Sales and Distribution – TYBMS Unit 1

SALES AND DISTRIBUTION MANAGEMENT

Unit 1

Sales refers to the exchange of goods/ commodities against money or service. It is the only revenue generating function in an organization. It has formed an important part in business throughout history.

Even prior to the introduction of money, people used to exchange goods in order to fulfill the needs, which is known as the barter system.

Sales management is just one facet of a company’s overall marketing mix, which encompasses strategies related to the “four Ps”: products, pricing, promotion, and place (distribution). Objectives related to promotion are achieved through three supporting functions:

1) advertising, which includes direct mail, radio, television, and print advertisements, among other media;

2) sales promotion, which includes tools such as coupons, rebates, contests, and samples; and

(3) personal selling, which is the domain of the sales manager.

• Distribution could be of the following two types −

1. Distribution- It can be defined as expanding or moving from one place to another without changing direction or stopping. For example, Bata has no distribution channel; it sells its products directly to the end consumers.

2. Indirect Distribution- It can be defined as means that are not directly caused by or resulting from something. For example, LG sells its product from the factory to the dealers, and it reaches the consumers through dealers.

Role of sales department –

The basic objective is obviously the achievement of profit through service. Following are the roles and responsibilities ;

1. Looking for the Sales Opportunities with the existing and new customers to sell products and services.
2. Organization effective presentation to the customers regarding the requested product and service.
3. Permanent contacts with the customers to know their needs and requirements.

4. Identify the target budget for each year with following-up percent of the budget realization each quarter of year.

5. Definition Business Opportunities with each customer to be considered in the target budget or forecast list.

6. Developing rapports with all existing and new customers to know their future plan as well as co-ordination with Marketing Department to reach the strategic goals.

Evolution of sales management –

Evolution of Sales Management happened under the following 5 phases :

1.Simple Trade Era –

1. Beginning of marketing concept to mid 19^th century.
2. Products were harvested with limited offerings.
3. Exploration and trade in resources was the focus of economic activity with products as Centre of attraction.

2. Production Era – (Until the Great Depression)
3. Importance was given on engineering and production
4. Primary Objective- To only produce product and sell it to the market in assumption that customers have to accept it .
5. NO alternatives.

3. Different Marketing Aspects (1920s & 1940s)-
4. Emphasized on diff marketing related aspects rather than product only.
5. Increasing competition
6. Consumer markets were saturated (due to high competition).
7. Not easy to sell product without providing adequate information/details about the brand.
8. Price became one of the most important features to organizations to get an edge over their rivals.

4. Marketing Department Era – (2^nd World War-Economic Boom)
5. World featured Economic Boom Resulted an urgent need of a separate

Department for marketing known as “Marketing Department Era”.

1. Here ,Organization experienced that past sales orientation concept were not sufficient to motivate consumers as they have more bargaining power in market place.

I.e. Consumers -> More bargaining power

1. Concentrating on Brand Positioning.
2. Businesses adopted market related activities like advertisements, Sales promotion, Public relations, etc.
3. Marketing Concept-
4. Era of marketing organization emerged to take care of customer needs.
5. Customers were the Focal Point.
6. All employees become part of the marketing effort.

In the classical theory of marketing evolution this is the last stage followed by 2 modified version of Sub-Stages.

Sub- Stages :

• Relationship Marketing Concept
• Social Marketing Concept
• Relationship Marketing Concept-

1. To build up long term customer relationships.
2. Aims to have lifetime customer value and customer loyalty.
3. Buzzwords- CRM (Customer Relationship Management) & Data-minning.

• Social Marketing Concept –

1. In this concept businesses are connected 24×7 to current, future and potential customers in real time.
2. Focuses on real time connections and social exchanges based on build up relationship driven by the consumers.

HOW ARE MANAGEMENT FUNCTIONS INTERFACED WITH SALES?

1. Relationship between Sales and Planning:

Just like every major event in life, whether it be preparing for a big trip to another country, gearing up to go to college, or preparing for your wedding, all of these events take planning. In sales it’s the same thing. It is important to take the time to think things through, create a plan, set goals and execute that plan to achieve the end goal.

Sales Planning is required to:

• Identify your ideal customer profile:

There are two aspects to your ideal customer profile- the first is at the company level and the second at the individual decision maker level.

What criteria for the types of companies you wish to work with fit your idea of the perfect customer? How big is the company, what’s the revenue, what industry, values, etc.? Once you’ve written this out for you ask the question “why?” for each criteria- why is it important that these criteria are present?

• Identify your target list of Prospects:

Once you’re clear on the types of companies you want to go after and the types of individuals in those companies you need to contact, you can start building your initial target list. It’s the list you’re going to hit hard and work tight.

• Identifying sales cycle:

The sales cycle is the time it takes from the initial contact of a prospect to them actually signing a contract becoming a customer. Depending on your product and industry a sales cycle can range from 2 weeks, 6 months, a year or longer. Identifying your sales cycle is incredibly important to your future sales planning.

• Setting Financial goals:

This is your opportunity to create what you say you want to achieve financially. It’s your guiding path, your target that keeps you in line at all times. It’s your financial future you’re creating and stepping forward into. Without this you have nothing you’re moving towards, you’ll walk aimlessly and in circles.

2. Relationship between Sales and Organizing:

The sales organization is an organizational unit within logistics that structures the company according to its sales requirements.

• Product Organizing:

If selling your company’s products requires various types of specialized knowledge, adopt a product-organization structure for your sales force. Salespeople must understand and be able to operate all the equipment they sell so they can anticipate and convincingly answer customers’ questions. By organizing your sales force so each salesperson is responsible for selling only the products she knows best, you increase the effectiveness of your whole sales force.

• Geographic Organizing:

Dividing your sales force by geographic region is the simplest approach. It reduces travel time, which means less overhead. A disadvantage is that each salesperson must understand how to sell every product you want sold in his assigned region. If your product line requires specialized knowledge, training your salespeople could get expensive.

