Sales and Distribution Management
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Sales and Distribution Management, as a composite function of Marketing, focuses on the development of sound Sales and Distribution Strategy, the management of marketing channels, and sales force management in a business organization. Rapid changes in technology, a higher level of customer orientation, the globalization of business, and increasing competition have made Sales and Distribution Management critical to the success of any business enterprise.
This book is designed to help students learn about sales and distribution management concepts and how to apply them to solve business problems. Sales Management focuses on the activities of first line field sales managers. Modern Sales Management is a complex and disciplined mix of: professional selling and negotiation skills, people and Management skills (including selection, motivation, Communicating and training). The importance of personal selling task and feedback system has been discussed. Companies are facing increasing competition, with threats to many traditional markets and customer bases, as supply and purchase points in many market segments become more concentrated. To tackle the threats and capitalize on opportunities the modern sales manager needs a far broader range of selling and managerial skills and experience than in past decades.
In Distribution Management the channel design is discussed, the different components of distribution like transportation, Inventory, Warehousing has been covered. This book will enable students to understand Supply chain Management which has improved the efficiency in distribution.
Dr.Archana Dadhe
Assistant Professor at Department of Management Sciences & Research, G.S.College of Commerce & Economics,Nagpur.Has done Ph.D , MBA,Post Graduate Diploma in Management,Post Graduate Diploma in Marketing Management.Having 15 years of experience in the field of Academics.Has worked as a promoter/Director in the capacity of Franchisee of NIIT Ltd.Has presented & published 20 research papers in various National & International Journals & Conferences.Research papers are available on Google Scholar,EBSCO USA & listed in Scopus.
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Book preview
Sales and Distribution Management - Dr.Archana Dadhe
Any reproduction or other unauthorized use of the material or artwork herein is prohibited without the express written permission of the author.
All rights Reserved
Sales & Distribution Management
© 2017 Archana Dadhe & Smashwords
First Edition: December 2017
This book is dedicated to
My father late Shri B. V. Dadhe &
Mother late Mrs. Sudha for their unconditional love and support
&
My sister Dr. Nilima & nephew Mr. Tushar
For their words of encouragement, affection & support.
PREFACE
Sales and Distribution Management, as a composite function of Marketing, focuses on the development of sound Sales and Distribution Strategy, the management of marketing channels, and sales force management in a business organization. Rapid changes in technology, a higher level of customer orientation, the globalization of business, and increasing competition have made Sales and Distribution Management critical to the success of any business enterprise.
This book is designed to help students learn about sales and distribution management concepts and how to apply them to solve business problems. Sales Management focuses on the activities of first line field sales managers. Modern Sales Management is a complex and disciplined mix of: professional selling and negotiation skills, people and Management skills (including selection, motivation, Communicating and training). The importance of personal selling task and feedback system has been discussed. Companies are facing increasing competition, with threats to many traditional markets and customer bases, as supply and purchase points in many market segments become more concentrated. To tackle the threats and capitalize on opportunities the modern sales manager needs a far broader range of selling and managerial skills and experience than in past decades.
In Distribution Management the channel design is discussed, the different components of distribution like transportation, Inventory, Warehousing has been covered. This book will enable students to understand Supply chain Management which has improved the efficiency in distribution.
Dr. Archana Dadhe
Sales and Distribution Management
Contents
Unit I
Unit II
Unit III
Unit IV
Sales and Distribution Management
UNIT I– SALES MANAGEMENT – Definition and meaning, Objectives, Sales Research, Sales Forecasting, Sales Forecasting methods, Sales Planning and control: Goal setting, Performance measurement, diagnosis and corrective actions, Estimating market and Sales Potentials, AIDAS theory.( Attention, Interest, Desire, Action, and Satisfaction)
UNIT II – SALES ORGANISATION – Setting up a sales organization, Personal Selling, Management of Sales force, Recruitment & Selection, Training, Motivation and Evaluation, Compensating Sales Force, Territory Management, Sales Budget, Sales Quota.
UNIT III – PHYSICAL DISTRIBUTION – Definition, Importance – participants in physical distribution process - Different forms of channels - Functions of Marketing Channels, Unconventional channels - Channel Intermediaries – Wholesaling and Retailing , Channels for Consumer goods, Industrial Goods & Services – Integrated Marketing Channels – Horizontal, Vertical, Multi channel marketing Systems - International Marketing Channels. Marketing Channel Policies and Legal Issues.
UNIT IV – SUPPLY CHAIN MANAGEMENT – concept – significance – components – Order processing – Material Handling – Transportation – Warehousing – Inventory Management – Reverse Logistics, E-enabled selling and distribution, E-commerce and e-retailing as a channel of distribution, Electronic intermediaries, Disintermediation and Re-intermediation, e-enabled logistics management and tracking systems.
Unit I
Sales Management
Companies use salespeople to find, sign, and service customers, and to build revenue and profits. Sales management is the discipline of maximizing the benefits a company and its customers receive from the efforts of its sales force.
Definition
A sales manager can have a narrow or a broad spectrum of responsibilities including the following: estimate demand and prepare sales forecasts; establish sales force objectives and quotas; prepare sales plans and budgets; establish the size and organization of the sales force; recruit, select, and train the sales force; compensate the sales force; control and evaluate sales performances.
– Robert D. Hisrich and Ralph W. Jackson, Selling and Sales Management
Good sales management properly applied is the least expensive, most effective, way to increase dollars of revenue and margins, market share, cash flow, return on investment, and net present value, as well as to beat the competition and make you a hero. . . . It costs no more to properly hire, train, compensate, motivate, and evaluate salespeople. Effective time and territory management, forecasting, planning, budgeting, and good communication and control are no more expensive than performing these same functions poorly.
