Sales & Distribution

Management
Dr. A. ANANDA KUMAR
Professor,
Department of Management Studies,
Christ College of Engg. & Tech.,
Puducherry, India.
Mobile: +91 99443 42433
E-mail: searchanandu@gmail.com
Sales & Distribution
Management
A. ANANDA KUMAR
Department of Management Studies,
Christ College of Engg. & Tech.,
Puducherry, India.
Mobile: +91 99443 42433
E-mail: searchanandu@gmail.com
 MARKET & MARKETING

total demand of potential buyers

all activities aimed consumer satisfaction

place or area (covers exchange functions)

where buying & selling take place

other facilitating functions (financing, risk

bearing, after sales services etc.)
 SELLING & MARKETING
Starting Focus Means Objectives
point

Selling Factory Product Selling & Profit through

Concept Promotion Sales Volume

Market
-ing Target Customer Integrated Profit through
Market needs market customer satisfaction
Concept
 SELLING & MARKETING
Sl.
N SELLING MARKETING
o
1. Selling begins with the seller and Marketing starts with the
the emphasis is on the product. consumer and the emphasis is
on the needs of the customers.

2. Narrow in scope. Considers business as a

consumer satisfying process.

3. Considers business as a goods Considers business as a

producing process consumer satisfying process.

4. The product that is to be offered The product that is to be offered

is determined by the seller. determined by the buyer.

5. Packaging is considered as a Packaging is designed to

mere protection or a mere provide the maximum
container for the goods. satisfaction and convenience to
Sl.

N SELLING MARKETING
o
6 Price is determined on the basis Price is determined by the
of cost. consumer.

7 Production is the central function Marketing is the central function.

and sales is a secondary The whole concern is organized
function. around the marketing function.

8 Internal, company orientation External, marketing orientation.

MARKETING MIX 4 PS

Product Price

Marketing
Mix

Promotion Place
The Marketing Mix
PRODUCT

1. Brand
2. Style
3. Color
4. Design
5. Product Line
6. Package
7. Warranty
8. Service
PRICE

1. Price Strategy
2. Pricing Policy
3. Basic Price
4. Terms of Credit
5. Discount
6. Allowances
PLACE

1) Distribution Channels
1. Wholesalers
2. Retailers
3. Mercantile Agents
2) Physical Distribution
1. Transport
2. Warehouse
3. Inventory
PROMOTION MIX

1. Personal Selling
2. Advertising
3. Publicity
4. Sales Promotion
Personal Selling
Personal selling is the process in which a
salesperson has a face-to-face interaction with
the customer for the purpose of selling a product
or service. Personal selling is one of the tools in
a companys promotional mix. It has greater
significance than any other form of promotion as
it allows the sales person to converse in detail
with the customer about the product or the
service.
Personal Selling
Personal Selling is oral presentation in a
conversation with one or more prospective
purchasers for purpose of making sales. It
includes in-person sales presentations and
telesales, sales meetings, samples. We have
already referred to personal selling as a tool of
marketing communication. Personal Selling is
communicating directly with the target audience
through paid personnel of the company or its
agents.
- American Marketing Association
Personal Selling
Personal Selling is the process effecting the
transfer, with the profit to buyer and seller, of
goods & services that gives such lasting
satisfaction that the buyer is predisposed to come
back to the seller for more of the same.
- E.F. Schumakar
Personal Selling consists of contracting
prospective buyers of a product personally.
- Richard Buskirk
Objectives of Personal Selling
1. To keep customers informed to changes in the
product line.
2. To assist customers in selling the product line.
3. To serve the existing customers.
4. To secure and maintain customers co-
operation in stocking and promoting the
product line.
5. To handle the sales personnel of middlemen.
Objectives of Personal Selling
6. To collect and report market information on
interested matters to company management.
7. To provide advice and assistance to
middlemen whenever needed.
8. To provide technical advice and assistance to
customers.
9. To search out and obtain new customers.
10. Its goal is to actually make a sale.
Advantages of Personal Selling
1. Personal Selling reduces the cost of
production
2. It minimizes waste
3. It helps to reduce marketing costs.
4. It carries the advantage of flexibility
5. It facilitates consumption
6. It provides immediate & clear-cut feedback
7. It is a two-way communication
8. It helps to introduce new products &
innovation to the market.
Limitations Of Personal Selling
1. Personal selling accommodates only a limited
number of consumers at a given time.
2. It is quite expensive.
3. It is especially on retail level, has poor image
in the eyes of a number of customers.
4. It is not an effective tool for obtaining
consumer awareness about a product.
5. Good and competent sales persons are not
easily found.
Personal Selling Tools

1. Sales presentations
2. Sales meetings
3. Incentive programs
4. Samples
5. Fairs and trade shows
Personal Selling Process
Pre-sale Prospecting
Pre approach
Preparation and Qualifying

Handling Presentation &

Approach
Objections demonstration

Follow up and
Closing
Maintenance
A) Pre-sale Preparation
It involves all the preparations for getting ready for the
selling process by the salesmen. The salesman has to
be familiar with the product, the market, the techniques
of selling and organization. He would be successful if he
is aware of the unsatisfied needs and problems of the
customers. He should prepare himself by knowing
himself and his company, competition and market
environment.
B) Prospecting and Qualifying
The potential customer is known as a prospect and the
method of finding he potential customer is known as
prospecting. Prospecting involves a significant amount
of time, effort and money. Although the company will
give the leads, the salesmen have to develop their own
leads.
C) Pre Approach
It involves finding out the needs, problems, preferences
habits, attitudes, nature and interests of the prospects.
The salesman should set best approach, which might be
a personal visit, a phone call, or a letter. The best timing
should be thought out because many prospects are busy
at certain times and finally the sales presentation
strategies are planned.
d) Approach
The initial few minutes of the sales talk are known as the
approach to the prospect. The purpose of the talk is to
arouse and sustain the customers attention. Before the
talk, the salesman should introduce himself by using the
telephone, by obtaining introduction from a customer
and by handling his business card. In the first contact,
he should attract the attention of the customers.
d) Approach
1) Reference approach that involves reference of the
product by the friends of the prospects,
2) Benefit approach that indicates the benefits of the
products,
3) Sample approach that involves giving samples to the
prospect and
4) Mutual approach that considers the prospect
supreme.
E) Presentation and Demonstration
It refers to the presentation of the product to the
customer or prospect, a demonstration of its features
and benefits to the prospect and showing how the
product meets the customers needs. It stimulates the
buyer by using right stimulus words, pictures, terms and
actions. Sales demonstrations can be improved by using
demonstration aids such as booklets, flip charts, slides,
movies, audio, video and actual product samples.
F) Handling Objectives
The customers almost always pose objections during
presentations or when asked for the order. The
resistance can be psychological such as interference,
preference for established supply or brands, relevance
to give up something. The resistance can also be logical
such as objections to price, delivery schedule or certain
product or company characteristics.
To handle these objections, the salesman has to
maintain a positive approach, by classifying the
objectives with valid reasons and turning objectives into
reasons for buying.
G) Closing
The sales person should try to close the presentation at
the earliest possible moment to avoid the emergence of
any reaction to the product. He should be expert enough
to close the sales talk at the right moment and including
physical actions, statements and comments.
H) Follow up and Maintenance
Follow up action begins when the prospect signs the
order and asks for delivering the salesman arranges for
the dispatch and delivery of the product, facilitates grant
of credit and reassures the buyer about the wisdom of
his decision. This step is necessary to ensure customer
satisfaction and repeat business. The sales person has
to develop an account maintenance plan to make sure
that the customer is not forgotten or lost.
Personal Selling Classification
1. Industrial Selling
a. Resellers
b. Selling to Business users
c. Institutional Selling
d. Selling to Government
2. Retail Selling
3. Service Selling
Personal Selling Types
1. Relationship Selling
2. Tele Marketing
3. Team Selling
4. System Selling
1. Relationship Selling
Developing a mutually beneficial relationship with
selected customer on a regular basis over time is
relationship selling. It may an extension of team
selling or it may be developed by individual sales
representative in their dealing with customer.
In relationship selling, a seller discontinues the
usual territorial practice of covering many
accounts. Instead the seller attempts to develop
a deeper, long lasting relationship built on trust
with key customers usually large buyers.
2. Telemarketing
Telemarketing is the innovative use of
telecommunication equipments and systems as
part of the going to the customer category of
personal selling. Both field selling and over the
counter selling sometimes utilize the telephones
in such activities as prospecting for new
customers and following up with existing
customer. The telephone is also the basis for a
third approach to personal selling that is
telemarketing in which selling is conducted
entirely by telephone.
2. Telemarketing
(a) Outbound Telemarketing: It involve a
sales force that use only the telephone to contact
customer. This approach is designed to reduce
the substantial cost entitled in making personal
visits to customers home or business.

