Birla Institute of Management Technology Sales & Distribution DM - 532 Trimester-V, End term Examination, PGDM 2008- 2010

Time Allowed: 3 hours Max Marks: 60 Roll No.

Section A
Answer any 3 out of 5 Questions. Q1. Explain the difference between selling, sales management and marketing management. What role does sales management play in marketing? Q2. What are different sources or conflicts in sales management? What strategies should sales managers follow to reduce conflicts and resolve them? Q3. What are the basic skills required in sales? What are the differences between selling skills required in B2B and B2C situations? Q4. How does mutual behaviour of a channel system differ when members want to maintain a long term relationship as against a short term relationship? Q5. How can a small manufacturer build an attractive channel position? Which part of channel offering should be more focussed by the small manufacturer?

SECTION B
Answer any 3 Questions. Each Question carries 5 marks each.

Q6. What method will you follow for prospecting in the following product sales : a) Cigarette b) Washing machine

Q7. What factors will you consider for forecasting sales for the following categories? a) wrist watch b) Engine oil

Q8. Why should a channel principal^ very careful in choosing a particular source of power in managing channel members? What are the consequences of using wrong power sources?

Q9. Attractive Footwear limited has seen substantial growth in last 10 years. The sales (in 00,000s) are reported in the following table. What method of forecasting will you suggest and why?

Year Sales

1993 49.39

1994 39.48

1995 36.47

1996 40.46

1997 39.88

1998 49.54

1999 48.98

2000 46.54

2001 49.56

2002 52.45

2003 53.21

SECTION C
Answer any 2 out of 3 Questions. Each Question carries 10 marks Q10. How will selling for a non-government organization vary from selling for a profit making organization? What preparation is necessary to sell scholarship and organize funds for Dhyanchand School of Hockey in Raipur (Chattisgarh)? Q11. You are the sales Manager of world Pub, a textbook publishing company. You believe it would be a good idea to get involved in internet to help market your company's line of college text books. Discuss your strategy for using internet and other sales channels to sell the text books? Q12. Modern sales personnel are more concerned about what they receive than what they give to the enterprise. Hence, the key challenge is to change this orientation through effective sales compensation program. Do you agree with above propositions? Give reasons. Q13. Discuss the compensation plans that a company can follow while hiring sales personnel. Q14. How would you devise a compensation plan for sales personnel of an engineering projects company? Q15. What are the various methods of non-financial compensation that can be offered to them?

SECTION C
Q14. Study the case and answer the questions given at the end of the case. (15)

Footwear (India) Ltd Reviewing Sales and Distribution Management for Performance Improvement
Your primary task is to stop the downward movement of the company's market share in the footwear market in India, said Michael S Williams, chief executive officer, Footwear (India) Ltd. to Rakesh Tandon, newly appointed national sales manager. Our market share was 60 per cent in early 1990s and it has come down to 40 per cent in the year 2005-06. You review our distribution channel structure, sales force management, and any other marketing area and come up with your suggestions on how to reverse the market share movement from going down to moving up, Williams added further details to clarify his viewpoint to Tandon. Tandon thought, after meeting his GEO, that he should first try to understand the existing distribution channel system and also how the sales force was managed. Only after that he would consider other alternatives and decide the best alternative(s) to achieve the objective of improving the company's market share. THE COMPANY AND ITS COMPETITORS Footwear (India) Ltd. was a leader in footwear industry in India with five factories and two tanneries located in eastern, northern, and southern parts of India: The unorganised-small-scale footwear makers had a market share of 20 per cent. The foreign brands like Nike, Reebok, and Adidas had captured a market share of 30 per cent in a short span of time. The balance 50 per cent market share was shared between the three players in the organised sector Footwear India (40 per cent), Liberty (6 per cent), and Paragon (4 per cent). The company sold footwear products of different designs and sizes of shoes, chappals, sandals, sports shoes, sports sandals, and hawai chappals. In addition, the retail stores sold accessories like socks, shoe-polish, leather belt, wallet, school-bag, t-shirts, and trousers. Although accessories contributed only about 8 to 10 per cent of the total sales, the profit margins were high at about 30 per cent. To give customers more choices and to improve its top line, the company started selling footwears of other brands like Nike, Lotto, Reebok, and Lee Cooper. This strategy was implemented from the year 2003-04. DISTRIBUTION CHANNEL SYSTEMS

