SALES

&
DISTRIBUTION
MANAGEMENT

What is Sales
Management?
The process of planning, directing, and
controlling of personal selling,
including
recruiting, selecting, equipping,
assigning,
supervising, paying, and motivating
the personal
sales force.

NATURE OF SALES MANAGEMENT

1. Integration With Marketing
Management :
A companys marketing team
consists of 2 basic groups :
a. Field selling
(field sales force , in their sales
territory contacting existing &
prospecting customers.)
b. Head quarter marketing team
(performs support & service
functions to help field salespeople in

Promo
tion

Marke
t
Resea
rch

HeadMarke
ting

Market
Logistics

Customer
Service

Coordina
tion

2. Relationship selling :
Its basically the creation of customer loyalty.

Transactional
Relationship/
Selling

Value added Collaborative/

Relationship/
Partnering
Selling
Relationship/
Selling

Transactional selling :
customers with low sales & profit
potential & businesses that have low
priced & low profit products and services ,
the focus is on single transaction with
each customer, where after the product
or service is sold the customer is
contacted again and hence the
relationship is not extended.
Eg:
Seeing a movie in a theatre or eating at
a restaurant

Value added relationship selling :

The focus is on the sales person understanding
the current & future needs of the customer
correctly & meeting those needs better than the
competitors. After the purchase is made , the
salesperson contacts the customer to find out if
the customer is satisfied & has any future
needs. Such customers have medium sale s&
profit potential.
Eg:
Maruti Udyogs sale s service centre contacts
each customer to find out their level of
satisfaction or dissatisfaction after the car
purchase or service.

Collaborative selling :
It means handling every aspect of
the sales process with a high degree
of professionalism. There are six
basic steps that describe how the
collaborative sales process unfolds
Target
(identify the specific markets)
Contact

 Explore
(collaborative salespeople conduct research, meet
with their prospects frequently, and do whatever it
takes to become an expert on their prospect's
business . Collaborative salespeople make it clear that
they want to help, not just make a sale)
Collaborate
(after an in-depth exploration of a prospect's situation
that collaborative salespeople talk about their
products or services. Collaborative salespeople never
dictate solutions to their prospects. Instead, they form
"partnerships" in which prospects play an active role in
the search for the best solution. The collaborate phase
of the sale is conducted in the spirit of "let's work
together on the solution and together build a
commitment to its successful implementation." )

 Confirm
(Collaborative salespeople move on to the next
phase of the sales process only after they have
received assurances that their customers are in
agreement with them on everything that has been
discussed.)
Assure
(This phase of the collaborative sales process
begins immediately after the sale has been
confirmed. Collaborative salespeople keep in touch
after the sale. They communicate regularly about
delivery dates, installation, training, and other
relevant matters. They make sure their customers
are satisfied with their purchases. They help
customers track their results and analyze the
effectiveness of the solution.)

3. Varying sales
responsibilities / sales
positions
Selling includes a variety of sales
jobs , which are different from one
another. No two sales positions are
similar
for eg :
Delivery sales person , order taker
sales support people , technical sales
support , demand creator , soultion
vendor

Objectives of sales
management
Sales Volume
Contribution to profits
Continuous Growth

Importance of sales
management
The only function / department in a
company that generates revenue / income
The financial results of a firm depend on
the performance of the sales department /
management
Many salespeople are among the best paid
people in business
It is one of the fastest and surest routes to
the top management

Personal selling objective

Building Product Awareness
A common task of salespeople, especially
when selling in business markets, is to
educate customers on new product offerings .
Creating Interest
The fact that personal selling involves personto-person communication makes it a natural
method for getting customers to experience a
product for the first time.
r

Providing Information When

salespeople engage customers a large
part of the conversation focuses on
product information. Marketing
organizations provide their sales staff
with large amounts of sales support
including brochures, research reports,
computer programs and many other
forms of informational material.
Stimulating Demand By far, the most
important objective of personal selling is
to convince customers to make a
purchase.

