Sales & Distribution Management R Hanji

Sales & Distribution Management R Hanji
Concept of Selling:
Concept selling refers to raising awareness of the benefits or USPs (Unique Selling
Points) of a companys products and services after understanding the requirements of the target
customers. Such a method of selling is bound to gain the prospects attention as the salesperson
or marketing campaign is communicating an idea that they can relate to and identify with. For
example, life insurance agents often sell their products by creating a concept or story around
them.
The salesperson has to go through a few steps before the final sale is made. These
involve educating the prospects about the concept, convincing them about the benefits of the
product, explaining its features, defining the return on investment involved and finally selling.
Such a method is usually beneficial in the marketing of innovative and new products.
Here, its role is to educate the prospective customers and using product benefits and USPs to
create a need. It involves the selling of benefits more than selling the features as a part of
providing solutions to customers.
The risk in concept-selling is that the prospects image of their problem or unsatisfied
need may not match what the product offers. However, this method proves to be beneficial in
the long run as it is a sure-shot method of getting repeat purchases.
Objectives of selling:
Building Product Awareness A common task of salespeople, especially when selling in
business markets, is to educate customers on new product offerings. In fact, salespeople serve a
major role at industry trades shows (see the Sales Promotion tutorial) where they discuss
products with show attendees. But building awareness using personal selling is also important in
consumer markets. As we will discuss, the advent of controlled word-of-mouth marketing is
leading to personal selling becoming a useful mechanism for introducing consumers to new
products.
Creating Interest The fact that personal selling involves person-to-person
communication makes it a natural method for getting customers to experience a product for the
first time. In fact, creating interest goes hand-in-hand with building product awareness as sales
professionals can often accomplish both objectives during the first encounter with a potential
customer.
Providing Information When salespeople engage customers a large part of the
conversation focuses on product information. Marketing organizations provide their sales staff
with large amounts of sales support including brochures, research reports, computer programs
and many other forms of informational material.
Stimulating Demand By far, the most important objective of personal selling is to
convince customers to make a purchase. In The Selling Process tutorial we will see how
salespeople accomplish this when we offer detailed coverage of the selling process used to gain
customer orders.
Reinforcing the Brand Most personal selling is intended to build long-term
relationships with customers. A strong relationship can only be built over time and requires
regular communication with a customer. Meeting with customers on a regular basis allows
salespeople to repeatedly discuss their companys products and by doing so helps strengthen
customers knowledge of what the company has to offer.
Sale volume objective-The most common and frequently set sales objective is to set in
terms of sales volume. It is otherwise called as sales quota. This objective expresses in rupees or
Sahyadri Commerce & Management College, Shimoga Page 1

units the volume which the management expects should be sold by a salesman within a given
time in his territory. It is worth emphasizing that salesmans ability to develop sales volume is
only a partial measure of his effectiveness.
These sales volume objectives can be set for individual, product or group of products,
individual salesman, branch, district, or sales region, time periods, types of customers and for
the sales call or the order.
Profit objectives- Management establishes profit objectives for each salesman, each
product, or line, each branch, district, or region, customer type, rupee sales, sales territory, call
or each order. It could be for a definite period of time. It is the cost accounting department that
has a major role to play in having this segmented target fixing. Profit objective, here, is the
percentage of gross profit to be earned on the sales.
Expenses objectives- Direct selling expenses decide the sales and the profit as noted
earlier. Therefore, direct sales expenses objectives are established for each salesman as a
percentage of total sales, per rupee sales, per customer, per call, and per order.
The direct selling expenses include salesmans remuneration, travel, lodging,
entertainment and other incidental expenses incurred in selling. This expense objective is
increasingly used as a standard measure of performance.
Activity objectives- Many sales organizations have set specific objectives for salesmans
activities such as number of calls, calls of interviews, number of demonstrations, number of new
prospects, number of displays arranged, and the number of store sales for a time period.
Research conducted in this line has clearly shown that there is definite relationship
between effective selling and the number of interviews, demonstrations, prospects, promotions,
calls made and so on.
These sales activity objectives may be established for number of calls per salesman, per
day, customers per salesman, orders per customer per year, orders per salesman per day or a
week or a month, presentations per day, prospects secured daily or weekly or monthly, hours
spent in sales office and field, displays installed, surveys completed, collections made, meetings
held with dealers and so on.
These objectives can be combined for better results because; there would be cross-
verification of the facts and the happening of the events.
Sales Management: Functions

Sales management facilitates the directions of activities and functions which are
involved in the distribution of goods and services. According to Philip Kotler, Marketing
management is the analysis, planning implementation and control of programmes designed to
bring about desired exchanges with target markets for the purpose of achieving organizational
objectives.
It relies heavily on designing the organizations offering in terms of the target markets needs and
desires and using effective pricing, communication and distribution to inform, motivate and
service the market.
Sales or marketing management is concerned with the chalking out of a definite

programme, after careful analysis and forecasting of the market situations and the ultimate
execution of these plans to achieve the objectives of the organization. Further their sales plans to
a greater extent rest upon the requirements and motives of the consumers in the market aimed at.

To achieve this objective the organization has to give heed to the right pricing, effective
advertising and sales promotion, discerning distribution and stimulating the consumers through
the best services. To sum up, marketing management may be defined as the process of
management of marketing programmes for accomplishing organizational goals and objectives. It
involves planning, implementation and control of marketing programmes or campaigns.
Functions:
 Sales research and planning.
 Demand creation.
 Sales costs and budget.
 Price fixations.
 Development of products.
 Establishing sales territories.
 Co-ordination of sales.
These functions differ from company to company according to their size and the nature
of their products.
Great salespeople, like great athletes, simply do the basics very well. Some of us would
like to believe that theres a shortcut around the basics; that, if we could only find it, there s a
secret formula out there somewhere for just sitting back and letting the money roll in. The
sooner you get rid of that illusion, the sooner you can get on with reaching the heights you want
to reach through effective use of the basics.
1. Prospecting. If youre like most of the people in my seminar audiences, just hearing
the word prospecting makes you a little nervous. Dont think that way. If you dont like to
prospect, its because no one has taught you the professional way to do it. Im going to.
2. Making original contact the professional way. We all meet new people all the
timein social situations, at events for our children, at church, in non-sales business settings.
The key to success in selling is to refine your skills during these initial contacts to become
memorable to the other folks and to remember as much about them as possible so you can
impress them even more on your second meetingwhich, hopefully, will be a selling situation.
3. Qualification. Many salespeople spend most of their time talking to the wrong people.
If you do that, it doesnt matter how eloquently you present your service or product. Your
earnings are going to be low. Ill show you how professionals make sure that they invest their
time with the right people who can make yes decisions, instead of expending it on the wrong
people who can only make no decisions.
4. Presentation. After you qualify and know that this person has a need for your product
or service, its now time to move on to the fourth basic which is the presentation or
demonstration. You must present your product in such a way that they see that its just what they
had in mind all along.
5. Handling objections. The fifth basic method of developing your competence is to learn
how to handle objections effectively. Maybe youve had prospects who want to wait and think it
over; prospects who already have one of whatever it is youre selling; prospects whove been
doing business with your competitor for years. Have you ever heard any of these things? If
youve been in sales longer than a week, you undoubtedly have. Read on. Youll find material
thatll make you smile the next time you hear these objections. Youll smile, bore inand close
a delightful number of such sales. But theres a price to pay for that smile: You ve got to learn
the concept, adapt the idea to your offering, and learn the words that make it work.

