Sales and Distribution

Management

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Third Edition

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i ty
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Tapan K. Panda
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Former Dean
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Jindal Global Business School (JGBS)

Sonipat, Haryana
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Sunil Sahadev
Professor
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University of Salford, UK
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Sales and Distribution Management Title.indd 1 04-06-2019 16:08:12

© Oxford University Press India. All rights reserved.

SDM_Book.indb 1 14/06/19 5:13 PM

 3
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Oxford University Press in the UK and in certain other countries.

Published in India by
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© Oxford University Press 2005, 2012, 2019

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The moral rights of the author/s have been asserted.

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First Edition published in 2005
Third Edition published in 2019

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All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
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by law, by licence, or under terms agreed with the appropriate reprographics
rights organization. Enquiries concerning reproduction outside the scope of the
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above should be sent to the Rights Department, Oxford University Press, at the
address above.
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You must not circulate this work in any other form

and you must impose this same condition on any acquirer.
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ISBN-13: 978-0-19-949904-5
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ISBN-10: 0-19-949904-7

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by Ideal Publishing Solutions, Delhi

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Printed in India by Radha Press, Delhi 110031

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Third-party website addresses mentioned in this book are provided

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by Oxford University Press in good faith and for information only.

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 Preface to the Third Edition
From the time the first edition of the book was published in 2005 and also later revised in 2012, there have been tremendous
changes in the market scenario and the way business is done. This edition of Sales and Distribution Management brings in
updated content which has been revised to suit the changing needs of its readers.
There have been tremendous changes in the sales and distribution management domain. A major impact has come from
technological changes. New technology applications have resulted in multiple changes in the sales and distribution management
processes. Internet technology has given birth to an entire e-commerce world. The majority of advertising pie now comes from the
e-commerce space. Companies need to change their business models and develop omnichannels to manage their business.
Faster, precise and larger databases and decision support systems have emerged to augment managerial decision-making. This
has happened both at back end with more effective supply chain management practices and softwares and at the front end with

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customer relationship management solutions. This has immensely contributed in more prudent decision-making by managers who

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are using database management systems, integrating the sales and distribution with mega databases, using geographic information
systems in mapping territories and allocating sales quota more scientifically. Emergence of aggregators like Ola, Swiggy, Zomato,

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etc. on the Internet market space has altered the way many businesses operate in India. So there was a demand to update the
content and bring in the latest changes in the business world.
The book includes a complete chapter on e-commerce and distribution channel management which explains various aspects of
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e-commerce management such as listing the advantages and types of e-commerce, e-service quality, ideas of psychological contract
violation and value proposition, and the revenue models in e-commerce. We have tried to bring in more scientifically proven
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metrics to measure sales performance.
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New cases studies on companies like Amazon Go, Flipkart, Ola, and Swiggy will help students realize the current business
challenges in both offline and online world. New sections on omnichannel distribution and customer journey mapping have been
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added to enrich the existing text. There is a balanced presentation of the concepts of sales and distribution through theoretical
concepts and illustrative examples.
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We are thankful to the students and faculty members who have used and appreciated the earlier editions of the book and
inspired to update content. We are sure they will find the new edition refreshing and embedded with new knowledge derived from
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our teaching, research and consulting practices. As authors, we are always open to receive feedback from you and also supplement
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your learning teaching practices.

Tapan K. Panda
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Sunil Sahadev
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PRAISE FOR THE SECOND EDITION

The text book is written in clear, simple English and is highly indigenous with lots of Indian examples and case studies. The module
flow is continuous and smooth.
– Dr R. Satish Kumar, IFIM Business School, Bangalore

It is extremely user friendly from the perspective of an average student.

– Ms Pooja Kudesia, Jagan Institute of Management Studies, Jaipur

The book is comprehensive and covers almost all the topics taught in ‘Sales and Distribution Management’ at various B-schools. The
book has been able to include application/practice part to a great extent besides all the theoretical concepts.
– Dr Neeraj Pandey, National Institute of Industrial Engineering (NITIE) Mumbai

Table of contents provides adequate coverage. The book is quite detailed with some relevant case studies.
– Ramendra Singh, IIM Calcutta

© Oxford University Press India. All rights reserved.

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 Preface to the Third Edition  v

PRAISE FOR THE FIRST EDITION

I liked the case studies associated with each chapter of the book.
– Prof. Chitra Bagchi, Heritage Institute of Technology, Kolkata

The Indian orientation is this title’s major strength.

– Prof. D. M. Sezhiyan, National Institute of Technology, Tiruchirappalli

The publisher and the authors would like to thank the following reviewers for their valuable feedback:
Prof. Megha Mathur, IMM, Delhi

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Prof. Pooja Kudesia, JIMS, Jaipur

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Prof. Bhalender Signh Nayyar, FORE, Delhi
Dr Pradeep Kautish, Mody University, Rajasthan

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Dr Rajendra Prasad Sharma, IIFT, Kolkata
Prof. Ramendra Singh, IIM, Kolkata
Dr Neeraj Pandey, NITIE, Mumbai
Dr R. Satish Kumar, IFIM Business School, Bangalore
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Dr Mukesh Kumar Mishra, IBS, Hyderabad
Prof. Jayakrishnan S., SDMIMD, Mysore
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Dr Dwarakanath Siriguppi, IBS, Hyderabad

Dr Sanjeev Tandon, ITS, Ghaziabad
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Prof. Veena Kumar, NDIM, Delhi

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© Oxford University Press India. All rights reserved.

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 Preface to the First Edition
Sales and distribution management, as a composite function of marketing, focuses on the development of a sound sales and
distribution strategy, the management of marketing channels, and sales force management in a business organization. Rapid
changes in technology, a higher level of customer orientation, the global­ization of business, and increasing competition have made
sales and distribution management critical for the success of any business enterprise.
  Traditionally, the key challenge to the marketer was to develop methods and practices to enhance the producti­vity and efficiency
of the sales force. The focus was on the individual’s performance rather than on the processes involved in the enhancement of this
performance. Over time, sales and distribution man­agement has evolved into a key area of marketing expertise and knowledge.
Today, the marketer faces the challenge of formulating strategies and methods for improving the selling approach, which include
sales force downsizing, the application of information technology, the enhanced use of telemarketing, key account management,

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use of independent sales organizations and sales representatives, electronic data interchange, and cross-functional team selling.

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  The business environment in India is very different from that in developed countries. In the pre-liberalization era, for example,
significant restrictions on consumer goods in the form of licences and high import tariff discour­aged manufactures from investing

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in a wide range of industrial and consumer goods. In the absence of a wider range of products, marketers earlier found it difficult
to exploit the benefits of economies of scale in sourcing of goods.
  As a result of economic liberalization in the 1990s, there was a spurt in consumer demand. Further, the growth in income levels
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by expanding their sales and distribution operations in the Indian market.
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also generated a demand for high-quality and expensive products. Many business organizations responded to these developments
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  In India, the industry structure of sales and distribution is characterized by the presence of a large number of channel intermediaries.
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While wholesale trading dominates the distribution sector, personal selling is largely the norm in sales organizations. Organized
retailing and franchising as innovative modes of selling have also witnessed growth in the recent years with foreign and Indian
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retail majors becoming active in the market. The activities of firms in this sector contribute 6 to 7 per cent of total employment,
as opposed to 14 to 20 per cent in Western countries.
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  Existing books on the subject approach the study of sales management and distribution management as distinct disciplines.
However, this book adopts an integrated approach to the study of sales and distri­bution management in view of the need for a
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textbook on the subject as a composite course in the MBA curriculum today and its important role in building successful business
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organizations.
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About the Book

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This book is primarily aimed at students enrolled in the MBA/PGDM programme. Given its practical orientation, the book will
also be a useful resource to practising company executives and other professionals active in training and consultancy.
It also covers the application of technology and cross-functional integration in the area of sales and distribution management.
The book presents the complexities involved in managing the third ‘P’ of mar­keting, namely, place.
The text has a process and customer orientation focus in sales and distribution management in the context of Indian business
organizations. It achieves this through cases on Indian business organizations operating in varied fields, such as manufacturing,
services, information technology, and fast moving con­sumer goods.

Pedagogical Features
A unique aspect of this book is the large number of illustrations and examples from the Indian context. It contains cases of major
Indian business organizations such as MRF Tyres, Hindustan Unilever Limited, SAS India, Blow Plast India Limited, Videocon
International Limited, Anchor Switches, Siffco Agro Chemicals Ltd, and CK Rotors Pvt Ltd. These cases will help students
to apply theoretical learning to the Indian busi­ness environment and understand the constraints and opportunities present in
managing the sales and distribution function.
Concept review questions are given at the end of each chapter on major topics dealt with in the chapter to test the students
of their understanding of the main concepts covered in the chapter. The chapter-end project assignments and critical thinking

© Oxford University Press India. All rights reserved.

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 Preface to the First Edition  vii

questions will not only help students to understand the practical aspects by con­ducting field studies but also encourage them to
think beyond concepts and appreciate areas that require further comprehension.

Acknowledgements
Many people have contributed to the development of this book. We wish to thank all those who have encouraged us and given
their valuable inputs during its preparation.
Tapan K. Panda specifically thanks Sitikantha Mishra, Professor and Administrator, Indian Institute of Tourism and Travel
Management; Prof. Pritam Singh, Director, Management Development Institute, Gurgaon; Murali Chandrasekharan, University of
Cincinnati, US; M. Janaki Raman Murthy and Avinash Mulky, Indian Institute of Management Lucknow; Rajendra Nargundkar,
S.S.S. Kumar, and Udai Damodaran, Indian Institute of Management Kozhikode; Ashish Sadh, Indian Institute of Management
Indore; Sandeep Budhiraja, AC Nielsen ORG-Marg; Prof. Pingali Venugopal, Xavier Labour Relations Institute, Jamshedpur; and
Swaroop Sahu, Professor Emeritus, Utkal University, Orissa.
He also acknowledges the help and support of his students at the Indian Institute of Management Lucknow, Indian Institute
of Management Kozhikode, and Indian Institute of Management Indore.

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Sunil Sahadev specifically thanks his close colleagues and friends Saji and Unni for their support and motivation. His sincere

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thanks also go to Prof. S. Jayachandran and Prof. L.S. Ganesh, Indian Institute of Technology Chennai.
He thanks his students who have provided valuable insights into the operations of their own companies, which proved to be

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very useful while presenting illustrative examples in the book. In this context, he would like to especially thank domainb.com for
being kind enough to permit him to use case studies as practical insights in this textbook.

to complete the book.

