Sales & Distribution Management

Module 1
Sales & Sales Force Management

Dr. Chithambar Gupta V

Professor
School of Management

1
 Learning Objectives
• To understand evolution, nature and importance of sales
management
• To know role and skills of modern sales managers
• To understand types of sales managers
• To learn objectives, strategies and tactics of sales management
• To know emerging trends in sales management
 Importance of Personal Selling and Sales
Management

• The only function / department in a company that generates

revenue / income
• The financial results of a firm depend on the performance of the
sales department / management
• Many salespeople are among the best paid people in business
• It is one of the fastest and surest routes to the top management
 Importance of Personal Selling and Sales
Management
• One of the most exciting, financially rewarding & challenging
careers.
• More positions in sales than any other professional
occupations.
• More CEO’s are from sales & Marketing background than from
any other functional areas.
• Hardly boring, because it deals with people, whose wants or
needs are ever-changing.
• In bad economic situation, a good salesperson is the last to be
fired.
 Evolution, Nature and Importance of Sales
Management
Evolution of Sales Management
• Situation before industrial revolution in U.K. (1760AD)
• Situation after industrial revolutions in U.K., and U.S.A.
• Marketing function splits into sales and other support
functions like market research, advertising, physical
distribution
 What is Sales Management?
• One definition: “The management of the personal selling part of a
company’s marketing function.”

• Another definition: “The process of planning, directing, and

controlling of personal selling, including recruiting, selecting,
equipping, assigning, supervising, paying, and motivating the
personal sales force.
Nature of Sales Management
• Its integration with marketing management

Head-
Marketing

Manager- Manager – Manager – Manager – Manager –

Promotion Market Sales Market Customer
Research Logistics Service

7
Sales Support Functions
• Promotion: Consists of Advertising, sales
promotion, public relations, publicity & direct
marketing
• Marketing Research: Collecting & interpreting
information on customers, competitors, products,
markets & so on
• Marketing Logistics: Physical distribution of
finished goods including warehousing, inventory,
transportation & order processing
Sales Support Functions
• Customer Service: Pre-sales & post-sales service as well as
delivery service to existing & prospective customers
• Co-ordination: Co-ordinate between customers, company’s sales
people & production or operations, by employing inside sales
people.
Relationship Selling
• Buyers and salespeople, who do business together have some type of
business (or working) relationships.
• Their relationships have a range or spectrum:

Transactional Value – added Collaborative /

Relationship / Relationship / Partnering
Selling Selling Relationship /
Selling
Relationship Selling
• Relationship Marketing / Selling: The process by which a firm
builds a long-term relationship with its customer for mutual
benefits, in order to create a customer loyalty.
• In Relationship selling salespeople concentrate their team selling
efforts on building trust and service on a few carefully selected
customers over a long period with a aim of becoming a preferred
sole supplier.
Relationship Selling
• Transactional Relationship / Selling: One type of relationship
marketing in which salespeople make one-time sale to price-
oriented customers, who are not contacted again.
• Value-added Relationship / Selling: Understanding current &
future needs of customers and meeting those needs better than
competitors with value-added solutions to their problems.
Relationship Selling
• Partnership / Collaborative Relationship: A type of relationship
marketing in which a selling organization works continuously with
its large customer to improve the customer performance in terms
of operations, sales and profit.
 Types of selling

• Order taker sales people

• Order creators
• Order getters
 Types of Selling
Inside Order Taker
Order
Takers Delivery Sales
People

Outside Order Takers

Selling Order Missionary Sales

Function Creators People

New Business
Sales People

Front Line Organizational

Sales People Sales People

Order Getters Consumer

Sales People

Sales Technical Support

Support sales People
Sales
people Merchandisers
 • Varying Sales Responsibilities / Positions / Jobs
Sales Position Brief Description Examples
• Delivery salesperson • Delivery of products to business • Milk, newspapers to households
customers or households.
• Also takes orders. • Soft drinks, bread to retail stores.

