, the products are packed and dispatched as per the expectation of consumer; all
these are imperative and effective tasks.
To collect the dues

Sales cannot always be done for cash. Bulk sales are made on credit. It’s very difficult
for an organization to perform only on the basis of cash sales; in this competitive
market, credit sales play a crucial role.
After the credit sales have been done, the organization has to collect dues. It is a very
challenging task as the salesperson has to retain the business and still get the task done.
To handle the task of personnel management

Every organization wants best sales personnel to enhance the sales. This depends on
training. The organization has to select, train, motivate, monitor and control its sales
personnel. Here the company has to make an investment in sales personal.
In summary, we can conclude that there is an immense impact of sales organization on

a company.
Types of Sales Organization

An organization is designed in a manner where we can identify the work or activity
performed by an individual or group. The roles and responsibilities are defined, which
helps in building relationships to enable people to work effectively and efficiently. This
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helps in achieving the goals of the organization. The following are the four types of sales
organizations:
Functional Type
Functional type of organization is divided and classified on the basis of the functions
performed. The following illustration shows a functional type organization.
This depicts the functional type organization. We will now discuss the advantages and
disadvantages of this type.
Advantages of functional type

The following are the advantages of a functional type of organization:
 Specialization: In the figure, we can see the division has been made according
to the functions. By this, we can expect each function is specialized in its activity.
 Flexibility: The number of departments can be added or removed as per the

requirements.
 Decision making: Decisions can be made quickly as the person would be an

expert in his department and will be aware of the impact of his decision.
 Co-ordination: The co-ordination between functions can be done easily.
Disadvantages of functional type

Let us now understand the disadvantages associated with functional type of
organization:
 Due Attention: Each department is only specialized in their own activity; hence
there is no attention focused on the product.
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 Delay: There is delay in making decisions because of co-ordination between all

the departments.
 Co-ordination: From the figure, we can see that all departments report to the
General Manager. Therefore, in peak times, it may become difficult for the
General Manager to maintain co-ordination between the departments.
 Conflicts: There is always conflict between departments due to being specialized

only in one core area and lack of cross training.
In general, functional type of organization is suitable where the organization

structure is small having limited products.
Product Type
This type of division is made according to the products. The organization divides the
departments based on the products.
The following illustration shows the layout of the product type.
Advantages of Product Type

 Due Attention: Due to the division according to the product, each product gets
required attention.
 Specialization: The salesperson is specialized in specific products; hence he/she

has an advantage in handling the department.
 Responsibility: The responsibility can be easily assigned to a salesperson

because all the salespersons are specialized in their product/ department and are
well acquainted with the product, which helps them to handle customers
smoothly.
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Disadvantages of Product Type

 Co-ordination: There would be problem of co-ordination between two product
departments.
 Selling Cost: The selling cost of product may increase due to the division
according to the products.
 Operational Cost: Operational cost may also increase due to each product being
treated differently.
 Freedom: There is no cap on the freedom enjoyed by employees because the

salesperson is specialized only on his/her product/department and will not be able
to handle other product/department.
Suitability of Product Type

Product type is suitable in the following cases:
 Where the organization has many products and it can divide the departments
according to the products.
 For organizations selling highly priced products.
 When the products of an organization are more technical oriented, the

organization can divide the departments according to the products as the
salesperson will be efficient and effective to discuss the product with the
customer in an effective way.
Consumer Specialization Type

According to consumer specialization, the departments are divided on the basis of the
costumers to whom the products are offered. Most of the time, market appearance plays
an important role in knowing the consumer needs and to divide the departments
accordingly.
The following illustration shows the layout of the consumer specialization type.
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Advantages of Consumer Specialization Type

 Consumer: Here the division is according to consumers, so each consumer gets
due attention.
 Consumer satisfaction: Consumer satisfaction is the first priority; as maximum

services are provided to the consumer.
 Planning and policies: The sales planning is done in a proper way and policies
are designed keeping each category in focus to achieve the goal.
 Brand: The organization is able to fulfil consumer needs and wants and create its
own brand to gain market share.
Disadvantages of the Consumer Specialization Type

 Expenses: The expenses for the company to build and plan according to
consumer and develop the market are huge.
 Sales activities: It becomes difficult for the sales manager to co-ordinate the
sales activities of salesperson.
 Investments: In this case of specialization, the investments are high and

sometimes repeated, which in turn, is loss to the company.
Suitability of the Consumer Specialization Type

Consumer type is suitable in the following cases:
 When there is a large number of consumers who are looking out for special
services.
 The costumer is ready to pay for the services offered. Here, the target is mostly
premier customers.
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Area Type
In this type of organization, departments are divided according to the attributes of
areas. They can also be divided geographically. The following illustration shows the
layout of the area type organization.
Advantages of Area Type

 Products: Customers can be served with the latest products and customized
products.
 Transport cost: Transport cost can be reduced because the division has been
made according to areas.
 Customer service: Company can provide better customer services as the

division is made according to area. Thus, the company can understand the
customer psychology and perception better.
 Sales performance: The sales performance can be compared according to zones

and steps can be taken to improve.
Disadvantages of Area Type

 Costly: It is costly as compared to other types and increases expenses of the
company.
 Markets: It becomes difficult for co-ordination for the General Manager for
different markets.
 Conflicts: There may be conflicts regarding resource allocation between zones.
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Suitability of Area Type

The area type of organization is suitable in the following cases:
 When the area or the territory for market is very large.
 Where the market is different based on zone.
 Where the product is differentiated depending on zone.
 Where the sales volumes are high and generate more revenues.
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7. SDM — Sales Quota Sales and Distribution Management
Sales quota can be defined as the sales target, which is assigned to any sales unit for a
particular duration of time; here sales unit can be a person, region, distributor etc. Sales
quota provides a target to be achieved in particular duration, which increases the
productivity.
Commercial firms set up sales quotas in order to improve sales volume and increase the
net profit of the organization. It can also be viewed as a standard to determine the
effectiveness of sales unit. Sales quota is determined using various factors such as
market potential, marketing method, past sales record etc., with effective projection of
market sentiments. For planning sales quota, control of sales operations can be an
effective method.
Objectives
Sales quota is imposed in an organization to fulfil various objectives required to increase
the sales of product and maximize profit.
Sales objectives help an organization in the following ways:
 They provide a standard to measure the performance.
 They help to control sales expenses for customer acquisition.
 They help define a target; this further facilitates motivation and enhanced
performance.
 These help to identify and monitor the performance of salespersons.
These are some of the primary objectives of sales quota for an organization. Further,
sales quota can be divided in different types according to the requirement.
Types of Sales Quota

Sales quota is divided into four different categories according to the difference in
forecasting and cost allocation procedure, management goals, selling issues and
executive decision.
The following are the different types of sales quota:
Sales and Volume Quota

Sales and volume quota is allocation of sales quantity for salesperson, geographical
regions, distribution outlets etc. This quota can be implemented according to sales
performed or revenue earned by respective units.
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The combination of both the criteria can also be used for the implementation of this
quota. The quantity of sales and revenue earned can be allocated to the respective unit
(salesperson, region) and it has to fulfil at least one of them.
Financial and Budget Quota

Financial and budget quota is used to determine and restrict expenses on sales to attain
desired net profit planned.
It is implemented on various segment of sales organization to control the expenses

accordingly. The aim of these quota is restriction of expenses for making sales so that
profit can be increased.
Activity Quota
In competitive market, the effective performance of sales group is required. It can act as
a long term benefit for the organization. Organizations set up activity quota for sales
force for efficient results. These can be performed by allocating sales target to
salespersons.
The following are the activities listed under sales quota:
 Number of accounts opened through the salesperson
 Number of sales calls made to potential customer
 Number of demonstrations made to show the product
 Number of maintenance activities performed
Activity quota is planned on the basis of these activities performed by the salesperson.
By setting quota for the activities, efficient performance and controlling can be managed.
Combination Quota
It depends on product type and market condition, issues related to sales of product and
the challenges faced during the sales of a product. Organizations set up quota with
combination of sales volume and activity quota in order to increase sales.
Methods for Setting Sales Quota

