ppts_sales and distribution mgmt
TRANSCRIPT
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Chapter 1
Introduction to SalesManagement
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1. Willingness to go to bat for the buyer within thesupplier firm
2. Thoroughness and follow through
3. Knowledge of the sales person’s product line
4. Market knowledge and keeping the buyer posted5. 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 departments10. Technical education
Personal selling strategies
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Persuasion
Consultative
Selling
Partnership
StrategiesBusiness
Management
Negotiation
Evolution of personal selling
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Marketing concepts
1) Production concept
2) Product concept
3) Selling concept4) Marketing concept
5) Societal concept
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Customer
Needs
Sales Customers
Emphasis on
Seller’s Needs
Production
Production
Sales
Emphasis onCustomer
Needs
Societal marketing concept
(Sales Orie
ntation)
(Marketing Orientation)
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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
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Types of selling
• Order taker sales people
• Order creators
• Order getters
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Selling
Function
Order
Takers
Order Getters
Order
Creators
Outside Order
Takers
Inside Order Taker
Merchandisers
Delivery Sales
People
Missionary Sales
People
New BusinessSales People
Organizational
Sales People
Consumer
Sales People
Technical Support
sales People
Front Line
Sales People
Sales
Support
Sales
people
Types of Selling
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Factory FactorySelling and
promotingProfits though
sales volume
Selling concept
Market concept
Market Customer
needs
Coordinated
marketing
Starting
point Focus Means Ends
Profits through
customer satisfaction
Difference between sales and marketing
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Marketing management process
MARKET ANTICIPATION
Exchange offer of value
Producer
MarketerConsumer
Marketing mix
•Product
•Price
•Place
•Promotion
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Formulation of a strategic sales programme
Implementation of the sales programme
Evaluation and control of sales force performance
Sales management process
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Technology
Relationship sellingCustomer orientation
Global and ethical
Issues
New selling methods
Diversity
Emerging trends
in sales
management
Emerging trends in sales management
Technology
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Chapter 2Selling Skills and
Strategies
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Selling and buying styles
9
8
7
6
5
4
3
2
1 2 3 4 5 6 7 8 9
Concernfor
thec u
stomers
(1,9) People OrientedI am customer’s friend,
I want to understand him and
respond to his feelings and
interests so that he will like me. It
is the personal bond that leads him
to purchase from me.(5,5) Sales technique Oriented
I have tried an effective routine for
getting a customer to buy. It
motivates through a blended
personality and product emphasis
(1,1) Take it or Leave it
I place the product before the
customer and it sells itself as and
when it comes.
(9,1) Push the product Oriented
I take challenge of the customer
and hard sell him, polling on all
the pressure it takes to make him
buy
(9,9) Problem Solving Oriented
I consult with the customer so as to
inform myself of all the needs in his
situation that my products can satisfy.
We work towards a sound purchase
decision on his part, which yield him
the benefits he expects from it.
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Selling situations
Sales task and function
Maintenance selling
Developmental selling
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e ng s s
Selling Skills
Listening Skills
Conflict management and
resolution skills
Negotiation
and bargaining
skills
Problem
solving skills
Effective
communication
skills
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Communication process
Noise
Channel
Feedback
Intended
Message
Sent Message
Encoding
Perceived
Message
Received
Message
Decoding
Sender Receiver
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Communication processcontd.
Managing body language:
Personal Appearance
Posture Gestures
Facial Expressions
Eye Contact Space Distancing
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Process of listening
Attendance
Interpretation
Evaluations
Remembrance
Response Action
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Levels of listening
Feedback
Paraphrasing
Emphatic listening
Clarifications
Active Listening
Barriers to Listening !