• Customer Organizing:

Organizing your sales force to suit various types of customers also can be effective. Suppose a hospital equipment manufacturer markets its products to large hospitals, nursing homes and private practices. Dedicating a portion of its sales force to each type of customer allows the manufacturer to customize its sales pitches to speak to each customer’s typical needs.

3. Relationship between Sales and Staffing:

Sales and staffing aren’t as separate as you might think. A company needs to attract profitable customers to achieve decent sales numbers, but getting top talent interested in your company is also critical to long-term success.

• Employer Branding:

The word “branding” conjures up visions of market research reports, company logos and product positioning meetings. Your products and services aren’t the only part of your company in need of promotion, though, especially if you want to attract and retain top talent. People want to work with a company that boasts a good reputation, that has a strong mission and vision. Showing people your company’s personality is important, especially in the current economic climate.

• Attracting the right talent:

Since small businesses almost always have tight budgets, even when times are good, it’s even more critical for you to get your staffing decisions right the first time. The secret to attracting the people you want and need: align your HR strategy with your business plan. If you want to be a top application developer for smartphones, you need creative and educated talent. Start blogging about trends in the smartphone industry. Attend developer conferences. Hold information sessions at local colleges, and advertise HR policies that cater to young professionals, like flex time and the chance to brainstorm new ideas on company time.

• Keeping people happy:

One rule of marketing is that you should only promise what you can deliver. If your product fails to live up to customer standards, loyalty and trust and your brand collapses. Similarly, if you promise a work environment that you can’t offer, you’ll hurt employee morale. While creating an image to attract top talent is important, you also need to sustain it. If your business can’t afford to promise tuition reimbursements, but you do want to attract employees committed to learning, work lower-cost education opportunities into your company culture. Have weekly lunch-and-learn sessions where employees take turns presenting to the group. Promise education funding on a smaller scale, agreeing to pay for one relevant conference each year.

• Keeping up with change:

Markets change, and so do employee expectations. Just like brands have to evolve to stay competitive, your employer brand has to change with employee expectations. You need to stay on top of basic trends, like salary data, but you also need to know what benefits your competitors are providing. Keep on top of news about the top places to work in your field. You may be too small to provide a gym in-house like a major corporate competitor, but maybe you could afford to offer fitness allowances.

4. Relationship between Sales and Directing:

Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals.

It is important for sales teams to know to avoid promising results that they cannot deliver and provide. This is one of the main reasons Directing is needed. With the help of directing, managers can guide their sales teams to go into one right direction and not to stray so as to get the team in trouble. Promising things that cannot be delivered leads to consumer dissatisfaction.  This needs to be avoided as much as possible to attain consumer loyalty. Collaboration and communication can help coordinating messages and improve efforts to retain and bring in customers.

5. Relationship between Sales and Controlling:

A sale is a transaction between two parties where the buyer receives goods (tangible or intangible), services and/or assets in exchange for money.

In sales, setting goals is crucially important, not just as it regards to commissions, salary and bonuses, but because goal setting can act as a game changer when it comes to our work and career. Setting goals and sticking to them increases our productivity and makes it easier for us to measure, interpret and share our progress. And benchmarking that progress motivates us to keep working toward our goals, rather than giving up on them prematurely.

When you come up with goals, what you’re actually doing is putting structure in place; creating something to work toward. This allows you to focus your energy and smarts on what matters most: which prospects you want to concentrate on, and what actions you’ll need to undertake to convert them to customers. Bonus: Setting goals motivates you not to procrastinate.

It is important for every sales department in an organisation to have a goal and to set a benchmark month on month to give an understanding of how well the department is doing.

Only with the help for controlling, the organisation knows where it stands and takes corrective measures in case of deviations.

6. Relationship between Sales and Coordinating:

The need for coordination is felt when group effort is needed for the accomplishment of an objective. In short, it can be said that coordination is related to group effort and not individual effort. The question of coordination does not arise, if the job is done by one person only.

Sales coordinators are important members of a company’s sales team. By supporting sales representatives and coordinating sales-related activities within the company, they contribute to achieving sales targets.

It is important for the sales department to coordinate with other departments such as marketing and HR so as to avoid confusion and acquire the desired results.

7. Relationship between Sales and Budgeting:

Sales budgeting are a key function of sales management. It involves estimating future level of revenue and selling expenses, and consequently the profit contribution made by the sales function. The outcome of sales budgeting is seen in the form of two documents:

1. The sales budget, and
2. The selling expenses budget.

A good sales budget should serve as a guide to company with regard to its sales target. It should be flexible and resilient to the volatile changes in the market. The budget should not put too many restraints on the sales functions of the company. A sales budget is a financial plan for the sales of goods and services of a company. It is the basis on which all the financial decisions of a company with regard to sales are taken. The budget also controls the general sales prospects of a company. Online and off line marketing, marketing in the media and other advertising expenditures are planned around a sales budget.

IMPORTANCE OF A SALES BUDGET:

• It is helpful in farming sales programming so as to achieve the sales targets of the firm
• It is useful in allocation of resources to different products, sales territories, etc. for realising the forecast sales.
• It is helpful in keeping expenses under control so that the objectives of net profits are achieved.
• It serves as a yard stick for evaluating progress and sales performance of the company.
• It can reveal the areas/products in which the company needs to strengthen its position.

SALES MANAGEMENT:

Sales management is the process of developing a sales force, coordinating sales operations, and implementing sales techniques that allow a business to consistently hit, and even surpass, its sales targets.

Besides helping your company reach its sales objectives, the sales management process allows you to stay in tune with your industry as it grows, and can mean the difference between merely surviving and flourishing.

