SALES AND DISTRIBUTION MANAGEMENTA Practice-Based Approach

VIKAS® PUBLISHING HOUSE PVT LTD

Ramendra SinghAssistant ProfessorMarketing Group

Indian Institute of Management CalcuttaIndia

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VIKAS® PUBLISHING HOUSE PVT LTDE-28, Sector-8, Noida-201301 (UP) IndiaPhone: +91-120-4078900 • Fax: +91-120-4078999Registered Offi ce: Vikas Publishing House Pvt. Ltd. 7361, Ravindra Mansion, Ram Nagar, New Delhi – 110 055E-mail: helpline@vikaspublishing.com Website: www.vikaspublishing.com

Sales and Distribution Management: A Practice-Based ApproachISBN: 978-93259-9406-5

First Edition 2016

Vikas® is the registered trademark of Vikas Publishing House Pvt LtdCopyright © Author 2016

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The book is dedicated to everyone who thinks selling is not just a profession

but a way of life!

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TABLE OF CONTENTS

Foreword xiiiPreface xv

PART A: SALES MANAGEMENT 1

Chapter 1 An Introduction to Sales and Distribution Channel Management 1Sales and Distribution Management: A Few Introductory Insights 2

Chapter 2 Personal Selling 5Case Example 1: Selling a Car (Car Dealer) 6Case Example 2: Selling Offi ce Space (Real Estate Industry) 8Types of Selling 10

Personal Selling 11Personal Selling Process 14

Selling Skills, Behaviours, and Attitudes 23Business to Business Buying and Selling Process 27

Buying Centre 27Organizational Buying Stages 28

Box 2.1 Personal Selling Through Distribution Channels in FMCG Companies 15Box 2.2 Direct Selling—Case of Eureka Forbes 16Box 2.3 Snakes and Ladders in Sales 23Chapter Summary 29Quiz Questions 29Project Assignments and Worksheets 30Case Study: Selling Personal Computers to Management Institute 33References 35

Chapter 3 Sales Organization 36Case Example: Sales Re-Organization at IBM 37What are Sales Organizations? 38Types of Sales Organizations 40

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Functional-Type Organization 41Geographic-Type Organization 43Customer-Type Organization 43Product-Type Organization 44

Principles for Organization 45Chapter Summary 48Quiz Questions 48

Chapter 4 Sales Technology 51Case Example 1: Use of IT in FMCG Channel Selling at ITC 52Case Example 2: Asian Paints Sales Management Information Systems (MIS) 53Why Sales Force Automation? 54

Lead Generation and Qualifi cation 55Knowledge 56Sales Presentation Skills 56Call Productivity 56

Sales Technology as a Management Tool 57Adoption of Sales Technology: Impediments and How to Tackle Them 58SFA Technologies 60

Handheld Terminals (HHTs) 60Distributor Point Software 60Business Intelligence App 60Territory Sales Offi cer’s Tool 61

Use of Sales Force Technology in FMCG Companies 61Chapter Summary 66Quiz Questions 66Project Assignments and Worksheets 67Case Study 1: Sales Force Automation at Dr. Reddy’s Laboratory 68Case Study 2: Automotive Distribution Channel and Use of SFA 71References 77

Chapter 5 Sales Territory and Time Management 79Case Example: Sales Territory Planning and Quota Setting in New Territories© 80What are Sales Territories? 81

Providing Proper Market Coverage 82Improving Customer Service and Relationships 83Controlling Selling Expenses 83Reducing Travel Time 84Objective Evaluation of Sales Performance and Control 84

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Improving Sales Force Motivations 85Coordinating Personal Selling and Marketing 85

Territory Design Procedures 85Step 1: Selecting Geographic Control Unit 85Step 2: Allocation Criteria 86Step 3: Choose the Starting Point 87Step 4: Combine Adjacent Control Unit 87Step 5: Compare Sales Territories 89Step 6: Assign Salespersons to New Territories 89