• Order taker (Response selling) • Inside order taker • Behind counter in a garment
shop
• Telemarketing salesperson takes • Pharma products’ orders from
orders over telephone nursing homes
• Outside order taker. Also • Food, clothing products’ orders
performs other tasks from retailers

• Sales support • Provide information, build • Medical reps. in pharma industry

• Missionary selling goodwill, introduce new products
• Technical selling • Technical information, assistance • Steel, Chemical industries

• Order-getter (Creative, Problem- • Getting orders from existing and • Automobiles, refrigerators,
solving, Consultative selling) new household consumers insurance policies
• Getting orders from business • Software and business solutions
customers, by solving their
business and technology problems
 Roles and Skills of a Modern Sales Manager

Some of the important roles of the modern sales

manager are:
• A member of the strategic management team
• A member of the corporate team to achieve objectives
• A team leader, working with salespeople
• Managing multiple sales / marketing channels
• Using latest technologies (like CRM) to build superior
buyer-seller relationships
• Continually updating information on changes in
marketing environment
Skills of a Successful Sales Manager
• People skills include abilities to motivate, lead, communicate,
coordinate, team-oriented relationship, and mentoring
• Managing skills consist of planning, organizing, controlling and
decision making
• Technical skills include training, selling, negotiating, problem-
solving, and use of computers
 Selling skills

Effective
Problem
communication
solving skills
skills

Selling Skills

Listening Skills

Negotiation
and bargaining
skills

Conflict management and

resolution skills
Communication process
contd.
Managing body language:
 Personal Appearance
 Posture
 Gestures
 Facial Expressions
 Eye Contact
 Space Distancing
Process of listening
Attendance

Interpretation

Remembrance

Evaluations

Response Action
Types of Sales Managers / Levels of Sales
Management Positions
CEO /
President

V. P. Sales / Top-Level Sales Managers /

V. P. Marketing Leaders

National Sales Manager

Regional / Zonal / Divisional

Middle-Level Sales Managers
Sales Managers

District / Branch / Area Sales Managers First / Lower Level Sales Managers

Sales Trainee / Sales Person / Sales Representative

Sales Objectives, Strategies and Tactics
The main components of planning in a company are
objectives, strategies and tactics. Their relationship is
shown below

Decide / Set Evolve Tactics /

Develop Strategies Action Plans
Objectives

E.G. A company wants to increase sales of electric

motors by 15 percent, as one of the sales
objectives. (see next slide)
Sales Objectives, Strategies and Tactics
• Objectives are statements of intent
• Goals: Quantified to specific and measurable targets with respect
to time periods.
• Strategies include ways of achieving the objectives
• Tactics (Action Plans) are the activities or the actions that should
be carried out in order to implement the strategy.
To illustrate the relationship between sales objectives, strategies and tactics, consider:
Sales Goals / Marketing Sales and Distribution Strategy Tactics /
Objectives Strategy Action plans

 Increase sales  Enter export  Identify the countries  Marketing / sales head to get
volume by 15 markets relevant information
percent  Decide distribution channels  Negotiate and sign agreements
in 3-5 months with
intermediaries

 Penetrate  Review and improve salesforce  Add channels and members

existing training, motivation and  Train salespeople in deficient
domestic compensation areas
markets  Use effective and efficient  Train field salesmanagers in
channels effective supervision
 Link sales volume quotas to the
incentive scheme of the
compensation plan

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 Emerging Trends in Sales Management
• Global perspective
• Challenges: Domestic, MNC, different culture, languages, requirements,
negotiation
• Revolution in technology
• Digital, internet, e-commerce
• Supply-chain management, video-conferencing, tele-commuting, PDAs.
• Customers – variety, compare prices, customization
• Customer relationship management (CRM)
• Relationship Marketing + IT = CRM
• CRM Software Packages
 Emerging Trends in Sales Management
• Sales force diversity
• Demographic characteristics of sales people
• Women, educated, less educated, senior sales people
• Team selling approach
• Companies often use multiple-person sales teams to deal with multiple-person buying
centres (or purchase committees) of their customers.
• The multiple individuals in the sales team are from different functional areas, such as
marketing, sales, manufacturing, design and physical distribution.
• For technically complex products / services like S/W, H/W, R & D etc.
• Designing an effective compensation plan can be a challenging task.
 Emerging Trends in Sales Management
• Managing multi-channels
• Organisations use two or more distribution channels to reach one or more customer
segments
• May also lead to conflict & control problems (may compete for same customer)
• Ethical and social issues
• Sales managers have legal, social & ethical responsibilities
• E.g: Bribery, Deception (misleading), high-pressure sales tactics.
• Sales professionalism
• A customer-oriented approach that uses truthful and straight-forward ways to satisfy the
long-term needs of both the customer and the selling firm.
 Emerging Trends in Sales Management
• Sales professionalism
• A customer-oriented approach that uses truthful and straight-
forward ways to satisfy the long-term needs of both the customer and
the selling firm.
• Top salespeople are largely made, not merely born
• Combination of natural ability & acquired skills : reliabilty,
credibility, professionalism, integrity and product knowledge
• Knowledge, skills and right attitudes through intensive training and
practice.
 Psychology in Selling