Sales manager is the typical title of someone whose role is sales management. The role typically involves talent development and leadership. Whether you’re an experienced or new sales manager, you’ll be able to evaluate and gain visibility into your current sales force, and decide whether you should grow your team and how you should go about doing so. You’ll be equipped to pinpoint issues early on, coach people before its too late, and have a better overview of the tasks the team should be doing to increase its sales.

Overall, sales management will help businesses and their workers better understand results, predict future performance, and develop a sense of control.

What is there to manage?

There are three “umbrellas” to manage within the sales process:

• Sales operations
• Sales strategy
• Sales analysis

Sales operations: Building the team

The sales team is the backbone of the company – they are the direct connection between the product and the customer. In other words, they matter – a lot. All in all, the sales team should feel like they are a part of the company and be equipped to move it forward, rather than viewed as money-making machines.

You must therefore:

• Set targets
• Assign territories
• Establish goals and quotas

Sales strategy: Defining the sales process

Once you have a team and know your targets, you might be wondering: How do you actually carry out the sales?

Every business has a sales cycle – a series of tasks that helps a company’s product reach its users – and having a sales pipeline, or sales funnel, will make that easier to manoeuvre.

A pipeline is a salesperson’s right-hand man, as it helps them stay organized and take control of their work. After all, there are some things you cannot control – results. That is where managing activities come into play. If a salesperson can see their progress, or their activities, they will be motivated to do more work and achieve more.

Sales Analysis: Reporting

Reporting is what allows you to understand how your current efforts affect your company’s success and gives you insight into what you can do to increase your efforts, whether it’s hiring more salespeople, or whether the salespeople should be making more calls or doing more demos.

Sales Management

Meaning: Sales management is concerned mainly with management of sales. It represents one of the most important functional area of business management.

Definition: The planning, direction and control of personal selling activities of a business unit, including recruiting, selecting, training, equipping, assigning, rating, supervising, paying and motivating as these tasks apply to the personal sales force.

Development in Sales Management

Evolution of sales management developed under the following four phases

1. Pre-industrial revolution period.
2. Production oriented period.
3. Sales oriented period.
4. Customer oriented period.

Pre-industrial revolution period –

• Small scale industries/crafts existed prior to industrial revolution
• The owner/craftsman turned into entrepreneur, looked after all the areas and functions of management
• Sales marketing was never a requirement in those days.

Production oriented period –

• Industrial revolution in 1760’s heralded this period.
• Mass production technique was introduced during this period which led to increase in production.
• this period prevailed in developed nation in the west till 1930’s.

Sales oriented period –

• Economic recession of 1930 was the starting period where demand declined.
• Entrepreneurs had to come up with marketing strategies in this period.
• This period prevailed in the developed nations in the past but it still prevails in the developing nations

Customer oriented period –

• As the word says, the focus is on customer satisfaction.
• Here marketing means customer satisfaction before, during and after the sales.
• Environment is of “buyers market” which results in severe competition.

MULTIDISCIPLINARY APPROACH

A multidisciplinary approach involves drawing appropriately from multiple academic disciplines to redefine problems outside normal boundaries and reach solutions based on a new understanding of complex situations.

Growing consumer expectations

• Consumers no longer focus on buying the products, they focus on finding the solution to the problem
• The demand is more sophisticated.
• The consumers are more demanding then before.

For example:

Previously mobile phones were only used for calling. But now-a-days, mobile phones are used for many purposes like editing documents, checking mails, entertainment purposes and many such things. This provides solution to many things for the consumers

Technological Development-

• Rapid transfer of technology enables competitors to copy each other’s products much more easily.
• This results in increase in competition.
• The product differentiation has decreased.

Globalization-

• Due to globalization, consumer can buy products from all over the world.
• This increases competition for domestic markets.
• Effective sales management is required to tackle this

Strategic Alliance-

• Instead of pitting one supplier against another, companies now tend to form strategic partnership with a smaller number of suppliers who can work together with successful sales management to provide greater value to end users.

Growing Professionalism-

• With growing expectations of the consumers, organizations are adopting professional approach.
• This results into development of various sales functions like training, developing, motivating and rewarding the sales force.

What is Internal Marketing?

The organizational marketing plan consists of 3 main marketing strategies i.e. Internal, interactive marketing and external marketing.

Internal marketing is a means of involving staff at all levels in effective marketing programs by enabling them to understand their role within the marketing process. Internal marketing is the communication of information to employees. Internal marketing is based on the idea that customers’ attitudes toward a company are based on their entire experience with that company, and not just their experience with the company’s products.

According to an American Express survey, 78% of consumers have bailed on a sales transaction because they received poor customer service. Even if they wanted or needed to buy a product, they were so put off by their experience with a company that they delayed their purchase.

In this context, a company’s employees can be seen as their most important marketing tools. These employees are on the front lines, adapting a company’s marketing strategies to the needs of each customer they work with. Their attitude, appearance, and approach all communicate something about the company they represent.

It’s the best way to help employees make a powerful emotional connection to the products and services you sell. Without that connection, employees are likely to undermine the expectations.This helps employees to stay unified and inspired by a common sense of purpose and identity.

IMPORTANCE OF INTERNAL MARKETING:

The sole purpose of any business is to make money for the owners who provide the necessary capital, and the employees who satisfy the requirements of customers who provide the business income. Although external marketing remains to be the most important business development task, it is essential to sell inwardly toward the companies people. When employees understand and commit to the value proposition of the company and its brands, external marketing becomes more effective, because the employees become product champions.

For organizations:

Organizations benefit from higher employee satisfaction, and retention. Recruitment and training have costs, so when employees stay longer, and are more satisfied with their jobs, organizations save money.

Other benefits include:

• a customer-oriented workforce
• enhanced external business relationships
• a better flow of information internally
• empowered employees
• increased compliance with standards and protocols
• improved brand reputation
• Increased profits!

For employees:

Employees feel more motivated and experience higher job satisfaction. They feel empowered to make decisions – within certain guidelines – and begin to feel more respected and valued for their contributions.

