Sales & Distribution Management
CHAPTER –ONE BBA 8th Sem
Sales are one of the most crucial functions of an organization. It is the principal, and
often, the only revenue generating function in the organization. Sales has formed an
important part of business throughout history and will continue to do so. A constant
evolution has been witnessed in the sales function from the early Stone Age, through the
Iron ages and the middle Ages to sales in the twenty-first century.
Sales and Distribution Management are both components of the marketing mix. Sales
Managers are responsible for generating sales, profits and customer satisfaction levels
that meet corporate objectives. Sales management is the attainment of sales force goals in
an effective and efficient manner through planning, staffing training and controlling
organizational resources. Sales Management defines the process of planning, directing,
and controlling of personal selling, including recruiting, selecting, assigning, supervising,
paying, and motivating the personal sales force.
Sales management refers to the administration of the personal selling component of a
company's marketing program. It includes the planning, implementation, and control of
sales programs, as well as recruiting, training, motivating, and evaluating members of the
sales force. In a small business, these various functions may be performed by the owner
or by a specialist called a sales manager. The fundamental role of the sales manager is to
develop and administer a selling program that effectively contributes to the organization's
goals. The sales manager for a small business would likely decide how many salespeople
to employ, how best to select and train them, what sort of compensation and incentives to
use to motivate them, what type of presentation they should make, and how the sales
function should be structured for maximum contact with customers.
American Marketing Association defines sales management as “the planning, direction
and control of Personal selling including recruiting, selecting, equipping assigning,
routing, supervising, paying and motivating as these task apply to personal sales force.”
1.1 Objectives of Sales Management
Three general objectives of Sales Management
• Sales Volume
• Contribution to Profits
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• Continuing growth
Channel Management (Distribution management) is the art and science of designing the
channel, selecting and motivating channel members and promoting the product or service
through the channel. Marketing channels are the pathways through which a product or
service is made available to consumers for consumption. Distribution system can be
defined as the sequential flow of procedures, systems and activities which are designed
and linked to facilitate and monitor the movement of goods and service from he source to
the consumer. Essentially, distribution is about making products and services available to
the end user when and where they need them.
Often times, you might hear the term Channel of distribution or a marketing channel in
reference to distribution systems. These two terms relate to a group of organization or
individuals who have an impact on the flow of products and services from the source
production and the end consumer. Distribution systems refer to making products and
service available to the customer base when they are in need and where they can be used.
1.2 Evolution of sales management concept
During the 20th century, some observers have described four evolutionary stages of sales
and marketing management.
1. First Stage: Pre-Industrial Revolution:
Small-scale industries/crafts existed prior to Industrial Revolution period. The
owner/craftsman turned entrepreneur, looked after all areas and functions of
management. These areas are production, finance and design and development. Sales and
marketing was never a serious problem in those days since demand far exceeded supplies.
Selling was only a part-time job for these entrepreneurs. They developed products and set
prices with the assumption that the customers would naturally buy whatever they could
get to the market. The job of the sales departments, then, was simply to facilitate the
smooth flow of goods from the company to the consumer.
2. Second Stage: Production Oriented:
Mass production technique introduced during this period. Marketing meant "sell what is
produced". Environment was that of a "sellers market". Sales people and managers were
elevated to a new status, and their input into product planning and organizational goal
setting increased. In this stage the propensity of most organizations is to focus on getting
the customer to want the product that was being offered rather than delivering what the
customer desired.
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3. Third Stage: Sales Oriented:
Focus is on sales and sales promotion with emphasis on sales volume. Marketing means
"product does not sell by self-it has to be pushed. Customers are to be manipulated."
Environment is highly competitive where "supplies are in excess and production capacity
is more. During the 1960s and 1970s, companies in the United States began to embrace
the concept of marketing, which initiated a shift of the organizational focus from selling
to customer satisfaction and more efficient advertising and promotional practices. The
adoption of marketing techniques essentially involved the integration of the selling side
of business into related functions, such as budgeting, inventory control, warehousing, and
product development.
4. Fourth Stage: Customer Oriented:
Globalisation and liberalisation have further increased the competition. Focus is on
"customer satisfaction." Emphasis is on "problem solving" on customer "needs" and
"wants“ to achieve customer loyalty. . Marketing means customer satisfaction before,
during and after sales. Environment is that of “buyers market” Sales management at U.S.
companies entered a fourth evolutionary stage during the 1980s, characterized by a
marked shift from a supply-side marketing orientation to customer orientation. Several
factors prompted this change. Increased foreign competition, particularly from Japan,
posed a serious threat to American companies, which were comparatively inefficient and
unaware of customer wants. In addition, a slowdown in U.S. market growth resulted in
greater competition between domestic rivals.
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1.3 Nature & Characteristics of Sales Management
The nature and features of sales management are as follows:
A. Its integration with marketing Management
B. Relationship Selling
C. Varying Sales responsibilities
1. Its integration with marketing Management :
Sales management in not the new concept. It is integrated with the marketing
management. In other words sales management is the part of marketing management.
It can be shown in figure as:
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Sales management can be integrated with marketing management in terms of:
• Aligning the sales plan with the marketing plan
• Marketing Research
• Customer Service
• Coordination
• Promotions (including advertising, Sales Promotion, Publicity & PR)
2. Relationship Selling
Buyers and salespersons have some type of a business or working relationship. Every
relationship is an exchange. Relationship Marketing aims at creation of customer loyalty.