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Conflict management skills
Models of conflict Components of conflict The conflict resolution process:
- lumping
- avoidance- coercion
- meditation
- conciliation
- arbitration- adjudication
- negotiation
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Stage I
Potentialopposition or
Incompatibility
Stage II
Cognition &Personalization
Stage III
Intentions
Stage IV
Behaviour
Stage V
Outcomes
Antecedent
Conditions
Communication
Personal
Variables
Structure
Perceived
Conflict
Felt Conflict
Conflict handling
Intentions
Competing
Collaboration
Compromising
Avoiding
Accommodating
Overt Conflict
Party’s
behaviour
Others
reaction
Increasedgroup
performance
Decreased
group
performance
Conflict management process
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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
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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
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Define the problem
Generate alternative solutions
Decide the solution
Implement the solution
Evaluate the solution
Problem solving processProblem solving process
t h i
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ProblemDefinition
Techniques
Find out origin of the
problem
Explore theproblem
Present
desired state
analysis
Evaluate
problemstatement
Statement
and
Restatement
Dunker’s
diagram
techniques
1
2
35
4
6
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Dunker’s diagramDunker’s diagram
Achieve the desired state
Possible path to the desired state
Path 1 Path 2 Path 3
Solutions to implement & paths to desired solutions
Solution 1Solution 2 Solution 3
General Solution
Functional Solution
Specific Solution
S
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F u z z y M e
s s
Perceived problems
Re Statement
Re Statement
Final problem Statement
Relax
Constraints
Make an
Opposite
Statement
Generalize
Statement restatement techniqueStatement restatement technique
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Components of a decision on the
future course of action
Components of a decision on the
future course of action
Situation analysis
Problem analysis
PastWhat is the fault
Decision analysis
Potential problem
Analysis
FutureHow to prevent future
faults?
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Decision on the best solution
Approval
Planning
Carry through
Follow up
Evaluation
I
M
P
L
E
ME
N
T
A
TI
O
N
Solution implementation processSolution implementation process
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Chapter 3
The Selling Process
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Stages in the selling process
Pre-sale
preparation
Sales
Presentation
Handling
Customer
Objections
Closing the
SaleFollow up
action
Approach to
the customer
Pre-
approach
before the
interview
Prospecting
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Prospecting
Successful prospecting
50 potential prospects
15 Qualified prospects
6 Interviews
1 sale
50 potential prospects
25 Qualified prospects
17 Interviews
7 sales
Successful prospecting
No Yes
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Process of prospecting
Identify and define prospects
Search for sources of potential
accounts
Qualify the prospects from the
suspects
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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
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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
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Handling customer objections
• 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
Suggested by SMITH
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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
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Closing the sale
• Methods of closing the sale
•Follow-up action
• B2B selling
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Chapter 4
Managing Sales Information
Forecasting market demand
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Forecasting market demandIt 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/
Unit
Price /
Unit
Price/
Unit
Price/
Unit
Price/
Unit
Price /
Unit
Qty per Unit (E)Qty per Unit (f)
Qty per Unit ©
Qty
perUnit
(B)
Qtyper
Unit
(A)
Qty per Unit (D)
Total
Market
demand
P1
P2
Q1Q2
D D1
D D2
D D1
D D2
Market demand curve
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Market demand function
QD = F (P, I, P0, T) P- Price of the productI- Consumer Income
T- Consumer preference
P0 Price of other goods and
servicesQD = B + aP P + a1I + a0P0 + aTT
aP,, a I, a0, aT represents the one unitchange in quantity associated
with the variables.
QD
= B + aP
P
Linear form of the demand
equationB represents the combined influence
of all the other determinants of the
demand
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• 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
Market demand forecasting
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MDSS
TRANSACTIONAL SYSTEMS USERS
Marketing decision support system
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Forecasting process
The forecasting process is defined as theseries of decisions and actions taken by abusiness organization in:
identifying the forecasting objectives
determining the independent anddependent variables
developing a forecasting procedure using the available data in the
selected method to estimate the sales infuture
F i
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Develop forecasting
procedure
Forecasting processcontd.
Select forecastinganalysis method
Comprehend total
forecasting procedure
Collect, collate,
gather and analyze
data
Determineindependent and
dependent variables
Present all theassumptions about
data
Forecast objectives
Evaluate performanceresults against the
forecasts
Make and finalize
the forecast
Popular methods in forecasting
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Qualitative methods
Expert opinion Survey of buyer’s
expectation
Sales force
composite
Delphi
technique
History analogy
Quantitative methods
Test marketing Naïve method Trend method
Moving average Regression methodExponential
smoothening
Popular methods in forecasting
Trend forecast of Sales
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Observed salesForecasted sales
T r e n d l i n
e
Time
Sales
Trend forecast of Sales
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Naïve methodSales (at the period t) = Sales T+1
The following formula shows how to adjust the naïve methodto account for achange in rate of sales levels. The formula is stated this way: Next Year’s Sales = This Year’s Sales X This Year’s Sales
Last Year’s Sales
Free Hand Graphic Method
0
5
10
15
20
25
30
1 2 3 4 5 6 7 8 9 10
Years
S a l
Series1
Freehand Method
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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 1101997 108
1998 116
1999 112
he average of the first three years will be:
102+105+114 321
----------- = -------- = 107
3 3
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The 3-yearly moving average can be computed with thefollowing formula:
a+b+c b+c+d c+d+e d+e+f --------- , ----------- , ---------- , --------- , ………….