This feeling leads to a greater sense of belonging to the “team,” as well as responsibility and accountability to employers. Staff conflicts wane and people have better dispositions at work. Now, who wouldn’t want to work for an organization with a culture like that? And what does it take? Openness, flexibility, and a desire to do things better for better results.It takes a customer-orientation mind-set.

Internal marketing over all helps achieving all the following things:

• Happy employees
• Happier customers
• Stronger brand reputation
• Greater trust
• Which results in more money

For example: Apple has a unique organizational culture that emphasizes innovation, creativity and expertise. In order to promote this culture, they are highly selective when they recruit employees and extremely thorough when they train them. Apple realizes that the best way to promote the image of their brand is for every employee, particularly the ones who work with customers, to accurately represent that image. Anyone who has been to an Apple store knows that the employees are experts in the products they sell and are willing to answer an endless number of questions. They are smart, accessible and knowledgeable, positively reflecting the company as a whole.

What is Internet Marketing?

The most basic explanation of Internet marketing is any sort of advertising, promotion, or marketing tactic used online. This includes promotional websites, email marketing, and social media.

The Goal of Internet marketing includes:

The objective of Internet marketing is to create clear value for the profit organization. With this focus the value proposition of the Internet is not limited to profitable transactions; partially it might be rather sufficient to raise awareness for new product launches or to support offline events with additional Internet activities.

• Communicate a company’s message about itself, its products, or its services.
• Conduct research as to the nature (demographics, preferences, and needs) of existing and potential customers.
• Sell goods, services, or advertising space over the Internet.

Why Market Online?

Internet was seen as a novelty and while some innovative businesses used it to promote their products and services, most existing businesses ignored it.

Today however, ignoring the Internet in growing your business would be a fatal mistake. Consumers use the Internet to find information and resources, and if you’re not there, they won’t find you.

Even if you have a local business listed in the Yellow Pages, odds are your customers will still go to the Internet before their phone book.

Marketing online has many other benefits including-

• Affordability: Many online marketing strategies are free (i.e. social media marketing) or very low cost.
• Reach: This is especially true if your business doesn’t have to be limited to your local area. The Internet reaches around the world.
• Always working: The Internet never sleeps. Night owls can learn about your business and even buy from you even while you’re sleeping.
• Focus on your target market: It’s easy to find your target market online so you can save time and money on marketing strategies to speak directly to your most likely buyers.

Internet Marketing Strategies:

There are many ways to dive into internet marketing; here are some of the most prominent and highly effective options –

• SEO (Search Engine Optimization)
• SEM (Search Engine Marketing)
• SMM (Social Media Marketing)
• Email and Mobile Marketing
• Lead Management

MEANING OF CRM

• Customer relationship management (CRM) is an approach to managing a company’s interaction with current and potential customers. It uses data analysis about customers’ history with a company and to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth.
• Customer Relationship Management is an upright concept or strategy to solidify relations with customers and at the same time reducing cost and enhancing productivity and profitability in business.
• CRM is concerned with the creation, development and enhancement of individualised customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value.

FEATURES OF CRM

• Customers Needs- An organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized.
• Customers Response- Customer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on the understanding and interpreting these queries and then working out to provide the best solution.
• Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In today’s competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer.
• Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for business success.
• Customer Retention- Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business.
• Customer Complaints- There always exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to launch a complaint. A genuine reason can also exist due to which the customer is dissatisfied but sometimes complaints are launched due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal provided by the supplier regarding any product or service. Handling these complaints to ultimate satisfaction of the customer is substantial for any organization and hence it is essential for them to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time.
• Customer Service- In an organization Customer Service is the process of delivering information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to the customer but also to abide with the conditions as well. If the quality and trend of service go beyond customer’s expectation, the organization is supposed to have a good business with customers.

IMPORTANCE OF CRM

• A CRM system consists of a historical view and analysis of all the acquired or to be acquired customers. This helps in reduced searching and correlating customers and to foresee customer needs effectively and increase business.
• CRM contains each and every bit of details of a customer, hence it is very easy to track a customer accordingly and can be used to determine which customer can be profitable and which not.
• In CRM system, customers are grouped according to different aspects according to the type of business they do or according to physical location and are allocated to different customer managers often called as account managers. This helps in focusing and concentrating on each and every customer separately.
• A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an ‘Opportunity of Business’. The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. All this is very easily and efficiently done by an integrated CRM system.
• The strongest aspect of Customer Relationship Management is that it is very cost-effective. The advantage of decently implemented CRM system is that there is very less need of paper and manual work which requires lesser staff to manage and lesser resources to deal with. All the details in CRM system is kept centralized which is available anytime on fingertips. This reduces the process time and increases productivity.
• Efficiently dealing with all the customers and providing them what they actually need increases the customer satisfaction. This increases the chance of getting more business which ultimately enhances turnover and profit.
• If the customer is satisfied they will always be loyal to you and will remain in business forever resulting in increasing customer base and ultimately enhancing net growth of business.

TYPES OF CRM

• Operational

The primary goal of customer relationship management systems is to integrate and automate sales, marketing, and customer support. Therefore, these systems typically have a dashboard that gives an overall view of the three functions on a single customer view, a single page for each customer that a company may have. The dashboard may provide client information, past sales, previous marketing efforts, and more, summarizing all of the relationships between the customer and the firm.

• Analytical

The role of analytical CRM systems is to analyze customer data collected through multiple sources, and present it so that business managers can make more informed decisions. Analytical CRM systems use techniques such as data mining to analyze the customer data. These analytics help improve customer service by finding small problems which can be solved, perhaps, by marketing to different parts of a consumer audience differently. For example, through the analysis of a customer base’s buying behavior, a company might see that this customer base has not been buying a lot of products recently. After scanning through this data, the company might think to market to this subset of consumers differently, in order to best communicate how this company’s products might benefit this group specifically, correlation, and pattern recognition to analyze the customer data. These analytics help improve customer service by finding small problems which can be solved, perhaps, by marketing to different parts of a consumer audience differently. For example, through the analysis of a customer base’s buying behavior, a company might see that this customer base has not been buying a lot of products recently. After scanning through this data, the company might think to market to this subset of consumers differently, in order to best communicate how this company’s products might benefit this group specifically.

