Professional Documents
Culture Documents
& DISTRIBUTION
Paras Bajaj
KIAMS
TYPES OF SALESPERSONS
THE SELLING
FUNCTION
MISSIONARY
SALES
PEOPLE
FRONT SALES
INSIDE DELIVERY OUTSIDE
LINE SUPPORT
ORDER SALES ORDER
TAKER PEOPLE TAKERS
NEW
INDUSTRIAL CHANNELS
BUSINESS
TECHNICAL
2 SUPPORT
MERCHANDISER
Types of Company-Employed
Salespeople
§Sells at a company’s facilities, either by
Inside
telephone or in person. Example Retail
Order Taker Sales Person
ORDER ORDER
4 TAKERS GETTERS
Activities of Sales People
5
Sales Executive vs.
Sales Manager Duties
Activity Sales Executive Sales Manager
Plan Set overall sales targets for Set quotas for each
each product salesperson for each product
7
Sales Management Trends
Fro T
Transactions Relationships
m o
Individuals Teams
Management Leadership
8 Local Global
Traits of Successful Salespeople
10
SHARING RESPONSIBILITIES
Sales Management Task Distribution Management Task
Achievement of volume and market share Stock pressure and shelf visibility
Width and depth of distribution Move all products and ensure visibility
11
SHARING RESPONSIBILITIES
Sales Management Task Distribution Management Task
12
Customer Relationship Selling
Process
1.Prospecting. Identifying and qualifying prospects.
2.Pre approach. Obtaining interview. Planning: determining sales call
objective, developing customer profile, customer benefit program, and
sales presentation strategies.
3.Approach. Meeting prospect and beginning customized sales
presentation.
4.Need Assessment . Discover, assess and understand the buyer’s needs
5.Presentation. Further uncovering needs; relating product benefits to
needs using demonstration, dramatization, visuals, and proof
statements.
6.Objections. Uncovering and meeting objections.
7.Close. Bringing prospect to the logical conclusion to buy.
8.Follow-up and service. Serving customer after the sale.
13
Principles of Personal Selling
Negotiation
When to negotiate
When factors bear not only on price,
but also on quality of service
When business risk cannot be accurately
predetermined
When a long period of time is required to produce the
items purchased
When production is interrupted frequently because of
numerous change orders
Win-Win
Both sides should be willing to make concessions
Items which have low cost to you and high value to
the other side
BATNA
ZOPA
14
Selling Success Factors
1. Listening skills
2. Follow-up skills
3. Ability to adapt sales style to situation
4. Tenacity
5. Well organized
6. Verbal communication skills
7. Able to interact with people at all levels of an
organization
8. Ability to overcome objections
9. Closing skills
10.Personal planning and time management skills
11.
15
16
17
18
SBU Objectives and
the Sales Organization
Market Sales
Share Organization Primary Compensatio
Objectives Objectives Sales Tasks n System
22
Analysis of Sales Behaviour
23
Stages of a Sales Call
Demonstrating Obtaining
Preliminaries Investigating
Capability Commitment
To uncover needs:
Implicit need – a statement of a buyer’s
problem, dissatisfaction or difficulty with a
current situation
Explicit needs – a clear statement of a buyer’s
want, desire or intention to act
In larger sales, implied needs do not predict
25
The SPIN Technique
SITUATION - Facts
PROBLEMS – Difficulties or
dissatisfactions
IMPLICATIONS of the Problems
NEED PAYOFF
26
The SPIN Model
Situation Questions
About the existing
customer situation
28
What is a Partnership?
29
Trust Among Partners
30
Key Account Management Features
31
Key Responsibilities
32
Transaction to Key
Accounts
Transactional Key Account
Selling Management
Overall objective Sales Preferred supplier
status
Sales skills Probing, presenting, Building trust,
handling objections, closing providing optimum
service
Nature of Short, Intermittent Long, intense
relationship
Salesperson goal Get order Relationship
management
Nature of sales One on one Multifunctional team
force
33
Advantages of Key Account
Management
34
Disadvantages of Key Account
Management
35
The key customer matrix
Definitely Decided
A Key Case By
High Account Case
Attractiveness
Relationship
ü ?
