Chapter 1

Introduction to Sales
Management
 Personal selling strategies
1. Willingness to go to bat for the buyer within the
supplier firm
2. Thoroughness and follow through
3. Knowledge of the sales person’s product line
4. Market knowledge and keeping the buyer posted
5. Applying his product and services to buyer’s needs
6. Knowledge of the buyer’s product line
7. Preparation for sales calls
8. Regularity of Sales calls
9. Diplomacy in dealing with operating departments
10. Technical education
Evolution of personal selling
Partnership
Business Strategies
Consultative Management
Negotiation Selling
Persuasion
 Marketing concepts

1) Production concept
2) Product concept
3) Selling concept
4) Marketing concept
5) Societal concept
Societal marketing concept

Production Sales Customers

(Sales Orientation)

Customer Production Sales

Needs

Emphasis on
(Marketing Orientation) Seller’s Needs

Emphasis on
Customer
Needs
 Nature and role of sales
management
 The determination of sales force objective and
goals
 Sales force organization, size, territory, and quota
finalization
 Sales forecasting and budgeting
 Sales force selection, recruitment, and training
 Motivating and leading the sales force
 Designing compensation plan and control systems
 Designing career growth plans and building
relationship strategies with key customers
 Types of selling

• Order taker sales people

• Order creators
• Order getters
 Types of Selling
Inside Order Taker

Order
Takers Delivery Sales
People

Outside Order
Takers
Selling Order Missionary Sales
Function Creators People
New Business
Sales People

Front Line Organizational

Sales People Sales People

Order Getters Consumer

Sales People

Sales Technical Support

Support sales People
Sales
people Merchandisers
Difference between sales and marketing
Starting
Focus Means Ends
point
Selling and Profits though
Factory Factory promoting sales volume

Selling concept

Market Customer Coordinated Profits through

needs marketing customer satisfaction

Market concept
 MARKET ANTICIPATION

Marketing mix
•Product
Producer
•Price Consumer
Marketer
•Place
•Promotion

Exchange offer of value

Marketing management process

Sales management process

Formulation of a strategic sales programme

Implementation of the sales programme

Evaluation and control of sales force performance

 Technology

Emerging trends
Customer orientation in sales
Relationship selling
management
Technology

Global and ethical Diversity

Issues

New selling methods

Emerging trends in sales management

 Chapter 2
Selling Skills and
Strategies
 Selling and buying styles
9 (1,9) People Oriented (9,9) Problem Solving Oriented

I am customer’s friend, I consult with the customer so as to

inform myself of all the needs in his
8
Concern for the customers

I want to understand him and situation that my products can satisfy.

respond to his feelings and
7 interests so that he will like me. It
is the personal bond that leads him
6 to purchase from me.
(5,5) Sales technique Oriented
We work towards a sound purchase
decision on his part, which yield him
the benefits he expects from it.

5 I have tried an effective routine for

getting a customer to buy. It
4 motivates through a blended
personality and product emphasis (9,1) Push the product Oriented
3 (1,1) Take it or Leave it I take challenge of the customer
and hard sell him, polling on all
2 I place the product before the
customer and it sells itself as and
the pressure it takes to make him
buy
when it comes.
1 2 3 4 5 6 7 8 9
Selling situations

 Sales task and function

 Maintenance selling

 Developmental selling
 Selling skills

Effective
Problem
communication
solving skills
skills

Selling Skills

Listening Skills

Negotiation
and bargaining
skills

Conflict management and

resolution skills
Communication process
Feedback
Intended Perceived
Message Message

Encoding Decoding
Noise

Received
Sent Message Message
Channel
Sender Receiver
Communication process
contd.

Managing body language:

 Personal Appearance
 Posture
 Gestures
 Facial Expressions
 Eye Contact
 Space Distancing
Process of listening
Attendance

Interpretation

Remembrance

Evaluations

Response Action
Levels of listening
Feedback

Paraphrasing

Clarifications

Emphatic listening

Active Listening

Barriers to Listening !
Conflict management skills
 Models of conflict
 Components of conflict
 The conflict resolution process:
- lumping
- avoidance
- coercion
- meditation
- conciliation
- arbitration
- adjudication
- negotiation
 Conflict management process
Stage I Stage II Stage III Stage IV Stage V
Potential Cognition & Intentions Behaviour Outcomes
opposition or
Personalization
Incompatibility

Increased
group
Perceived Conflict handling performance
Conflict Intentions
Antecedent Overt Conflict
Conditions Competing Party’s
behaviour
Communication Collaboration Others
reaction
Personal Felt Conflict Compromising
Decreased
Variables Avoiding group
Structure performance
Accommodating
 Negotiation skills
• Situation and timing for negotiations
• Formulation for a bargaining strategy
• The theory and strategy of principle
negotiations
- separate the people from the problem
- focus on interests, not on positions
- invent options for mutual gains
- insist on objective criteria
Problem solving skills
• Habit I: be proactive
• Habit 2: begin with an end in mind
• Habit 3: put first things first
• Habit 4: think win–win
• Habit 5: seek first to understand,
then to be understood
• Habit 6: synergize
• Habit 7: renewal
Problem solving process
Define the problem