– Robert J. Calvin, Sales Management
Sales management: The attainment of sales force goals in an effective and efficient manner through planning, staffing, training, directing, and evaluating organizational resources.
– Charles M. Futrell, Fundamentals of Selling
Note that these functions are mentioned repeatedly in these summaries of sales management:
• Sales planning
• Recruiting / staffing
• Training
• Controlling / directing
• Evaluating
• Effectiveness / efficiency
• Compensation
Objectives of sales management
Sales managers in modern organization are required to be customer-oriented and profit-directed and perform several tasks besides setting and achieving personal selling goals of the firm. From the company view point the sales management has the following three broad and important objectives namely:
• Sales Volume
• Contribution to profits
• Continuing growth
Difference between sales management, personal selling and salesmanship.
Sales management directs the personal selling efforts, which in turn is implemented largely through salesmanship. For example instant term life insurance rates company having many different life insurance quotes online options with them. Sales management directs all different marketing option to be planned and organize to achieve profits and more customers.
Personal selling is a broader concept than salesmanship, personal selling is the art of successfully persuading prospects or customers to buy a product or services from which they can derive suitable benefits, thereby increasing their total satisfaction. A window treatment company who are selling vertical blinds, roman shades and other types of blinds online, their individual agents who are selling their products to different architects and interior designer. Such sells consider as
Personal selling.
Salesmanship, then, is seller-initiated effort that provides prospective buyers with information and other benefits, motivating or persuading them to decide in favor of the seller’s product or service. For example in business meeting a salesman from motels in California is explain their different California motels specifications to customers. This type of selling is considered as salesmanship.
The Impact of Effective Sales Management
While this may seem like a lot to do, effective sales management requires ongoing involvement with the sales force. But effective sales management has numerous positive impacts. It can:
• Increase sales revenue and profitability
• Decrease variability of revenue due to inaccurate forecasting
• Increase sales productivity (revenue per salesperson)
• Increase customer satisfaction and loyalty
• Increase salesperson motivation
If your company’s sales efforts are not living up to expectations, it is time to take your sales efforts to the next level, or there is a specific area where your sales organization needs some assistance, Sales Management Services can help. Contact us for more information.
Sales Research
Marketing management depends heavily on Sales Control Research (Sales Research) for formulating marketing policies, planning and controlling marketing operation. Sales Control Research is the identification and measurement of all those variables which individually and in combination have an effect on sales.
Sales Control Research comprises substantial proportion of research work conducted by various companies’ marketing research departments. This encompasses the marketing studies pertaining to sales forecasting, market potentials, market share analysis, and determination of market characteristics and sales analysis.
These are the four most common sales control research activities undertaken by a marketing research department of a company. Sales Control Research heavily relies on secondary data and expert opinion. Techniques such as multiple regression analysis, multiple discriminant analysis, factor analysis and cluster analysis are widely used in such studies.
Most of the research activities of marketing research departments of companies is confined to market and sales analysis studies.
But following are most common activities undertaken by marketing research units:
Marketing intelligence is responsible for examining published information maintaining full records of sales and customer activity by the maintenance of company records and by means of field research and information supplied by salesmen and advertising agencies provides a balanced information flow to formulate suitable and effective marketing strategies.
Market analysis is undertaken to reveal a set of geographical sales potential the maximum possible sales opportunities, for all sellers of product or service in a specific area. Market potentials refer to total sales possibilities and sales forecast refers to possible units of sale of a product by a seller.
It may be noted that market potential is not the same thing as sales potential and sales forecast. Generally, the industry sales forecast will be less than its sales potential. Likewise, a company’s sales force cost will be less than its sales potential. The former is a point estimate of the future sales, while the latter represents a boundary condition which the sales might reach in an ideal solution.
In the latter sense, sales potential is to firm what market potential is to an industry or product class: both represent maximum demand response and are boundary conditions. Depending upon the sales potential existing in each sales territory, we can design the trade channels keeping in view the sales potential figures.
Sales Analysis:
Means actual analysis of sales-results according to the product, customer, order size and territory. The objective of sales analysis is to find out the areas of strengths and weaknesses. The maximum and lowest volume of sales in accordance with the product, territory customers and order size can be revealed by sales analysis.
Sales analysis provides information about areas where sales performance has been good or bad.
Sales Forecasting
Definition
Sales Forecasting is the projection of customer demand for the goods and services over a period of time. In other words, it is the process that involves the estimation of sales in a physical unit that a company expects within a plan period.
Sales Forecasting is the prediction of future sales, known as sales forecasting. Every manufacturer makes an estimation of the sales likely to take place in the near future. It gives focus to the activities of a business enterprise. In the absence of sales forecast, a business has to work at random.
A businessman who invests a large amount of capital in his business, cannot afford to work haphazardly. He has to plan his production and sales activities. Forecasting helps the business to work according to a plan, i.e., systematically.
Importance of Sales Forecasting
1. Sales forecasting enables a business organization to work systematically.
2. Forecast enables the production manager to set target for his workers.
3. It enables the sales department to fix responsibilities on every salesman.
4. In the absence of sales forecast, a business enterprise may work without any focus and this may result in wastage of its resources.
5. It helps to cut down wasteful expenditure and as a result the goods can be offered at a fair price.
6. Sales forecast enables all the departments of the business to work together in proper co-ordination and co-operation.
7. As target is set for each individual and department, it is easy to control performance.
8. Sales forecasting is vital for preparing budget.
9. It helps to determine the production capacity that is actually required.
10. Sales forecast helps in product mix decisions as well. It enables the business to decide whether to add a ncw product to its product line or to drop an unsuccessful one.
Factors that influence the sales forecast:
The general economic conditions like inflation and a recession that has a considerable