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The authors especially thank the editors of Oxford University Press, New Delhi, for their editorial sup­port and encouragement
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Tapan K. Panda
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Sunil Sahadev
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© Oxford University Press India. All rights reserved.

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 Brief Contents
Preface to the Third Edition  iv
Preface to the First Edition  vi
Detailed Contents  ix

Module I: Sales Management

  1. Introduction to Sales Management 1

  2. Selling Skills and Selling Strategies 21

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  3. The Selling Process 53

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  4. Managing Sales Information 81

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  5. Sales Force Automation 111

  6. Sales Organization 125

  7. Management of Sales Territory i ty 148

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  8. Management of Sales Quota 169

  9. Recruitment and Selection of the Sales Force 184

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10. Training the Sales Force 207

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11. Sales Force Motivation 232

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12. Sales Force Compensation & Evaluation 245

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13. Sales Force Control 272

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Module II: Distribution Management

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14. Distribution Channel Management—An Introduction 288

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15. Designing Customer-oriented Marketing Channels 309

16. Customer-oriented Logistics Management 333

17. E-commerce and Distribution Channel Management 363

18. Channel Information Systems 379

19. Managing Channel Member Behaviour 394

20. Managing Wholesalers and Franchisees 422

21. Retail Management 437

22. Managing the International Channels of Distribution 466

Index 483
About the Authors  489

© Oxford University Press India. All rights reserved.

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 Detailed Contents
Preface to the Third Edition  iv
Preface to the First Edition  vi
Brief Contents  viii

Module I: Sales Management

  1. Introduction to Sales Management 1 Stages in the Selling Process  53

Introduction 1 Pre-sale Preparation  54
Evolution of Sales Management  1 Prospecting 56

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Marketing Concepts  1 The Process of Prospecting  57
Methods of Prospecting  58

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The Nature and Role of Sales Management  3
Types of Personal Selling  4 Pre-approach Before Selling  60
Industrial Selling  5 Approach to the Customer  61

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Retail Selling  5 SPIN Selling – Asking the Right Sales Questions  62
Services Selling  5 Situation Questions  63
Types of Selling  6 Problem Questions  63
Order Taker Salespeople  7
Order Creators  7
i ty Implication Questions  63
Need-payoff Questions  63
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Order Getters  7 Sales Presentation  64
Difference between Selling and Marketing  7 Approaches to Sales Presentation   64
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The Modern-Day Sales Activity  9 Methods of Sales Presentation  65

The Sales Management Process  10 Handling Customer Objections  68
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Formulation of a Strategic Sales Management Methods of Handling Customer Objections   70

Programme 10 Closing the Sale  71
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Implementation of a Strategic Sales Management Methods of Closing the Sale  71

Programme 12 Follow-Up Action  72
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Evaluation and Control of a Strategic Sales Management Business-to-business Selling  75

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Programme 13 Selling Approaches in Business to Business (B2B)

Emerging Trends in Sales Management  14 Markets 76
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Case Study 1.1: Vishal Julka’s Dilemma  19 Programmed Buyers  76

Relationship Buyers  76
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  2. Selling Skills and Selling Strategies 21 Transactional Buyers  77

Introduction 21 Bargain Hunters  77
Selling Situations  21 Case Study 3.1:  Hunters & Rearers at Lenovo  79
The Sales Task and Function  22
Selling Skills  22   4. Managing Sales Information 81
Communication Skills   23 Introduction 81
The Communication Process   24 Forecasting Market Demand  82
Managing Body Language   26 The Market Demand Function   83
Listening Skills   28 Market Demand Forecasting  83
Conflict Management Skills  31 Marketing Decision Support System   84
Negotiation Skills  33 Importance of Sales Forecasting  86
Problem-solving Skills   38 The Forecasting Process  87
Typical Sales Manager’s Problems  45 Approaches to Sales Forecasting  88
Competencies of a Sales Manager  47 Sales Forecasting Methods  89
Case Study 2.1:  MRF Tyres  51 Qualitative Methods of Forecasting   89
Quantitative Methods of Forecasting  91
  3. The Selling Process 53 Trend Projections  92
The Selling Process  53 Naive Method  93

© Oxford University Press India. All rights reserved.

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 x  Detailed Contents

Free Hand or Graphic Method  93 Number of Salespeople  141

Method of Semi-averages   94 Affordability Method  141
Method of Moving Averages  94 Incremental Method  142
Method of Least Square  95 Workload Method  142
Decomposition Method  96 Case Study 6.1:  Amazon Go: Omnichannel or Convenience
Exponential Smoothing Method  96 Store of the Future?  144
Autoregressive Moving Averages  98 Case Study 6.2:  SAS India  146
Correlation Analysis  98
Regression Analysis  99   7. Management of Sales Territory 148
Market Factor Indices Method  102 Introduction 148
Econometric Techniques  103 Sales Territory  148
Factors Affecting Selection of a Forecasting method  104 Advantages 149
Case Study 4.1:  Happy Haveli Fans Limited  108 Disadvantages 150
Size of Sales Territories  151
  5. Sales Force Automation 111 Allocation of Sales Territories  151
Introduction 111 Designing a Sales Territory  152

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Sales Force Automation—What is it?  111 Criteria for Selecting Geographical Control Units  153

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Sales Process Automation  112 Starting Point  154
Benefits of Customer Relationship Management and Territory Shapes  154

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Sales Force Automation  112 Control Units Adjacent to the Starting Point  154
Objectives of Customer Relationship Management and Allocation Criteria and Workload Analysis  155
Sales Force Applications  113 New Territories  157
Types of Sales Force Automation Tools  114
Mobile Sales Force Automation  117
i ty Use of Information Technology  157
Sales Territory Mapping  158
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Understanding Electronic Data Interchange  118 Case Study 7.1:  Polar Lamps & Lights  163
Electronic Mail and Electronic Data Interchange  119
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Functionality of Sales Force Automation  120   8. Management of Sales Quota 169

Field Force Automation  120 Introduction 169
Sales Quota  169
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Blockchain Technology  121

Advantages of Blockchain   121 Importance of Sales Quota  169
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Case Study 5.1:  Karvay Financials Limited (KFL)  124 Principles of Quota Setting  170
Organization of the Sales Job  171
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  6. Sales Organization 125 Defining Annual Objectives  172

Introduction 125 Procedure for Setting Quota  172
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Factors Influencing Structure   126 Conferencing with Each Salesperson  173

Changes in Structure   127 Types of Sales Quota  174
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Organizational Principles  128 Sales Volume Quota  174

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Span of Control  129 Sales Budget Quota  175

Centralization and Decentralization  129 Sales Activity Quota  176
Integration and Coordination  129 Combination Quota  176
Organizational Design  130 Methods of Setting Sales Quota  176
Line Organization  130 Quotas Based on Sales Forecasts and Potentials  177
Organizational Design by Territory  132 Quotas Based on Forecast   177
Organizational Design by Management Quotas Based on Past Sales or Experience  177
Function 132 Quotas Based on Executive Judgement  177
Organizational Design by Product  133 Quotas Based on the Judgement of Salespeople  177
Organizational Design by Customer  136 Quotas Based on Compensation  177
Combined Organizational Design  136 Problems in Setting Sales Quota  178
Sales Process Automation  139 Case Study 8.1:  Videocon International Limited  180
Emerging Organizational Designs  139
Agency and Distribution Selling  139   9. Recruitment and Selection of
Shared Sales Force  140 the Sales Force 184
Telemarketing 140 Introduction 184
Total Quality Management and Team-based Selling  140 Hiring Process  184

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 Detailed Contents  xi

Challenges in Sales Force Selection  185 The Process of Motivation  234

Planning For Recruitment  186 Motives and Motivational Drives  234
Strategic Position Analysis  187 Factors Influencing the Motivation of
Turnover 187 the Salesperson  236
Job Analysis  188 Designing a Motivational Programme  238
Job Qualification and Job Descriptions  189 Programme Objective  238
Sales Force Recruitment  190 Motivational Tools  238
Sources 191 Communication   240
External Recruitment vs Internal Recruitment  191 Case Study 11.1:  One Day it Happened by Chance!  243
Selection of a Salesperson  193
Selection Procedure  194 12. Sales Force Compensation & Evaluation 245
Socialization 199 Introduction 245
Case Study 9.1:  Sales Aptitude Tests  202 Objectives of a Sales Compensation Plan  246
Characteristics of an Effective Compensation Plan   246
10. Training the Sales Force 207 Types of Compensation Plan  247
Introduction 207 Financial Compensation  247

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Objectives of Sales Training  207 Non-financial Compensation   252

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Challenges in Sales Training  208 Trends in Compensation Management  254
Role of a Trainer  209 Evaluation of Salesforce  255

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The Training Process  209 Performance Appraisal Process  256
Training Need Assessment Phase  209 Appraisal Criteria  256
Designing and Conduct Phase  211 Performance Rating  258
Evaluation Phase  215
Training methods  216
i ty Conduct of Performance Appraisal  262
Individual versus Team Appraisal  264
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Didactic Method  217 Actual Performance  265
Visual Support  218 Frequency 265
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Participative 218 Case Study 12.1:  JCL Infrastructures Limited   268

Conferences 218 Case Study 12.2:  Unique Beverages Limited   269
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Seminars 218
Discussions 219 13. Sales Force Control 272
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Role Play  219 Introduction 272

Case Study  219 Controlling Sales Force Performance—
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Fishbowl 220 an Input-Output Based Approach  273

Analysis of Market Situation and Competition to
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Workshops 220
Sensitivity Training  220 Set Performance Evaluation and Control
Policy 273
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Transaction Analysis  221

In-tray Exercise  221 Criteria for Sales Personnel Performance
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Transcendental Meditation  221 Evaluation 274

Designing a Sales Training Programme  221 Setting Up Performance Standards  274
Aim 222 Compare and Contrast Actual Performance with
Content 222 Set Standards  276
Evaluation 225 Review and Communicate Performance
The Process of Socialization  225 Evaluation Reports with Salespeople  278
Anticipatory Socialization  225 Decide Sales Management Actions  278
Accommodation Stage  225 Sales Audit  279
Outcome Stage  226 Marketing Audit  280
Case Study 10.1:  OYO Rooms  228 Sales Force Expense Analysis  281
Case Study 10.2:  IQor Global Services India Private Measurement of Sales Organization Effectiveness  282
Limited 229 Sales Analysis  282
Marketing Cost Analysis  283
11. Sales Force Motivation 232 Case Study 13.1:  Too Many Meetings and
Introduction 232 Too Little Action?   286
Importance of Motivation  233

© Oxford University Press India. All rights reserved.