Sales Force Sizing 90Common Mistakes when Sizing Sales Force 94

Sales Quotas 95Setting Quotas 96

Time Management 97Chapter Summary 100Box 5.1 Salesperson’s Satisfaction with Territory Design 100Quiz Questions 101Case Study: Sales Beat Optimization of HUL Sales Territory in Kolkata 103References 109

Chapter 6 Sales Force Recruitment and Training 110Case Example 1: Talent Development at Colgate Palmolive 111Case Example 2: Hiring a New Salesperson 112Sales Force Recruitment and Selection 113

Recruitment and Selection Issues 113Recruiting and Selecting Salespeople 114Job Analysis and Selection Criteria 114Recruiting Applicants 115Selection Procedure 116Guideline for the Appropriate Use of Tests 117

Box 6.1 Hire to Fry, Not Fire 119Sales Force Training 120

Assessment of Training Needs 121Setting Training Objectives 122Evaluating Training Alternatives 122Designing and Delivering Training Programmes 123Training Programme Evaluation and Follow-Up 124

Box 6.2 Learning and Development 125Learning and Development Environment and its Impact 127

Box 6.3 Listening with Your Eyes 128Emotions Expressed through Facial Expressions 129

Measuring Sales Training Effectiveness 131Perceived Sales Force Performance Scale (PSFP) (Adapted from Berhman and Perreault, 1982) 133

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Current Sales Training Practices Index (CSTPI) By Jantan (2000) 134Sales Training Needs Determination (STND) 134Sales Training Objective Setting (STOS) 134Sales Training Programme Methods (STPM) 134Sales Training Programme Content (STPC) 135Sales Training Evaluation (STE) 135

Chapter Summary 136Quiz Questions 136Project Assignments and Worksheets 137References 139

Chapter 7 Sales Force Motivation and Compensation 141Case Example 1: Pharma Talent—Paying Sales Force Bonuses with Fixed Budget 142Case Example 2: Sales Performance for Fair Compensation at Pharmex 144Case Example 3: Eureka Forbes Limited—Managing Sales Force Motivation 146Importance of Sales Force Motivation 147Theories of Sales Force Motivation 149Box 7.1 Case Study: Sandeep’s Career in Sales 152Sales Force Compensation 152Box 7.2 Case Study: Sales Force Motivation and Compensation Strategies for a Large Sales Force 156Chapter Summary 158Quiz Questions 159Project Assignments and Worksheets 160Case Study: A Day in the Life of a Salesperson 164References 171

Chapter 8 Sales Force Productivity and Performance 172Case Example: Eureka Forbes—Sales Productivity Issues 173What is Sales Force Productivity? 174Box 8.1 The Point of Purchase 176What are the Factors Affecting Sales Force Performance? 177

Situational Factors 180Knowledge 181

Customer-Oriented Selling and Sales Performance 181SOCO Scale 182Customer Orientation 184Salespeople’s Performance Orientation 184

Examples of Sales Force Productivity 185Box 8.2 Sales Performance 186Chapter Summary 188Quiz Questions 189

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Project Assignments and Worksheets 190References 190

Chapter 9 Selling Ethics 192Case Example 1: The Shoe that Pinches 193Case Example 2: Every Day in the Life of a Salesperson 193What are Ethics and What is the Importance of Ethics in Selling? 195Ethical Dilemmas in Selling 198Some Ethical Dilemmas and Overcoming These 199Box 9.1 The Sales Kit 201Chapter Summary 202Quiz Questions 202Project Assignments and Worksheets 204References 205

PART B: DISTRIBUTION MANAGEMENT 206

Chapter 10 Sales-Marketing Interfaces 206Case Example: Yogesh’s Dilemma 207Why are Sales and Marketing Different? 207How do the Sales and the Marketing Functions Interact? 208Managing Seamless Sales-Marketing Integration 210Chapter Summary 213Quiz Questions 214Project Assignments and Worksheets 215References 217

Chapter 11 Distribution Channel Design 218Case Example 1: Ingersoll Rand (I-R) and Inter-Channel Competition 219Case Example 2: Warehousing of Online Fashion Retailers 220Case Example 3: Distribution Network of Nokia Mobile Handsets 221What are Distribution Channels? 225Why are Distribution Channels Required? 228Roles of Channel Partners in a Distribution Channel 230