Generate alternative solutions

Decide the solution

Implement the solution

Evaluate the solution

techniques

Dunker’s
Statement diagram 4
and Present
Restatement desired state
5 analysis
3
Problem
Definition
Techniques
Evaluate
problem 6 Explore the
statement 2 problem
Find out origin of the
problem 1
 Dunker’s diagram
Achieve the desired state
General Solution

Possible path to the desired state

Path 1 Path 2 Path 3 Functional Solution

Solutions to implement & paths to desired solutions

Specific Solution
Solution 2 Solution 3
Solution 1
Statement restatement technique
ess
y M
u zz
F

Relax Perceived problems Generalize

Constraints

Make an Re Statement
Opposite
Statement

Re Statement

Final problem Statement

Components of a decision on the
future course of action

Situation analysis

Potential problem
Problem analysis Analysis
Past Decision analysis Future
What is the fault How to prevent future
faults?
Solution implementation process

Decision on the best solution I

M
P
L
Approval E
M
E
Planning N
T
Carry through A
T
I
Follow up O
N
Evaluation
 Chapter 3

The Selling Process

 Stages in the selling process

Pre-
Pre-sale approach Approach to
Prospecting before the
preparation the customer
interview

Handling
Follow up Closing the Customer Sales
action Sale Objections Presentation
 Prospecting
Successful prospecting

50 potential prospects 50 potential prospects

15 Qualified prospects 25 Qualified prospects
6 Interviews 17 Interviews
1 sale 7 sales

No Yes

Successful prospecting
Process of prospecting

Identify and define prospects

Search for sources of potential

accounts

Qualify the prospects from the

suspects
 Methods of prospecting
 Cold canvassing
 Endless chain customer referral
 Prospect pool
 Centers of influence
 Non competing sales force
 Observation
 Friends and acquaintances
 Lists and directories
 Direct mail
 Telemarketing
 Trade shows and demonstrations
 Selling process
• Pre approach to selling
• Approach to the customer
• Sales presentation
- approach to sales presentation
- attracting customer attention
- creating interest
- arousing desire and building conviction
• Methods of sales presentation
- canned presentation
- organized presentation
- tailored presentation
 Handling customer objections
Suggested by SMITH

• Start with your highest expectations

• Avoid conceding first
• BE sure the customer understands the value of a concession
• Make concessions in small amounts
• Admit mistakes and make corrections willingly
• BE prepared to withdraw a concession
• Avoid ‘split the difference’ strategy
• Do not advertise willingness to concede
Methods of handling customer
objections
 Superior feature method
 Yes…But method
 Reverse English method
 Indirect denial method
 Pass out method
 Comparison method
 Direct denial method
 Another angle method
 Narrative method
 Testimonial method
 Question or WHY method
 Closing the sale

• Methods of closing the sale

• Follow-up action
• B2B selling
 Chapter 4

Managing Sales Information

 Forecasting market demand
It is the estimated rupee or unit sales for a specific future time
Period based on the company’s marketing plan and an assumed
marketing environment.

Price/ Price/ Total

Price/
Unit Unit Market
Unit
demand
Qty
Qty per
per Unit Qty per Unit ©
Unit (B)
(A) D D1 D D1
P1
P2 Price / Price/
Price / Unit Unit
D D2 D D2
Unit Q1
Q2 Qty per Unit (f)
Qty per Unit (E)
Qty per Unit (D)
Market demand curve
 Market demand function
QD = F (P, I, P0, T)
QD = B + aP P + a1I + a0P0 + aTT
Linear form of the demand
equation QD = B + aP P
P- Price of the product
I- Consumer Income
T- Consumer preference
P0 Price of other goods and
services
aP,, a I, a0, aT represents the one unit
change in quantity associated
with the variables.
B represents the combined influence
of all the other determinants of the
demand
 Market demand forecasting

• marketing decision support system

- an MDSS is an ongoing future-oriented information structure
designed to collect, collate, categorize, edit, store, and retrieve
information on demand to aid decision making in an organization’s
sales and marketing programme
Marketing decision support system

TRANSACTIONAL SYSTEMS USERS

MDSS
 Forecasting process
The forecasting process is defined as the
series of decisions and actions taken by a
business organization in:
 identifying the forecasting objectives
 determining the independent and
dependent variables
 developing a forecasting procedure
 using the available data in the
selected method to estimate the sales in
future
 Forecasting process
contd.

Determine
Develop forecasting independent and Forecast objectives
procedure dependent variables

Select forecasting Evaluate performance

results against the
analysis method
forecasts

Comprehend total
forecasting procedure
Present all the
assumptions about Make and finalize
Collect, collate, data the forecast
gather and analyze
data
 Popular methods in forecasting
Qualitative methods

Sales force Delphi

Expert opinion Survey of buyer’s
composite technique
expectation

History analogy

Quantitative methods

Naïve method Trend method

Test marketing

Exponential
Moving average Regression method smoothening
 Trend forecast of Sales
Observed sales Forecasted sales

Sales e
lin
e nd
Tr

Time
 Naïve method
Sales (at the period t) = Sales T+1

The following formula shows how to adjust the naïve method

to account for a
change in rate of sales levels. The formula is stated this way:
FreeHandGraphicMethod
Next Year’s Sales = This Year’s Sales X This Year’s Sales
30
Last Year’s Sales
Freehand Method
25
Sales