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 xii  Detailed Contents

Module II: Distribution Management

14. Distribution Channel Management— The Channel Establishment Plan  325

An Introduction 288 Customer Journey Mapping for Better Channel Design  327
Introduction 288 Types of Customer Journey Maps   328
Distribution Channels—Why are They Required?  288 Techniques for Developing Customer
Activities that a Typical Distribution Channel Performs  290 Journey Maps   329
Spatial Discrepancy  291 Customer Journey Mapping and
Temporal Discrepancy  291 Distribution Channel Design   329
Need for Breaking the Bulk  291 Case Study 15.1:  Foodeliver.com and the Distribution
The Need for Assortment  292 Dilemma 331
Intermediation—Is it Really Needed?   293 16. Customer-oriented Logistics Management 333
Value Enhancement Through the Distribution Function  295 Introduction 333
Distribution Channel Strategy  295 Objectives of Logistics  333
Setting Distribution Objectives   297 Logistics Planning  334

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Finalizing Channel Activity  297 Facilities Decisions  335
Organizing the Channel Activities  297

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Inventory Management Decisions  343
Developing Policy Guidelines for Day-to-day Why do We Need Inventories?  344
Operations 297

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Objectives of Inventory Management  344
Distribution Channel Management  298 Inventory Level Decisions  347
Pharmaceutical Distribution in India   299 Distribution Resources Planning System  351
Rural Distribution Channels  301
Rural Distribution Channels—Major Issues  302
Rural Distribution Channels—Trends  303
i ty Transportation Decisions  353
Mode Selection  353
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Vehicle Routing and Scheduling  354
Omnichannel Distribution  303 Freight Consolidation  354
Case Study 14.1:  Medicinal Plant Growers Cooperative
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Factors Affecting Transportation Costs  355

Society (MPGCS)  306 Return on Investment (ROI) in Distribution  355
ROI Calculation  356
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15. Designing Customer-oriented Marketing Channels 309

Introduction 309 Gross Margin Return on Investment (GMROI)  356
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Designing a Customer-oriented Channel  310 Case Study 16.1:  Swiggy: Swinging the Food E-tailing
Capturing the Customer Requirements  310 Business 359
Case Study 16.2:  Great Grocer’s Ltd. Food Distribution
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Bulk-breaking 312
Spatial Convenience  312 System 361
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Waiting Time  313 17. E-commerce and Distribution Channel Management 363

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Assortment 313 Introduction 363
Conceiving the Channel Flows  315 Definitions of E-commerce  363
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Physical Possession  316 Different Types of E-commerce  364

Ownership Flow  316 Advantages of E-commerce  364
Promotion Flow  318 E-commerce and Distribution Channel Management  366
Negotiation Flow  318 E-commerce and E-service Quality  367
Financing Flow  318 Psychological Contract Violation  368
Risk-taking Flow  319 E-commerce Business Models  369
Ordering Flow  319 Value Proposition  369
Payment Flow  320 Revenue Model  371
Linking the Service Output Objectives to the Flows  320 Case Study 17.1:  Analysis of Flipkart’s Strategy  375
Conducting Cost Analysis  321 Case Study 17.2: Kripaadressess.com  376
Designing the Ideal Channel  322
Comparing the Ideal with the Reality  324 18. Channel Information Systems 379
Comparing the Channel Designs  324 Introduction 379
Effectiveness   324 Channel Information System—A Description  380
Efficiency 325 Channel Information System—The Different Forms  381
Equity 325 Zero-level System  381
Scalability 325 One-level System  382
Flexibility 325 Multiple-level Systems  382

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 Detailed Contents  xiii

Channel Information System—Motives and Challenges  383 Services Provided to Buyers  424
Benefits of Channel Information System  383 Types of Wholesalers  424
Costs Related to Implementing Channel Information Merchant Wholesalers  424
System 384 Agents and Brokers  425
Channel Information System—Components  385 Managing Wholesale Operations  427
Transaction Processing System  385 Fixing Operational Margins  427
Knowledge Work Systems  386 Tackling Issues of Asset Specificity and Opportunism  427
Management Information System  386 Measuring Wholesaler Performance  428
Executive Support System  387 Guidelines for Setting up a Monitoring Mechanism  429
Designing a Channel Information System  387 Franchising 430
Step 1 Develop Objectives for the Channel Information Types of Franchise Arrangements  430
System 388 Advantages and Disadvantages of Franchising  431
Step 2 Conduct a Channel Flow Analysis  388 Franchising Success Factors  432
Step 3 Conduct an Information Needs Analysis  388 Major Causes of Conflict in the Franchisor—Franchisee
Step 4 Identification of the Information Sources  388 Relationships 433

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Step 5 Analyse Hardware and Software Options  389 Case Study 20.1:  Naik Welding Pvt Ltd  434

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Step 6 Develop a Cost Analysis  389
Step 7 Finalize the System Based on the 21. Retail Management 437
Approved Cost  389 Introduction 437

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Redesigning the Channel Information System  390 Retail Marketing Mix and Retail Positioning   438
Integration of the Channel Information System   390 Developing and Implementing Merchandise Strategies  439
Factors Affecting Choice of Retail Strategy  440
Case Study 18.1:  Dragon Bathroom Fittings   391

19. Managing Channel Member Behaviour 394

i ty Category Management  441
The Merchandising Function  441
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Introduction 394 Financial Aspects of Merchandising  444
Channel Relationships  395 The Merchandise Planning Process  446
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Channel Control  396 Critical Merchandising Ratios for Retail Decisions  450
Channel Power  399 Deciding on the Customer Service Levels  451
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Channel Positioning  401 Qualifying and Determining Services  451

The Channel Core Elements  403 Customer Service Development  452
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Capability Building Programmes  403 Trading Format  453

Incentive Programmes  404 Shopping Occasion and Store Format  453
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Channel Influence Strategies  404 The Macro Considerations for Trading Formats  454
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Exercising Influence Strategies  406 Micro Considerations for Trading Format  458
Channel Conflict  407 Customer Communication Strategy in Retail Outlets  460
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Channel Conflict as a Process  408 Case Study 21.1:  Fabulous Fashion Fabrics  463
Attitudinal Causes of Conflict  409
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Structural Causes of Conflict  409 22. Managing the International Channels

Felt Conflict  410 of Distribution 466
Manifest Conflict  411 Introduction 466
Conflict Management Methods  411 Differences in Customer Expectations Across Countries   467
Case Study 19.1:  Heliflex Cables  416 Differences in Channel Structure and Trade Practices  467
Case Study 19.2:  HIMONA Ceramics – Managing Channel Differences in the Quality of Physical Infrastructure  468
Conflict   417 International Orientation of Companies  469
The Mode of Entry Decision  469
20. Managing Wholesalers and Franchisees 422 Exporting 470
Introduction 422 Implications of Entry Modes  474
Defining Wholesalers  423 International Logistics Management  477
Services Provided by Wholesalers  423 International Shipment Procedures  477
Services Provided to Manufacturers  423 Case Study 22.1:  Green Stone Leather Industries Ltd  481
Index 483
About the Authors  489

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 Module I: Sales Management

1
Introduction to Sales Management
LEARNING OBJECTIVES
After reading this chapter, you will be able to

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understand the concepts of sales management

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learn about the evolution of sales management
explain the importance and functions of sales management

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understand the types of personal selling and the types of salespeople
differentiate between selling and marketing
understand the sales management process and modern-day sales activity
get an overall idea of current trends in sales management
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INTRODUCTION
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This chapter will introduce students to sales management—its concepts and pra­ctice in business organizations. It will explain
the meaning of sales management and its fundamental principles. The other chapters in Part  I will further analyse the sales
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management process.
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EVOLUTION OF SALES MANAGEMENT

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Let us look at some of the fundamental marketing concepts that have guided the growth of sales and marketing as a discipline.

Marketing Concepts
The marketing concepts are the major domains of knowledge in marketing theory. They represent the business principles that
govern the function of marketing. A modern concept of marketing talks about customer orientation, though customer orientation
is easier said than done.
This is because organizations have to realign their business processes, manpower, and information systems in order to listen
and execute what a customer says or intends to say to a marketer about his/her evolving need structure. These concepts make a
student realize that customers do not buy products and services merely for the utility value but for obtaining values higher than
what is embedded in the physical product.
Customers buy for the reasons of satisfaction, which is a measure of the product or service performance in relation to the
perceived expectations of the consumers from that product or service. These dominant ideas of marketing make us believe that
marketing means understanding customer needs and demands, and responding to their evolving needs and demands through
better product or service offers.
This is essentially the reason why many organizations that care for their consumers are so successful in business.

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 2  Sales and Distribution Management

Therefore, marketing involves understanding of a consumer’s evolving needs, understanding the competitive product offerings,
and then delivering products or services better than what is available in the market. Let us look at various concepts of marketing
and their value propositions.
There are five different marketing concepts practised by business enterprises to conduct their marketing activity:
1. Production concept 4. Marketing concept
2. Product concept 5. Societal marketing concept
3. Selling concept

Production concept
The production concept has its origin in the production orientation. The basic tenet of the concept is that customers will choose
products and services that are widely available and are of low cost. Therefore, managers try to sell a higher volume of goods at low
costs and through an intensive distribution strategy. This seems a viable strategy in a developing market where market expansion
is the crucial survival strategy for a business. Companies interested in reaping the benefits of scale economies pursue this kind

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of orientation. It is obvious that these companies cannot deliver quality products and suffer from problems arising out of their

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impersonal behaviour with the customers.

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Product concept
The product concept has the proposition that consumers will favour those products that offer high-quality attributes such as

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quality, performance, and other innovative features. The managers focus on developing superior products and improving the
existing product lines over a period of time. The innovations in scientific laboratories are commercialized, and consumers get an
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opportunity to know and use these products.
This is called ‘technology push model’. The problem with this orientation is that managers launch innovative products without
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properly understanding and analyzing the needs of the customers. Many a time it is observed that the innovative products enter a
market before the market is ready for the products. Innovative products are launched without educating the customers about the
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innovation and the probable benefits that the customers hope to get from it.
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Sales concept
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The sales concept proposes that customers, either an individual or an organization, will not buy enough of an organization’s products
or

unless they are persuaded to do so through selling efforts. Therefore, organizations should undertake selling and promotion of their
products for marketing success. The consumers are typically inert and they need to be goaded for buying products by converting
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their inert need into a buying motive through persuasion and selling action.
In a modern marketing situation, a buyer has a number of options to choose from and a customer is also fed with a high dose
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of advertising. So, often there is a misconception that marketing is all about selling. According to this approach, a customer will
certainly buy a product after enough persuasion and if dissatisfied, will not speak about it to others. However, in reality, this does
not happen and companies pursuing this concept often fail in the market.