 Reinforcing the Brand Most

personal selling is intended to build longterm relationships with customers. A
strong relationship can only be built over
time and requires regular communication
with a customer. Meeting with customers
on a regular basis allows salespeople to
repeatedly discuss their companys
products and by doing so helps strengthen
customers knowledge of what the
company has to offer.

Personal selling process

Prospecting :
Sources :

Qualifying :
conditions for a prospect to qualify -

After qualifying, the prospects are placed into 3 groups :

Pre approach
It basically includes 2 tasks:
1. Information gathering
2. Planning the sales call
a. setting call objectives
It includes :
. Gathering info about needs from the
prospect.
. Checking merchandise & placing reorder
from
existing distributor.
. Preparing sales presentation etc.

b. planning the sales strategyfinding out when (date & time) and
whom to
approach by phone call.
Adaptive selling
The tentative planning of the sales
strategy may have to be changed
later on after gaining the info based
on actual calls made by the
salesperson. This type of
modification to the selling objective
or plan is called adaptive selling.

Approach :

The next step is to make an

appointment to see the prospect, this is
called the approach.

Presentation & Demonstration

It includes following steps :

1. Understanding the buyers
need.
2. Knowing sales presentation
methods.
3. Developing an effective
presentation.

1. Understanding the buyers need :

2. Knowing sales presentation methods

1. Stimulus response method

2. Formula method
- Attention
- Interest
- Desire
- Action
3. Need satisfaction method
(features, advantage, benefits)
4. Team selling method
5. Consultative selling method

3. Developing an effective presentation :

Planning
Adapt presentation
Use technology
Dont overload
Prospects language
Convincing

Demonstration :

Overcoming objections:
2 types of objection are there :
1. Psychological (hidden)
eg: beliefs , preference for
established brand
2. Logical ( real or practical)
eg : they are tangible like : quicker
delivery, high price , product
quality, product availablitiy

Methods for handling &

overcoming objections:
Ask questions
Turn an objection into a benefit
Deny objection tactfully

Trail close/Closing the

sale:

Closing the sale means asking for order.

when should a sales person close the sale.
Most of the times prospective buyer gives
indication about their readiness to buy.
Eg:

Follow up & service :

Theories of personal
selling
1. AIDAS theory of selling :
Seeking Attention
Gaining Interest
Developing Desire
Generating Action
Customer Satisfaction

2. Right set of circumstances theory :

Its a seller oriented theory. The sales person
should give proper stimuli to secure attention
of
the prospect .
This theory sums up that everything was
right
for the sale. Its also known as situationresponse theory.
Situation is of 2 types
Internal
External

3. Buying formula theory:

Need
solution
satisfaction

purchase

Solution consists of 2 parts

Product / service
Trade name
Need
product/service
purchase
satisfaction

trade name

4. Behavioral equation theory :

Given by : J A Howard. It consist of 4 elements

1. Drive its a strong internal stimuli that

holds the key to the buyers response.
a. innate (strong drive governed by
physiological needs)
b. learned drive (social status )

2. Cues weak stimuli that indicate when

buyer is going to initiate the purchase
activity.
a. triggering (activates the decision making
process of the buyer). It takes the buyer to
the buying point.

b. non triggering- only influences

the buyers
decision. It helps in selecting
the product.
Its of 2 typesproduct cues &
informational cues

3. Response (+ve or ve)

4. Reinforcement
B= P x D x K x V
B- Response of the buyer
P- force of habit
D- motivation level of buyer
K- incentive provided by the product
V- intensity of all cues.

Evolution of Personal Selling

Stage-1
Description

Provider
Accepting and delivering to buyer

Customer needs are

Type of market
Nature and intensity of competition
Examples

Assumed to exist.
Sellers
None
Sales people drivers.

Stage- 2
Description

Customer needs are

Persuader
Attempting to convince anyone to
buy available offerings.
Created, awakened

Type of market
Nature and intensity of competition

Examples

Buyers
Undifferentiated,
slight intensity
Tele marketer.

