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1. BEHAVIOURAL EQUATION THEORY

J A HOWARD FORMULATED THE THEORY

FOUR ESSENTIAL ELEMENTS OF THE LEARNING PROCESS INCLUDED IN STIMULUS-RESPONSE MODEL ARE

DRIVES: STRONG INTERNAL STIMULI THAT IMPELS THE BUYER TO RESPOND. THERE ARE TWO KINDS

INNATE DRIVE: STEMS FROM PHYSIOLOGICAL NEEDS

LEARNED DRIVES: SUCH AS STRIVING FOR STATUS OR SOCIAL APPROVAL, ARE ACQUIRED WHEN PAIRED WITH SATISFYING OF INNATE DRIVES

2.CUES: WEAK STIMULI THAT DETERMINE WHEN THE BUYER WILL RESPOND

TRIGGERING CUES: ACTIVATE THE DECISION PROCESS FOR ANY GIVEN PURCHASE

NON-TRIGGERING CUES INFLUENCE THE DECISION PROCESS BUT DO NOT ACTIVATE IT. TWO KINDS

PRODUCT CUES: EXTERNAL STIMULI RECEIVED FROM THE PRODUCT DIRECTLY. (PACKAGE, WEIGHT, PRICE)

INFORMATIONAL CUES: EXTERNAL STIMULI THAT PROVIDE INFORMATION ABOUT THE PRODUCT. MAY COME FROM ADVERTISING, PERSONAL SELLING ETC.

SPECIFIC PRODUCT AND INFORMATION CUES MAY ALSO ACT AS TRIGGERING CUES

3.RESPONSE: WHAT BUYER DOES

4.REINFORCEMENT: ANY EVENT THAT STRENGTHENS THE BUYERS TENDENCY TO MAKE PARTICULAR RESPONSE

HOWARD INCORPORATES THESE FOUR ELEMENTS INTO AN EQUATION:

B=P X D X K X V

B= RESPONSE (PURCHASING THE BRAND/PATRONISING THE SUPPLIER)

P= PREDISPOSITION (INWARD RESPONSE TENDENCY)

D= PRESENT DRIVE LEVEL (AMOUNT OF MOTIVATION)

K= INCENTIVE POTENTIAL (VALUE OF PRODUCT OR ITS POTENTIAL SATISFACTION TO THE BUYER)

V= INTENSITY OF ALL CUES

THE RELATION AMONG THE VARIABLE IS MULTIPLICATIVE. THUS, IF ANY INDEPENDENT VARIABLE HAS ZERO VALUE, B WILL ALSO BE ZERO AND THERE IS NO RESPONSE.

BUYER-SELLERS DYAD AND REINFORCEMENT

BY PROVIDING THE PRODUCT TO THE BUYER

BY GIVING SOCIAL APPROVAL

SALESPERSONS INFLUENCE PROCESS

THE PROCESS IS EXPLAINABLE IN TERMS OF EQUATION

B= P X D X K X V

SALESPERSON INFLUENCES P DIRECTLY

SALES PERSON ALSO INFLUENCES D, WHICH ULTIMATELY AFFECTS K

FINALLY THE SALES PERSON VARY THE INTENSITY OF HIS EFFORTS, SO MAKING DIFERNCE IN V

SALESPERSONS ROLE IN REDUCING BUYERS DISSONANCE:FOUR TYPES OF CASES INVOLVING THE SALESPERSONS ROLE.

AN ESTABLISHED PRODUCT: AN ONGOING SALESPERSONS-CLIENT RELATIONSHIP

AN ESTABLISHED PRODUCT: A NEW SALESPERSON-CLIENT RELATIONSHIP

A NEW PRODUCT: AN ONGOING SALESPERSON-CLIENT RELATIONSHIP

A NEW PRODUCT: A NEW SALES PERSON-CLIENT RELATIONSHIP

HOW TO REDUCE BUYERS DISSONANCE

TO EMPHASIZE THE ADVANTAGES OF PRODUCTS PURCHASED

BY PROVIDNG THE INFORMATION THAT PERMITS THE BUYER TO RATIONALIZE THE DECISION

PURE COMPETITION

NO SINGLE BUYER/SELLER IS SO LARGE THAT AFFECTS THE PRODUCT TOTAL DEMAND/SUPPLY

ALL SELLERS PRODUCTS ARE IDENTICAL

NO ARTIFICIAL RESTRAINTS ON PRICE EXISTS

ALL BUYERS ARE INFORMED ABOUT SELLERS PRICE

PERSONAL SELLING STRATEGY

UNREALISTIC ASSUMPTIONS, THEREFORE, NO PERSONNEL SELLING STRATEGIES

MONOPOLISTIC COMPETITION

LARGE NUMBER OF SELLERS OF GENERIC PRODUCT BUT EACH PRODUCT IS DIFFERENTIATED

EASY ENTRY CONDITIONS

BUYERS ARE NOT FULLY INFORMED ABOUT THE OFFERING OF COMPETING SELLERS

PERSONAL SELLING STRATEGY

SELLERS DIFFERENTIATE THEIR MARKET OFFERINGS THROUGH INDIVIDUALIZING ONE OR SEVERAL COMPONENTS OF OVERALL MARKETING STRATEGY.

FEW & LARGE COMPETITORS

ENTRY BARRIERS

CHANGING OF MARKETING STRATEGY OF ONE COMPETITOR HAS DIRECT REPURCUSSIONS ON OTHER

PERSONAL SELLING STRATEGIES

PLAYS IMPORTANT ROLE IN BUILDING AND MAINTAINING DEALER COMPETITION, IN SERVICING THE DISTRIBUTION NETWORK AND IN GATHERING INFORMATION ON COMPETITORS ACTIVITIES.

NO DIRECT COMPETITION

NO DIRECT BUT INDIRECT COMPETITION EXISTS.