Sales quota for any unit like salesperson, region, etc., should be a reasonable and an
achievable goal, for it to be fulfilled at the provided time span. At the same time, quota
should not be such that it doesn’t take much effort to achieve.
The following are some of the methods for setting the sales quota:
Total Market Estimate Method

Total market estimate method is used to determine sales quota in places where the
management doesn’t have any data about the market potential. It can be
determined by dividing the company’s sales quota with respect to regions or dividing
sales quota according to relative sales opportunity as per region.
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Territory Potential Method

Territory potential method directly relates territorial sales potential to sales quota.
The potential here is total industry’s sales for that segment. Sales potential represents
the maximum market size of the product; size of the market reflects the sales potential.
This method gives precise results if territorial sales potentials are used with a
combination of territorial design.
Past Sales Experience Method

Past sales experience method determines the sales quantity based on the previous year
sales. Managements of organizations set this up by increasing some percentage from the
previous sales record.
For more precision in the approach, managements most commonly use an average of
several years as a base line for the measurement. This method is simple and doesn’t
take much effort to implement.
Executive Judgement Method

In this method, sales quota volume is determined by the management, but it is more
likely to be a guess. The management decides the sales quantity and no fixed
procedures are involved.
This method is not precise and it’s mostly not used by organizations to determining the
sales quota. This method doesn’t provide any estimate for territorial based sales volume.
Sales People Estimate Method

In this method, the sales quota is determined by the salesperson of the organization.
Through this approach, a more relevant sales estimate can be maintained, which can be
achieved by the salesperson.
Salesperson have better knowledge of the market conditions, so they can set the target
as per their standards, and if the standards are set by the salesperson themselves rather
than imposed by the management, their fulfillment is more likely possible.
Compensation Plan Method

Compensation method is based on management’s view of what a particular salesperson
should receive as revenue; this method does not take into account the sales projection
or territorial volume.
For example, if a salesperson has to receive 20,000 as salary, which can be received as
10 percent commission of the sales amount, then the salesperson has to sell products
worth 200,000.
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8. SDM — Sales Territory Sales and Distribution Management
A sales territory consists of a group of consumers or a geographical area assigned to a

particular salesperson. The area allocated to the salesperson contains the present and
the potential consumers of the organization.
After the allocation of sales territory, the sales manager can be in a position to contest
between sales efforts and sales opportunities. It would be very difficult for the sales
manager to monitor the total market as it is too large and unmanageable by one person.
Hence it is divided as per territories to manage effectively and efficiently and control the
sales force.
The salesperson does not only pay attention to the area but also the consumer
prospects. Thus, a sales territory can be known as the grouping of customers and
prospects, which is assigned to an individual salesperson.
Sales territory is for the big companies having huge market share. Small and medium
scale companies do not use geographically defined territories. The market share is not so
high to divide into territories.
Reasons for Establishing Territories

The main motive of establishing sales territories is to simplify the planning and
controlling of the selling function.
Following are some reasons for establishing sales territories:
To obtain thorough coverage of the market

According to the division of sales territory, the activities are assigned to salesperson.
This helps in market coverage, rather than the salesperson selling the product according
to his ambition. It helps the sales manager to monitor and take updates accordingly
from different sales managers.
To establish the salesperson’s job and responsibilities

It’s very important to establish jobs and responsibilities for salespersons. Sales
territories help in doing so because the task is assigned to the salesperson and he is
responsible and answerable for the same.
Once the task is assigned, frequent checks are done to monitor the calls; it helps to
determine the work of each salesperson. If the sales manager finds the workload for a
particular person is more, the work is divided and reassigned equally. This creates
motivation and interest to work.
To evaluate sales performance

In an organization, the sales territory is compared from the previous years to current to
find out the difference, i.e., the increase or decrease in sales volumes. It helps to work
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on the difference accordingly. This is done with the help of sales territory as the activities
are assigned in a proper manner and gathering of data and evaluation becomes easy.
The comparison to evaluate sales performance is done on the following basis:
 Individual to District
 District to Regional
 Regional to Entire Sales Force
By this comparison, we can evaluate and determine where the sales force is contributing
for high volume of sales.
To improve customer relations

As we know, salespersons have to spend most of their time on road to sell the products
but if the sales territory is designed in a proper way, the salesperson can spend more
time with the customers (present and potential). This helps in building rapport and
understanding the needs better.
Sales of a company can increase when a customer receives regular calls and the
salesman has to visit the customers on the basis of calls. The salesman and the
customer get time to understand each other and resolve their issues regarding demand
and supply. This also helps in increasing the brand value of the company.
To reduce sales expenses

Once the geographical areas are decided, the company gets a proper picture as to the
areas that can be assigned to the salespersons. He/she needs to cover that area so that
there is no duplication of work by sending two salespersons in the same area.
The selling cost of the company gets reduced and leads to increase in profits. There is
also an advantage to the salesperson for few travels and overnight trips.
To improve control of the sales force

The performance of a salesperson can be measured on the basis of calls made to
customers, the routes taken and the schedules. In this case, the salesperson cannot
deny if the results are not positive.
The salesperson has to work on the same routes, schedule and everything is pre-
determined. This results in better control of the sales force.
To coordinate selling with other marketing functions

If the sales territory is designed properly, it helps the management to perform other
marketing functions as well. It is easy to perform an analysis on the basis territory as
compared to the entire market.
The research done by the management on marketing on territory basis can be used to
set sales quotas, expenses and budgets. The results can be satisfactory if the
salesperson helps in advertising, distribution and promotion when the work is assigned
on territory basis instead of the market as a whole.
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Procedure for Designing

At the time of designing the territory, the manager has to keep in mind the size of the
territory that is going to be assigned to the salesperson. It should be neither too small
nor too large. If the territory is geographically too small, the salesperson would keep
calling the same customers repeatedly. In contrast, in a too large geographical area, the
salesperson will not be able reach the scattered customers as most of his time will be
utilized in travelling. Hence the territory should not be too large or too small; it should
be such that all potential customers can be visited as per the requirement.
The procedure of designing sales territories is the same for all companies, whether
setting the territories for the first time or revising the existing territories.
Select Control Point

As the name suggests, the management has to select a geographical control point. The
control points can be classified on the basis of district, pin codes, areas, states and
cities.
At the time of selecting the control unit, the management should aim to select as small a
control unit as possible.
The following are the reasons behind selecting small control units:
Reason 1
If the control unit is too large, the areas with low sales potential will be hidden by the
areas with high sales potential. The areas with high sales will be concealed if the areas
with low sales potential will be included.
Reason 2
In case of any changes required in future, they can be done smoothly. Example: A
company wants to allot some territory to Mr. A. This part of territory had earlier been
assigned to Mr. B. It can be done easily, as the unit is small.
If the sales potential for the company is located in urban areas, the city can be used as a
control point. But there are some disadvantage also, as the adjacent areas to cities also
possess sales but they are covered by paying additional cost to the salesperson.
The control point can also be set up according to the trading areas. It is a sensible
decision to set up the control point according to the trading area. It is based on the flow
of goods and services rather than economic boundaries. Example: The wholesaler or
retailer use trading area as the control point.
Trading area can be considered as the geographical region that consists of a city and the
surrounding areas; this region works as the main retail or wholesale center of the region.
Generally, the customers from one trading area do not go outside the boundaries to buy
goods.
Even an outsider customer will not enter the trading area to purchase a product. The
main advantage of the trading area is that the salesperson is aware of the buying habits
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of the customers and the pattern of trade. It also helps the management in planning and
control.
The control point can be decided on the basis of states. A state may be a capable control
unit when the organization has small sales force that is covering the market selectively.
Example: A company sells its products in the country in all states; in this case, the
territory boundaries could be based on states.
It is less expensive and convenient to gather data and make evaluation.
Making an Account Analysis