Stage 3

Prospector

Description
need for

Seeking out prospects with

available offering as well as

resources
and authority to
buy.
Customer needs are
Type of Market

Considered but inferred

Segmented

Nature and intensity of competition Differentiated and growing

Examples

Car insurance salespeople

calling on new car buyers.

Stage 4

Problem solver

Description

Matching available offerings to solve

customer stated

problem
Customer needs are

Diagnosed with attention to customer

input
Type of Market
Participative
Nature and intensity of competition
Responsive and counter
active with
increasing
resources.
Examples
Communication
systems
salespeople for telephone
company.

Stage 5

Procreator

Creating a unique offering to

match customers needs as
mutually specified involving any
or all aspects of the sellers total
marketing mix.
Customer needs are
Mutually defined: matched with
tailored offering
Type of Market
Co active
Nature and intensity of competition Focused: growing
in breadth of
market and service
offerings
Examples
Materials handling equipment sales
person who designs and sells a
system
to fit a buyers manufacturing facility
Description

les. Sales people a

r prospective
advising them of n
s and
hem.

Changing Face of Personal Selling

1.Value Sharing:
Salespeople study the changing needs and preferences of their customers.
2.Relation Building:
A value-based relationship helps the salespeople to constantly mobilize
resources and modify the end product by catering to the specifics of the
buyer.
3.Role Playing:
The salespeople, in personal selling, go far beyond realizing sales. Sales
people act as consultants to their prospective customers constantly advising
them of new products, their updates and impart knowledge to them.
4.Changing Approach:
Personal selling comes in a package containing the inputs of the experts
from different areas such as maintenance, installation, trouble shooting,
delivery staff, sales personnel, etc.

Terms used in sales forecast

Market potential
Market forecast
Sales potential
Sales forecast
Sales budget
Sales quota

Forecasting Approaches
Top down/ Break down

 Step 5 : The methods used are

a. market buildup
1. Identify existing & potential business
buyers.
2. To find out the potential purchase.
3. add up the business potential of all buying
firms.
b. multiple factor index
1. Identify the factors that influence the
sales of
a product (population , personal income ,
retail sales)

Eg:
Factors influencing the sales of detergent
arepopulation weight given 0.4
income 0.3
sales 0.3
Suppose Bangalore has 0.7 % of Indias
population.
1% of Indias personal income
0.9% of Indias retail sales
Index for Bangalore

Bottom up /Build up approach

Sales forecasting methods

 Executive opinion mostly used , getting

views of top executives of the company
regarding future sales.
Delphi Method The members of expert
panel do not met or communicate with
each other. Experts are from within &
outside the organization.
Sales force composite method
salespeople are involved to estimate future
sales
Survey of buyers intentions also called
market research , asking questions about
products & services (eg: do you intend to
buy refrigerator within the next six months)

 Test marketing useful for forecasting

sales for a new product , which has no
historical sales figure.
Methods :
a. Full blown test markets
company chooses few cities in which
full promotion campaign is introduced
(duration few months to 1 year).
Then buyer survey is carried out. If test
markets show high trail & repurchase
rates, the product should be launched
nationally.

b. Controlled test marketing company with

new products hires a research firms and gets a
panel of stores at specified geographic locations.
The product is delivered at the stores and
measure the sales of new product.
Both a & b methods expose the new product to
the competitors
c. Simulated test marketing 30-40
consumers are selected . Print ad is shown is
shown to them of the well known and the new
product without specific mention. These
consumers are given small amount of money and
asked to buy any item in the store. The researcher
notes how many consumers buy the new product
and interview them to ask the reason behind their
purchase.

 Moving average method- forecast

is developed by calculating the
average company sales for previous
years.
Exponential smoothing method
formula is
sales forecast for next year =
(L) (actual sales this year) + (1 L) (this years sales forecast)
L = smoothing constant (value range
0 to 1)
lowest value - 0.3 or 0.2

 Decomposition method
companys previous sales data is
broken down into 4 major
components trend ,cycle ,
seasonal ,erratic events . These are
recombined to produce the sales
forecast.
Ratio method its assumption is
what happened in the past will
continue to happen in the immediate
future.