(b) Inbound Telemarketing: It typically involve

toll free hundred of number that customer can
call to obtain information and make purchases.
3. Team Selling
The sales person is joined by specialist from
other functional areas of the firms during the
selling process. In other words, a sales team
(also called selling center) is a group of people
representing the sales department as well as
other functional areas in firm such as finance
production, distribution and research and
development.
3. Team Selling
Example, i.e., relation to selling washing machine to a
large buyer, a firm may assemble a team of sales people
an engineers to educate such large buyers buying team
in order to match the expertise on the buying side
especially in industrial market. A growing number of
firms on the selling has become the standard for
successful selling, especially to large and important
customers.
Team selling is expensive and is use therefore only
when there is potential for high sale volume and profit.
Each team is assigned to cover large retailer including a
large multinational firm.
4. System Selling
The concept of system selling means selling a
total package of related goods and services (i.e.,
system) to solve a customers problem. The
purpose is that the system (i.e., the total package
of goods and services) will satisfy the buyers
need more effectively than selling individual
products separately.
Sales Force Structures
The sales force strategy will have implications for
structuring the sales force. If the company sells one
product line to one end using industry with customers in
many locations, the company would use a territorial
sales force structure. If the company sells many
products to many types of customers, it might need a
product or market sales force structure.
Alternative Structures for the Sales Force

a) Territorial structured sales force

b) Product structures sales force
c) Market structured sales force
d) Complex sales force structures
a) Territorial structured sales force
In the simplest sales organization, each sales
representative is assigned an exclusive territory
in which to represent the companys full line. This
structure has a number of advantages. First it
results in a clear definition of the sales persons
responsibilities. As the only sales person working
the territory, he or she bears the credit or blame
from area sales. Secondly the territorial
responsibility increases. Thirdly, travel expenses
are relatively small, since the sales
representative travels within a small geographical
b) Product structures sales force
The importance of sales representatives knowing
their products, together with development of
product divisions and product management has
led companies to structure their sales forces
along product lines. Product specialization is
particularly warranted where products are
technically complex, highly unrelated or very
numerous.
C) Market structured sales force
Companies often specialize their sales forces
along industry or customer lines. Separate sales
forces can be setup for different industries or
even for different customers. The advantage of
market specialization is that each sales force can
become knowledgeable about specific customer
needs. The major disadvantages of structured
sales forces arise when the various type of
customers are scattered throughout the country
as this requires extensive travel by each sales
force.
d) Complex sales force structures
When a company sells a wide variety of products
to many types of customers over a broad
geographical area, if often companies several
principles of sales force structure. A sales
representative might then report to one or more
line managers and staff managers.
Market / Sales Potential
A sales potential is an estimate of the maximum
possible sales opportunities present in a
particular market segment open to a specified
company selling a good or service during a
stated future period.
ANALYZING MARKET POTENTIAL
1. Market Identification
2. Market motivation
3. Analysis of Market Potential
Sales Forecast
A sales forecast is an estimate of sales, in dollars or
physical units, in a future period under a particular
marketing program and as assumed set of economic
and other factors outside the unit for which the
forecast is made. A sales forecast may for a single
product or for an entire product line. It may be for a
manufacturers entire marketing area, or for any
subdivision of it.
Sales Forecast
Accurate sales forecasting is essential for a firm to
enable it to manufacture the required quantities at the
right time and arrange well in advance for the various
factors of production e.g., raw materials, equipments,
machine accessories etc. Forecasting helps a firm to
access the probable demand for its products and plan its
production accordingly.
Importance of Sales Forecast
Helpful in deciding the number of salesmen required
to achieve the sales objective.
Determination of sales territories.
To determine how much production capacity to be built
up.
Determining the pricing strategy.
Helpful in deciding the channels of distribution and
physical distribution decision.
To decide to enter a new market or not.
To prepare standard against which to measure
performance.
Factors Affecting Sales Forecast
1. Purchasing power of customers
2. Demography
3. Price
4. Replacement demand
5. Credit Conditions
6. Conditions within the industry
7. Socio economic conditions
Methods of Sales Forecast
1. Survey of buyers intentions/opinion survey method
2. Sales force composite method/collective opinion
survey method
3. Executive judgment/jury of executive opinion
method
4. Delphi method
5. Time series analysis
6. Market test method
7. Correlation method
1. Survey of buyers intentions/opinion survey
method
Customers may be asked to communicate their buying
intentions in a coming period. This requires identifying
potential buyers and asking them if they intend to buy a
certain product during a specific future time period and if
so, how many units and from whom will they buy.
Survey of this type is used especially for industrial
products sales forecasting.
2. Sales force composite method/collective
opinion survey method
In this method, the sales men are required to estimate
expected sales in their respective territories in a given
period. Then the individual sales force forecasts are
combined to produce the total company forecast. This
method is used based on the assumption that sales
persons are closest to the customers and have direct
contact with them.
3. Executive judgment/jury of executive
opinion method
It involves combining and averaging the sales
projections of executives in different departments to
come up with a forecast. If they are experienced and
knowledgeable about the factors that influence the
sales, and if they have up to date knowledge of current
market developments.
4. Delphi method
It consists of an attempt to arrive at a consensus in an
uncertain area by questioning a group of experts
repeatedly until the responses appear to converge along
a single line. The participants are supplied the
responses to previous questions from others in the
group by the coordinator. The coordinator provides each
expert with the responses of the others including their
reasons. Each expert is given the opportunity to react to
the information or considerations advanced by others.
5. Time series analysis
Time series analysis is based on extrapolation, which is
the process of projecting a past trend or relationship into
the future on the belief that history will repeat itself.
Unfortunately, this is not always the case, especially in
the longer term.
6. Market test method
In a market test the firm distributes the product in one or
more markets to total potential customer response to the
marketing mix. The market test measures actual sales,
not intentions to buy. If test markets are selected wisely
and the test is conducted properly, the marketer can
generalize test experience to the entire market and
develop a sales forecast.
6. Correlation method
The method is based on historical sales data. When
there is a close relationship between sales volume and a
well-known economic indicator, correlation method can
be used. The marketer could develop a mathematical
formula that describes the relationship between sales
and independent variable.
Direct Marketing
Most companies rely primarily on advertising,
sales promotion, and personal selling to move
their products and services. They use advertising
to create awareness and interest, sales
promotion to provide an incentive to buy, and
personal selling to close the sale. Direct
marketing attempts to compress these elements
to lead to a direct sale without using an
intermediary.
Direct Marketing
Direct marketing is the use of consumer-direct
channels to reach and deliver goods and services
to customers without using market middlemen.
Direct Marketing - Methods
The mail (Direct Mail).
Telephone (Telemarketing).
Humans (Door-to-Door Selling, Party Plan
Selling).
E-mail (E-mail Marketing).
Internet (Behavioral Targeting)
Mobile phones.
Direct Mail
Direct marketers send single mail pieces-letters flyers,
foldouts, and other salespeople on wings. Some direct
marketers have been mailing audiotapes, videotapes
and even computer diskettes
Telemarketing
Telemarketing is the innovative use of
telecommunication equipments and systems as
part of the going to the customer category of
direct marketing. Both field selling and over the
counter selling sometimes utilize the telephones
in such activities as prospecting for new
customers and following up with existing
customer.
The Internet
Provides buyers with infinite selection
Available for access 24/7
Buyers chose when to interact with information
Similar to catalogues
Services can become sales arms with
manufacturer handling fulfillment
Presentation improves as broadband expands
Mobile Marketing
Mobile marketing can also be defined as the use
of the mobile medium as a means of marketing
communication, the distribution of any kind of
promotional or advertising messages to customer
through wireless networks. More specific
definition is the following: using interactive
wireless media to provide customers with time
and location sensitive, personalized information
that promotes goods, services and ideas, thereby
generating value for all.
Characteristics Of Direct Marketing
1) Non Public: The messages are addressed to specific
person and do not reach others.