PERSONAL SELLING STRATEGIES

SELLING STRATEGIES REQUIRED TO STIMULATE PRIMARY DEMAND

REQUIREMENT OF DISTRIBUTION STRATEGY

REQUIREMENT OF PRICING STRATEGY

INTEGRATION OF PRODUCT, DISTRIBUTION, PRICING STRATEGIES IN OVERALL MARKETING STRATEGIES

PRODUCT MARKET ANALYSIS

PRODUCT SPECIALIST

MARKET SPECIALIST

COMBINATION OF BOTH

2. ANALYSIS OF SALES PERSONNEL ROLE IN SECURING THE ORDER: CHOICE OF BASIC SELLING STYLE

TRADE SELLING:

DEVELOPING AND MAINTAING LONG-TERM RELATIONSHIP WITH STABLE CUSTOMERS

LOW KEY SELLING, LITTLE OR NO PRESSURE, JOB IS DULL & ROUTINE

ADVETISING & OTHER PROMOTIONAL MEASURES ARE PREFERRRED THAN PERSONAL SELLING

SALES PERSON ROLE IS TO BUILDUP VOLUME BY PROVIDING PROMOTIONAL ASSISTANCE

B) MISSIONARY SELLING

LOW KEY AND DOES NOT REQUIRE HIGH-LEVEL TECHNICAL TRAINING OR ABILITY

SALESPERSON JOB IS TO PERSUADE INDIRECT CUSTOMERS TO BUY FROM THE COMPANYS DIRECT CUSTOMERS

C) TECHNICAL SELLING

SALES PERSON DEALS WITH COMPANYS ESTABLISHED ACCOUNT & PERFORM ADVISORY FUNCTION

SALES PERSON SELLS DIRECTLY TO THE INDUSTRIAL USERS & OTHER BUYERS

SALES PERSON SPECIALIZE BY EITHER PRODUCT OR MARKET

THE ABILITY TO IDENTIFY, ANALYZE & SOLVE CUSTOMERS PROBLEM IS IMPORTANT

NEW BUSINESS SELLING

SALES PERSONS ROLE IS TO CONVERT PROSPECTS INTO CUSTOMER

SALES PERSON SHOULD UNUSUALLY CREATIVE, INGENIOUS AND POSSESS A HIGH DEGREE OF RESOURCEFULNESS

THE WORKLOAD METHOD: ALL SALES PERSONS SHOULD SHARE EQUAL WORKLOAD

CLASSIFY CUSTOMERS INTO SALES VOLUME POTENTIAL CATEGORY

DECIDE ON LENGTH OF TIME PER SALES CALL AND DESIRED CALLS FREQUENCIES ON EACH CLASS

CALCULATE THE TOTAL WORKLOAD

CALCULATE TOTAL WORKTIME AVAILABLE PER PERSON

DIVIDE TOTAL WORKTIME AVAILABLE PER PERSON BY TASK

CALCULATE THE TOTAL NO. OF SALES PERSON NEEDED

LARGE FIRMS LIKE IBM & AT&T HAS USED THIS APPROACH

BASIC FLAW DISREGARD PROFIT AS AN EXPLICIT CONSIDERATION

- ALL SALES PERSON WILL UTILIZE THEIR TIME WITHEQUAL EFFICIENCY

THE SALES POTENTIAL METHOD

PERFORMANCE OF THE SET OF ACTIVITIES CONTAINED IN THE JOB DESCRIPTION REPRESENTS ONE SALES PERSONNEL UNIT

DOES NOT CONSIDER THE LEAD TIME

ASSUMES SALES POTENTIAL ARE IDENTICAL IN ALL TERRITORIES

ESTIMATE OF SALES PRODUCTIVITY OF ONE UNIT SALE& TURNOVER IS CRUCIAL & RELIES ON ACCURACY

N = S/P+T(S/P) OR N=S/P(1+T)

N = NO. OF SALES PERSONNEL UNITS

S = FORECASTED SALES VOLUME

P =ESTIMATED SALES PRODUCTIVITY OF ONE SALES PERSONNEL UNIT

T = ALLOWANCE FOR RATE OF SALES TURNOVER

3 . INCREMENTAL METHOD

BEST APPROACH TO DETERMINE SALES FORCE SIZE

BASED ON PROPOSITION: NET PROFITS WILL INCREASE WHEN ADDITIONAL SALES PERSONNEL ARE ADDED IF THE INCREMENTAL SALES REVENUES EXCEEDS THE INCREMENTAL COSTS INCURRED

CONCEPTUALLY MOST CORRECT BUT MOST DIFFICULT TO APPLY

IT IS DOUBTFUL THAT THE METHOD IS APPROPRIATE WHERE PERSONAL SELLING IS NOT PRIMARY MEANS OF MAKING SALES

IT FAILS TO ACCOUNT FOR POSSIBLE COMPETITIVE REACTIONS AND LONG TERM INVESTMENT EFFECT OF PERSONAL SELLING

THE PLANNING WORK WHICH IS ESSENTIAL IN ELIMINATING NON-BUYERS

STEPS IN PROSPECTING

FORMULATING PROSPECTS DEFINITION

SEARCHING OUT POTENTIAL ACCOUNTS

QUALIFYING PROSPECTS & DETERMINING PROBABLE REQUIREMENTS

RELATING COMPANY PRODUCTS TO EACH PROSPECTS REQUIREMENT

METHODS OF PROSPECTING

ACQUINTANCE REFERENCES

COLD CALLING

CENTRE OF INFLUENCE METHOD

PERSONAL OBSERVATION METHOD

DIRECT MAIL/ TELEPHONE METHOD

COMPANYS RECORD

NEWSPAPERS

RETAILERS

ANY OTHER

DIRECT CONTACT BETWEEN SALES PERSON & PROSPECT

IMPORTANCE OF SUCCESSFUL APPROACH

ENHANCES SALES & THUS IMPORTANT FOR RUNNING BUSINESS

ENLIGHTENS THE CUSTOMER

FAILED APPROACH GIVES OPPORTUNITY TO RIVALS

KEY TO SUCCESSFUL APPROACH

MEET PROSPECT WITH PRIOR APPOINTMENT

PROFESSIONALISM, CONFIDENCE & COMPLETE INFORMATION

MAKE PROSPECT FEEL RELAXED

RESPECT THE VIEWS & CRITISM OF PROSPECTS

EFFECTIVE PRESENTATION WITH THE USE OF SALES FIGURE

NEED IDENTIFICATION

SALES PERSON CONFIRMS THAT PERSON HAS A NEED TO PURCHASE

IDENTIFICATION OF DECISION PROCESS ELEMENT FACING THE CUSTOMER (AUTHORITY)