Stimulus Buyer’s decision Response

(Sales Presentation) making process (buy or no buy)

• If a sales person makes a presentation, the prospect

may or may not buy
• The above “buyer behaviour model” does not tell us
the reasons of buying or not buying
• To understand the psychological aspects of selling
or buying, salespeople should study consumer or
buyer behaviour, including buying process and
situations
Stages in Consumer Decision Making and Evaluation
of Products / Services
Categories in Consumer Decision-Making and Evaluation of
Products / Services
Information Evaluation of
Evaluation of
Search Alternatives

Alternatives
Evoked set
 Use of personal sources
 Perceived risk Emotion
Evokedand
set mood
 Emotion and mood

Purchase and Post-Purchase

Consumption Evaluation
 Service provision as  Attribution of dissatisfaction
drama
 Service roles and scripts  Innovation diffusion
 Compatibility of customers  Brand loyalty
Categories in Consumer Decision-Making and Evaluation of
Services

Information Evaluation of
Evaluation of
Search Alternatives

Alternatives
Evoked set
 Use of personal sources
 Perceived risk Emotion
Evokedand
set mood
 Emotion and mood

Culture
 Values and attitudes
 Manners and customs
 Material culture
 Aesthetics
 Educational and social
institutions

Purchase and Post-Purchase

Consumption Evaluation
 Service provision as  Attribution of dissatisfaction
drama
 Service roles and scripts  Innovation diffusion
 Compatibility of customers  Brand loyalty
Buying Process of Consumers and Business Buyers

Five – stage model for household Eight – stage model for business
customers buyers
1. Problem / need recognition 1. Problem / need recognition
2. Characteristics and quantity
determination
3. Specification development
2. Information search / collection 4. Supplier search and qualification
5. Obtain and analyse supplier
proposals
3. Evaluate alternatives 6. Evaluation and selection of
suppliers
4. Purchase decision 7. Selection of purchase order routine
5. Post – purchase behaviour 8. Performance feedback and post-
purchase evaluation
Buying Situations Faced By

Household customers Business Buyers

• Routine decision-making • New task / New purchase

• Limited decision-making • Modified rebuy / change in

supplier
• Extensive decision-making • Straight rebuy / Repeat purchase

• Buying process and situations differ for household

consumers and business buyers.
• Consumers / Buyers may skip or reverse some stages in
buying process. E.G. A consumer buying toothpaste
Knowledge of Sales and Sales-related Marketing Policies

Sales Knowledge Marketing Policies

• Company knowledge • Pricing and Payment policies
• Product knowledge • Product policies
• Customer knowledge • Distribution policies
• Competitor knowledge • Promotional policies

Major reasons for giving above information / knowledge

through training programmes to salespeople are:
• increase their self-confidence
• Meet customers’ expectations
• Increase sales
• Overcome competition
 Types of personal selling

• Industrial selling
• Retail selling
• Services selling
 The Sales Process
As a part of selling activities, if salespeople follow the steps or phases
shown below, their chances of success are far better.

