Sales & Distribution Management PDF

Sales & Distribution Management By Dr. Sumit Saxena Asst. Professor - Marketing NMIMS SOBA MUMBAI...

Sales & Distribution Management By Dr. Sumit Saxena Asst. Professor - Marketing NMIMS SOBA MUMBAI Ph.D. (Marketing Area) Indian Institute of Technology Ropar, India Access me @ MyLinkedin https://www.linkedin.com/in/dr-sumit-s-a7a8a322/ @ My Google Scholar https://scholar.google.com/citations?user=BccLvBQAAAAJ Reference textbook 1. Sales & Distribution Management by Havaldar & Cavale, 3rd Edition 2. Sales and distribution management by Panda, Tapan K. (Tapan Kumar)  Revision Questions Diff between Sales and Marketing ? Channels of distribution ? Challenges of production philosophy ? What is product Myopia ? Why sales and Distribution are studied together ? Why sales is of concern for Brand Manager ?  Sales + Distribution Why they are merged and studied together? Distribution is actually a part of sales often studies as different function but closely entangled with sales processes. Sales believes in push strategy and customer satisfaction Distribution is about realizing sales outcome by management of network channels to make products and services available to consumers. It may be direct, selective, and exclusive + distribution Similarly sales can be direct sales, indirect sales and many other type Moral of the story is both complements each-other and cannot survive of its own.  Quick Concepts What is sales distribution cycle ? Key stakeholders ? Qualities of a good sales manage? PE ratio ? EOQ ?  Sales + Distribution Missionary salespersons In making decisions, sales managers also consider the interests of the firm’s various stakeholders, which include: 1. Customers, 2. Employees, 3. Channel partners, 4. Financial community, 5. Media, 6. Stockholders, 7. Special interest groups, and 8. Governments. What Qualities Are Needed To Be A Sales Manager? What Qualities Are Needed To Be A Sales Manager? Remember some terms and try to relate it with Sales and Distribution Sales vs Marketing Differences 4Ps + 3Ps Economic Order Quantity STP Customer Psychographics (AIO Framework) Social Media Metrics (In-general) Remember some more concepts  Marketing + Sales Sales team did not have a ton of visibility into pipeline, campaigns, Marketing + Sales: The customer experience and budgets. There was always a journey | McKinsey sense of “What’s marketing up to? Where are they making their investments?” Second, the customer doesn’t care whether you work in sales or marketing or service. They just want a common experience with you. Marketing department should view sales personnels as their customers. It should make sure that marketing is helping their sales team achieve their numbers. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our- insights/marketing--sales-the-customer-experience-journey Evolution of Sales Evolution of Distribution: Going complex to simple  Some broad topics that we will touch Sales Processes Distribution issues in hand. Managing Sales Career Selling Skills Sales force management Sales force training and compensation Outsourcing distribution Sales in Retail, Pharma, FMCG, IT, Telecom Role of Generative AI in sales development Ethics in sales and distribution  What is Sales Management? Case Pg 2,3 Text Book, AV Clip- https://www.youtube.com/watch?v=6tDfPoEOOoE Sales is the transfer of ownership of a product from a seller to a buyer for a predecided consideration ( money) In the case of a service there is no transfer of ownership Sales Management is the sum total of activities that enable the transfer of ownership to the customer Objectives of Sales Management Generate sales and earn revenue Providing Profitability Improving Market Share Improving Corporate Image  Sales are different for B2B and B2C sectors In B2B sales come under Business Development Business Development is the discipline of achieving growth by acquiring new profitable customers and expansion of existing customers Remember BD has to happen at all times. Many small businesses ignore this when they are loaded with clients. The key is to have an active pipeline of clients and to be active in business quarter on quarter Sales is a sub part of BD. Sales is the science of presenting your solution to a prospective customer’s need and getting them to buy it C2C ? Importance of Sales Integration with other departments In many organisations sales and marketing operate in silos, wherein they need to work in an integrated manner in the following areas- Marketing Communication Market Research Distribution Customer Service Interesting trends: Organizations offering sales support to other firms Insightful research  Sales Psychology Sales psychology refers to the psychological principles and techniques employed to influence and persuade potential customers to make a purchase. By understanding the cognitive biases, emotional triggers, and decision-making processes that drive consumer behavior, businesses can tailor their sales strategies to align with customers' needs and preferences.  