• Collaborative

The third primary aim of CRM systems is to incorporate external stakeholders such as suppliers, vendors, and distributors, and share customer information across organizations. For example, feedback can be collected from technical support call, which could help provide direction for marketing products and services to that particular customer in the future.

CRM AND MARKETING

• Web Marketing- With the growing popularity of web, customers are tending towards web marketing or web shopping. This helps both customers and suppliers to transact in a real time environment irrespective of their locations.
• Email Marketing- Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons, eCards, provision of saving events into calendars etc.
• Analyzing customers buying behavior online- A CRM system provides a platform to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services furnishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended.
• Building business impact models- It is important for an organization to have check on marketing performance regularly so that the techniques never deteriorate and always match to yield greater results. These CRM oriented models help in delivering accurate measurement of marketing performance throughout the organization and to do better every time.

INFORMATION TECHNOLOGY AND CRM

• Technology plays a pivotal role in CRM. Technological approaches involving the use of databases, data-mining and one-to-one marketing can assist organisations to increase customer value and their own profitability.
• This information can be used to target customers in a personalised way and offer them services to meet their specific needs.
• This personalised communication provides value for the customer and increases customer loyalty to the provider.
• Example: Having access to customers contact details and their service or purchase preferences through databases etc can enable organisations to alert customers to new, similar and alternative services or products. Like loyalty/membership cards.

PROFESSIONALISM IN SELLING

• The interpersonal communication process in which a seller uncovers and satisfies the needs and wants of a prospect to the mutual, long-term benefit of both parties.

The following three tenets are required for professional selling:

• The focus of the sales profession centers on the human agents involved in the exchange between buyer and seller
• Effective selling requires a systems approach, at minimum involving roles that sell, enable selling, and develop sales capabilities
• A specific set of sales skills and knowledge are required to facilitate the exchange of value between buyers and sellers.

WHO IS A PROFESSIONAL SELLER?

• The professional seller is a person who others perceive to be a top class executive, a true specialist. They are well-groomed, radiate warmth and project an image of confidence. They know what they are doing, and where they are going – but more importantly, they know how they are going to get there. They have a special pride about them – pride in the way they look, dress and conduct themselves, and they are proud of the product or service they represent.

WHAT SALESPEOPLE DO

Salespeople act on behalf of their companies by doing the following:

• Creating value for their firms’ customers
• Managing relationships
• Relaying customer and market information back to their organizations
• In addition to acting on behalf of their firms, sales representatives also act on behalf of their customers. Whenever a salesperson goes back to her company with a customer’s request, be it for quicker delivery, a change in a product feature, or a negotiated price, she is voicing the customer’s needs. Her goal is to help the buyer purchase what serves his or her needs the best.

IMPORTANCE OF A SALES PROFESSIONAL

The level of professionalism of its sales force is a key component of any company’s brand. Your company spends millions of dollars to bolster, polish and protect its brand, which is in effect its reputation and a major reason customers do business with it and not the competition. In spite of all the money spent on advertising and image, and in ensuring that the product delivers quality and value, one of the most salient features of the customer experience is their contacts with the salesperson. Trust takes a long time to build and an instant to destroy. The professionalism of the sales force is the most reliable guard to protect a company’s image and its customer base. Surveys across a wide variety of industries indicate that the number one reason that customers drop a supplier is the way they are treated by the salesperson.

Sales management also benefits from professionalism: professionals can be counted on to produce results and do the right thing with very little supervision. They are self-motivated and driven, and as a matter of pride and self-respect can be counted on to make proper and decisions without someone looking over their shoulder.

CHARACTERISTICS OF SALES PROFESSIONALISM

• Positive Attitude

When you sell, a customer not only buys your goods or services, but he also buys into a relationship with you as his salesperson. A professional seller projects a positive attitude, which reflects well on his business and himself. To get a buyer to believe in your goods, you have to show belief in them as well. Closely related is confidence. If you have a positive attitude and belief in what you offer, you should convey an honest confidence.

• Flexibility

Salespeople hear “no” more often than they hear “yes.” Even customers who end up buying may say “no” multiple times before an agreement. A professional seller doesn’t get easily frustrated and show his emotions to a prospect.  Flexibility and self-control help in solving customer problems and building strong relationships.

• Nonverbal Communication

As much as sellers are known for verbal communication abilities, you project much of your professionalism through nonverbal factors. The way you dress and groom yourself contributes mightily to sales professionalism. In some environments, sellers wear suits and ties, while in others, business casual dress is more accepted. A straight posture, firm handshake and friendly facial expressions all help to put buyers at ease.

• Strong Social Skills

A top sales professional doesn’t just talk a lot, he has strong social skills. The ability to carry on informal conversation with prospects is distinct from the ability to deliver a canned sales pitch. Building initial rapport by finding talking points, such as mutual interests, compliments and here and now topics, is key in making sales. Your social skills help to get prospects to let their guard down and assist you in maintaining relationships.

• Organized and Focused

Organizational skills and focus help professional salespeople efficiently and effectively serve their prospects’ needs. A professional real estate salesperson comes to an initial meeting with a potential home seller prepared with all contracts, information and materials. Focus and attentiveness during sales meetings gives buyers the impression that you are genuinely interested in helping them versus trying to meet a sales quota and earn commissions.

Sales Structure

Sales drives a business, so you can’t afford to take your sales department lightly. Considering how to structure a sales force has to work both for your business model and help salespeople achieve success. To do this, you’ll have to consider your product, your clientele and how salespeople think and function. Once you have a system and the right talent, it may take some fine tuning before it really works optimally. But it all starts with the structure.

