SALES MANAGEMENT AND DISTRIBUTION

 By Prof. Rajni Pathak

Sales management is defined as the planning, direction, and control of personal selling including
recruiting, selecting, assigning, supervising, paying, and motivating as these tasks apply to
personal sales force.
Evolution of Sales Management
Pre –Industrial Revolution Period
Sales Oriented Period
 NATURE AND IMPORTANCE OF SALES
MANAGEMENT

 The Nature of sales management can be explained by-

 Relationship Selling- Relationship selling is – as the name implies – a 

sales technique based around using relationships to close sales. The
purpose is to build image, retain existing customer, future prospects.
 Transactional Selling- Customers who purchase low priced product and services the focus is on
single transaction with each customer. This is called transaction oriented selling, where after the
product or service is sold, the customer is not contacted again and hence the relationship is
not extended.
 Value added Selling- In the case of VALUE-ADDED SELLING , the focus is on the salesperson
understanding the needs of the customer correctly and meeting those needs and providing.
After the purchase is made, the salesperson contacts the customer to find out if the customer is
satisfied and has any future needs.
 Collaborative Partnering Selling- Usually happens in B to B BUSINESS.
Importance of sales Management

 It manages the sales force,

 Sales management inspires sales,
 To give training to the salespeople,
 To establish brand image and goodwill,
 To manage the sales data,
 To evaluate the performance,
 The motivation of the sales force,
 Understand Customer expectation
 Financial profit of company
Buyer-seller dyad

 Good communication is a key to successful marketing, and it is

particularly important for positive personal selling results. The buyer-
seller dyad is flexible and efficient, closes sales, and provides
feedback.
 The salesperson and the prospect, interacting with each other, constitute one example of a “buyer-seller
dyad”.
 Another is the interaction of a seller using advertising with a particular prospect .
 In both advertising and personal selling, the seller seeks to motivate the prospective buyer to behave
favorably toward the seller. Whether or not the buyer reacts as the seller desires depends upon the
nature of the interaction.
 The opportunity for interaction is less in the advertising case than in personal selling. However,
advertising and personal selling often supplement or support each other, and the buyer reacts to their
combined impact.
 What Is Personal Selling
 Personal selling is a personalized sales method that employs person-to-person interaction between a sales
representative and prospective customers to influence the customer’s purchase decision.
 Precisely, it’s a promotional technique where a salesperson:
 Uses person to person communication
 To sell an offering
 Using a personalized sales strategy.
 Today, personal selling is considered a business-to-business selling technique but is also used in trade and 
retail sales.
 With the advent of the internet and other communications methods, personal sales isn’t limited to just face-
to-face meetings. Salespersons now use video calls, phone calls, IM, and even emails, along with in-person
interactions to develop a relationship with prospective customers.
 Build brand and product awareness by educating customers on the company’s offerings and their benefits.
 Increase sales by identifying and persuading the prospects to buy a business’s offering.
 Building close long-term relationships with the customers by enforcing person-to-person two-way
communication.
 Supporting the customers of complex, technical, or high-priced items by providing detailed technical
information.
 Stimulating the offering’s demand by helping the customers throughout their decision-making process and
guiding them towards the business’s offering.
 Features Of Personal Selling
 Personal selling differentiates itself from other sales and promotional techniques by possessing the following characteristics:
 Development of relationship: Personal selling involves developing a relationship between the seller and the buyer where trust is
established, and the prospective buyer can rely on the salesperson. Moreover, this technique even results in the salesperson
becoming a part of the buying process.
 Two-way flow of information: Unlike mass marketing, personal selling is characterized by a two-way flow of information. The
prospective buyers get their chance to ask questions and clear their doubts directly from the seller before purchasing.
 Quick communication: Since personal selling involves person-to-person interaction, the communication flow is really quick.
 Satisfaction: The process of personal selling requires the salesperson to understand the customer’s needs and satisfy the same by
offering the customer the opportunity to buy something he has to offer.
 Persuasion: Personal selling isn’t just about informing prospective customers about the company’s offerings. It also involves
using the power of persuasion to make customers accept the seller’s point of view or convince the customer to take a particular
action.
Importance of sales management