The next step after selection of geographical control unit is to plan an audit of each
geographical unit. The reason for performing this audit is to analyze the customer
prospects and find out the sales volumes for each account.
Accounts can be recognized by names; in recent times, there are many sources to pull
out the data, for example, the yellow pages. We can also collect the data through the
past sales of the company. After collecting the data, the next step is to estimate the
sales for each geographical unit. The sales manager estimates the sales volume that the
company is expected to get in the following years.
There are many factors to contribute such as competition, advantage of the company in
that geographical area, etc. Now there are many software available for calculation and
the final result. This can be done much quickly as compared to when it is done by the
sales manager manually.
After the sales potential estimates have been taken, the system divides into three types,
which is done through ABC analysis. This is one of the most common analyses used by
companies. Where the sales potential is greater than expected, it is classified as “A
Category”. Average potential is classified as “B Category” and the sales potential below
average is classified as “C Category”.
Developing a Salesperson Workload Analysis

The salesperson workload analysis is done on the basis of the time and effort taken by a
salesperson to cover a geographical unit.
The following are a few points needed to estimate workload:
 Frequency of calls
 Duration of calls
 Travel time
The estimates workload is calculated by considering these factors.
The most important factor is the duration of calls. These depend on the customers and
issues. If the problem is severe, it may take time to resolve and tackle the question from
customers.
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Another important factor is the travel time; this differs from one area to another
depending on the factors transportation, condition of roads, weather condition etc. The
sales manager tries and plans accordingly to reduce the travel time taken by the
salesperson and utilizes the time to call more number of accounts/clients.
Combining Geographical Control Units into Sales Territories

In the first three steps, the sales manager works on the geographical control units; now
he has to combine the control units into territories.
Initially the sales manager used to manually develop a list of territories by combining the
control units. It was a time consuming procedure and also the result was not accurate,
as it was done manually. Now computers handle this activity and complete it in a much
shorter period of time with accurate results. The operational error is reduced here.
All the salespersons cannot be considered equal and competitive; it depends on the basis
of experience and skills. The salespersons are assigned territories by the sales manager
depending on the basis of sales. The geographical areas with high sales are assigned to
the salesperson with experience, who can handle the workload. The new or less effective
sales people are assigned the areas with less sales potential.
Territory Shape
The sales manager has to decide the shape of the territory. The territory shapes affects
the selling expenses and also helps for sales coverage. There are four types of shapes,
which are used widely.
 The wedge
 The circle
 Hopscotch
 The cloverleaf
Let us discuss these types one by one.
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The Wedge
This shape is suitable for the territories, which contain both the urban and non-urban
areas. The radius starts from the most populated urban center. Wedges can be divided
into many sizes and the travel time can be maintained by balancing between the calls of
urban and non-urban areas.
The Circle
When the clients are distributed evenly throughout an area, the sales manager chooses
the circle shape. The salesperson starts from the office, moves in a circle of stops until
he reaches the office again. This helps the salesperson to come near to the customer as
compared to the wedge.
Hopscotch
In this shape, the salesperson begins from the last point from office and reach out the
customers while coming back to the office. While going, the salesperson does not stop
anywhere and attends calls in one direction while coming back to the office.
The Cloverleaf
When the accounts or client are located randomly in a geographical area, the cloverleaf
shape is used. This type of shape is more often found in industrial markets than in
consumer markets.
Assigning Sales Personnel to Territories

Once the sales territory has been designed, the last step is to assign sales personnel to
the territories. All the salespersons are not equal in terms of ability, initiative, etc.; the
workload of one salesperson may be overload to another and may cause frustration.
The sales manager must rank the salespersons accordingly before assignment of
territories. The ranking should be done on the basis of ability, knowledge,
communication, etc. The other points, which the sales manager should look at, are the
cultural characteristics of the salespersons and how they match with the territory.
Example: If a salesperson is born and brought up in rural area, he would be able to do

more effective sales in that particular area as compared to urban area.
We can now conclude that the goal of a sales manager is to assign the geographical area
to the salesperson who would maximize the territory sales and where the customers are
comfortable with the salesperson.
Establishing the sales territory helps in planning and controlling the sales operations. A
well designed sales territory helps to increase sales volume and market coverage and
provide better services to customers. Once the sales territory is allocated to the
salesperson, he is responsible for making things happen.
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9. SDM — Personal Selling Sales and Distribution Management
Personal selling can be termed as the oral presentation given by the salesperson to one
or more than one consumers face to face to sell the product or service. Personal selling
is a highly peculiar form of promotion. It is mostly two-way communication, which not
only involves a particular individual but also social behavior.
The intention is to deliver the right product to the right customers. Depending upon the
complexity of product, personal selling plays an important role. Industries manufacturing
technical products like laptops, computers, digital phone, gadgets, etc., likely depend on
personal selling as compared to the other manufactures.
The reason behind this is to explain the features of the product, tackle the customer
queries and provide the best customer service. The competition in the market has
increased today and therefore the importance of the salesperson in the organization.
Salespersons are also called salesman or salesgirl or sales representative and their
payment is made as the commission to push the product in the market by motivating the
customer through oral conversation.
The consumer wants all kinds of goods and services in the market but lack of interest
keeps them away from making decisions or purchasing products. This is where the
salesman needs to act as a catalyst and explain the product or service to the customer.
He/she should motivate the customer by giving a presentation and he may sometimes
act as a consultant. This helps the consumer to make a decision.
In case of technical products, the salesperson plays a more vital role as compared to the
promotions. It becomes difficult for the customers to make decision while purchasing
high value products with complex nature. The salesperson helps the customers by
making personal contact with them and making them understand the quality and utility
of the product.
Objectives of Personal Selling

Personal selling contributes in achieving the long-term objectives for the organization.
The following are some of the objectives of personal selling:
 To do the complete selling job when there are no other components in

promotional mix
 To provide service to the existing customers and try to maintain contacts with the
present customers
 Identify and find new prospective customers
 Promote the products to increase sales
 Provide the information to the customers regarding the change in product line
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 Provide assistance to the customers to help in decision-making
 Provide technical advice to customers for complex products
 Gather the data in relation to market and provide it to company’s management
The reason behind setting personal selling objectives is to make decision on sales
policies and personal selling strategies, which helps in promoting the product. The
objectives are set for long-term, as it becomes the important element for qualitative
personal selling objectives.
The objectives can also be quantitative if they are short-term and it could be adjusted
from one promotional period to another. The quantitative personal selling objective is
related to sales volume objective. Hence, the sales volume objective should also be
explained.
The following are a few sales objectives:
 Capture and maintain a specific market share
 Increase sales volumes that help the organization to gain maximum profit
 Reduce or keep the expenses provided for personal selling within limits
 Obtain the percentage of customers as per the set targets
Relevant Situation for Personal Selling

