Sales Distribution Management[1]

Q-5. Explain the process of recruitment and selection of sales personnel, including the source of recruits and prerecruiting criteria as if you work the sales manager of an Organisation selling personal computers. Ans. Recruitment means finding potential job applicants telling them about the company and getting them t o apply. It is the process of finding good people and ultimately selecting them for the organisation. The entire sales organisation ultimately depends on a successful recruiting approach. It is the discovering of potential applicants for actual on anticipated organizational vacancies. It is the linking activity of those with job and those seeking job. The recruitment process consists of various steps which are as follows:Conduct Job Analysis Prepare Job Description

Identify Sales Job Qualification Attract Pool Of Sales Recruits

Select Best Recruits

1. Job Analysis : It is conducted to identify the duties, requirements, responsibilities and conditions involved in the job. It is most essential to give a complete idea of the job profile to the applicants so that they don’t have any problem in accepting that profile in future. It involves these steps :  Analysis of the environment in which the sales person is going to work  Determining the duties and responsibilities expected from the sales person.  Observing and recording the various tasks of job actually performed. SALES & DISTRIBUTION MANAGEMENT (Page 1)

2. Job Description : Job description is the result of a formal job analysis. It is the most important tool in managing the sales force. It helps in following ways:     

Preparing description of sales person duties. Developing training programs to help them perform better. Developing compensation plans. In supervision and motivation. Help the management to decide whether each salesman has a reasonable work load.

3. Identify sales job qualification : Job description should be converted to the job qualification a recruit should have in order to perform the sales job satisfactorily. Qualification a sales person needs to perform satisfactorily are following :  Personality traits such as self-confidence, aggressiveness, job commitment, persistence, etc.  Level of qualification such as ability to make decisions under stress, specific product knowledge, little work experience, etc. 4. Attract pool of sales recruits : Companies with a large sales force need to identify, locate and attract potentially effective candidates. The recruitment process always furnishes the organisation with a pool of organisation from where to choose. The most frequent used sources are:  Persons within the company: Some of the organisations often recruit sales people from the non-selling section of the sales department or from other departments.  Competitions: Sales people recruited from the competitors firm are already trained in selling the similar product and don’t need much of training.  Non-competing companies: Non competing firms can provide a well-trained sales force. The only thing required is to train them in the product range.  Educational institutions: High schools, evening classes, business colleges and universities are all excellent sources of sales recruits.  Advertising and Employment agencies , etc. 5. Select the best recruits : The importance to assess a candidate’s selling skills and technical background, hiring decision is also based on temperament, suitably to our culture, creativity, ability to visualize, ambition, etc. The selection process involves choosing the candidates who best meets the qualification and have greatest aptitude for the job. There are no. of tools that can be used for the selection process like application forms, In-depth interviews, reference checks, etc. Procedures followed in selection of a sales person are as follows : SALES & DISTRIBUTION MANAGEMENT (Page 2)

1. Initial Screening Interviews : It should be brief just to eliminate undesirable recruits. 2. Application Forms : It is the most widely used selection tool. It is an easy means of collecting information necessary for determining an applicant’s qualification. It gives an initial impression of the applicant. 3. In-depth interviews: It is used to help determine if a person is right for the job or not. It can bring out the personal characteristics and also serves as a two way channel of communication, which means both the company and applicant can ask questions and learn about each other. 4. Reference Checks: A company cannot be sure it has all the information on an applicant until references have been thoroughly checked. It allows a company to secure information not available from other sources. 5. Physical examination: It require a degree of physical activity and stamina. Poor physical condition can hinder a sales person’s job performance, therefore, a company should insist on thorough medical examination. 6. Tests: these are the most controversial tool used in the selection process. Test profile data can be useful to management in process of selecting and classifying sales applicants who are likely to be high performers. Different types of tests can be used in selection process like intelligence test, knowledge test, etc. Q-7

Short Notes:

Ans-7(a) REQUIREMENT OF A GOOD SALES COMPENSATION PLAN: Sales Compensation Plan is an essential part of the total sales program to motivate roles personnel. A properly designed sales compensation plan fulfills a company’s special needs and problems and from it flows attractive returns for both the company as well as the sales personnel. A good sales compensation plan meets the following requirement:  It provides a living wage in form of a secure income so that the individual concentrate more on the job rather than on the financial gains.  It does not conflict with the other motivational factors.  It does not penalize personnel on factors, which are beyond their control. The plan must be same for all the personnel for the similar performance.  It must be easily understood by the sales personnel so that they are always aware of their earnings.  The plan must adjust change in pay on the basis of the performance of sales personnel. SALES & DISTRIBUTION MANAGEMENT (Page 3)

