MBA (MK0010) Sales, Distribution and Supply Chain Management

Q1. Explain the classification of retailer in detail. Specialty Store: These stores sell a narrow product line but offer a variety in these lines of products. Departmental Store: They have a broad product line. Each line of product is a separate wing or a floor or a department. Super Market: These super markets have goods selling at competitive prices. They keep their profit margin low but emphasise on the volume of sales. Convenient Store: These cater to the needs of the people living in adjoining areas and keep products that are frequently required. Discount Store: offer products at a discount and have diversified itself into discount sporting goods store, electronic stores, book stores, all-purpose stores. Off-price Stores: Sell at a price lower than ordinary retailers but higher than wholesalers. Goods are obtained at reduced prices from manufacturers or dealers. Super Store: These are very large stores and meet the total needs of consumer and have almost everything to offer. Catalogue Show Room: Catalogues are posted to consumers who go through the details of the products which are illustrated with their uses and prices given in details. Direct Selling: This can take the form of personal selling where salesman & Sales woman go from door to door with or without appointments. Direct Marketing: It is done by direct mail or catalogue marketing Automatic Vending: Vending machines where cold drinks, coffee, etc. can be served automatically by inserting coins and pressing a button Buying Service: This service is provided by individuals who do not own a store but get products at cheaper rates from a set of stores. Retail organizations: they have great purchasing power, wider brand recognition and have better trained employees. Voluntary Chain: These are whole-seller sponsored retailers who are engaged in mass buying Retailer Co-operatives: Independent retailers who join hand in promoting and buying jointly to get the products at a chapter price. Consumer Co-operatives: The consumers come together to float a cooperative retail store owned by the customers themselves. Franchise Organizations: These are retail outlets run by a franchisee. It is a contractual association.

Merchandise Conglomerate: These retail outlets undertake the merchandising of a variety of products lines which is under a central ownership Self Service and Selection: customer buys products according to his choice, gets seated and serves himself. Limited Service: Some service like assistance and advice is provided to the customers. Full Service: All types of services are provided in these stores.

Q2. Describe the four principal component of Physical Distribution management. There are four principal components of PDM and these are: Order Processing The efficiency of order processing has a direct effect on lead times. Orders are received from the sales team through the sales department. Many companies establish regular supply routes that remain relatively stable over a period of time ensuring that the supplier performs satisfactorily. the company need to know as quickly as possible that an order has been placed and the customer must have rapid confirmation of the orders receipt and the precise delivery time. When buyers review their suppliers, efficiency of order processing is an important factor in their evaluation. Inventory Inventory, or stock management, is a critical area of PDM because stock levels have a direct effect on levels of service and customer satisfaction. The optimum stock level is a function of the type of market in which the company operates. Stocks represent opportunity costs that occur because of constant competition for the companys limited resources. If the companys marketing strategy requires that high stock levels be maintained, this should be justified by a profit contribution that will exceed the extra stock carrying costs. Warehousing Companies function adequately with their own on-site warehouses from where goods are dispatched direct to customers. When a firm markets goods that are ordered regularly, but in small quantities, it becomes more logical to locate warehouses strategically around the country. An optimum strategy must be established that reflects the desired level of service. Transportation Transportation usually represents the bulk of distribution cost. Costs must be carefully controlled through the mode of transport selected amongst alternatives, and these must be constantly reviewed. The patterns of retailing that have developed, and the pressure caused by low stock holding and short lead times, have made road transport indispensable. Rail transport is also suitable for light goods that require speedy delivery (e.g. letter and parcel post). Except where goods are highly perishable or valuable in relation to their weight, air transport is not usually an attractive transport alternative. For long-distance overseas routes air transport is popular. Here, it has the advantage of quick

delivery compared to sea transport, and without the cost of bulky and expensive packaging needed for sea transportation, as well as higher insurance costs.

Q3. Discuss the formulation of Sales strategy in brief. Strategy formulation in case of sales would involve identification of the sales goals and designing of a game plan, using the organizational resources at hand, to achieve those goals

Assessment of competitive situation and corporate goals The sales objective is directly affected by the corporate mission or goal which in turn identifies the specific set of common needs and wants the company would like to satisfy. Another input in objective setting is the macro business environment. Variables in the political, economic, social and technological environment have significant bearing on what and how much the company would be able to sell. The environmental scan thus provides pointer to a company's specific opportunities and threats, strengths and weaknesses. Setting sales objectives The sales objectives are stated in quantitative and qualitative terms. The qualitative sales objectives reflect the expectations the top management regarding the contribution of sales function to the total marketing effort. Quantitative objectives on the other hand relate to the operating results that the company would like to achieve.