2) Customized: The message can be customized to

appeal to the addressed individual.

3) Up to date: A message can be prepared very quickly

for delivery to an individual.
Relationship Marketing
The principles of personal selling and negotiation
as described are transaction oriented; that is,
their aim is to help salespeople close a specific
sale with a customer. But in many cases, the
company is not seeking simply a sale: it has
targeted a major customer account that it would
like to win and serve. The company would like to
demonstrate to the account that it has the
capabilities to serve the accounts needs in a
superior way, particularly if a committed
relationship can be formed.
Salesmanship
W.G.Cater - Salesmanship is an attempt to induce
people to buy goods

Knox, T.S. Salesmanship is the power or ability to

influence people to buy at a mutual profit that which we
have to sell but which they may not have thought of
buying until we call their attention to it. Salesmanship is
the ability to persuade people to want what they already
need.
Characteristics of Salesmanship
1. Salesmanship is an educative process.
Salesmanship educates people about their needs.
Sometimes people are not aware of their needs or
the way in which they could satisfy them. The
salesman performs the function of educating the
customers about their needs and their satisfaction.
2. Ideal salesmanship aims at serving the producer,
distributor and consumer. The salesman helps the
producer in disposing off his goods at a profit. While,
for the distributor the salesman makes the
distribution process smooth and easy for the
consumer, the salesman assists to buy wisely.
Characteristics of Salesmanship
3. Salesmanship aims at winning the buyers confidence.
Modern salesmanship does not use doubtful methods
to influence buyers.
4. The person involved in selling must possess skill and
ability to convince another. Salesmanship involves the
ability to influence or persuade people. It is the art of
persuasion, not pressure which is highly essential.
5. Modern salesmanship does not sell duplicate, fake
products to customers.
6. The price of the product or service must be reasonable
for both the buyer and the seller. In fact, salesmanship
should benefit both the buyer and the seller.
Characteristics of Salesmanship
7. Salesman always acts as a link between two parties,
the seller and the consumer and looks after the benefit
of both the parties.
8. Salesmanship creates satisfied customers, not just cast
producing sales. For a sale once made is end but a
satisfied customer once made is the beginning.
Modern salesmanship expects to create permanent
customers and aims at repeat orders.
Functions of Salesmanship
1. To introduce products to the customers.
2. To help the customer to make buying decisions
3. To see how the customers needs are transformed
into wants and demand
4. To negotiate and conduct effective selling at least
cost
5. To gather information about markets and competitors
products and transmit it to the company
Sales Force Management
kind of personnel management
centralized direction of their activities
provides limited opportunities for face to face contact
efficiency of sales people
prime concern of the sales manager to field sufficient
sales people to serve the needs of the prospecting
customers for the company tasks
complex problems make task of recruitment and
selecting sales people more difficult than other
employees.
covering wide geographical area markets
suitable to market
SALES FORCE MANAGEMENT
Train
i
Supe ng &
io n rvisio
l ect n
Se