 It is Dagmar of the marketing system,

 It manages the sales force,
 Sales management inspires sales,
 To give training to the salespeople,
 To establish brand image and goodwill,
 To manage the sales data,
 Important element of national income,
 To evaluate the performance,
 The motivation of the sales force,
 Other factors or importance
  Role of Sales Manager
 A sales manager plays a key role in the success and failure of an organization. He is the one who plays
a pivotal role in achieving the sales targets and eventually generates revenue for the organization.
 A sales manager devises strategies and techniques necessary for achieving the sales targets. He is the one
who decides the future course of action for his team members.
 It is the sales manager’s duty to map potential customers and generate leads for the organization. He
should look forward to generating new opportunities for the organization.
 A sales manager is also responsible for brand promotion. He must make the product popular amongst the
consumers. A banner at a wrong place is of no use. Canopies must be placed at strategic locations; hoardings
should be installed at important places for the best results.
 Motivating team members is one of the most important duties of a sales manager.
 It is the sales manager’s duty to ensure his team is delivering desired results. Supervision is essential.
Track their performances. Make sure each one is living up to the expectations of the organization..
 A sales manager is responsible for not only selling but also maintaining and improving relationships with
the client. Client relationship management is also his KRA.
Types of sales management position
 Personal Selling Process
 Salespersons follow a specific personal selling process to make the sales happen. This process involves these
steps.
 Prospecting: .
  Pre-approach:
  Approach: 
 Sales presentation: 
 Handling objections: 
 Closing Sales: 
 Following up: 
Sales organization structure
Objective of Personal Selling

 Building Product Awareness 

 Creating Interest
 Providing Information
 Stimulating Demand
 Reinforcing the Brand
 Theories of Selling
 AIDAS theory of personal selling( Seller Oriented Theory ) By  St. Elmo Lewis 
 Right Set of Circumstances” theory of selling.By Prof. Howard
 Buying Formula” theory of selling.(Buyer Oriented Theory) Prof E K Strong
 Behavioral Equation” theory. By- Prof. Haward
 AIDAS
 ATTENTION
 INTEREST
 DESIRE
 ACTION
 SATISFACTION
Right Set of Circumstances” theory of selling

 It is also called the “situation-response” theory.

 The major emphasis of the theory is that a particular circumstance prevailing in a given
selling situation will cause the prospect to respond in a predictable way.
 This is essentially a seller-oriented theory and it stresses that the salesman must control the
situation in such a way as to produce a sale ultimately.
Buying Formula” Theory of Selling:

 Buyer oriented theory

 The buyer’s needs or problems receive major attention, and the salesperson’s role is to help
the buyer to find solutions.
 This theory purports to answer the question: What thinking process goes on in the
prospects' mind that causes the decision to buy or not to buy?
 The theory is based on the fact that there is a need or a problem for which a solution
must be found which would lead to purchase decision, as shown below:
 Need- Solution- Purchase –Satisfaction
 In purchasing, the “solution” involves
 The brand name, manufacturer or the salesperson of the particular brand name:
 Behaviour Equation Theory of Selling:
 This theory explains buying behaviour in terms of purchasing decision process, viewed as a phase of the learning
process, four essential elements of learning processes included in the stimulus response model are drive, cues, response
and reinforcement, which are given below, in brief:
 1. Drive is a strong internal stimuli that impel buyers’ response. Innate drives stem from psychological needs and learned
drives such as striving for status or social approval.
 2. Cues are weak stimuli that determine when the buyer will respond. Triggering cues activate the decision process
whereas new triggering cues influence the decision process.
 3. Response is what the buyer does.
 4. A reinforcement is any event that strengthens the buyers’ tendency to make a particular response.
 B=PxDxKxV
 B-Response of Buyer
 P-Predisposition or habit of buyer
 D-Drive level of buyer
 K-Value of Product
 V-Intensity of all cues.
 Strategic Planning

 A strategic plan is a document that reflects how a company plans to function and grow over a
significant period of time, usually three-to-five years. It is done at
 Corporate Strategic Plan –Goal, Vision, Mission, objectives, Resources, Implementation, Find a Gap.
 Division/Business unit strategy plans-SWOT Analysis, Prepare strategy, Implementation, Results
 Functional Plans –Marketing, Production, HRM ad Finance.
 MISSION

The long range objectives that will drive the

VISION development process and stretch the organization to
achieve them.