GAINING PRE-COMMITMENT

METHODS OF APPROACH

CASHING ON BRAND NAME OR COMPANYS REPUTATION

CUSTOMER BENEFIT APPROACH

INNOVATIVE PRODUCTS OPEN THE DOOR TO SALESMAN

THE PREMIUM APPROACH

THE SHOCK APPROACH

THE APPROACH OF MAKING PROSPECT FEEL IMPORTANT

THE SURVEY APPROACH

THE INTERACTIVE APPROACH

REQUIREMENTS OF GOOD PRESENTATION

QUICK PRESENTATION OF PRODUCTS

ATTRACTIVE, DECORATED & WELL ORGANIZED PACKAGES

EXPLAINATION OF PRODUCT FEATURES IN SIMPLE & EASY TERMS

SHOW THE KIND OF QUALITY DEMANDED BY SALES PERSON

PRODUCT APPEAL TO CUSTOMER SENSES

ADVANTAGES OF DEMONSTRATION

SHOWS PRODUCT FEATURES CLEARLY

REINFORCEMENT OF BUYING DECISIONS

GIVES CUSTOMER OPPORTUNITY TO COMPARE PRODUCTS

INCREASES CONFIDENCE OF CUSTOMER

SPEAKS LOUDER THAN SALESMAN

TYPES OF OBJECTIONS

OBJECTIONS ON PRICE

OBJECTIONS ON QUALITY

OBJECTIONS ON PAYMENT

OBJECTIONS ON AFTER SALE SERVICE

OBJECTIONS ON TIMING TO BUY

PROCEDURE FOR HANDLING OBJECTIONS

GIVE OPPORTUNITY TO PROSPECT TO RAISE OBJECTION

ADMIT VALID OBJECTIONS AND ACCEPT IN POSITIVE SPIRIT

NEVER OFFEND PROSPECT BY OVERRULING OBJECTION

CONVINCE PROSPECT TO VIEW PROBLEM FROM DIFFERENT ANGLE

GIVE BETTER DEAL TO CUSTOMER TO COUNTER OBJECTION

CONVINCE THE CUSTOMER TO BUY APRODUCT

REASONS FOR FAILURE TO CLOSE

PROSPECT NOT FULLY CONVINCED

PRESSURIZED BY SALESMAN TO BUY PRODUCT

PROSPECTS WANT TO POSTPONE PURCHASE

SALESMAN NOT RECOGNIZING HIS NEEDS/PREFERENCES

SALESMAN NOT FULLY AWARE

PROPER PLANNING, PRESENTATION & DEMONSTRATION IS NOT THERE

PURPOSE OF SALES ORGANIZATIONS

TO PERMIT THE DEVELOPMENT OF SPECIALIST

TO ASSURE THAT ALL NECESSARY ACTIVITIES ARE PERFORMED

TO ACHIVE COORDINATION OR BALANCE

TO DEFINE AUTHORITY

TO ECONOMIZE ON EXECUTIVE TIME

DEFINING THE OBJECTIVE

SET BOTH QUANTITATIVE AS WELL AS QUALITATIVE OBJECTIVES

QUALITATIVE OBJECTIVES ARE INDISPENSABLE FOR LONG-RANGE PLANNING, THUS, KEPT IN MIND IN SHORT RANGE PLANNING ALSO

QUANTITATIVE OBJECTIVES ARE REQUIRED AS OPERATING GUIDEPOSTS

DELINEATING THE NECESSARY ACTIVITIES

DETERMINING THE NECESSARY ACTIVITIES & THEIR VOLUME OF PERFORMANCE IS BASED ON QUALITATIVE & QUANTITATIVE OBJECTIVES

ALSO HELPS IN DETERMINING WHICH ACTIVITIES TO BE PERFORMED IN WHAT VOLUME

GROUPING ACTIVITIES INTO JOBS OR POSITIONS

ACTIVITIES IDENTIFIED ARE ALLOCATED TO DIFFERENT POSITIONS

ACTIVITIES ARE GROUPED SO THAT CLOSELY RELATED TASKS ARE ASSIGNED TO SAME POSITIONS

EACH POSITION MUST ALSO CONTAIN SOME VARIATIONS

ASSIGNING PERSONNEL TO POSITIONS

WHETHER TO RECRUIT SPECIAL INDIVIDUALS TO FILL THE POSITIONS OR TO MODIFY THE POSITIONS TO FIT THE CAPABILITIES OF AVAILABLE PERSONS

PROVIDING FOR COORDINATION AND CONTROL

SALES EXECUTIVES REQUIRE MEANS TO CONTROL THEIR SUBORDINATES & TO COORDINATE THEIR EFFORTS

THEY SHOULD NOT BE OVERBURDENED NOR SHOULD HAVE TOO MANY SUBORDINATES

COORDINATION & CONTROL IS OBTAINED THROUGH BOTH FORMAL & INFORMAL MEANS

FORMAL INSTRUMENTS OF ORGANIZATIONAL CONTROL:

WRITTEN JOB DESCRIPTION

REPORTING RELATIONSHIPS

JOB OBJECTIVES, DUTIES & RESPONSIBILITIES

PERFORMANCE MEASUREMENTS

AN ORGANIZATION CHART

REDUCES CONFUSION ABOUT INDIVIDUALS ROLE

DELINEATES FORMAL RELATIONSHIP

ORGANIZATIONAL MANUALS

EXTENSION OF ORGANIZATION CHART

CONTAINS CHART FOR BOTH THE COMPANY & THE DEPARTMENT

FACTORS AFFECTING THE ORGANIZATIONAL STRUCTURE

TYPES OF ORGANIZATION STRUCTURE

THE CUSTOMERS

THE MARKETING CHANNELSTHE COMPANY SIZE

THE PRODUCT OR PRODUCT LINE

THE PRACTICES OF COMPETITORS

PERSONALITIES & ABILITIES OF PERSONNEL

LINE SALES ORGANIZATIONS

OLDEST & SIMPLEST STRUCTURE

WIDELY USED IN SMALLER FIRMS OR FIRMS WITH SMALL NUMBERS OF SELLING PERSONNELS, LIMITED GEOGRAPHICAL AREA OR NARROW PRODUCT LINE