20
15 Series1
10
5
0
1 2 3 4 5 6 7 8 9 10
Years
 Method of semi-averages
In this method available data are divided into two parts, usually with
equal number of years on both the parts
Year Sales
1993 102
1994 105
1995 114
1996 110
1997 108
1998 116
1999 112

he average of the first three years will be:

102+105+114 321
----------- = -------- = 107

3 3
 Method of moving averages
The 3-yearly moving average can be computed with the
following formula:
a+b+c b+c+d c+d+e d+e+f
--------- , ----------- , ---------- , --------- , ………….
3 3 3 3

Method of Least Square

The least squares method is a formalization of the eyeball-
fitting or graphical technique. It is used to mathematically
project the trend line to the forecasting period with the time
as the independent variable that influences the dependent
variable i.e sales.
Decomposition method
It is a time series method in which seasonality is taken in to
account while doing demand forecasting. This method consists
of three essential steps which are illustrated below.
Exponential smoothing
method (contd.)
• It is similar to the moving- average forecasting method
• The forecaster is allowed to vary the weights assigned to
past data points
• It allows consideration of all past data, but less weight is
placed on data as it ages
• Exponential smoothing is basically a weighted moving
average of all past data
• The method is used to forecast only one period in the
future
• Exponential smoothing techniques vary in terms of how
they address trend, seasonality, cyclical and irregular
influences
 Exponential smoothing
method contd.
Next Year’s Sales = a (This Year’s Sales) + (1 – a) (This Year’s
Forecast)

Autoregressive moving averages

It uses a different procedure than the other models explained
above in identifying the proper number of past observations
to be included in the analysis and the weights that should be
attached those observations
 Correlation analysis
• a correlation is basically the degree of linear
association between two variables where one variable
is treated as independent variable and sales as the
dependent variable
• sales managers look for variables that correlate with or
relate to sales
• correlation analysis involves the determination of whether a
relation exists, and if it does, then measuring it, testing
whether it is significant, and establishing the cause and
effect relation
• the degree of relationships between the variables is called
co-efficient of correlation
 Regression analysis
• regression analysis is another form of correlational
technique
• reveals average relationship between two variables and
this makes possible estimation or prediction
• a statistical method used to incorporate independent
factors that are thought to influence sales into
forecasting procedures

Sales
Sales

Population Population

(Liner Relationship) (Curvilinear Relationship)

Market factor indices methods
•the most commonly used market factor index
method is Buying Power Index Method (BPI)
•BPI is used to predict sales for specific
geographic regions for retailer and FMCG
sector such as clothing, food, auto, and other
consumer items
•BPI is also used to determine sales quota by
many multinational organizations
•applications are limited in Indian
organizations as we do not have data bases to
support this method at different levels of the
market
 Market factor indices methods
contd.

Econometric techniques
Econometric techniques uses multiple independent variables
where the assumption is that of a liner equation between the
dependent variable (sales) and independent variables
 Market factor indices methods
contd.
Factors affecting selection of a forecasting technique
• data availability
• cost
• variability
• consistency of the data
• the degree of detail necessary
• time horizon
• technical sophistication
• ability of the method to capture the level of risk and
variability
• the level of accuracy of the forecast
• fundamental change indicators
MAPE (Mean Absolute Percentage Error)
• level of accuracy is an explanation of the gap between
the actual and predicted sales

• techniques with lower level of gap are more accurate

• statistic used to calculate the level of accuracy of a

forecast is called MAPE (Mean Absolute Percentage
Error)
• MAPE is the average percentage forecast error and is a
popular way to measure accuracy
 Chapter 5

Sales Organization
 Sales organization

• an organization of individuals either working together

for the marketing of products and services manufactured
by an enterprise or for products that are procured by the
firm for the purpose of reselling

• a sales organization defines duties, roles, rights, and

responsibilities of sales people engaged in selling
activities meant for the effective execution of the sales
function
 Sales organization
contd.

• a structural body through which the functions of

sales management are carried out

• sales organization always makes efforts to increase sales,

thereby achieving the principle of profit maximization,
which contributes to the overall growth of enterprise
 Factors influencing structure
• product and service related factors

• organization related factors

• marketing mix related factors

• external factors:
- the speed of market change
- reduction in the number of vendors per
buyer
- closer to customer relationships
- changes in regulations and international
practices
Organizational principles
 span of control

 unity of command
 hierarchy of authority
 stability and continuity
 coordination and integration
 homogeneity
 objectivity
 specialization
 Organizational design
- formal and coordinated task
- assigning territories
- establishing flows of communication and responsibilities
of sales groups and individuals to customers effectively
Line organization Mr. Ratnakar Shetty
President / Owner

Mr. Chandrakant
VP (Sales)

Five sales people

 Typical structure of a line organization

Consumer Institutional Corporate

market market market

National
Distributors Direct to Direct
Home marketing Distributors Bundling Gifting

Regional Consumer
Distributors

Retailers

Consumers
 Design by territory
VP Marketing

National Sales
Manager

Divisional Manager Divisional Manager Divisional Manager

(East) (North) (West)

Regional Sales Regional Sales Regional Sales

Manager Manager Manager

District Sales District Sales District Sales

Manager Manager Manager

Sales Staff Sales Staff Sales Staff

(City wise) (City wise) (City wise)
 Design by management function
Mr. Dara singh,
VP
(Marketing)