Decided Probably
Case By Not A Key
Low
Case Account
? û
High Low
Financial Attractiveness
Criteria for Selecting Key
Accounts
37
KAM Relationship Development
Model
D D
I I
From
R Marketing Marketing R
E E
C Operations Operations C
T T
OInformation O
Sales Purchasing Information
RSystems Systems R
S S
Supplier Customer
38
www.oxlearn.com
Key account strategies
Interdependent KAM
Integrated KAM
Adapted from: “Key Account Management”, Cranfield University School of Management, 1996
The total value of the key
account
Has three elements:
1.Customer lifetime value
2.Other benefits from the relationship
3.The risk of the key account
―the probability of securing (1) and (2)
Total Customer
Relationship Economic
Value of = Lifetime +
Benefits Risk
Customer Value
Managing key relationships
profitably
• Implement key account management strategies based on
lifetime value: LIFETIME REVENUES
● Hig Low
COST
MANAGE:
h REDUCTION:
●
Cost reduction if Reduce costs to
● High appropriate e.g. serve, visit
frequency,
buy over
● cheaper
Internet. Discuss channels. Then,
● COSTS costs with increase
TO customers. revenue.
● RETAIN:
SERVE Possibly, divest
Defend from
●
competition, INVESTIGATE:
erect barriers to Increase share of
● Low exit, share data, spend. If not
● longer-term possible, contain
contracts, costs to serve.
● relationship
pricing
●Manage defection of profitable customers
•Manage acquisition of unprofitable customers
Key account risk
Defection or migration
Volatile purchasing patterns
Negative word of mouth
Default / fraud / litigation
Slow payment
Then, there are the PROFIT LEAKS: the things that
suppliers themselves cause:
Using lots of our valuable time (sales, service,
technical)
Using lots of our valuable services (that we offered
them)
Demanding emergency support at peak times
Sorting out the errors we made (and not paying our
invoices meantime)
Building Relationships with Key
Accounts
Personal trust
Keep promises
Swift replies
Arrange factory/site visits
High frequency of contact
Socialize
Give advance warning of problems
Technical support
Research and development
Service
Training
Helping key accounts to sell
43
Building Relationships with Key
Accounts
Resource support
Provide credit
Help in financing
Joint promotions
Counter trade
Service levels
Delivery as per schedule
Just in time
Computerized reorder systems
Quote to the right level
44
Building Relationships with Key Accounts
Risk reduction
Free demonstrations
Low cost trial period
Product and delivery guarantees
Preventive maintenance contracts
Proactive follow ups
Suppliers should look at the cost benefit analysis for all the
relationship building measures and work swiftly on those
where costs are low but benefits are high
45
Key Account Managers
Essential Skills and Qualities
1. Intrapreneurial ability
2. Business Awareness
3. Planning and organisational skills
4. Communication skills
5. Negotiation skills
6. Analytical skills
7. Selling skills
1.
46
Selling Situation Contingencies
Customer and Product Determinants
of Sales Force Specialization
Market- Product/Market-
Driven Driven
Simple Specialization Specialization Complex
Product Range of
Offering Products
Geography- Product-
Driven Driven
Specialization Specialization
§Reps may take short- §Can take a lot of time, §Establishing distinct
term view leaving less time for sales channels for
§Reps may not other duties, like major acc’ts is more
understand broader, managing sales force costly
overall needs of key §Duplication of effort
acc’t §Financial viability if key
48
acc’ts lost
Adding Independent Sales Reps
to the Sales Structure
§Sell on behalf of mfgs or other sellers in
Clients territories where no company sales force is
present
51
Also from job fairs
Recruiting Sources of Sales Reps
Source Comment
Referrals Advantage of known person. This is also
rewarded
Current Employees They are known and know the company
and the products
Other Companies Especially competitors, suppliers and
customers know your company and
products
The Internet Web page recruiting; Internet recruiting
sites; Resume search services
Educational Institute Cost effective; building relationships
Advertisements Maximum response and cost; quality
questionable
Employment Agencies Advantage of initial screening
Part time workers Specialist companies like MAFOI
Voluntary applicants Unsolicited applications
52
Recruiting Evaluation Matrix
Evaluation Criteria
Recruitin Consisten Percen
g sources t with t Rep’s
strategic Number Numbe retaine Cost Frequenc per-
planning? recruits r hired d after y of use formance
3 years after 2
Within company:
yrs.