The objective of the distribution channel was to make the company products available to consumers in every town across India. For achieving this objective, the company had adopted a strategy of vertical marketing system (VMS). The company had two types of VMS : corporate vertical marketing system with both production and distribution under the company's ownership, and contractual vertical marketing system by appointing retailers as the company's franchisees. The company called its VMS, consisting of company owned retail stores and franchise retailers, as distribution network 'A', as shown in exhibit 1. Distribution Network A It consisted of 1500 retail outlets, which included the company-owned retail stores and franchise stores. The franchise stores, which were 150 and mainly located in rural markets, had contractual agreements with the company to sell only the company's products. The franchisees were local entrepreneurs, who had familiarity with local communities and conditions. They invested their capital to set up stores as per the requirements of the company. These franchisees paid five per cent of sales as royalty for using the company's brand, and the proven business format. The franchisees also received the services and support from the company (franchisor) for site selection, planning, training salespeople and promotion. Company-owned Retail Stores These stores were classified into four types of retail stores: (a) main stores, (b) commercial stores, (c) family stores, and (d) discount stores.

Main Stares These were air-conditioned, modern and full-service stores located in major metro cities in posh areas. The stores carried medium to high priced products for men, women and children. The collection included fashionable products with local and international brands to meet the needs of upper-class consumers. Mobile display units were used for brand promotion. Commercial Stores These were similar to main stores, except that they were located in commercial locations in metro and semi-metro cities. Family Stores These non-air-conditioned retail stores were located in metro and semi-metro cities in high traffic locations. These stores satisfied the basic footwear needs of middle income families with local brands and unbranded footwear

products from small manufactures, priced at medium to high levels. Discount Stores These stores were located in thickly populated areas, satisfying the footwear needs of low and-middle income segments. These footwears had basic and discounted prices, including old and substandard quality stocks. Distribution Network B This network contributed 40 per cent of the company's total sales, and balance 60 per cent came from distribution network A. Network B was built around the wholesalers and independent retailers (called as dealers). The wholesalers were independent traders, who purchased merchandise from the company's wholesale depots to resell to independent retailers (or dealers), who were located in rural areas, and markets of major cities and towns. These dealers sold footwear products of all brands, as required by customers. Organisation Structure and Salespeople at Retail Stores Except for large retail stores, other stores owned by the company, had an organisation structure as shown in exhibit 2. For a Large retail store, an additional position of floor manager, reporting to the stores manager, was provided. The stores managers reported to the regional managers located at the company's regional sales offices, situated at the four retail distribution centers. Stores Salespeople The company recruited salespeople for their retail stores with minimum qualification of secondary school leaving certificates (SSLC). These sales people were initially recruited as temporary staff for about 6 to 12 months after which they were asked to take product and selling skills tests and the personal interview by the regional manager and the stores manager. Only when the temporary salesperson performed well in the tests and the personal interview, he was given the permanent position of a salesperson and was paid a salary, in the scale of Rs. 3000-150-10,000-30015,000. In addition, a commission at the rate of 2.25 per cent of sales of the retail store was paid equally to all the permanent salespeople and shop assistants. The company management tried to link commission payment to the individual salesperson's performance against the sales quotas, but the strong union, controlled by Communist Party Marxist (CPM), did not allow the management to implement the decision. The new salespeople were given on-the-job training for 30 days by the senior salespersons. The regional manager conducted the training programmes for salespeople for three days, twice a year, at the regional or state level. Rakesh Tandon also looked at the annual financial results of the company, which is briefly shown in exhibit 3. He was not surprised that the company was making losses for the past two years. Rakesh wondered whether he should focus his analysis and suggestions on the improvements in top-line, bottom-line, or both.