The spectrum of relationships include:
1. Transactional relationship (Selling)
2. Value added relationship (Counseling)
3. Collaborative relationship (Partnering)
3. Varying Sales responsibilities
The requirements of the sales executive’s job vary from company to company and from
position to position within companies. However, certain responsibilities are typically
assigned to the same types of executives in different companies. It is possible, therefore,
to generalize about the activities and responsibilities of sales managers, district sales
managers, product managers, and other sales or marketing executives. Some companies
have formulated concise statements of duties associated with various positions, known as
job or positioned descriptions.
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1.5 Varying Sales Responsibilities / Positions / Jobs
Sales Position Brief Description Examples Sales
Position
• Delivery • Delivery of products • Milk, newspapers to Delivery
salesperson to business customers households salesperson
or households. • Soft drinks, bread to
• Also takes orders. retail stores.
• Ordertaker • Inside order taker • Behind counter in a Order taker
(Response • Telemarketing garment shop (Response
selling) salesperson takes • Pharma products’ selling)
orders over telephone orders from nursing
• Outside order taker. homes
Also performs other • Food, clothing
tasks products’ orders from
retailers
• Sales • Provide information, • Medical reps. in Sales support
support build goodwill, pharma industry
• Missionary introduce new • Steel, Chemical Missionary
selling products industries selling
• Technical • Technical
selling information, Technical
assistance selling
• Order- • Getting orders from • Automobiles, Order-getter
getter existing and new refrigerators, (Creative,
(Creative, household consumers insurance policies Problem-
Problem- • Getting orders from • Software and solving,
solving, business customers, by business solutions Consultative
Consultativ solving their business selling)
e selling) and technology
problems
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1.5 Objectives of Sales Management
Three general objectives of Sales Management
• Sales Volume
The main objective of sales management is to maximize the sales volume. Higher the
sales volume higher would be the revenue generation so, that organization can reap its
organizational objectives.
• Contribution To Profits
Higher sales volume leads to higher profits. Sales management major objectives is to
maximize the profit.
Profit = Sales Revenue- Cost
• Continuing growth
The third objective is experiencing continuing growth. This is very important from the
viewpoint of top management because it formulates plans and strategies. As the sales
management remains directly connected with consumers and markets, it keeps a hand on
the market pulse. It can experience the pace of growth and informs the top management,
so that top management can take corrective actions if necessary. Example: Volvo has
traditionally positioned its products in the automobile market in North America in
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order to be perceived as the leader in “safety”, whereas BMW has traditionally
positioned its brand to be perceived as the leader in “performance.”
Business must be for long run. Sales management helps to deal personally with the
customers view and expectation so it create good brand value of the goods and services,
which leads to the growth of the organization.
1.6 Objectives of Sales Management
The objectives of sales management are as under:
A. Quantitative Objectives
1. To retain and capture market share.
2. To determine sales volume in ways that contributes to profitability.
3. To obtain new accounts of given types.
4. To keep personal expenses within specified limits.
5. To secure targeted percentage of certain accounts of business.
B. Qualitative Objectives
1. To do the entire selling job.
2. To service existing accounts, (customers).
3. To search and maintain customer cooperation.
4. To assist the dealer in selling the product line.
5. To provide technical advice wherever necessary.
6. To assist in training of middleman’s sales personnel.
7. To provide advice and assist the middlemen.
8. To collect and report market information of interest and use to the company
management.
1.7 Relationship between Sales Management and Marketing
Sales management and marketing management are closely related to each other.
Generally marketing denotes the process through which the goods/services are transferred
to customers for monetary consideration.
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It is the performance of business activities that directs the flow of goods from the
producer to the consumer and so it is viewed from the customers point of view. Every
attempt is made under marketing to provide maximum satisfaction to customers. It starts
with the needs of the consumers and ends with their satisfaction.
On the other hand, the term “sales management” is used by businessman to refer to the
direction or supervision of salesmen. But in the present business scenario, it has included
other aspects of management also, such as planning, direction, control of personnel
selling, including recruiting selecting, equipping, supervising, paying and motivating,
etc., for they directly apply to sales force.
Marketing management is a broader concept and sales management is a part of marketing
management. Whereas marketing is concerned with the product, price, promotion,
distribution, target market, planning and implementation and control of these activities,
the sales management is only a sub-function of marketing management and is mainly
concerned with the planning, direction and control of the sales force. Sales force are
found in both profit and non-profit making organizations. Everyone lives by selling
something. Selling is one of the oldest professions. Today’s selling executives are
professionals. They plan, build and maintain effective organizations and design and
utilize efficient control procedures. This requires a thorough analysis of quantitative and
qualitative personal selling objectives, formulation of sales policies and selling strategy.
Sales and distribution management is the most important part of marketing management.
Exchange is the core aspect of marketing and sales and distribution management
facilitates it. The following figure clearly shows the relationship between sales
management and marketing management.
Figure 1
Top Management
↓
Marketing Management
↓
Sales Management
The marketing management is broader and sales management is only the part of the
marketing management. The figure shows that there is top level management and under it
there is many department like marketing department, finance department, production
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department. But we only study about the marketing department. So, there is marketing
part under the top management and sales management is under the marketing
management.
Responsibilities of a Sales Manager
The responsibilities of the sales manager are like as:
• Hiring
• Training
• Coaching
• Motivating
• Setting Targets and Tracking The Results
• Recognizing and rewarding the performance
• Providing lead and sales support
• Organizing the Sales Effort
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