Sales force
Other departments
Other companies:
Competitors
Customers
Noncompetitor
s
Educational institutions
Advertisements
Employment agencies
Voluntary applicants
53
Computerized databases
5 Stages of the Selection Process
1
Having candidate complete application
form
2
Testing
candidate
3
Interviewing
candidate
4
Verifying candidate’s background
info
5
Conducting physical exam (if
necessary)
54
An Excerpt from Xerox Campus Interview-
Evaluation Report
EVALUATION (Does Not Meet (Meets Xerox (Exceeds Xerox
(Circle Level) Xerox Standards) Standards) Standards)
Aggressiveness and 1 2 3 4 5
Enthusiasm
Communication Skills 1 2 3 4 5
Record of Success 1 2 3 4 5
Maturity 1 2 3 4 5
Overall Evaluation 1 2 3 4 5
Types of tests
Psychological test
Personality tests
Intelligence tests
Ability tests
Aptitude tests
Emotional intelligence tests
Must ensure test is valid
in case challenged
Should be confirming
factor, not eliminating
56
Model for Selecting New Salespeople
57
Avoiding Common Hiring
Mistakes
Conduct Proper Generate Enough
Don’t Rush to Hire
Job Analysis Applicants
§Wrong rep hired §Identify essential skills, §Have a large enough
§Backgrounds not knowledge, and group of qualified
diverse activities that new hire individuals from which
should possess to to select best
succeed applicants to interview
and hire
59 35
Interrelatedness of
Sales Force Deployment Decisions
Sales
Sales Force
Force How many salespeople are required to
Size
Size provide the desired amount of selling effort?
Determine
location Set up Evaluate
Select Determine Assign sales territorial
and basic people to effectiveness
a potential coverage of design
control territories territories plans
of
unit customers
61 35
Basic Control Units
State
PIN Code
Sales territory
District Control unit
Colony
City
62 35
Sales Territory Design
Build up Method
Combine
Desirabl Total calls
Total calls Control Units
Modify
e call needed in
till calls needed
territories as
pattern each control possible per needed
sales person = total calls
group possible
Break down Method
Combine
Determine Sales Control Units
Sales Modify
company volume till total sales
potential in expected territories as
potential =
sales each control needed
from each expected sales
potential unit sales person volume
63 35
Managing the Sales Training
Process
Assess Sales Training Needs
Sources: Based on Erffmeyer, Robert C.; Russ, Randall K. and Joseph F. Hair, Jr. (1991). “Needs
Assessment and Evaluation in Sales-Training Programs,” Journal of Personal Selling & Sale Management
661, pp. 18–30; and Honeycutt, Earl D., Jr. (1996). “Conducting a Sales Training Audit,” Industrial
(11)
Marketing Management 25, pp. 105–113).
Typical Sales Training Needs
Sales Techniques:
“how to sell”
Product Knowledge:
Product benefits, applications, competitive strengths,
and limitations
Customer Knowledge:
Customer needs, buying motives, buying procedures,
and personalities.
Competitive Knowledge:
Competitive offerings in terms of strengths and
weaknesses.
Time and Territory Management:
For maximum work efficiency.