Staff Function Line Function

Mr. Chandra De
Mrs. Chitra Mohanty Mr. Dibya Behera Manager
(Advt / Sales (Sales Manager) (MR)
Promotion Mgr)

20 Sales People
 Design by product

President,
Marketing

Product Manager (A)

Manager Manager Manager

(Sales) (Training) (Promotion)
Product Manager (B)

Manager Manager Manager

(Sales) (Training) (Promotion)
 Design by customer
President
(Marketing)

Vice President
(Marketing)

Sales Manager Sales Manager Sales Manager

Industrial Relations Wholesalers Retail Sales

Sales People Sales People Sales People

 President

Functional Vice President Vice President Vice President

(Production) (Marketing) (HRD)

Geographic
Marketing Manager Combined Marketing Manager
International
India
Sales Org. Design
G.M G.M G.M
Consumer care International Sales International Sales
Customer
Divisional Manager Divisional Manager Divisional Manager
Soaps Paper Food Product

Eastern Sales Western Sales Northern Sales

Division Division Division

Europe Division America Division Gulf Division

 Sales Organization
Key account sales
- focus on CRM
- customer profitability and value analysis
- the few accounts give incremental returns
- national accounts

Sales process automation

- EDI – Electronic Data Exchange
 Emerging organizational design
• agency and distribution selling
• shared sales force
• telemarketing
• TQM and team-based selling

Customer

Technical
Sales Marketing Manufacturing
Support

Supplier selling team

 Number of sales people
• determined by:
- territories vary in their demand structure for prospecting
- product mix demands
- levels and types of prospecting
- nature of the customer segments

Affordability method (based on sales budget)

Incremental method
Workload method (Number
(Number of (Ideal (Length of
Number of sales people = existing X of
X frequency of X a call)
customers) Potential calls)
customers)

Ideal selling time available for a salesperson

 Chapter 6

Management of Sales Territory

 Sales territory

• a group of present and potential customers assigned to

an individual
• sales person, a group of sales person, a branch, a dealer,

a distributor or a marketing organization at a given

period of time
 Sales territory (contd.)

Advantages of designing a sales territory :

 it ensures better market coverage

 effective utilization of the sales force
 efficient distribution of workload among sales
people
 it is convenient to evaluate the performance of
sales people
 to control over the direct and indirect costs of the
sales function
 optimum utilization of sales time by sales people
 Designing sales territories
Factors
influencing the Select the basic geographic
modifications control units
of a territory:
• mergers Decide on the criteria for
• market allocation
consolidation
• split in division Decide on the starting point
• sales force Combine control units Modify
turnover adjacent to starting point territorial
• customer Compare territories on boundaries to
relocations allocation criteria and balance
• product life conduct workload analysis workload
cycle change Assign sales force to new and potential
• product line territories
change
 Territory shapes

circle Clover leaf

wedge
 Strategic Planning Matrix
Opportunity Opportunity
The account offers a good opportunity. The account may represent a good
H It has high potential and the sales opportunity. The sales organization needs
organization has a differential to overcome its competitive disadvantages
i advantage in serving it. and strengthen its position to capitalize on
the opportunity.
g Strategy
Strategy
h Commit high levels of sales resources to
Either direct a high level of sales
take advantage of the opportunity. resources to improve the position and to
take advantage of the opportunity or
shift resources to other accounts.

L Opportunity
The account offers stable opportunity since
o the sale organization has differential
advantages to serving them.
w is at a competitive disadvantage in serving
Strategy
Allocate a moderate level of resources to
maintain current advantage.
Strong
Opportunity
The account offers little opportunity. Its
potential is small and the sales organization
it.
Strategy
Either commit a minimal level of
resources to the account or consider
abandoning the account altogether.
Weak
 Sales territories

New Territories..?

Use of Information Technology

 IT enabled services
 computer programmes
 simulation techniques
 Chapter 7

Management of Sales Quota

 Sales quota
• a quota is an expected performance objective

• a quota is a sales assignments or goal to be

achieved in a specific period of time
• it is routinely assigned to the sales units (e.g.
departments, divisions, and individuals)
• sales units proceed to reach quotas in their
respective
“A domains
sales quota is the sales goal set for a product line,
company division, or sales representative. It is
primarily a managerial device for defining and
stimulating the sales effort.”. … Kotler
 Principles of quota setting
• setting of sales quotas is a challenge to the sales
manager and should be handled with precision
and adequate skill
• objectivity to be observed while fixing quotas
and should be based on facts and figures drawn

from the market

• it must be simple to understand both to the
manager and the sales people
• quotas set above the achievable limit often
demotivate and result in high turnover in the
organization
 Principles..
contd.
• flexible to the prevailing and emerging market
conditions
• there should be a level of definiteness in the quota
set for a salesperson
• it should be fixed either in terms of geographic
territory, on money value, or on the basis of units of
product(s)
• a participatory quota setting procedure followed
jointly by the sales manager and sales people together
serves as a tool of motivation and leads to the
realization of the organizational sales goals
S M A R T
P E T R I
E A T E M
S A E SPECIFIC
CI A
FI U I L
C R N I
A A S
B B T SBO…
L L I MBO in the Sales
E E C domain?
 Organization of the sales job
Defining annual objectives
Procedure for setting sales quota
Individual Goal setting form