6. Closing the sale. Many average to good salespeople prospect, make contacts, qualify,
present, and handle objections so well that they manage to get by without learning to close
competently. And that, of course, is what keeps them from being great. Closing contains
elements of both art and science, and those elements can be learned.
7. Referrals. After youve satisfied the needs of your client and closed the sale, you have
earned the right to your next prospect. By that I mean getting referral business from each and
every client. That is the seventh and final basic. If theyre happy, theyll want someone else to be
happy, too. Ill teach you simple steps to getting solid, qualified referrals every time, if youre
willing to learn.
But many of us have forgotten how to learn, so lets quickly review the steps to learning
that apply not only to everything in this book, but to anything you choose to study.
OR
The process of selling involves the following steps:
(i) Pre-Sale Preparations: A salesman has to serve the customer and must identify a
customers problems and prescribe a suitable solution. For this, a salesman must be familiar with
the product characteristics, the market, the organization and the techniques of selling. Also he
must know the customer, himself and the company. He must know buying motives and buying
behavior of the customers or prospects. He should be aware of current competition and market
environment.
(ii) Prospecting: A salesman has to seek potential customers who are his prospects i.e.,
probable buyers. A prospect has unsatisfied need, ability to buy and willingness to buy.
Prospecting relates to locating prospects. They can be through present customers, other
salesman, phone directories, or by direct cold canvassing. These prospects must, of course, be
accessible to salesman. Thus, prospecting is similar to the seeking function for the total
marketing activities.
(iii) Pre-Approach: After locating a prospect, salesman should find out his needs and
problems, his preferences and behavior etc. The product may have to be tailored to the specific
requirement of customer. On the basis of adequate information of the customers wants and
desires, salesman can prepare his plan of sales presentation or interview. The sales presentation
should match to the needs of the individual prospect. It should enable the salesman to handle his
prospect smoothly through the buying process, i.e., during, the sales talk.
(iv) Approach: The next step is approach where the salesman comes face to face with the
prospect. The approach has two parts, i.e., obtaining an interview, the first contact. He may use
for this, telephone, reference or an introduction from another customer; and his business card.
The salesman must be able to attract the prospects attention and get him interested in the
product. It is very important to avoid being dismissed before he is able to present his product.
(v) Sales Presentation: After the salesman has found a prospect and he has matched the
customers wants with his product, he becomes ready to make a sales presentation. The sales
presentations are closely related to the buying process of customers. The sales interview should
generally go according to AIDA theory (i.e., Attention, Interest, Desire and Action).
Attention is attracted and interest is gained. The salesman at this point can increase the
interest through smart and lively sales talk together with proper demonstration. Sometimes,
visual aids are used in sales demonstration. These are common for capital goods or machineries.
After explaining the product characteristics and expected benefits, the salesman should
find out customers reactions. The prospective customers all queries and doubts must be clearly
answered. The salesman should find the customer satisfied. A satisfied sales presentation must

be clear, complete, and assertive about products superior performance and be able to gain the
confidence of the prospect.
(vi) Objections: At any stage of sales interview, the prospect may attempt to postpone
the purchase or resist purchase. A good salesman must consider an objection as an indication of
how the prospects mind is working. The clever salesman should welcome an objection, interpret
it correctly and will avoid it tactfully, without arguing with the customer.
(vii) Close: The close is the act of actually getting the prospects consent to buy. It is
culmination of the efforts so far made by the salesman and is the climax of the entire sales
process.
It is very important for salesman to be alert and find out the right moment for closing the
deal. This is the Psychological or reaction movement, at which the minds of salesman and
prospect are tuned together.
The salesman watches every sign of prospect willing to buy and shall apply the close.
A sale is never complete until the product is finally in the hands of a satisfied customer.
(viii) The Follow-up: This stage is the post sale contacts. The salesman after obtaining
the order arranges for dispatch and delivery of the product, facilitate grant of credit, reassure the
customer on the wisdom of his purchase decision, and minimize dissatisfaction, if any.
The salesman should contact the customer periodically to maintain his goodwill. A sale
is made not in the mind of salesman, or over the counter, but in the mind of the buyer. A
salesman should have the quality of empathy, i.e., reading customers mind. This will provide
the salesman accurate information of buyers motives, feelings, emotions, and attitude etc.
Salesmanship:
According to W.G Carter, Salesmanship is in attempt to induce people to buy goods.
According to the National Association of Marketing Teachers of America, It is the ability to
persuade people to buy goods or services at a profit to the seller and benefit to the buyer.
According to J.C. Jagasia, It is an ability to remove ignorance, doubt, suspicion and
emotional objection concerning the usefulness of a product.
According to Holtzclaw, Salesmanship is the power to persuade plenty of people to
pleasurably and permanently purchase your product at a profit.
According to Sefred Gross, Salesmanship is the art of increasing satisfaction by
persuading those people who should do so to buy specific goods or service.
Thus, salesmanship is the process of persuading a person to buy goods or services. It
does not mean that salesmanship is applied only to personal selling; it can also be applied to
advertising- printed salesmanship. Salesmanship in its broader meaning, includes all types of
persuasion means, by a seller, viz., advertising, personal selling and other methods.

Product knowledge:
Product knowledge is an essential sales skill. Understanding your products' features
allows you to present their benefits accurately and persuasively. Customers respond to
enthusiastic sales staff that who are passionate about their products and eager to share the
benefits with them.
An understanding of a good or service that might include having acquired information
about its application, function, features, use and support requirements. A business sales
representative is an example of an individual that is typically expected to acquire considerable
product knowledge about the goods and services that they are responsible for selling to
consumers.
Consumer knowledge:
Consumer knowledge refers to understanding your consumers, their needs, wants and
aims. It is essential if a business is to align its processes, products and services to build real
consumer relationships.
Consumer knowledge is defined as the research an organization has about the needs and
wants of their consumers. Consumer knowledge helps an organization to align its business in
line with customer expectations and helps the organization to build strong customer relationship.
Most of the organizations have knowledge about their customers but they do not try to gain
more insight into it and are unaware of the customer expectations. So to produce products and
services according to customer expectation and satisfy customers companies should have
consumer knowledge.
Consumer knowledge can be both quantitative as well as qualitative. Reports and data
from CRM system and also past sales data can provide quantitative data which can form as
customer knowledge. This type of data can be used for segmentation of customers according to
their past buying behaviors. Qualitative data can be information about customers organization.
For example if customer has signed a new deal which expands its portfolio. This type of
information can tell about financial status of customer and also give way for new opportunity
which will lead to strengthening of ties with customers.
Also consumer knowledge is how much customer is aware about the product. This can
be divided into two types: product familiarity and product knowledge. Product familiarity tells
consumers about depth and breadth of product. It makes customer aware about existence of the
product. Thus it will make consumer familiar about the product which is available in market.
Product knowledge is knowledge given to consumers about the characteristics of product and
making customer aware about usage of product. Also, companies provide expertise on product
they are selling thus increasing product knowledge of the consumers. These are dimensions of
consumer knowledge which can be explored by various sources of media.
Sales Planning: Importance

