Sales & Distribution Management

Compiled By
Saud Hussain
Module - 1

Module-I:

Definition, objectives, Functions and classification of Sales Management

Selling under the Marketing concept,

Interdependence of Salesmanship and Advertising.

The Sales Organization:

Purpose, principles and policies of sales organization,

Setting up of the sales organization,

Typical sales organization structure,

Planning of the selling factors.

Definition, objectives, Functions and

classification of Sales Management:
Definition: Sales management is a sub-system of marketing
management, which translates the marketing plan into
marketing performance. Sales managers in the modern
organization are required to be customer oriented and
profit directed and performs several tasks besides setting
and achieving personal selling goals of the firm.
Sales management as defined by the American marketing
association, The planning ,direction and control of personal
selling including recruiting, selecting, equipping, assigning ,
routing, supervising, paying and motivating the sales force.

Definition, objectives, Functions

and classification of Sales
Management:
It is important to differentiate sales management from
personal selling and salesmanship.
Sales management directs the personal selling efforts,
which in turn is implemented largely through
salesmanship. Personal selling is a broader concept than
salesmanship.
It is the art of successfully persuading prospects or
customers to buy a product or service from which they
can derive suitable benefits, thereby increasing their

total satisfaction.

Definition, objectives, Functions

and classification of Sales
Management:
Sales managers have still other responsibilities

They are responsible for participating in the preparation of

information critical to take key marketing decisions, such as
those on budgeting, Quota setting and territory
management.
They also participate in product decisions, marketing
channels and distribution policies, advertising and other
promotion and pricing.
A sales manager is both an administrator in charge of
personal selling activity and a member of the executive
group that makes marketing decisions of all types.

Definition, objectives, Functions

and classification of Sales
Management:

Sales management is a key function in many

kinds of enterprises. It may be a manufacturing
concern, a wholesaling unit, a retail outlet, a real
estate broker, or a automobile dealer.

Even firms selling intangibles such as

insurance companies, stock brokers, mutual funds,
tours and travel have sales management problems

Why choose the sales profession?

Employment in sales is growing
Sales positions offer advantages:
Good compensation
Intrinsic reward from helping customers
Flexible in day-to-day activities
High-visibility career track
Limited supervision
Travel opportunities
Increasing responsibilities

Objectives of sales management:

From company viewpoint there are three

general objectives of sales management. These
are
as follows:
Enhancement of sales volume.
Contribution to profit
Continuous growth.

Objectives of sales management:

Though the sales manager is responsible to make major
contribution on the above areas, yet the top management is
accountable for supplying an ever-increasing volume of
socially responsible products that the final buyers want at
satisfactory prices.
To achieve the above objectives, the following goals are set
for the sales manager.

Objectives of sales management:

Sales executives provide estimates on market and sales

potential.
To guide and lead the sales personnel and middlemen.
To develop strategy for future operations.
To provide information to the higher management for making
marketing decisions and for setting sales and profit goals.
Comparing marketing opportunities with the projected growth
rate, the sales manager is responsible for achieving a particular
sales volume, gross margin and net profit in units of products
and in dollars.
To create and maintain relationship with the channel members.
To negotiate with the customers.
To provide smart service and develop the goodwill for the firm.
To provide solutions to the problems

Functions 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

Selling under the Marketing

concept:
Sl. No.

MARKETING

SELLING

Emphasis is on customers needs and wants.

Emphasis is on the product, and the needs and

interests of the seller.

Satisfaction of the customer is primary.

Sales are the primary motive.

Planning is long-term oriented.

Planning is short-term oriented.

External, market segmentation.

Internal, company orientation.

Consumer determines the price and price

determines the costs.

Cost determines the price.

It is an activity that converts the consumer

needs into products.

It is an activity that converts the goods into cash.

Marketing overall a whole process.

Selling is a part of marketing process.

Emphasizes on innovation in every sphere;

on providing better value to the customer by
adopting the most innovative technology.

Emphasizing on staying with the existing

technology and reducing the cost of production.