 The plan is economical to administer. It should not incur much cost.  It helps in attaining the objectives of sales organisation. Ans-7(c) SALES QUOTAS A Sales Quota is a quantitative goal assigned to the sales personnel to figure out his achievements at any moment. They are basically used to plan, control and evaluate various sales activities. They provide specific goals to the sales person and also a way to manipulate their financial gains or incentives. It also helps in having a better control on the market. The most commonly used quota is the sales volume quota measured either in terms of Rs or in terms of physical units. There are different procedures for setting sales volume quotas.  First one is the basic method in which the sales quotas are decided on the basis of previous year’s sales figures and then adjusting those figures according to the different market conditions and the present market scenario.  Another method is based on the territorial sales potentials. As we are well aware that sales potential is the attainable amount under ideal conditions but they are difficult to achieve. Hence, some adjustments are made in those figures first by the territory or the branch manager, on the basis of sales person’s skills and physical conditions, and then by the country manager, on the basis of future price fluctuations and new product offerings.  One more important method to set the sales quotas is on the basis of estimates of total market. In this case the individual quotas are set on the basis of employees sales potential. In some of the companies sales person are allowed to set their own sales quotas as they are best aware of their territory’s potential. The quota must be fairly and objectively determined. And also it must be easily understood and administered. Ans-7(e) METHODS OF MOTIVATING THE SALES PERSONNEL: Motivation plays an important role in the performance of the sales person. A motivated sales person always gives better results as he put his deephearted efforts to achieve the targets. Motivation doesn’t always means incentives or money but sometimes appreciation letters and other such kind of non-financial rewards also act as major motivators. There are two major ways to motivate the sales personnel: 1. Non-Financial incentives 2. Financial incentives  Non-financial incentives: These are the techniques for specific and special effort situation like recognition by honours and awards. This can be done by SALES & DISTRIBUTION MANAGEMENT (Page 4)

1. Sales Contests: In this case certain prizes are awarded for achieving specific sales targets. 2. Sales meetings: in this case a monthly or quarterly gathering is organised for the sales force of a particular office or a particular region. It gives the confidence to the sales person that they are working as a team. 3. Sales Conventions: Annual or semi-annual gathering of the total sales force of all the branches also acts a great motivator among the sales personnel.  Financial Incentives: These are the techniques in which the financial gains motivate the person. Financial gains are always desirable at each and every level. They can be: 1. Direct monitory payments like salaries and wages 2. Indirect rewards with financial benefits like paid vacations, insurance plans, etc. Q-10.

Explain various steps in selection of a sales person. Point out the importance of each step.

Ans. Sales Personnel is the link between the company and the customer. And thus it is the area of special concern for any industry. Selection of sales persons plays an important role in any organisation as they are the people who will represent the company in front of the customer. It gives an image of the company and its stand in the market. Various steps involved in selection of any sales person are as follows: Preliminary Interview

Formal Application

Interview (S)

References and Credit Checks

Psychological Testing SALES & DISTRIBUTION MANAGEMENT (Page 5)

Physical Examination

 Preliminary Interviews and Screening: It is for the purpose of eliminating the unqualified applicants. It may be on the basis of applicants basic qualification, education, etc. In these interviews company may just ask to fill a small interview application form. It is basically the rejection round and not the selection round. It means the candidates not fulfilling the basic criteria for selection are out in the start. This is important because selection process also incurs some cost and this round can be easily handled by a low paid clerk and hence lowest cost selection step. Also it is difficult to process the papers of all the applicants for the whole selection procedure unnecessarily.  Formal Application: It serves as a central record for all information collected during the selection process. It may be filled by the applicant personally or by the interviewer during the interview from his responses. Ideally the application form must be different for different industries as no two companies can have the same information requirement. But in case of a small sales force the company can go for the standard form of some other company also. These companies obtain the additional information if required during the interview. This is important as it gives the complete data about the applicant to the interviewer even before he interviews the candidate. It helps the interviewer to prepare his questionnaire for the interview.  Interview(s): This is the most widely used selection step and in some companies, it comprises the entire selection system. It is an effective way to obtain the information about the applicant. But through out the interview, a pleasant rapport must be maintained between the interviewer and the candidate so as to make the interview successful. There are many other questions, which arises from this, like who should take the interview or techniques to be followed during the interview and many more. This step is an important tool in selection of the sales person as in this case the interviewer and the candidate are face to face and hence the details, which remained hidden in the application form, can be explored and a better decision can be taken.  References: These provide information on the applicant not available from other sources. Personal contact is the better way to obtain information than facial expressions or voice intonations. There is a tendency for references to be biased in favor of the applicant. These are partially offset by contacting persons not listed as references, but who know the applicant. This is an important tool as it helps to reveal the background of the applicant. The information kept hidden by the applicant during interviews also comes into picture.  Testing: Psychological tests are one of the last steps in the selection process because of its high cost. The task of validating tests is complicated because different sets of attributes can lead to successful SALES & DISTRIBUTION MANAGEMENT (Page 6)