Prospecting & Preapproach / Presentation &

Qualifying Approach
Precall planning Demonstration

Follow-up & Trail close / Overcoming

Service Closing the sale Objections

• The sequence of above steps may change to meet the sales situation in
hand.
• Some of the above steps may not be applicable for selling to the trade
• We now discuss application of above steps to industrial selling
Prospecting
• It is identifying or finding prospects i.e. prospective or potential
customers.
• Methods of prospecting or sales lead generation are: (1) referrals
from existing customers, (2) company sources (website, ads.,
tradeshow, teleprospecting), (3) external sources (suppliers,
intermediaries, trade associations), (4) salespersons’ networking, (5)
industrial directories, (6) cold canvassing

Qualifying
• Companies qualify sales leads by contacting them by mail or phone to
find their interests (or needs) and financial capacity.
• Leads are categorized as: Hot, Warm, and Cool
Process of prospecting

Identify and define prospects

Search for sources of potential

accounts

Qualify the prospects from the

suspects
 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
 Prospecting
Successful prospecting

50 potential prospects 50 potential prospects

15 Qualified prospects 25 Qualified prospects
6 Interviews 17 Interviews
1 sale 7 sales

No Yes
Successful prospecting
 Preapproach
• Information gathering about the prospect.
Sources of information: the Internet, industrial
directories, government publications,
intermediaries, etc.
• Precall planning
• Setting call objectives
• Tentative planning of sales strategy: which products,
features and benefits may meet the customer needs
 Approach
• Make an appointment to meet the prospect
• Make favourable first impression
• Select an approach technique:
• Introductory
• Customer benefit
• Product
• Question
• Praise
• The approach takes a few minutes of a call, but it can
make or break a sale
 Presentation and Demonstration
There are four components:
• Understanding the buyer’s needs
• Knowing sales presentation methods / strategies
• Developing an effective presentation
• Using demonstration as a tool for selling
We will examine each of the above points
 Understanding the buyer’s needs
• Firms and consumers buy products / services to
satisfy needs
• To understand buyer’s needs, ask questions and
listen
• In business situations, problem identification and
impact questions are important
E.G.
• Have you experienced any problems on quality and
delivery from the existing supplies?
• What impact the quality and delivery problems will
have on your costs and customer satisfaction?
Knowing Sales Presentation Methods/Strategies
Firms have developed different methods / styles / strategies of sales
presentation
• Stimulus response method / canned approach.
• It is a memorised sales talk or a prepared sales presentation.
• The sales person talks without knowing the prospect’s needs.
E.G. Used by tele-marketing people
• Formula method / formulated approach.
• It is also based on stimulus response thinking that all prospects
are similar.
• The salesperson uses a standard formula – AIDA (attention,
interest, desire, and action).
• It is used if time is short and prospects are similar.
• Shortcomings are: prospects’ needs are not uncovered and uses
same standard formula for different prospects.
 Sales Presentation Methods (Continued)

• Need – satisfaction method

• Interactive sales presentation
• First find prospect’s needs, by asking questions and
listening
• Use FAB approach: Features, Advantages, Benefits
• Effective method, as it focuses on customers
• Consultative selling method / Problem-solving
approach
• Salespeople use cross-functional expertise
• Firms adopt team selling approach
• It is used by software / consulting firms
 Developing an Effective Presentation
Some of the guidelines are:
• Plan the sales call
• Adopt presentation to the situation and person
• Communicate the benefits of the purchase
• Present relevant and limited information at a time
• Use the prospect’s language
• Make the presentation convincing – give evidence
• Use technology like multi-media presentation
 Using Demonstration
• Sales presentation can be improved by
demonstration
• Demonstration is one of the important selling
tools EGs: Test drive of cars; demonstration of
industrial products in use
• Benefits of using demonstration for selling are:
• Buyers’ objections are cleared
• Improves the buyer’s purchasing interest
• Helps to find specific benefits of the prospect
• The prospect can experience the benefit
Overcoming Sales Objections / Resistances
• Objections take place during presentations / when
the order is asked
• Two types of sales objections:
• Psychological / hidden
• Logical (real or practical)
• Methods for handling and overcoming
objections: (a) ask questions, (b) turn an objection
into a benefit, (c) deny objections tactfully, (d)
third-party certificate, (e) compensation
 Turn Objection into a benefit
Value Example: Caterpillar
• Utility: The attribute Tractor is $100,000 vs.
that makes it capable of Market $90,000
want satisfaction
• Value: The worth in $90,000 if equal
terms of other products 7,000 extra durable
6,000 reliability
• Price: The monetary 5,000 service
medium of exchange. 2,000 warranty
$110,000 in benefits -
$10,000 discount!
 Trial close and Closing the sale
• Trial close checks the attitude or opinion of the
prospect, before closing the sale (or asking for the
order)
• If the response to trial close question is favourable,
then the salesperson should close the sale
• Some of the techniques used for closing the sale
are: (a) alternative-choice, (b) minor points, (c)
assumptive, (d) summary-of-benefits, (e) T-
account, (f) special-offer, (g) probability, and (h)
negotiation
 Follow-up and Service