Selling under the

Marketing concept:
Selling Concept:
Starting
Point

Factory

Focus

Means

Factory

Selling
& Promoting

Ends

Profit through
Sales Volume

Marketing Concept:

Market

Customer
Needs

Coordinated
Marketing

Profits through
Customer Satisfaction

Interdependence ship between

salesmanship and advertising:
Salesmanship is an 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.
Salesmanship therefore is a seller initiated effort that provides
prospective buyers with information and other benefits, motivating and
persuading them to decide in favor of the sellers product or service.
Personal selling effort is a two way communication process.
It can be easily measurable
Advertising is any form of non-personal form of communication
between the buyer and seller by an identified sponsor.
Advertising is a one way communication.
In advertising customer does not come in direct contact
with any representative of the organization.
So the reaction, attitude or perception of the viewers
cannot be immediately gauged in advertising.

Interdependence ship between

salesmanship and advertising:

%age
of
Promotion
al
effort

Personal selling

Advertising
Simple/ Inexpensive
goods

Complex/Expensive
goods

Interdependence ship between

salesmanship and advertising:

Now very interesting aspect of advertising and selling, during the three different
stages i.e. pre-purchase phase, the purchase phase and the post purchase phase. of a
products/brands market.

Pre-purchase stage is a time period when the companies try to generate demand for
the product.

In purchase stage the customer actually buy the product.

In postpurchase stage the consumer evaluates his/her purchase decision. The figure
shows that personal selling has an increasing role in all the three stages of purchase
decision and particularly a leading role in the purchase stage.

Advertising has a leading role in the pre-purchase stage and post purchase stage to
generate mass demand and congratulating the consumer for taking the right product
decision.

The Sales Organization:

Effective sales executive insist upon sound organization.

Sales organization must achieve both qualitative and quantitative personal selling
objectives.

The qualitative objectives are instrumental for the long term growth.

The quantitative objectives in terms of sales, profit and market share are important
for the short term growth of the organization.

Sales organization needs people striving jointly to reach qualitative and quantitative
objectives by creating a suitable structure of human relationship.

The sales organization should not have a rigid structure. It should have build-in
adaptability to respond appropriately in fluid and diverse marketing environments.

The Sales Organization: Purpose

The sales organization must not be worried of designing a
formal structure.
How an organization works is more important than how it
suppose to function.
Sales management should direct its organizational efforts
towards a informal organization through intelligent
leadership.

The followings are the purpose of

setting a sales organization

Purpose:
1.

To permit the development of specialists:

The sales department is organized and reorganized to retain the
specialized workforce through proper delegation of authority
and responsibility.

2.

To perform all necessary activities:

When an organization grows and specialization increases, it
becomes difficult to supervise all the activities. Therefore the
change is required to restructure the system.
When the company is small, its executives are in close contact
with the end users of the product. But as the company grows, as
the marketing channels lengthen and the marketing area
expands geographically, the executives become farther and
farther from the customers.

Purpose.
3.

4.

To achieve co-ordination or balance:

Sales people are the field workers.

The entire department is target oriented either qualitatively or
quantitatively or both.
Motivating individuals to work together toward common objectives is
important in achieving co-ordination.
Individual goals are subordinated to the organizational goals.
Modern sales organizations should be divided into small, freely
communicating and face to face groups to reduce the possibility of
un coordinated proliferation.

To define authority:

Sales executives should know whether their authority is line, staff

or functional.
The sales organization should be clear whether the order is
unidirectional or multi directional.
The organization should be developed to promote harmony among the
employees.

Purpose..
5. To economize on the executive time:

Sales departments operations and activities increase in complexity and

number, additional subordinates are added.

This permits the higher ranking sales executives to delegate more

authority towards planning decisions and less time on operational
activities.

This change will definitely initiate structural reforms in the

organizational set-up. It is all important for time and man management

Principle and Policies of organizational

structuring:

There must be clear lines of authority running from the top to the
bottom of the organization.
Responsibility should always be coupled with corresponding
authority.
Authority should be delegated as far down the line possible.
The work of every person should be confined as far as possible to
the performance of a single leading function.
There should a limit to the number of positions that can cocoordinated by a single objective.
The number of levels of authority should be kept as a minimum.
The organization should be flexible so that it can be adjusted to
changing conditions.
The organization should be kept as simple as possible. The
responsibility and authority of each level should be clearly defined,
if necessary in writing.