Key Biases and Psychological Factors Anchoring bias: It refers to the tendency to rely heavily on the first piece of information encountered when making a decision. Emotional triggers: Emotions play a significant role in consumer behavior, and understanding how to tap into these emotions can greatly impact sales. For instance, creating a sense of urgency or scarcity Decision-making processes: By understanding the stages of the decision-making process, businesses can tailor their sales strategies accordingly. For example, during the evaluation stage, customers may have specific concerns or objections.  Sales Psychology Advantages Disadvantages enables businesses to create customers may perceive persuasive marketing certain sales techniques as messages manipulative or coercive, Allows businesses to leading to a negative anticipate and overcome perception of the brand. objections by addressing overly aggressive or unethical customers' concerns directly use of sales psychology can understanding the psychological further exacerbate the negative factors that drive consumer perception of the brand. behavior, businesses can create a Any actions that are perceived customer-centric approach that as manipulative or dishonest meets their needs and exceeds can lead to a loss of trust and their expectations. long-term customer loyalty.  Food for Thought Why Sales and Distribution or Sales and Marketing needs to be integrated Do you think studying sales and distribution management is only important for students who want to opt for sales or marketing stream in their future carrier? Does it has anything with branding? If Yes then how Note: Genesis of sales relies on Selling concept which assumes that customer will not buy enough of an organization's products unless they are persuaded to do so through selling effort. Mega Trends In Sales Management Virtual Selling” Is Now Just “Selling”  Contact Less Technology-Based Services 1946-1964 1965-1980 1981-1996  Greater Focus On Reducing Buyer’s Remorse Customers' preference for unassisted channels corresponds with 23% higher purchase regret, compared to purchases that involve human interaction. Duolingo Duolingo, Inc. is an American educational technology company that produces learning apps and provides language certification. AI Aids Sales Teams In 2013, the University of Oxford released the first study of its kind, profiling the extent to which jobs across 702 occupations were at risk of being replaced by artificial intelligence (AI). The risk profile for sales jobs was diverse. The vulnerability to AI of sales engineers, sales managers, and jobs in financial services sales, was estimated at less than 2%, while real estate, insurance, retail, and parts sales were extremely at risk — between 86% and 98%. More recently, a 2018 McKinsey study reaffirmed those predictions: sales jobs that involve a lot of repetition and little to nogood The socialnews intelligence, will become is that the numberobsolete. of sales jobs that demand a high degree of social intelligence and the interpersonal connection is expected to grow by more than 7.9% by 2030. 1. Loyalty to the employer vs. the moral obligation to protect the public and the environment An employee discovers that their company is engaging in illegal activities, such as dumping toxic waste into a river, which is both environmentally damaging and a serious health hazard to nearby communities. The employee faces an ethical dilemma between reporting the misconduct, potentially leading to legal action against the company and safeguarding public and environmental health, and remaining silent to protect their job and the livelihoods of their colleagues. Ethical Dilemma: Loyalty to the employer vs. the moral obligation to protect the public and the environment. The safety of passengers vs. the safety of pedestrians Programmers of autonomous vehicles face an ethical dilemma in creating algorithms for unavoidable accidents. For example, if an accident is inevitable and the choice is between altering the vehicle’s path to avoid hitting a pedestrian, thereby endangering the passengers, or protecting the passengers at the cost of the pedestrian’s life, how should the car be programmed to act? Ethical Dilemma: The safety of passengers vs. the safety of pedestrians. 4. The duty to report news truthfully vs. the potential harm to public safety and societal peace A journalist obtains exclusive footage of a terrorist group committing an atrocity. Publishing the footage could inform the public about the severity of the situation and the threat posed by the terrorist group, but it could also spread fear, possibly lead to public panic, and serve the terrorists’ goal of gaining attention for their cause. Dilemma: The duty to report news truthfully vs. the potential harm that such reporting might cause to public safety and societal peace. Upholding the client-lawyer confidentiality vs. the moral responsibility to prevent future crimes. A defence attorney knows their client is guilty of a serious crime and intends to commit similar crimes in the future. The attorney faces an ethical dilemma between maintaining client confidentiality, a cornerstone of legal ethics, and the moral obligation to prevent future harm. Ethical Dilemma: Upholding the client-lawyer confidentiality vs. the moral responsibility to prevent future crimes.  Selling Process The selling process refers to the step-by-step, logical actions a salesperson takes, to eventually lead potential customers towards buying a product or service.  