Carrying and Forwarding Agents (C&F Agents) 230Distributors 230Retailers 231Wholesalers 232Logistics 241

Trade Merchandizing 243Chapter Summary 246Quiz Questions 246Project Assignments and Worksheets 248

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Chapter 12 Distribution Channel Power and Relationships 254Case Example: Distribution System and Channel Relationships in Indian Newspaper Industry 255What is Channel Power? 256What are the Various Sources of Channel Power? 258What are Channel Confl icts? 261Chapter Summary 264Quiz Questions 264Project Assignments and Worksheets 266Case Study 1: Parmeet Oil Company 268Case Study 2: Fish Distribution System in West Bengal 269

Chapter 13 Trade Loyalty Programmes 276Case Example: HUL’s Wholesale Loyalty Programme-Vijeyta 277What is Trade Loyalty and What are the Payoffs? 278What are the Various Types of Trade Loyalty Programmes? 281

Retailer Loyalty Programme 282Evaluation of Trade Loyalty Programmes 283

How to Design a Good Trade Loyalty Programme? 285Chapter Summary 285Quiz Questions 286Project Assignments and Worksheets 287

Chapter 14 Channel Economics 289Case Example 1: Return on Investment for Prashant Enterprises 290Case Example 2: Your First Date with the Distributor 290Channel Economics: Its Components 291Trade Economics 291

Mark-ups and Mark-downs 292Distribution Economics 292

Inventory Management 297Inventory Planning 298Stock Turnover Ratio (STR) 299

Receivables Management 300Project Assignments and Worksheets 301Case Study 1: Pet Main Dakar 304Case Study 2: Bondage 305

Chapter 15 Retailing 309Case Example: Creating Buzz in Rural Large Retail Formats 310What is Retailing? 313Forms of Retailing 319Retailing Economics 321

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Shopper Marketing 325Online Retailing 330

Flash Sale 334Chapter Summary 335Quiz Questions 335Project Assignments and Worksheets 336

PART C: CASES IN SALES AND DISTRIBUTION MANAGEMENT 338

Topic: Selling in Distribution Channels 338Case 1: Is Anandam a Good Sales Man? 338

Topic: Sales/Trade Promotions 339Case 2: Sri Maruti Bakers–Returns Blues 339

Topic: Managing Sales Organization 340Case 3: Impex–Restructuring Sales Organization 340

Topic: Online Retailing 351Case 4: Flipkart.com: India’s Most Successful Book E-Tailer 351

Topic: Distribution Channel Confl ict 365Case 5: Prabhar Oil Company 365

Topic: Sales Force Training and Compensation 372Case 6: Training and Compensating the Field Force 372

Topic: Customer-Oriented Selling 373Case 7: Complaining Customer 373

Topic: Sales force Resistance 374Case-8: Launching a Window Awning 374

Topic: Managing Sales Career 375Case 9: Sandeep’s Career in Sales 375

Topic: Sales Territory Planning and Quota Setting 375Case 10: Selling PCS in Behala, Kolkata 375

Topic: Outsourcing Sales Staffi ng 377Case 11: Adecco and Outsourced Sales Force 377

Topic: Logistics and Supply Chain 379Case 12: Uttarakhand State Cooperative Federation: Can It Help The Horticulture Farmers? 379

Topic: Navigating the Selling Process 391Case 13: Selling Process @ Omnitech Informatics 391

Topic: Selling Skills and Sales Process 395Case 14: A Day in the Life of a Voltas Salesperson 395

Topic: Sales Force Size Estimation 400Case 15: ZS Associates-Sales Force Sizing 400

Topic: Sales Accounting and Audit 401Case 16: Sales or No-Sales 401

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Topic: FMCG Distribution Challenges 402Case 17: Astra Foods India: Selling and Distribution 402

Topic: Infl uence of Salespersons in Customer Interactions 405Case 18: Consumer Insights at Moments of Truth 405

Topic: FMCG Distribution 408Case 19: Comparative Analysis of FMCG Distributors 408