Name
Output
Year
Your territory
Results expected
Pessimistic Realistic Optimistic Results
1. Volume per month
2. Expenses per month
3. Gross margin per month
4. Market share per month
5. Key account coverage per
month

Conferencing with each sales person

Types of sales quota
• sale volume quota
• sales budget quota

• sale activity quota

• combination quota
 Methods of setting sales quota
Quotas are based on…
• sales forecasts and potentials

• forecast

• past sales and experience

• executive judgment

• sales people judgment

• compensation
Problems in setting sales quota
1. There is a high level of individual difference in every
organization
2. A perfect quota is a combination of selling and non-
selling activities

3. Often sales people do not give proper attention to the

non-selling activities (e.g. searching for prospects,
handling customer objections, and creating market for
probable entry of new products)
 Chapter 8

Recruitment and selection of

the sales force
 The sales manager
• performs sales management +HR
management !
• recruits, selects, trains, motivates, leads,
controls, and compensates sales teams
• selection and recruitment of efficient sales
people is always a process of building competitive
advantage for an organization
Turnover Strategic position Job qualification
analysis
Establish Decide on the number of
hiring Job description
people to hire
objectives
Planning Identify best sources of
recruitment: Organizational
internal and external sources characteristics,
Recruitment Generate database of company image
candidates and climate,
styles of
Evaluate candidates supervision,
Select and induce compensation,
Selection
candidates to accept and motivation
positions of the company
Socialization
Socialize

The hiring process

Challenges in sales force
selection
• personality types matching to job profiles
• one of the measures that the organization
looks in an employee is:
- the ability to perform by an employee
= ability x motivation
• level of motivation
 Planning for recruitment
1. Strategic position analysis
2. Turnover
3. Job analysis
• gathering and organization of information
• concerning the tasks, duties and
responsibilities of a specific job

3. Task inventory analysis and KSA matrix

• job qualification
• job description
 Sales force recruitment
• recruitment is an act of inducing qualified and
appropriate people to get interested in and apply
for a salesperson’s position within a sales
organization
• internal sources
- existing employees
- lateral and upward moves
- interns and cooperative students
- employee referral programmes
• external sources
- industry sources
- educational institutions and campus
recruitments
- employment exchanges
- placement consultants
- walk in interviews
External sources contd...
- networking referrals
- web consultants
- responses to direct open advertisements

Selection procedure
- inviting application forms
- personal interviews
- reference checks
- physical examinations
- psychological tests
- intelligence
- personality
- aptitude and skills
- determination of terms of service
- appointment
- initial orientation
 Socialization process
• process of orienting a new salesperson to the
sales organization, territory, or division in which
he or she will be working
• three stages

Anticipatory stage

Encounter stage

Settling stage
Chapter 9

Training the Sales Force

 Challenges in sales
training

 Will the training programme be effective

in solving a problem?
 Will the investment in it be justified?
 Will it produce the desired or intended
results?
 Role of the trainer

 The success of the training programme depends on the

ability, skill, and motivation of the sales trainer
 The training process

Training need assessment

Design and conduct of a training programme

Evaluation of a training programme

Training need assessment
phase

Organizational level analysis

Task level analysis

Individual level analysis

 Training needs
Identification of specific problems
Anticipating impending and future
problems
Management requests
Interviewing and observing the
personnel on the job
Performance appraisal
Questionnaire survey
Checklist
Attitude survey
Interpersonal skill test
 Designing and conduct
phase

Location

Job Instruction Training (JIT)

Presentation options
 Types of training

 Cross-functional training

 Team training

 Creativity training

 Literacy training
 Training methods
Didactic method
- structure the lecture
- reinforce the Message
- aid concentration
- material used for the lecture
- make it memorable for the participants
- deliver with dynamism
- use questions
Visual support
Participative
Conferences
Training methods contd..
Seminars
Discussions
Role play
Case study
Fishbowl
Workshops
Sensitivity training
Transaction analysis
In-tray exercises
Transcendental meditation
Deciding a sales training
programme
 Aim
Content
Contents
Knowledge
Proficiencies
Location
Evaluation
 Process of socialization

 Anticipatory socialization
 Accommodation stage
 Outcome stage
 Chapter 10

Sales Force Motivation

Process of motivation

Motive

Behaviour Tension
reduction

Goal
 Motives

 Primary
 General
 Secondary
 Motivational drives

 Principles
 Security
 Achievement
 Approval
 Loyalty
 Advancement
 Leadership
 Human behaviour
 Theories of motivation

Content
Process
Reinforcement
 Content theories
Need hierarchy theory

Hertzberg’s two factor theory

Alderfer’s ERG theory

McGregor Theory X and Y

Z theory of William Ouchy

Maslow’s hierarchy of needs

Self actualisation need

Esteem need

Social need

Security need

Physiological need
 Process theories

Equity theories
Expectancy theories
 Reinforcement theories

Hull’s drive theory

Skinner’s reinforcement theory

© Oxford University Press 2005, All rights

reserved.
Factors influencing the
motivation of the salesperson
 Personal characteristics

 Environmental conditions

 Organizational policies
Designing a motivational
programme
 Programme objective
 Motivational tools
 Individual methods
 Group methods
 Communication
 Auxiliary environment
 Feedback
 Chapter 11