CHAIN OF COMMAND RUN FROM TOP TO DOWN

ALL EXECUTIVES EXERCISE LINE AUTHORITY & EACH SALES PERSON IS RESPONSIBLE TO NEXT IN THE HIERARCHY

NO CROSS COMMUNICATION BETWEEN PERSONS AT SAME LEVEL

GREATEST USE IN COMPANIES WHERE ALL SALES PERSONS REPORT DIRECTLY TO THE CHIEF SALES EXECUTIVES

ADVANTAGES:

PROBLEMS OF DISCIPLINE & CONTROL ARE SMALL

AUTHORITY & RESPONSIBILTY ARE CLEAR

SAVES TIME IN MAKING POLICY CHANGES

DEVELOPMENT OF CLOSE RELATIONSHIP BETWEEN SUPERIOR & SUBORDINATE

ADMINISTRATIVE EXPENSES ARE LOW

DISADVANTAGES

TOO MUCH DEPENDENCE ON DEPARTMENT HEAD

INSUFFICIENT TIME FOR POLICY MAKING & PLANNING

INAPPROPRIATE FOR RAPIDLY GROWING FIRMS

OFFERS LITTLE OPPORTUNITY TO SUBORDINATES TO ACQUIRE MANAGEMENT SKILLS

LINE & STAFF SALES ORGANIZATIONS

FOUND IN LARGE & MEDIUM-SIZED FIRMS EMPLOYING NUMBER OF SALES PERSONS, SELLING DIVERSIFIED PRODUCT LINES OVER WIDE GEOGRAPHIC AREAS

PROVIDE TOP SALES EXECUTIVES WITH GROUP OF SPECIALISTS TO ASSIST

STAFF HELPS IN CONSERVING THE TIME & FREES EXECUTIVES FOR OTHER WORKS

STAFF SPECIALISTS INCREASES OVERALL EFFECTIVENESS OF DEPARTMENT

STAFF DO NOT HAVE AUTHORITY TO ISSUE ORDERS OR DIRECTIVES

ADVANTAGES

SPECIALIZATION

PLANNING ACTIVITIES ARE DIVIDED AND APPORTIONED TO STAFF MEMBERS

EXECUTIVES CONCENTRATE ON COORDINATION & CONTROL

DISADVANTAGES

INCREASE IN ADMINISTRATIVE EXPENSES

DIFFICULT TO PREVENT SOME PERSONS FROM EVADING UNWANTED RESPONSIBILITIES

FUNCTIONAL SALES ORGANIZATION

EACH INDIVIDUAL IN AN ORGANIZATION SHOULD HAVE FEW DISTINCTIVE DUTIES AS POSSIBLE

PRINCIPLE OF SPECIALIZATION IS UTILIZED TO ITS FULLEST EXTENT

SALES PEOPLE RECEIVE INSTRUCTIONS FROM SEVERAL EXECUTIVE BUT AT DIFFERENT ASPECTS OF THEIR WORK

ADVANTAGES

IMPROVED PERFORMANCE

DISADVANTAGES

NOT FEASIBLE FOR SMALL & MEDIUM SIZED FIRMS

SUITABLE FOR LARGE FIRMS WITH STABLE OPERATIONS & WITH OPPORTUNITY FOR CONSIDERABLE DIVISION OF LABOUR

COMMITTEE SALES ORGANIZATION

NEVER A SOLE BASIS FOR ORGANIZING A SALES DEPTT.

METHOD OF ORGANIZING THE EXECUTIVE GROUPS FOR PLANNING & POLICY FORMULATION

THE AGENDA MUST BE PLANNED & CONTROLLED TO AVOID WASTING TIME

ADVANTAGES

PROMOTE COORDINATION

COLLECTIVE DECISION MAKING

PROVIDE FOCAL POINT FOR DISCUSSION & FOR SUGGESTIONS

A SALES TERRITORY IS A GROUPING OF CUSTOMERS AND PROSPECTS ASSIGNED TO AN INDIVIDUAL SALES PERSON

REASON FOR ESTABLISHING OR REVISING SALES TERRITORIES

TO PROVIDE PROPER MARKET COVERAGE

TO CONTROL SELLING EXPENSES

TO ASSIST IN EVALUATING SALES PERSONNEL

TO CONTRIBUTE TO SALES FORCE MORALE

TO AID IN THE CO-ORDINATION OF PERSONAL SELLING AND ADVERTISING EFFORT

FOUR STEPS

SELECTING A BASIC GEOGRAPHICAL CONTROL UNITS: THE MOST COMMONLY USED CONTROL UNITS ARE

COUNTIES: SMALLEST UNIT FOR WHICH GOVT. OFFICIALS REPORT DATA

ZIP CODE AREAS: GENERALLY REFLECTS ECONOMIC CHARACTERISTICS OF AREA

CITIES: USED WHEN SALES POTENTIAL IS LOCATED IN URBANIZED AREAS

METROPOLITAN STATISTICAL AREAS: GEOGRAPHICAL AREA WITH LARGE POPULATION NUCLEUS TOGETHER WITH ADJACENT COMMUNITIES

TRADING AREAS: THE GEOGRAPHICAL REGION SURROUNDING THE CITY THAT SERVES AS DOMINANT RETAIL OR WHOLESALE CENTER OR BOTH FOR THE REGION

STATES: USED WHEN COMPANY WITH SMALL SALES FORCE COVERING THE MARKET EXTENSIVELY RATHER INTENSIVELY OR WHEN COMPANY IS FIRST USING THE NATIONAL DISTRIBUTION , WHICH ASSIGNS ITS SALES PERSON TERRITORIES WITH 1 OR MORE STATES AS TEMPORARY EXPEDIENT AND AS SOON AS FEASIBLE A CHANGE IS MADE TO A SMALL CONTROL UNIT

DETERMINING SALES POTENTIALS IN CONTROL UNIT

SALES POTENTIAL REPRESENTS THE MAXIMUM POSSIBLE SALES OPPORTUNITIES OPEN TO A SPECIFIC COMPANY SELLING A GOOD OR SERVICES DURING A STATED FUTURE PERIOD TO A PARTICULAR MARKET SEGMENT

3. COMBINING CONTROL UNITS INTO TENTATIVE TERRITORIES

DECIDES ON NUMBER OF TERRITORIES, ASSUMING THAT ALL SALES PERSONNEL ARE OF AVERAGE ABILITY

ANALYSIS OF PAST SALES EXPERIENCE HELPS IN DETERMINIG THE % OF TOTAL SALES POTENTIAL THAT AN AVERAGE SALES PERSON SHOULD REALIZE

ESTIMATE THE SALES PRODUCTIVITY PER SALES PERSONNEL UNIT AND DEVIDES IT INTO THE TOTAL ESTIMATED SALES POTENTIAL = NO. OF SALES PERSONNEL UNITS- & TERRITORIES REQUIRED.