Marketing concept
The marketing concept proposes that the reason for success lies in a company’s ability to create, deliver, and communicate a better
value proposition through its marketing offer, in comparison to its competitors, for its chosen target market.
The marketing concept is an elaborate attempt to explain the phenomenon that rests on four key elements: target market,
customer need, integrated marketing, and profitability.
Companies are interested in increasing their returns on investment. Instead of spending on a mass undifferentiated market, they
have started to look for specific markets best suited for their products, and then accordingly design a marketing programme that
would catch to the taste of this target market.
The next important act is the understanding of the needs of the customers in that target market so that a suitable marketing
offer can be designed. Needs are the inner state of felt deprivation. They can be defined or undersigned. It is difficult to understand
the unspoken needs of the customers.

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 Introduction to Sales Management  3

Marketers use various sophisticated techniques of consumer research to understand customers’ needs. It is important to understand
and act upon the needs of customers because the effort executed to keep a customer satisfied is almost one fifth of the effort expended
to get a new customer. The whole organization has to be integrated to this mantra of customer satisfaction. As a result, businesses need
to develop an integrated approach.
The integration has to start at the marketing department level where various key marketing functions such as product design,
distribution channel selection, advertising and promotion, customer service, and marketing research should be integrated with
the common marketing goals. Marketing culture should be adopted by other departments of the enterprise also. While external
marketing targets customers outside, internal marketing targets customers inside an organization, which can be trained to serve the
customers better. The ultimate goal of any business house is to maximize profits. Figures 1.1 and 1.2 summarize the differences
between sales orientation and marketing orientation.

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FIGURE 1.1  Sales Orientation

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FIGURE 1.2  Marketing Orientation

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Today’s world not only looks at profit but also tries to benchmark the efforts and costs required to achieve this level of profit.
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In this situation, profitability of an enterprise through efficient marketing activities is the key success criterion. This profitability is
now treated as a by-product of creation of superior customer value and better understanding of customer needs.
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Societal marketing concept

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The societal marketing concept proposes that an enterprise’s task is to determine the needs, wants, and intentions of a target
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market and to deliver the expected level of satisfaction more effectively and efficiently than the competitors in order to preserve or
enhance the consumers’ and society’s well-being.
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Social marketing, often termed as cause-related marketing, utilizes the concepts of market segmentation, consumer research,
product concept development and testing, and communication to maximize the target adopters’ response.
Excessive exploitation of resources, environmental deterioration, and customer movements in particular have necessitated the
recognition of relevance of marketing to the society. Marketing, therefore, must be a socially responsible or accountable activity.
The societal concept holds that a business organization must take into account the needs and wants of the consumers, and deli­ver
the goods and services efficiently so as to enhance consumer’s satisfaction as well as society’s well-being.
The relational paradigm that governs the sales function works in cases where a customer’s interest is accorded higher priority
in comparison with the product or the business domain. Sales organizations are designed and technologies are adopted to make
them more customer-responsive.

THE NATURE AND ROLE OF SALES MANAGEMENT

The basic function and role of selling is to generate sales and earn revenue for an organization. Today’s selling approach, of course,
also highlights maintaining good customer relationship, managing the profitability of a firm, managing customer complaints, and
building brand value in the eyes of the customers.

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 4  Sales and Distribution Management

Though the above statements give a simplistic view of sales management’s role in an organization, there are complex
processes, systems involving a whole set of principles, strategies, techniques, and personal skills to cover different facets of the
sales function.
The job of a sales manager is not only to organize sales but also to carry out man-management functions such as guiding
and leading a set of people to achieve sales targets. Therefore, the functions of a sales manager can be classified into two aspects:
personal selling and sales management. Personal selling entails personal communication between a seller and a buyer for the
purpose of determining and satisfying the buyer’s current and latent needs.
It involves an individual salesperson or a sales team to establish and build a profitable and symbiotic relationship with customers
over time through multiple transaction cycles. In this process of building a relationship, a salesperson must determine a buyer’s needs
and influence or persuade the buyer to purchase his product with the assurance that the product or service will satisfy the buyer more
than the competitor’s products.
Sales organizations are increasingly becoming dependent on the sales force due to various reasons. Sales managers at higher
levels are responsible for strategic decisions, such as organizing the sales force, determining the sales force compensation structure,
forecasting long-term sales, and overall controlling of a sales organization.

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The role of a sales manager in an organization has become strategic and formidable. He/she is looked at as a combination of an

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accountant, a planner, a personnel manager, and a marketer at the same time (Figure 1.3). However, his/her prime responsibility is
to augment the sales force by augmenting the sales closing process.

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Determining sales

and goals
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force objectives
Designing career growth
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Finalizing sales force plans and building
organization, size, relationship strategies
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territory, and quota with key customers

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Duties and
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Responsibilities of a
Sales Manager
Forecasting Designing
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and budgeting compensation plan

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sales and control systems

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Selecting, recruiting, Motivating and

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and training the leading the

sales force sales force

FIGURE 1.3  Responsibilities of Sales Manager

TYPES OF PERSONAL SELLING

Personal selling can be broadly classified into industrial, retail, and services selling. The appro­aches that a salesperson takes in each
of these categories vary despite similarities in the sales function. Selling of a ball bearing is different from selling of a consumer
dur­able, such as a vacuum cleaner, or a beauty product in a retail showroom.
These differences are linked to a customer’s choice behaviour, the importance the customer gives to the purchase, and the risks
involved in buying a product. When someone purchases a ball bearing that is fitted to a machine whose value is in millions, his/her
seriousness in decision making, information collection on various brands of bearings and their specifications, and the time taken
to arrive at a decision differ from a customer deciding on a brand of shampoo.
In the latter case, the customer pays less as the risk involved in buying is less and also the time taken to reach a decision is less.
Therefore, the selling approaches are bound to be different in each of the buying situations.

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 Introduction to Sales Management  5

Industrial Selling
Industrial selling is basically termed as B2B selling but in a traditional business model, it is categorized as the manufacturing sector
selling. These are grouped into four categories on the basis of consumer base. The first category is selling to resellers. A reseller is
a wholesaler or a retailer or an intermediary who buys finished goods and resells them to the end-users. Companies such as Hero
Cycles, T Series, and Sunshine chemicals sell to the resellers. The objective of a salesperson in such a case is to gain larger shelf space
and higher point-of-purchase display so that the products can reach the ultimate consumers rather quickly.
The second category of industry sales is selling to business users. This means the output of one producer enters into the production
process of another producer to manufacture a final good for the consumption of the end-users. The salesperson of the first firm
tries to sell the goods to the second firm which, in this case, is a business customer.
For example, IBM sells Intel Pentium processors which are used by Compaq or HCL Infosystems to make computers for
the final customers. Companies such as Tata Refractory produce bricks that go to other manufacturers involved in hot metal
technology, who use these bricks in their production process. Other examples of firms that sell to business users include producers
of heavy machinery, ball bearings, fork lifts, and electrical cables.

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The third category is institutional selling. These institutional customers use the products in their daily operations. Companies

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such as Xerox in photocopiers, Johnson and Johnson in surgical equipment, and Reynolds in office stationeries sell directly to
institutions for insti­tutional consumption. A salesperson sells to the ultimate consumers but the product is used in providing

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support to the buyers’ business rather than in producing the buyers products.
The fourth category is selling to governments. In most countries, the government is the leading buyer. There are many companies,
such as Escort Rites, that sell only to governments or to gov­ernment undertakings. A salesperson’s ultimate consumers are the

institutional buyers.
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employees of the government. The procedure in government buying is different from the procedures involved with the other
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Retail Selling
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The second category of selling is called retail selling. Retailing is defined as all
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the activities directly related to the sale of goods and services to the ultimate
consumers for personal or non-business use or consumption. The primary
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difference between retailing sales and industrial sales is the actual location of
the sale.
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In a retailing environment, a customer approaches a seller, which is quite

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different from industrial selling where a seller seeks a customer. A retailer usually
sells directly to the ultimate consumers. The retailer purchases from the industrial
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seller in large quantities and sells them in smaller assortments according to the
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demand of the consumers.

Retail Selling
Retail selling is effected at the level of a retailer, a dealer, or even a wholesaler
who carries out retailing function for large buyers. Shopper’s Stop, Big Bazaar, and Crossroads in India are examples of large retail
stores. In the US, there are even larger retailers, such as K-Mart, Wal-Mart, and Tiffany, that are either selling a whole range of
products to the consumers or specializing in a particular category.

Services Selling
Services are activities or benefits provided to consumers. The areas of services
like the product areas are quite diverse. There are four unique characteristics
that distinguish products from services. Services are intangible in nature. They
cannot be touched, seen, tasted, heard, or felt like physical goods.
Services such as insurance, airline, and travel are intangible in nature and
they are manifested through a source object. Unlike products, services cannot be
separated from their sources and hence cannot be stored for future use.
They are produced, sold, and consumed at the same time. When you travel
in a car you enjoy the services related to the car and it varies depending on which Services Selling

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 6  Sales and Distribution Management

car you are driving and the related benefits associated with the car. Services are less standardized and uniform in nature than the
products.
Physical products may look similar due to the same manufacturing process and technology but services are a set of unique
experiences. Hence, services cannot be standardized.
Today, services in hotels are standardized due to various dimensions attached to a service definition. These dimensions are physical in
nature. For example, when we see a five-star hotel, we standardize the services by linking it to certain facilities in the organization. Services
are very individualized because of their intangible nature.
As we have mentioned earlier, services cannot be stored or inventoried. If a ticket in a flight is not sold for a circuit, the
sale for that seat is lost for the trip and one cannot sell it the next day as the next day will be another sale. In case of a physical
product, however, the product can be sold another day for consumption. Some services are termed as retail services, such as
hotel room service, transport, and some of them can be quite similar to industrial selling such as insurance, banking, and real-
estate sales.

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TYPES OF SELLING

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The diverse nature of buying situations demands a diverse pattern of selling function. Selling process varies according to the nature

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of selling task. Figure 1.4 explains different types of selling practised in the industry. Selling task is classified as order takers, order
creators, and order getters. Order takers respond to the already committed customers.