SWOT Analysis

Internal Environment External Environment

Strengths Opportunities
Weaknesses Threats
- Value systems - The changing environment
- Culture - The demand for new products
- Staffing - The economic environment
- Support systems, operating environment - Availability of resources

STRATEGIC AREAS FOR DEVELOPMENT

STRATEGIC OBJECTIVES

Strategic Strategic Strategic Strategic

Action 1 Action 2 Action 3 Action 4

EVALUATION/FEEDBACK
 Marketing and Personal selling strategies

 Marketing Strategy
 Identifying target segment
 Collecting information about competitor and potential customer
 Develop marketing mix strategy
 Advertisement Strategy
 CRM
 Availability of Product
 Personal Selling-
 Understanding needs
 Interacting with customer
 Giving complete information about product
 Query handling
 Customer satisfaction
 Sales Strategy

 Sales Strategy- A sales strategy is a long-term plan for increasing sales. Possible strategic goals
include selling to new clients, boosting repeat business or upselling customers into making larger
purchases.

 Customer Classification strategy

 Customer Relationship Strategy
 Selling methods
 Channel strategy
 Customer Classification Strategy-
 Class A-High sales and profit potential customer
 Class B-Medium sales and profit potential customer
 Class C-Low sales and profit potential customer
 Customer Relation ship Strategy-
 Transaction relationship
 value added relationship
 and collaborative relationship.
 Selling Methods
 AIDA
 Team selling method
 Consultative selling method
 Marketing Channel Strategy
 Through salesperson
 Agents
 Online
 Sales Forecast -Sales forecast is the estimated units or rupees of sales for a specific future time
period based on an assumed marketing plan or other sort of planning.
 Purpose of sales forecast is to plan the company's operations in an effective manner. It is used by
other functions like- Manufacturing or production, finance , Purchase and HRM.
 Methods of Sale Forecast- Qualitative and Quantitative Method
 Qualitative Method
 Executive Opinion method
 Delphi Method
 Sales Force Composite Method
 Survey of Buyers Intensions method
 Test Marketing
 Executive opinion method, sales forecasts are made based on the opinions of the top
executives of the company. The executives will take into account the past performance of
the business, the present market conditions and the future trend before arriving at a
conclusion.
 Delphi Method- Selection of panel of experts from within and outside the company,
coordinator asks each expert separately to make forecast. Coordinator summarizes these
forecasts into a report and sent to each panel member. This will be repeated until the panel
pf experts arrive at consensus.
 Sales forecast composite method -sales representatives of the business are asked to
forecast sales for their respective areas. Their views will be combined with those of the 
sales managers in arriving at an estimate. 
 Survey of Buyers Intentions Method- Information on customers intentions on purchase
of product or service can be obtained through personal interview, telephonic survey on the
likely purchase of company’s product and services for forecast period. Customers are also
asked on product quality, features and service.
 Test Marketing-
Quantitative Method
 Moving Averages Method
 Exponential Smoothing Method
 Decomposition Method
 Naive or Ratio method
 Regression Analysis
 Quantitative Method
 Moving Averages Method-Calculating the average company sales for previous year.
 Decomposition Method- Company’s previous periods sales data is broken into 4 major components-
trend, cycle, seasonal and erratic events.
 Naïve or Ratio method
 Regression Analysis

 Method of Improving forecasting accuracy –

 Use multiple forecasting method
 Obtain a range of forecasts
 Sales Budget
 Sales budget is a financial plan, which shows how the resources should be allocated to achieve
forecasted sales. The main purpose of sales budget is to plan for maximum utilization of resources
and forecast sales.
 The objective of sales budgeting is to plan for and control expenditure of resources (money, material,
facilities and people) necessary to achieve the desired sales objective. It aims at leveraging and
maximizing profits.
 The purpose of sales budget is to achieve the objectives of the sales department. It also acts as a
planning tool. It helps a firm to set standards and strive to achieve them. It is also an instrument of
coordination between different departments in an organization like sales, finance, production and
advertising.
 The sales manager is responsible for preparing three detailed budget- Sales volume budget, selling
expense budget, Administrative budget.
 Sales Territory

 A sales territory is defined as a group of present and potential customers assigned to a geographical
boundaries to the individual salesperson at a given period of time. 
 Benefit of designing sales territories-
 Increased customer coverage
 Reduce selling expense
 Better sales performance
 Improved customer relationship
 Increased salespeople effectiveness
 Benefited Salespeople and company
 Procedure for designing sales territory