Sales Force Compensation

Factors influencing the design
of a compensation plan

Financial stability

Size of the market

Nature of the product

 Types of compensation
plans

 Financial compensation
 Non-financial compensation
Financial compensation
 Straight salary plan
 Straight commission plan
 Bonus and incentive
 Salary plus incentive (combination plan)
 Drawing account and commission plan
 Allied methods
Non-financial
compensation
 Promotions
 Recognitions programmes
 Fringe benefits
 Expense accounts
 Perks
 Sales contests
Steps in designing a
compensation plan
 Determine sales force and compensation
objectives
 Determine major compensation issues
 Implement long-term and short-term

compensation plans
 Relate rewards to performance
 Measurement of performance
 Appraise the compensation plan
 Chapter 12
Evaluation of the Sales Force
 Deciding on the criteria for
measuring performance

Deciding in the conduct of the

performance appraisal

Deciding on the evaluation of

individuals and teams

Comparison of actual
performance with standards

Deciding on the frequency of

the performance appraisal

The external variables and

their influences
Sales force performance appraisal process
Sales force performance appraisal
process
• Appraisal criteria
• Relative and absolute judgments
• Trait-based
• Outcome-based
• Behaviour-based
• Performance rating
• Force choice scales
• Behavioural observation scales
• Call reports
• Silent call monitoring scores
• Activity reports
• Combinational methods
 Conduct of performance and individual vs
team appraisal

Example of a Role result Matrix

Position Developing a new business
Servicing existing customers
Key account manager
Regional sales manager
Application engineer
Customer service staff
Technical support staff
Installation and quality engineer
Financial staff
 Chapter 13

Distribution channel
management - an
introduction
Role of distribution
channels
• To adjust the discrepancy of assortment through the
process of sorting, accumulation, allocation, and
assorting
• To minimize the distribution costs through
routinising and standardizing transactions to make
exchange more efficient and effective
• To facilitate the searching process of both buyers
and sellers by structuring the information essential
to both the parties
• To provide a place for both parties to meet each
other and reducing uncertainty
How do distribution channels
contribute
• Intermediaries can improve the efficiency of the
exchange process

• Channel intermediaries adjust the discrepancy of

assortment through the performance of the sorting
process

• Marketing intermediaries hang together in channel

arrangements to provide for the routinisation of
transactions

• Channels facilitate the searching process

Discrepancies in the
process of exchange
 Spatial discrepancy

 Temporal discrepancy

 Need to break the bulk


Need to provide assortment
The cost and control aspects of
intermediation

Cost
efficiency

Control

Direct Distribution Indirect distribution

 Distribution channel
strategy
• Setting distribution objectives in terms of the customer
requirements
• Finalizing the set of activities that are required to be
performed to achieve the channel objectives
• Organizing the activities so that the responsibility of
performing the activities is shared among the entities
who are meant to perform these activities
• Developing policy guidelines for the smooth
functioning of the channel on a day to day basis
 Distribution channel
management (contd.)

• Distribution channel management

encompasses all activities dealing with the
distribution function of the firm
• The distribution strategy provides
guidelines for decision making
• The distribution management function can
be viewed as happening in two phases: the
ex ante phase and the ex poste phase
 Distribution channel
management (contd.)

• The ex ante phase involves all the activities

that are associated with the design and
establishment of the distribution channel.
These activities actually take place before the
distribution channel actually starts functioning.
• The exposte phase involves managing the day
to day activities of the channel wherein the
behavior of the individual channel members
are coordinated
 Channel Management
tasks
Design of the
channel structure
Ex ante
Phase
Establishing the
channel
Distribution Channel Strategy
•Channel Objective
•Activity Finalization
•Organizing the activities Motivating
Channel Members
•Developing Policy Guidelines
Ex Poste
Phase
Resolving Conflicts
among channel
members
 Chapter 14

Designing customer-
oriented
marketing channels
 Channel Design
 The channel design is normally meant to give a
clear idea about:
 The number of channel entities in the channel

network,
 The way in which they are linked,

 The roles and responsibilities of the entities in the

network
 The rewards for participating in the activities and

also
 Clear cut guidelines for the major activities to be

performed during the normal functioning of the

channel.
What are the service
outputs
Waiting time

Breaking the bulk

Spatial convenience

Assortment
Distribution channel design

To consume
a product Channels

Service outputs Participates in

have to be delivered channel flows

Activities have
to be performed
Thus performs activities
 Example of a service output
delivered template
Sl.No. Service dimension Service output delivered
1. Bulk-Breaking Units are delivered in ones
2. Spatial convenience There is at least one outlet for almost every
3 km radius excluding of course thinly
populated areas
3. Waiting time Not more than 2 days for any model
4. Assortment Other consumer goods items including that
of other competitors are available at all the
outlets where the products are otherwise
Available
5. Installation support Available
6. After sales support Free for first two years, but available on
payment afterwards. Also available at every
city from where the product was bought.
7. Consumer financing Available
 ChannelDirect
Flow flows and contribution
Indirect to
Other
service contribution
outputs contribution contribution
Physical Spatial convenience, Assortment
Possession bulk breaking, waiting
time
Ownership Spatial convenience
Promotion Spatial convenience Is a service output in
itself
Negotiation Spatial convenience, Assortment
bulk breaking
Risk taking Waiting time, bulk
breaking, spatial
convenience
Financing Spatial convenience, Assortment
waiting time, bulk
breaking
Ordering Bulk breaking, spatial
convenience, waiting
time
Payment Bulk breaking, spatial
convenience, waiting
time
 Channel design effort
decisions
 The service output levels
 The flows or activities that are
associated with the achievement of the
service output levels
 The type of entity who would be
entrusted with the performance of each
of these flows
Parameters for comparing
channel designs

Efficiency
Effectiveness
Equity
Scalability
Flexibility
 (contd.)