In some situations, personal selling becomes more relevant. The following are some
relevant situations:
Product Situation
Product selling is more effective for the following types of products:
 Product with high value like machinery, computers etc.
 Product in its first stage of life cycle, when it needs more demand
 Product to match consumer needs like insurance policy
 Products that need presentation, for example, industrial products
 When the products need after sales service
 Product with less brand loyalty
Market Situation
Personal selling can be utilized optimally depending upon the market situation.
 An organization selling products to small number of buyers
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 Company selling in local market
 Required middle men or agents not available
 No direct channel available for selling products
Company Situation
Personal selling is comparatively more adequate to the companies when
 A company cannot invest huge amount of money in advertisement on regular

basis.
 A company is unable to find and make use of relevant non-commercial media in

promoting the product.
Consumer Behavior Situation

In case of some consumer behaviors, personal selling can be effective when
 The product purchased by the consumer is expensive but it’s not regular.
 The consumers need answers instantly without delay.
 The customers need follow up in competing pressure.
These are the four situations where personal selling is important. This will help the
salesperson to spot the customers and provide product knowledge through face to face
presentation. Once the consumer understands the nature of the product, it helps
him/her to decide whether to purchase the product.
Diversity of Selling Situation

In our day to day life, we come across different types of selling situations. This depends
on the individual selling styles because of the marketing factors. The activities of the
salesperson differ as per the situation.
Example: The job of a salesperson selling soft drinks is different as compared to that of
a salesperson selling computers. In case of soft drinks, the salesperson is not required to
explain the significance or the nature of product but in case of computers, the
salesperson has to clarify all the technical requirements.
The categorization of the salesperson is done on the basis of selling styles, creative skill
required in the job, complexity of the product etc.
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Let us now discuss different kinds of selling positions:
Delivery Salesperson
As the name suggests, the job of the delivery salesperson is to deliver the product; the
selling responsibility is secondary. Example: Milk, curd, bread, soft drinks etc.
Inside Order Taker

The person standing behind the counter is known as inside order taker. He does not help
the customers much with suggestions. The main purpose is to provide the product
requested by the customer. Example: General stores.
Missionary Sales People

The salesperson does not have the permission to promote an order. Their primary job is
to develop goodwill and educate the customers about the products. Example: Medical
Representatives.
Consultative Salesperson
This type represents those products or services sold to consumer, which are highly
priced and need huge investment to purchase. Due to high capital investment by the
customer, the salesperson cannot put much pressure to sell.
The salesperson should have a thorough knowledge regarding the product and the
patience to discuss and advise the features and advantage of the product.
During the sales process, the salesperson has to be creative. He should maintain the
interest with customer without exerting much pressure on the client. Example: Huge
Machines, computer systems, etc.
Technical Salesperson
The most important character of the salesperson should be the knowledge relating to the
product. The salesperson should have a detailed knowledge regarding the product
features, benefits, disadvantages, etc.
Most of the people do not have the required technical knowledge and easily agree to the
points of salesperson but there are few customers having knowledge that may influence
the decision of purchasing the product. The salesperson should satisfy these types of
customers by explaining the product features, installation etc. The salesperson should be
well trained to tackle the questions of customers and provide relevant knowledge.
Commercial Salesperson
In this category, the salesperson has to sell the product to other business, industry or
government organization etc. It’s generally business to business where the salesperson
closes the sale in the first or the second call. The sales process is short as compared to
business to customer sales.
The salesperson has to be aggressive and highly motivated for the follow up and
maintenance of accounts. Example: Wholesale goods, construction products, office
equipment etc.
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Direct Sales People

Direct sale of product involves selling the products and services to the final consumers.
The sales process is short and closed in a short period of time. There are many products
available in market for direct sales; hence the salesperson is trained to close the deal in
the first visit because the consumer will either purchase the product or switch to its
competitor. Example: Insurance, door to door sales, magazines, etc.
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10. SDM — Steps in Personal Selling Sales and Distribution Management
The selling process consists of several steps; there are few basic steps, which need to be
followed for all types of products. The selling process can be for short time or long time,
depending upon the nature of the product. A product, which needs huge investment,
may take longer time to complete the selling process whereas in case of daily products
where the customer is aware of the nature of the product, the selling process ends in
shorter time.
Example: Door to door sales, where the salesperson explains all the steps and ends the
process in 10 to 15 minutes. However, for heavy machinery, it may take time to present
the technical nature and explain the product; it takes more than one visit to complete
the selling process.
Prospecting
The initial step of selling process starts with prospecting or searching for potential
customers. Apart from retail sales, it’s very rare when customers reach out to the
salesperson. It’s the salesperson who reaches out to customers in order to sell the
product.
The following are the two major activities under prospecting:
 Find the prospects or the potential customers
 Educate them in order to figure out if they are valid customers
Find the Prospects or the Potential Customers

Finding the prospect is not an easy step for a sales person because consumers would not
even like to listen to the presentation regarding the product they do not need. The rate
of saying “No” is very high. In few consumer goods, the identification of customers
comes from sources like friends, relatives, colleagues etc. The following are some of the
best sources.
 Existing Customers: One of the good sources of prospects is an existing

customer. For a salesperson, it is very easy to sell the products to an existing
customer instead of selling to the new customers.
 Never-ending Chain: This is a competing strategy to find out prospects. The

salesperson reaches many new customers with the help of existing customers.
The salesperson selling the product to existing customers asks to provide referral
to friends or relatives and the salesperson reaches the new customers. This chain
goes on and on.
 Cold Call: In this technique, the salesperson has to visit door to door to sell the
products. The sales process starts from introduction but in this case, the rejection
rate is high.
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 Directories: The salesperson tries to find out prospect customer contact with the
help of a directory. The salesperson can also collect the information through
membership directories of trade associations, social organization etc.
 Mailing: The companies promote their product through mails by sending
advertisements. The advantage is that it’s cheap and the company targets many
customers by sending mass mailers.
 Exhibition: The salesperson could target the prospective customers through

tradeshows and exhibitions. It’s one of the simplest ways and the salesperson
could also practically show the use of the product and the features.
Announcement is advance, before the exhibitions starts, is very helpful to attract
more customers.
Train/Educate the Prospects

After the salesperson has identified the potential customers, he should find out if they
are valid prospects. After finding the valid prospects, the salesperson has to give the
presentation.
There are several approaches for qualifying customers and the prominent approach is
MAN, i.e., Money, Authority and Need.
 Money: The salesperson should know the financial status of the customers
because money matters a lot, and, without it, the prospect cannot purchase the
product. The consumer or the prospect should be able to pay money in return of
the product.
 Authority: The prospect that is purchasing the product should have the authority
to make decision. This is important while dealing with government agencies,
corporate etc.
 Need: This is one of the most important points because if the prospect has
money and also the authority but there is no need of the product, he or she will
not purchase the product.
The salesperson has to find out about these aspects before proceeding to the selling
process.
Preparation for the Sale of Product