Setting of a Sales Organization:

Define the Objectives:

Sales, Profits & Growth

Determination of activities and their volume of

performance:
Volume of performance
Duties and Responsibilities

Grouping activities into the position:

Allocation of Job, Objectives, duties & responsibilities and

performance measures
It has implication on organization design

Setting of a Sales Organization:

Assignment of personnel to positions:

To assign personnel to positions.
This is the fitment study.
It is a very controversial debate whether the unique talents and
abilities those are prudent and profitable will be having the same
positions or the positions need to be modified

Provision for co-ordination and control:

Co-ordination and control is obtainable through both informal and

formal means.
Strong leaders control and co-ordinate the efforts of their
subordinates largely on an informal basis through their personality.
These leaders make minimal use of formal instruments of control
and co-ordination.
Written job description where the reporting relationship, job
objectives, duties and responsibilities, performance measurements
etc are clearly mentioned.

Sales Organization Structure:

There are basically four types of sales
organizations from the standpoint of
position and relationship.
These are as follows:

Line organization
Line and staff organization
Functional organization
Committee organization

Line Organization
It is the oldest and the simplest form of sales
organizational structure.
It is widely used in smaller firms with small
number of selling personnel.
Companies that cover limited geographic location
or sell narrow product line.
There is no cross communication between persons
at the same level.
This is purely indirect and effected through the
next higher level.
The greatest weakness of this structure is the
excessive dependency on the department head
and therefore inappropriate for the growing
concerns having large sales staffs.

Line Organization
Gen. Manager
Sales manager

Asst. S. Mgr
Div- 1

Asst. S. Mgr
Div-2

Asst. S. Mgr
Div-3

Asst. S. Mgr
Div-3

Sales people

Sales people

Sales people

Sales people

Line and staff organization:

The line and staff sales department is often found in large and
medium sized firms, employing substantial number of sales
personnel, and selling diversified product lines over wide
geographic areas.
In contrast to the line organization, the line and staff
organization provides the top sales executives with a group of
specialists- experts in dealer and distributor relations, sales
promotions, sales analysis, sales training, sales planning, service,
traffic and warehousing and similar fields.
These staffs helps the top sales executives by providing the
necessary informations and saves the time of the top
executives

Line and staff organization:

President

V.P- Marketing

Advertising Mgr

Dic. Sales
Training

Gen. Sales Mgr

Dic. Sales
Personnel

Asst. Gen.
Sales Mgr
District Sales Mgrs
(6)
Branch Sales Mgrs
(32)
Sales Personnel
(450)

Mgr- Marketing
Research

Mgr- Sales
Promotion

Dic. Dealer
&Distributor
Relations

Line and staff organization:

The greatest weakness of the line and staff
model is the role ambiguity and conflict.
The success of this model depends upon the
co-coordinated effort between the line and
staffs which is very much costlier.
Sufficient time should be devoted for
problem recognition and corrective action
which may hamper the decision making
process.

Functional Sales Organization:

Few sales departments use functional organization .

This structure has been developed as the brainchild of Frederic W
Taylor which is based upon the principle of specialization.
The outstanding advantage of the functional sales department is
improved performance.
Specialized activities are assigned to the experts whose guidance
should help in increasing the effectiveness of the sales force.
The sales operations are highly centralized and therefore becomes
ineffective for many large firms.
It is not financially possible to adopt high degree of division of
labor.
It is suitable for large companies with stable operation , but the
large companies with stable selling operations is an exception

Functional Sales Organization:

Director of Sales
Administration

MgrInstallation &
service

Salesperson

Mgr- Sales
Training

Salesperson

Mgr- Sales
Promotion

Salesperson

Mgr- Dealer &

Distributor
Relation

Salesperson

Committee sales organization:

It is not the sole basis for organizing a sales department.