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FIGURE 1.4  Types of Selling

The accounts executives in an advertising agency are of this nature. They perform only client servicing function and take the
release orders from the existing clients. The order creators do not directly receive orders since they talk to specifiers rather than
customers. The order getters attempt to persuade customers to place an order directly. The order takers are classified into three
categories.
These are inside order takers, delivery salespeople, and outside order takers. Order creators are missionary salespeople. Order
getters are front line salespeople consisting of new business, organizational, or consumer salespeople, or sales support salespeople
or merchandisers. Both type of order getters operate in situations where a direct sale can be made.

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 Introduction to Sales Management  7

Order Taker Salespeople

Inside order takers are the retail sales assistants. A customer chooses a variety of products from the range available in a store without
the presence of a salesperson. A sales assistant’s role is to complete the transaction. He/she receives payment and passes the goods to
the consumers. This is done in superstores such as Wal-Mart, Big Bazaar, and other chain stores.
In telemarketing, the salespeople take the order over phone and deliver products at the customers’ addresses. The job of delivery
salespeople is to deliver the products to the customers. The salespeople that deliver milk, newspapers, magazines, and pizzas can be
called delivery salespeople.
They do not try to sell products or increase the consumption level of existing customers, however, winning and losing of orders
is dependent to a great extent on the reliability and promptness of the delivery salespeople.
The outside order takers visit the customers regularly and their primary concern is to respond to the customer calls rather
than seek new customers. They do not deliver anything at the customer’s place. They make sales call and take orders from the
customers. The salespeople from Eureka Forbes are included in this category.

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Order Creators

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Missionary salespeople are the sales staff who normally do not close a sale but persuade the customers to promote a seller’s brand.
Medical representatives, for example, do not make direct sales as the doctors do not buy the medicines personally but prescribe

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the medicines to the patients. Therefore, the medical representatives are called missionary salespeople. In this kind of selling, the
objective is to educate and make the people aware of the product rather than closing a sale.

Order Getters i ty
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These are the set of people whose objective is to persuade the customers to make a direct purchase. They are the front line
salespeople who go door to door to sell products. The function of new business salespeople is to persuade new buyers and non-users
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to buy a company’s products and services.

The executives in charge of business development in any advertising agency come in this category. They always look at people
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who have previously not used the services of the agency. They undertake prospecting and convert the leads into final sales.
Organizational salespeople are the industrial sellers who try to establish and nurture a long-term relationship with organizational
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buyers. The selling job involves team selling where a cross-functional sales team, sales and technical support staff joined together,
does a sales presentation.
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The consumer salespeople comprise the door-to-door salesperson who sell spices, eatables, encyclopedia, insurance, and other
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personal products for individual consumption. The second group of order getters provides sales support to the front line salespeople.
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The technical support salespeople support the front line salespeople when the product is technically complex or it needs
negotiations demanding financial attention of the company. They go as a part of a key account management team or temporarily
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for a particular business deal. The merchandisers provide sales support in retail and wholesale selling situations.
Orders are negotiated nationally and sales to individual outlets are supported by merchandisers who give advice on
display, execution of sales promotion programmes, and help in displaying the point-of-purchase material, checking the stock
levels, and maintaining contact with store managers. This kind of sales support staff is found in a more organized retailing
environment.

DIFFERENCE BETWEEN SELLING AND MARKETING

Generally, managers use ‘marketing’ and ‘selling’ as synonyms, though there is a significant difference between the two concepts. It
is necessary for a successful marketing manager to understand the differences between the two. Selling has always sufferred due to
dubious business practices by a few where the value promised and the product delivered did not match when the customer actually
used the product or the service.
This tarnished image could only be corrected if a customer could be persuaded by a marketer to buy the product again.
Organizations seldom make profit from one-time buying of the first-time customers. So they have to rely on the repeat business
to generate profits.

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 8  Sales and Distribution Management

Most of the selling efforts of well-organized marketing organizations are directed towards keeping a large number of customers
loyal and reducing the number of transactional customers. Market intelligence provides feedback to the organizations and informs
the firms about the major reasons behind the customers’ dislike for a particular product.
This information makes a company redesign its marketing programme so that the dissatisfaction of the customers is reduced or
higher consumer benefits are provided to the customers. Effective selling is not about half truths or overrated claims.
Selling has a product focus and is mostly producer driven. It is the action part of marketing and has a short-term goal of achieving
market share. The emphasis is on price variation for closing a sale where the objective can be worded as ‘I must somehow sell the
product to the customer.’
This short-term focus does not take into account planning for building up a brand in the marketplace and winning competitive
advantage through a large set of loyal customers. The key objective of any sales activity is maximizing profits through sales
maximization.
When the focus is on selling, a businessman thinks that after production is complete the task of the sales force will start. It is
also the task of the sales department to sell whatever the production department has manufactured. Aggressive sales methods are
employed to meet the goals and customers’ actual needs, and satisfaction is taken for granted. Selling converts the product into

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cash for the company in the short run.

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Marketing as a concept and approach is much wider than selling. It is dynamic in nature as the focus is on the customers rather
than the products. While selling revolves around the needs and interests of a manufacturer or a marketer, marketing revolves

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around that of a consumer. It is a process of meeting and satisfying the needs of the consumers. Marketing consists of all those
activities that are associated with product planning, pricing, promoting, and distributing the products or services.
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The task commences with identifying consumer needs and does not end till feedback on consumer satisfaction after the
consumption of the product is received. It is a long chain of activities, which comprises production, packaging, promotion,
i
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pricing, distribution, and selling.
Consumer needs become the guiding force behind all these activities. Profits are not ignored but they are built on a long-term
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basis. Mind share is more important than market share in marketing. According to Prof. Theodore Levitt, ‘The difference between
selling and marketing is more than semantic. A truly marketing-minded firm tries to create value satisfying goods and services
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which the consumers will want to buy. What is offered for sale is determined not by the seller but by the buyers.
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The seller takes his/her cues from the buyer and the product becomes the consequence of the marketing effort, not vice versa.
Selling merely concerns itself with the tricks and techniques of getting the customers to exchange their cash for the company’s
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products, it does not bother about the value satisfaction that the exchange is all about. On the contrary, marketing views the entire
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business as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs.’
The differences between selling and marketing are summarized in Table 1.1.
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TABLE 1.1  Differences Between Selling and Marketing

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No. Selling Marketing

 1. Emphasis on product Emphasis on consumer needs and wants
 2. Company manufactures the product first and then decides to sell Company first determines customers’ needs and wants and then
it decides on how to deliver a product to satisfy these wants
 3. Management is sales-volume oriented Management is profit-oriented
 4. Planning is short-term oriented, in terms of today’s products and Planning is long-term oriented, in terms of new products,
markets tomorrow’s markets, and future growth
 5. Stresses needs of a seller Stresses needs and wants of buyers
 6. Views business as a goods producing process Views business as a consumer satisfying process
 7. Emphasis on staying with existing technology and reducing costs Emphasis on innovation in every sphere, on providing better value
to the customers by adopting a superior technology
 8. Different departments work as highly separate watertight All departments of a business operate in an integrated manner,
compartments the sole purpose being generation of consumer satisfaction
 9. Cost determines price Consumers determine price, price determines cost
10. Selling views customers as the last link in business Marketing views the customers as the very beginning of a business

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 Introduction to Sales Management  9

Seven common elements which distinguish marketing-based companies are:

1. They use market share, rather than volume, as the primary measure of marketing success (although if they ignore the cost of
acquiring share, profits will be unsatisfactory),
2. They analyse and use market segmentation principles,
3. Marketing-based companies research the process of monitoring customer needs, usage, and trends as well as competitive activity,
4. They evolve a structure or process of coordinating all non-marketing functions towards the achievement of marketing goals,
5. They have set of specific marketing goals and targets,
6. They follow a corporate style and culture where marketing plays a key role, and
7. They follow a market-based business concept that provides a unique value to the customers.
Therefore, selling is inward-looking. It persuades customers to take what the manufacturer has got, in which product development
is detached from marketplace. Only when the product is ready, there is a search for a market and customers to persuade. Marketing
is outward looking, trying to match the real requirements of the customers. The company looks for a marketing opportunity and
creates products as a solution to the customers’ problems.

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THE MODERN-DAY SALES ACTIVITY

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A modern sales job does not stick to the stereotyped classifications of the functions, as explained in the preceding section while
distinguishing between sales and marketing. It includes topics such as marketing research, consumer behaviour, and strategic

one-third of his sales time on the actual selling function.

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planning for long-term sales gain and for establishing endurable relationship with customers. Today, a salesperson spends only
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They are conducting more of marketing functions such as territory analysis, sales research, market planning, and sales
promotion. Salespeople are spending more time on tele-selling, fix­ing appointments for sales call, and checking the orders and
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payment patterns which are not part of the core, face-to-face selling function. They provide services to key and national accounts
for building future business, travelling to a client’s location, administration, and internal meetings.
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Example of an SAP Screen

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 10  Sales and Distribution Management

The sales activities and functions are regularly changing. Today, companies are trying to automate sales reporting and forecasting
systems and they are opening up gateways for com­munication flows through systems applications and products (SAP) platforms
(see image for example of an SAP screen). The speed at which information and market intelligence reports are generated for quick
decision making is higher compared to yesteryears. The salespeople are carrying out different kinds of sales activities at different
stages of the selling process.
For example, when a medical representative makes a call to a doctor he is not only providing services to the doctor but also
helping the doctor increase his knowledge level on new products. At the same time, he is also collecting marketing intelligence
about the type and nature of diseases affecting patients at different points of time.
The level of sales activity that a salesperson does also varies from country to country. In a developed market, a salesperson spends
more time on sales presentations whereas in a developing market, he has to do more prospecting to generate leads and make them
qualify as prospects. The daily activities of the sales staff are not constant or stagnant, rather they present greater challenges at every
point of time to the sales representatives.

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THE SALES MANAGEMENT PROCESS

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The sales management process in any organization involves three interrelated and dynamic set of decisions and processes. Sales

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management is the process of attaining sales force goals in an effective and efficient manner through planning, staffing, training,
leading, and controlling organizational resources. Any organization with a substantial sales force needs to plan and manage the sales
management process and accomplish goals through resource utilization and people management.
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The sales management process covers three interrelated steps—formulation of a strategic sales programmes, implementation
of the strategic sales programme, and evaluation and control of sales force performance. Figure 1.5 explains the steps and their
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meanings.
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Formulation of a Strategic Sales Management Programme

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The strategic sales programme should consider the environmental issues affecting the business. It
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should organize and plan the company’s overall personal selling efforts and integrate these with the
other elements of the firm’s marketing strategy.
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Implementation of a Strategic Sales Management Programme

It involves selecting appropriate sales personnel, training them, leading them and motivating them, and
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designing and implementing of policies and procedures that will direct the efforts of the salespeople
towards achieving corporate objectives.
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Evaluation and Control of Sales Force Performance

It involves developing methods and practices for monitoring and evaluating the individual and group
sales force performance. This entails taking corrective steps either in formulation or in implementation
programmes to achieve the desired corporate goal.