Topic: Rural Retailing 411Case 20: Hariyali Kisaan Bazaar 411

Topic: Informal (Roadside) Retailing 411Case 21: Rambhai Kettley 411

Topic: Distribution in Bottom of Pyramid 412Case 22: Chotukool from Godrej 412

Topic: Organized Retailing and Retail Salesperson 413Case 23: One Evening in a Shopping Mall 413

Topic: Sales and Distribution Strategy for New Product-Markets 418Case 24: Developing a Market for Compost in India 418

Topic: Servicing through Distribution Channels 426Case 25: Cosmos Service Centre 426

Topic: Comparison of Parallel Distribution Systems 440Case 26: HUL and the Salt Distribution Model 440

Topic: Shelf Space Management in Department Store 445Case 27: The Picture Case on Shelf Space 445

Topic: Rural Distribution Channel Design and Scaling Challenges 449Case 28: O’nergy Distribution Channel in Rural Eastern India 449

Topic: Vendor Based Distribution 453Case 29: Distribution Channel of the Times of India in Kolkata 453

Topic: Management Case 458Case 30: Makemytrip.com (A) 458

Topic: Management Case 478Case 31: Planet Health 478

Simulation G ames 503

Distribution Challenges and Workable Solutions 519

Question Bank 549

Index 569

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FOREWORD

It is my great pleasure to write this Foreword for the new textbook on Sales and Distribution Management (S&DM) by Professor Ramendra Singh of IIM Calcutta.

S&DM (including retailing) are two critical aspects of a fi rm’s Go-to-Market Strategy that are important for any business student to appreciate and understand, especially one who hopes to embark on a successful career in marketing management and rise quickly in the corporate hierarchy. The sales management aspect typically involves either independent agents and/or company-owned sales forces while the distribution management aspect typically involves channel intermediaries such as distributors, wholesalers and retailers—who may be brick-and-mortar establishments and/or electronic today. Whatever is the confi guration, however, the fact of the matter is that after all the strategizing and planning done by the top management team, it is the quality and effectiveness of S&DM that drive and deliver actual results, that is the fi rm’s realized revenues and profi ts. More specifi cally, S&DM decisions and activities signifi cantly impact topline revenues even as they consume the highest proportion of marketing resources including sales force compensation and trade promotions expenditures. Given their nature, it is clear that effective S&DM calls simultaneously for sound knowledge and skills in marketing, accounting, contracting, negotiations, and human resource management. Moreover sales and distribution management are inextricably linked in that a supplier’s sales agents depend on channel intermediaries to help them promote and fulfi ll end-customer demands even as the latter depends on the sales agents to coordinate their relationships with the supplier’s marketing and distribution managers.

Consequently, an integration of sales, distribution, and retailing topics in one management course supported by a well-planned sales and distribution management textbook is highly desirable in today’s complex marketplaces. Even in the fast developing markets of India and South Asia, fi rms are increasingly following multichannel strategies. Curiously, however, the number of strong textbooks that provide a combined and focused treatment of S&DM is quite small compared to the numbers of separate books written on sales management, channels or retailing management. While the latter offers detailed content in each of these areas, there is also a need for a higher-level book that effectively makes students think of these areas in a more cohesive manner. From that perspective, this new book by Ramendra Singh is helpful and welcoming. More specifi cally, Professor Singh’s book offers 15 concise and informative chapters on well-chosen topics including sales, channels, and retailing management. Each chapter is motivated by a comprehensive and insightful real-world case examples, often drawn from the Indian context, and takes

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xiv Foreword

the student through basic defi nitions and valuable frameworks for organized thinking and decision-making with respect to various relevant activities and metrics such as prices, sales, costs, margins, contributions, and profi t. Further, the chapters include concise summaries, case assignments, quizzes and simulation exercises. Together, these features suggest that this book will be an excellent aid for a comprehensive and actionable overview of sales and distribution management.

October 15, 2015 Murali MantralaSam M. Walton Distinguished

Professor of MarketingUniversity of Missouri, Columbia

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Sales And Distribution Management

Publisher : SChand Publications ISBN : 9789325994065 Author : Ramendra Singh

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