ion Job Specification

ent

luat

Performanc
JOB ANALYSIS
m

Evaluation
Eva
ru i t
Rec

Job

r i pt io n
D esc

e
Job

Compensation
& Motivation
Sales Force

Sales Force Recruitment Selection

Motivation Supervision Training

Evaluation
Functions of Sales Force Mgt.
1. Setting sales Force objectives
2. Designing Sales Force strategy
3. Recruitment & Selection
4. Training
5. Supervision
6. Motivation
7. Compensation
8. Monitoring or controlling
10. Performance Evaluation
Objectives / Goals of Sales Force
Management
1. Maintaining continual growth
2. Achieving sufficient sales volume
3. Providing sufficient contribution to profits.
Sales Force Compensation
Compensation is the amount received by salespeople
in exchange of the work or services performed by them.
Compensation is the form of salaries or commissions
enables the sales people to meet their needs and those
of their families. Financial compensation is a vital
source of satisfaction.
A proper compensation structure not only retains
competent and efficient sales personnel but also
attracts others from outside the organisation. An
appropriate compensation package gives employees a
sense of satisfaction and motivates them to strive more
and more to achieve the set objectives.
OBJECTIVES OF SALES FORCE COMPENSATION
1. It should stimulate the salesmen to put forth his best
efforts in the accomplishment of his tasks by
establishing visible correlation between efforts plus
results and rewards.
2. It should help in the early elimination of the men who
do not fit into the long run plans of the firm.
3. It should ensure the full support of the sales force.
4. It should enable the firm to attract, retain and develop a
contented, efficient and loyal sales force.
5. It should enable the firm to control and direct the
activities of the salesmen.
6. It should provide for extra benefits for doing duties
other than selling.
TYPES OF SALES FORCE COMPENSATION
Monetary compensation is the single most important
factor to affect efficiency of salesman. Efficiency of
salesman has direct relation with the method of
remuneration adopted by the company. There are
number of methods of rewarding salesmen, it can,
however, be brought under the following three basic
types of compensation plans.
1. Straight Salary method
2. Straight commission method
3. Combination of Salary and commission (other
variable elements)
Salary Commission

Combination
1. Straight Salary Method
The most common form of rewarding a salesperson is to
put him on a straight fixed monthly salary. This ensures
that the salesperson takes home a fixed income every
month and hence he can plan his living accordingly. It
also ensures that the firm knows its financial
commitment and that even the non-selling jobs like
information gathering and customer service get
adequate attention. The salesperson will not necessarily
put all efforts in selling fast moving items.
2. Straight Commission method
A straight commission plan is like a straight piecework
plan in that the salespersons earnings are in direct
proportion to his or her sales. It is probably the oldest
form of compensation program for sales personnel.
In this method, salesmen only get a fixed percentage of
the sales of profit volume. Naturally, his earnings are in
direct proportion to his input and the results. This type
of scheme is particularly popular while selling insurance,
operating as agents to overseas suppliers, selling real
estate etc.
3. Combination of Salary &
Commission
The limitations of the above two methods of
compensation are sought to be overcome through
combination plans. In these plans, a base salary is
determined which the sales person will carry home each
month, no matter what the sale or profits are in that
month. This enables him to plan the monthly living.
Normally, this is adequate enough to take care of the
essential needs of the salesperson like food, clothing,
childrens education and his other commitments like
monthly rent etc.
Various Other Schemes

1. Sales contests and prizes

2. Promotion
3. Bonus
4. Profit sharing plan
1. Sales Contests and Prizes
Some companies use sales contests and offer prizes to
boost the competitive spirit of the salesmen. As a result
to win sales contest, salesmen make special efforts to
increase sales volume. Special quotas are fixed or
special targets are set and salesmen who are able to
reach those targets are properly rewarded. These
rewards may be in the form of cash or other benefits.
2. Promotions
Sometimes salesmen are given incentive by way of
promotion. Those salesmen who have performed
exceptionally well or who are able to sell beyond a limit
are given special promotions. Sometimes junior
salesmen are also promoted for special efforts to
increase sales.
3. Bonus
Bonus is paid to salesmen who put extra efforts to
increase the sales volume. This amount is given in
recognition of services and talent of salesman, as it is
paid over and above the regular income. They are used
to reward salesman for performing tasks.
4. Profit Sharing Plan
Some firms disburse a portion of their divisible profits
amongst their sales men thus in effect given a share in
the profits earned by them to their salesmen. The
amount to be disbursed may be calculated on the basis
of over all profits of the firm or the profits earned on
sales in a given sales territory.
EXPENSES REIMBURSEMENT
Salespeople should have an economic incentive for
controlling their expenses and for using expenses
money productively and efficiently. If no economic
incentives exist because expenses are open-ended,
salespersons use them as an additional form of
compensation. Similarly, management cannot ask its
salespeople to pay for expenses when this would lower
their total compensation to an unacceptable level.
FRINGE BENEFITS
Fringe benefits include mandatory items such as Social
security, medical care and unemployment insurance,
plus expected items such as health, life, and disability
insurance, vacations and retirement plans and optional
items such as profit sharing, stock options, education
reimbursement, clubs, dental/vision insurance, and
moving expenses.
SALES FORCE TRAINING
Training is the act of increasing the knowledge and skills
of an employee for doing a particular job. It is the
responsibility of the employee to develop his skills by
giving him adequate training concerning his job. The
programme should particularly concentrate on
understanding the behaviour of different kinds of people
because a sales man has always to be in touch with the
prospective and present customers.
Objectives of Training Programme
1. A salesman is to be prepared for the various types of
buyers he will meet and give him an insight into their
problems and ideas so as to enable him to vary his
methods of approach behaviour and sales talk to suit
the particular type of buyers. They are given training
in sales technique.
2. A salesman must acquaint himself with the business
principles of his firm and to make it clear to him just
what product or service the firm offers to its
customers, and at what price?
3. A salesman should be given a frank and true
statement regarding the competition he has to face
and the strong and weak points of the goods.
Training Methods
1. Refresher Training
2. Orientation / Induction Training
3. Conference Training
4. Promotion Training
5. Remedial Training
6. On the job Training
7. Study Material
8. Vestibule School
9. Role Playing
10.Discussion Method
Motivating the Sales Force
Motivation is an important factor which encourages
persons to give their best performance and help in
reaching enterprise goals. A strong positive motivation
will enable the increase output of employees but a
negative motivation will reduce their performance.
Importance of Motivating the
Sales Force
1) Good Human Relations
2) Low Absenteeism and Turnover
3) Good Corporate Image
4) Higher Efficiency
Methods of Motivating Sales
Force
1) Sales contest
2) Convention and meetings
3) Recognition and honour
4) Personal meet
5) Promotion
6) Personal Communication
7) Freedom
8) Timely Information
Evaluating Salesman Performance
Evaluating salesmans performance is a complex task
not only because salesmen are required to perform a
variety of activities, but also because different types of
selling situations require different kinds of selling skills
which may not lend themselves to equitable
comparisons.
In addition, salesmen differ in terms of selling acumen
and personal qualities. Then, territories differ and they
are required to spend a large part of their time away
from their immediate manager. A good monitoring
system becomes a basis for developing an evaluation
system.
Control of Sales Force
The success of planning depends greatly on supervision
and control. Control of sales activities has gained much
importance in modern competitive world. In fact,
planning and controlling are two sides of a coin of all the
problems of the sales management.
Controlling is the act of checking and verifying an act to
know whether everything takes place in accordance with
the predetermined plan. In other words, control covers
the direction and guidelines towards securing desired
objectives.
Objectives of Control of Salesman
1. Spotting out negative performance
2. Measurement of Sales performance
Sales Quota
Sales quota, may be defined as the estimated volume of
sales that a company expects to secure with in a definite
period of time. Quota is the amount of business, in
terms of value or in terms of units sales, which is fixed
for every salesman. It may be fixed for a geographical
area to be achieved with in a definite period of time, a
month or a year.
Objectives of Sales Quota
1. To motivate salesman
2. To provide quantitative performance standards
3. To use in connection with sales contest
4. To obtain an effective budgetary control over sales
Territory Sales Force
According to Philip Kotler, by sales territory is meant
the geographical area assigned to a salesman for his
operations or selling activities.
Seles territories may be planned either on geographical
basis or on the basis or on the basis of number or nature
of customers. Once the territories are defined, personal
selling resources as well as other marketing resources
can more easily be allocated, monitored and controlled.
Benefits/Advantages of Sales
Force Territories
1. To evaluate performance
2. Benefit to salespeople and the company
3. To improve customer relations
4. To obtain thorough coverage of the market
5. To reduce sales expense
6. To allow better matching of sales person to
customers needs
7. To establish sales persons responsibilities
Sales Audit
The sales audit is an objective total evaluation of
marketing efforts including policies, objectives and even
personnel. Sales audit is an important function of
modern marketing executives.
It has been defined as a systematic, critical, unbiased
review and appraisal of the basic objectives and policies
of the marketing function and of the organisation,
methods, procedures and personnel employed to
implement those policies and to achieve those
objectives.
Case Studies
ABC electronics is a seven year old company which
manufactures power generating equipment and sells
directly to customers as well as through distribution
network. The sales force was recently expanded to
cover several regions. The marketing manager felt an
urgent need to institute a sales incentive programme so
as to motivate sales managers to increase sales
revenues at least by 30% over the previous year. The
power generating equipment business was extremely
competitive. Although ABC had an approved price list,
sales managers would frequently come to their
supervisors to allow lower pricing than approved price
list. The marketing manager spent considerable amount
 Page - 2
of time reviewing pricing exceptions. He thought that in
the long run this had to stop. The only way to
discourage sales personnel from seeking exceptions
was to give their clients a price that would win business.
But then he had to devise a disincentive plan to sales
personnel from arbitrarily dropping prices to generate
larger revenues and obtain incentive bonus. The larger
revenues at lower prices would have negative impact on
the corporate bottom line. After many discussions with
management, the marketing manager instituted the
incentive programme as follows.
 Page - 3
(a) Sales personnel had price flexibility and could quote
lower prices if in their judgment it was the only way to
win the business.
(b) At the lowest end of the discretionary price authority
the incentive would be very minimal. The incentive
would increase as the quoted price increased above
the minimum price level. The incentive increased
exponentially which meant much larger incentives at
higher price levels.
The marketing manager presented this incentive
scheme to the sales force expecting an enthusiastic
support. However, there was virtually no reaction
from the sales force.
 Page - 4
Questions:
1. Do you feel the incentive programme so devised will
achieve the results as desired by the marketing
manager? Justify your answer.
2. Suggest an alternative sales incentive programme to
motivate the sales force.
3. What types of training can be provided to the sales
force of ABC electronics to achieve their targets?
 MARKETING MIX