The importance of planning cannot be over emphasized for an organization or even for
an individual. From the start of a small business, to managing a large business, from starting

your own career, to the last stages of your working life, planning will be the most important tool
that you use in marketing. Here are 7 reasons justifying the importance of planning.
1) Better position: Whenever you plan, you plan to succeed. Thus, it is not a surprise that
planning will eventually lead you to have better success and achieve a better position in the
market, be it a brand or a product. Any of your goals can have more chances of success with
proper planning.
2) Progress: If you are planning to succeed, the plan will include your progress as well as
the best pathway to achieve the goal. The management of the organization always keeps goals
for itself which it wants to achieve. These goals, and the subsequent planning, will always lead
to the progress of the organization. The progress of the organization is the reason that planning
is important for the management.
3) Decision making: Whenever you make a marketing plan, you know what you want to
achieve in a given time frame. At the same time, you are clear what the future holds for you and
what is the ultimate goal. This ultimate goal, which has been decided by planning, makes your
decision making more efficient and more to the point. This is because you know that how a
decision will affect your plan in the long term and whether or not, this decision will help you in
achieving your goals. Thus, because planning helps you decide short term and long term goals,
it helps you make decisions faster.
4) Flexibility: The importance of planning increases in an organization where stability
has not been observed. These are typical traits of a newly formed organization, or an
organization which is trying to rebuild itself. These organizations do not have a standard
strategy. Thus, when these organizations plan ahead, they have the flexibility to adjust the
growth of the organization if any unseen events happen. So, tomorrow if a competitor launches a
new product, you have an answer already in the pipeline in your plan. Because of this reason,
you will not panic, but instead you will just pay attention to the execution of your plans.
5) Integrated approach: Planning brings the organization together. The importance of
planning also lies in its holistic approach. Although you might make plans for different
departments within the same organization, however all the departments together are trying to
achieve a desired objectives. Unity will always lead to success and hence, the integrated
approach which planning imparts to an organization is ultimately very important.
6) Evaluation and control: One of the best things about planning is that it can be done in
the board room. Thus, whenever you plan things, you know what are the results expected.
However, you always keep a tab on the planning, so that you can at anytime refer to the plan and
find out whether you are on track or not. For example your plan is to increase the sales to 2000
units this year. This means you need to sell 500 units a quarter. However, if you are at 400 units,
then you need to evaluate the options to increase sale. At the same time, if the growth is large
and you are at 700 units, then you need to boost manufacturing. Thus, the importance of
planning is seen when we know which factors to observe to evaluate and control the plan.
7) Achieving Desired Results: Planning is important, because through progress, an
integrated approach, flexibility, and all of the other points mentioned above, planning ultimately
helps the organization reach a desired, economically viable and profitable objective. If the plan
is implemented correctly, the results will always be desirable by the organization.
The end of the implementation of one marketing plan is immediately followed by the
implementation of another marketing plan, the process of which starts immediately with a
different objective in mind. Thus, planning is important to an organization because it gives a
steady growth and prepares the organization for a desired future.

Types of Sales Planning:
 Situation Analysis- Assessing the current situation with techniques such as a SWOT
analysis.
 Objectives & Goals- Developing targets.
 Strategy- Determining how you will achieve targets. Includes details such as a sales
incentive plan.
 S&OP- Aligning your plan with operations. For example, using initial sales forecasts to
plan production.
 Sales Budget- Developing a budget for the team based on the strategy.
 Communicate & Engage- Engage sales teams to communicate strategy and build support
for the plan. Make changes to strategy and incentive plan if the team isn't behind it.
 Controls & Monitoring- Implement the plan with controls such as weekly sales meetings
and monitoring such as weekly sales reports.
Sales planning process:

Sales planning process is very important for an organization as success cannot be
achieved by haphazard actions. Sales planning process is usually done in the second stage of
planning and can be carried out only when the company has a strategic marketing plan in place.
The first thing that an organization does is make a strategic marketing plan. Once the
strategic marketing plan is made, the organization knows the segment that has to be targeted,
and also, the consumer buying behavior for that segment. Accordingly sales planning are done.
Eg: sales planning process with the example of Air conditioners
1) Setting objectives: Your sales planning is going to start only when you have defined
the objectives for the sales team. For example The objective of an air conditioning company
might be to increase the market share of the company. For this, it will have to penetrate a new
geographic market. Thus the objective of sales planning is to penetrate a new market to increase
market share.
2) Determine the actions necessary: Once you know the objectives of your sales plan,
you have to forecast what actions you need to take and the operations which are needed in effect
before you implement the sales plan. This is a crucial step in the sales planning process because
if you do not forecast the correct operations strategy, then in future you will face operational
difficulties which will hamper you in meeting your sales objectives.
The air conditioning company needs to penetrate a new geographic territory to increase
market share. Thus it needs Sales as well as service operation backup in this territory. The
marketing department should also know the new territory so that they can come up with
aggressive marketing tactics to target that territory.
3) Organize your actions: Coming back to the first point haphazard actions will never
bring results. Once you know the operations that are necessary, you need to organize your sales
planning. For example The first priority of the air conditioning company in new territory will
be to have a service setup. Than to have a sales setup and the necessary channel in place. Once
that happens, they will have to bombard the new territory with aggressive marketing tactics.
Thus an organized action plan needs to be made during the sales planning process.
4) Implement: Once you have your actions planned and organized, implementing them is
the next step. Although it may sound easy, there are many real time and real world problems you
may face while implementing a sales plan. For example The customers of the new territory
might not respond to the new air conditioners entering the market. On the other hand, the

product might be picked up readily by the customers and you might not be able to adapt with the
unexpected demand which can make your brand lose face from the start.
5) Measure results: As in any planning process, the fifth and very important step in the
sales planning process is to measure the results. Unlike advertising, sales results are very easy to
measure because everything is documented and recorded. For example the air conditioning
company will measure the total sales of the geographic territory in study. At the same time it
will find out the competitors sales as well for record keeping.
6) Re evaluate: When you have the sales records in hand, ensure that you analyse the
sales records to know whether or not the sales planning process has succeeded. The analysis will
tell you what you did right and what went wrong. Thus, based on the analysis you can know the
good work that has to be repeated as well as the bad work which has to be avoided.
For example Your sales report shows that you have succeeded in penetrating the new
geographic territory. This stage will help you set your objectives for the next year and you will
plan increasing your brand equity through quality of sales and service. If on the other hand, you
have failed to penetrate the market, then you need to study the reasons which caused the failure
and in the next year, sales planning should be done taking these negative results into account
and the sales objectives should be re planned.
Remember that sales are a dynamic process and your competitors are themselves
watching you all the time. In the above example, the air conditioning segment is one of the
vigorously growing segments across the world and it comes with its own share of challenges.
Thus your sales planning will go a long way in implementing your organizations visions as well
as in implementing the strategic marketing plan.
Sales forecasting:
Sales forecasting is the process of estimating future sales. Accurate sales forecasts enable
companies to make informed business decisions and predict short-term and long-term
performance. Companies can base their forecasts on past sales data, industry-wide comparisons,
and economic trends.
Sales forecasting allows companies to:
 Predict achievable sales revenue;
 Efficiently allocate resources;
 Plan for future growth.
Sales Territories:
Sales Territory- is the regional, industry, or account type assigned to a specific
salesperson or sales team. A sales territory owner is responsible for prospecting into their
customer base and meeting their territory quota.

