Sales and Distribution Management CBMMM5T06

Syllabus topics (RTMNU)

• Nature and scope of sales management
• Setting and formulating personal selling objectives
• Recruiting and selecting sales personnel
• Developing and conducting sales training programmes
• Designing and administering compensation plans
• Motivating sales personnel

Nature and Scope of Sales Management

Sales management is the planning, direction and control of the personal selling activities of a business, including recruiting, selecting, training, equipping, assigning, paying, supervising and motivating the sales force.

Nature:

1. Part of marketing management – it carries out the promotion and distribution plans.
2. Revenue-generating – brings sales and profit.
3. People management – managing salespersons spread over many areas.
4. Continuous and dynamic – changes with market and customer needs.
5. Goal-oriented – works through targets and quotas.
6. Customer-focused – builds long-term customer relationships.

Scope: sales planning and forecasting; sales organisation; managing the sales force (recruitment, training, pay, motivation); territories and quotas; sales budgets; sales control and evaluation; customer relationship management; coordination with distribution.

Setting and Formulating Personal Selling Objectives

Personal selling is the face-to-face presentation of a product by a salesperson to prospective buyers in order to make sales.

Personal selling objectives may be:

• Sales volume objectives – e.g. sell ₹25 lakh worth of goods in a quarter.
• Market share objectives – increase share in a region.
• Profit objectives – sell high-margin products, control discounts.
• Customer objectives – add new dealers, retain old customers.
• Service objectives – product demonstrations, complaint handling.
• Information objectives – gather market and competitor feedback.

Steps in formulating: study the marketing plan and forecast → analyse market potential → decide qualitative and quantitative objectives → make them SMART → break them down by region, product and salesperson → communicate and review.

Recruiting and Selecting Sales Personnel

Recruitment is finding prospective salespersons and inviting applications; selection is choosing the best among them.

Sources: internal (other departments, referrals) and external (campus, job portals, advertisements, competitors' salespersons, placement agencies).

Selection process: application → preliminary interview → tests (sales aptitude, personality) → in-depth interview, sometimes a role-play of a sales call → reference check → medical → offer → induction.

Qualities of a good salesperson: good communication, confidence, product knowledge, persuasion, patience, honesty, self-motivation, physical fitness for travel, and ability to handle rejection.

Developing and Conducting Sales Training Programmes

Sales training improves the knowledge, skills and attitudes of salespersons.

Steps:

1. Assess training needs – gaps in skill and performance.
2. Set objectives – what trainees should be able to do.
3. Design content – company and product knowledge, customer knowledge, selling skills (prospecting, presentation, objection handling, closing), market and competitor knowledge, use of CRM apps.
4. Choose methods – lectures, role-playing, case studies, demonstrations, on-the-job training (field training with a senior), e-learning.
5. Conduct – by trainers, sales managers or outside experts.
6. Evaluate – trainee reaction, learning, behaviour change and sales results.

Designing and Administering Compensation Plans

A compensation plan decides how salespersons are paid. A good plan is simple, fair, motivating, linked to company objectives and competitive with the market.

Example: salary ₹15,000 + 2% commission on sales of ₹6,00,000 = ₹15,000 + ₹12,000 = ₹27,000.

Fringe benefits and expenses: travel allowance, daily allowance, mobile reimbursement, insurance, incentive trips.

Administering means communicating the plan clearly, calculating pay correctly and on time, and reviewing it regularly.

Motivating Sales Personnel

Motivation is the inner drive that makes salespersons work hard to reach goals. Salespeople need special motivation because they work alone, face rejection and travel a lot.

Financial incentives: commission, bonus, sales contest prizes, profit sharing.

Non-financial incentives: recognition ("Salesperson of the Month"), promotion, job security, training, good supervision, freedom, team meetings, appreciation letters.

Theories useful here: Maslow's need hierarchy, Herzberg's two-factor theory, and Vroom's expectancy theory (effort → performance → reward).

Likely exam questions

1. (Long, 8/16 marks) Explain the nature and scope of sales management.
2. (Long, 8/16 marks) Explain the methods of compensating sales personnel. How can a sales manager motivate the sales force?
3. (Short, 4 marks) What are personal selling objectives?
4. (Short, 4 marks) State the steps in a sales training programme.
5. (Short, 4 marks) State the qualities of a good salesperson.

Syllabus topics (RTMNU)

• Sales meetings and sales contests
• Designing territories and allocating sales efforts
• Objectives and quotas for sales personnel
• Developing and managing sales evaluation programme
• Use of AI in sales management

Sales Meetings

A sales meeting is a planned gathering of salespersons and sales managers to share information, solve problems and motivate the team.