Product & Service Mix Distribution Mix Promotion Mix

Physical Channels of
Distribution Distribution

Brand Transportation
Trademark
Advertising
Inventory Mgt Retailer
Service
Personal Selling
Materials Movement Wholesaler
Product
Publicity
Communication (Middleman)
Line Public Relations
Order Processing
Style Sales Promotion
Colour
Design
Warranty
Guarantee
Physical Distribution
Physical distribution involves planning, implementing
and controlling the physical flows of materials and final
goods from point of origin to point of use to meet
customer requirements at a profit. - Philip Kotler

Physical distribution (also called market logistics)

involves planning, implementing, and controlling the
physical flow of materials and final goods, from points of
use, to meet customer requirements at a profit.
- Kotler & Armstorng
 Materials Physical
manageme distribution
nt management

Supplie Manufacturer Customer

r

Inbound Outbound
Logistics Logistics

Logistics Management
 Physical Distribution Logistics
1.Management of movement, 1. Process of planning,
inventory control, protection and implementing and controlling
storage of raw materials and of the efficient, cost-effective flow
processed or finished goods to and storage of raw material, in-
and from the production line. process inventory, finished
goods and related information
from point of origin to point of
consumption for the purpose of
confirming customer
requirements.
2.Narrow scope than of 2. Larger scope.
logistics.
3.Concerned with creation of 3. Creates time, place, form and
time and place utilities. possession utilities.
4.Deals with outbound activities 4. Deals with both inbound and
only. outbound activities.
SUPPLY CHAIN MANAGEMENT
Supply chain is the network of organized activities that
are co-ordinated, or in other words, upstream and
downstream linkages of different processes and
activities, so as to distribute the products, through
channels, ultimately to the consumers.
For example, a shirt manufacturer is a part of a supply
chain that extends upstream through the weavers of
fabrics to the manufacturer of fibers and downstream
through distributors and retailers to the final consumers.
Elements / Functions of PD
Customer Locational Transporta Material
Services Analysis tion Handling

Physical Distribution

Order Inventory Ware

Packaging
processing Control Housing
Order Processing
Time to complete the activities of the order cycle is at the
very heart of customer service. It has been estimated
that the activities associated with order preparation,
transmittal, entry, and filling represent 50 per cent to 70
per cent order cycle time in many industries. Due to this,
activities involved in processing company's orders are
receiving more and more management attention. As it is
closely related to sale and production, order processing
should also be a part of physical distribution department.
Industrial Packaging
Packaging cost is a part of the total cost of production.
Container manufacturers, carriers, trade associations
and government agencies are continuously working for
improvements in packaging techniques. Physical
distribution department, in order to fulfill this function,
has to work in cooperation with sales and manufacturing
department, and deliver the products in their best quality
and condition in the consumer hands.
Inventory Management
Inventory (or stockholding) can be described as the
accumulation of an assortment of items today for the
purpose of providing protection against what may occur
tomorrow. An inventory is maintained to increase
profitability through manufacturing and marketing
support. Manufacturing support is provided through two
types of inventory system:
An inventory of the materials for production;
An inventory of spare and repair parts for maintaining
production equipment.
Warehousing
Warehousing refers to storing products while they wait to
be sold. This function is necessary, as production and
consumption functions rarely match. Organizations use
either warehouses or distribution centers to process their
products. The choice is made in regard to the
transportation cost, amount of customer service and
level of inventories.
Material Handling
Efficient and careful material handling methods in factory
and distribution warehouses can contribute much to
customer satisfaction. Proper material handling helps
1. Decrease the damage;
2. Maintain the quality of storage;
3. Facilitate order processing; and
4. Move right goods at right time to make them available
to right customers.
Locational Analysis
With the continuing growth of individual units of
economic activity, there is greater expansion of
organization, and new plant locations must be carefully
chosen. Moreover, trend of decentralization of industries
have further increased emphasis upon the site location
that best fulfills the needs of the customers and
companies. Physical distribution performs this function
after analyzing aspects like market area, transportation
facilities, transportation rates, and public and private
warehouse facilities.
Logistics Management
Logistic Management is a field of management which
primarily deals with the coordination of resources in an
organisation. These resources may be in the form of
men, money, materials, machines and time and requires
most efficient use of existing organisation resources.
Many projects in developing countries do not succeed
due to lack of attention in coordination logistic function.
As such there are delays in completion of projects.
Case Studies
Pratap has an outstanding track as a sales person at
Everest Electric Company. His behaviour towards
customers is excellent and can serve as a role model.
But with his peers and even with the sales groups
manager is best described as offensive even though his
ideas are good ones. He never actually hears what
others are proposing or suggesting. He is
argumentative and downright unpleasant in the way he
interacts with the group. He laughs at the quotas set for
him by the company. He says the company does not
know customers and their potential. His sales group has
 Cont
Spent immeasurable amount of time and energy trying
to persuade him to consider other options and
approaches to problems whose solutions are vital to the
sales group. The groups resentment towards Pratap is
interfering with its group and development as a team.
Questions:
1. If you were the Prataps manager, what would you do
about his behaviour?
2. What alternatives would you consider and which
course of action would you select?
The Environment of PD
1. Demand characteristics
a) Population
b) Income
c) Demand variations
2. Product characteristics
a) Value of the product
b) Seasonality of the product
c) Product line
3. Dynamic environment.
Distribution Channel
Distribution channel comprises a group of people and
firms involved in the transfer of title of ownership (of the
product), as the product moves from producer to
ultimate consumer or a buyer. A channel of distribution
includes producer, consumer as well as many
middlemen such as retailers and wholesalers.
Channels of Distribution
A channel of distribution or marketing channel, is the
structure of intra company organisation units and extra
company agents and dealers, wholesale and retail
through which a commodity, product or service is
marketed. - American Marketing Association