Determining factors of Sales Territories:
Geographic location is often the main factor in a sales territory. Typically one
salesperson is responsible for servicing the customers in each sales territory. Territories are
often categorized by geographic location. Territories are designed to give each salesperson equal
sales potential and workload. Many companies set strict guidelines as to which customers a
salesperson may solicit to avoid infringement on each others' sales.
One factor in determining territories is geographic location. A territory can be divided by
states, counties, cities or even several territories within a city. The size of the territory depends
on how often the salesperson has to physically visit the customer. In cases where sale calls need
to be made to all customers on a daily or weekly basis; the area would need to be of a smaller
size in order to make this possible.
Sales Potential: Sales potential is another factor in determining territories. The number
of potential customers within a particular area can determine the size of the territory. If you are
marketing a product that is used by only one customer in a given city, your territory would need
to be expanded to cover several cities.
Workload: Workload is also considered in determining sales territories. The number of
accounts, the average size of each sale, and the amount of time necessary to spend with the
customer are factors considered when determining the workload of the sales force.
Sales Quota
A sales quota is a target sale reps are set for a specific period (month, quarter, and year).
Sales quotas can be set in dollar figures or in the number of goods or services sold.
Any kind of sales figures given to any particular person or region or distributor is called
Sales Quota. It can be measured either in terms money or the stock of goods sold. It is
particularly an amount of target sales that is assessed on daily or monthly basis. To assess the
performance of an individual sales person, his/her ability is looked to meet the given target.
Types of Sales Quotas:

This can include many things from cold calling, Marketing emails, advertisements, invitation to
executives for events and many more things. Its always in the interest of the sales team as to
how they should get the stuff out.
1. Sales volume quota: This always includes sales in monetary terms or units sold for a
specific period of time. This type of sales quotas is always set for a given year. The sales teams
are then assigned their yearly quotas to be accomplished. These quotas are set in the areas
mentioned below:
(I). Product line
(ii). Product range
(iii). Branch offices
(IV). Individual sales person
2. Profit quotas: This type of quotas is very useful for FMCG companies as various
products add to varying levels of profits. The advantage of this type of sales quota is that the
sales person can use his time optimally. Hence he/she can strike a balance between high and low
profit yielding products.
3. Expense Quotas: These are linked to selling costs with a realistic time frame. Few
companies set quotas for expenses to different sales levels achieved by the sales person. The

sales team may be given an expense budget which is a percentage of a particular region s sales
volume. He/She should spend only that sum as expenses.
4. Activity Quotas: Under such quotas the sales team is required to execute other
activities that will have a long term bearing on the companys goodwill. Here certain objectives
related to the job are set in attaining the performance targets of the sales force. When it comes to
the Indian companies we have few common types of these quotas as mentioned below:
Sales budget
A sales budget is management's estimate of sales for a future financial period. A
business uses sales budgets to set department goals, estimate earnings and forecast production
requirements. The sales budget affects both other operating budgets and the overall master
budget of the company.
Sales Organisation: Needs, Importance, Functions and Structure
Sales Organisation: Needs, Importance, Functions and Structure!
Sales organisation consists of human beings or persons working together for the effective
marketing of products manufactured by the firm or the products purchased for resale. Sales

organisation co-ordinates the efforts of members of a group to bring about a desirable result. It
provides an efficient, economic and flexible administrative set up to ensure timely movement of
products from the warehouse to the ultimate consumer. Thus it provides satisfactory job to
buyers and sellers.
A sales organisation has a number of departments. It has a planned and well co-ordinated
structure. It performs the functions of planning, organizing and controlling marketing and
distribution of products. Sales organisation is a foundation for effective sales planning and sales
policies. Systematic execution of plans and policies and programmes of a sales organisation
control all the sales activities. As such it ensures maximum efficiency and profitability without
losing consumer service and satisfaction.
According to Boiling, “A good sales organisation is one wherein the functions or departments
have each been carefully planned and co-ordinated towards the objective of putting the product
in the hands of the consumers—the whole effort being efficiently supervised and managed, so
that each function is carried out in the desired manner.”
Need for a Sales Organisation:

“A sales organisation is like a power station sending out energy, which is devoted to the
advertising and selling of particular lines; and there is a tremendous waste of energy between the
power station and the points where it reaches the consumers. Therefore, there arises the
necessity of organizing the sales department.”
So long as the firm is a small one, there is no need for sales organisation, as the proprietor
himself can sell all the output or in certain cases, he is assisted by one or two salesmen, under
his direct control. But when the firm or the business itself expands, because of extension of
markets, production in large-scale, competitive market etc., the need for a sales organisation is
felt.
The need arises because of the following factors:
1. Production in anticipation of demand, which must be sold.
2. To create demand for the products through efficient salesmen.
3. Execution of orders without delay.
4. Satisfactory action against complaints from customers.
5. Collection of credit sales.
6. Keeping enough stock by looking at the future demand.
7. Maximum contribution to profit.
8. To enforce proper supervision of sales-force.

9. To divide and fix authority among the subordinates.
10. To locate responsibility.
Importance of Sales Organisation:

A sales organisation is the mechanism through which a sales manager’s philosophy is translated
into action. The sales organisation provides the vehicle for making decisions on planning,
organisation, selection and training of salesmen, their motivation, directing and controlling
them. It also provides vehicle through which these decisions are implemented.
“A business organisation is like a home. It has characteristic atmosphere. In some homes the
head of the household and all its members are vitally concerned about religion, politics or some
other interest—the occupations of the individual members being only of minor interest. In other
homes where the personality of the head of the household dominates the activities and spirit of
the members the opposite occurs. Like any group a business organisation has its own culture,
traditions, and to some extent its own language and climate.” —Hepner
“A sale organisation is like a power-station sending out energy which is devoted to the
advertising and selling of particular lines and there is a tremendous waste of energy between the
power station and the points where it reaches the consumers. Therefore, there arises the
necessity of organizing the sales department.” —Boiling
“Sales are the life blood of business,” Sales organisation is part and parcel of a business firm.
All the departments are carefully plaited in a good sales organisation.
The importance of the sales organisation, in brief, is:
1. Blood circulation of a human body keeps a man alive and in sound health. Similarly the sales
strengthen the organisation. The more is the sales, the more is the profit.
2. Increasing sales means progress of the firm. If the sales fall down, it is fatal, because sales are
the life blood of the business, as the blood is to a human body.
3. Consumers are the kings. Manufacturers produce goods for consumers. They must be
satisfied in the market which is full of competitors with products for similar use. So suitable
products are necessary, and for this an organisation is necessary.
4. To move the products from the factory to the consumers, the sales organisation is necessary—
demand creation.
5. To handle the orders promptly i.e., from the stages of enquiry to order at full satisfaction to
consumers.
6. Collection of dues is also important. Several drops make an ocean; at the same time milking
cows should not be neglected.

7. To keep good public relations by redressing the complaints if any, and to create a good image
of the firm.
Functions of a Sales Organisation:

Modem sales organisation is not only profit-oriented but also customer-oriented.
The following are the important functions of a sales organisation:
1. Analysis of markets thoroughly, including product and market research.
2. Adoption of a selfishly sound but defensible sales policy.
3. Accurate market or sales forecasting and planning the sales campaign, based on relevant data.
4. Deciding about prices and terms of sales and pricing policies.
5. Packaging for the consumer wants a container which will satisfy his desire for attractive
appearance, keeping qualities, utility, and correct price and many other factors.
6. Branding the product.
7. Deciding the channels of distribution.
8. Selection, training and control of salesmen and fixing their remuneration.
9. Allocation of Territory and quota-setting.
10. Sales programmers and sales promotion activities.
11. Arranging for advertising and publicity.
12. Order preparation and office recording.
13. Preparation of customer’s record cards.
14. Scrutiny and recording of reports.
15. Study of statistical records and returns.
16. Maintenance of salesmen’s records.
Structure of the Sales Organisation:

The following factors are to be taken into consideration while designing the structure of a sales
organisation:

1. Nature of the market
2. Sales policies of the enterprise
3. Nature of the product
4. Number of products
5. Availability of financial resources
6. Level of distribution system
7. Size of the company
8. Price of the product
9. Ability of the professionals
10. Position of competitors’ Products.
Sales Management:
Sales management is concerned with mainly with the management of selling function. The sales
function in a business is a basic function. The sales management represents one of the most
important functional areas of business management, and all the principles of general
management such as planning, organizing, directing, motivating, and controlling are applied to
sales management too for securing better business performance, viz., reasonable profits through
sales. Modem business is consumer centred.
The American Marketing Association has defined sales management as “the planning, direction,
and control of the personal selling activities of a business unit, including recruiting, selecting,
training, equipping, assigning, rating, supervising, paying and motivating as these tasks apply to
the personal sales force.”
Functions of Sales Management:

The general functions of sales management or marketing management are as follows:
1. Sales planning and policies
2. Pricing policies and price fixing
3. Advertising and promotions
4. Control of sales force
5. Marketing research

6. Planning and control of sales
7. Management of distribution channels
8. Branding, packing and labelling
9. After sale service
10. Integration and co-ordination of all functions.
The Field of Sales Management:

The field of sales management includes the following tasks:
1. Setting sales force objectives
2. Human resource planning
3. Recruitment and selection of salesmen
4. Training of sales personnel
5. Motivation
6. Compensation
7. Controlling the sales force
8. Organizing and supporting the work of salesman
9. Designing sales force objectives
10. Supervising and evaluating the sales force.
Sales planning process

By Hitesh Bhasin December 16, 2017 in
Tagged With: Sales management articles
The sales planning process is very important for an organization as success cannot be achieved
by haphazard actions. Sales planning process is usually done in the second stage of planning and
can be carried out only when the company has a strategic marketing plan in place.
The first thing that an organization does is make a strategic marketing plan. Once the strategic
marketing plan is made, the organization knows the segment that has to be targeted, and also,
the consumer buying behaviour for that segment. Accordingly sales planning is done.
Principles of Sales Organization

Principles of Sales Organization A good organization is required to implement the sales policy
and sales programmed. Only an efficient organization can co-ordinate various sales activities.
The structure of a good Sales organization is based on the following principles:
The principle of objective. The objectives of the sales organization should be clear, definite and
in accordance with the objectives of the enterprise. The work should be well defined.
Principles of co-ordination. There should be co-ordination in the efforts of various departments
so that the sales plans and Programs can be completed on time. There should be co-ordination
between the sales and another departments. In this regard according to money Reflective
coordination.
Principle of Specialization. The basis of this principle is that to achieve specialization in a work.
An employee should be given as much work as possible in the field where he has specialization
or can attain it.
Principle of the authority and responsibility. Work is done well when the employees are made
aware of their responsibility. To get the work done they should also be given authority.
According to this principle, authority & Responsibility go hand in hand. Work cannot be done
by fixing responsibility alone. ‘
Principle of unity of command. According to this principle, one person cannot serve more than
one officer at a time. Therefore an employee should receive orders from one person only. He
should fulfill only those orders that are given by his boss.
The principle of span control. A senior officer should have only as many employees under him
as he is able to control. In this relation the famous scientist GRACUNAS holds the view that an
officer cannot control more than five or six employees.
The principle of Continuity. According to this principle of organization, organizing should
continue at all times. Therefore, separate, organization should be set up in every unit.
Principle of Simplicity. There should be simplicity in the structure of the organization so that
minimum time is spent in doing every work.
Principle of homogeneity. The principle of homogeneity should be kept in mind while preparing
the structure of a sales organization. There should not be any overlapping in the areas of work of
two officers. Two officers who do a similar job should have similar rights.
The principle of flexibility. The sales organization should be flexible there should be flexibility
so that changes can be made in the organization as and when required.
Principle of Exception. As per this principle the day to day decisions should taken by
subordinates while the important and exceptional decision should be taken by higher officials.
Principle of Responsibility. Every employee and official in the organization should be aware of
his responsibilities. He should also know who he is accountable to him.
Types Of Sales Organization
The grouping of activities into positions and the charting of relationships of positions causes the
organization to take on structural form. When sales department is set up in an organization it
follows one of these general structures – Line, Line and Staff, Functional and Committee.
The line sales organization:

This is the oldest type used in smaller firms and in firms where there is a small selling force.
This limitation restricts them to narrow product line in limited geographical area.
All executives have line authority and each subordinate is responsible only to one higherup.
They have fixed responsibilities and sales personnel reports directly to the chief sales executive
Lines of authority and responsibility are clear and logical, and it is difficult for individuals to
shift or evade responsibilities
Not appropriate when there is a large sales staff
The line and staff sales organization
Found in large and medium sized firms selling diversified product lines over a wide
geographical area
Provides the top sales executive with a group of specialists and experts in dealer and distributors
relations, sales analysis , sales organization, sales personnel, sales planning, sales promotion,
sales training, service, traffic and warehousing
Staff sales executives do not have authority to issue orders or directives.
Staff recommendations are submitted to the top sales executives and after approval, transmit
necessary instructions to the line organization
Gives time to the staff executives time to study problems before recommendations
Functional sales organization
Based upon the concept that each individual in an organization, executive and employee, should
have as few distinct duties as possible
Salespeople receive instructions from several executives but on different aspects of their work
All specialists have line authority and they have a function authority
There is a great improved performance
Not feasible for small and medium sized firms
Committee sales organization

The executive group plans policy formulation while implementation of plans and policies is
done by individual executives
Many firms have a sales training committee
Before policies are made and action is taken, important problems are deliberated by committee
members and are measured against varied viewpoints.
Divisional Structures
This is the kind of structure that is based on the different divisions in the organization.
A sales organisation may be classified on the basis of product, market or customer territory,
product cum territory and function. They are
Product type
Market or customer type
Territorial type
Product-cum-territorial types
Elements and Functions of Sales Force Management

Sales force management is the soul of the company. Establishing a world recognize brand does
not only require marketing and advertise efforts, but it also requires the sales representatives or
in simple words sale force along with all other promotional activities. Firms are now investing
considerable funds, time and expertise to rain the sales force. In order to compete in the market
and getting brand recognition; a quality product needs a quality sale force. The Sale Force is the
FACE of the Brand or the Product. A very important aspect of marketing that yields business is
the efficient and effective use of sales force management and companies are always looking for
better ways to complete this task.
Managing Customer relations effectively needs a well-trained Sales Force, which is also known
as sales force management. The Companies are now spending a considerable marketing budget
on Customer Relation Management CRM and Sales Force Management Systems. Some firms
are opting for Automated Sales Force Management System. The Sale Force is responsible for all
the contacts that are made with the end users, keeps a record of all the data and tracks down the
customers to generate sales.
Elements of Sales Force Management

Lead Generation: The Sales Representatives generate the sales lead and then track the potential
user by gathering the data and customer related info like phone numbers, tastes, and buying
patterns.
Sales Forecasting: Predicting the company future sales based upon the previous sales for a
particular period of time; is sales forecasting process. The Sales Forecasting is done for the next
tax year or the fiscal year (or for a period of a time in the near future). This enables the company
to take important business decisions regarding production, distribution, advertising budgets.
Order Management: The sales Force Manages and streamlines the product orders efficiently. A
well-executed Order Management System or OMS results in Sales Boost, Improved Customer
retention and Better Consumer Relations. Order Management System is quite a hefty term for a
simple concept; delivering Goods and products without or minimum delay is order management.
Product Knowledge: The basic element for closing a deal or making a successful sale is having
the complete knowledge of the product. To win the customer trust is of outmost important for
the Sales representative. In order to convince the buyer to spend the money on the product the
Sale team must have the complete know how of the Product and its benefits.
Sales Force Management is also responsible selecting, recruiting, training, supervising,
controlling and managing the sales teams or Sales personnel.
Functions of Sales of Force Management
The sales force management plays an integral role in the success of the marketing plan.
Executing the marketing strategy successfully requires efficient and well trained Sale
Representatives. The sales force management performs the following functions.
Recruitment
An essential part for the effective sales force management is recruitment. Over the decades
companies have designed advances selection programs and procedures to test the behavioral,
Managerial, and Personality Skill and expertise are identified. Some companies have developed

research methods or execute surveys to look for the preferences and demands of the customers
for the selection of Sales team.
Training and Supervision