 Select a control unit- State, City, district

 Find location and sales potential of Customer
 Determine basic territory(Build up method and break up method )
 Assign salespeople to territory
 Evaluate sales territory
Manage Territorial coverage

 Planning Efficient routes for sales people

 Scheduling salespeople time
 Time management tools

 Sales Quotas
 A sales quota is the performance expectation that sellers must achieve during a set
time period to earn their target incentive pay. Quotas are also called goals or targets and
can increase seller motivation when opportunity varies by territory.
 Importance of Sales Quotas
 Providing Performance standards(Benchmark based on experience)
 Controlling Performance (target and actual performance, reason of deviation if any)
 Motivating People (Realistic Targets and ,rewards)
 Identifying strength and weaknesses (Strong point and weak point)

 Method for setting sales quotas

 Territorial sales potential
 Past sales experience
 Executive Judgment
 Salespeople estimates
 Compensation Plan
 Purpose of Sales Organization Structure

 Determining the degree of centralization

 Allowing the degree of specialization
 Define line and staff positions
 Achieving effective coordination
 Ensuring a reasonable span of control
Sales force Staffing

 Planning
 Recruiting
 Selecting
 Hiring
 Socialization
Training the sales force

 1.Class room /Conference Training

 2.On the Job Training
 3.Online Training
 4.Behavioral Training
 Sales force Motivation

 Financial Rewards &Non financial rewards

 Salary Increment Sense of accomplishments
 Incentive Recognition
 Bonus Job security
 Holiday Trip Vouchers
 Promotion
 Sales force Compensation

 A sale compensation plan refers to the determination of the right compensation

schemes and application of it to the sales force to bring a balance between
compensation and the sales force performance.
 Sale Compensation is an integral part of an employee’s sustenance and survival
which has a motivational element also.
 The basic purpose of the plan is to establish an equitable and fair distribution of
salaries or wages, and other incentives amongst working personnel in a way that
maintains equity between proportionate performance contribution of an employee
and compensation received.
 Designing an effective sales compensation plan

 Examine job description

 Decide specific objective
 Establish the level of compensation
 Evolve the method of compensation
 Determine payment of fringe benefits
 Pretest, install and evaluate the plan
Objective of sale force compensation plan -

 Company prospective-To control sales people activities.

 Attract and retain quality sales people.
 Flexible.
 Salespeople prospective- Regular and incentive income(fixed salary to take care of living
expenses)
 Simple plan
 Leading the sales force

 Effectiveness of leader depends on three factors-

 1-Personal characteristics or traits.
 2-Leadership style or behavior (Transformational and transactional leadership)
 3-Leadership skills
 Sales expense
 Salesforce expenses include travel, meals, lodging, telephone.
 Firms have salesforce expense plans to ensure proper spending
 Objectives / Criteria of effective expense plans are:
It should be
 Fair to the salesperson and company
 Simple and economical to administer
 Clear to prevent misunderstanding
 Reimbursed without much delay
Types of salesforce expense plans

 Salespeople pay all expenses

 Company partially pays expenses / Limited payment plan
 Company pays all expenses
 Sales Audit

 Salesforce or sales management audit is a part of marketing audit

 A marketing or salesforce audit is a comprehensive, systematic, diagnostic, and prescriptive tool,
to be used periodically
 Purpose. To assess adequacy of process, improve performance, recommend changes
 Evaluation process of salesforce audit. It has 3 stages. Company management should find out:
 What happened by comparing actual performance with goals
 Why it happened by identifying factors contributing to negative variance. Difficult and time
consuming task
 What to do about it by taking corrective actions
Evaluating & Controlling Performance of
Salespeople
 Purposes / objectives / importance of performance evaluation of salespeople are:
 Mainly to find how salespeople have performed
 This information is used for other purposes, such as:
 Improving salespersons’ performance, by identifying causes of unsatisfactory
performance
 Deciding salary increments and incentive payments
 Identifying salespeople for promotion
 Determining training needs
 Motivating salespeople through recognition and reward
 Understanding strengths and weaknesses of salespeople
Procedure for Evaluating and Controlling
Salesforce Performance
The steps involved in the procedure are:
 Set policies on performance evaluation and control
 Decide bases of salespersons’ performance evaluation
 Establish performance standards
 Compare actual performance with the standards
 Review performance evaluation with salespeople
 Decide sales management actions and control
We shall describe above steps briefly
 Distribution Management
 Distribution Channels- Are sets of interdependent organizations involved in the process of
making a product or service available for use or consumption
 Distribution Management- Management of all activities which facilitate movement and co-
ordination of supply and demand in the creation of time and place utility in goods
 The art and science of determining requirements, acquiring them, distributing them and
finally maintaining them in an operationally ready condition for their entire life.
 Product
 Place
 Price
 Promotion
 Distribution channels help in the ‘place’ aspect of the marketing mix
 Distribution provides place, time and possession utility to the consumer
 Need of Distribution Channels