3 3 3 3
Method of moving averages
Method of Least Square
The least squares method is a formalization of the eyeball-fitting or graphical technique. It is used to mathematicallyproject the trend line to the forecasting period with the timeas the independent variable that influences the dependentvariable i.e sales.
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.
Decomposition method
Exponential smoothing
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Exponential smoothingmethod (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 movingaverage of all past data
• The method is used to forecast only one period in thefuture
• Exponential smoothing techniques vary in terms of howthey address trend, seasonality, cyclical and irregularinfluences
Exponential smoothing
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Exponential smoothingmethod contd.
Next Year’s Sales = a (This Year’s Sales) + (1 – a) (This Year’sForecast)
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
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Correlation analysis • a correlation is basically the degree of linear
association between two variables where one variableis treated as independent variable and sales as thedependent variable
• sales managers look for variables that correlate with or
relate to sales
• correlation analysis involves the determination of whether arelation exists, and if it does, then measuring it, testingwhether it is significant, and establishing the cause and
effect relation• the degree of relationships between the variables is calledco-efficient of correlation
Regression analysis
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Regression analysis
• regression analysis is another form of correlationaltechnique
• 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 intoforecasting procedures
Population
Sales
Population
Sales
(Liner Relationship) (Curvilinear Relationship)
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•the most commonly used market factor indexmethod 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 otherconsumer items
•BPI is also used to determine sales quota by
many multinational organizations
•applications are limited in Indianorganizations as we do not have data bases to
support this method at different levels of the
market
Market factor indices methods
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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 methodscontd.
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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 andvariability
• the level of accuracy of the forecast
• fundamental change indicators
Market factor indices methodscontd.
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• 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 aforecast is called MAPE (Mean Absolute PercentageError)
MAPE (Mean Absolute Percentage Error)
• MAPE is the average percentage forecast error and is a
popular way to measure accuracy
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Chapter 5
Sales Organization
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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 salesfunction
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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
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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
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Organizational principles
span of control
unity of command
hierarchy of authority
stability and continuity
coordination and integration
homogeneity
objectivity
specialization
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Organizational design
- f ormal and coordinated task
- assigning territories
- establishing flows of communication and responsibilities
of sales groups and individuals to customers effectively
Line organization Mr. Ratnakar ShettyPresident / Owner
Mr. Chandrakant
VP (Sales)
Five sales people
Typical structure of a line organization
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Consumermarket
Institutionalmarket
Corporatemarket
National
DistributorsDirect to
Home
Direct
marketing Distributors Bundling Gifting
ConsumerRegional
Distributors
Retailers
Consumers
Typical structure of a line organization
D i b t it
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Design by territory
VP Marketing
National Sales
Manager
Divisional Manager
(East)
Divisional Manager
(North)
Divisional Manager
(West)
Regional Sales
Manager
District SalesManager
Sales Staff
(City wise)
Regional Sales
Manager
District SalesManager
Sales Staff
(City wise)
Regional Sales
Manager
District SalesManager
Sales Staff
(City wise)
D i b t f ti
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Design by management function
Mr. Dara singh,
VP(Marketing)
Mrs. Chitra Mohanty
(Advt / Sales
Promotion Mgr)
Staff Function Line Function
Mr. Dibya Behera
(Sales Manager)
Mr. Chandra De
Manager
(MR)
20 Sales People
D i b d t
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Design by product
President,
Marketing
Product Manager (A)
Product Manager (B)
Manager
(Sales)
Manager
(Training)
Manager
(Promotion)
Manager
(Sales)
Manager
(Training)
Manager
(Promotion)
D i b t
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Design by customer
President(Marketing)
Sales Manager
Wholesalers
Sales Manager
Retail Sales
Sales People
Sales Manager
Industrial Relations
Vice President
(Marketing)
Sales People Sales People
President
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Functional
Geographic
Customer
Combined
Sales Org. Design
President
Marketing Manager
International
G.M
International Sales
Marketing Manager
India
Vice President
(Marketing)
G.M
Consumer care
G.M
International Sales
Vice President
(HRD)
Vice President
(Production)
Divisional Manager
Soaps
Divisional Manager
Food
Divisional Manager
Paper
Eastern SalesDivision
Western SalesDivision
Northern SalesDivision
Europe Division America Division Gulf Division
Product
S l O i ti
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Key account sales
Sales process automation
- focus on CRM
- customer profitability and value analysis
- the few accounts give incremental returns
- national accounts
- EDI – Electronic Data Exchange
Sales Organization
Emerging organizational design
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Emerging organizational design
• agency and distribution selling
• shared sales force
• telemarketing
• TQM and team-based selling
Customer
Sales MarketingTechnical
SupportManufacturing
Supplier selling team
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Chapter 6
Management of Sales Territory
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Sales territory
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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 thesales function
optimum utilization of sales time by sales people
Designing sales territories
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Designing sales territories
Select the basic geographiccontrol units
Decide on the criteria for
allocation
Decide on the starting point
Combine control units
adjacent to starting pointCompare territories on
allocation criteria and
conduct workload analysisAssign sales force to new
territories
Factors
influencing the
modifications
of a territory:• mergers
• market
consolidation• split in division
• sales force
turnover
• customer
relocations
• product life
cycle change
• product line
change
Modify
territorial
boundaries to
balanceworkload
and potential
Territory shapes
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Territory shapes
circlewedge
Clover leaf
Strategic Planning Matrix
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Strategic Planning Matrix
Opportunity
Strategy
Opportunity
Strategy
Strategy
StrategyAllocate a moderate level of resources to
maintain current advantage.