Marketing channels are the combination of agencies

through which the seller, who is often, though not
necessarily the manufacturer, markets his product to the
ultimate user. - John A. Howard
Levels of Channels
1. Direct Marketing Channels/Zero Level Channel

Producer Consumer
2. Indirect Marketing Channels
a. One-Level Channel

Producer Retailer Consumer

Producer Distributor Consumer

b. Two Level Channel

Wholesaler/
Producer Retailer Consumer
Distributor

c. Three Level Channel

Producer Distributor Wholesaler Retailer

Consumer
d) Four Level Channel

Producer Agent Distributor Wholesaler

Consumer Retailer
Functions / Role of Marketing
Channels
1. Buying
2. Carrying Inventory
3. Selling
4. Transporting
5. Financing
6. Promoting
7. Negotiating
8. Marketing Research
9. Servicing
CHANNEL STRUCTURE
Channel Structure

Multi-
Direct Vertical
Channel

Indirect Horizontal
Factors Influencing the Channel
Selection Decision
1. Product or Market Characteristics Factors
a. Number of customers and frequency of
purchase
b. Cost of the product
c. Level of service required
d. Technical nature of the product
e. Geographical concentration of the market
f. Type of the product
2. Company Characteristics factors
a. Degree of channel control desired
b. Financial position of the company
 Cont.
c. Propensity of assumed risk
d. Ability of Management
3. Middlemen consideration
a. Services provided by middlemen
b. Financial position of the company
c. Attitude of middlemen towards manufacturers
policies
4. Environment Characteristics factors
Channel Selection Process /
Designing distribution Channels
Identify Target Customer

Determining Consumer buying habits for the

type of goods

Locate Potential Customer Geographically

Pinpoint Channel Alternatives

Evaluate Channel Alternatives

Select Channel Members

Selecting Channel Members -
Variables
1. Financial strength of the prospective partner
2. Sales strength
3. Product lines
4. Reputation of the intermediary
5. Market coverage
6. Sales performance
7. Management strength
8. Equipment and facilities
9. Ordering and payment procedures
Functions of Intermediaries
1. Information
2. Promotion
3. Physical Possession
4. Financing
5. Retail
6. Consumers
Types of Intermediaries
1. Merchant Wholesaler
2. Brokers and Agents
a. Manufacturers Agents
b. Selling Agents
c. Purchasing Agents
d. Commission Agents
1. Merchant Wholesaler
A wholesaler or distributor is an independent commercial
establishment that purchases products from various
manufacturers for stock and offers complete
assortments of special merchandise for resale to the
retail store. A merchant wholesaler provides the widest
variety of marketing functions an services. They are
independently owned, and take title to merchandise.
Merchant wholesalers can be further divided into full
service wholesalers and limited service wholesalers.
2. Brokers and Agents
Brokers and agents do not take title to the products, and
offer their customers a very limited number of services.
Brokers are middlemen who bring the buyer and seller
together and assist in price, product and delivery
negotiations. Agents are wholesalers contracted to
represent the producer or the buyer. These are of
several types.
a. Manufacturers agents
These are independent agents who usually represent
two or more manufacturers who produce complementary
products. They usually represent the manufacturer with
whom they have entered into a contract. This contract
usually contains details concerning pricing policies,
territories, order handling procedures, delivery service
and warranties and commission rates. These are firms
composed of highly skilled sales people who are
contracted by the small firms who cannot afford to have
an extensive sales force of their own.
b. Selling agents
These are intermediaries who are contracted by the
manufacturer to sell the entire production output. This
type of agents are taken on by companies incapable of
employing individual fulltime sales force.
c. Purchasing agents
Agents adopted by the customers are purchasing
agents. These agents are able to get best goods and
prices for the customer and also provide consultative
services.
d. Commission agents
These are intermediaries who purchase goods from the
manufacturer and then sell it in the market for the best
possible price. After deducting their fee and
miscellanies, the balance is on to the manufacturer.
Channel Distribution Strategies
and Polices
After deciding the channel of distribution, the
manufacturer has to decide how many middlemen
should be there in the channel i.e., the intensity of
distribution to be used at the wholesaling and retailing
levels in the channels has to be decided.

A major channel of distribution decision is determining

the intensity of distribution. It is referred to as the extent
to which company wants to saturate existing outlets with
the product. It is usually measured by the percentage of
all potential outlets that a firm wants to carry its
products. There are three basic coverage strategies:
INTENSITY OF DISTRIBUTION

Exclusive Selective Intensive

Distribution Distribution
through single through multiple, Distribution
wholesaling but not all, through every
middlemen in a reasonable outlet reasonable outlet
market in the market in market
 Distribution Intensity

Exclusive Selective Intensive

Distribution Distribution Distribution
1. Intensive Distribution
It means maximum market coverage. Under this
strategy, a marketer sells its product(s) through every
available outlet in a market where the consumer might
look for it. Marketers of convenience products like
cigarettes, chewing gum, salt, biscuits, bread, soaps,
detergents and soft drinks want intensive distribution.
A manufacturers ability to achieve intensive distribution
depends a great deal on the willingness of relevant
middlemen to stock the product. Trade promotions such
as big discounts may be introduced to motivate
middlemen to push the product.
2. Selective Distribution
Here the manufacturer sells its product through multiple,
but not all-possible outlets. It is the distribution in the
geographical area restricted to middlemen on the basis
of their performance capability. Selective distribution is
appropriate for consumer shopping products such as
various types of garments, appliances etc.