Once the prospect has been identified and qualified as discussed in first step, the
salesperson has to prepare for the sales of product or service. The following are the two
stages involved in preparation:
 Pre-approach
 Call Planning
Pre-approach
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This step involves collecting all the information important to learn about the prospects
and their needs. The following are the four steps of pre-approach:
 Prospect need and ability should be disclosed.
 All the required information, which would help the salesperson to prepare the
presentation
 Relevant information, which helps salesperson not create any errors during
presentation
 Confidence to tackle the questions of the prospect
Call Planning
Call Planning includes a particular planning sequence. The salesperson calls the customer
and explains the objective of the call and explains the product to makes appointments.
The first objective of the salesperson is to get an order from the customer. Some
objectives may also be required in the mid-of-the-call progress, depending on the call.
Following are a few objectives for call planning:
 Collect more information from the customer
 Find out the need of the customer and link with the features of product
 Take permission from customer before presentation of product
 Suggest a new distributor
The salesperson has to develop a strategy and plan accordingly to achieve the objective
or goal. The salesperson should be very careful while checking the background of the
customers and obtaining details. This helps to frame a strategy and develop a plan. The
calls made by salesperson are costly, so they have to take prior appointment.
Presentation
In this step, the salesperson has to give the presentation regarding the product to the
customer. She/he should explain the features of the product and how it will fulfill the
needs. The presentation should be clear and understandable by the customer. It should
also be interesting to keep the customer involved in the conversation.
A presentation can be classified into the following categories:
 Fully automated
 Semi-automated
 Memorized
 Organized
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 Unstructured
Fully Automated
In this approach, the salesperson gives the presentation with the help of slides in a
structured manner. He also explains and clears the doubts of the customers. Example:
Life Insurance.
Semi-Automated
The salesperson reads out the company brochures and adds comments as per
requirement or queries from the client. Example: Pharmaceutical products.
Memorized
The company presents its message, which is short and crisp, and which can be easily
memorized by the customer.
Organized
One of the most attractive, effective and often-used approaches is organized
presentation. The salesperson can make changes in the presentation as required but
based on the company’s pre-defined outline. In this approach, the sale person covers the
four steps, i.e., Attention, Interest, Desire and Action.
Unstructured
The salesperson and the customer together try to resolve the problems. Hence this
approach is also known as problem solving. This type of presentation is not well focused
many a times; some points are missed and time is wasted. Also the salesperson has to
face many queries from the customers and if the salesperson is new in the field, he/she
will not be able to answer the queries in an effective manner.
Thus, we can conclude that the presentation to the established customers should be
done by an effective salesperson.
Handling Objections
The salesperson has to struggle to sell the product to the customers. During the sales
process, the prospects raise objections, which can be stated or hidden. Prospects may
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state the reason for objections and give a chance to salesperson to answer. This is an
absolute situation because the prospect is informed regarding the objections.
Unfortunately, in many cases, the prospects do not provide the reason for objection of
the product. They hide their real reason for not buying the product. If the salesperson is
unable to know the real reason, he/she will not be able to resolve the problem.
To resolve this, there are two techniques to find out the objections.
 To allow the prospect to talk to find out the hidden objection.
 The observation gained by experience and mixing with the knowledge of the
prospects.
Many times, the objection is due to high price of the product. That objection can be
answered when the salesperson has the knowledge of the competitor’s products as well.
Also, in many cases, the prospects do not understand the technical aspects and are
misinformed. The salesperson should provide additional information in this case.
Now we can conclude that the objection can be resolved by providing an alternative
product to the prospects.
Closing the Sale

After answering the objections made by prospects, the salesperson asks for the prospect
to order the product. If the prospect does not agree to buy the product, the entire effort
gets waste. The following are some effective techniques to close the sale:
Gift Close
In this technique, the customers get an incentive for immediate buying action. The
salesperson informs regarding the benefits of the product to the prospects.
Example: A company provides an option to the prospect that if the bill exceeds
Rs.3000, he can buy a bed sheet worth 2000 for just Rs.200.
Here, if the customer has made a purchase of Rs.2500, he will check out to buy
something else to reach 3000. This helps the company to sell two extra products — one
for Rs.500 or more to reach 3000 and another, bed sheet for Rs.200.
Direct Close
This is one of the simplest techniques to close the sales. This happens when the buyer
has positive approach to buy a product. The salesperson summarizes the important
points that were made prior to sale.
Example: A prospect needs beauty cream and steps into a shop. The salesperson offers
the products; if required, shows the demo. Once the prospect is satisfied, he/she will buy
it.
If the salesperson is experienced, he/she will try to close it as early as possible because
he/she would understand if the prospect is inclined to buy the product. A good
salesperson makes sure that he has completed all the steps during sales process.
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Thus, closing is an important step in sales process. The other steps are meaningless
without closing.
Follow-up
After making the sale, the salesperson has to follow up with the prospects. After sales
activities are important parts of the selling process. This helps in reducing any doubt by
the customer regarding the product or service. There is also a chance that the buyer
with buy again in future.
There are specific policies by a company for after sales activities. Even though the
company provides good products, there will be few complaints from customers. The
complaints should be taken seriously and the company should try to resolve. This helps
the company to improve in terms of product or service.
An experienced salesperson tries to provide the best service to its customers. As a part
of handling complaints, they also keep the prospect informed regarding the latest
products or services and also provide other types of assistance. The salesperson should
build good rapport with the customer. This helps to get more customers because the
existing customer will refer to his friends and relatives.
The salesperson should thank the customer for the business and offer small gifts.
51
11. SDM — Sales Management Budget Sales and Distribution Management
Sales budget is a financial plan, which shows how the resources should be allocated to
achieve forecasted sales. The main purpose of sales budget is to plan for maximum
utilization of resources and forecast sales.
The information required to prepare a sales budget comes from many sources. One of
the best sources is the salesperson who deals with the products on a daily basis. The
company can also gather information from the production department regarding the date
of manufacture or expiry.
It is very important to forecast the accurate sales because the budget of other
departments is based on the sales budget. For example, the production is manufactured
as per the sales forecast, but if the sales forecast is not accurate, either the production
will be less or more than desired.
Objective of Sales Budgeting

The objective of sales budgeting is to plan for and control expenditure of resources
(money, material, facilities and people) necessary to achieve the desired sales objective.
It aims at leveraging and maximizing profits.
The purpose of sales budget is to achieve the objectives of the sales department. It also
acts as a planning tool. It helps a firm to set standards and strive to achieve them. It is
also an instrument of coordination between different departments in an organization like
sales, finance, production and advertising.
Sales budgeting is also a tool or control, which helps by comparison with the actual
results. If the actual of sale is more than that of budget, we can say it is a favorable
condition.
Methods of Sales Budgeting

There are a variety of methods which can be used to prepare a sales budget.
The following are some of the popular methods to prepare a sales budget:
Affordable Budgeting
This is a method generally used by organizations dealing in industrial goods. Also, firms,
which do not give importance to budgeting or firms which are having small size of
operation, make use of this judgmental method.
Rule of Thumb
Such as a given percentage of sales. Companies involved in mass selling of goods and
companies dominated by the finance function are the major users of this method.
52
Competitive Method
A few companies, the products of which face tough competition and many challenges in
selling and which need effective marketing strategy to maintain profits, make use of this
method. Using this method needs knowledge of how our competitor is working with
regards to resource allocation.
Companies make use of a combination of the above methods. Depending upon the past
experiences, budgeting approaches are refined time to time. The status of the sales &
marketing helps the organization to figure out the extent of sophistication needed in
approaching sales budgeting.
Preparation of Sales Budget

Preparation of sales budget is one of the most important processes of the sales.
Generally, companies prepare the sales budget based on the principle of bottom up
planning. Preparation of a budget for revenue and sales will depend on the sales
organizational structure; each departmental head is asked to forecast their sales volume
and expenses for the coming period.
For example, in a leading automobile company, the budget would be prepared district
wise and all the Budgets from each district would be submitted to the Regional office.
Clubbing of all the District budgets is done at the Regional or Zonal level or Division
wise. A division Budget is prepared and these Divisional wise budgets would vary product
wise or market wise. So the Division wise budgets are finally submitted to the Manager,
Sales as either product oriented or market group oriented
Division wise budgets across all divisions would be submitted to the Central sales
department and they would scan and finalize the company’s Sales Budget. Now the
marketing budget is combined with the budgets of the sales and marketing staff
departments, which will give a clear picture of total sales expenses, other marketing
related expenses and approximate sales revenue generated for the company. Some of
the common items in each sales budget include Employee Salaries, Administrative
Expenses, Marketing Expenses and many more.
Direct selling expenses include boarding and lodging for salesperson, food and travel,
and along with these:
 Commission or incentive based sales
 Employee benefits like medical insurance, gratuity and retirement contribution
 Office expenses like internet charges, mailing, telephone, office supplies
 Miscellaneous costs
Advertising and promotional materials like:
 Selling aids
 Contest awards
53
 Product samples catalogues
 Price lists
 Other miscellaneous materials
Reviewing of past sales budget helps in better planning of future sales budget by
informing about the pros and cons of the past budgets. This leads to better budget for
future and can minimize the differences between the actual and the budgeted.
Communicating Overall Objectives