Personal Selling Process  The sales process is a sequential series of actions:  Pre-sale preparation.  Prospecting  Pre-approach before the interview  Approach the customer  Presentation  Handling the customer’s objections  Trial close  Close  Follow-up and service. 44 Personal Selling Process  Pre-sale preparation: by the salesman to equip himself with-  Product knowledge  Types  Features  Benefits / Limitations  Price  Company knowledge  History  Management  Size  Finances  Policies and procedures  Competitor’s knowledge:  Industry structure  Products  Market share  Policies 45 Personal Selling Process  Prospecting: Few methods of prospecting are  Cold canvassing: goes door to door in an identified area.  Customer referrals: Requesting customers to provide a list of possible customers.  Prospect pools: Gathered from telephone directory or mailing list.  centers of influence: They are people in a position to influence others by the virtue of their power, popularity etc. Their referrals carry certain level of authority.  Net working  Non competing sales force.  Telemarketing.  Direct mailing  Using internet.  Trade shows and demonstrations at exhibitions 46 Personal Selling Process  Pre-approach before selling: The pre-approach takes place prior to meeting the qualified prospect. In this stage the salesperson must decide how to best initiate a face to face meeting.  Approach: This takes place when the seller first meets the prospective buyer. The goal at this stage is to gain the interest and attention of the buyer. Careful pre- approach planning is needed to achieve this.  Presentation: During sales presentation there are basically three approaches used– attracting attention, creating interest and arousing desire / conviction building. 47 Personal Selling Process  Handling objections: Commonly used objection handling methods are  Boomerang methods - Converting objections into reasons for buying.  Compensation – Used when objections are valid but there are factors which compensate or outweigh the objections  Forestalling - With his experience anticipates and counters the possible objections at the presentation level itself.  Feel, felt, found – Salespeople express their understanding of how prospects feel, indicate that it is possible to feel that way because others have also felt that way but have found their fears to be unfounded.  Head on – It is used when the objections are based on incorrect information. Salespeople in such a situation 48 Personal Selling Process  Closing the sale : This the stage at which the seller tries to gain a purchase commitment from the prospect. Salespersons who are uncertain that it is an appropriate time to close the deal may use a trial close. If a trial close seems to be going well , it can be pursued to a complete close. If not, it can be withdrawn with out detracting reducing the effectiveness of the meeting.  Follow-Up: This step in the process represents the salesperson’s efforts to assume customer satisfaction after the sale. 49 Example of Follow-up script  Relationship selling Relationship selling is a technique in which a sales rep prioritizes their connection with the customer over all other aspects of the sale. They develop trust — usually by adding value and spending a lot of time with prospects — before attempting to close.  5 Best practices for relationship selling 1. Build rapport. In relationship selling, rapport-building between the rep and the buyer is emphasized more than the features or price of the offering. To build rapport, sales reps typically practice active listening to successfully uncover prospects’ needs and form a relationship. 2. Include custom personalization. 71% of consumers expect in-depth personalization, making it a critically important facet of relationship-building. If they feel like the experience isn’t personalized, prospects are unlikely to purchase an expensive product. 3. Check in often. Just like your friendships outside of work, checking in frequently is key to a relationship staying alive. Staying in touch with future and past customers ensures you’ll be the first person they think of when they need to buy or recommend your product. 4. Be proactive. If you’re running a promotion, have a new product, or are hosting a webinar, don’t wait for your prospects and customers to contact you. Proactively let them know of exciting developments at your organization. 5. Do your research. In the TV show The Bear, a server at a fine dining restaurant is stunned to discover that the staff have a pre-meal discussion where they discuss what they discovered about each customer eating at the restaurant that night from their social media. This in-depth research leads to a once-in-a-lifetime dining experience because of the detailed care they experience. Relationship selling for B2B sales The relationship selling technique works well in a B2B sales environment, which often has a long sales cycle and high-cost products or services. Example: Adam works for a company that sells cybersecurity learning solutions to companies and is currently discussing a potential $50,000 contract with a cybersecurity consulting firm. Before his call with the client, Adam reads up on the latest industry trends to prepare