Selective distribution benefits middlemen by limiting the

number of rival outlets that carry the brand. This often
helps build co-operation among channel members.
3. Exclusive Distribution
The most restrictive form of market coverage is
exclusive distribution. It is an extreme form of selective
distribution one outlet in a geographical area.
Exclusive distribution is frequently used in the marketing
of consumer specialty products. Exclusive distribution is
also attractive to middlemen. The manufacturers
promotion effort benefits middlemen exclusively in their
market areas.

In this policy the crux of the matter is the exclusivity in

mutual loyalty between a manufacturer and his
middlemen developed by virtue of a contract or an
understanding.
 Intensity of Distribution y
of
s it tion
n
n te ribu
I st
Di

Speciality
Goods e
s i v on
c lu uti
Ex trib
s
Di
Types of Product

e
ti v on
Shopping c i
e l e b ut
Goods S tri
s
Di

e
s i v on
i
te n but
In tri
s
Di
Convenience
Goods

of Little or no
y
it tion Some Effort Much Effort
ns Effort
n te ribu
I st
Di
Motivating Channel Members
A major challenge to a marketer today is to keep
channel members motivated such that they give their
best performance. Motivation of channel members is
often achieved through financial and non-financial
rewards. Financial rewards include higher margins,
extended credit time, bonuses and reimbursement of
expenses. The problem with most financial rewards,
particularly higher margins and bonus, is that the
wholesalers use them to reduce their prices for their
customers.
 Cont
There are three basic things involved in motivation
management:
1. Finding out the needs and problems of channel
members
2. Offering support to the channel members that
matches with the needs & problems.
3. Providing leadership through the effective use of
power
Channel Member Performance
Evaluating of middlemen is carried out by the middlemen
to determine how well each middlemen is performing.
The criteria used for evaluation may include the total
sales made by middlemen, the relationship with the
customers, the maintenance of the inventory etc. If after
the evaluation, the performance of the middlemen is
found unsatisfactory, the decision for the replacement is
being made and the same process repeats.
Factor affecting scope &
frequency of evaluation
1. Degree of manufacturers control over channel
members
2. Relative importance of channel members
3. Nature of the product
4. Number of channel members
 Cont.

Degree of control: depends on

Contractual agreements
Acceptance of manufacturers product
Market position of the manufacturer
Importance of channel members: depends on
Whether the manufacturer sells all its outputs through
intermediaries or relies less on intermediaries.
 Cont.

Nature of product
Whether reseller sells a high volume product of low
unit value or products of high unit value which is more
complex.
Importance of channel members:
Generally for intensive its a routine sales data
whereas for selective its a more comprehensive
evaluation.
Evaluation verses Monitoring

Performance Day to day

Evaluation Monitoring

Overall performance Appraisals that assist

reviews that give management in
management a complete & maintaining current
objective analysis of each operating control of
distributors operations distributors efforts
Channel Member Performance
Audit
1. Developing Criteria
a. Sales Performance
b. Inventory Maintenance
c. Selling Capabilities
d. Attitudes of Channel Members
e. Competition
f. General Growth Prospects
2. Applying Performance Criteria
a. Separate Performance Evaluations
b. Multiple Criteria Combined Informally
c. Multiple Criteria Combined formally
Vertical Market System (VMS)
One of the most significant recent channel developments is the
rise of vertical marketing systems, which have emerged to
challenge conventional marketing channels. A conventional
marketing channel comprises an independent producer,
wholesaler and retailer. Each is a separate business seeking to
maximize its own profits. No channel member has completed a
substantial control over the other members.
A vertical marketing, marketing system by contrast, comprises the
producer, wholesaler and retailer acting as a unified system. One
channel member owns the others a franchises them or has so
much power that they all cooperate. The vertical marketing
system can be dominated by the producer, the wholesaler or the
retailer.
Vertical Market System (VMS)
Conventional Vertical
Marketing Marketing
Channel Channel

Manufacturer Manufacturer

Wholesaler
Wholesaler

Retailer
Retailer

Consumer Consumer
Types of Vertical Market System

Corporate

Vertical
Marketing Administrated
Systems

Contractual
Vertical Market System (VMS)
(1) Administered: It is a system in which a single dominant firm in
effect administers the channel by virtue of its market power. It is a
channel situation where a manufacturer who dominates a market
through its size and strong brands may exercise considerable
power over intermediaries even though they are independent. In
the administered vertical system, a channel leader exerts power
over the behaviour of other channel members and can influence
their decisions and actions.
Vertical Market System (VMS)
(2) Contractual: In this system, the independent organisations
like wholesalers, retailers, etc. operate under contract specifying
how they will try to improve distribution efficiency and
effectiveness. It is a franchise arrangement typing producers and
resellers together. Contractual VMS consists of independent firms
at different levels of production and distribution integrating their
programmes on a contractual basis to obtain larger economies of
scale and or sales impact than they could achieve along.
Vertical Market System (VMS)
(3) Corporate: It is a system in which a single company owns all
of the manufacturing, wholesaling and retailing operations. It is a
channel situation where an organization gains control of
distribution through ownership. The corporate VMS is closest to
total channel systems concept. In corporate VMS, successive
stage from production to distribution are under single ownership of
any of the channel members.
Horizontal Marketing System
Another channel development is the horizontal
marketing system, in which two or more unrelated
companies put together resources or programs to exploit
an emerging marketing opportunity. Each company
lacks the capital, know-how, production, or marketing
resources to venture along, or it is afraid of the risk.
Retail
Retailing includes all the activities involved in selling goods or
services directly to final consumers for their personal, non
business use . - Philip Kotler
S
Retailing outlets are shops from whom the consumer ultimately
buys. - R.S. Davar
Product Issues in channel mgt
Effective channel management requires that the channel
manager be aware of how channel management
interfaces with product, price, promotion, and logistics in
the marketing channel. Three basic areas of product
management are considered: (1) new product planning
and development, (2) the product life cycle, and (3)
strategic product management.
Price Issues in channel mgt
Pricing strategy should incorporate channel
considerations before being implemented. If the channel
members perceive a manufacturers pricing strategy to
be congruent with their own interests, they are likely to
have a higher level of cooperation and the reverse is
also true.
Promotion Issues in channel mgt
One of the major tools the manufacturer uses for
implementing an integrated promotional program is
selling support by channel members. A manufacturer
must carefully administer promotional strategies to help
assure a high degree of channel member cooperation in
the promotion of its products. Research shows that
merely offering more monetary incentives is not
sufficient to secure promotional cooperation from
channel members.
E-COMMERCE
E-commerce involves the exchange of products,
services, information and payment through the electronic
medium of computers/networks. E-commerce means
business done on line. Ecommerce is the umbrella term
used for the entire spectrum of activities such as
electronic data inter-change (EDI), electronic payment
systems, order management, information exchange and
other business applications, with electronic/paperless
documentation.
SIZE OF E-MARKET
Internet usage varies from country to country and is
growing rapidly. It is creating opportunities and
challenges for e-marketers to target and operate in
countries that are less developed. Some of the most
recent researches indicate the continuing rapid global
growth of Internet connection and e-business
generation.
According to the Internet audience measurement
service, Nielsen/Net Ratings, a total of 498 million
people had Internet access in their home by the end of
2001. The analysis showed that 24 million people gained
Internet access from home during the last quarter of
2001.
DEVELOPMENT OF E-COMMERCE
E-commerce development varies widely by geography.
The countries in the north are by far the most advanced
in terms of Internet development; the countries in the
south, the least developed, with the countries in central
Western Europe generally falling somewhere in between
in terms of Internet development and sophistication.
Furthermore, mobile technologies, including mobile
Internet access, are relatively widespread in the region,
given that Finland and Sweden are home to mobile
phone giants Nokia and Ericsson, respectively. Finally,
much of the areas population is fluent in English, the
predominant language of todays Web.
E-COMMERCE AS A CHANNEL OF DISTRIBUTION