Either commit a minimal level of
resources to the account or consider
abandoning the account altogether.
The account offers stable opportunity since
the sale organization has differential
advantages to serving them.
Opportunity
Opportunity
The account offers little opportunity. Its
potential is small and the sales organization
is at a competitive disadvantage in serving
it.
The account offers a good opportunity.It has high potential and the sales
organization has a differential
advantage in serving it.
Commit high levels of sales resources to
take advantage of the opportunity.
The account may represent a good
opportunity. The sales organization needs
to overcome its competitive disadvantages
and strengthen its position to capitalize on
the opportunity.
Either direct a high level of sales
resources to improve the position and totake advantage of the opportunity or
shift resources to other accounts.
Strong Weak
H
i
g
h
L
o
w
S l t it i
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New Territories..?
Use of Information Technology
IT enabled services computer programmes simulation techniques
Sales territories
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Management of Sales Quot
Chapter 7
Sales quota
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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 theirrespective domains
“A 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 settingPrinciples of quota setting
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Principles of quota settingPrinciples of quota setting
• setting of sales quotas is a challenge to the sales
manager and should be handled with precision
and adequate skill
• it must be simple to understand both to themanager and the sales people
• objectivity to be observed while fixing quotas
and should be based on facts and figures drawn
from the market
• quotas set above the achievable limit oftendemotivate and result in high turnover in theorganization
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S M A R T
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S M A R TP
ECIFI
C
E
ASU
R AB
LE
T
TAI
NAB
LE
R
EAL
IST
IC
I
ME SPECIFIC
SBO…
MBO in the Salesdomain?
Organization of the sales job
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Organization of the sales job
Defining annual objectives
Procedure for setting sales quota
Conferencing with each sales personIndividua
lGoalsettin
gform
OutputName
Year
Your territory
Results expected
Pessimistic Realistic Optimistic Results1. Volume per month
2. Expenses per month
3. Gross margin per month
4. Market share per month
5. Key account coverage per
month
Types of sales quota
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Types of sales quota
• sale volume quota• sales budget quota
• sale activity quota
• combination quota
Methods of setting sales q ota
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Methods of setting sales quota
Quotas are based on…
• sales forecasts and potentials
•forecast
• past sales and experience
• executive judgment
• sales people judgment
• compensation
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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 forprobable entry of new products)
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The sales manager
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• 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
The sales manager
Strategic positionTurnover Job qualification
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analysis
Decide on the number of
people to hireIdentify best sources of
recruitment:
internal and external sources
Generate database of
candidates
Evaluate candidates
Select and induce
candidates to accept
positions
Socialize
Establish
hiring
objectives
Job qualification
Job description
Organizational
characteristics,
company image
and climate,styles of
supervision,
compensation,
and motivation
of the company
Selection
Socialization
Recruitment
Planning
The hiring process
Challenges in sales force
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Challenges in sales forceselection
• 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
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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
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Sales force recruitment
• recruitment is an act of inducing qualified and
appropriate people to get interested in and applyfor 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 campusrecruitments
- employment exchanges- placement consultants- walk in interviews
External sources contd...