• Necessary for customer satisfaction

• Successful salespeople follow-up in different
ways: For example,
• Check order details
• Follow through delivery schedule
• Visit when the product is delivered
• Build long-term relationship
• Arrange warranty service
 Negotiation
• Salespeople, particularly in business to business selling,
need negotiating skills
• When to negotiate?
(a) When the buyer puts certain conditions for buying to the
seller, (b) When agreement between the buyer and the
seller is needed on several factors, (c) When the product is
customised, (d) When the final price is to be decided
• How to prepare for negotiation?
(a) planning, (b) building relationship, (c) purpose
• Styles of negotiation
(a) I win, you lose, (b) Both of us win (or win-win style), (c)
You win, I lose, and (d) Both of us lose
 Key Learnings
• For understanding psychology in selling, study consumer
or buyer behaviour, buying process and situations
• Salespeople are given knowledge of sales and relevant
marketing policies in order to increase their self-
confidence and sales, and meet customers’ expectations
• Typical steps in the sales process include prospecting and
qualifying, preapproach, approach, presentation and
demonstration, overcoming objections, trial close / closing
the sale, follow-up and service
• Salespeople should know when to negotiate, how to
prepare for negotiation and which style of negotiation to
use
 Concepts of Sales Organisation
• An organisation structure defines relationship
among the jobs, and amongst the people, in a
company.
• The aim is to arrange the activities or jobs in such a
manner that the people involved can perform
effectively and efficiently and act together rather
than individually.
 Concepts of Sales Organisation
• A sales organisation assists the sales manager to
carry out needed tasks efficiently and effectively to
achieve results
• The basic concepts of the sales organisation are:
• Degree of centralisation
• Degree of specialisation
• Line or staff positions
• Market orientation
• Effective co-ordination
• Span of control
Line or staff positions
• Sales management positions are grouped into line or staff
• Line positions have line authority, which means people in
management positions have formal authority or power to direct &
control immediate subordinates
• Line sales managers have responsibility & authority to direct &
control subordinates reporting to them
Line or staff positions
• Staff management positions have staff authority, which means
advising & recommending roles in their respective areas of
specialisation or expertise
• Staff managers have the role of assisting line sales managers
• They do not have the authority to issue directives to sales people,
who report to line sales managers
 Basic Types of Sales Organisations
Sales organisations are generally classified into four
basic types:
• Line Organisation
• Line and staff organisation
• Functional organisation
• Horizontal organisation
We shall discuss main characteristics, advantages,
and disadvantages of each type of sales organisation
 Line Organisation
Head
Marketing

Sales
Manager

Area Sales Area Sales

Area Sales Area Sales
Manager3 Manager4
Manager1 Manager2

salespeople salespeople salespeople salespeople

Characteristics: All managers have line authority to direct and control subordinates. Used in
small firms / departments
Advantages: Simple organisation, clear authority, quick decisions, low cost
Disadvantages: No support to line managers from subordinates who have specialised
knowledge / skills. Less time for planning / analysis
 Line and Staff Organisation
Head-Marketing

Marketing Research Promotional Customer Service

Sales Manager
Manager Manager Manager

Area Sales Area Sales Area Sales

Manager-1 Manager-1 Manager-1

Salespeople Salespeople Salespeople

Characteristics: Specialist staff managers are available for senior marketing / sales managers. Staff managers’ role is to
assist / advise line managers. Used in medium and large size organisations
Advantages: Better marketing decisions, superior sales performance
Disadvantages: High cost and coordination, slower decision making, conflict may arise if staff managers’ role is not clear
 Functional Organisation
Head-Marketing

Marketing Research Promotional Customer Service

Sales Manager
Manager Manager Manager

Area Sales Manager #4

Salespeople

Characteristics: Each functional specialist has line responsibility over salespeople. Used by a large
firm with many products / market segments, minimising line authority to functional managers
Advantages: Qualified specialists guide salesforce, simple to administer
Disadvantage: confusion due to more managers giving orders to salesforce
 Horizontal Organisation
Operations Team:
Research & Design Team: •Production / Operations
•Customer Research •Quality Assurance
•Product / Service Design •Systems Engineering