It is important for the top management to present their goals and objectives to the
marketing department and argue effectively for an equitable share of funds. The chief
sales executive of the firm should take the inputs from all supervisors and managers in
preparing the sales budgets and encourage them to come with different ideas so that
after the preparation of the Budget, they could take responsibility and show involvement
in achieving the targets and implementing them.
While preparing the sales budget, we need to set a preliminary plan so that we can
allocate the resources and the efforts needed to sell the products, increase the customer
base and territories. Any revisions in the Budget can be identified in the initial sales
budget so that the sales manager could provide a realistic budget with maximum
efficiency. Deviations should also be identified in each stage of development of sales
budget
As the budget is prepared by taking inputs from all levels of the hierarchy, the entire
team would cooperate to achieve it. In case of failure, the sales manager should have
control points in order to get the budget on track. He could also include some
motivational factors like rewards, public commendations and recognition in the budget,
which will motivate the employees to have a positive attitude, resulting in achievement
of the budget goals.
Selling the Sales Budget to Top Management

There should be uniformity among the Budgets provided by different divisions. Top
management of Sales and Marketing should propose the Budget that anticipates the
future challenges and is competitive, along with the proposal submitted by the Heads of
other divisions
Each and every division usually demands for additional funds and so there could be
deviation from sales budget. These deviations should be addressed by the sales
managers and they should justify each deviation in their budgets, as these would affect
the profit percentage. In other words, there should be scope for deviations as well in
sales budget.
54
12. SDM — Marketing Channel Sales and Distribution Management
Marketing channel can be defined as the procedure of activities that need to be

performed to distribute the finished goods at the point of production to the customer at
the point of consumption.
Manufactures use different channels to distribute the finished goods to customers.

However, the most common methods are wholesale or retail, which are discussed
further.
The profit is distributed between the elements of distribution channel, so if the channel is
longer, each element has lower profit margin and there is less scope for discounts for the
consumer. In a shorter channel, the distribution is divided between fewer elements,
profit is higher for each element and higher discounts can be provided to the customer.
Wholesale
In this distribution channel, wholesalers buy the products and then distribute to
consumers. Wholesalers directly purchase goods from the manufacturer in large quantity
at a discounted price. Several service taxes and sales taxes are also reduced, which in
turn reduces the cost of the final product.
55
The wholesaler then sells the product to the consumer. From the consumer’s
perspective, wholesale is a cheaper option as the cost of the product is lower than retail
value and for wholesalers, the profit margin is higher because of bulk purchase from the
producer.
Retail
In retail distribution channel, the finished goods are purchased by a wholesaler or
distributor, the wholesaler sells to retail shops and then the product is sold to the
consumer.
The wholesalers buy the product in bulk; then the product is sold to the retailers in
lesser quantities; further, the retail shops sell the product to the customers. Here the
distribution channel is longer than wholesale, so the profit margin for each element is
comparatively lower and the customer gets a higher cost than wholesale.
56
Source: http://ww2.nscc.edu/gerth_d/MKT2220000/Lecture_Notes/unit13.htm
Unit 13: Channels of Distribution, Logistics, and Wholesaling
The Importance of Distribution:
Most producers use intermediaries to bring their products to market. They try to develop
a distribution channel (marketing channel) to do this. A distribution channel is a set of
interdependent organizations that help make a product available for use or consumption by the
consumer or business user. Channel intermediaries are firms or individuals such as wholesalers,
agents, brokers, or retailers who help move a product from the producer to the consumer or business
user.
A company’s channel decisions directly affect every other marketing decision. Place decisions, for
example, affect pricing. Marketers that distribute products through mass merchandisers such as Wal-
Mart will have different pricing objectives and strategies than will those that sell to specialty stores.
Distribution decisions can sometimes give a product a distinct position in the market. The choice of
retailers and other intermediaries is strongly tied to the product itself. Manufacturers select mass
merchandisers to sell mid-price-range products while they distribute top-of-the-line products through
high-end department and specialty stores. The firm’s sales force and communications decisions
depend on how much persuasion, training, motivation, and support its channel partners need.
Whether a company develops or acquires certain new products may depend on how well those
products fit the capabilities of its channel members.
Some companies pay too little attention to their distribution channels. Others, such as FedEx, Dell
Computer, and Charles Schwab have used imaginative distribution systems to gain a competitive
advantage.
Functions of Distribution Channels

Distribution channels perform a number of functions that make possible the flow of goods from the
producer to the customer. These functions must be handled by someone in the channel. Though the
type of organization that performs the different functions can vary from channel to channel, the
functions themselves cannot be eliminated. Channels provide time, place, and ownership utility. They
make products available when, where, and in the sizes and quantities that customers want.
Distribution channels provide a number of logistics or physical distribution functions that increase the
efficiency of the flow of goods from producer to customer. Distribution channels create efficiencies
by reducing the number of transactions necessary for goods to flow from many different
manufacturers to large numbers of customers. This occurs in two ways. The first is called breaking
bulk. Wholesalers and retailers purchase large quantities of goods from manufacturers but sell only
one or a few at a time to many different customers. Second, channel intermediaries reduce the
number of transactions by creating assortments—providing a variety of products in one location—so
that customers can conveniently buy many different items from one seller at one time. Channels are
efficient. The transportation and storage of goods is another type of physical distribution function.
Retailers and other channel members move the goods from the production site to other locations
where they are held until they are wanted by customers. Channel intermediaries also perform a
number of facilitating functions, functions that make the purchase process easier for customers and
manufacturers. Intermediaries often provide customer services such as offering credit to buyers and
accepting customer returns. Customer services are oftentimes more important in B2B markets in
which customers purchase larger quantities of higher-priced products.
Some wholesalers and retailers assist the manufacturer by providing repair and maintenance
service for products they handle. Channel members also perform a risk-taking function. If a retailer
buys a product from a manufacturer and it doesn’t sell, it is ―stuck‖ with the item and will lose money.
Last, channel members perform a variety of communication and transaction functions. Wholesalers
buy products to make them available for retailers and sell products to other channel members.
Retailers handle transactions with final consumers. Channel members can provide two-way
communication for manufacturers. They may supply the sales force, advertising, and other marketing
communications necessary to inform consumers and persuade them to buy. And the channel
members can be invaluable sources of information on consumer complaints, changing tastes, and
new competitors in the market.
The Internet in the Distribution Channel
By using the Internet, even small firms with limited resources can enjoy some of the same competitive
advantages as their largest competitors in making their products available to customers internationally
at low cost. E-commerce can result in radical changes in distribution strategies. Today most goods
are mass-produced, and in most cases end users do not obtain products directly from manufacturers.
With the Internet, however, the need for intermediaries and much of what has been assumed about
the need and benefits of channels will change. In the future, channel intermediaries that physically
handle the product may become largely obsolete. Many traditional intermediaries are already being
eliminated as companies question the value added by layers in the distribution channel. This removal
of intermediaries is termed disintermediation, the elimination of some layers of the distribution
channel in order to cut costs and improve the efficiency of the channel.
Wholesaling:
Wholesaling is all activities involved in selling products to those buying for resale or business
use. Wholesaling intermediaries are firms that handle the flow of products from the manufacturer to
the retailer or business user.
Wholesaling intermediaries add value by performing one or more of the following channel functions:
 Selling and Promoting