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- 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
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p
• process of orienting a new salesperson to the
sales organization, territory, or division in whichhe or she will be working
• three stages
Anticipatory stage
Encounter stage
Settling stage
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Chapter 9
Training the Sales Force
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l f h i
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Role of the trainer
The success of the training programme depends on theability, skill, and motivation of the sales trainer
The training process
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The training process
Training need assessment
Design and conduct of a training programme
Evaluation of a training programme
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Training needs
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g
Identification of specific problemsAnticipating impending and future
problemsManagement requests
Interviewing and observing thepersonnel on the jobPerformance appraisalQuestionnaire survey
ChecklistAttitude surveyInterpersonal skill test
Designing and conducth
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phase
Location
Job Instruction Training (JIT)
Presentation options
T f t i i
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Types of training
Cross-functional training
Team training
Creativity training
Literacy training
Training methods
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g
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 supportParticipativeConferences
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Training methods contd..
SeminarsDiscussionsRole playCase study
FishbowlWorkshopsSensitivity training
Transaction analysisIn-tray exercisesTranscendental meditation
Deciding a sales trainingprogramme
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programme
Aim
Content
Contents
Knowledge
Proficiencies
Location
Evaluation
P f i li ti
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Process of socialization
Anticipatory socialization
Accommodation stage
Outcome stage
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Chapter 10
Sales Force Motivation
Process of motivationProcess of motivation
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Motive
Behaviour
Goal
Tension
reduction
Process of motivationProcess of motivation
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Primary General Secondary
Motives
Motivational drives
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Principles Security Achievement
Approval Loyalty Advancement
Leadership Human behaviour
Theories of motivation
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Theories of motivation
ContentContent
ProcessProcess
ReinforcementReinforcement
Content theories
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Content theories
Need hierarchy theory
Hertzberg’s two factor theory
Alderfer’s ERG theoryMcGregor Theory X and Y
Z theory of William Ouchy
Maslow’s hierarchy of needs
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Physiological need
Security need
Social need
Esteem need
Self actualisation need
y
Process theories
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Process theories
Equity theories
Expectancy theories
Reinforcement theories
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Reinforcement theories
© Oxford University Press 2005, All rights
reserved.
Hull’s drive theory
Skinner’s reinforcement theory
Factors influencing the
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gmotivation of the salesperson
Personal characteristics
Environmental conditions
Organizational policies
Designing a motivational
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programme
Programme objective
Motivational tools
Individual methods Group methods
Communication
Auxiliary environment
Feedback
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Chapter 11
Sales Force Compensation
Factors influencing the design
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Factors influencing the designof a compensation plan
Financial stability
Size of the market
Nature of the product
Types of compensationplans
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plans
Financial compensation
Non-financial compensation
Fi i l i
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Financial compensation
Straight salary plan
Straight commission plan
Bonus and incentive
Salary plus incentive (combination plan)
Drawing account and commission plan
Allied methods
Non-financialcompensation
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compensation
Promotions
Recognitions programmes
Fringe benefits
Expense accounts
Perks
Sales contests
Steps in designing a
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Steps in designing acompensation 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
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Deciding on the criteria for
measuring performance
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Deciding in the conduct of the
performance appraisal
Deciding on the evaluation of
individuals and teams
Comparison of actualperformance with standards
Deciding on the frequency of
the performance appraisal
The external variables and
their influences
Sales force performance appraisal process
Sales force performance appraisalprocess
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• 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
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pp
Example of a Role result Matrix Position Developing a new business
Servicing existing customers
Key account manager
Regional sales managerApplication engineer
Customer service staff
Technical support staff
Installation and quality engineer
Financial staff
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Chapter 13
Distribution channel
management - anintroduction
Chapter 13
Distribution channel
management - anintroduction
Role of distributionchannels
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• 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 eachother and reducing uncertainty
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Discrepancies in theprocess of exchange
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process of exchange
Spatial discrepancy
Temporal discrepancy
Need to break the bulk
Need to provide assortment
The cost and control aspects of
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intermediation
Direct Distribution Indirect distribution
Control
Cost
efficiency
s r u on c annestrategy
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• 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
s r u on c annemanagement (contd.)
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• Distribution channel managementencompasses 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
management (contd.)