67
Training Content and Methods
Matrix
Lectures Discussion Demonstration Mentoring On Role Audio Videos Web
s s the playing Cassettes Based
job Training
Company
knowledge * * * *
Product
Knowledge * * * * * * * *
Market
Knowledge * * * * * * *
Selling
Skills * * * * * * * * *
Time
Management * * * * * *
68
Value to Individual
69
Value to Organization
Leadership:
The use of influence with other people through
communications processes to attain specific
goals and objectives
Management:
The attainment of organizational goals in an
effective and efficient manner through
planning, organising, staffing, directing and
controlling
Supervision:
The day-to-day control of the sales force under
routine operating conditions
71
Leadership Characteristics and Skills
Personal Characteristics
Self-Confidence
Initiative
Energy
Creativity
Maturity
Managerial Skills to:
anticipate problems and solve them
seek and obtain substantive feedback
diagnose problems and opportunities
select an appropriate leadership behavior and match it to
the situation
communicate effectively
72
Basic Leadership Styles
Transactional Transformational
support
People
Task
Tell Persuade Participate Delegate Oriente
Oriente
73 s s s s d
d
5 Challenges for Future Leaders
1
Incorporate globalization/internationalization of leadership
concepts
2 Increase the integrity and character of
leaders
3 Incorporate new ways of thinking about
leadership
4 Integrate
technology
5 Demonstrate return on
investment
74
Leadership
HIG
H
Styles
PARTICIPATES PERSUADES
Sales Manager and Salespersons
Sales Manager
decide jointly
Decides with discussions on Why
PEOPLE ORIENTATION
DELEGATES TELLS
Salespersons take decisions
Sales Manager takes unilateral decision
TASK ORIENTA
75 LOW HIG
Examples of appropriate and inappropriate H
78
How Will You Handle?
Sales Behavio Nonverb Looking Strengths Problems
Person
Grandstand ur
Aggressive al
Exuberant for
Big
Awards
Great
Closer
Overpowering
At times
George
Fearful Fred Low
Enthusiasm
Signals
Scared Support Honesty Low Sales
Volume
Slumped Sally Burned Depressed Coaching Past success Pessimistic
Out
Excited Eddie High Wired Exotic New Poor Follow-
Enthusiasm Incentives Territories up
Disorganised Inconsistent Frustrated Meaning Team Unfinished
Debbie Player Business
Perfectionist Overconfident Rigid Control Detail Lack of
Pete Oriented Flexibility
Worried Low Hesitant Stability Amiable Starts rumours
Walter Enthusiasm
79
5 Challenges for Future Leaders
1
Incorporate globalization/internationalization of leadership
concepts
2 Increase the integrity and character of
leaders
3 Incorporate new ways of thinking about
leadership
4 Integrate
technology
5 Demonstrate return on
investment
80
Job Satisfaction
•Sometimes called individual morale
•An individual salesperson’s emotional and
evaluative feelings toward various
dimensions of the job, including feelings
toward…
•Pay
•Promotions
•Job Security
•Benefits
•Co-workers
•The Sales Manager (or Leader)
82
Maslow’s Hierarchy of Needs
F: self actualisation
M: Special projects, more
responsibility and authority
F: Status, recognition
M: title change,
promotion
F : Affiliation , friendship ,
acceptance
M : team selling , sales
meetings , mentoring
programs , social functions
F : Job security , safety , income
security
M : Mutually agreed performance
standards , insurance , retirement
benefits
Fulfilled through Food, shelter,
clothing
Managerial action : Compensation
83 packages
Motivational Conditions
NO NO
NO
84
Vroom’s Expectancy Theory
A person’s motivation to exert efforts depends on his
expectations of success
Expectancy – A person’s perception of relationship between
efforts and performance
Value
EFFORT Expectancy
PERFORMANC
E
Instrumentality REWARD Valence of
Rewar
d
Instrumentality – Relationship between performance and
reward
Valence – Value placed on a particular reward by a sales
person
Higher the motivation, greater the effort leading to superior
performance
85
Career Stages
Exploration
Primary concern is finding a suitable occupation
Underdeveloped skills and knowledge
Many drop out or are terminated
Low expectancy, instrumentality, high valence for personal growth
Establishment
Primary concern is improving skills and performance
Lack of promotion may cause disengagement or quitting
New commitments make pay important
High expectancy instrumentality, high valence for promotion and pay
Maintenance
Primary concern is maintaining position, status, and performance
Have highest sales volumes and percentage of quota and pay
High valence for recognitions, respect, and pay
Low valence for promotion
Disengagement
Primary concern is preparing for retirement and/or developing outside interest
Low valence for higher order and lower order rewards
Low instrumentality
86
Sales Person’s Perceived Reasons for Failure
and Motivational Impacts
Perceived Reasons Motivational Impact
Positive Negative
Ability Seek help from others Become frustrated and
Get additional training discouraged
Effort Behaviour Work harder
Increase effort No
Givechange
up in behaviour
Make more calls
Strategy Behaviour Change selling
Work longer strategy
hours No change in behaviour
Task Difficulty Work harder Become frustrated and
Change strategies discouraged
Luck No change
Seek help in behaviour Change
Give up the situation
87
What Motivates Your Employees?
