Sales & Distribution Management Management Compiled By Saud Hussain Module - 1
Module-I: •
Definition, objectives, Functions and classification of Sales Management
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Selling under the Marketing concept,
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Interdependence of Salesmanship and Advertising.
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The Sales Organization:
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Purpose, principles and policies of sales organization,
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Setting up of the sales organization,
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Typical sales organization structure,
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Planning of the selling factors.
Module-I: •
Definition, objectives, Functions and classification of Sales Management
•
Selling under the Marketing concept,
•
Interdependence of Salesmanship and Advertising.
•
The Sales Organization:
•
Purpose, principles and policies of sales organization,
•
Setting up of the sales organization,
•
Typical sales organization structure,
•
Planning of the selling factors.
Definition, objectives, Functions and classification of Sales Management: • Definition: Sales management is a sub-system of marketing management, which translates the marketing plan into marketing performance. Sales managers in the modern organization are required to be customer oriented and profit directed and performs several tasks besides setting and achieving personal selling goals of the firm. • Sales management as defined by the American marketing association, “ The planning ,direction and control of personal selling including recruiting, selecting, equipping, assigning , routing, supervising, paying and motivating the sales force.
Definition, objectives, Functions and classification of Sales Management: • It is important to differentiate sales management from personal selling and salesmanship. Sales management directs the personal selling efforts, which in turn is implemented largely through salesmanship. Personal selling is a broader concept than salesmanship. It is the art of successfully persuading prospects or customers to buy a product or service from which they can derive suitable benefits, thereby increasing their total satisfaction.
Definition, objectives, Functions and classification of Sales Management: • Sales managers have still other responsibilities
They are responsible for participating in the preparation of information critical to take key marketing decisions, such as those on budgeting, Quota setting and territory management. They also participate in product decisions, marketing channels and distribution policies, advertising and other promotion and pricing. A sales manager is both an administrator in charge of personal selling activity and a member of the executive group that makes marketing decisions of all types.
Definition, objectives, Functions and classification of Sales Management:
Sales management is a key function in many kinds of enterprises. It may be a manufacturing concern, a wholesaling unit, a retail outlet, a real estate broker, or a automobile dealer.
Even firms selling intangibles such as insurance companies, stock brokers, mutual funds, tours and travel have sales management problems
Why choose the sales profession?
• Employment in sales is growing • Sales positions offer advantages: – – – – – – –
Good compensation Intrinsic reward from helping customers Flexible in day-to-day activities High-visibility career track Limited supervision Travel opportunities Increasing responsibilities
Objectives of sales management: From company viewpoint there are three general objectives of sales management. These are as follows:
Enhancement of sales volume. Contribution to profit Continuous growth.
Objectives of sales management: • Though the sales manager is responsible to make major contribution on the above areas, yet the top management is accountable for supplying an ever-increasing volume of socially responsible products that the final buyers want at satisfactory prices. To achieve the above objectives, the following goals are set for the sales manager.
Objectives of sales management:
Sales executives provide estimates on market and sales potential. To guide and lead the sales personnel and middlemen. To develop strategy for future operations. To provide information to the higher management for making marketing decisions and for setting sales and profit goals. Comparing marketing opportunities with the projected growth rate, the sales manager is responsible for achieving a particular sales volume, gross margin and net profit in units of products and in dollars. To create and maintain relationship with the channel members. To negotiate with the customers. To provide smart service and develop the goodwill for the firm. To provide solutions to the problems
Functions of sales management: The determination of sales force objective and goals Sales force organization, size, territory, and quota finalization Sales forecasting and budgeting Sales force selection, recruitment, and training Motivating and leading the sales force Designing compensation plan and control systems Designing career growth plans and building relationship strategies with key customers
Selling under the Marketing concept: Sl. No.
MARKETING
SELLING
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Emphasis is on customers’ needs and wants.
Emphasis is on the product, and the needs and interests of the seller.
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Satisfaction of the customer is primary.
Sales are the primary motive.
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Planning is long-term oriented.
Planning is short-term oriented.
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External, market segmentation.
Internal, company orientation.
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Consumer determines the price and price determines the costs.
Cost determines the price.
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It is an activity that converts the consumer needs into products.
It is an activity that converts the goods into cash.
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Marketing overall a whole process.
Selling is a part of marketing process.
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Emphasizes on innovation in every sphere; on providing better value to the customer by adopting the most innovative technology.
Emphasizing on staying with the existing technology and reducing the cost of production.
Selling under the Marketing concept: • Selling Concept: Starting Point
Factory
Focus
Means
Factory
Selling & Promoting
Ends
Profit through Sales Volume
Marketing Concept:
Market
Customer Needs
Coordinated Marketing
Profits through Customer Satisfaction
Interdependence ship between salesmanship and advertising:
Salesmanship is an art of successfully persuading prospects or customers to buy a product or services from which they can derive suitable benefits, thereby increasing their total satisfaction. Salesmanship therefore is a seller initiated effort that provides prospective buyers with information and other benefits, motivating and persuading them to decide in favor of the seller’s product or service. Personal selling effort is a two way communication process. It can be easily measurable Advertising is any form of non-personal form of communication between the buyer and seller by an identified sponsor. Advertising is a one way communication. In advertising customer does not come in direct contact with any representative of the organization. So the reaction, attitude or perception of the viewers cannot be immediately gauged in advertising.
Interdependence ship between salesmanship and advertising: %age of Promotion al effort
Personal selling
Advertising Simple/ Inexpensive goods
Complex/Expensive goods
Interdependence ship between salesmanship and advertising: •
Now very interesting aspect of advertising and selling, during the three different stages i.e. pre-purchase phase, the purchase phase and the post purchase phase. of a products/brand’s market.
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Pre-purchase stage is a time period when the companies try to generate demand for the product.
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In purchase stage the customer actually buy the product.
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In post–purchase stage the consumer evaluates his/her purchase decision. The figure shows that personal selling has an increasing role in all the three stages of purchase decision and particularly a leading role in the purchase stage.
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Advertising has a leading role in the pre-purchase stage and post purchase stage to generate mass demand and congratulating the consumer for taking the right product decision.
The Sales Organization: •
Effective sales executive insist upon sound organization.
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Sales organization must achieve both qualitative and quantitative personal selling objectives.
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The qualitative objectives are instrumental for the long term growth.
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The quantitative objectives in terms of sales, profit and market share are important for the short term growth of the organization.
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Sales organization needs people striving jointly to reach qualitative and quantitative objectives by creating a suitable structure of human relationship.
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The sales organization should not have a rigid structure. It should have build-in adaptability to respond appropriately in fluid and diverse marketing environments.
The Sales Organization: Purpose • The sales organization must not be worried of designing a formal structure. • How an organization works is more important than how it suppose to function. • Sales management should direct its organizational efforts towards a informal organization through intelligent leadership.
The followings are the purpose of setting a sales organization
Purpose: 1.
To permit the development of specialists: The sales department is organized and reorganized to retain the specialized workforce through proper delegation of authority and responsibility.
2. •
To perform all necessary activities: When an organization grows and specialization increases, it becomes difficult to supervise all the activities. Therefore the change is required to restructure the system. When the company is small, its executives are in close contact with the end users of the product. But as the company grows, as the marketing channels lengthen and the marketing area expands geographically, the executives become farther and farther from the customers.
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Purpose…. 3.
To achieve co-ordination or balance:
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Sales people are the field workers. The entire department is target oriented either qualitatively or quantitatively or both. Motivating individuals to work together toward common objectives is important in achieving co-ordination. Individual goals are subordinated to the organizational goals. Modern sales organizations should be divided into small, freely communicating and face to face groups to reduce the possibility of un –coordinated proliferation.
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4.
To define authority:
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Sales executives should know whether their authority is line, staff or functional. The sales organization should be clear whether the order is unidirectional or multi directional. The organization should be developed to promote harmony among the employees.
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Purpose….. 5. To economize on the executive time:
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Sales department’s operations and activities increase in complexity and number, additional subordinates are added.
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This permits the higher ranking sales executives to delegate more authority towards planning decisions and less time on operational activities.
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This change will definitely initiate structural reforms in the organizational set-up. It is all important for time and man management
Principle and Policies of organizational structuring: – – – – – – – –
There must be clear lines of authority running from the top to the bottom of the organization. Responsibility should always be coupled with corresponding authority. Authority should be delegated as far down the line possible. The work of every person should be confined as far as possible to the performance of a single leading function. There should a limit to the number of positions that can cocoordinated by a single objective. The number of levels of authority should be kept as a minimum. The organization should be flexible so that it can be adjusted to changing conditions. The organization should be kept as simple as possible. The responsibility and authority of each level should be clearly defined, if necessary in writing.
Setting of a Sales Organization: • Define the Objectives: – Sales, Profits & Growth
• Determination of activities and their volume of performance: – Volume of performance – Duties and Responsibilities
• Grouping activities into the position: – Allocation of Job, Objectives, duties & responsibilities and performance measures – It has implication on organization design
Setting of a Sales Organization: •
Assignment of personnel to positions: – To assign personnel to positions. – This is the fitment study. – It is a very controversial debate whether the unique talents and abilities those are prudent and profitable will be having the same positions or the positions need to be modified
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Provision for co-ordination and control: – – –
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Co-ordination and control is obtainable through both informal and formal means. Strong leaders control and co-ordinate the efforts of their subordinates largely on an informal basis through their personality. These leaders make minimal use of formal instruments of control and co-ordination. Written job description where the reporting relationship, job objectives, duties and responsibilities, performance measurements etc are clearly mentioned.
Sales Organization Structure: There are basically four types of sales organizations from the standpoint of position and relationship. • • • •
These are as follows: Line organization Line and staff organization Functional organization Committee organization
Line Organization • It is the oldest and the simplest form of sales organizational structure. • It is widely used in smaller firms with small number of selling personnel. • Companies that cover limited geographic location or sell narrow product line. • There is no cross communication between persons at the same level. • This is purely indirect and effected through the next higher level. • The greatest weakness of this structure is the excessive dependency on the department head and therefore inappropriate for the growing concerns having large sales staffs.
Line Organization Gen. Manager Sales manager
Asst. S. Mgr Div- 1
Asst. S. Mgr Div-2
Asst. S. Mgr Div-3
Asst. S. Mgr Div-3
Sales people
Sales people
Sales people
Sales people
Line and staff organization: • The line and staff sales department is often found in large and medium sized firms, employing substantial number of sales personnel, and selling diversified product lines over wide geographic areas. • In contrast to the line organization, the line and staff organization provides the top sales executives with a group of specialists- experts in dealer and distributor relations, sales promotions, sales analysis, sales training, sales planning, service, traffic and warehousing and similar fields. • These staffs helps the top sales executives by providing the necessary information’s and saves the time of the top executives
Line and staff organization: President
V.P- Marketing
Advertising Mgr
Dic. Sales Training
Gen. Sales Mgr
Dic. Sales Personnel
Asst. Gen. Sales Mgr District Sales Mgrs (6) Branch Sales Mgrs (32) Sales Personnel (450)
Mgr- Marketing Research
Mgr- Sales Promotion
Dic. Dealer &Distributor Relations
Line and staff organization: • The greatest weakness of the line and staff model is the role ambiguity and conflict. • The success of this model depends upon the co-coordinated effort between the line and staffs which is very much costlier. • Sufficient time should be devoted for problem recognition and corrective action which may hamper the decision making process.
Functional Sales Organization: • • • • • • •
Few sales departments use functional organization . This structure has been developed as the brainchild of Frederic W Taylor which is based upon the principle of specialization. The outstanding advantage of the functional sales department is improved performance. Specialized activities are assigned to the experts whose guidance should help in increasing the effectiveness of the sales force. The sales operations are highly centralized and therefore becomes ineffective for many large firms. It is not financially possible to adopt high degree of division of labor. It is suitable for large companies with stable operation , but the large companies with stable selling operations is an exception
Functional Sales Organization: Director of Sales Administration
MgrInstallation & service
Salesperson
Mgr- Sales Training
Salesperson
Mgr- Sales Promotion
Salesperson
Mgr- Dealer & Distributor Relation
Salesperson
Committee sales organization: • • • • • •
•
It is not the sole basis for organizing a sales department. It is a method of planning and policy formulation while leaving the actual operation including implementation of plans and policies to the individual executives. The organization may have many committees such as sales training committees, customer relation committees, human resource committees and new product committees. The sales training committee may consist of sales training manager, his/her assistants, the general sales manager and the regional sales manager. All the members sit together to draft training plans and formulate sales training policies but its implementation sole responsibility of the sales training manager. The use of committees in the sales department has many advantages. Before policies are made and action is taken, important problems are deliberated by committee members and are measured against varied viewpoints. It also promotes co-ordination among members of the executive team. But the committee meetings consume more time. Therefore the agenda of the meeting should be properly framed to avoid wastage of time.
Committee sales organization: The marketing organization can be organized on any of the following basis: • • • • •
Function-oriented Sales Organization. Product-oriented Sales Organization. Customer-oriented Sales Organization. Geography-oriented Sales Organization. Combined-based Sales Organization.
a. Function-oriented Sales Organization
• When departmentation of sales organization is done on the basis of sales activities, it is called departmentation on function basis.
a. Function-oriented Sales Organization MARKETING MANAGER
Advertising Deptt.
Sales Promotion Deptt
Marketing Research Deptt.
Sales Planning Deptt.
Sales Manager
Sales Supervisor
Sales Supervisor
Salesman
Salesman
b. Production Oriented Sales Organization: • Product type of departmentation is done when the enterprise produces or manufacturers or markets different types of products. • In this case separate sales executives are appointed for each product or group of products in the product line. Each will have its own organization to perform the various sales tasks.
b. Production Oriented Sales Organization: GENERAL MANAGER MARKETING
Marketing Officer Product - 1
Sales Supervisor
Salesmen
Marketing Officer Product 2
Sales Supervisor
Salesmen
Marketing Officer Product - 3
Sales Supervisor
Salesmen
c. Customer-oriented Marketing Organization: • When the departmentation sales organization is done on customer basis, it is called customer oriented Marketing Organization. We may also call it as “departmentalization on the basis of distribution channels”.
c. Customer-oriented Marketing Organization: MANAGER MARKETING
Sales Officer Direct Marketing
Salesmen
Sales Officer Channel Mktg.
Salesmen
Sales Officer Industrial Products
Sales Officer Foreign Customers
Salesmen
Salesmen
Sales Officer Consumer Products
Salesmen
d. Geography/Territory Oriented Marketing Organization:
• Here for the selling of a particular product types, the total marketing area is divided into territories. • Each territory is under the control of a separate sales executive. He is assisted by a separate sales force.
d. Geography/Territory Oriented Marketing Organization: COUNTRY MARKETING MANAGER
Regional Sales Manager NORTH
Sales Supervisor
Sales man
Regional Sales Manager SOUTH
Sales Supervisor
Sales man
Regional Sales Manager EAST
Regional Sales Manager WEST
Sales Supervisor
Sales Supervisor
Sales man
Sales man
e. Combined-base Marketing Organization:
The combination of two more basis of departmentation such as territorial, product and customers’ basis etc. is called combined basis of departmentation of sales organization.
Planning of the selling factors: • Examine customers in each market. • Determine the types of sales jobs needed to serve a market. • Note the job activities salespeople must do. • Design sales jobs around customers. • Set up the sales force organizational structure, which includes the various sales jobs and geographic territories. • Product and service related factors • Organization related factors • Marketing mix related factors
Planning of the selling factors: • External factors:
The speed of market change Reduction in the number of vendors per buyer Closer to customer relationships Changes in regulations and international practices
Other Factors like: – – – – – – –
The product The customers Territory Techniques of selling Promotional materials His/Her own organization Targets
Stages in the selling process:
Pre-sale preparation
Follow up action
Prospecting
Closing the Sale
Pre- approach before the interview
Handling Customer Objections
Approach to the customer
Sales Presentation