Objectives: announce new products, prices and schemes; review performance; train; solve field problems; build team spirit; collect market feedback.

Types: national/annual meetings, regional meetings, branch or daily morning meetings, and online (video) meetings.

Planning a good meeting: clear agenda, right timing, short and interactive sessions, use of presentations and demonstrations, recognition of achievers, and follow-up of decisions.

Sales Contests

A sales contest is a short-term competition among salespersons, with prizes, to achieve a specific sales objective.

Objectives: push a new product; clear slow-moving stock; get new customers; increase sales in the off-season.

Designing a contest: (1) set a specific objective; (2) decide the theme and duration (usually 1–3 months); (3) fix fair rules so every salesperson has a chance; (4) choose prizes – cash, gifts, foreign trips, recognition; (5) promote the contest; (6) announce results quickly and evaluate.

Limitations: may create unhealthy rivalry, pushing goods on dealers (overstocking), and a fall in sales after the contest.

Designing Territories and Allocating Sales Efforts

A sales territory is a geographical area or group of customers assigned to a salesperson or team.

Reasons for territories: full market coverage, fixing responsibility, better customer service, control of travel costs, fair evaluation of salespersons.

Steps in designing territories:

1. Select a basic control unit – district, city, pin-code area or trading area.
2. Estimate market potential in each unit.
3. Combine units into tentative territories of roughly equal potential and workload.
4. Analyse workload – number of customers, call frequency, travel time.
5. Assign salespersons according to ability.
6. Review and adjust regularly.

Allocating sales effort: deciding how much time each salesperson spends on each customer and product. Customers are often grouped A, B, C by sales value – A customers are visited more often. Routing plans the order of visits to save time and fuel.

Objectives and Quotas for Sales Personnel

A sales quota is a target assigned to a salesperson, territory or branch for a given period.

Types of quotas:

1. Sales volume quota – in ₹ or units (most common).
2. Profit quota – gross margin or contribution to be earned.
3. Expense quota – limit on travel and other selling expenses.
4. Activity quota – number of calls, demonstrations, new dealers.
5. Combination quota – a mix of the above.

Qualities of a good quota: realistic and attainable, fair, simple to understand, flexible, linked to territory potential and communicated in advance.

Example: territory potential ₹1 crore; company's expected share 20% → quota of ₹20 lakh for the year.

Developing and Managing Sales Evaluation Programme

Sales evaluation measures the performance of salespersons against standards so that good work is rewarded and weak areas are improved.

Steps: set policies → choose bases → set standards → compare actual with standards → discuss results with the salesperson → take action (reward, training, transfer).

Quantitative bases: sales volume, quota achievement %, new accounts opened, gross margin, number of calls, orders per call (call strike rate), selling expense as % of sales.

Qualitative bases: product knowledge, customer relations, personal appearance, attitude, teamwork, reporting discipline.

Example: quota ₹20 lakh, actual sales ₹17 lakh → achievement = 17 ÷ 20 × 100 = 85%.

Sales audit is a broader, periodic review of the whole sales function.

Use of AI in Sales Management

Artificial Intelligence (AI) means computer systems that learn from data and do tasks that need human intelligence. In sales:

1. Sales forecasting – AI studies past sales, season and market data to predict demand.
2. Lead scoring – ranks prospects by likelihood of buying so salespersons focus on the best.
3. Chatbots and virtual assistants – answer customer queries 24×7 on websites and WhatsApp.
4. CRM analytics – suggests the next best product or action for each customer.
5. Territory and route optimisation – plans shortest routes for field staff.
6. Dynamic pricing and discount suggestions.
7. Performance tracking – dashboards and call-quality analysis for coaching.
8. Automating paperwork – order entry, reports, follow-up emails.

Limitations: cost, need for good data, privacy concerns (Digital Personal Data Protection Act, 2023), and loss of the human touch.

Likely exam questions

1. (Long, 8/16 marks) What is a sales territory? Explain the procedure for designing sales territories.
2. (Long, 8/16 marks) What is a sales quota? Explain its types and the features of a good quota.
3. (Short, 4 marks) What are sales contests? State their objectives.
4. (Short, 4 marks) State the bases of evaluating sales personnel.
5. (Short, 4 marks) Explain the use of AI in sales management.