Motivational Factors Rank Rank
Employees Managers
Interesting work 1 5
Appreciation of work done 2 8
Being well informed 3 10
Job Security 4 2
Compensation 5 1
Growth and promotion opportunities 6 3
Good working conditions 7 4
Personal loyalty to employees 8 6
Tactful discipline 9 7
Help with personal problems 10 9
88
Causes of Plateauing
89
Leadership Model for Sales Management
Sales
Manag
Power er’s
Needs
Sales Manager Leader Salespeople
ship Other People
Effectiv
eness
Leadership
Skills
Power Anticipation
Salespeople Diagnostic
Other People Selection
Communication
90 -Influence Strategy
-Communications
Mechanisms
A SITUATIONAL MODEL OF LEADERSHIP FOR SALES
PERSONNEL
Sales Manager
•Personal Characteristics
•Needs and Motives
•Power
•Past Experience and
•Reinforcement
Salesperson
•Personal Characteristics
•Needs and Motives
•Performance Level Sales Manager's Behavior
•Past Experience Salesperson’s
and Activities
Behavior
•Tells •Supervision
Influence •Performance
•Persuades •Coaching
•Satisfaction
Sales Group •Participates •Counseling
•Turnover
•Characteristics •Delegates
•Expectations
•Norms
•Sales Culture
Situation
•The Task Being Faced
•Organizational Factors
•Problem Faced
•Time Pressures
91
Sales Organization Effectiveness
vs. Salesperson Performance
Environmenta Salesforce
Salesforce
Environmenta
ll Control
Control
Factors System
System
Factors
Salesforce
Salesforce Sales
Sales
Salesforce
Salesforce
Salesforce
Salesforce Selling
Selling Organization
Organization
Outcome
Outcome
Characteristics
Characteristics Behavioral
Behavioral Effectivenes
Effectivenes
Performance
Performance
Performance
Performance ss
Salesforce
Salesforce
Nonselling
Nonselling
Behavior
Behavior
Organizational
Organizational Performanc
Performanc
Factors
Factors ee
Sales Organization Audit Framework
SALES ORGANIZATION SALES ORGANIZATION
ENVIRONMENT PLANNING SYSTEM
Extra-organizational Factors Objectives
•Economic-Demographic Sales Management Program
•Political-Legal Implementation of the Program
•Technological
•Competitive
• Market
•Customer
•
Sales force Management Auditor
Intra-organizational Factors
SALES MANAGEMENT
FUNCTIONS
•Company Organization
Sales force Organization
•Sales-Marketing Department Links
Recruitment and Selection
•Sales-Other Department Links
Sales Training
•Marketing Mix
Compensation and Expenses
Supervision, Morale, and Motivation
Sales Forecasting
Budgeting
Quotas
SALES MANAGEMENT Territories and Routing
EVALUATION Sales Analysis
Adequacy of Sales Managers Cost/Profitability Analysis
Adequacy of Management Practices Sales force Evaluation
Benchmarking
Sales Profitability
Analysis Analysis
Sales Organization
Effectiveness
Cost Productivity
Analysis Analysis
Sales Analysis Framework
Sales Analysis
Organizational
Level of Analysis Type of Sales Type of Analysis
Comparisons with
Forecasts
Sales quotas
Previous period
Same Period Last Year
Comparisons within Sales Organization
Comparisons with Industry/Competitors
Allocation of Functional Expenses
Function Basis of Allocation of Expenses
Personal Selling Direct to Sales Territories
Selling time for each segment/product
Behavioral
Behavioral Results
Results
Salesperson
Salesperson
Performance
Performance
Professional
Professional Profitability
Profitability
Development
Development
Performance Evaluation Output Base
Sales Volume
In value
Units
Compared to quota
Compared to Last Year
Market share
Accounts
New accounts
Number of lost accounts
Orders
Hit rate Orders / Number of Calls
Size of Order Sales / Orders
Performance Evaluation Activity Base
Customer Calls