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• 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 thedistribution 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 Managementtasks
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tasks
Distribution Channel Strategy•Channel Objective
•Activity Finalization•Organizing the activities•Developing Policy Guidelines
Design of the
channel structure
Establishing the
channel
Motivating
Channel Members
Resolving Conflicts
among channel
members
Ex ante
Phase
Ex Poste
Phase
Chapter 14
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p
Designing customer-oriented
marketing channels
Channel Design The channel design is normally meant to give a
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The channel design is normally meant to give aclear idea about:
The number of channel entities in the channelnetwork,
The way in which they are linked,
The roles and responsibilities of the entities in thenetwork
The rewards for participating in the activities andalso
Clear cut guidelines for the major activities to beperformed during the normal functioning of thechannel.
a are e serv ceoutputs
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Waiting time
Breaking the bulk
Spatial convenience
Assortment
Distribution channel design
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To consumea product
Service outputs
have to be delivered
Channels
Participates in
channel flows
Activities have
to be performed Thus performs activities
Example of a service outputdelivered template
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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 every3 km radius excluding of course thinlypopulated areas
3. Waiting time Not more than 2 days for any model
4. Assortment Other consumer goods items including thatof other competitors are available at all theoutlets where the products are otherwiseAvailable
5. Installation support Available
6. After sales support Free for first two years, but available onpayment afterwards. Also available at everycity from where the product was bought.
7. Consumer financing Available
Flow Directcontribution
Indirectcontribution
Othercontribution
Physical Spatial convenience Assortment
Channel flows and contribution toservice outputsChannel flows and contribution toservice outputs
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PhysicalPossession
Spatial convenience,bulk breaking, waitingtime
Assortment
Ownership Spatial convenience
Promotion Spatial convenience Is a service output initself
Negotiation Spatial convenience,bulk breaking
Assortment
Risk taking Waiting time, bulk breaking, spatialconvenience
Financing Spatial convenience,waiting time, bulk breaking
Assortment
Ordering Bulk breaking, spatial
convenience, waitingtime
Payment Bulk breaking, spatialconvenience, waitingtime
Channel design effortd i i
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decisions
The service output levels
The flows or activities that areassociated with the achievement of the
service output levels The type of entity who would be
entrusted with the performance of eachof these flows
Parameters for comparingh l d i
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channel designs
Efficiency
Effectiveness
EquityScalability
Flexibility
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Plan….. Contd.
Details about the various channel constituents who will
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Details about the various channel constituents who willbe performing these tasks
The cost of performing the activities The designated roles and responsibilities of the channel
constituents
The proposed remuneration for performing these rolesand responsibilities
Standards for measuring the performance Procedures for reporting and information sharing
Monitoring mechanisms
Criteria for appointing the channel members
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Chapter 15Chapter 15
Customer-orientedCustomer-oriented
logistics managementlogistics management
Logistics strategy
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g gy
Cost reduction
Capital reduction
Service improvement
Inventory Management Transportation decisionsf
Logistics Planning
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Location decisions•Number, size and location of facilities
•Assignments of stocking points to sourcing points
•Assignment of demand to stocking points
•Inventory levels
•Deployment of inventories
•Control methods
•Modes of transport
•Carrier routing/scheduling
•Shipment size /consolidation
Customer
Service
goals
Generic types of outbound logistics strategies
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Direct shipment
Warehousing
Cross-docking
Functions of warehousing operations
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Movement
Storage
Information transfer
•ReceivingReceiving
•TransferringTransferring•Order picking/selectionOrder picking/selection
•ShippingShipping
•Stock keeping locationsStock keeping locations
•Inbound and outboundInbound and outbound
shipmentsshipments
•Facility space utilizationFacility space utilization•Order fulfillment dataOrder fulfillment data
Relationship between logistics, cost,and number of warehouses
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Total cost
Inventory cost
Transportationcost
Warehousing
cost
Number of warehouses
Total
cost
Why Inventories?
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Why Inventories?
To improve customer serviceTo smoothen the operations of the
logistics systemTo reduces costsInventory procurement costsInventory carrying costsStock out costs
Cost associated with inventory
Components of inventory carrying cost
Capital cost Inventory
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Inventory
carrying cost
p
Inventory
service costs
Storage space
costs
Inventory
carrying cost
Investments
Insurance and
Taxes
Warehouse rent,
maintenance
charges
Obsolescence
Damage&
PilferageShrinkage
Relocationcosts
Stockist
h l
StockistStockist
echelonechelon
Echelon inventoryEchelon inventory
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RetailerRetailer
StockistStockist
SupplierSupplier
RetailerRetailer RetailerRetailer RetailerRetailer RetailerRetailer
echelon
lead time
InventoryInventory
Product related factors
Factors affecting transportation costFactors affecting transportation cost
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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
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Chapter 16
Managing Channel Member Behaviour
Channel relationships
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• Perceptions of organisational power
• Dependence
• Control
• Trust
• Commitment
• Co-operation
Discrete relational exchangecontinuum
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Arm’s length relationship
Relational exchange relationship
Channel control
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Pay–Off Pay–Off
FunctionFunction
ToleranceTolerance
FunctionFunction
Supplier authoritySupplier authority
Distributor’sDistributor’s
profit earnedprofit earned
Zone of acceptanceZone of acceptance
Role of persuasion, authority, andcoercion in channel control
Ch l bChannel members ToleranceTolerance
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AuthorityAuthoritypersuasionpersuasion
Coercion
Pay –off Pay –off
functionfunction
AA BCC
Channel membersChannel members
profitprofit
ToleranceTolerance
functionfunction
controlcontrol
Components of channel offeringManufacturer sales
force incentives
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Financial returnsQuality products
Competitive priceReliable delivery
National reputation
Promotionalsupport
Training
MarketresearchCompany
policies
Technical
assistance
Responsiveness
systems
Distributor
sales force
incentives
Distributor firmincentives
Capability
building
programmesChannel core
elements
Incentive
programme
InfluenceStrategy
group
Types of Influencestrategy
Explanation
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Influence strategytypes (contd.)