FIGURE 1.5  The Sales Management Process

Formulation of a Strategic Sales Management Programme

This is the beginning of a scientifically designed sales management programme. The sales planner must take into account the
influences and constraints imposed by the external environment. The demands of the potential customers and the strategic moves
of competitors are two important external environmental factors that a sales manager should take into account. The strategic sales
management process formulation is summarized in Figure 1.6.
The other environmental issues taken into account include the legal and political environment, social and cultural environment,
the technological and natural environment, and the prevailing economic environment. The organizational environmental factors
help in determining the nature of a sales programme. Human and financial resources, the level of capacity utilization, and the

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 Introduction to Sales Management  11

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FIGURE 1.6  Formulation of a Strategic Sales Management Programme

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innovation cycles prevailing in the environments can help and decide a company’s ability to pursue particular types of strategies
or

such as staying in the same market or expanding the market. There are five key decisions that a sales manager needs to take at
this stage.
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1. The sales manager should decide on how the personal selling efforts can best be dovetailed to the company’s environment and
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integrated with other elements of the marketing strategy. This decision is set to explain the firm’s personal selling strategy.
2. The next decision is to find out and decide in what way the potential customers can best be approached, persuaded, and
serviced. This means deciding the kind of account management policies the firm should adopt. This is essentially the decision
related to sales approach.
3. The third decision is the organization of the sales force to call and manage various types of customers as effectively and
efficiently as possible. This is related to the design of sales organization suitable to the market.
4. The fourth decision is related to the level of performance each member of the sales force is expected to attain during the
planning period under consideration. This involves decisions related to forecasts, quota, and budget-setting.
5. The fifth decision is related to the deployment of the firm’s sales force in the light of the account management policy
and demand forecasts. The decision involves deciding on the sales territories and allocation of these territories to the
salespeople.
A sales programme must be carefully integrated with other marketing strategies. Personal selling is only one of the tools of sales
promotion strategy, which is a part of the core marketing strategy. The sales manager should decide what kind of sales promotion
strategy the firm should pursue in view of the firm’s product offerings, competition in the market, the available distribution strategy,
and the prevailing pricing policy. These decisions will influence the personal selling objectives and organizational deployment of
resources to personal selling efforts.

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 12  Sales and Distribution Management

Implementation of a Strategic Sales Management Programme

Implementation of the strategic sales management programme involves motivating people and directing their efforts and energy
towards the achievement of the corporate goals. A sales manager needs to understand the reasons behind the behaviour of people
and their level of commitment towards the organizational goals. There are five factors that influence the job performance and
behaviour of salespeople.
The ability of the salespeople to achieve the desired level of outcome is always influenced by the environment in which they
operate. On many occasions their job behaviour is influenced and sometimes constrained by the environmental factors such as
the situation in the market, the level of competition, the market demand for the category, and the condition of the economy in
providing consumption power to the end-users.
In many situations, the condition of the economy influences the organizations so much that their demand pattern is moderated
by the end-user demand. In organizational selling, the de­mand of the secondary industry is influenced by the income level and
purchase intent of the end consumers, hence affecting the sales performance level of the sales staff in the primary industry.
Other elements of the marketing mix, such as the perceived quality of the product, the pric­ing policy followed in the market,

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and the level of promotional support, also influence the sales performance of the people in an organization.

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A salesperson should be clear about his job profile and the methods he should follow to execute the desired role in the
organization. Any ambiguity in the job description and expectations and demands of other people from the salesperson, within or

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outside the organization, may create role confusion.
A salesperson’s job is defined by the roles and expectations of the sales manager, the marketing manager, his family members,
and other employees in the organization. The salesperson’s ability to understand these roles will decide his performance level.
i ty
This is termed as role perception in the organization He has to face conflicting situations in the organization while executing
his job. For example, he may have to handle a customer who is very price sensitive and enjoys hard bargaining whereas the
rs
company policy may not permit him to close the sale with a bargain. His ability to handle situations like this will decide his
ve

success level.
The performance of a salesperson is also influenced by his ability to perform the job. Personal characteristics, personality traits,
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level of intelligence, and analytical ability to comprehend the selling situations will decide his success level in the sales field. No
matter how much a salesperson tries, he will not succeed unless he has an aptitude for selling.
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As different kinds of selling demands different kinds of role expectations, a person successful in a particular job may fail
in another role in the same or a different organization. Even when a salesperson has the aptitude to sell, he may lack the skill
d

required to carry out the specific job. The salesperson should have adequate knowledge about the product market conditions,
or

competitor product information, and should also have the knowledge about and training of closing a sale through effective
presentation.
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A mere commitment to the job may not bring a highly motivated sales force to the organiz­ation. The salespeople should
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be motivated enough to stay committed to the job and contribute incessantly. A salesperson’s motivation level is related to his
expectations of rewards from the organization at different levels of performance and the practice of rewarding people in the
organization. People stay committed due to the expected rewards in financial terms, job enrichments, or promotions.
Sales managers use various policies and procedures to influence the ability of a salesperson to sell more. They can also influence
the aptitude, skill levels, role perceptions, and motivation of the sales force. Implementation of an effective sales management
programme involves designing of policies and procedures to recruit the right kind of people, training them and helping them
acquire adequate skills to perform better, and motivating them to achieve higher than their normal commitment levels. The
policies should be the guiding force in deciding what kind of job behaviour and performance is desired from each salesperson and
how they can be shaped and directed towards achieving organizational goals.
A sales manager should decide what kind of aptitude is required for performing the selling function and then should go to
develop the recruitment and selection criteria to ensure that the right kind of people with right ability and capabilities are hired for
the enterprise. A salesperson improves his skills and ability to sell by practice and through experience.
But it is not prudent to leave him on the field to learn by trial and error as it may affect the company’s reputation. Good
companies develop training modules to train the new sales force before they go on the field. In many companies, the salespeople
are trained regularly to increase their knowledge regarding the emerging global competition and the application of technology in
the selling function.

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 Introduction to Sales Management  13

Therefore, training is an ongoing process to upgrade the knowledge and skill level of the sales force. A sales manager should
decide what kind of selling skills and knowledge are required for selling the products, and then design sales training programmes
and introduce them for enhancing the efficiency level of the sales force.
After the training programmes are over, the sales staff needs to go and work in the field. In many instances they face conflicting
situations and need guidance in executing their duties. So in situations like these the sales managers need to develop effective
supervision policies and procedures so that the salespeople can obtain advice and guidance from the management. A supervision
policy should give enough freedom to the sale force to apply creative selling skills in realizing a sale.
A salesperson’s level of motivation is a function of his intrinsic desire to be successful and the extrinsic desire to obtain rewards
from the organization for a given level of job performance. A sales manager should determine what rewards are important and
desirable by the sales force and develop motivational plans and compensation mechanism to reward the successful salesperson.
A compensation programme involves financial and non-financial rewards. The non-financial rewards programme includes
recognition programmes, promotions to better territories or man­agement positions, or opportunities for personal development.
Figure 1.7 explains the steps and process involved in the implementation of a strategic sales management programme.

s
es
Determinants of
Sales management the salespeople’s Outcomes
functions performance

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Salespeople’s view of
job requirements, role

Supervision
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perceptions
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Environment
Performance
variables
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Selection and • Sales volume

recruitment of Aptitude • Quota allocation
sales personnel
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• Selling expenses
• Profitability of
Sales training Skills
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customer
• Motivating the • Level of
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sales force customer service

• Sales reports
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• Compensation Motivation level

system • Ethical practices
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• Reward system

FIGURE 1.7  Implementation of a Strategic Sales Management Programme

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Evaluation and Control of a Strategic Sales Management Programme

It is necessary to have an effective control and evaluation system to implement a reward system in a sales organization. The performance
of every salesperson should be measured and evaluated. Many organizations have a well-structured reward system based on the sales
performance. Wipro’s consumer product division uses a structured performance measurement system based on all the activities
of a salesperson in the organization, which includes the sales calls made, prospecting done, and information collected on market
behaviour, and the annual sales volume and customer satisfaction index generated by an employee in the area or territory of operation.
It is important on the part of a sales manager to monitor the overall sales management programme to check its level of achieving
the desired level of marketing goals set in the marketing strategy. A successful sales programme also needs monitoring as the
environment undergoes changes faster than expected.
Hence, a sales manager needs to keep a tab on the changing landscape of competition, the entry of new players in the business,
changes in the economic conditions of the country, changes in the consumer profile, consumer intention in buying a specific brand
again and again, and effectiveness of all other components of the marketing programme.
Changes on above variables may make a successful marketing programme redundant and the company may lose the market
share. Therefore, overall performance of a sales programme should be measured frequently and compared with the intended

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 14  Sales and Distribution Management

planned activity. If observed and monitored carefully, sales managers can make timely interventions to adjust the strategy to the
changing market conditions.
Several performance dimensions can be measured and evaluated. Data collected on sales volume, market share, profitability
levels, cost of customer acquisition, the quality of service expected and provided to the customers, timeliness, and truthfulness of
the call reports help a sales manager to take correct decisions regarding the future course of action. There are three major variables
measured for evaluating and controlling a sales force. Companies conduct sales analysis, cost analysis, and behavioural analysis to
monitor sales programmes.
Each salesperson’s sales volume can be monitored and measured against the quota allocated to him. These sales figures can be
broken by territory, by product line, by customer types, and results can be compared with quota and forecasted sales in these areas.
This method is called sales analysis.
Similarly, cost analysis can also be undertaken in organizations by the sales managers. The costs can be evaluated on the basis of
an individual sales man, territory, product line, and cust­omer type. When these data are combined with the sales analysis, a sales
manager can find out not only the profitability on segment to segment basis but also the overall customer profitability.
Cost analysis poses a challenge of distributing the administrative costs and overheads on sales accounts and among salespeople

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or product lines. The third kind of analysis is called behavi­oural analysis. Thomas Bonama proposed the behavioural evaluation

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model for the performance evaluation of the salespeople. The ability of the salespeople to achieve a certain level of sales is sometimes
beyond the control of a sales manager due to the level of competition and nature of economic condition prevailing in the country.

Pr
Therefore, salespeople’s actual behaviour should be evaluated with the sales volume and profit generated by each one of them.
There are various techniques such as self ratings, supervisor’s evaluation, self appraisals, field observations, and survey of customer

organizations use a combinatorial method of performance evaluation.