Syllabus topics (RTMNU)

• An overview of distribution channels, their structure, functions and relationships
• Channel intermediaries - wholesaling and retailing
• Logistics of distribution
• Channel planning
• Organisational patterns in marketing channels
• Managing distribution channels

Distribution Channels: Overview, Structure, Functions and Relationships

A distribution (marketing) channel is the set of independent organisations and persons involved in making a product available to the final consumer.

Structure (levels):

• Zero-level (direct): Manufacturer → Consumer (e.g. Eureka Forbes earlier, D2C websites).
• One-level: Manufacturer → Retailer → Consumer (e.g. cars through dealers).
• Two-level: Manufacturer → Wholesaler → Retailer → Consumer (common for FMCG).
• Three-level: Manufacturer → Agent / C&F agent → Wholesaler/Distributor → Retailer → Consumer.

Functions of channels:

1. Information – collect and pass on market information.
2. Promotion – display and push products.
3. Contact – find and reach buyers.
4. Matching – sorting, grading, assembling, packing to suit buyers.
5. Negotiation – agree on price and terms.
6. Physical distribution – transport and storage.
7. Financing – credit to retailers and customers.
8. Risk taking – bearing stock, price and damage risks.

Channel relationships: members may cooperate (joint promotions, sharing data), compete or face conflict. Relationships can be transactional (one-time deals) or partnerships (long-term, trust-based).

Channel Intermediaries: Wholesaling and Retailing

Wholesaling is selling goods in large quantities to retailers, other wholesalers or industrial users, not to final consumers.

Services of wholesalers: to manufacturers – bulk buying, storage, finance, market information, risk bearing; to retailers – ready supply, credit, small lots, variety, product information.

Retailing is selling goods and services directly to final consumers for personal use.

Types of retailers: small shops (kirana stores, hawkers), departmental stores (Shoppers Stop), supermarkets and hypermarkets (D-Mart, Reliance Smart), specialty stores, chain stores, malls, franchise outlets, and non-store retailing (e-commerce like Amazon/Flipkart, quick-commerce, direct selling, vending machines).

Logistics of Distribution

Logistics (physical distribution) is planning, implementing and controlling the physical flow of goods from the point of origin to the point of consumption at a profit.

Components:

1. Order processing – receiving, checking and dispatching orders.
2. Warehousing – storing goods near markets.
3. Inventory control – right stock level; avoid shortage and overstock.
4. Transportation – road, rail, air, water, pipeline.
5. Material handling and packaging.

Indian context: GST has led to fewer, larger warehouses; the e-way bill system tracks goods movement; the National Logistics Policy 2022 aims to reduce logistics cost.

Channel Planning

Channel planning (design) is deciding the best channel structure to reach target customers.

Steps: analyse customer needs (lot size, waiting time, variety, service) → set channel objectives → identify alternatives (type and number of intermediaries) → evaluate alternatives on economic, control and adaptability criteria → select.

Intensity of distribution: intensive (as many outlets as possible – soaps, biscuits), selective (a few chosen dealers – electronics), exclusive (one dealer per area – luxury cars).

Factors affecting choice: product (perishable, technical, value), market (size, location, buying habits), company (finance, control desired), intermediaries (availability, cost), environment (laws, technology), competitors' channels.

Organisational Patterns in Marketing Channels

1. Conventional channel – independent manufacturer, wholesaler and retailer, each maximising own profit.
2. Vertical Marketing System (VMS) – members act as a unified system: corporate (one owner owns all stages, e.g. Raymond showrooms), contractual (franchise, e.g. McDonald's, Amul), administered (a large, powerful member leads, e.g. HUL with its distributors).
3. Horizontal marketing system – two or more firms at the same level join to use a channel (e.g. bank ATMs inside petrol pumps).
4. Multichannel / hybrid / omnichannel system – using several channels together (stores + website + app).

Managing Distribution Channels

After designing the channel, the firm must manage it continuously:

1. Selecting members – on financial strength, experience, reputation, area covered.
2. Training – product and service training for dealers' staff.
3. Motivating – margins, discounts, credit, schemes, dealer meets, awards.
4. Evaluating – sales achieved, stock levels, delivery time, service quality.
5. Modifying – adding or dropping members as markets change.
6. Handling conflict – clear policies and communication.

Likely exam questions

1. (Long, 8/16 marks) What is a distribution channel? Explain its levels and functions.
2. (Long, 8/16 marks) Explain the factors affecting the choice of a channel and the steps in channel planning.
3. (Short, 4 marks) Distinguish between wholesaler and retailer.
4. (Short, 4 marks) What is a Vertical Marketing System? State its types.
5. (Short, 4 marks) State the components of logistics.