 Buying and Assortment Building
 Bulk-Breaking
 Warehousing
 Transportation
 Financing
 Risk Bearing
 Market Information – giving information to suppliers and customers about competitors, new
products, and price developments
 Management Services and Advice – helping retailers train their sales clerks, improving store
layouts and displays, and setting up accounting and inventory control systems.
Independent Intermediaries
Independent intermediaries do business with many different manufacturers and many different
customers. Because they are not owned or controlled by any manufacturer, they make it possible for
many manufacturers to serve customers throughout the world while keeping prices low.
Merchant Wholesalers
Merchant wholesalers are independent intermediaries that buy goods from manufacturers and sell
to retailers and other B2B customers. Because merchant wholesalers take title to the goods, they
assume certain risks and can suffer losses if products get damaged, become out-of-date or obsolete,
are stolen, or just don’t sell. At the same time, because they own the products, they are free to
develop their own marketing strategies including setting prices. Merchant wholesalers include full-
service merchant wholesalers and limited-service wholesalers. Limited-service wholesalers are
comprised of cash-and-carry wholesalers, truck jobbers, drop shippers, mail-order wholesalers, and
rack jobbers.
Merchandise Agents or Brokers

Merchandise agents or brokers are a second major type of independent intermediary. Agents and
brokers provide services in exchange for commissions. They may or may not take possession of the
product, but they never take title; that is, they do not accept legal ownership of the product. Agents
normally represent buyers or sellers on an ongoing basis, whereas brokers are employed by clients
for a short period of time. Merchandise agents or brokers include manufacturers’ agents
(manufacturers’ reps), selling agents, commission merchants, and merchandise brokers.
Manufacturer-Owned Intermediaries
Manufacturer-owned intermediaries are set up by manufacturers in order to have separate
business units that perform all of the functions of independent intermediaries, while at the same time
maintaining complete control over the channel. Manufacturer-owned intermediaries include sales
branches, sales offices, and manufacturers’ showrooms. Sales branches carry inventory and provide
sales and service to customers in a specific geographic area. Sales offices do not carry inventory but
provide selling functions for the manufacturer in a specific geographic area. Because they allow
members of the sales force to be located close to customers, they reduce selling costs and provide
better customer service. Manufacturers’ showrooms permanently display products for customers to
visit. They are often located in or near large merchandise marts, such as the furniture market in High
Point, North Carolina.
Types of Distribution Channels:
The first step in selecting a marketing channel is determining which type of channel will best meet
both the seller’s objectives and the distribution needs of customers.
Channel Length
Distribution channels can be described as being either short or long. A short channel involves few
intermediaries. A long channel, on the other hand, involves many intermediaries working in
succession to move goods from producers to consumers. In general, business products tend to move
through shorter channels than consumer products due to geographical concentrations and
comparatively few business purchases. Service firms market primarily through short channels
because they sell intangible products and need to maintain personal relationships within their
channels. Not-for-profit institutions also tend to work with short, simple, and direct channels. Please
note Table 15.1 below that highlights the characteristics of short and long marketing channels.
Consumer Channels
The simplest and shortest distribution channel is a direct channel. A direct channel carries goods
directly from a producer to the business purchaser or consumer. One of the newest means of selling
in a direct channel is the Internet. A direct channel may allow the producer to serve its customers
better and at a lower price than is possible using a retailer. Sometimes a direct channel is the only
way to sell the product because using channel intermediaries may increase the price above what
consumers are willing to pay. Another reason to use a direct channel is control.
Many producers, however, choose to use indirect channels to reach consumers. Customers are
familiar with certain retailers or other intermediaries and habitually turn to them when looking for what
they need. Intermediaries also help producers fulfill the channel functions previously cited. By creating
utility and transaction efficiencies, channel members make producers’ lives easier and enhance their
ability to reach customers.
The producer-retailer-consumer channel is the shortest indirect channel. GE uses this channel when it
sells small appliances through large retailers such as Wal-Mart or Sears. The producer-wholesaler-
retailer-consumer channel is another common distribution channel in consumer marketing.
Business-to-Business Channels
B2B distribution channels facilitate the flow of goods from a producer to an organizational customer.
Generally, B2B channels parallel consumer channels in that they may be direct or indirect. The
simplest indirect channel in industrial markets occurs when the single intermediary—a merchant
wholesaler referred to as an industrial distributor rather than a retailer—buys products from a
manufacturer and sells them to business customers. Direct channels are more common to business-
to-business markets because B2B marketing often means selling high-dollar, high-profit items to a
market made up of only a few customers. In such markets, it pays for a company to develop its own
sales force and sell directly to customers at a lower cost than if it used intermediaries.
Channels for Services

Because services are intangible, there is no need to worry about storage, transportation, and the
other functions of physical distribution. In most cases, the service travels directly from the producer to
the customer. Some services, however, do need an intermediary, often called an agent, who helps
the parties complete the transaction. Examples include insurance agents, stockbrokers, and travel
agents.
Note the alternative distribution channels for consumer goods, business goods, and services
illustrated in Figure 15.2 below:
Horizontal Marketing Systems
A horizontal marketing system is a channel arrangement in which two or more companies at one
level join together to follow a new marketing opportunity. By working together, companies can
combine their financial, production, or marketing resources to accomplish more than any one
company could alone. Companies can join forces with competitors or noncompetitors. McDonald’s
places ―express‖ versions of its restaurants in Wal-Mart stores. McDonald’s benefits from Wal-Mart’s
considerable store traffic, while Wal-Mart keeps hungry shoppers from having to go elsewhere to eat.
Multichannel Distribution Systems

A multichannel distribution system is a distribution system in which a single firm sets up two or
more marketing channels to reach one or more customer segments. This is also called a hybrid
marketing channel. Multichannel distribution systems offer many advantages to companies facing
large and complex markets. With each new channel, the company expands its sales and market
coverage and gains opportunities to tailor its products to the specific needs of diverse customers.
Multichannel distribution systems, however, are harder to control, and they generate conflict as more
channels compete for customers and sales.
Channel Strategy:
Marketers face several strategic decisions in choosing channels and marketing intermediaries for their
products. Selecting a specific channel is the most basic of these decisions. Marketers must also
resolve questions about the level of distribution intensity, the desirability of vertical marketing
systems, and the performance of current intermediaries.
Marketing Channel Selection