The crux of building a well-trained and effective sales force is Sale force Training Programs. In
order to beat the market completion and become a market leader Trained Work force is required.
Efficient Training during the product life cycle can build a strong Sale Force. Supervising the
sales Team will keep the moral of the sales people high and put the sales team in the right
direction to manage the customers. The better the results are achieved the Sale team if provided
better the supervision. The efficiently managed sales teams perform task effectively and meet
the sales goals.
Motivation and Incentives

The Data and Market Research suggests that a Motivated Sales Force is more target oriented,
Goal Achievers, and Result Producers. To drive up and boost the morale of the Sales employees
the Motivation plays an integral role. Compensations, Incentives, Sale Shares, Quotas are
motivational elements for the Work Force.
Sale Force Evaluation

Evaluating the Sale Results, Product Numbers and Profit Reports is the key for the successful
Sale Force Management System.
Behavioral Aspects
The fast paced business world the buying and selling has no longer remained the transaction
marketing; it’s about building strong ties with the customers. The Companies now focus on
relationship marketing. The Sale force management must be equipped with all techniques and
arts to build long term relationship to make a successful Sale. The Art of Negotiation is the key
element of closing the deal.
Basic Objective of Sales Force Management
A customer identifies the Brand or product by the Sales Representatives. The Sale Force
Management is the primary link between the Product offered by the Company and the end
consumer that will buy the product. Over a decade the firms have a single goal of earning profit
and making sales. The Sales Team were recruited to search for the present and potential
customers and to make the sale. The Soul purpose was to sell a product. Now with the
advancements in market; the user is becoming more and more informed the companies cannot
focus on the sole purpose of earning profit. It about winning a customer that will not only ensure
current sales but also ensures future business or profit for the company. Therefore, the sale
Teams are now better trained as closing the deal requires effective communication, good
negotiation skills and product knowledge. The Sales force management gathers info regarding
market completion, new trends, and Changing Consumer demands. The sales representatives are
the Eye and Ears of any business organization and can really matter a lot in the success and
failure of the product.

Definition: Manpower Planning. Manpower planning is the process of estimating the optimum
number of people required for completing a project, task or a goal within time. Manpower
planning includes parameters like number of personnel, different types of skills, time period etc.
Sales Force
A large proportion of employees of companies are engaged in sales activities. Efficiency and
effectiveness of a sales force are very strong determinants of competitiveness of a company.
Managing a sales force is an intricate task because most salespeople work away from the direct
supervision of their managers.
Setting Objectives
In order to achieve aggregate sales objectives, individual salespeople need to have their own
sales targets, but increasingly profit targets are being used, reflecting the need to guard against
sales being bought cheaply by excessive discounting. To gain commitment to targets, individual
salespersons should be consulted. Sales managers can also set input objectives such as time
spent developing new accounts or time spent introducing new products. They may also specify
number of calls expected per day and precise customers who should be called upon.
Recruitment and Selection

High caliber salespeople should be recruited. If a company’s most successful salespeople were
put in a territory by replacing the average ones, a 20% increase in sales should be expected in
two years. Work practices of the company and independence are more important than earnings
as the key attraction to a selling career. Sales managers need to discover the reasons why people
want to become salespeople in their industry so that they can develop recruitment strategies that
reflect those desires.
Recruitment process follows five stages:

Preparation of job description and personnel specifications
Top ten qualities sought in salespeople by sales managers of large companies are
communication skills, personality, determination, intelligence, motivation/self motivation,
product knowledge, educational background, confidence, appearance, resilience and tenacity.
Research has reduced the above ten qualities to two – empathy and ego drive.
Empathy is the ability to feel problems and needs of the customer in the same way and with the
same intensity that the customer does. Ego drive is the need to make a sale in a personal way i.e.
the salesperson will feel miserable if he is not able to make the sale, and not merely for money.
Job description will include job title, duties and responsibilities, technical requirements,
geographic area to be covered and degree of autonomy given to salespeople.
Identification of source of requirement and method of communication
Sources of hiring salespeople include company personnel, recruitment agencies, educational

institutes, competitors, unemployed people, other industries. Advertising is the most common
method of communication. Size of advertising correlates with impact. The ad should contain a
headline which attracts the attention of possible applicants.

Design of application form

It allows sales managers to check if the applicant is qualified in the light of personnel
specifications. It provides a common basis for drawing up a short list of candidates, provides a
foundation for interview and is a reference point for the post-interview decision making stage.
Interview
Screening and selection interview is employed. Overall objective is to form a clear and valid
impression of strengths and weaknesses of each candidate. Following requirements may be
used: Physical requirement (speech, appearance), attainments (educational attainment, previous
sales success), personal qualities (drive, ability to communicate), disposition (maturity, sense of
responsibility), interests (any interests that may have positive impact on building customer
relationship).
The interview should start with easy-to-answer questions that allow the candidate to talk freely
and relax. The interviewer should be courteous and appear interested in what the candidate says.
Open questions like ‘can you tell about your experiences selling automobiles’, encourage
interviewers to express themselves. Probes can be used to prompt further discussions. At the end
of the interview the candidate should be told when a decision will be made and how it will be
communicated.
Supplementary selection aids:

Psychological tests should be used only when it can be validated that test scores correlate with
sales success. A test that may be useful in selecting car salespersons may be useless when filing
a vacancy for an aero engine sales job. Role playing is also used to gauge potential of applicants.
Role playing is useful in estimating potential in making short term sales but it is unlikely to
provide a reliable guide when emphasis is on building a long term relationship with customer.
Training:
Training should include product knowledge and development of selling skills. Success at selling
comes when the skills are performed automatically without consciously thinking about them. A
training program should include knowledge about the company, products, competitors and their
products, selling procedures and techniques, work organization including report preparation and
relationship management.
Training in management of long term customer relationship as well as context specific selling
skills should be given. This should be followed by in-the-field training where skills can be
practiced face to face with customers. The best salespeople do not always make the best sales
managers as other skills like teaching and motivating others are needed.
Motivation and Compensation

Motivation is based on understanding of salespersons as individuals, their personalities and
value systems. Managers should provide the enabling conditions in which salespersons motivate
themselves.
Tasks of sales managers in motivating salespeople