 Distribution channels:
 Exist because producers cannot reach all their consumers
 Multiply reach and provide efficiency to the marketing process
 Facilitate smooth flow and create time, place and possession
utilities
 Producers get and reaches out to maximum number of
distribution netwroks.
 Feedback and queries
58 Industrial Products

Producer Producer

Agent/middleman

Industrial Distributor Industrial Distributor

Industrial Customer Industrial Customer

SDM- Ch 8
 Consumer Products
59

Producer Producer Producer

Distributor Distributor

Wholesaler

Retailer Retailer Retailer

Customer / Customer/ Customer/

consumer Consumer Consumer

SDM- Ch 8
Patterns of Distribution

 Determines the intensity of the distribution

 Intensity decides the service level provided
 Types of distribution intensity or strategy:
 Intensive
 Selective
 Exclusive
Marketing Channels

 A marketing channel consists of the people, organizations, and activities necessary to

transfer the ownership of goods from the point of production to the point of
consumption.
 Channel Formats-
 Producer driven ( company owned retail outlet, licensed outlets, Franchise)
 Seller driven(Departmental stores, specialty stores, Existing retailers)
 Service Driven(All kinds of transporters)
 Summarize Expectations…

62
Channel Levels
Manufacturer Manufacturer Manufacturer

Distributor/ wholesaler

Retailer Retailer

End User End User End User

Zero level One level Two level

SDM- Ch 9
 Service Channel
 It is the availability of and accessibility of a service to consumers. Two service marketers are involved
in delivering service through intermediaries.
  1.The service principal/originator  - it is the entity that creates the service concept.
  2.The service deliverer/intermediary –it is the entity that interacts with the customer in the actual
execution of the service.
 Expectations of Customers from Channel-
 1.Variety and assortment in one location
 2.Availability in preferred lot sizes
 3.Close to customer/consumer location
 4.Additional service
 5.Financing support
 Retailing Definition
 Any business entity selling products and services to consumers is retailing.
 Retailing is a set of activities performed in selling the goods and services directly to the end users.
The goods and services sold to the consumers are meant for their personal use and not for resale or
business activity. Retailing is the last activity conducted in the chain of product distribution.
 How do consumers decide which retailers to buy from(Price, location, product selection, special
services, helpful salespeople, fairness in dealing.
 Functions of retailing
 Performing marketing function
 Helping create time, Place and possession utilities
 Provide wide variety of products
 Adding from utility.
 Types of retailers
 Mom & Pop store -
 Departmental store- Wide range of assortments are available
 Category killers- Multi brand outlet(mother care, Mom &Mom, Planet sports, Decathlon
 Malls- Various brands of different products are available
 Discount stores-Products are prices less than market price(brand factory, Vishal mega mart)
 Supermarkets- grocery and other products(reliance, more)
 Hypermarkets- Supermarket + departmental store(BIG Bazar, D MART)
 Street Vendors-
 Cash and carry-Purchase in bulk and take the goods (B to B) Metro

Retail strategy
 Get new and retain old customer
 Know the business
 Know the competition
 Location and target customers
 Social media to reach target customer
 Location of stores
 Store Image
 Retail Performance Measures

 Gross margin return on inventory management- The gross margin return on investment
(GMROI) is an inventory profitability evaluation ratio that analyzes a firm's ability to turn
inventory into cash above the cost of the inventory. It is calculated by dividing the gross margin
by the average inventory cost and is used often in the retail industry.
 Gross margin per square foot- Measurement of how well the floor and other space in the store is
being utilized.
 Sales per transaction
 Value of purchases per buyer
 Global and Indian retail-
 https://www.youtube.com/watch?v=cJGu2fNB2jc&authuser=0
Franchising