for questions about how his company is adapting to meet new demands.During his first conversation with the client, Adam spent most of the call listening to their needs and answering questions. When he did not have the answer to all the questions during the call, he promised to find out and send a follow-up email by the following afternoon—which he did. He also took note of any personal information he gained about the client, including the fact that they lived in the Los Angeles area and had a child interested in computers. Example ctd… During subsequent calls, Adam made sure to mention these personal details by asking whether they were affected by recent wildfires in the area. He also emailed the client information about a free beginner's computer safety course his company offered that might be of interest to the client's child. After weeks of back and forth, the client signed the contract. Adam sent an appreciation note to the client, who replied that they appreciated Adam's effort and personalized service—including the recommendation for their child.  Relationship selling for consumer products: While this sales technique typically applies to high-cost or high- value purchases, it also works with consumer products. Example: Anna has been going to the same hairstylist for six years. She returns to this hairstylist because they do a great job on her hair, but the repeated visits over the years also created a significant relationship between the two. Their conversations during appointments include their interests and aspects of their personal lives, which makes the pair's relationship feel like a friendship rather than a business encounter.Through these repeat visits, the hairstylist also gains knowledge of Anna's hair needs or preferences and can make personalized recommendations or provide advice. Anna now feels a strong sense of loyalty to her hairstylist and trusts that they are looking out for her best interest. As a result, Anna will continue seeing them because they offer specialized services that hairstylists who don't already know Anna cannot.  Relationship Orientations and CRM Businesses develop customer relationships in four different ways: 4. One-to-One Marketing 3. Relationship 1. Niche Orientation Mass Marketing and CRM Marketing 2. Differentiated Marketing  Production versus Marketing Orientation Among the many business philosophies, two contrasting ones are: 1. Production orientation, and 2. Market orientation. 1. 2. Orientation Production Orientation Marketing Orientation  Production versus Marketing Orientation 1. 2. Orientation Production Orientation Marketing Orientation  CRM and Repeat Business CRM is based on the premise of serving customers over an extended period, thus generating repeat business through multiple buyer-seller relationship interactions (i.e., transactions or exchanges) between firms. Three levels of interactions are: 1. Transactional Selling 2. Relationship Selling, and 3. Strategic Partnerships 3 Levels of Buyer-Seller Relationship Interactions Low Medium High Transactional Selling Relationship Selling Strategic Partnerships  Mechanisms That Govern Exchanges Transactional exchanges are controlled by market forces. Relational exchanges are governed by contracts. It includes arrangements for sharing information and tasks between the buying and selling firm, but falls short of spelling out specific obligations for each party. Strategic partnerships are governed by a mechanism known as relational governance.  CRM, Customer Loyalty, and Lifetime Value Sources of sales revenues are: 1.New customers, and 2.Current customers. Finding new customers is expensive due to high search costs Selling to existing buyers is less costly, but it is crucial to build customer loyalty.  Computing the Value of a Customer Hotels, casinos and credit- card firms use CRM processes to develop long- term customer relationships by offering rewards programs include. An important way to ascertain if selling to existing buyers is advantageous, sales managers can actually quantify Customer Lifetime Value.  Computing the Value of a Customer p CLVi   Rt  Ct  t 1 Where: CLV = Customer lifetime value, R = Revenue gained from the customer in a time period, and C = Cost of the sales and service effort directed at the customer.  Computing the Value of a Customer CLV can also be computed for firms that take a transactional view by using the following formula: CLV1  R1  C1  Where: CLV = Customer lifetime value, R = Revenue generated by this particular sale (R), and C = Costs associated with selling to and serving this customer.  CRM and Selling But what exactly is value? Value is often narrowly used as a synonym for low price. Value is an individual’s selective perception of the worth of some product, activity, object, or idea.  The Salesperson and Managing Customers Some ways a salesperson can create value by: 1. Gathering important data about the customer and the market 2. Identifying the types of data needed to give the customer better service 3. Managing the relationship between the firm and the customers to whom the salesperson is assigned  CRM and Production Systems There are three types of CRM systems. 1. 2. Three Types Of Analytical Operational CRM Systems Systems Systems 3. Operational Systems