Number
Number per day
Number per customer
Non-selling
Reports Sent
Number of customer complaints
Dealer/Influencer meetings held
Overdue payments collected
Prospects found
Direct Selling
As a percentage of sales
As a percentage of quota
Performance Evaluation
Effort/Activity Base
Personal efforts/skills
Communication
Time management
Planning ability
Knowledge
Product
Competition
Pricing
Company policies
Personality and Attitude
Enthusiasm
Initiative
Appearance and Health
Performance Evaluation Methods
Behaviorally Anchored Rating Scales (BARS)
Links behaviors to
specific results
Salespeople are used to
develop performance
results and critical
behaviors
Positive feedback about
behaviors may be
more affective than
positive output
feedback
Functions of Marketing
Channels
108
Functions of Marketing
Channels
Routinisation of transactions
Each purchase transaction involves ordering, valuating
and paying for goods/services
Routinisation of these transactions lead to higher
efficiencies and standardisation of goods
Electronic Data Interchange
Continuous Replenishment Programmes
109
Functions of Marketing
Channels
Reduction in Number of
Contacts by
Manufacturers
Manufacturer also wants to
take advantage of bulk
packs to reduce
transaction and
distribution costs
Lot sizes, frequency of
delivery, payments and
communications
routinised through
channels
110
Other Channels
Door to door
Individual on site
Route selling
Home party
Multi-Level marketing
Buyer Initiated
Co-operative stores
Buying group
111
Other Channels
Point of consumption
Vending machines/kiosks
ATMs/Computer access information
Third party influencer
Company sponsored programmes
Premium and gift market
Co-branded cards
112
Other Channels
113
End Users
Business
Individual – The onset of mass merchandisers has
changed the buying patterns of this group making
them part of the various processes
114
Mutual Fund Marketing Channel
Mutual Fund
Custodian
MF Investment Adviser Mutual Fund
Holds the fund
assets, Management Company Transfer Agent
maintaining them Manages the funds portfolio Processes orders to
separately to according to the objectives in buy and redeem
protect the prospectus units
shareholder
interests
115
INVESTORS
Marketing Flows in Channels
S RELI ATE R
Risking Risking Risking
S RE MUS NOC
EL ASEL OH W
T C AF U NA M
Marketing Flow
Cost represented
Physical possession Storage and delivery costs
Ownership Inventory carrying costs
Promotion Personal selling, Advertising, Sales
Promotion, Publicity, PR
Negotiation Time and legal costs
Financing Credit terms, terms and conditions of
sales
Risking
Price guarantees, warranties, insurance,
repairs and after sales service
Ordering Order processing costs
Payment Collections, bad debt costs
117
Distribution Strategy
Set of Objectives
FEEDBACK
D
n
ig
s
e
C
a
h
lD
n
ig
s
e
C
a
h
l
S
c
tru
eS
c
tru
e
Channel Management Decisions
An Analytic Framework or Channel
Design and Implementation
Channel Design
▪ Segmentation
▪ Positioning
▪ Targeting
▪ Establish new Channels or Re-design Existing Channels
Implementation
▪ Identifying Power Sources
▪ Identifying Channel Conflicts
▪ The Goal of Channel Coordination
Channel coordination
120
B2B Channel Segments for a new High
Technology product
Possible Service Output Priorities Lowest total Responsive Full Service References
References and credentials cost/Presales
5 Support/
4 Post Relationship
6 and
25
Info Segment sales Segment Segment Credentials
Financial stability and longevity 4 4 5 16
Segment
Product demonstrations and trials 11 10 8 20
Proactive advice and consulting 10 9 8 10