The structure of a sales organisation identifies how an organisations sales department is organised in order facilitate the organisations sales growth. It’s a very important subject that is interlinked with the organizations strategy, tactics, marketing and culture.

Benefits of Choosing the Right Sales Structure for Your Company

Selecting the right sales force structure will provide several organizational benefits:

1. Clarity of responsibilities across selling roles: sales reps know what responsibilities they have for different product lines and markets;
   2. Strong coordination and communication across sales roles: mobility for sales forces and increased time for actual selling;
   3. Increased sharing of ideas: top sales reps are willing to share know-how;
   4. Improved transparency with decision-making: sales managers share information on a regular basis and get faster buy-in when making changes;
   5. Reduced channel conflict and lack of engagement: fewer disputes over new opportunities, more engagement towards achieving sales goals.

Knowing the organizational structures advantages and disadvantages lets you decide which unique or hybrid sales management structure is the best for your organization. This helps you improve performance, adapt sales compensation strategy, and drive sales growth. In the end, everything will fit in the bigger picture of your corporate strategy.

Territory based Structure (area of responsibility defined by assigned territory) 

This is also known as territorial sales force structure and it means that the organization assigns each sales representative to a certain geographic area. It facilitates sales administration by which customers are grouped and shared with the salesperson. Territory can be based on factors like geographical area, nature of business etc.

 Advantages of Territory based Structures:

• Serves local people to their satisfaction.
  • Can adapt business to various regions
  • Expansion of business to various regions
• Spirit of competition among various zones.

Disadvantages of Territory based structure:

• More people required thereby higher costs
• Territory sizing can be a challenge, resulting in uneven revenue/opportunity across geographies.

• Conflicts between various managers can’t be ruled out.
• Uneven revenue generated from various zones

Examples:

Facebook was started initially to connect only Harvard University students. That time he wasn’t even thinking of having billions on his platform. In fact if Facebook didn’t start within a set territory it wouldn’t have become what it is now.

Village Laundry Services was started by Akshay Mehra in order to cater the needs of the working class in Bangalore. They came up with idea of tapping into the laundry business and put dhobis out of business.

Product based Structure (area of responsibility defined by product/product groups)

This organisational structure is based on product specialisation. It is used by businesses dealing with multiple products. The entire operation is controlled by the sales manager but departmental managers are given from hands to look after sales of their products like an automobile company will have one department for passenger another for jeeps third one for trucks and the fourth one for mini buses. Since companies like Hindustan Unilever and Automobile industry have multiple products to deal with they use product sales structure.

Advantages of Product based Structures:

• Sales reps develop product expertise
  Management can guide selling efforts
• Every product gets proper attention.
• Coordinated work

Disadvantages of Product based Structures:

• Higher costs
  Increased selling cost
• Problem of effective control.

Functional Structure (area of responsibility defined by sales process: inside sales, account managers, product specialists, etc.)

Functional structure is a type of sales organisation which is divided and subdivided on the basis of functions to be performed. It is the simplest and efficient form of Management distribution and promotions are given equal importance the showdown between example product management and sales are minimised or even eliminated every employee is assigned a job and is required to pursue his goal.

Advantages of Functional Structures:

• Economical
• Application of special knowledge
• Increase in efficiency
• Regular feedback

Disadvantages of Functional Structures:

• Departmental jealousy problems
  • Customer duplication
  • Greater need for coordination

Examples:

Banks follow functional sales structure to function according to the customers’ needs and wants. Eg: Axis bank, SBI, etc. or any bank for that instance have functional departments such as marketing, sales, administration, etc.

Market Based Structure:

Market based structure is also known as customer sales force structure. The sales people are grouped according to customer or industry. The area of responsibility is defined by customer groupings

Advantages of Market Based Structures:

• Pleasant and lasting customer base.
• Needs of customers taken into consideration
• Full attention to customers
• Goodwill to organisation through proper service.

Disadvantages

• Costly
• Problem of duplication of services
• Higher overheads
• Special treatment to certain class of customers
• Problem of Underutilisation of resources.

Examples:

1)         DoCoMo offers doorstep delivery of sim cards and even MNP

2)         Google makes dozens of other software products, not to mention robotic cars, Android phones, and wearable computers. But 95% of Google’s revenue comes from search advertising; its other products generated just $2.35 billion in 2012, and its consumer tech products a mere fraction of that.

Combined or hybrid structure:

It features the efficient use of resources and expertise development found in functional structures and the flexibility among command found in divisional structures. Various activities of a business unit are grouped as per the need and the surrounding situation. A combination of different patterns facilitates quick and economical achievement of objectives.

Advantages of Hybrid structure:

Increased Efficiency

Development of Cross-Functional Skills

Flexibility

Disadvantages of hybrid structure:

High administration cost.

Potential confusion over authority and responsibility.

High prospects of conflict.

Overemphasis on group decision making.

Excessive focus on internal relations.

Examples:

Intuit a business and financial software company works using such a sales structure to be ahead of its market environment.

Distribution Management

Meaning of Distribution Management

The management of resources and processes used to deliver a product from a production location to the point-of-sale, including storage at warehousing locations or delivery to retail distribution points. Distribution management also includes determination of optimal quantities of a product for delivery to particular warehouses or points-of-sale in order to achieve the most efficient delivery to customers.

Importance of Distribution

Channels of distribution render useful services to manufactures and consumers and perform important marketing functions. Marketing channels play a very vital role in the distribution of consumer goods. It is very important because product is in one place while the consumption is scattered in many place. So there is big gap between producers and the consumers. So through channels of distribution can only fill the gap. A channel of distribution connects a link between the producers and the consumers. Distribution channels facilitate large scale distribution of goods. It also brings division of labor and specialization in the business field.