Syllabus topics (RTMNU)

• Information system and channel management
• Managing channel member behaviour
• Assessing performance of marketing channels
• Managing international channel of distribution
• Use of AI in distribution management

Information System and Channel Management

A channel information system is the set of people, equipment and procedures that collect, store and share data among the manufacturer and channel members so that distribution decisions are timely and correct.

Information needed: sales by outlet and product, stock levels, orders, payments and credit, schemes, competitor activity, customer complaints.

Tools:

1. Distributor Management System (DMS) – software for billing, stock and claims at distributors.
2. Sales Force Automation (SFA) apps – salespersons book orders on mobile.
3. Electronic Data Interchange (EDI) – automatic exchange of orders and invoices between firms.
4. ERP systems – link production, inventory and sales.
5. Barcodes, RFID and point-of-sale (POS) data.
6. B2B ordering apps and e-invoicing under GST.

Benefits: quick replenishment, less stock-out and overstock, faster payment collection, better planning, transparency and trust.

Managing Channel Member Behaviour

Channel members are independent businesses with their own goals, so their behaviour must be managed.

Channel cooperation – working together for common goals.

Channel conflict – disagreement between channel members. Types: vertical (between levels, e.g. manufacturer vs dealer), horizontal (between members at the same level, e.g. two dealers in one city), multichannel (online sellers' discounts hurting offline shops).

Causes: different goals, unclear roles and territories, low margins, delayed payments, direct selling by the company, poor communication.

Ways to manage conflict: clear territory and pricing policies, fair margins, joint goals, regular dealer meets, a channel council, mediation or arbitration, and exclusive products for each channel.

Channel power (bases): reward power (margins, bonuses), coercive power (threat to cut supply), legitimate power (contract), expert power (knowledge), referent power (strong brand everyone wants to sell). Good channel leaders use reward and expert power more than coercion.

Assessing Performance of Marketing Channels

Channel performance evaluation measures how well each member and the channel as a whole meets objectives.

Criteria:

1. Sales performance – sales volume, growth, quota achievement.
2. Inventory maintenance – stock levels, stock turnover.
3. Selling capability – size and quality of the dealer's sales force.
4. Attitude and cooperation – participation in schemes and promotions.
5. Customer service – delivery time, complaint handling.
6. Financial – payment record, channel cost as % of sales, profitability.
7. Market coverage – outlets reached.

Example: stock turnover = cost of goods sold ÷ average stock; ₹60 lakh ÷ ₹10 lakh = 6 times a year.

After evaluation: reward good members, help weak members with training and support, and replace members who repeatedly fail.

Managing International Channels of Distribution

International distribution moves goods from the home country to customers in foreign markets.

Entry and channel options:

1. Indirect export – through merchant exporters or export houses in India.
2. Direct export – to foreign importers, distributors or agents.
3. Licensing and franchising abroad.
4. Joint ventures and wholly owned subsidiaries with own distribution.
5. Cross-border e-commerce – Amazon Global Selling and similar platforms.

Challenges: different laws, languages and cultures; long distances and higher logistics cost; documentation (bill of lading, invoice, certificate of origin); exchange-rate risk; choosing reliable foreign partners; control and after-sales service.

Managing them: careful partner selection, clear written agreements, training and support, regular visits and reports, adapting to local practices, and use of trade fairs and Indian export promotion councils.

Use of AI in Distribution Management

1. Demand forecasting – predicts demand by outlet and area.
2. Inventory optimisation – automatic reorder suggestions; fewer stock-outs.
3. Route optimisation – fastest delivery routes, saving fuel (used by delivery and quick-commerce firms).
4. Warehouse automation – robots and AI for picking and packing.
5. Retailer recommendations – suggests which products each shop should stock.
6. Real-time tracking and estimated delivery times.
7. Fraud and claim checking – detects false scheme claims.
8. Chatbots for dealers – order status and queries.

Limitations: high cost for small firms, need for clean data, job concerns, and data privacy.

Likely exam questions

1. (Long, 8/16 marks) What is channel conflict? Explain its types, causes and methods of resolving it.
2. (Long, 8/16 marks) Explain the criteria for assessing the performance of marketing channels. How are international channels of distribution managed?
3. (Short, 4 marks) What is a channel information system?
4. (Short, 4 marks) State the bases of channel power.
5. (Short, 4 marks) Explain the use of AI in distribution management.