job performance. Because of this, separate validity tests should be performed for different ethics groups. Apart from this test consistency is also important. Other criteria for educating tests are cost, time and ease of administration. This test is also important in case to check the stability of the candidate. It also helps to check the habitual characteristics and ability of the applicant.  Physical examination: Good health is important in success of any sales person but this step is costly, hence it is avoided by the most of the companies. Because of its high cost, this is the last step if followed. It is also an important step as the person who is physically fit is able to perform better. And sales person needs to travel a lot so he must be physically fit to avoid any kind of problem in traveling.

SECTION-II – DISTRIBUTION MANAGEMENT Q-1. What are the channels of distribution? What are the advantages of having adequate channels of distribution? Suggest and justify suitable channels for the distribution of a. b. c. d.

Cosmetics Medicines Personal Computers Generators

Ans: Distribution means to distribute the material in the market so that it is in easy approach of the consumer. Distribution Network is a continuous chain starting from supplier to the consumer i.e. end users. It can involve various steps in between like distributor, wholesaler, stockiest, dealer, retailer, etc. The number of steps involved in any distribution network varies depending on various other factors. Distribution channel is the path followed by the product to reach the consumer. There are different channels of distribution depending on the requirement of the consumers. The different channels of distribution are as follows: Type 1 Producer

Distributor

Retailer

Consumer

Type 1 : This type of distribution channel is generally used for convenience products. In this case the goods first of all goes to the distributor, who in turn distributes the goods to the various dealers or retailers according to their demand and then finally it is purchased by the consumer from the retailers. This type of distribution channel is normally adopted for daily consumables. As in that case the requirements of the consumer is small but the no. of consumers are more. In this case the convenience of purchase is the most important factor. But in this case a small cost is added at each level. This additional cost is justified by saving SALES & DISTRIBUTION MANAGEMENT (Page 7)

in traveling time and no need of unnecessary inventory. This is also used for some of the industrial product where the requirement of the customer is small. Type 2 Producer

Distributor

Consumer

Type 2 : This is the method of distribution channel generally used for specially products. This type of distribution channel is adopted when the purchases are not that frequent like consumer durables for e.g. washing machines, etc. This is adopted because it is difficult for the manufacturer to approach each and every area. Also it may not be economical. As the distributor is more closer and in approach to the consumer, he can cater the better services and that too more promptly and effectively. Type 3 Producer

Consumer

Type 3: This is the type of distribution channel adopted for bulk supplies. In this case, the producer to the consumer without any intermediary directly supplies the goods. This pattern can only be adopted when purchases are large enough or customer and the producer are so located to each other that there are distinct cost advantages. For e.g. the vendor supplying the shafts and other parts to Maruti Udyog Limited to assemble the car. Advantages of having adequate channels of distribution:  Goods are easily available whenever required.  Time in traveling is saved due to availability at nearby locations.  Cost incurred in traveling to purchase that good is saved.  Less need for storage space is required as the goods are easily available.  Fewer funds are required to stock the material as it can be purchased in the required quantity from the nearby areas.  Fresh stocks of goods are more frequently available.  Almost all requirements of the customer are available at as single source.  More of choice is there for the customer because of the varieties available at the same location. Selection of suitable channels of distribution for the following items: a) Cosmetics: Suitable channel for the distribution of cosmetics is of Type 1. As this is the item more frequently required by the ladies. And even they cannot stock this item, as everyday more and more varieties keep on coming into the market. Also it is not possible for each lady to travel; to the distributor of that area to purchase any cosmetic. The SALES & DISTRIBUTION MANAGEMENT (Page 8)

number of customer for this product is large but the requirement of each customer is small.

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b) Medicines: Suitable channel for this product is also of Type 1. As this is the item always required in urgency. The more important is time in case of this product for the customer rather than the price of the product. It has to be readily available to serve the customer better. c) Personal Computers: The distribution channel Type 2 can be selected for this product. The reason being the product is never required in urgency but needs some after sales service at the time of problem. And it will be difficult for the producer to reach each and every location as it won’t be economical. d) Generators: The distribution channel Type 2 is appropriate for this product. This is because the product is never required by large group of customers and also it is not possible for the manufacturer to have its establishment at each and every location. Q-2.

What are the factors to be taken into consideration in the selection of proper channels of distribution?