Marketing channel selection can be facilitated by analyzing market, product, producer, and
competitive factors. A marketer could refer to Table 15.1 above for insights into whether the
distribution channel should be short or long for the product in question. Then, he or she could refer to
Figure 15.2 above and consider the alternative long or short channels for consumer goods, business
goods, or services.
Distribution Intensity
Distribution intensity refers to the number of intermediaries through which a manufacturer
distributes its goods. The decision about distribution intensity should ensure adequate market
coverage for a product. In general, distribution intensity varies along a continuum with three general
categories: intensive distribution, selective distribution, and exclusive distribution.
Intensive Distribution
An intensive distribution strategy seeks to distribute a product through all available channels in an
area. Usually, an intensive distribution strategy suits items with wide appeal across broad groups of
consumers, such as convenience goods.
Selective Distribution
Selective distribution is distribution of a product through only a limited number of channels. This
arrangement helps to control price cutting. By limiting the number of retailers, marketers can reduce
total marketing costs while establishing strong working relationships within the channel. Moreover,
selected retailers often agree to comply with the company’s rules for advertising, pricing, and
displaying its products. Where service is important, the manufacturer usually provides training and
assistance to dealers it chooses. Cooperative advertising can also be utilized for mutual benefit.
Selective distribution strategies are suitable for shopping products such as clothing, furniture,
household appliances, computers, and electronic equipment for which consumers are willing to spend
time visiting different retail outlets to compare product alternatives. Producers can choose only those
wholesalers and retailers that have a good credit rating, provide good market coverage, serve
customers well, and cooperate effectively. Wholesalers and retailers like selective distribution
because it results in higher sales and profits than are possible with intensive distribution where sellers
have to compete on price.
Exclusive Distribution
Exclusive distribution is distribution of a product through one wholesaler or retailer in a specific
geographical area. The automobile industry provides a good example of exclusive distribution.
Though marketers may sacrifice some market coverage with exclusive distribution, they often develop
and maintain an image of quality and prestige for the product. In addition, exclusive distribution limits
marketing costs since the firm deals with a smaller number of accounts. In exclusive distribution,
producers and retailers cooperate closely in decisions concerning advertising and promotion,
inventory carried by the retailers, and prices. Exclusive distribution is typically used with products that
are high priced, that have considerable service requirements, and when there are a limited number of
buyers in any single geographic area. Exclusive distribution allows wholesalers and retailers to recoup
the costs associated with long selling processes for each customer and, in some cases, extensive
after-sale service. Specialty goods are usually good candidates for this kind of distribution intensity.
Channel Conflict
The channel captain or leader, the dominant and controlling member of a distribution channel, must
work to resolve conflicts between channel members. Conflicts can be horizontal and vertical.
Horizontal & Vertical Conflict

Horizontal conflict occurs among firms at the same level of the channel (i.e. between two
retailers). Vertical conflict is conflict between different levels of the same channel (i.e. between a
wholesaler and a retailer). Some conflict in the channel takes the form of healthy competition. Severe
or prolonged conflict, however, can disrupt channel effectiveness and cause lasting harm to channel
relationships.
Vertical Marketing Systems

A vertical marketing system (VMS) is a distribution channel structure in which producers,
wholesalers, and retailers act as a unified system. One channel member owns the others, has
contracts with them, or has so much power that they all cooperate. A conventional distribution
channel consists of one or more independent producers, wholesalers, and retailers. A vertical
marketing system, on the other hand, provides a way to resolve the channel conflict that can occur in
a conventional distribution channel where channel members are separate businesses seeking to
maximize their own profits—even at the expense sometimes of the system as a whole. The VMS can
be dominated by the producer, wholesaler, or retailer. There are three major types of vertical
marketing systems: corporate, contractual, and administered.
A corporate VMS is a vertical marketing system that combines successive stages of production and
distribution under single ownership—channel leadership is established through common ownership. A
little-known Italian eyewear maker, Luxottica, sells its many famous eyewear brands—including
Giorgio, Armani, Yves Saint Laurent, and Ray-Ban—through the world’s largest optical chain,
LensCrafters, which it also owns.
A contractual VMS is a vertical marketing system in which independent firms at different levels of
production and distribution join together through contracts to obtain more economies or sales impact
than they could achieve alone. Coordination and conflict management are attained through
contractual agreements among channel members. The franchise organization is the most common
type of contractual relationship. There are three types of franchises:manufacturer-sponsored retailer
franchise system (Ford Motor Co.), manufacturer-sponsored wholesaler franchise system (Coca-Cola
bottlers), and service-firm-sponsored retailer franchise system (McDonald’s). The fact that most
consumers cannot tell the difference between contractual and corporate VMSs shows how
successfully the contractual organizations compete with corporate chains.
An administered VMS is a vertical marketing system that coordinates successive stages of

production and distribution, not through common ownership or contractual ties, but through the size
and power of one of the parties. Manufacturers of a top brand can obtain strong trade cooperation
and support from resellers (P&G). Large retailers such as Wal-Mart can exert strong influence on the
manufacturers that supply the products they sell.
Logistics:
Logistics is the process of designing, managing, and improving the movement of products through
the supply chain. The supply chain is all the firms that engage in activities necessary to turn raw
materials into a product and put it in the hands of the consumer or business customer. The difference
between a supply chain and a distribution channel is the number of members and their function. A
supply chain consists of those firms that supply the raw materials, component parts, and supplies
necessary for a firm to produce a product plus the firms that facilitate the movement of that product
from the producer to the ultimate users of the product—the channel members.
Physical Distribution
Logistics has the objective of delivering exactly what the customer wants—at the right time, in the
right place, and at the right price. In planning for the delivery of goods to customers, marketers have
usually looked at a process termed physical distribution, which refers to the activities used to move
finished goods from manufacturers to final customers. Physical distribution activities include order
processing, warehousing, materials handling,transportation, and inventory control. This process
impacts how marketers physically get products where they need to be, when they need to be there,
and at the lowest possible cost.
In logistics, the focus is on the customer. When planning for the logistics function, firms consider the
needs of the customer first. The customer’s goals become the logistics provider’s goals. With most
logistics decisions, firms must compromise between low costs and high customer service.

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SALES MANAGEMENT

What is sales management?

The role of a sales manager

People Manager Customer Manager Business Manager

•Recruitment & Selection •Sales process •Connect to HQ & Field

Types of CUSTOMERS and ACCOUNT RELATIONSHIPS in sales management

Intrinsic Value Transactional

EFFICIENCY V/S EFFECTIVENESS

COMPARING GO-TO-MARKET ALTERNATIVES

Qualifying Developin Organising

Market Potential > Sales Potential > Sales Forecast

Sales Forecasting Procedures

1) Preparing a forecast for general economic conditions

2) Preparing a forecast of industry sales

3) Preparing a forecast of the product or company sales

Definition Area of Area of Area of Area of

Advantages Product knowledge, Low cost, no Deeper customer Effectiveness in

TYPES OF BUYING CENTRES

I Economic Buying Influence

Role: Asks ‘why’, gives final approval

Characteristics: Access to money, can release money, veto power

Focus: Total organization, Bottom line, The future

II User Buying Influence

Role: To decide on how a purchase will affect job performance

Characteristics: Implementation oriented, use or supervise use of product or service

Focus: Tactical, the job to be performed

III Technical Buying Influence

Role: To eliminate alternatives, to recommend

Focus: Product specifications, Asks ‘what’ not ‘why’

Role: Helps guide the sale

TYPES OF PURCHASES IN AN ORGANIZATION

SALES FORCE SIZING METHODS

Sales Force Training and Consulting

Evolution of Sales What is sales insight?

• Technology changing the way organizations buy.

Induction, Funnel Management, Account

Territory & Time Management

Sales Targets (Quotas)

Using Goals to Guide and Manage Performance of a Sales Force

Characteristics of a Good Target

Attainable Easy to understand Complete Timely

Different Types of Goals or Quotas

Input-Based Goals Output-Based Goals

• Often based on past sales.

Why the incentive culture?

Sales Force Analytics

About the Tutorial

Disclaimer & Copyright

Disclaimer & Copyright ........................................................................................................................... i

Table of Contents .................................................................................................................................. ii

1. SDM — INTRODUCTION ..................................................................................................... 1

Skills of a Sales Executive....................................................................................................................... 2

Importance of Sales Management ......................................................................................................... 3

Objective of Sales Management ............................................................................................................ 4

2. SDM — SALES MANAGEMENT STEPS ................................................................................. 5

Set Objective ......................................................................................................................................... 5

Develop Sales Strategy .......................................................................................................................... 5

3. SDM — PROCESS ............................................................................................................... 7

4. SDM — SALES METHODS ................................................................................................. 13