Planning Team:
•Strategic Planning
•Accounts, Finance
•HR, Administration
•Chief Operation Officer

Customer Support Team: Customer Satisfaction

•Information Team:
•Service •Sales & Marketing
•Training •Pricing, Promotion
•Channels, Logistics

Characteristics: Removes management levels & departmental boundaries. Except planning team,
all others are members of cross-functional teams. Used by firms having partnering relationships
with customers.
Advantages: Reduction in supervision, unnecessary tasks, & cost; Improved efficiency and
customer responses.
Specialisation within Sales Organisation
• Needed to increase effectiveness of salesforce
• Done by expanding basic sales organisation
• Basis of specialisation
• Geography
• Type of product
• Market
• Combination of above
• Criteria for selection – (1) nature of product, (2)
salesforce abilities, (3) demands of selling job, (4)
customer and market facts
 Geographic Specialisation
Head-Marketing

Marketing Research General Sales Customer Service

Manager Manager Promotion Manager
Manager

Regional Sales Regional Sales Regional Sales Regional Sales

Manager-North Manager-East Manager-West Manager-South

Salespeople Salespeople Salespeople Salespeople

Characteristics: salespeople, assigned geographic areas, are responsible for all selling activities to all customers within
assigned areas. Branch sales managers adjust marketing plan to local needs
Advantages: Better market coverage and customer service, more control over salesforce, quick response to local
conditions & competition
Disadvantages: Limited specialisation of marketing tasks. Hence, it is combined with product / market sales organisation
 Product Specialisation
• Used when the company has many products and / or brands
• Two types of product specialisation
(x). Sales organisation with product specialised salesforce
(y). Sales organisation with product managers as staff specialists
Head-Marketing

Marketing Research General Promotion Sales Training

Manager Sales Manager Manager Manager

Area Sales Managers – Area Sales Managers –

Product Group ‘A’ Product Group ‘B’

Salespeople – Salespeople –
Product Gr. ‘A’ Product Gr. ‘B’

Fig. ‘x’ Sales Organisation with product specialised salesforce

 Product Specialisation (Continued)
Head-Marketing

Marketing Research Promotion General Product Manager Product Manager

Manager Manager Sales Manager Product Gr. ‘A’ Product Gr. ‘B’

Area Sales
Managers

Salespeople

Fig. ‘y’ Sales Organisation with Product Managers as Staff Specialists

In fig. ‘x’: Characteristics: Salespeople in each product group sell only the products in
that group
Advantage: Each product gets specialised attention from the salesforce
Disadvantage: Sometimes, more salespeople contact the same customer, resulting in
customer dissatisfaction and higher cost
In fig. ‘y’: Characteristics: Each product manager plans and implements marketing plan,
for a product group
Advantage: Corrects the problem of duplication calls on a customer by salespeople
Disadvantage: Lack of product specialisation by salespeople
 Market Specialisation
General Sales
Manager

Sales Manager- Sales Manager- Sales Manager-

Sales Manager-
International- Government Consumer Markets
Commercial
Markets

Area Sales Mgrs Area Sales Manager- Area Sales Manager- Area Sales Mgrs-
International Commercial Government Consumer Markets

Sales Executives Salespeople Salespeople Salespeople

• Characteristics: Desirable when customers are classified by type, user industry,

or channel. Salespeople carry out all activities for all products only for specific
customer groups

• Advantages: Meets needs of specific customer groups, implements customer-

centred philosophy of the company

• Disadvantages: Geographic duplication, high cost

 Combination Sales Organisation
Director – Sales
& Marketing

General Manager General Manager General Manager General Manager

Sales - North Sales - East Sales - West Sales - South

Regional Sales Regional Sales Regional Sales

Mgr. – Govt. Mgr. - Commercial Mgr. - Dealers

Salespeople Salespeople Salespeople

• Characteristics: Many firms use some combination of specialisation

organisations, called hybrid or combination sales organisation, with a
view to minimise disadvantages and maximise advantages of
specialisation organisations
• Figure above shows combination of geographic and market
specialisations