THE NEXT STEP IS TO DECIDE THE TERRITORY SHAPE, WHICH AFFECTS SELLING EXPENSES & EASE OF COVERAGE

4. ADJUSTING FOR COVERAGE DIFFICULTY AND REDISTRICTING TENTATIVE TERRITORIES REDISTRICTING TO ADJUST FOR COVERAGE DIFFICULTY IS A SEVEN STEP PROCEDURE

DETERMINE NO., LOCATION & SIZE OF CUSTOMERS & PROSPECTS IN EACH TENTATIVE TERRITORY

ESTIMATE TIME REQUIRED FOR EACH SALES CALL

DETERMINE LENGTH OF TIME BETWEEN CALLS, THAT IS AMOUNT OF TIME REQUIRED TO TRAVEL FROM ONE CUSTOMER TO ANOTHER

DECIDE CALL FREQUENCIES

CALCULATE THE NO. OF CALLS POSSIBLE WITHIN A GIVEN PERIOD

ADJUST THE NO. OF CALLS POSSIBLE DURING A GIVEN PERIOD BY THE DESIRED CALL FREQUENCIES FOR THE DIFFERENT CLASSES OF CUSTOMERS & PROSPECTS

CHECK OUT THE ADJUSTED TERRITORIES WITH SALES PERSONNEL WHO WORK OR WHO HAVE WORKED IN EACH AREA, AND MAKE FURTHER ADJUSTMENT AS REQUIRED

QUOTAS ARE QUANTITATIVE OBJECTIVES ASSIGNED TO SALES ORGANIZATIONAL UNITS.

ALL QUOTAS HAVE TIME DIMENSION THEY QUANTIFY WHAT MANAGEMENT EXPECTS WITHIN A GIVEN PERIOD

QUOTAS ARE DEVISES FOR DIRECTING & CONTROLLING SALES OPERATION

ACCURATE DATA ARE IMPORTANT TO THE EFFECTIVENESS OF QUOTA SYSTEM

JUDGEMENT & ADMINISTRATIVE SKILLS ARE REQUIRED OF THOSE WITH QUOTA SETTING RESPONSIBILITIES.

TO PROVIDE QUANTITATIVE PERFORMANCE STANDARD

DETERMINE WHICH SALES PERSONNEL/SALES ORGANIZATION/DISTRIBUTIVE OUTLET ARE DOING BELOW AVERAGE, AVERAGE OR ABOVE AVERAGE JOB

COMPARISION OF QUOTA WITH SALES PERFORMANCE IDENTIFY WEEK & STRONG POINTS

TO OBTAIN TIGHTER SALES & EXPENSE CONTROL

TO MOTIVATE DESIRED PERFORMANCE

QUOTAS SHOULD BE ATTAINABLE GOALS, ACHIEVABLE WITH JUSTIFIABLE PRIDE

MOTIVATION DECLINES WITH EASILY ATTAINABLE QUOTAS

TO USE IN CONNECTION WITH SALES CONTEST

COMPANIES FREQUENTLY USE PERFORMANCE AGAINST QUOTA AS THE MAIN BASIS OF MAKING AWARDS IN SALES CONTEST

SALES CONTEST IS A POWERFUL INCENTIVE IF ALL PARTICIPANTS FEEL THEY HAVE EQUAL CHANCE OF WINNING

SALES VOLUME QUOTA

OLDEST & MOST COMMON TYPE

COMMUNICATES HOW MUCH FOR WHAT PERIOD

SET FOR GEOGRAPHICAL AREAS, PRODUCT LINES OR MARKETING CHANNELS OR COMBINATION

THE SMALLER THE UNIT, THE MORE EFFECTIVE THE QUOTA FOR CONTROLLING SALES OPERATION

DOLLAR SALES VOLUME QUOTA

COMPANIES SELLING BROAD PRODUCT LINES SET SALES VOLUME QUOTAS IN DOLLARS RATHER THAN IN UNITS OF PRODUCT

ADVANTAGE: RELATE EASILY TO OTHER PERFORMANCE DATA

UNIT SALES VOLUME QUOTA

USED IN TWO SITUATIONS

PRICES FLUCTUATE CONSIDERABLY

NARROW PRODUCT LINES SOLD AT STABLE PRICES

POINT SALES VOLUME QUOTA

COMPANIES USE POINT SALES VOLUME QUOTA BECAUSE OF PROBLEM IN USING $ OR UNIT VOLUME QUOTA

SALES VOLUME QUOTAS DERIVED FROM TERRITORIAL SALES POTENTIALS THIS APPROACH IS APPROPRIATE WHEN

TERRITORIAL SALES POTENTIAL ARE DETERMINED IN CONJUNCTION WITH TERRITORIAL DESIGN

BOTTOM UP PLANNING AND FORECASTING PROCEDURES ARE USED IN OBTAINING THE SALES ESTIMATE IN THE SALES FORECAST

HOWEVER, IN BOTH THE CASES FURTHER ADJUSTMENT IS NEEDED

SALES VOLUME QUOTA DERIVED FROM TOTAL MARKET ESTIMATE HERE, MANAGEMENT HAS NEITHER STATISTICS NOR SALES FORCE ESTIMATES OF TERRITORIAL SALES POTENTIAL. MANAGEMENT MAY EITHER

BREAKDOWN THE TOTAL COMPANY SALES ESTIMATE, USING VARIOUS INDEXES OF RELATIVE SALES OPPORTUNITIES IN EACH TERRITORY, AND THEN MAKE ADJUSTMENTS TO ARRIVE AT TERRITORIAL SALES VOLUME QUOTAS

CONVERT THE COMPANY SALES ESTIMATE INTO A COMPANY WIDE SALES QUOTA AND THEN BREAK DOWN THE COMPANY VOLUME QUOTA, BY USING AN INDEX OF RELATIVE SALES OPPORTUNITIES IN EACH TERRITORY