g p
Indirectinfluencestrategies
•
Information exchange• Information control• Modeling
Where information on general businessissues and the channel program is
merely exchanged with channelmember personnel.
DirectUnmediatedStrategies
• Recommendation• Warning• Positive normative• Negative normative.
In this type of strategy theconsequences of the acceptance orrejection of the channel programme orits implementation are stressed, butthese consequences are based on aresponse from the market environment,not on the mediation of the channelPrincipal.
Reward andPunishmentStrategies
• Economic reward• Non-economic reward• Economic punishment• Non-economic punishment
In this type of strategy rewardsand punishments are directlygiven to channel members
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(contd.) Influence strategytypes
Directunweightedstrategy
• Direct request This strategy involves making a
direct request to the channelmember where the Principalmainly communicates desires orwishes concerning the channelmember’s acceptance of thechannel program.
DirectMediatedstrategies
• Personal plea• Promise• Threat and• Legalistic reference.
In this type of strategy specificaction is requested; consequencesof acceptance or rejection arestressed and are based on themediation of the channelprincipal.
relationship
Attitude towards the channel progranmmeAttitude towards the channel progranmme
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Reinforcement process
Behavioural
reinforcement
Moderaterationalization
Attitude change
Radicalrationalization
Attitude change
Inducement process
Behavioural change
Moderateconfrontation
Behavioural andattitudinal change
Radicalconfrontation
Behavioural andattitudinal change
PositivePositive NegativeNegativeNeutralNeutral
+ ve+ ve
- ve- ve
Attitude towards the channel progranmmett tude to a ds t e c a e p og a e
Behaviour
towards the
channel
programme
Stages in channel conflict
AttitudinalAttitudinal
sourcessources Cognitive/Cognitive/ifM if t C f iC fli t
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of conflictof conflict
StructuralStructural
sources of sources of conflictconflict
ConflictConflict
resolutionresolution
Cognitive/Cognitive/
AffectiveAffective
conflictconflict
ManifestManifest
conflictconflict
ConflictConflict
outcomesoutcomes
CAUSES OF CONFLICTSCAUSES OF CONFLICTS
Attitudinal CausesAttitudinal Causes
Structural causesStructural causes
Conflict management methods at differentstages of conflict
Institutional approachesInstitutional ap
proachesi i f i iJ i t b hi f i ti
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Latent conflictLatent conflict
Felt conflictFelt conflict
Manifest conflictManifest conflict
Joint membership of associationsJoint membership of associations
Exchange of executivesExchange of executivesCooptationCooptation
Dealer councilsDealer councils
Third party mechanismsThird party mechanisms
MediationMediationarbitrationarbitration
NegotiationNegotiation
Negotiationstrategies
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AccommodativeAccommodative Collaborative/problemCollaborative/problem
solvingsolving
CompromiseCompromise
AvoidanceAvoidance Competitive /aggressiveCompetitive /aggressive
ConcernConcern
for thefor the
othersothers
interestinterest
HIGHHIGH
LOWLOW
LOWLOW HIGHHIGHConcern forConcern for
own interestown interest
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Chapter 17
Retail ManagementRetail Management
Retail marketing mixRetail marketing mix
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Merchandise characteristic
Customer service characteristic
Trading format
Customer communication
Retail marketing mixRetail marketing mix (contd.)(contd.)
H h di i f ti ff tH h di i f ti ff t
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(i) the merchandise in the store affect the volume of (i) the merchandise in the store affect the volume of
sales as it is primarily the merchandise that attractssales as it is primarily the merchandise that attracts
customerscustomers
(ii) since profitability is based on the turnover rate of ii) since profitability is based on the turnover rate of
the inventory, the choice of merchandise and thethe inventory, the choice of merchandise and the
quantity of merchandise of each category stockedquantity of merchandise of each category stocked
affects the overall profitability of the establishmentaffects the overall profitability of the establishment
How merchandising functions affectsHow merchandising functions affects
profitability?profitability?