Get to know what each salesperson values and what each one is striving for.
Be willing to increase responsibility of salespersons.
Realize that training can improve motivation as well as capabilities by strengthening link
between effort and performance.
Provide targets that are believed to be attainable yet provide a challenge to salespersons.
Link rewards to performance that the salesperson wants to improve.
Recognize that rewards can be financial and non-financial, and both can motivate.
Convince salespersons that they will sell more by working harder or by being trained to work
smarter i.e. more efficient call planning, developing selling skills.
Convince salespeople that rewards for better performance are worth the extra effort. Managers
should give rewards that are valued and attempt to sell the worth of those rewards to
salespeople.
Types of salespersons
Some salespeople have decided the type of life they want. They try to maintain their standard of
living by earning a predetermined amount of money.
Some of them are satisfiers. They perform at a level just sufficient to keep their jobs.
Some salespersons make trade-offs. They allocate their time based upon personally determined
ratio between work and leisure that is not influenced by the prospect of higher earnings.
Some of them are goal oriented. They prefer recognition as achievers by peers and superiors,
and tend to be sales quota oriented, with money mainly serving as recognition of achievement.
Some of them are strictly money oriented. Their aim is to maximize their earning. family
relationships, and leisure may be sacrificed in pursuit of money.
Managers must categorize their salespeople before deciding their motivational and
compensation plan. The first three will not be motivated by commission opportunities but the
last two will be.
Three types of compensations plans

Fixed salary: Because payment is not linked to sales, salespeople ore willing to carry out such
tasks as technical bock-up, completing information feedback reports and prospecting. It provides
security but opportunity to increase income by increasing sales is lost. There may be perceived
injustice if higher performance salespeople are not paid more than low achieving ones.
Commission only: This provides a strong incentive to sell, too strong at times leading to
overbearing salespeople desperate to close the sales. There is unwillingness to take time off
form direct selling tasks to attend training courses or fill in reports and there is high turnover.
Salary plus commission: A hybrid system provides some incentive to sell with an element of
security. Salary makes about 70 % of the income. The system is attractive to ambitious
salespeople who wish to combine a base level of income with the opportunity to earn more by
greater effort and ability. This is the most commonly used method of payment. Bonuses are
usually paid on achievement of some task such as achieving a sales target or opening a certain
number of new accounts.
Evaluation of Salespeople

Evaluation provides information to check if targets are being achieved and provide information
to guide training and motivation. By identifying strengths and weaknesses of individual
salespeople, training can be focused on areas in need of development and incentives can be
aimed at weak spots such as poor prospecting performance.
Quantitative measures of performance

Output criteria: Sales revenue, profits generated, sales per active account, number of new
accounts opened.
Input criteria: Number of calls, calls per active account, calls on new account, number of
prospects visited.
Quantitative measures are compared against target figures to identify strengths and weaknesses.
Many of the measures are diagnostic, pointing to reasons why a target is not being reached. A
poor call rate may be cause of low sales achievement. Some results will need investigation.
Qualitative measures of performance

Sales skills: Questioning, making presentation
Customer relationships: How much confidence do customers have in the salesperson?
Product knowledge
Self management: How well are calls prepared, routes organized?
Cooperation and attitudes: To what extent does a salesperson show initiative, follow
instructions?
The use of quantitative and qualitative measures should be interrelated. A poor sales per ratio
will mean a close qualitative assessment of selling skills, customer relationship and product
knowledge.
Evaluation and Control of Total Sales Operation

Companies need to be in control of their sales operation. Sometimes they may have to take
drastic actions to ensure that sales organizations are achieving their targets. One company which
suspected that its salespeople had become complacent moved every salesperson to a different
territory, and sales increased.
distribution management
The management of resources and processes used to deliver a product from a production
location to the point-of-sale, including storage at warehousing locations or delivery to retail
distribution points. Distribution management also includes determination of optimal quantities
of a product for delivery to particular warehouses or points-of-sale in order to achieve the most
efficient delivery to customers.
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.
Channels:
A number of alternate ‘channels’ of distribution may be available:
Selling direct, such as via mail order, Internet and telephone sales
Agent, who typically sells direct on behalf of the producer
Distributor (also called wholesaler), who sells to retailers
Retailer (also called dealer or reseller), who sells to end customers
Advertisement typically used for consumption goods
Distribution channels may not be restricted to physical products alone. They may be just as
important for moving a service from producer to consumer in certain sectors, since both direct
and indirect channels may be used. Hotels, for example, may sell their services (typically rooms)
directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation
systems, etc.
There have also been some innovations in the distribution of services. For example, there has
been an increase in franchising and in rental services – the latter offering anything from
televisions through tools. There has also been some evidence of service integration, with
services linking together, particularly in the travel and tourism sectors. For example, links now
exist between airlines, hotels and car rental services. In addition, there has been a significant
increase in retail outlets for the service sector. Outlets such as estate agencies and building
society offices are crowding out traditional grocers from major shopping areas.
Channel members
Distribution channels can have a number of levels. Kotler defined the simplest level, that of
direct contact with no intermediaries involved, as the ‘zero-level’ channel.
The next level, the ‘one-level’ channel, features just one intermediary; in consumer goods a
retailer, for industrial goods a distributor. In small markets (such as small countries) it is
practical to reach the whole market using just one- and zero-level channels.
In large markets (such as larger countries) a second level, a wholesaler for example, is now
mainly used to extend distribution to the large number of small, neighborhood retailers.
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.
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.
Wholesaling: Importance, Functions and Types of Wholesaling
Wholesaling: Importance, Functions and Types of Wholesaling!
Wholesaling is the buying/handling of products and services and their subsequent resale to
institutional users and in some cases to final consumers. Wholesaling assumes many functions
in a distribution channel, particularly those in the sorting process. Manufacturers and service
providers sometimes act as their own wholesalers.
Industrial, commercial and government institutions are wholesalers’ leading customers followed
closely by retailers:
(a) Importance of Wholesaling:

Wholesaling is a significant aspect of distribution because of its impact on the economy, its
functions in the distribution channel and its relationship with suppliers and customers. In USA,
wholesalers generate almost one-fifth of their total revenues from foreign markets.
Revenues are high since wholesaling involves substantial purchases by institutional consumers.
There are larger numbers of retailers because they serve individual, disposed final consumers,
and wholesalers handle fewer, larger and more concentrated customers.
From cost prospective, wholesalers have a great impact on prices. Operating costs for
wholesalers include inventory charges, sales force salaries, rent charges and costs of advertising
etc. Wholesaler costs and profits depend on inventory turnover, money value of products the
functions performed and efficiency etc.
(b) Functions of Wholesaling

Wholesalers carry out tasks ranging from distribution to risk taking.
Following functions are performed by wholesalers:
(i) Enable manufacturers and service providers to distribute locally without making customer
contacts.
(ii) Provide a trained sales force.
(iii) Provide marketing and research supports for manufacturers, service providers and retail or
institutional consumers.
(iv) Purchase large quantities, thus reducing total physical distribution costs.
(v) Provide warehousing and delivery facilities.
(vi) Provide credit facilities for retail and institutional customers, whenever required.
(vii) Provide adjustments for defective merchandise.

(viii) Take risks by being responsible for theft, deterioration and obsolescence of inventory.
Wholesalers who take title of ownership of products and services usually perform all the above
tasks.
Meaning and Definition:

The word ‘Retailer’ had been derived from the French word ‘Re-tailer’ which means ‘to-cut
again’. Obviously then, retailing means to cut in small portions from large lumps of goods. A
retailer is last middlemen in the chain of distribution of goods to consumers. He is a link
between the wholesalers and the consumer.
The American Marketing Association defines retailing as “the activities involved in selling
directly to the ultimate consumer for personal and non-business use. It embraces direct-to-
customer sales activities of the producer, whether through his own stores or by house-to-house
canvassing or by mail-order business. The retailer is an intermediary in the marketing channels
and is a specialist who maintains contact with the consumer and the producer and is an
important connecting link in the mechanism of marketing.
Characteristics of Retailers:
(i) A retailer is the link between a wholesaler and the ultimate consumer and he is the last
intermediary in distribution.
(ii) A retailer buys goods from wholesaler in bulk and resells them to consumers in small
quantities.
(iii) A retailer maintains a personal contact with his customers.