 Franchising is an arrangement where franchisor (one party) grants or licenses some rights
and authorities to franchisee (another party). Franchising is a well-known marketing
 strategy for business expansion.
 A contractual agreement takes place between Franchisor and Franchisee. Franchisor
authorizes franchisee to sell their products, goods, services and give rights to use their
trademark and brand name. And these franchisee acts like a dealer.
 Wholesaling

 Wholesaling is the act of buying goods in bulk from a manufacturer at a discounted price
and selling to a retailer for a higher price, for them to repackage and in turn resell in
smaller quantities at an even higher price to consumers. Due to the large quantities
purchased from the manufacturer at a discounted price, the wholesaler can also pass on this
discount to retailers. The retailer sells at a price that reflects the overall cost of doing
business.
Functions of wholesalers

 Enable manufacturers and service providers to provide their goods and services with no
customer contact
 Provide support to retail or institutional consumers in terms of market research
 Provision of facilities in terms of delivery and inventory management
 Provision of credit to institutional consumers and retailers whenever required
 Reducing physical distribution costs through purchase in large quantities
 Grading and packaging of goods
 Bearing the risks with the business
Classification of wholesalers
 1.Merchant wholesaler -A merchant wholesaler is an intermediary who buys goods from
manufacturers and sells them to third parties – retailers, businesses, government
institutions, or other wholesalers.
 Full-Service Wholesaling
 Limited-Service Wholesaling
 Cash and Carry
2. Brokers and Agents
Trends in Wholesaling
 Understanding customer needs
 Shifting towards ecommerce
 Modernize their warehouses and physical handling capacity
 Adopting selective distribution policy
Distributor, Stockists and Dealers

 Distributor- Person nominated by the company to exclusively re-distribute the company

products to all retailers in designated territory.
 Stockist- Person work for a company and may have pre-designed territory but does not re-
distribute the stocks. Sells them to customers who visit his shop. Ex-A stockist for paper
products, stockiest for automobile spares.
 Dealers- Similar role of distributor but has two difference(1) he may not have clearly
defined territory and sells both in the market and from his shops and(ii)he may deal with
competitive products also.
 Ex- A dealer for apparel brands, cosmetics brands
Factors affecting nature of distribution channel

 Unit value of Product

  Technical Nature
 Number of Buyers
 Types of Buyers
 Size of market
 Possibilities of Sales
 Cost of channel
 Channel Design Process
73

Development
SDM- Ch 12
74 Evaluation of Major Alternatives

Cost of operations

Ability to manage
and control

Adaptability

Range and volume

to be handled

Criteria for evaluation

SDM- Ch 12
75 Selecting Channel Partners

 Getting good channel partners is a difficult part of doing

business
 Some of the methods employed to select channel partners
are:
 Sales people identify prospects and talk to them
 Press advertising (industrial goods)
 Existing channel partners can give good references
 Competitors’ channel members for reference, not poaching

SDM- Ch 12
76 Selection Criteria

 Qualitative: willingness, confidence in company products, willingness to abide by

company rules, building company image, innovativeness etc
 Quantitative: financial status, infrastructure, location, present businesses, customer
relationships, market standing etc

SDM- Ch 12
77 Training Channel Members

 Starts from the time of recruitment

 Channel member owner and his staff on the company products.
 Training on submitting the reports and maintain records
 Training could be on the job field training or classroom training
or both
 Special meetings for new product launches

Subjects….. SDM- Ch 12
 Role of ROI…..
78 Channel Members Evaluation

 Effectiveness of the distribution channel determines the

success of the company
 Company would like its channel partners to perform at the
highest standards possible
 Need to constantly evaluate performance on sales targets,
coverage, productivity, inventory holdings, attending to
servicing requests, advertising and promotion, channel partner
send goods on time etc

SDM- Ch 12
79 Channel Comparison Factors
Efficiency
Effectiveness
Capacity
Agility
Consistency
Reliability
Integrity

SDM- Ch 12
Channel Management &Channel Conflict

 Channel Management-
 Selecting Channel Member- (Financial Health, Location, Growth &profit record and level
of cooperation &reputation)
 Motivating Channel Member-(Higher margins, special deal, co- operative advertising,
display allowances)
 Evaluating &Controlling Channel Member
Channel Conflict
Channel Conflict