Formula
(actual sales of this year) X actual sales of this
year
actual sales of
last year
Regression analysis statistical method used
to predict sales, called dependent variable (Y),
The company identifies cause & effect
relationship b/w the company sales and the
independent variables, which influences the
sale.

If there is only one independent

variable say promotional expenditure
(denoted by x) , a graph is plotted
b/w promotional expenditure & data
of past sales. This is known as linear
or simple regression.
In case if multiple independent
variables the graph is known as
multiple regression analysis.

 Econometric analysis Steps:

a) find out which factors or variables
influences sales and the relationships
b/w sales and these factors as well as
the interrelationship b/w the factors.
b) Develop a no. of regression equation
representing these relationship .
c) A forecast is prepared by solving
these equations on computer.
Advantage : accurate forecast is made.
Disadvantage : large amount of data is
required.

Sales Territory

Reason for setting up sales

territory :
a. Increase market coverage
b. Control selling expenses
c. Better evaluation of sales force
performance
d. Improve customer relations
e. Increase sales force effectiveness
f. Improve coordination
g. Benefit sales people & the company

Procedure for designing sales

territory

 Select a control unit :

Commonly used control units are
states , metros , cities, districts ,
towns , areas etc.
Find location & potential customer :
This info can be obtained from
companys sales analysis ,telephone
directories , market research studies.
Decide basic territory :
This can be done by using 2
methods :
a. Build up method

a. Build up method

Decide call frequency :

Depending upon the customers
potential, cost , nature of product
offered , buying behavior of the
customer.
Calculate total no. of calls in each
control unit

Done by multiplying call frequency

per month by no of customers & 12
months.
Estimate workload capacity of a sales
person
Multiply average no of calls a sales
person can make in a working day by

 Make tentative territory :

The company should group the
adjoining control units
unit x & y needs 1272 (552 +
720)visits , which is almost equal to
1250 calls of normal workload of a
sales person.
Develop final territory.
Add or delete certain control units to
equalize the workload of the sales
person.
This method is basically used for

b. Breakdown method

Assigning salespeople to
territories :
a. Relative ability of salespeople
b. Salespersons effectiveness in a
territory
Managing territory coverage :
. Routing
. Scheduling (allocation of time)
. Time management

 Setting up a routing
plan

 Setting up a routing
plan

 Scheduling

 Time management tools

High tech equipment (laptops, fax
machine , teleconferencing
,pagers ,phones.)
Inside salespeople (sales assistant to
provide clerical support ,technical
people to provide technical info &
support , telemarketers to find new
prospects , qualify them & then refer
them to the outside salesperson)

Sales Organization
Structure
It defines relationship between job and
employees in a company.
Basic concepts in sales organization
are :
a. degree of centralization
b. degree of specialization
c. line & staff positions
d. marketing orientations
e. effective coordination
f. Span of control

Types of Sales Org

Structure

Line sales org

Line & staff sales org
Functional sales org
Horizontal org

a. Line sales org

Head
marketing

Sales
manager

Area sales
Manager
1

Area sales
Manager
2

Area sales
Manager 3

Area sales
Manager
4

salespeop
le

salespeop
le

salespeop
le

salespeopl
e

b. Line & Staff sales org

Head Marketing

Marketing
services
manager

Sales
manager

Marketing
research
manager

Promotion
al
manager

Area sales
Manager
1

Area sales
Manager
2

Area sales
Manager 3

Area sales
Manager
4

salespeo
ple

salespeop
le

salespeop
le

salespeopl
e

c. Functional sales org

Head Marketing

Marketing
services
manager

Sales
manager

Area sales
Manager
#4

salespeop
le

Marketing
research
manager

Promotion
al
manager

d. Horizontal sales org

Specializatio
n within
sales
organization

a. Geographic
specialization

b. Product specialization

c. Market specialization

d. combination/hybrid sales org