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satisfaction used in behavioural analysis. Although sales analysis is a traditional method of performance evaluation, many modern
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EMERGING TRENDS IN SALES MANAGEMENT

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The field of sales management is changing according to the changes in the area of personal selling. These emerging trends are
affecting the business practices and orientations in the organizations. We will now discuss six emerging trends in the field of sales
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management in the following paragraphs. The six emerging trends in sales management process is presented in Figure 1.8.
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FIGURE 1.8  Emerging Trends in Sales Management

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 Introduction to Sales Management  15

The most important is the customer orientation in Indian organizations. Structures, systems, and processes are designed around
customers to give them high value products and services, deliver more satisfaction to the customers, and retain customers for a
longer period.
This proposition is completely different from the concept of transaction relationships in traditional sales management. The
traditional sales management was more product-driven, whereas modern sales management is more oriented towards mapping
customers’ needs and delivering products to satisfy customers’ needs. Service, quality, and low cost have become cust­omer
expectations.
Buyers change suppliers more often if they are dissatisfied with the quality of support and service provided. Brand loyalty is
no longer assumed and salespeople must work hard to keep a hold on their customer base. If an organization wants to remain in
business for a long time, it must practise it while providing high quality goods or services. Customer orientation requires a higher
level of commitment from sales resources to ensure that customer needs and wants are met satisfactorily. This added commitment
means that resources must be stretched or new methods of sales effort and services be found.
This kind of customer orientation demands exploring newer methods and techniques of selling. The traditional selling process
of individual salesperson calling on an individual buyer is fast disappearing in many industries. It is observed that in the late 1980s

s
and 1990s, many organizations started using non-traditional methods of selling such as telemarketing, key ac­counts management,

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part-time sales force, team selling, and Web-based e-selling techniques.
A company such as Bazee.com started selling through Web-based platforms whereas com­panies such as Videocon used sales

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teams to make sales presentations.
In the industrial sector, software companies have turned to cross-functional selling for the sale of enterprise-wide solutions.
ty
A cross-functional sales team comprises people across all the functions, such as sales, marketing, finance, operations, and human
resource, so that a holistic picture of customers’ problem can be snapped and solutions can be developed for them.
i
rs
A company such as priceline.com in the US uses a Web-based sales model and practices reverse auctioning as a successful method
of selling. In a traditional auction model, people quote high for a deal, whereas in priceline.com, the customers go for the lowest prices
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and a deal is struck by matching the offer of sale of the customers.

This non-personal form of intermediation is found in many sectors such as hotel, travel, and airline industry in the US.
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Companies such as Cummins Engineering also develop teams with sales and technical people as members to take note of customers’
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requirements and develop solutions or customize the product offer to match customers’ problems.
The basic objective of reorienting the selling strategies is to build relationship with customers. This has changed the selling
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process from transactional selling to relationship selling. It implies that the selling-buying process is a continuous stream of
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transactions rather than a single business of exchange.

The long-term association between buyers and sellers becomes the focus of business with the customers. It is observed that
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keeping a satisfied customer is more profitable than gaining a new customer.

The cost of acquiring a customer is increasing day by day, whereas if one is able to retain the profitable customer, it has a
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unique advantage in business. Companies rely more on retaining customers than acquiring new customers through a process of
relationship selling and customer relationship management programmes.
Data from customer interactions are collected and mined to find out implications for customer decision-making, and relationship
programmes are built around the new found customer intelli­gence. Companies such as HCL technologies in India appoint full-
time employees at the client’s place for solving any problems relating to computer hardware.
GE and other leading players have opened back office operations in India to attend to customer complaints and route them
to appropriate channels for faster redressal through call centres and real-time interaction points on the Web. Most of the Indian
software companies also appoint sales and maintenance staff at clients’ project sites to solve any immediate problem.
All these are part of relationship selling where the existing customer is taken care of in a better way and profits are generated
by retaining the customers. Many firms launch customer loyalty programmes such as the Jet Airways programme on Extra Miles
for the frequently flying customers. A relationship selling strategy demands the sales staff to develop long-term relationships with
their customers.
These relationships should be built across the enterprise and with a wide range of indi-viduals within the buying organization.
This allows sellers to up-sale the newer and high-value products and cross-sell the other categories to the same set of customers,
thereby increasing the profitability out of each customer.

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 16  Sales and Distribution Management

As we have observed, there is a need to collect a large amount of customer data and build models to forecast the likely behaviour of
customers. This forecasting has to be ably supported by faster design of solutions and faster communication with the customers about
the new pro­duct offerings.
Today’s enterprises are also undertaking unparallelled cost-cutting steps whereby the demand for information of vendor’s cost
structure is rising. Newer frontiers of emerging technology is not only solving the problems of the traditional businessmen but also
posing newer challenges to the salespeople.
Organizations are adopting technology and integrating their businesses across the enterprise so that all the departments are
aware about the changing need patterns of the customers and can gear up resource commitments towards satisfying customers’
evolving needs. Probably no single variable has made such an immediate impact on the sales world as has the changing world of
technology.
Technology is having an impact in two ways: in terms of the selling function as a whole, and also in terms of the performance
of the selling function by an individual salesperson.
Newer technology has made it possible to automate the sales force. Organizations have integrated their requirements with
vendors and vendors also have adopted systems which are compatible to the enterprise-wide solutions of their customers. So there

s
is no need of a sales call to be made with the routine customers.

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Technology has made the organizations aware about their customers’ need patterns, and supplies are fed into the system as and
when demand arises. This has reduced the role of the salesperson as an order taker. These order cycles are linked to payment cycles

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also, whereby the cash is automatically transferred to the seller’s account from the buyer’s account and there is no need for a follow-
up to realize the sales proceeds. This has directly reduced the cost of maintaining a back-up sales force for these routine activities.
ty
The buyers are benefited as they get fresh shipments and their inventory carrying cost is lowered due to the supplier’s attention
to the needs of the buyers. Tata Motors has integrated around 56 suppliers to its automated supply chain management system.
i
rs
Under this system, the vendors, with desired quality specifications, supply uninterruptedly to the organizations and the receipts
for them are automatically cash transferred.
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Maruti has a sales automation process whereby all the dealer networks are linked to its production process at the Gurgaon plant
and the production of different types of cars are linked to the demand patterns in the marketplace. This kind of flexible manufacturing
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system is possible due to the adoption of integrative technology. Companies such as Archies and Hallmark use data derived from bar
U

codes scanned at the check-out counters of retailers to supply information to their salespeople.
This information allows the companies to supply the retailers with tailored displays and promotions designed for the retailers’
d

customers based on their buying preferences. Pharma majors such as Torrent and Pfizer also use technology to augment the job of
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their salespeople and manage the demands in the marketplace.

Another aspect of adoption of technology has been the way the salespeople perform their jobs. Many Indian companies provide
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hardware support in the form of notebooks to their salespeople for data recording, transmission, and retrieval for faster access
to customer order information, price data, and bid specifications. More and more salespeople can now work from their homes
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through computers, faxes, copiers, voicemails, and cellular phones.

The Web-based technology has improved their virtual presence on the job in the form of faster reporting and better information
feed to the organization. The emerging wireless technology has brought another world order in which the decisions on quotations,
inventory level, supply cycles, and wait-in periods are taken on a real time basis at the client site also.
The use of various networks such as www.indianrailways.com or www.jetairways.com and similar websites help the salespeople
to speed up the reservation process, send email to customers from home, workplace, and while traveling, and access banking
information about new products and services of competitors from the websites. All these technological changes have improved the
sales efficiency, and demand a different pattern of selling professionalism unheard of in the past.
Business world is under a flux due to the emergence of new enterprises including virtual organizations. Sales organizations are
looking for diversity in experiences, background, culture, and frames of reference for their sales personnel. Organizations must
approach diversity in a serious way due to the diversity in culture, practice, and rituals in India.
Organizations should have counselling programmes on gender awareness, cultural sensitivity, and disability awareness to
promote a harassment-free workplace. As the business is going global and the virtual organizations have made it possible for the
small firms to compete with large firms, a global, multicultural workforce is emerging. This needs a radical attention to the way
sales management practices including working hours and travelling norms are decided.

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 Introduction to Sales Management  17

The global and ethical issues strongly influence the sales management practices across the world. Various legislations governing
different countries influence the business decisions of enterprises. Hence, they guide the business practices in different countries,
which may pose dif­ferent challenges to the salespeople in each of these countries.
The global legislations such as the General Agreement on Trade and Tariff (GATT), the changes due to World Trade Organization
(WTO) pacts, and the emergence of legislations on environment make it binding for a sales force to look at the emerging issues in
the business world and take corrective actions for business success. The growth in consumption in the emerging markets, such as
China, India, and Malaysia, demands special attention to be given to the structure, approach, and nature of sales force and selling
techniques.
This has given a boost to international travel for the salespeople, and has increased competition in domestic as well as international
markets. As organizations have begun competing globally, the ethical issues and norms conducting businesses have also emerged.
Maintaining a certain level of ethical norm is a part of responsible commercial success. There are ample cases of bribery and
cheating in the world of sales in Indian market and organizations are being blamed and ridiculed for the misconduct in business.
Salespeople are now evaluated on the basis of ethical practices in realizing a sale. More and more companies are now moving to
an ethics-based corporate philosophy.

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SUMMARY
The nature of personal selling and sales management is outlined   The revolution in information technology and the emergence
in this chapter. This chapter gives an overall idea of the scope of
this book.
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of the Internet has affected the sales func­tion more than any
other activity of management.
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  A successful sales management programme does not exist in   Companies are using enterprise-wide solutions and integrating
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vacuum. A sales manager has to build a successful sales management their business practices with customers so that the cost of serving
strategy keeping in mind the available resources, internal environment the customers can be kept low and inventory carrying cost
of an organization, external environmental factors such as can be minimized. Sales force automation has made the job of
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prevailing economic conditions, level and intensity of competition, a salesperson easier as he does not have to put extra efforts for
U

and the stage in the life of the available technology. realizing repeat sales. There are various trends emerg­ing in the
  Personal selling is a personal mode of communi­cation between sales world today. The orientation is more towards relationship
d

a salesperson and the potential cust­omers. Sales management selling than transaction selling.
is the process of organizing resources, planning for the future   Sales management involves a strategic planning process
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course of action for the enterprise, and managing sales force. where sales strategies are formulated, imple­ mented, and the
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  Personal selling is the most widely used promotional technique. performance of the salespeople is evaluated through a monitoring
A salesperson is the primary point of con­tact between a customer and evaluation mechanism. Though sales management is
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and an organization. Many a time, a salesperson represents the perceived as a push strategy, modern sales management has bri­
organization and impressions built on the salesperson make or mar dged the gap between sales and marketing.
the prospect of the business. Technological advances are affecting   An increasing member of companies are focusing more on
the way salespeople perform their jobs and the manner in which customers than the product, and are design­ ing organizations,
sales functions are accomplished today. strategies, and principles according to the customers’ needs and wants.