Responsive assistance during problem 14 9 10 6
solving
One stop solution 4 1 18 3
Lowest price 32 8 8 6
Installation and training support 10 15 12 10
Responsive problem solving after sale 8 29 10 3
Ongoing relationship with a supplier 1 11 15 1
Total 100 100 100 100
% Respondents 16% 13% 61% 10%
121
123
Coverage vs. Assortment
124
Selectivity vs. Intensive
125
Sources of Power
Rewards
Coercion
Expertise
Reference
Legitimacy
Support
Competition
126
Influencer Strategies
127
Continuum of Vertical Integration
128
Sometimes fail to see big Channelwide perspective
picture
Continuum of Vertical Integration
FUNCTION Classical Quasi-Vertical Vertical
Marketing Integration Integration
Contract
Selling Manufacturer’s Captive Sales Direct Sales
Representative Agency Force
129
in
m
d
A
r
te
s
130
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Systems
Types of Vertical Marketing
Types of Vertical Marketing
Systems
Vertical
Vertical
Marketing
Marketing
Systems
Systems (VMS)
(VMS)
Corporate
Corporate Contractual
Contractual Administered
Administered
VMS
VMS VMS
VMS VMS
VMS
Wholesaler
Wholesaler Franchise
Retailer
Retailer Franchise
Sponsored
Sponsored Organizations
Cooperatives
Cooperatives Organizations
Voluntary
Voluntary Chain
Chain
Manufacturer-
Manufacturer- Manufacturer-
Manufacturer- Service-Firm-
Service-Firm-
Sponsored
Sponsored Sponsored
Sponsored Sponsored
Sponsored
131 Retailer
Retailer Wholesaler
Wholesaler Franchise
Franchise
Franchise
Franchise Franchise
Franchise System
System System
System
System
System
Major Logistics Functions
Costs
Costs Order
Minimize Order
Minimize Costs
Costs Processing
of Processing
of Received
Attaining Received
Attaining Processed
Logistics Processed
Logistics Shipped
Objectives Shipped
Objectives
Logistics
Transportation Warehousin
Warehousin
Rail, Truck,
Functions gg
Water, Pipeline, Storage
Storage
Air, Intermodal Inventory Distribution
Distribution
Inventory Automated
When
When toto Automated
order
order
How
How much
much toto
132 order
order
Just-in-time
Just-in-time
Logistics Strategy
Pull Supply Chain
Merchandise
shipped to stores
based on sales and
inventory levels in
the stores
Push Supply
Chain
Merchandise
shipped to the (c) Brand X Pictures/PunchStock
stores based on
forecasted sales
rate
133
Activities Performed by Distribution
Center
Managing inbound transportation
Receiving and checking merchandise
Storing or cross docking merchandise
Preparing merchandise for the sales
floor
Ticketing and marking
Putting on hangers
Shipping merchandise to
stores
Managing outbound
transportation
134
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Key Logistics Activities
Customer Service
Demand Forecasting
Distribution communication
Inventory control
Materials handling
Order processing
After sales parts and service support
Plant and warehouse site location
Procurement
Packaging
Returned goods handling
Reverse logistics
Salvage and scrp disposal
Traffic and transportation
Warehousing and storage
135
SCM Framework
136
IMPLEMENTATION
Benefits of Efficient Supply Chain
Management
Fewer stockouts – merchandise will be
available when the customer wants them
Tailoring assortments – the right
merchandise is available at the right
store
137
WHY GO INTERNATIONAL?
Limited growth in home market
Overseas markets offer large profitable
opportunities
The WTO agreement has resulted in opening up of
new areas for freer trade (Textiles, Services &
Agricultural products)
It has also forced the opening up of markets like
China, Russia, India & the East European
countries.