Distribution is one of the important mix among marketing mixes. The role of distribution in marketing and in the whole economy can be discussed as follows:

1. Delivery of satisfaction

Marketing concept emphasizes on earning profit through satisfaction of the customers. Besides market research for the development and sales of goods according to need and wants of consumers, the participants of distribution channel also help producers in production of new goods.

2. Standard of living

Distribution function helps to improve living standard of the consumers in the society. Proper distribution of necessary goods and services to the consumers easily at right time does not only satisfy them but also brings change in their living standard. Distribution brings improvement in living standard of consumers through generation of employment, increase in income and transfer of ownership. Hence, it brings positive effect in the society.

3. Value addition

The functions of distribution such as transportation, warehousing, inventory management etc. increase the importance of products by creating place utility, time utility and quantity utility. Distribution mix plays an important role to increase the value of the products through delivery of goods in right quantity, at right place and right time.

4. Communication

Distribution serves as link between producers and consumers. Producers can make flow of information and messages to consumers about their products, price, promotion etc. through channel members. Similarly, they receive information about customers, competitors and environmental changes from channel members.

5. Employment

The function of distribution creates employment opportunities in society. Market intermediaries work as direct and indirect sources of employment. Different producers need to supply their innumerable products to consumers. Thousands of distributors, agents, wholesalers, retailers, brokers etc. involve in supplying the products to the consumers. Similarly, many persons of the society can get job in the transport and warehouses sectors, etc.

6. Efficiency

Producers produce limited types of goods in mass quantity, but the consumers demand different types of goods in small quantity. When goods are produced in a mass quantity, they can be obtained at lower price. Distribution helps to satisfy the needs of consumers by supplying assortment of different products of different producers. From this, efficiency can be achieved in both production and distribution.

7. Financing

Intermediaries themselves make arrangement to keep reserve and stock of goods. The producers need not make arrangement and management of distribution centers and warehouse. The producers need not do anything except remaining busy in production, the timely payment by intermediaries and financial helps become more important for smooth operation of production. Similarly, the role of finance is also decisive in mobilizing other means of production.

8. Satisfaction of the consumers

Marketing concepts emphasizes on earning profit through satisfaction of the customers. Besides market research for the development and sales of goods according to need and wants of consumers, the participants of distribution channel also help producers in production of new goods.

9. Scope of marketing

Channels of distribution enlarge the scope of marketing and facilitate sales promotion. Channels perform the role of salesmen ship.

10. Mass distribution

Mass production needs the support of mass distribution which is possible through marketing channels. They occupy strategic position in the field of distribution and this suggest their importance.

Role of Distribution

The continuous strengthening of the role of distribution in the modern economy is driven by both the increase and diversification of supply and demand of goods and the increasing consumer’s demand across the quality and efficiency required for their manufacture.

In distribution, the product undergoes some changes that can be grouped into three categories physical changes (packaging, sharing products in smaller quantities, transport and storage), which are handled by the industrial function of distribution; 2) temporal and spatial transformations, related to the proper function of the distribution, which cover items such as: • the place where to find the product; • the batch to be delivered; • the assortment (list proposed at the same place and same time); • the date on which the product will be delivered etc. 3) commercial and psychological transformations, which ensures demand agreeing upstream to the downstream. Distribution, as a whole of the activities taking place in time and space, from the end of production until the moment the product, enters to final consumption, holds the intermediation role between production and consumption, ensuring the completion of the activity of any producer and obtaining from the part of the consumer the commodity that satisfies their necessity. In other words, the distribution’s role is crucial in allowing the flow of business processes, it ensuring the financial resources necessary to restart the economic activity.

Examples:

Distribution Channels are those sources through which a firm’s Value Proposition reaches the consumers. Connecting people through mobile network or internet. For e.g. Airtel,  Vodafone ,Facebook, Twitter

GlaxoSmithKline  – It’s a pharmaceutical company which hired people who made medicines for different health problems and made a patent pool so that people can discuss their ideas and make new innovations in medicine.

Skype- 1st software to give people easy internet video calling access.

Role of Intermediaries

The marketing intermediaries include distributors, agents, wholesalers, retailers etc. The role of intermediaries becomes very important in distribution of goods or services in marketing process. Their role can be mentioned as follows:

1. Search For Potential Buyers

Marketing intermediaries search for prospective buyers of the goods or services.

2. Title Of Ownership

The role of intermediaries becomes very important in marketing process. They make producers free from worry about sale of their products by taking ownership of the product.

3. Communication Link

Marketing intermediaries establish communication link between firms and market, viz producer and consumers.

4. Wide Range Of Product

Marketing intermediaries collect different goods or services from different producers and supply themtotheconsumers.

5. Economy

Marketing Intermediaries purchase huge amount of products at a time and supply to different customers. This minimizes distribution cost. As a result, the goods or services become comparatively cheap in price.

6. Feedback

Marketing intermediaries can receive regular reactions and experience of consumers about the products. Then they give information to the producers about the reactions and experience of the consumers. This gives chance to the producers to make necessary improvement in the quality of the product.

Examples:

Metro- A newspaper company which distributed news paper for free but made money by giving space for advertisement

Lulu.com – Gave niche and amateur writers chance to publish their work online and make some money

Evolution of Distribution Channels

A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. It can include wholesalers, retailers, distributors and even the internet itself.

• Surplus wealth:

Creation of surplus wealth was the beginning of exchange process . domestication of animals led to the development of agriculture. Transport system was not well developed. Producers found it convenient to sell their produce in the vicinity. In some crude form, marketing was launched.

• Formations of business organization:

With increase in the scale of production and marketing, ownership of business started taking concrete shape such as sole trading, partnership, joint stock company, public and private sectors, public utilities, cooperatives etc.