SALES VOLUME QUOTA BASED ON PAST SALES EXPERIENCE ALONE

COMPANIES ASSUME NOT ONLY THAT PAST AND FUTURE SALES ARE RELATED BUT THAT PAST SALES HAVE BEEN SATISFACTORY

COMPANIES PERPETUATE PAST ERRORS

AVERAGE SALES LAG BEHIND ACTUAL SALES DURING LONG PERIODS OF RISING OR FALLING SALES

SALES VOLUME QUOTAS BASED ON EXECUTIVE JUDGEMENT ALONE

JUSTIFIED WHEN THERE IS LITTLE INFORMATION TO USE IN SETTING QUOTAS

QUTAS CAN BE OF NO HIGHER QUALITY THAN THE JUDGEMENT OF THOSE SETTING THEM

SALES VOLUME QUOTAS RELATED ONLY TO COMPENSATION PLAN

BASED SOLELY UPON THE PROJECTED AMOUNTS OF COMPENSATION THAT MANAGEMENT BELIEVES SALES PERSONNEL SHOULD RECEIVE

POOR STANDARDS FOR APPRAISING SALES PERFORMANCE

SET FOR VARIOUS UNITS IN SALES ORGANIZATION TO CONTROL EXPENSES, GROSS MARGINS, OR NET PROFIT

EXPENSE QUOTAS

EXPENSE QUOTAS ARE USED MOST OFTEN IN COMBINATION WITH SALES VOLUME QUOTA

MANAGEMENT PROVIDE SALES PERSONNEL WITH FINANCIAL INCENTIVES TO CONTROL THEIR OWN EXPENSES

TO REDUCE ADMINISTRATIVE BURDEN AND MISUNDERSTANDINGS, EXPENSE QUOTAS ARE GENERALLY EXPRESSED AS % OF SALES

PROBLEMS

VARIATIONS IN COVERAGE DIFFICULTY & OTHER ENVIRONMENTAL FACTORS, MAKE IT IMPRACTICAL TO SET IDENTICAL EXPENSE % FOR ALL THE TERRITORIES

DIFFERENT SALES PERSON SELLS DIFFERENT PRODUCT MIXES, SO SOME INCUR HIGHER EXPENSES THAN OTHERS

ADVANTAGES

MAKES SALES PERSONNEL MORE COST CONSCIOUS

AWARENESS TOWARDS EXPENSE CONTROL

GROSS MARGIN OR NET PROFIT QUOTAS

APPROPRIATE WHEN THE PRODUCT LINE CONTAINS BOTH HIGH & LOW MARGIN ITEMS

PROBLEMS

SALES PERSONS DO NOT SET THE PRICE AND HAVE NO ROLE ON THE MANUFACTURING COST.THUS, NOT RESPONSIBLE FOR GROSS MARGIN

CERTAIN SELLING EXPENSES ARE BEYOND THE SALESPERSONS INFLUENCE

INCREASED CLERICAL & ADMINSTRATIVE COSTS

ACTIVITY QUOTAS

DEFINE THE IMPORTANT ACTIVITIES SALES PERSON PERFORM; THEN SET TARGET PERFORMANCE FREQUENCY

APPROPRIATE WHEN SALES PERSONNEL PERFORM IMPORTANT NON-SELLING ACTIVITIES

CONTROL & RECOGNITION OF SALES PERSON PERFORMING NON SELLING ACTIVITIES

REWARD SALES PERSON ON QUANTITY OF WORK; IRRESPECTIVE OF QUALITY

PROBLEM IN INSPIRING THE SALES FORCE

1.COMBINATION QUOTA

COMBINATION QUOTAS CONTROL PERFORMANCE OF BOTH SELLING & NON-SELLING ACTIVITIES

OVERCOME THE DIFFICULTY OF USING DIFFERENT MEASUREMENT UNITS TO APPRAISE DIFFERENT ASPECTS OF PERFORMANCE

BECAUSE PERFORMACES ARE COMPUTED AS %, KNOWN AS PONI SYSTEMS, THE POINTS BEING % POINTS.

SUMMARIZE OVERALL PERFORMANCE IN A SINGLE MEASURE

PROBLEMS

SALES PERSONS MAY HAVE DIFFICULTY IN UDERSTANDING & APPRAISING THEIR OWN ACHIEVEMENTS

DESIGN IMPERFECTION MAY CAUSE SALES PERSONNEL TO PLACE TOO MUCH EMPHASIS ON ONE COMPONENT ACTIVITY

FULL LINE QUOTA

DESIGNED TO SECURE SOME DESIRED BALANCE OF SALES AMONG VARIOUS PRODUCTS

ACCURATE, FAIR & ATTAINABLE QUOTAS

DEPENDS NOT ONLY ON THE QUALITY OF MANAGEMENTS JUDGEMENT BUT ON THE CAPABILITIES & MOTIVATIONA OF THE SALES FORCE

SECURING & MAINTAINING SALES PERSONNELS ACCEPTANCE OF QUOTAS

PARTICIPATION BY SALES PERSONNEL IN QUOTA SETTING

KEEPING SALES PERSONNEL INFORMED

NEED FOR CONTINUOUS MANAGERIAL CONTROL

REASONS FOR NOT USING SALES QUOTAS

IN CERTAIN INDUTRIAL GOODS, ITS DIFFICULT TO OBTAIN ACCURATE SALES ESTIMATE

SINCE QUOTA REQUIRES STATISTICAL TECHNIQUE, FEAR IS THAT SALES PERSONNEL WILL NOT ACCEPT QUOTA PREPARED BY HARD TO EXPLAIN TECHNIQUES

PLACE TOO MUCH EMPHASIS UPON MAKING SALES LEGITIMATE CRITICISM OF SALES VOLUME QUOTA

IF PRODUCT IS IN SHORT SUPPLY, QUOTAS ARE NOT APPROPRIATE

THE CHANNEL MANAGEMENT PROCESS IS DEFINED AS A SET OF ACTIVITIES ASSOCIATED WITH THE CREATION AND MAINTENANCE OF DISTRIBUTION CHANNEL

THE CHANNEL MANAGEMENT GIVES A CLEAR IDEA ABOUT

THE NUMBER OF CHANNEL ENTITIES IN THE CHANNEL NETWORK

THE WAY IN WHICH THEY ARE LINKED

THE ROLES AND RESPONSIBILITIES OF THE ENTITIES IN THE NETWORK

THE REWARDS FOR PARTICIPATING IN THE ACTIVITIES

THE NORMAL ACTIVITIES TO BE PERFORMED DURING THE NORMAL FUNCTIONING OF THE CHANNEL

THE CHANNEL DESIGN PROCESS

LIST DOWN ALL SERVICE OUTPUTS THAT CHANNEL NEEDS TO OFFER

THE SERVICE OUTPUT DELIVERED TEMPLATE FOR MARKETING CHANNEL SELLING A CONSUMER DURABLE TO THE MIDDLE CLASS CONSUMERS:

BULK BREAKING: UNITS ARE DELIVERED IN ONES

SPATIAL CONVEVIENCE: THERE IS ATLEAST 1 OUTLET FOR ALOMOST EVERY 3 KM RADIUS EXCLUDING THINLY POPULATED AREAS

WAITING TIME: NOT MORE THAN 2 DAYS FOR ANY MODEL

ASSORTMENT: OTHER CONSUMER ITEMS INCLUDING THAT OF OTHER COMPETITORS ARE AVAILABLE AT ALL OUTLETS WHERE THE PRODUCTS ARE OTHERWISE AVAILABLE

INSTALLATION SUPPORT: AVAILABLE

AFTER SALES SUPPORT: FREE FOR FIRST 2 YEARS: BUT AVAILABLE ON PAYMENTS AFTERWARDS

CONSUMER FINANCING: AVAILABLE

DEVELOP THE LEVELS AT WHICH EACH OF THE SERVICE OUTPUT HAVE TO BE OFFERED THROUGH COLLECTION OF INFORMATION FROM THE CUSTOMER OR BENCHMARKING WITH THE COMPETITOR

CLASSIFICATION SCHEME FOR CHANNEL FLOW :

PHYSICAL POSSESSION: TRANSPORTATION & STORAGE OF PRODUCT IN ORDER TO PHYSICALLY DELIVER THE PRODUCT TO THE END USER

OWNERSHIP: NORMALLY TAKING TITLE TO THE PRODUCT SO THAT IN CASE THE PRODUCT IS DAMAGED OR LOST DUE TO ANY REASON, THE LOSS IS ACCOUNTED FOR.

PROMOTION:PROMOTING THE PRODUCT IN SEVERAL WAYS, ADVERTISING, DISPLAYING ETC

NEGOTIATING:COMING TO AN AGREEMENT ABOUT THE TERMS OF TRADE WITH THE UPSTREAM AND DOWN STREAM ENTITIES IN THE CHANNEL INCLUDING CUSTOMERS

FINANCING:TAKING CARE OF FINANCIAL REQUIREMENTS (MAINLY WORKING CAPITAL) OF THE CHANNEL MEMBERS

RISK TAKING:UNDERWRITING THE RISKS ASSOCIATED WITH THE POSSESSION OR OWNERSHIP OF THE CHANNELINCLUDING WARRANTIAS FOR AFTER SALES SERVICE

ORDERING: RECEIVING AND RECORDING THE ORDERS, CONSILIDATING IT AND PASSING IT ON TO THE UPSTRAEM

PAYMENTS: RECEIVING PAYMENTS, RECORDING IT, CONSOLIDATING IT AND PASSING IT ON TO THE UPSTREAM

WORKBACK FROM EACH OF THE SERVICE OUTPUT LEVELS AND CONCEIVE THE ACTIVITIES THAT HAVE TO BE PERFORMED TO FULFILL THESE SERVICE OUTPUT OBJECTIVES

CHANNEL ACTIVITIES & SERVICE OUTPUTS

FLOW DIRECTINDIRECTOTHERCONTRIBUTION CONTRIBUTION CONTRIBUTION

PHYSICALSPATIAL CONVENIENCE,BULK

POSSESSIONBREAKING, WAITING TIME

OWNERSHIP SPATIAL CONVENIENCE

PROMOTION SPATIAL CONVENIENCE IS A SERVICEOUTPUT INITSESLF

NEGOTIATINGSPATIAL CONVENIENCE,BULK ASSORTMENT

BREAKING, WAITING TIME

FINANCINGSPATIAL CONVENIENCE,BULK ASSORTMENT

RISK TAKING WAITING TIME,BULK

BREAKING SPATIAL

CONVENIENCE

ORDERINGSPATIAL CONVENIENCE,BULK

BREAKING, WAITING

PAYMENTSSPATIAL CONVENIENCE,BULK

CALCULATE THE COST INCURRED FOR PERFORMING THESE ACTIVITIES

THE COST ASSOCIATED WITH ALL THE FLOWS ADD UP TO FORM THE COST OF DISTRIBUTION

WHILE DESIGNING THE IDEAL CHANNEL, IT IS IMPORTANT TO CONSIDER THE REMUNERATION OF CHANNEL MEMBERS. THE REMUNERATION HAS TO BE TUNE IN WITH

A. THE COST OF PERFORMING THAT ACTIVITY

THE CRITICALITY OF THE ACTIVITY

DESIGN THE IDEAL CHANNEL STRUCTURE

THE DESIGN EFFORT WOULD INVOLVE DECISION ABOUT:

A. SERVICE OUTPUT LEVELS

B. FLOWS OR ACTIVITIES THAT ARE ASSOCIATED WITH THE ACHIEVEMENT OF THE SEVICE OUTPUT LEVEL

TYPE OF ENTITY THAT WOULD BE ENTRUSTED WITH THE PERFORMANCE OF EACH OF THESE FLOWS

COMPARE THE IDEAL CHANNEL STRUCTURE WITH THE CHANNEL STRUCTURE THAT IS EXISTING

THENEED FOR LOOKING AT THE EXISTING DISTRIBUTION SYSTEM EMANATES FROM TWO REASONS:

THE EXISTING DISTRIBUTION SYSTEM WOULD GIVE IDEAS & INSIGHTS ABOUT THE TASKS PERFORMED BY ENTITIES AND THE PROBLEMS IF ANY RELATED TO THAT