 The main purpose of the channel to be set-up

 The profile of the customers who are the target
market for the channel
 The needs and requirements of the target market
with regard to the identified service outputs
provided by the proposed/ existing channel:
 Analysis of the operations of the existing channels
that deal in similar product/service lines
 Detailed activity chart for achieving the service
output objectives
Plan….. Contd.

 Details about the various channel constituents who will

be performing these tasks
 The cost of performing the activities
 The designated roles and responsibilities of the channel
constituents
 The proposed remuneration for performing these roles
and responsibilities
 Standards for measuring the performance
 Procedures for reporting and information sharing
 Monitoring mechanisms
 Criteria for appointing the channel members
 Chapter 15

Customer-oriented
logistics management
Logistics strategy

Cost reduction

Capital reduction

Service improvement
 Logistics Planning
Inventory Management Transportation decisions
•Inventory levels •Modes of transport
•Deployment of inventories •Carrier routing/scheduling
•Control methods •Shipment size /consolidation

Customer
Service
goals

Location decisions
•Number, size and location of facilities
•Assignments of stocking points to sourcing points
•Assignment of demand to stocking points
Generic types of outbound logistics strategies

Direct shipment

Warehousing

Cross-docking
Functions of warehousing operations

Movement •Receiving
•Transferring
•Order picking/selection
Storage •Shipping

Information transfer

•Stock keeping locations

•Inbound and outbound
shipments
•Facility space utilization
•Order fulfillment data
 Relationship between logistics, cost,
and number of warehouses
Total cost

Total Inventory cost

cost
Transportation
cost

Warehousing
cost

Number of warehouses
 Why Inventories?
To improve customer service
To smoothen the operations of the
logistics system
To reduces costs
Inventory procurement costs
Inventory carrying costs
Stock out costs
Cost associated with inventory
Components of inventory carrying cost
Capital cost Inventory
Investments

Inventory Insurance and

service costs Taxes
Inventory
carrying cost Warehouse rent,
Storage space maintenance
costs charges

Inventory Obsolescence
carrying cost Damage&
Pilferage
Shrinkage
Relocation
costs
 Echelon inventory
Stockist
Stockist echelon
echelon Supplier Inventory
lead time

Stockist

Retailer Retailer Retailer Retailer Retailer

 Factors affecting transportation cost
 Product related factors
 The density of the product
 Stow ability
 Difficult in handling
 Liability

 Market related factors

 Intramode competition
 Location of markets
 Balance or imbalance of in freight traffic in and
out of the market
 Seasonability of the product movements
 Chapter 16

Managing Channel Member

Behaviour
 Channel relationships

• Perceptions of organisational power

• Dependence
• Control
• Trust
• Commitment
• Co-operation
Discrete relational exchange
continuum

Arm’s length relationship

Relational exchange relationship

 Channel control

Distributor’s Tolerance
Function
profit earned

Pay–Off
Function

Zone of acceptance Supplier authority

Role of persuasion, authority, and
coercion in channel control

Channel members Tolerance

profit function
A
B
C Pay –off
function

Coercion

persuasion Authority control

 Components of channel offering
Manufacturer sales
force incentives

Promotional
Responsiveness
support
systems Training
Financial returns
Quality products Distributor
Technical
assistance Reliable delivery sales force
Competitive price Market incentives
Company National reputation research
policies

Distributor firm
Incentive incentives
Capability
programme Channel core building
elements programmes
Influence Types of Influence Explanation
Strategy strategy
group
Indirect • Information exchange Where information on general business
influence • Information control issues and the channel program is
• Modeling merely exchanged with channel
strategies member personnel.
Direct • Recommendation In this type of strategy the
Unmediated • Warning consequences of the acceptance or
Strategies • Positive normative rejection of the channel programme or
• Negative normative. its implementation are stressed, but
these consequences are based on a
response from the market environment,
not on the mediation of the channel
Principal.

Influence strategy
types (contd.)
Reward and • Economic reward In this type of strategy rewards
Punishment • Non-economic reward and punishments are directly
• Economic punishment given to channel members
Strategies • Non-economic punishment

• Direct request This strategy involves making a

Direct direct request to the channel
member where the Principal
unweighted mainly communicates desires or
strategy wishes concerning the channel
member’s acceptance of the
channel program.

Direct • Personal plea In this type of strategy specific

Mediated • Promise action is requested; consequences
• Threat and of acceptance or rejection are
strategies • Legalistic reference. stressed and are based on the
mediation of the channel
principal.