• Emphasis on selling:

The market is full of different varieties of products but consumers will not buy as long as they are not approached through advertising, salesmanship and sales promotion. Goods are not bought but they have to be sold through competitive advertising and publicity. No consumer can be forced to make purchases. The ability to build relationships with customers, persuade them to buy and generate respect.

• Maintaining relationships:

Relationship marketing refers to a concerted effort by a company not only to work closely with the customers to better understand and satisfy their needs but also to develop long term , mutually beneficial relationship with them. Retaining the old customer is always better  rather than winning new customers. Sales plays a crucial role in building and maintaining customer relationships.

• Priority to production:

Marketing is an extension of production function. The use of better and cheaper methods of production technology ruled the business world. With production activities widely practiced high production with reduction in cost became the standard formula getting supported by efficient distribution. The market was flooded with varieties of goods. The entire emphasis was placed in presenting the best quality products.

• Customer friendly marketing:

Customer and not the product is the center of the entire business system. All marketing operations revolve around customer satisfaction and service. Marketing starts with the determination of consumer wants and ends with the satisfaction of those wants. Customer-friendly marketing has one eye on profits and the other eye on how best to serve the customers. Marketing becomes easy when the salesperson take time to establish a relationship and create a rapport with the customer.

• Distribution in virtual world:

Virtual world is computer based online community. It is designed and shared by individuals so that they can interact in a custom-built l, stimulated world. There is no face to face meeting between sellers and buyers. Sellers in the virtual world use online advertising, press and electronic media to reach the consumers. Interested consumers buy online and mostly Payments are made through debit and credit cards. Some online sellers permit cash on delivery.

Examples:

LEGO –  Made blocks game started from 1949, introduced different characters to attract children for e.g. batman , harry potter etc and gave customers to customize their design and also book online

OkCupid a very popular dating site had it’s blog as the focal point for all its marketing, distribution related activities.

Integration of Marketing, Sales and Distribution

It’s a very important subject that is interlinked with the organizations strategy, tactics, marketing and culture.

Concept of Marketing: Integrated marketing creates a unified experience for consumers to interact with the enterprise and its range of products. It covers all the aspects of the integrated marketing communication (IMC). The emergence of marketing as a management discipline has got a lot of prominence that it is considered as the most important of all business function. Marketing is applied to all the business activities which are directed towards flow of goods and services from the manufacturers to the consumers. Marketing is involved in the creation of place, time and possession utilities.

Concept of Sales: Sales convert prospects into customers.  The salespeople, through direct interaction with customers recommend the right product or services and close the sale. The importance of sales department cannot be underestimated because it generates revenue. For a company to succeed it requires efficient sales department which brings in money into the business and generates profits. The sales manager integrates the sales organisation and the distribution channels and other related departments such as advertising, sales promotion etc. Now with detailed information travelling the customers have complex needs. Meeting customer procurement requirements and perfecting the overall customer interface requires a coordinated customer focused sales team such as customer service, technical specialists and highly skilled salespeople. The coordination of the sales team efforts, benefits in reward system, goal selling process and staffing and training.

Concept of Distribution: Distribution channels includes the manufacturer and the final consumer along with intermediary agencies involved in the transfer of title of goods. Consumers are presented “assortment of items”, a service for consumers who are not satisfied with just one or two items. Mass distribution requires large resources in terms or men, money and materials. Economical distribution needs the services of intermediary agencies without which it would be impossible to reach out the scattered consumers. When the intermediaries minimise the number of contacts and the firm sells its products, it’s called distribution efficiency. Intermediaries collect information regarding customer’s opinion, company’s product, position of the behaviour from a number of retailers. In turn, intermediaries pass on the information and take action.

Marketing, Sales and distribution are closely related and their integration could be understood as:

• Mutual Dependency: Marketing, Sales and distribution need each other. Marketing metrics drive sales and sales identify the right market. Distribution reaches goods into the hands of the consumers.
• Message Transfer: Marketing creates message to be used by sales to attract and verbally or digitally present it to the customers. Distribution translates these efforts into actual practice.
• Commitment: Marketing fulfils consumers’ wants and needs. Sales do Business quickly to achieve sales volume objectives. Distribution creates utilities and keeps consumers content,
• Expectations Fulfilled: Consumers have expectations towards products and services. The expectations relating to products are fulfilled by marketing and sales justifies by giving satisfying service. Distribution ensures that products reach consumers as wanted by them at the right time and place.
• Common Goal: Marketing, sales and distribution have common goal that is increasing revenue. From this standpoint one cannot survive without the other two. Marketers generate leads and salespeople close the deal. The means to translate these in action is the work of distribution.
• Communication: The information collected in CRM helps marketers to determine a successful marketing strategy. Marketing can use analytics to determine which of their marketing efforts are effective. Channel members cooperate by serving customers. This elaborate integration is based on effective communication between the three functional areas.
• Close Harmony: Marketing, Sales and distribution must work hand in hand to guide customers through the buying process. Marketing is a part of sales function and should jointly guide product development. When better product is produced, better results can be demonstrated in sales. Distributers build channels to connect things to people.
• Competitive Advantage: Companies have realised that effective distribution system can be a source of competitive advantage. If finances permit companies can develop their own channels or delegate the functions to channel members who makes efforts for bigger sale.
• Hybrid Channels: Hybrid channels develop when organisations begin to use a number of channels to sell their products. These channels includes retail selling, direct marketing, direct mail, telemarketing, online selling, catalogue selling and so on. In the process both the functions of sales and marketing are integrated with distribution. Hybrid channels are preferred more as they offer many advantages.
• Customer Support: Customers support channels integration because they bring out the best of marketing and sales. Business integrates by leveraging organisational expertise and resources through distribution channels using retailing, catalogues, web and direct selling. When marketing and sales strategies come up to the expectations of customers satisfying their needs, customers provide the much needed support.

 Source:- Vipin Saboo Tutorials

For any further clarifications, please feel free to contact Prof Vipin Saboo on 9820779873