Factors affecting choice of retailstrategy
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Company’s strategic objectives in termsof the level of profitability desired
Space availability
Preferences of target customersRelationships with manufacturers
Availability of trained salespeople etc.
Availability of stock and stock holding cost
Stock Stock
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holdingholding
costcost
Percentage of availabilityPercentage of availability 80% 90% 100%
+20%
Financial method of merchandising
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Cost method
Retail method
Merchandise planning process
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Plan reductionsPlan reductions
Develop a stock planDevelop a stock plan
Plan merchandise needsPlan merchandise needs
Calculated planned PurchaseCalculated planned Purchase
Plan mark –ups based on profitability targetsPlan mark –ups based on profitability targets
Develop a sales planDevelop a sales plan
Customer services
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Product services
Service products
Support activities
Customer performance measuringtechniques
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techniques
Frequency or browsing visits
Frequency of purchase visits
Average transaction per visit
Items purchased
Range purchased
Customer service facilities used
Purchase process for servicerequirement identification
Service requirementsService requirements
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Pre-purchase phase
Purchase phase
Post purchase phase
Purchase processPurchase process
q
SearchSearch
ComparisonComparison
Product relatedProduct related
Augmentation of the producAugmentation of the produc
Transaction relatedTransaction related
DeliveryDelivery
InstallationInstallation
Use extensionUse extension
Repeat visitsRepeat visits
Attitude towards trading formatand store environment
Shopping Attitudes
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Pre-purchase
Stage
During
Purchase
Post-purchase
Stage
Task Oriented Pleasure Oriented
Convenient Locations
Ample Parking
Close to Other Task Oriented
Stores
Relevant Merchandise Selection
Exclusive Store Merchandise
Wide Choice
Prestigious Image
High Availability
Competitive Pricing
Rapid Cash Handling
Ambience and ExcitementVisual Merchandising
In-store Facilities
Product Services Centers
Product Displays
Customer Advice Areas
Theme Displays
Customer Advice Areas
Chapter 18
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Chapter 18
Managing theInternational Channels of
Distribution
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Market entry strategy
I di t tiIndirect exporting
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Indirect exportingIndirect exporting
Direct exportingDirect exporting
LicensingLicensing
FranchisingFranchising
Contract manufacturingContract manufacturing
Strategic allianceStrategic alliance
Joint ventureJoint venture
Wholly owned subsidiaryWholly owned subsidiary
C
O
N
TR
O
L
R
I
S
K
Success factors in manf. – overseasdistributor relationships
Distributioninhibitors
Outcomes Remedies
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inhibitors
Separate ownership Divided loyalties
Seller buyer atmosphere
Unclear future intentions
Offering good incentives,helpful support schemes,frank discussions, andhigh levels of interactions
Geographic, economic,
and cultural gaps
Communication blocks
Negative attitudes
Problems in physicaldistribution
Making judicious waysof two way visits,establishing a wellmanaged communicationprogramme
Differences in the legaland regulatorystructures
Vertical tradingrestrictions
Dismissal difficulties
Full compliance withlaw,drafting a strongdistributor agent.
International logisticsmanagement
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International distribution system
International suppliers
Offshore manufacturing
Fully integrated global supply chain
Export procedure
1
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ExporterExporter ImporterImporter
Bank in exporter’sBank in exporter’s
countrycountryImporters bank Importers bank
ManufacturingManufacturing
FreightFreight
forwarderforwarder
Transportation andTransportation and
DocumentationDocumentation
formalities securedformalities secured
ImportImport
warehousewarehouse
CustomsCustoms
brokerbroker
CustomsCustoms
ShipShip
1
2
3
4
5
6
5
8
79
9
Contd.
State Process1 The Sale
•Importer makes enquiry from potential supplier
•Exporter sends catalogue and price list
Contd.
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•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 received5 Exporter produces or acquires goods
6 Exporter arranges transformation and documentation and spacereserved 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 theware house
International logisticsintermediaries
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Freight forwarder
a) To forward an export shipment from thepoint of origin to the ultimate destination
andb) To deal with transport carriers to getspace for the shipment.
•Customs broker
Exporting documents
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Letter of credit
Bill of lading
Commercial invoice
Commercial invoiceConsular invoice
Certificate of origin
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Thank you