KEY TERMS
Cross-functional selling  This involves a team of people bringing Marketing concept  This concept proposes that the reason for success
together expertise from different parts of the supplier organization lies in a company’s ability to create, deliver, and communicate a
to capture, retain, and increase business with customers. better value proposition through its marketing offer.
Industrial selling  This is the selling process followed to satisfy the Personal selling  It is a personal communication of in­formation to
industrial customers and big organizations in­cluding the government persuade a prospective customer to buy something—a good, service,
establishments. or idea—that satisfies an individual’s needs.

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 18  Sales and Distribution Management

Product concept  It is the proposition that consumers will favour Sales management  It is the attainment of sales force goals in an
those products that offer attributes such as qua­lity, performance, effective and efficient manner through planning, staffing, training,
and other innovative features. leading, and controlling organizational resources.
Production concept  It proposes that customers will cho­ose the Selling concept  It proposes that customers will not buy enough
products and services that are widely available and are of low of an organization’s products unless they are per­suaded to do so
cost. through selling efforts.
Relational selling  It is a level of relationship marketing in which the Service selling  This is the selling process where the sales­people sell
seller contacts the customers after the purchase to determine if they services to customers.
are satisfied and have future needs. Technological environment  This is the environment that influences
Retail selling  This is the front-door sales process that a customer the selling process due to adoption and evo­lution of technology in
encounters when he visits a retail store. the industry and company in general.

CONCEPT REVIEW QUESTIONS

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 1. What is the difference between selling, sales manage­ment, and  5. Why people are giving importance to relationship selling? What
marketing management? added advantage does it provide to the sales managers?

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 2. What role does sales management play in marketing?  6. What are the key constituents of a strategic sales management
 3. What are the different types of selling? Explain indu­stry selling, process? What key decisions a sales manager has to take at
service selling, and retail selling. different stages of the sales management process?
 4. What are the emerging sales management trends and how are they
affecting the role and functions of a salesperson?
i ty
 7. Differentiate between production orientation, product orientation,
and marketing orientation.
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CRITICAL THINKING QUESTIONS

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 1. It is estimated that the first year cost to automate information market share. What is the role of personal selling in the steel scrap
handling and customer account data for a field salesperson is industry and in Ispat Alloys? Do you think this strategy will work?
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`35,000. This includes the cost of hardware, additional telecom  3. Tata Timken markets heavy equipment ball bearings in India.
charges, and insurance for the equipment. This is for a small They had a countrywide sales network of 120 salespeople but the
pharmaceutical company having a turnover of `300 crores and sales were stagnant and the organ­ization was in the red. As a
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head­quartered in Gujarat with a countrywide sales network. There restructuring practice, the company decided to follow a different
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are 70 salespeople in the company. How will you justify the selling model and fired the entire sales staff. They appointed
expenses on sales force automation to your sales vice president? 55 independent manufacturer’s representatives. Manu­ facturer’s
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 2. The Indian steel sector faces stiff competition from the cheap representatives were not employed in the company and they
Chinese imports in steel scrap industry. Many steel scrap sellers sold goods of other companies as well. The representatives sold
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have reduced their costs by downsizing the sales staff and various other items with the ball bearing equipment. The sales
reducing the number of sales calls. Ispat Alloys, on the other picked up, old customers came back to the company, and new
hand, has instructed its salespeople to make frequent calls to a customers also started buying. What reasons can be attributed to
large number of customers. The salespeople are motivated to take this development? What were the ad­vantages and disadvantages
a share of the additional profit that they will generate with this of appointing manu­ facturers’ representatives compared to the
exercise and in the process satisfy management’s desire to gain company’s salespeople?

PROJECT ASSIGNMENTS
 1. Visit the website www.jobsahead.com and analyse the services  3. Visit a retail store and interview 10 salespersons on the basis of
available from a sales manager’s point of view and prepare a fact their selling approaches? Evaluate them on the basics of their
sheet covering what kind of organizations are advertising on the customer orientation?
site for the sales job and what kind of avenues are open for the  4. Conduct a survey of 20 medical representatives and identify the reasons
applicants. of their working in a particular company, how are they compensated
 2. Prepare a list of companies that you would wish to join and list and evaluated, what is their sales target, and how long have they been
their uniqueness and conditions of employ­ability from articles and looking for working in this company. What are the reasons for them
news clippings published in newspapers and magazines. Visit their to leave the company, if at all they are planning to do so? Prepare a
websites and rate them accordingly. Give reasons for your rating. report on the basis of this and submit to your instructor.

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 Introduction to Sales Management  19

CASE STUDY 1.1

Vishal Julka’s Dilemma
Mr Vishal Julka works in a company that manufactures quality   He wondered how many hours he would have to travel as
writing pens called Victoria and markets them in India through there would be heavy traffic and it would take him more than an
its own sales force and retail channels. It is already 7 p.m. but he is hour to reach the hotel to be in time for the presentation. The
still in his office tying up loose ends of his work with a hope that VP (sales) assured that all the material would arrive at his desk
tomorrow will be a better day for him in the office. by late evening from his office and the presentation had to be
  He is the regional sales manager of the company and looks prepared the same evening for next day’s meeting.
after the western Indian market. He has to see a few files and   After attending a few phone calls he could come to the
answer a few phone calls that have come over the day and he territory redesign project by 3.30 p.m. Just after that he had an
has not been able to respond due to his office work. He wonders appointment with one area sales manager (ASM) and had to spend
at least an hour discussing the problems of his area and suggest
whether, being a middle level manager, it is his job to promote
some corrections in the sales promotion programme carried out in

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sales, travel a lot, and also plan for the sales staff. He has to meet
the area for the retailers. Then he had to collect the daily market

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his clients and also talk to regional distributors regarding market
reports over phone from two of his area sales managers.
expansion.
  Mr Vishal looked at his watch and a write-up on the wall. The
  Today is not an exception to any of the days in office. He

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write-up read ‘so much to do, so little time.’ He took a breather and
went early to office to meet Sandeep Singh, the regional sales closed his eyes for a moment. It was about 7 p.m. and he realized
manager of south India, to finalize a joint sales forecast that they there was no point in making official calls to the warehouse as most
are planning to prepare for the coming year. Working with Mr
Sandeep is not an easy job. He is a hard task master and does not
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of the people in the warehouse must have left for home.
  The whole day had slipped out of his hand. He remembered
rs
compromise a bit in his work. that he had promised his wife to take her for dinner tonight as he
  He also called up the production managers of two of the plants had missed her birthday due to official engagements last week,
ve

located in Goa to find out the reasons for delay in the supply of but it seemed that he would cut a sorry figure again this time.
the new range of pens to the west Indian market. The production He still had the material from the VP (sales) for review and a
people are not nor­mally responsive to the market demands and they
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presentation to make next day.

do not realize that the retail outlets have to keep a higher inventory   He had to find out a way to motivate the field sales force
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level at this time of the year as educational institutions are going to through the reward system and achieve the additional sales that
open by 15 June across western India. had been planned for the new product line. The redesign of the
d

  The new product lines were test marketed last De­cember territory was just a small assignment. He thought what else he
and showed a big promise for the market. The phone calls were
or

could do in the evening so that the coming day would be better

taking more than the normal time but he was able to speak to organized. He was thinking of calling home and saying sorry to
the production people by 11 a.m. Vishal was able to concentrate
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his newly married wife Salinee.

on the major projects he had planned for the day. After perusing   It had been more than three weeks and he had not been able
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for weeks he was able to collect the sales call reports of the sales to take his wife out for dinner. He thought that the only time
representatives of his area for calculating total sales generated by he really had no work was when he went to the pizza corner
each salesperson and find out the productivity and profitability across the road for his lunch. Many a day he feels so tired that
of each salesperson in his territory. he sleeps with­out dinner and the latest health report says that his
  He has a strong feeling that the productivity of the salesperson cholesterol levels are alarmingly high.
can be improved by redesigning the territories and adjusting each
salesperson’s area and quota for the territory so that they have Questions
to travel less and attend to the retailers more often than in the
previous design. This is a major project and he needs to present this 1. Analyse Vishal’s job. Is it worth doing so much, at the cost of
restructuring plan in the next meeting with the vice president (sales). so many things?
  Vishal went out of the office to the nearest Domino’s Pizza 2. How is Vishal’s life similar to any salesperson’s life in general?
point for a little longer than the normal lunch break. When he What difference did you find between your life and that of Vishal?
came back to office, he found a long list of phone calls he had to 3. What managerial skills are described in this case? Which skill
attend to immediately, in­cluding a phone call from vice president is more important for Vishal to possess? Why?
(sales). When he called the vice president (sales), he came to know 4. Why do you think that Vishal is handling too much (if you
that he had to allocate a major part of next day’s time to present a think so)? Is there a way out?
new incentive programme at the area sales officers’ meeting to be 5. Can Vishal manage his life in the long run? If so, please give
held at Hotel Taj, Mumbai. suggestions.

© Oxford University Press India. All rights reserved.

SDM_Book.indb 19 14/06/19 5:13 PM

 20  Sales and Distribution Management

REFERENCES
Belden, Thomas and Marva Belden 1962, The Lengthening Show, Moncrief, William C. and Shannon H. Shipp 1997, Sales
Little Brown, Boston. Management: Strategy, Technology, Skills, Addison-Wesley,
Churchill, Gilbert A. Jr, Neil M. Ford, and Orville C. Walker Jr 1997, Reading, Massachusetts.
Sales Force Management, Irwin, Chicago. Russel, Fredrick, Frank Beach, and Richard Bskirk 1950, Textbook of
Futrell, Charles M. 2001, Sales Management, Team Work, Leadership Salesmanship, McGraw Hill, New York.
and Technology, Harcourt Brace College Publishers. Sprout, Allison L. 1994, ‘Information Technology: The Wired
Herman, Paul 1954, Conquest by Men, Harper & Row, New York. Executive’, Fortune, January 10, p. 85.
Johnston, Mark M., Joesph F. Hair Jr, and James Boles 1989, ‘Why do
salespeople fail?’ Journal of Personal Selling and Sales Management,
9(3), p. 61.

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© Oxford University Press India. All rights reserved.

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