Domestic competition has increased especially
from imports.
Global Sourcing in manufacturing and services has
increased due to cost pressures & improvement
in infrastructure.
138
CHOOSING THE MARKET
139
The Complex Environment
Behavioral
Behavioral processes
processes in
in
international channels
international channels
Environment
Environment
of
of Designing
international Designing
international international
international
channel
channel channels
management channels
management
Motivating
Motivating international
international
channel
channel members
members
Designing International Channels
142
ROLE OF LOGISTICS
143
PRICING AND PAYMENT TERMS
144
PRICING AND PAYMENT TERMS
Payment terms can include:
Cash in advance
Cash on delivery – cash against documents
Consignment basis – payable after sale
Usance – payment … days after acceptance of
documents
Letter of credit
Long term credit financing – for machinery /
projects
Each method has risks for the buyer or seller.
The LC offers safety and comfort for both
145
CURRENCY OF PRICING
The US Dollar is the most widely used
currency for pricing international sales
Importers in some countries may prefer
invoicing in local currencies like Japanese
Yen or Euro or Pound Sterling, Singapore
Dollars or UAE Dirhams Saudi riyals etc.
This reduces the risk of exchange rate
fluctuations for the buyer
Exchange fluctuation is a major risk for sellers
and can be managed by hedging the
currency.
146
PACKING AND SHIPPING
147
CHANNELS CHANNEL LEVEL
Level 1 Company Depot State
CFA District
Level 2 Redistribution Headquarters
Stockists (May cover 2 to 4)
Redistribution District
Level 3 Stockists Headquarters
Semi
Semi Wholesalers Tehsil
Vans
Wholesalers Headquarters
Level 4
NGOs Feeder Towns
Retailers
Vans Village
Level 5 Government Haats
148
Agencies
CFAs
Normally employed by FMCG Companies
to supplement their own depots.
Cost of CFAs is lower than running own
depots.
They provide space and are involved in
the order processing from
distributors/stockists.
The orders are booked by the Company
representatives and passed on to the
CFA for execution.
Redistribution Stockists
They are the main link between the
Company and the rural channels.
RS are involved in all the marketing flows.
They have vans and a sales force with PJPs
to cover the rural retailers.
Redistribution Stockists cover about 30% of
the rural retailers and are located at
district headquarters.
Some companies also have a next level of
sub-stockists (also called star sellers) who
are located at the tehsil (thana) level.
HUL recently withdrew their sub-stockists.
Wholesaling: More than 70% of rural market
Wholesalers
is still out of reach of direct distribution.
50% of rural consumption through
wholesears located nearby. The reasons of
wholesaling in India are:
Limited product availability to feed the
channel.
Company focused on large number of
retailers in urban areas
Neglect of rural market due to low density of
retail outlets & small off-take per retailer.
Wholesalers are seen as speculators and
exploit the companies and the retailers
Retailers
HAATS – THE SCOPE
155
Melas
Unique System of Rural Coverage
Exclusive , Painted van
Master Van Programme of 12 X 2 days per
month
Frequency - Weekly, Fortnightly, Monthly
50-60 avg. calls per day
Exclusive area of operation
Van Running Cost subsidized
Success lies in training, systems and controls
New Channels
Cooperative Societies
Over 4000 Primary Marketing Societies
Nearly 3000 Large Agricultural Multipurpose Primary
Marketing Services
Public Distribution System
3.8 lakh shops in the rural segment
Petrol Outlets – 7000 in rural
NGOs – They work for employment and income
generation of the rural households
Barefoot Salesmen
Designing Rural Distribution
Two Concepts:
Network
ØMPV
ØPCS
•COST OF COVERAGE
ðViability & Frequency
ðHigh whole sale dependence
ðLogistics in coverage
ðCost of Infrastructure
•160
Synergy & Scale is critical for Rural Distribution
•Appropriate hygiene in terms of Market rates is equally vital
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