It is a method of planning and policy formulation while leaving the actual
operation including implementation of plans and policies to the individual
executives.
The organization may have many committees such as sales training
committees, customer relation committees, human resource committees
and new product committees.
The sales training committee may consist of sales training manager, his/her
assistants, the general sales manager and the regional sales manager.
All the members sit together to draft training plans and formulate sales
training policies but its implementation sole responsibility of the sales
training manager.
The use of committees in the sales department has many advantages.
Before policies are made and action is taken, important problems are
deliberated by committee members and are measured against varied
viewpoints.
It also promotes co-ordination among members of the executive team. But
the committee meetings consume more time. Therefore the agenda of the
meeting should be properly framed to avoid wastage of time.

Committee sales organization:

The marketing organization can be organized on
any of the following basis:

Function-oriented Sales Organization.

Product-oriented Sales Organization.
Customer-oriented Sales Organization.
Geography-oriented Sales Organization.
Combined-based Sales Organization.

a. Function-oriented

Sales Organization

When departmentation of sales organization is done on the

basis of sales activities, it is called departmentation on
function basis.

a. Function-oriented

Sales Organization

MARKETING MANAGER

Advertising Deptt.

Sales Promotion
Deptt

Marketing
Research Deptt.

Sales
Planning
Deptt.

Sales Manager

Sales Supervisor

Sales Supervisor

Salesman

Salesman

b. Production Oriented Sales Organization:

Product type of departmentation is done when the
enterprise produces or manufacturers or markets different
types of products.
In this case separate sales executives are appointed for
each product or group of products in the product line. Each
will have its own organization to perform the various sales
tasks.

b. Production Oriented Sales

Organization:
GENERAL MANAGER MARKETING

Marketing Officer
Product - 1

Sales Supervisor

Salesmen

Marketing Officer Product 2

Sales Supervisor

Salesmen

Marketing Officer
Product - 3

Sales Supervisor

Salesmen

c. Customer-oriented Marketing
Organization:

When the departmentation sales organization is done on

customer basis, it is called customer oriented Marketing
Organization. We may also call it as departmentalization on
the basis of distribution channels.

c. Customer-oriented

Marketing
Organization:
MANAGER MARKETING

Sales Officer
Direct Marketing

Salesmen

Sales Officer
Channel Mktg.

Salesmen

Sales Officer
Industrial
Products

Sales Officer
Foreign
Customers

Salesmen

Salesmen

Sales Officer
Consumer Products

Salesmen

d. Geography/Territory Oriented
Marketing Organization:

Here for the selling of a particular product types, the total

marketing area is divided into territories.
Each territory is under the control of a separate sales
executive. He is assisted by a separate sales force.

d. Geography/Territory Oriented
Marketing Organization:
COUNTRY MARKETING MANAGER

Regional Sales
Manager NORTH

Sales Supervisor

Sales man

Regional Sales
Manager SOUTH

Sales Supervisor

Sales man

Regional Sales
Manager
EAST

Regional Sales
Manager
WEST

Sales Supervisor

Sales Supervisor

Sales man

Sales man

e. Combined-base Marketing
Organization:

The combination of two more basis of departmentation such as

territorial, product and customers basis etc. is called combined basis
of departmentation of sales organization.

Planning of the selling factors:

Examine customers in each market.
Determine the types of sales jobs needed to serve a
market.
Note the job activities salespeople must do.
Design sales jobs around customers.
Set up the sales force organizational structure, which
includes the various sales jobs and geographic
territories.
Product and service related factors
Organization related factors
Marketing mix related factors

Planning of the selling 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

Other Factors like:

The product
The customers
Territory
Techniques of selling
Promotional materials
His/Her own organization
Targets

Stages in the selling process:

Pre-sale
preparation

Follow up action

Prospecting

Closing the Sale

Pre- approach
before the
interview

Handling
Customer
Objections

Approach to the
customer

Sales
Presentation

Desirable Salesperson Traits

Empathetic
Self-motivated

Competitive

Organized

Goal-oriented

Salesperson

Enthusiastic

Adaptive
Customeroriented