Influence strategy
(contd.)

types
 Influence situations in channel
relationship

Attitude towards the channel progranmme

Positive Neutral Negative

+ ve
Reinforcement process Moderate Radical
Behavioural rationalization rationalization
Behaviour
reinforcement Attitude change Attitude change
towards the - ve
channel
programme Inducement process Moderate Radical
Behavioural change confrontation confrontation
Behavioural and Behavioural and
attitudinal change attitudinal change
Stages in channel conflict
Attitudinal
sources Cognitive/
of conflict Manifest Conflict
Affective
conflict outcomes
conflict

Structural
Conflict
sources of
resolution
conflict

CAUSES OF CONFLICTS
Attitudinal Causes
Structural causes
Conflict management methods at different
stages of conflict
Institutional approaches
Joint membership of associations
Exchange of executives
Latent conflict
Cooptation
Dealer councils

Third party mechanisms

Mediation
Felt conflict arbitration

Manifest conflict Negotiation

 Negotiation
strategies

HIGH Accommodative Collaborative/problem

solving

Concern Compromise
for the
others
interest

Avoidance Competitive /aggressive

LOW

LOW Concern for HIGH

own interest
 Chapter 17

Retail Management
 Retail marketing mix

 Merchandise characteristic

 Customer service characteristic

 Trading format

 Customer communication
 Retail marketing mix (contd.)

How merchandising functions affects

profitability?
(i) the merchandise in the store affect the volume of
sales as it is primarily the merchandise that attracts
customers
(ii) since profitability is based on the turnover rate of
the inventory, the choice of merchandise and the
quantity of merchandise of each category stocked
affects the overall profitability of the establishment
Factors affecting choice of retail
strategy

Company’s strategic objectives in terms

of the level of profitability desired
Space availability
Preferences of target customers
Relationships with manufacturers
Availability of trained salespeople etc.
Availability of stock and stock
holding cost
Stock
holding
cost

+20%

Percentage of availability
80% 90% 100%
 Financial method of
merchandising

Cost method

Retail method
Merchandise planning process

Develop a sales plan

Plan reductions

Develop a stock plan

Plan merchandise needs

Calculated planned Purchase

Plan mark –ups based on profitability targets

Customer services

Product services

Service products

Support activities
Customer performance measuring
techniques

Frequency or browsing visits

Frequency of purchase visits

Average transaction per visit

Items purchased

Range purchased

Customer service facilities used

Purchase process for service
requirement identification
Service requirements
Search
Purchase process
Comparison
Pre-purchase phase
Product related
Augmentation of the product
Purchase phase Transaction related
Delivery
Installation
Post purchase phase Use extension
Repeat visits
 Attitude towards trading format
and store environment
Shopping Attitudes
Task Oriented Pleasure Oriented

Convenient Locations Exclusive Store Merchandise

Ample Parking Wide Choice
Pre-purchase
Stage Close to Other Task Oriented
Stores Prestigious Image
Relevant Merchandise Selection
During
Ambience and Excitement
Purchase High Availability
Visual Merchandising
Competitive Pricing
In-store Facilities
Post-purchase Rapid Cash Handling Product Services Centers
Stage

Product Displays Theme Displays

Customer Advice Areas Customer Advice Areas
 Chapter 18

Managing the
International Channels of
Distribution
Factors affecting
international trade

 Differences in customer expectations

across countries
 Differences in channel structure and

trade practices
 Differences in governmental policies

and regulations
 Differences in the quality of physical

infrastructure
Market entry strategy
Indirect exporting

C Direct exporting
O Licensing
R
N
Franchising I
T
S
R Contract manufacturing
K
O Strategic alliance
L
Joint venture

Wholly owned subsidiary

 Success factors in manf. – overseas
distributor relationships
Distribution Outcomes Remedies
inhibitors
Separate ownership Divided loyalties Offering good incentives,
Seller buyer atmosphere helpful support schemes,
frank discussions, and
Unclear future intentions high levels of interactions

Geographic, economic, Communication blocks Making judicious ways

and cultural gaps Negative attitudes of two way visits,
establishing a well
Problems in physical managed communication
distribution programme

Differences in the legal Vertical trading Full compliance with

and regulatory restrictions law,drafting a strong
structures Dismissal difficulties distributor agent.
International logistics
management
International distribution system

International suppliers

Offshore manufacturing

Fully integrated global supply chain

 Export procedure
1
Exporter Importer

4 2

55 Bank in exporter’s Import

Importers bank
country 3 warehouse

9
Manufacturing Customs

8
9
6 Transportation and
7
Documentation Ship Customs
formalities secured broker
Freight
forwarder Contd.
Contd.
State Process
1 The Sale
•Importer makes enquiry from potential supplier
•Exporter sends catalogue and price list
•Importer requests samples
•Exporter sends Proforma invoice
•Importer sends purchase order

2 Importer arranges bank financing.

3 Letter of credit send by importer’s bank
4 Exporters bank notifies that the LOC has been received
5 Exporter produces or acquires goods
6 Exporter arranges transformation and documentation and space
reserved on ship or aircraft
7 Exporter ships goods to importer
8 Exporter presents documents to bank for payment
9 Importer has goods cleared through customs and delivered to the
ware house
International logistics
intermediaries
Freight forwarder
a) To forward an export shipment from the
point of origin to the ultimate destination
and
b) To deal with transport carriers to get
space for the shipment.
• Customs broker
Exporting documents
Letter of credit
Bill of lading
Commercial invoice
Commercial invoice
Consular invoice
Certificate of origin
Thank you