(iv) A retailer makes sufficient shop display of his wares to attract customers.
(v) Retailers perform all the marketing functions which a wholesaler performs and in addition
emphasises on advertisement.
(vi) Retailers deal in a variety of merchandise and are often known as general merchants.
(vii) Usually retailers are classified into two major groups, viz., small scale retailers and large
scale retailers.
(vii) Retailers aim at providing maximum satisfaction to their customers in limited area.
Pre-Requisites of Retail Trade:
The success of retail trade is based on a proper combination of the following factors:
(i) Locations:
The ultimate success of a retailer depends on the location of his shop. Proper selection of
location is important for a retailer to establish his business.
(ii) Price:
A proper pricing policy can give better results for a retailer if he can combine low prices with
good quality to attract consumers.
(iii) Sales Promotion:
A retailer must arrange for proper sales promotion campaigns in order to familiarise the
customers of that area with his products.
(iv) Prudent Buying Principles:
Every retailer ought to be a shrewd purchaser; only then he can give his best to his customers.
Careful buying earns rich dividends in retail trade.
(v) Knowledge of Merchandise:
Modern business is so complex and the variety and quality of goods being so diverse, a retailer
must have adequate and latest knowledge of the wares he sells. It would not only enable him to
answer customer queries satisfactorily but also to handle the complications of his business. Thus
adequate knowledge of merchandise is another pre-requisite feature of retail trade.
(vi) Services:
A retailer should concentrate on his services. Courteous and prompt service on his part will help
him in attracting more and more customers and thereby flourish in his business. Most retailers

go in for after sale service also, where they cater to the needs of the customers after the latter has
purchased a commodity from them. So efficient service should be the motto of every retailer.
(vii) Efficient Management:

Better planning, organisation and control by a retailer can offer efficient retail operations. A
retailer should have a proper and adequate work-force to assist him in his business. He should
always keep stocks ready for customers and even offer specialised comments on the products he
deals in. If a retailer plans his inventories and works in advance, there is no doubt that he will
achieve his targets and also attract more customers.
(viii) Display of Goods:

Since a retailer deals in a verity of products, he must display his goods in a proper and orderly
manner. This will enable him to get what is required by the customer quickly and also help in
attracting customers. The retailer must go in for tastefully decorated interiors and also have
proper and attractive window-dressing and display.
The goods must be neatly and orderly stocked and the pattern of window display should be
frequently changed for the better, so as to attract the customers’ eye. A retailer must not forget
that a well laid out window display will help him to entice and attract customers from his rivals
and competitors. Hence, proper care and attention ought to be given for display of goods out as
well as in the retailer’s shop or showroom.
Functions of Retailers:
Every retailer performs the following functions:
(i) Buying:
A retailer deals in a variety of merchandise and so he buys collects large number of goods his
stocks from a variety of wholesalers. He selects the best from each store them and bears
wholesaler and also pays the most economical price. He brings all the goods marketing risks,
under one roof and then displays them in shop. Thus he performs the twin _ functions of buying
and assembling of goods.
(ii) Storage:
After assembling the goods, the retailer stores them in his godown so that they are held as
reserve stocks for the future. Storage of goods in ready stock is also necessary.
(iii) Selling:
The ultimate aim of every retailer is to sell the goods he buys. So he employs efficient methods
of selling to dispose off his products at a faster rate so that he can increase his turnover in a
period of time.
(iv) Risk-bearing:
The retailer bears the risk of physical damage of goods and also that of price fluctuations.
Moreover, risk of fire, theft, deterioration and spoilage of goods has also to be borne by him.
Changes in fashions, tastes and demand of his customers also have an adverse effect on his
sales; nevertheless a retailer does not lose heart. He bears all these trade risks which come in his
way during the normal course of business.
(v) Packing:

A retailer packs his goods in small packets and containers for his customers. Occasionally he
may be required to grade the goods also.
(vi) Credit:
Often retailers grant credit to customers and also bear the risk of bad debts, which go along with
credit sales.
(vii) Supply Information:
Retailers supply valuable market information to both wholesalers and customers.
(viii) Advertising:
Retailers display goods and spend on advertisement also.
Franchise:
A franchise is a type of license that a party (franchisee) acquires to allow them to have access to
a business's (franchisor) proprietary knowledge, processes, and trademarks in order to allow the
party to sell a product or provide a service under the business's name. In exchange for gaining
the franchise, the franchisee usually pays the franchisor an initial start-up and annual licensing
fees.
Dealership:
A business that sells products, especially cars, made by a particular company.
Authorization to sell a commodity.
A sales agency or distributor having such authorization.
Organised retailing refers to trading activities undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc. These include the corporate-backed
hypermarkets and retail chains, and also the privately owned large retail businesses.
Retailing in India is one of the pillars of its economy and accounts for about 10 percent of its
GDP.The Indian retail market is estimated to be US$ 600 billion and one of the top five retail
markets in the world by economic value. India is one of the fastest growing retail markets in the
world, with 1.2 billion people.
Top 10 Retail Companies in India

Reliance Retail. Reliance Retail is on the top of the list of retail companies in India and one of
the best retail companies in India. ...
Future Group
Trent
Aditya Birla Retail
Titan Company
Shoppers Stop
The Raymond Group
Avenue Supermarts Ltd
Godrej Consumer Products Limited
Provogue.

Sales & Distribution Management R Hanji

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Sahyadri Commerce & Management College, Shimoga Page 1

Sales Management: Functions

Sales or marketing management is concerned with the chalking out of a definite

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Sales Planning: Importance

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Sahyadri Commerce & Management College, Shimoga Page 7

Sales planning process:

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Types of Sales Quotas:

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Sales Organisation: Needs, Importance, Functions and Structure

Sales Organisation: Needs, Importance, Functions and Structure!

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Need for a Sales Organisation:

The need arises because of the following factors:

1. Production in anticipation of demand, which must be sold.

2. To create demand for the products through efficient salesmen.

3. Execution of orders without delay.

4. Satisfactory action against complaints from customers.

5. Collection of credit sales.

6. Keeping enough stock by looking at the future demand.

7. Maximum contribution to profit.

8. To enforce proper supervision of sales-force.

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9. To divide and fix authority among the subordinates.

10. To locate responsibility.

Importance of Sales Organisation:

The importance of the sales organisation, in brief, is:

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Functions of a Sales Organisation:

The following are the important functions of a sales organisation:

1. Analysis of markets thoroughly, including product and market research.

2. Adoption of a selfishly sound but defensible sales policy.

4. Deciding about prices and terms of sales and pricing policies.

6. Branding the product.

7. Deciding the channels of distribution.

8. Selection, training and control of salesmen and fixing their remuneration.

9. Allocation of Territory and quota-setting.

10. Sales programmers and sales promotion activities.

11. Arranging for advertising and publicity.

12. Order preparation and office recording.

13. Preparation of customer’s record cards.

14. Scrutiny and recording of reports.

15. Study of statistical records and returns.

16. Maintenance of salesmen’s records.

Structure of the Sales Organisation:

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1. Nature of the market

2. Sales policies of the enterprise

3. Nature of the product

5. Availability of financial resources

6. Level of distribution system

7. Size of the company

8. Price of the product

9. Ability of the professionals

10. Position of competitors’ Products.

Functions of Sales Management: