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1
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2

Chapter 1
Introduction to Sales
Management
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1. Willingness to go to bat for the buyer within the
supplier firm
2. Thoroughness and follow through
3. Knowledge of the sales persons product line
4. Market knowledge and keeping the buyer posted
5. Applying his product and services to buyers needs
6. Knowledge of the buyers product line
7. Preparation for sales calls
8. Regularity of Sales calls
9. Diplomacy in dealing with operating departments
10. Technical education
Personal selling strategies
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Persuasion
Consultative
Selling
Partnership
Strategies
Business
Management
Negotiation


Evolution of personal selling
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Marketing concepts

1) Production concept
2) Product concept
3) Selling concept
4) Marketing concept
5) Societal concept
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Customer
Needs
Sales Customers
Emphasis on
Sellers Needs
Production
Production
Sales
Emphasis on
Customer
Needs
Societal marketing concept







(Sales Orientation)






(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 personal selling

Industrial selling
Retail selling
Services selling
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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 Business
Sales 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 Factory
Selling and
promoting
Profits 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
Marketer

Consumer
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 selling
Customer 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 2
Selling 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
C
o
n
c
e
r
n

f
o
r

t
h
e

c
u
s
t
o
m
e
r
s

(1,9) People Oriented
I am customers 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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Selling skills

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 process
contd.
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
Potential
opposition 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
Partys
behaviour
Others
reaction
Increased
group
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 winwin
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 process
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Problem
Definition
Techniques
Find out origin of the
problem
Explore the
problem
Present
desired state
analysis
Evaluate
problem
statement
Statement
and
Restatement
Dunkers
diagram
Problem definition techniques
1
2
3
5
4
6
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Dunkers 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 1
Solution 2 Solution 3
General Solution
Functional Solution
Specific Solution
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Perceived problems
Re Statement
Re Statement
Final problem Statement
Relax
Constraints
Make an
Opposite
Statement
Generalize
Statement restatement technique
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Components of a decision on the
future course of action
Situation analysis
Problem analysis
Past
What is the fault
Decision analysis
Potential problem
Analysis
Future
How to prevent future
faults?
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Decision on the best solution
Approval
Planning
Carry through
Follow up
Evaluation
I
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P
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M
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T
A
T
I
O
N
Solution 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
Sale
Follow 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
YesBut 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
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Forecasting market demand
It is the estimated rupee or unit sales for a specific future time
Period based on the companys 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
per
Unit
(B)
Qty
per
Unit
(A)
Qty per Unit (D)
Total
Market
demand
P1
P2
Q1
Q2
D
D1
D
D2
D D1
D
D2
Market demand curve
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Market demand function
QD = F (P, I, P
0
, T)
P- Price of the product
I- Consumer Income
T- Consumer preference
P
0
Price of other goods and
services
Q
D
= B + a
P
P + a
1
I + a
0
P
0
+ a
T
T
a
P,,
a
I,
a
0,
a
T
represents the one
unit change in quantity associated
with the variables.
Q
D
= B + a
P
P
Linear form of the demand
equation
B 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 organizations
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 the series
of decisions and actions taken by a business
organization in:

identifying the forecasting objectives
determining the independent and
dependent variables
developing a forecasting procedure
using the available data in the
selected method to estimate the sales in
future
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Develop forecasting
procedure
Forecasting process
contd.
Select forecasting
analysis method
Comprehend total
forecasting procedure
Collect, collate,
gather and analyze
data
Determine
independent and
dependent variables
Present all the
assumptions about
data
Forecast objectives
Evaluate performance
results against the
forecasts
Make and finalize
the forecast
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Qualitative methods
Expert opinion
Survey of buyers
expectation
Sales force
composite
Delphi
technique
History analogy
Quantitative methods
Test marketing
Nave method
Trend method
Moving average
Regression method
Exponential
smoothening
Popular methods in forecasting
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Observed sales
Forecasted sales
Time
Sales
Trend forecast of Sales
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Nave method
Sales (at the period t) = Sales
T+1
The following formula shows how to adjust the nave method
to account for a
change in rate of sales levels. The formula is stated this way:

Next Years Sales = This Years Sales X This Years Sales
Last Years Sales

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 110
1997 108
1998 116
1999 112
The average of the first three years will be:
102+105+114 321
----------- = -------- = 107
3 3
Similarly, for the last three years,
108 + 116 + 112 336
---------------------- = --------- = 112
3 3

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The 3-yearly moving average can be computed with the
following 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 mathematically
project the trend line to the forecasting period with the time
as the independent variable that influences the dependent
variable 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
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Exponential smoothing method
(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 moving
average of all past data
The method is used to forecast only one period in the
future
Exponential smoothing techniques vary in terms of how
they address trend, seasonality, cyclical and irregular
influences
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Exponential smoothing method
contd.
Next Years Sales = a (This Years Sales) + (1 a) (This Years
Forecast)

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 variable
is treated as independent variable and sales as the
dependent variable
sales managers look for variables that correlate with or
relate to sales
correlation analysis involves the determination of whether a
relation exists, and if it does, then measuring it, testing
whether it is significant, and establishing the cause and
effect relation

the degree of relationships between the variables is called
co-efficient of correlation
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Regression analysis

regression analysis is another form of correlational
technique

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 into
forecasting procedures
Population
Sales
Population
Sales
(Liner Relationship) (Curvilinear Relationship)
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the most commonly used market factor index
method 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 other
consumer items
BPI is also used to determine sales quota by
many multinational organizations
applications are limited in Indian
organizations 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 methods
contd.
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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 and
variability
the level of accuracy of the forecast
fundamental change indicators
Market factor indices methods
contd.
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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 a
forecast is called MAPE (Mean Absolute Percentage
Error)
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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63
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 sales
function
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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
- formal and coordinated task
- assigning territories
- establishing flows of communication and responsibilities
of sales groups and individuals to customers effectively
Line organization
Mr. Ratnakar Shetty
President / Owner
Mr. Chandrakant
VP (Sales)
Five sales people
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Consumer
market
Institutional
market
Corporate
market
National
Distributors
Direct to
Home
Direct
marketing
Distributors Bundling Gifting
Consumer
Regional
Distributors
Retailers
Consumers
Typical structure of a line organization

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69
Design by territory
VP Marketing
National Sales
Manager
Divisional Manager
(East)
Divisional Manager
(North)
Divisional Manager
(West)
Regional Sales
Manager
District Sales
Manager
Sales Staff
(City wise)
Regional Sales
Manager
District Sales
Manager
Sales Staff
(City wise)
Regional Sales
Manager
District Sales
Manager
Sales Staff
(City wise)
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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
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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)
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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
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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 Sales
Division
Western Sales
Division
Northern Sales
Division
Europe Division America Division Gulf Division
Product
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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

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Emerging organizational design
agency and distribution selling

shared sales force

telemarketing

TQM and team-based selling
Customer
Sales Marketing
Technical
Support
Manufacturing
Supplier selling team
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Number of sales people
determined by:
- territories vary in their demand structure for prospecting
- product mix demands
- levels and types of prospecting
- nature of the customer segments
Affordability method (based on sales budget)
Incremental method
Workload method
Number of sales people =
(Number of
existing
customers)
(Number
of
Potential
customers)
(Ideal
frequency of
calls)
(Length of
a call)
X X
X

Ideal selling time available for a salesperson
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Chapter 6

Management of Sales Territory
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78
Sales territory
a group of present and potential customers assigned to
an individual
sales person, a group of sales person, a branch, a dealer,
a distributor or a marketing organization at a given
period of time
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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 the
sales function
optimum utilization of sales time by sales people
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80
Designing sales territories
Select the basic geographic
control units
Decide on the criteria for
allocation
Decide on the starting point
Combine control units
adjacent to starting point
Compare territories on
allocation criteria and
conduct workload analysis
Assign 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
balance
workload
and potential
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Territory shapes
circle
wedge
Clover leaf
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Strategic Planning Matrix
Opportunity
Strategy
Opportunity
Strategy
Strategy
Strategy
Allocate 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 to
take advantage of the opportunity or
shift resources to other accounts.
Strong Weak
H
i
g
h
L
o
w
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New Territories..?

Use of Information Technology
IT enabled services
computer programmes
simulation techniques
Sales territories

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84
Management of Sales Quota
Chapter 7
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85
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 their
respective domains

A sales quota is the sales goal set for a product line,
company division, or sales representative. I t is
primarily a managerial device for defining and
stimulating the sales effort.. Kotler
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86
Principles 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 the
manager 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 often
demotivate and result in high turnover in the
organization
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flexible to the prevailing and emerging market
conditions
there should be a level of definiteness in the quota
set for a salesperson
it should be fixed either in terms of geographic
territory, on money value, or on the basis of units of
product(s)
a participatory quota setting procedure followed
jointly by the sales manager and sales people together
serves as a tool of motivation and leads to the
realization of the organizational sales goals
Principles..
contd.
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S M A R T
P
E
CI
FI
C
E
A
S
U
R
A
B
L
E
T
T
A
I
N
A
B
L
E
R
E
A
L
I
S
T
I
C
I
M
E
SPECIFIC
SBO
MBO in the Sales
domain?
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Organization of the sales job
Defining annual objectives
Procedure for setting sales quota
Conferencing with each sales person
I
n
d
i
v
i
d
u
a
l

G
o
a
l

s
e
t
t
i
n
g

f
o
r
m

Output
Name
Year
Your territory
Results expected
Pessimistic Realistic Optimistic Results
1. Volume per month
2. Expenses per month
3. Gross margin per month
4. Market share per month
5. Key account coverage per
month
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Types of sales quota
sale volume quota
sales budget quota
sale activity quota
combination quota
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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 for
probable entry of new products)
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Chapter 8

Recruitment and selection of
the sales force
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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
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Strategic position
analysis
Decide on the number of
people to hire
Identify best sources of
recruitment:
internal and external sources
Generate database of
candidates
Evaluate candidates
Select and induce
candidates to accept
positions
Socialize
Turnover
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
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Challenges in sales force
selection
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
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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
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Sales force recruitment
recruitment is an act of inducing qualified and
appropriate people to get interested in and apply
for a salespersons 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 campus
recruitments
- employment exchanges
- placement consultants
- walk in interviews
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- networking referrals
- web consultants
- responses to direct open advertisements
External sources contd...
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
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Socialization process
process of orienting a new salesperson to the
sales organization, territory, or division in which
he 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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Challenges in sales training
Will the training programme be effective in
solving a problem?
Will the investment in it be justified?
Will it produce the desired or intended results?
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Role of the trainer
The success of the training programme depends on
the ability, skill, and motivation of the sales trainer

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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 need assessment phase
Organizational level analysis
Task level analysis
Individual level analysis
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Training needs
Identification of specific problems
Anticipating impending and future problems
Management requests
Interviewing and observing the personnel on the
job
Performance appraisal
Questionnaire survey
Checklist
Attitude survey
Interpersonal skill test
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Designing and conduct phase
Location
Job Instruction Training (JIT)
Presentation options
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Types of training
Cross-functional training
Team training
Creativity training
Literacy training
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Training methods
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 support
Participative
Conferences
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Training methods contd..
Seminars
Discussions
Role play
Case study
Fishbowl
Workshops
Sensitivity training
Transaction analysis
In-tray exercises
Transcendental meditation
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Deciding a sales training programme
Aim
Content
Contents
Knowledge
Proficiencies
Location
Evaluation
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Process of socialization
Anticipatory socialization
Accommodation stage
Outcome stage
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Chapter 10

Sales Force Motivation
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Motive
Behaviour
Goal
Tension
reduction
Process of motivation
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Motives
Primary
General
Secondary

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Motivational drives
Principles
Security
Achievement
Approval
Loyalty
Advancement
Leadership
Human behaviour

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Theories of motivation
Content
Process
Reinforcement
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Content theories
Need hierarchy theory
Hertzbergs two factor theory
Alderfers ERG theory
McGregor Theory X and Y
Z theory of William Ouchy
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Physiological need
Security need
Social need
Esteem need
Self actualisation need
Maslows hierarchy of needs
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Process theories
Equity theories
Expectancy theories

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Reinforcement theories
Hulls drive theory
Skinners reinforcement theory
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Factors influencing the motivation of
the salesperson
Personal characteristics
Environmental conditions
Organizational policies
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Designing a motivational
programme
Programme objective
Motivational tools
Individual methods
Group methods
Communication
Auxiliary environment
Feedback
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Chapter 11

Sales Force Compensation
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Factors influencing the design of a
compensation plan
Financial stability
Size of the market
Nature of the product
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Types of compensation plans
Financial compensation
Non-financial compensation
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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
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Non-financial compensation
Promotions
Recognitions programmes
Fringe benefits
Expense accounts
Perks
Sales contests
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Steps in designing a
compensation 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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Chapter 12
Evaluation of the Sales Force
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Deciding on the criteria for
measuring performance
Deciding in the conduct of the
performance appraisal
Deciding on the evaluation of
individuals and teams
Comparison of actual
performance with standards
Deciding on the frequency of
the performance appraisal
The external variables and
their influences
Sales force performance appraisal process
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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
Sales force performance appraisal
process
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Conduct of performance and individual vs
team appraisal
Example of a Role result Matrix
Position Developing a new business
Servicing existing customers
Key account manager
Regional sales manager
Application engineer
Customer service staff
Technical support staff
Installation and quality engineer
Financial staff
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Chapter 13

Distribution channel
management - an introduction
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135
Role of distribution channels
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 each other and
reducing uncertainty
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How do distribution channels
contribute
Intermediaries can improve the efficiency of the
exchange process
Channel intermediaries adjust the discrepancy of
assortment through the performance of the sorting
process
Marketing intermediaries hang together in channel
arrangements to provide for the routinisation of
transactions
Channels facilitate the searching process
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Discrepancies in the process of
exchange
Spatial discrepancy

Temporal discrepancy

Need to break the bulk

Need to provide assortment
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The cost and control aspects of
intermediation
Direct Distribution Indirect distribution
Control
Cost
efficiency
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Distribution channel strategy
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

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Distribution channel
management (contd.)
Distribution channel management encompasses 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

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Distribution channel
management (contd.)
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 the distribution 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
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Channel Management 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
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Chapter 14

Designing customer-oriented
marketing channels
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Channel Design
The channel design is normally meant to give 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 and also
Clear cut guidelines for the major activities to be
performed during the normal functioning of the
channel.
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What are the service outputs
Waiting time

Breaking the bulk

Spatial convenience

Assortment
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Distribution channel design
To consume
a product
Service outputs
have to be delivered
Channels
Participates in
channel flows
Activities have
to be performed
Thus performs activities
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Example of a service output delivered
template
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 every
3 km radius excluding of course thinly
populated areas
3. Waiting time Not more than 2 days for any model
4. Assortment Other consumer goods items including that
of other competitors are available at all the
outlets where the products are otherwise
Available
5. Installation support Available
6. After sales support Free for first two years, but available on
payment afterwards. Also available at every
city from where the product was bought.
7. Consumer financing Available
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Flow Direct
contribution
Indirect
contribution
Other
contribution
Physical
Possession
Spatial convenience,
bulk breaking,
waiting time
Assortment
Ownership Spatial convenience
Promotion Spatial convenience Is a service output
in itself
Negotiation Spatial convenience,
bulk breaking
Assortment
Risk taking Waiting time, bulk
breaking, spatial
convenience
Financing Spatial convenience,
waiting time, bulk
breaking
Assortment
Ordering Bulk breaking,
spatial convenience,
waiting time
Payment Bulk breaking,
spatial convenience,
waiting time
Channel flows and contribution to
service outputs
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Channel design effort decisions
The service output levels
The flows or activities that are associated
with the achievement of the service output
levels
The type of entity who would be entrusted
with the performance of each of these
flows
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Parameters for comparing
channel designs
Efficiency
Effectiveness
Equity
Scalability
Flexibility
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The channel establishment plan
(contd.)
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 and requirements of the target market with
regard to the 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
objectives
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Plan.. Contd.
Details about the various channel constituents who will
be performing these tasks
The cost of performing the activities
The designated roles and responsibilities of the channel
constituents
The proposed remuneration for performing these roles
and 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 15

Customer-oriented
logistics management
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154
Logistics strategy
Cost reduction

Capital reduction

Service improvement
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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 Management
Inventory levels
Deployment of inventories
Control methods
Transportation decisions
Modes of transport
Carrier routing/scheduling
Shipment size /consolidation
Customer
Service
goals
Logistics Planning
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Direct shipment

Warehousing

Cross-docking
Generic types of outbound logistics strategies
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Movement

Storage

Information transfer
Functions of warehousing operations
Receiving
Transferring
Order picking/selection
Shipping

Stock keeping locations
Inbound and outbound
shipments
Facility space utilization
Order fulfillment data
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Total cost
Inventory cost
Transportation
cost
Warehousing
cost
Number of warehouses
Total
cost
Relationship between logistics, cost,
and number of warehouses
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Why Inventories?
To improve customer service
To smoothen the operations of the logistics
system
To reduces costs
Inventory procurement costs
Inventory carrying costs
Stock out costs
Cost associated with inventory
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Components of inventory carrying cost
Inventory
carrying cost
Capital cost
Inventory
service costs
Storage space
costs
Inventory
carrying cost
Inventory
Investments
Insurance and
Taxes
Warehouse rent,
maintenance
charges
Obsolescence
Damage&
Pilferage
Shrinkage
Relocation
costs
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Retailer
Stockist
Supplier
Retailer Retailer Retailer Retailer
Stockist
echelon
lead time
Stockist
echelon
Inventory
Echelon inventory
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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
Factors affecting transportation cost
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163

Chapter 16

Managing Channel Member
Behaviour
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Channel relationships
Perceptions of organisational power
Dependence
Control
Trust
Commitment
Co-operation
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Discrete relational exchange
continuum
Arms length relationship
Relational exchange relationship
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Channel control
PayOff
Function
Tolerance
Function
Supplier authority
Distributors
profit earned
Zone of acceptance
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Role of persuasion, authority, and coercion
in channel control
Authority persuasion
Coercion
Pay off
function
A
B
C
Channel members
profit
Tolerance
function
control
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Components of channel offering
Financial returns
Quality products
Competitive price
Reliable delivery
National reputation
Promotional
support
Training
Market
research
Company
policies
Technical
assistance
Responsiveness
systems
Manufacturer sales
force incentives
Distributor
sales force
incentives
Distributor firm
incentives
Capability
building
programmes
Channel core
elements
Incentive
programme
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Influence strategy types
(contd.)
Influence
Strategy
group
Types of Influence
strategy
Explanation
Indirect
influence
strategies
Information exchange
Information control
Modeling
Where information on general business
issues and the channel program is
merely exchanged with channel
member personnel.
Direct
Unmediated
Strategies
Recommendation
Warning
Positive normative
Negative normative.
In this type of strategy the
consequences of the acceptance or
rejection of the channel programme or
its implementation are stressed, but
these consequences are based on a
response from the market environment,
not on the mediation of the channel
Principal.
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(contd.) Influence strategy types
Reward and
Punishment
Strategies
Economic reward
Non-economic reward
Economic punishment
Non-economic punishment
In this type of strategy rewards
and punishments are directly
given to channel members

Direct
unweighted
strategy
Direct request This strategy involves making a
direct request to the channel
member where the Principal
mainly communicates desires or
wishes concerning the channel
members acceptance of the
channel program.
Direct
Mediated
strategies
Personal plea
Promise
Threat and
Legalistic reference.
In this type of strategy specific
action is requested;
consequences of acceptance or
rejection are stressed and are
based on the mediation of the
channel principal.
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Influence situations in channel
relationship
Reinforcement
process
Behavioural
reinforcement
Moderate
rationalization
Attitude change
Radical
rationalization
Attitude change
Inducement process
Behavioural change
Moderate
confrontation
Behavioural and
attitudinal change
Radical
confrontation
Behavioural and
attitudinal change

Positive Negative
Neutral
+ ve
- ve
Attitude towards the channel progranmme
Behaviour
towards the
channel
programme
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Stages in channel conflict
Attitudinal
sources
of conflict
Structural
sources of
conflict
Conflict
resolution
Cognitive/
Affective
conflict
Manifest
conflict
Conflict
outcomes
CAUSES OF CONFLICTS
Attitudinal Causes
Structural causes
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Conflict management methods at different
stages of conflict
Latent conflict
Felt conflict
Manifest conflict
Institutional approaches
Joint membership of associations
Exchange of executives
Cooptation
Dealer councils

Third party mechanisms
Mediation
arbitration
Negotiation
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Negotiation strategies
Accommodative Collaborative/problem
solving
Compromise
Avoidance Competitive /aggressive
Concern
for the
others
interest
HIGH
LOW
LOW HIGH
Concern for
own interest
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Chapter 17

Retail Management
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Merchandise characteristic
Customer service characteristic
Trading format
Customer communication
Retail marketing mix
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Retail marketing mix (contd.)
(i) the merchandise in the store affect the volume of
sales as it is primarily the merchandise that attracts
customers
(ii) since profitability is based on the turnover rate of
the inventory, the choice of merchandise and the
quantity of merchandise of each category stocked
affects the overall profitability of the establishment
How merchandising functions affects profitability?
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Factors affecting choice of retail strategy
Companys strategic objectives in terms of the level
of profitability desired
Space availability
Preferences of target customers
Relationships with manufacturers
Availability of trained salespeople etc.
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Availability of stock and stock holding
cost
Stock
holding
cost
Percentage of availability
80%
90%
100%
+20%
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Financial method of merchandising

Cost method

Retail method
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Merchandise planning process
Plan reductions
Develop a stock plan
Plan merchandise needs
Calculated planned Purchase
Plan mark ups based on profitability targets
Develop a sales plan
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Customer services

Product services

Service products

Support activities
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Customer performance measuring
techniques
Frequency or browsing visits
Frequency of purchase visits
Average transaction per visit
Items purchased
Range purchased
Customer service facilities used
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Purchase process for service
requirement identification
Pre-purchase phase
Purchase phase
Post purchase phase
Purchase process
Service requirements
Search
Comparison
Product related
Augmentation of the product
Transaction related
Delivery
Installation
Use extension
Repeat visits
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Attitude towards trading format and
store environment
Pre-purchase
Stage
During
Purchase
Post-purchase
Stage
Task Oriented
Pleasure Oriented
Shopping Attitudes
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 Excitement
Visual Merchandising
In-store Facilities
Product Services Centers
Product Displays
Customer Advice Areas
Theme Displays
Customer Advice Areas
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186
Chapter 18

Managing the International
Channels of Distribution
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187
Factors affecting international trade
Differences in customer expectations across
countries
Differences in channel structure and trade
practices
Differences in governmental policies and
regulations
Differences in the quality of physical
infrastructure
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Market entry strategy
Indirect exporting
Direct exporting
Licensing
Franchising
Contract manufacturing
Strategic alliance
Joint venture
Wholly owned subsidiary
C
O
N
T
R
O
L
R
I
S
K
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Success factors in manf. overseas
distributor relationships
Distribution
inhibitors
Outcomes Remedies
Separate ownership Divided loyalties
Seller buyer atmosphere
Unclear future intentions
Offering good
incentives, helpful
support schemes, frank
discussions, and high
levels of interactions
Geographic,
economic,
and cultural gaps
Communication blocks
Negative attitudes
Problems in physical
distribution
Making judicious ways
of two way visits,
establishing a well
managed
communication
programme
Differences in the
legal and regulatory
structures
Vertical trading
restrictions
Dismissal difficulties
Full compliance with
law,drafting a strong
distributor agent.
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International logistics management
International distribution system
International suppliers
Offshore manufacturing
Fully integrated global supply chain
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Export procedure
Exporter Importer
Bank in exporters
country
Importers bank
Manufacturing
Freight
forwarder
Transportation and
Documentation
formalities secured
Import
warehouse
Customs
broker
Customs
Ship
1
2
3
4
5
6
5
8
7
9
9
Contd.
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State
Process
1 The Sale
Importer makes enquiry from potential supplier
Exporter sends catalogue and price list
Importer requests samples
Exporter sends Proforma invoice
Importer sends purchase order
2 Importer arranges bank financing.
3 Letter of credit send by importers bank
4 Exporters bank notifies that the LOC has been received
5 Exporter produces or acquires goods
6 Exporter arranges transformation and documentation and space
reserved 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 the
ware house
Contd.
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International logistics
intermediaries
Freight forwarder
a) To forward an export shipment from the point of
origin to the ultimate destination and
b) To deal with transport carriers to get space for the
shipment.
Customs broker
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Exporting documents
Letter of credit
Bill of lading
Commercial invoice
Commercial invoice
Consular invoice
Certificate of origin
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195
Thank you