THE NEED TO UNDERSTAND THE EQUILIBRIUM THAT EXISTS IN THE SYSTEM

THE BEST CHANNEL DESIGN PRACTICE IS TO CONCEIVE THE IDEAL DESIGN AND THEN COMPARE IT WITH THE EXISTING SYSTEM AND MAKE MODIFICATIONS WHEREEVER POSSIBLE

ASSESS THE IDEAL CHANNEL DESIGN WITHIN TERMS OF THE CHANNEL SELECTION CRITERIA LIKE EFFECTIVENESS, EFFICIENCY, EQUITY, SCALABILITY & FLEXIBILITY

ESTABLISH THE CHANNEL ESTABLISHEMENT/MODIFICATION PLAN

THE MAIN PURPOSE OF THE CHANNEL TO BE SET UP

THE PROFILE OF THE CUSTOMERS WHO ARE THE TARGET MARKET FOR THE CHANNEL

THE NEEDS & REQUIREMENT OF THE TARGET MARKET WITH REGARD TO IDENTIFIED SERVICE OUTPUTS PROVIDED BY THE PROPOSED/EXISTING CHANNEL

ANALYSIS OF THE OPERATIONS OF THE EXISTING CHANNELS THAT DEAL IN SIMILAR PRODUCT/SERVICE LINES

DETAILED ACTIVITY CHART FOR ACHIEVING THE SERVICE OUTPUT OBJECTVES

DETAILS ABOUT THE VARIOUS CHANNEL CONSTITUENTS WHO WILL BE PERFORMING THESE TASKS

THE COST OF PERFORMING THE ACTIVITY

THE DESIGNATED ROLE & RESPONSIBILITIES OF THE CHANNEL CONSTITUENT

THE PROPOSED REMUNERATION FOR PERFORMING THESE RESPONSIBILITIES

STANDARDS FOR MEASURING THE PERFORMANCE

PROCEDURE FOR REPORTING AND INFORMATION SHARING

MONITORING MECHANISM

CRITERIA FOR APPOINTING THE CHANNEL MEMBERS

WHAT IS CHANNEL CONFLICT?

A SITUATION WHERE ONE CHANNEL MEMBER PERCEIVES THE BEHAVIOUR OF ANOTHER CHANNEL MEMBER TO BE IMPEDING THE ATTAINMENT OF ITS GOAL OR ITS EFFECTIVE FUNCTIONING

CHANNEL CONFLICT AS A PROCESS

SOURCES OF CONFLICT

A. ATTITUDINAL SOURCES

B. STRUCTURAL SOURCES

COGNITIVE/AFFECTIVE CONFLICT

MANIFEST CONFLICT

CONFLICT RESOLUTION

CONFLICT OUTCOME

CAUSES WHICH ARE ASSOCIATED WITH DISAGREEMENTS ABOUT

CHANNEL ROLES: A SET OF PRESCRIPTIONS DEFINING THE BEHAVIOUR OF A MEMBER SHOULD BE IN A PARTICULAR SITUATION. MAY ALSO BE DUE TO LACK OF PROPER DEFINITION OF ROLES.

EXPECTATIONS: BELIEFS ABOUT WHAT IS GOING TO HAPPEN IN FUTURE

PERCEPTIONS: WHILE EXPECTATIONS ARE ABOUT THE FUTURE STATE OF AFFAIRS, PERCEPTIONS IS ABOUT THE PRESENT STATE OF AFFAIR. INTERCHANNEL CONFLICT COULD ARISE DUE TO DIFFERING PERCEPTIONS OF RELAITY ALSO

CHANNEL COMMUNICATIONS: LACK OF COMMUNICATION COULD ALSO LEAD TO INTERCHANNEL CONFLICT

NOT VERY EASY TO DETECT

THREE MAIN CAUSES OF STRUCTURAL CONFLICT ARE:

DIVERGENCE IN GOALS

DRIVES FOR AUTONOMY

FIGHTS OVER SCARCE RESOURCES

IF CONFLICT IS LEFT UNATTENDED, IT COULD FESTER INTO A SPIRAL OF DISRUPTIVE ACTIVITIES WHERE EACH MEMBER WILL TRY TO OUTSMART EACH OTHER

MEMBERS REALLY FEEL THE CONFLICT IN TERMS OF FRUSTRATION, DISAPPOINTEMENTS, OR NEGATIVE FEELINGS TOWARDS THE RELATIONSHIP

LEVEL OF DISAGREEMENT CROSSES A PARTICULAR LEVEL AND AFFECTS THE EMOTIONS OF THE INDIVIDUAL CONCERENED

MOST OF THE CHANNEL PRINICIPALS TAKE NOTE OF THE CONFLICT AND INITIATE SOME MEASURES FOR RESOLUTION

IF NOT SATISFACTORILY RESOLVED, DETERIORATES INTO THE MANIFEST CONFLICT STAGE

DISTRUCTIVE ACTIONS LIKE BOYCOTT OR TOTAL BREAKDOWN OF COMMUNICATION

IT IS UNADVISABLE TO ALLOW MATTERS TO DRIFT TO SUCH A STATE

WHEN THE CONFLICT REACH TO THIS STAGE, IT IS DIFFICULT TO COMEBACK TO FORMER RELATIONSHIP STAGE

AT THIS STAGE SOME RESOLUTION METHODS ARE THOUGHT ABOUT & IMPLEMENTED

TWO BASIC METHODOLOGIES CAN BE IDENTIFIED FOR CONFLICT MANAGEMENT IN THE FIRST OF THE CONFLICT:

INSTITUTIONAL MECHANISMS THAT FOCUS ON STRUCTURAL CHANGES SUCH AS JOINT MEMBERSHIP IN TRADE ORGANIZATIONS, EXECUTIVE EXCHANGES,DISTRIBUTION COUNCILS ETC

INTERPERSONAL & THIRD PARTY MECHANISM, SUCH AS ARBITRATION & MEDIATION

Institutional approaches

Joint membership of associations

Exchange of executives

Cooptation

Dealer councils

Third party mechanisms

Mediation

Arbitration

time tested and popular approach

parties to the dispute set down mutual rules of engagement and work within these rules to obtain the competitve advantage over other party

negotiation strategies:

competing or aggressive

collaborative or problem solving

compromising

avoiding, and

accomodating

sdm

Economy & Finance

new product

established product

buyers sales person

contd product cues

generic product

specific product

customer sales person

product total demandsupply