 Channel conflict can be explained as any dispute, difference arising between two or
more channel partners, where one partner's activities or operations affect the business,
sales, profitability, market share or similar goal accomplishment of the other channel
partner.
Use of Power

 Reward- In terms official and non financial)

 Coercion – Hint of punishment for the channel
 Expertise –Special knowledge
 Legitimacy- Contracts and agreement about the terms and condition usually in writing.
 Reference- Manufacturer should develop its image in such a way, that the intermediaries
must feel proud to be associated with it
 Logistics
 Logistics is also known as Physical Distribution management. Logistics is an activity carried out by many
different companies for the physical distribution of goods.
 These goods have to be transported to the distributors and dealers and lastly to the end consumer. Logistics is
the means to transport the goods from the company to the middlemen or the end consumer.
 Scope of logistics
 Order Processing -ensures customer orders are properly prepared and delivered to the right place.
 Materials handling- Material handling” refers to the movement of materials from the store room to the
machine and from one machine to the next machine or work station during the process of manufacture.
Receiving , storing and dispatching the goods to end user.
 Warehousing
 Inventory Control
 Transportation
 Packaging
 Inbound Logistics
 A manager in charge of inbound logistics manages everything related to the incoming flow of
resources that the company needs to produce its goods or services. These activities will
include managing supplier relationships, accessing raw materials, negotiating materials
pricing, and arranging quicker delivery.
 Outbound Logistics
 A manager working in outbound logistics will be focused on two issues: storage and
transportation. He or she will use warehousing techniques to keep the finished goods safe and
accessible. Since the products may need to be moved out to a customer at any moment,
proper organization is crucial.
  
Supply Chain Management

 Supply chain management is the handling of the entire production flow of a good or
service — starting from the raw components all the way to delivering the final product to
the consumer.
Supply chain management vs logistics

 Supply chain management is the handling of the entire production flow of a good or
service — starting from the raw components all the way to delivering the final product to
the consumer.
 Process-

Logistics Supply Chain Management

•Inbound and Outbound •Procurement
Transportation •Supply Planning
•Warehousing •Demand Planning
•Reverse Logistics (Returns) •Enterprise Resource Planning
•Protective Packaging •Inventory Management
•Fulfillment •Manufacturing
•Logistics
•Optimization
 Purpose -

Logistics Supply Chain Management

The purpose of logistics is to The goal of supply chain management is
provide just-in-time delivery for supply chain optimization for the sake
the primary sake of customer of competitive advantage, as in the most
satisfaction. efficient and cost-effective methods for
those working within a supply chain.
Extension into Supply chain Management

 Warehouse design and management. This role of logistics in supply chain

management covers several tasks at once: from the design of storage facilities to the
requirements for storage of products .
 The formation of packages. Packaging, tracking and accounting – all of these tasks
allow for end-to-end control of goods on the way to the customer/distributor;
 Transportation of products. This includes work with cargo carriers and vehicles listed
in the company’s fleet: planning their routes, calculating fuel costs, etc.;
 Working with customs. When an enterprise plans international delivery of goods, it is
very important that during their transportation the goods fully comply with customs
requirements and contain all the necessary documentation.
 E-logistics is defined as the management of all the physical flows of an organization
that sells goods on an online platform.
 Logistics- Cost of service
 Inventory Cost
 Production cost
 Distribution cost
 Packaging related to logistics
 Cost of lost sales as a result of stock outs.
 Logistics- Performance Measurement
 Purpose of performance measurement is to find out how the logistics
function delivers customer service fast at an optimal cost.
 Measurement related to warehousing support, transportation capabilities.
 Performance can be measure both internally and externaly.
 Internal Measurement- Cost incurred to accomplish the objective of customer service.
 Customer Service status as combination of sales achieved, order numbers received and
executed, order cancelled, damage claims settled
 Order shipped complete-Ability to supply the full order every time.
 Speed of response-Order cycle time.
 Stock out frequency- Number of times demanded exceeded availability.
 Asset utilization-Equipment , transport facilities and inventory.
 External Measurement- Customer perception – obtained through regular feedback or
surveys.
 Normally rank customer service parameters in relation to competition.-parameters like
order cycle time, feedback on order status, after sales service and support system.
 International Sales
Nature of International Market