1. Commercial Channels
2. The Internet
1. Commercial Channels
In this the various companies have set up on-line
information and marketing services that can be
accessed by those who have signed up for the service
and pay a monthly fee. These channels provide
information (news, libraries, education, travel, sports,
reference), entertainment like fun & games, shopping
services, dialogue opportunities and e-mail etc.
1. www.olx.in
2. www.quikr.com
3. www.amazon.com
4. www.justdail.com
5. www.techsatish.net
2. The Internet
The internet is a global web of computer networks that
has made instantaneous and decentralized global
communication possible. Internet usage has surged with
the recent development of the user friendly world wide
web and web browser software such as net scope
navigator and micro soft internet explorer. Users can surf
the internet and experience fully integrated text,
graphics, images and sound. Users can send e-mail,
exchange views, shop for products, and access news,
recipes, art and business information.
FEATURES OF E-COMMERCE AS A CHANNEL
OF DISTRIBUTION
It allows to sell to a geographically disperse market.
It makes the firms able to target and focus on specific
segments.
It has relatively low set-up costs.
It makes possible the use of e-commerce technology
(for payment, shopping, software, etc).
It brings in a pattern shift in commerce and
consumption.
E-RETAILING
E-retailing means using of interactive computer
technology to present a sales message and
consummate the sale. E-retailing includes all the
activities involved in selling goods or services directly to
final consumers for personal, non-business use. E-
retailer or retail store is any business enterprise whose
sales volume comes primarily from e-retailing.
 E-RETAIL
E-retailers need to consider the following issues:
- Product / content issues
- Software interface issues
- Process issues
- Pricing issues
- Payment issues
- Market penetration issues
HIGHLIGHTS OF E-RETAIL
A complete package to suit the businesses entire
sales related requirements such as order, purchase,
payment, delivery, customer service, returns and
replacements.
Good prices and continuous stock availability.
Immediate pre-sales information on product quality,
prices etc. Satisfying the buyers curiosity about the
product.
Provides knowledge about the psychological needs,
motives and choices of the customers.
FEATURES OF E-RETAIL
Electronic interface between retailer and
manufacturer.
Customer interaction and personalization.
Order processing and order tracking.
Shopper self service option.
Product management.
Service integration (payment systems, tax and
shipping).
Post-sales customer service.
Inventory management.
ONLINE RETAILERS
Online retailers are business firms that buy products and
resell them online. Here the consumers can access
pictures of products, read the specs, shop among online
retailers for the best prices and terms, and click to order
and pay.
Business-to-business purchasing is growing fast on the
internet. Purchasing agents can use book-marked
websites to shop for routine items. Personal selling can
increasingly be conducted electronically, with buyer and
seller seeing each other on their computer screens in
real time.
DIGITAL PRODUCTS
In electronic commerce, digital goods is a general term
that is used to describe any goods that are stored,
delivered and used in its electronic format. Digital goods
are shipped electronically to the consumer through e-
mail or download from the Internet. Usually when you
purchase digital goods online, after payment has been
received the merchant will provide you with your digital
item as an e-mail attachment or they may provide you
with a secure link where you can download the item.
Examples of digital goods include e-books, music files,
software, digital images, Web site templates, manuals in
electronic format, and any item which can be
electronically stored in a file or multiple files.
 DISINTERMEDIATION
Disintermediation describes the process of eliminating
traditional intermediaries. Eliminating intermediaries can
potentially reduce costs since each intermediary must
add to the price of the product in order to profit. Taken to
its extreme, disintermediation allows the supplier to
transfer goods and services directly to the consumer in a
direct channel. Complete disintermediation tends to be
the exception because intermediaries can often handle
them. An intermediary that specializes in one function,
such as product promotion, tends to become more
proficient in that function than a non-specialist.
 REINTERMEDIATION
Reintermediation can be defined as the reintroduction of
an intermediary between end users (consumers) and a
producer. This term applies especially to instances in
which disintermediation has occurred first.
Reintermediation occurred due to many new problems
associated with the e-commerce disintermediation
concept, largely centered on the issues associated with
the direct-to-consumers model. The high cost of
shipping many small orders, massive customer service
issues, and confronting the wrath of disintermediated
retailers and supply channel partners all presented real
obstacles.
 E-enabled Tracking System
The term tracking in logistics management means getting
information about the status of inventory and the location of
inventory carrying vehicles etc. When this information or
tracking system uses some electronic devices for it then it is
called e-enabled tracking system. The need for tracking is
necessary for knowing about the exact location of the
inventories and to take some decisions on the basis of this
information.
The orders can be tracked by order number, waybill number,
customer's name or telephone number. Status information
includes inventory on hand, delivery information, purchase
order validation, shipment transit information, EDD
(estimated delivery dates) and other information that
enhances product visibility through the supply chain.
 RADIO FREQUENCY
IDENTIFICATION DEVICE (RFID)
Radio Frequency Identification Device (RFID) is the
technology that is associated with tracking wildlife or
enabling drivers to speed past electronic tollbooths on
the highway. Its working is simple. A radio frequency
transponder that contains a microchip (RFID tag) is
placed on something being tracked and it will emit or
reflect a signal whenever it passes under a scanner.
Decreasing chip prices have made RFID technology
cost effective for the supply chain.
 RFID Technology and Tracking
Systems
RFID Technology has an improvement over the bar-code
technology. Bar-code technology requires the forklift
driver or warehouse operator to scan the label on each
carton manually to track what's being moved. RFID
technology would enable the same tracking by equipping
an archway or doorway with an RFID scanner that
registers what's in the load when the forklift drives
through. The scanner simply reads the signals of tags
within radio transmission range. No human effort is
required to track the load, except to drive it through.