Determination of the type and size of sales force needed To arrive at an ideal figure by using various methods such as (a) the incremental method, (b) the workload method and the (c) sales potential method. The incremental method utilises incremental reasoning in that it suggests that salesmen should be added to the sales force if incremental margins exceed incremental sales costs. In the workload method, through the computation using total market size, sales, volume potential and volume of non-selling activities like travelling the company arrives at the total workload. Dividing this by the work it expects one individual salesman to carryout, gives the sales force size. Organizing the sales effort territory design Geographical basis which utilizes the existing geographical boundaries and assigns them to the sales personnel. Sales potential basis which consists of splitting up a company's customer base according to the dispersion of its sales potential. Servicing requirement basis where the company splits up its total market according to servicing requirements of its current and prospective customers. Workload basis: This approach considers both account potential and servicing requirements and in addition reflects the difference in workload created by topographical, locational and competitive factors. Establishing and managing channels support and coordination The channels of distribution usually act as the only point of contact the final buyer has with the manufacturer. They together with the sales organization of the manufacturers collectively bear the responsibility, of consummating exchanges with the final buyers. When indirect distribution is adopted, it is imperative that the sales organization initiates dealer cooperation programmes.

Q4. Compare and contrast the various types of sales organization structures. Sales organization development refers to the formal, coordinating process of communication, authority and responsibility for sales groups and individuals. An effectively designed sales organization has a framework that enables the organization to serve its customers. They are Line and staff components of organizations, A line function is a primary activity and a staff function is a supporting activity. In a marketing organization, the selling function is the line component whereas advertising, marketing research, marketing planning, sales training and distributor relations are usually considered staff roles. Formal and informal organizations The formal organization is a fixed set of rules of intra organization procedure and structure that of the management whereas the informal organization is often developed

from the informal relationships existing within the organization. Also called the grapevine, informal organization is basically a communications pattern that emerges to facilitate the operation of its formal counterpart. Most formal organizations would be totally ineffective if it were not for a supportive informal organization. Horizontal and vertical organizations This arrangement varies among companies even within the same industry. In this structure, there are several layers of sales management all of which report vertically. Other extreme is a horizontal organization, the factor that determines whether a vertical or horizontal organizational structure should be employed is the effective span of control. The span of control refers to the number of employees who report to the next higher level in the organization. Horizontal structures tend to exist where larger spans of control are acceptable, while vertical organizations characterise cases in which closer managerial supervision is required. Centralized and decentralized organizations Here responsibility and authority are delegated to lower levels of sales management while in a centralised sales organization, the responsibility and authority for decisions are concentrated at higher levels of management you find higher degree of decentralization as an organization grows in size. A decentralised organization structure is ineffective unless commensurate responsibility and authority accompany the assignment of decisions to a specific level of sales management.

Q5. Explain the formulation of Sales organization The formulation of sales organization is a three step process. Step 1 Sales Strategy: The first step is to segment the population into different categories, by using various methods of segmentation. The population can be segmented on the basis of demographics, location, psychographics etc. Mostly the segments with similar sales processes are identified so that they could be easily targeted by the sales organization. After deciding on the segments, the products and services that relate to each decided segment is specified. Effectively reaching the segments with right products and services holds the key to success. Step 2 Marketing Strategy: At this stage, the ways to inform customers about the product and services available and ways to reach them are decided. The company decides the channel through which it will reach the prospective buyers. Some companies adopt an indirect channel including intermediaries and some adopt a direct approach. Step 3 Sales Force Design: At this step, the sales organization decides the structure of its sales force. It decides the roles of different sales person, number of sales persons to be devoted to a particular segment, the formal relationships between sales persons, appraisal and evaluation methods, compensation etc.

Q6. Describe the types of sales strategies. A Selling Partner P Prepares strategically for a long-term, high-quality relationship that solves customers problems. A Asks questions to get on the customers agenda. R Restates customer needs with confirmation questions. T Teams with support people to provide the customer with solutions. N Negotiates double-win solutions with joint decision making. E Exceeds customer expectations whenever possible. R Re-examines the ongoing quality of the relationship frequently. In this model, a customer is also treated as a partner. Double-win strategy In this strategy, both the customer and the salesperson come out of the sale with a sense of satisfaction. The double-win strategy is based on such irrefutable logic that it is difficult to understand why any other approach would be used. Win-win attitude which is one of the principles of partnering-style selling. Instant service No matter how efficiently and effectively goods/services are produced, if they cannot be delivered to the customer in the quickest possible time, all efforts made earlier are in vain, particularly in the context of very short product life cycle counted in months rather than years. One cannot survive in a highly competitive market without conforming to the so called Q-C-D triangle Highest Quality, Lowest Cost and Least Delivery times. In their effort to delight the customers, many companies in the developed world have adopted very creative, innovative ways of dealing with them. Hard sell vs. soft sell strategy The main purpose of a salesperson is not just to make sales but to create customers. Identifying potential customers is an important aspect of customer strategy. Every salesperson must cope with the inevitable loss of customers over a period of time, which can be attributed to a variety of causes. Integrated sales strategies Sales and distribution management constitutes one of the most important areas for customer satisfaction. Sales management has been defined as the management of a firms personal selling function while distribution is an indirect function.

Client-centered selling strategy Client-centered selling strategy focuses the entire selling process and efforts on the clients needs, problems and successes. Client-centered selling is focused on the needs, interests, concerns and problems of the client rather than that of the companys or salespersons. The aim is to secure business for the products, ahead of the competitors, but this goal is achieved much more quickly and effectively by putting the clients needs first. Example: The Aggressive Client