Ans Channels of distribution means the paths followed to make the goods easily available to the consumer. Distribution channel is a continuous chain starting from supplier to the consumer i.e. end users. It can involve various steps in between like distributor, wholesaler, stockiest, dealer, retailer, etc. The number of steps involved in any distribution network varies depending on various other factors. Factors to be considered for the selection of proper channel of distribution are as follows:  Quantity of goods that will be normally purchased by the consumer at a time: If the quantity of goods required at a time is small then it must be available at more outlets so that it is easily available whenever required. These are the items that lie under the category of daily consumables.  Number of people that may be requiring the similar product at a time: if a large group of customer may require the similar product at a time, then it must be available at more than one outlets.  Type of commodity: If the commodity is fashionable like clothes, shoes, etc then the customer is not going to stock it. And it will be required by the customer at very short intervals with the changing fashions.  Urgency of the product to the customer at a particular time: if the product is always urgently required like medicines then it must be readily available and that too at number of locations.  Cost added due to intermediaries will be acceptable to the customers: if the cost added due to intermediaries is small as SALES & DISTRIBUTION MANAGEMENT (Page 10)

compared to that incurred in traveling to a distant place, then it hardly matters to the customers.  Whether the customer can stock the commodity: It depends on how frequently the need for that commodity is going to arise for the customer.  Price of the good: if the price of the good is high, the customer will try to purchase the commodity whenever required rather than blocking the funds available.  Life of the product: if the life of the product is small then it must be available at more no. of outlets because in that case nobody is going to stock that material. They are going to purchase it whenever they require it and only in that quantity. Conclusion: The selection of proper channel of distribution is a critical factor for the proper sale of any commodity. The proper channel of distribution always helps in promoting the sales of any product. All the factors must be thoroughly considered before selecting the channel of distribution. Q-3. Short Notes: Ans-3

(a) DISTRIBUTION NETWORK: Distribution means to distribute the material in the market so that it is in easy approach of the consumer. Distribution Network is a continuous chain starting from supplier to the consumer i.e. end users. It can involve various steps in between like distributor, wholesaler, stockiest, dealer, retailer, etc. The number of steps involved in any distribution network varies depending on various other factors. Distribution Network involves a distribution chain from supplier to main distributor, to town distributor, to wholesaler, to stockiest, to dealer, to retailer and finally to the consumer. This chain of network can vary in different cases depending on volume required by the consumer at the time of purchase. If the volume is small, the number of stages will be more because in that case bulk is being broken at each stage into economic lot sizes. Distribution network is very much beneficial in any distribution channel. Merits of having a distribution network:  It provides continuity in distribution. It provides clarity among the consumer about the place and time of availability of material and also how it can be purchased.  It facilitates growth and diversification i.e. there is sufficient business to sustain that chain.

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 It determines commissions at each level, which in turn helps in distributing even the responsibilities at each level.  It encourages teamwork and simplifies the communication between the consumer and the supplier. And many more. CONCLUSION : Distribution Network is a two edged sword i.e. a network is required to obtain the business in the first place and business is required to sustain the network. And also every point in the network is an independent profit centre, hence will look for opportunities on their own to improve business and profits. Ans-3(b) CONFLICTS IN THE DISTRIBUTION CHANNEL: Distribution Channel is a chain to supply the material from the supplier to the consumer. It can include a number of intermediaries depending on the volume a consumer is going to purchase at a time. Conflicts are a part of any distribution channel. The tussle to assume leading role leads to conflicts. The tussle to assume powers and controls to take decisions and donating all responsibilities to others is a major cause of this conflict in the distribution channel. Manufacture emphasizes on the consumption and the use aspects whereas retail chain emphasizes on the appearance, aesthetics, merchandising and packaging part. Conflicts also arises of who is going to take the ultimate responsibility for inventory management and delivery. It also comes into picture at the time of deciding who is going to take the responsibility of advertising and sales promotions. Earlier this was directly handled by the manufacturer but now a days this is also taken care of by the retailer. CONCLUSION : Conflicts is basically to assume the leading role in the distribution channel. It is to assume the powers to decide and control the decisions. Ans-3(d) LEADERSHIP REQUIREMENTS IN THE DISTRIBUTION CHANNEL Leadership means to lead the complete distribution channel in its own direction. Leadership implies power. Power to decide and control the decision of other members also in their own favour. Leader is always the decision-maker about all the points in any distribution channel whether it is for payment terms or advertising policy or any other. Earlier the demand was more and the supply was less so whatever was produced by the manufacturer, was automatically sold in the market. So, at that time, the manufacturers were the decision-maker or in turn the leader. This was the case when options in the market were limited and the products were always in shortage. At that time the traders were totally dependent on the manufacturers. They had no option other than to accept the policies of the manufacturer. But, now a day, similar product is being offered by a number of manufacturers and that too at competitive prices. So, leadership can only be attained now on the basis of size and demand. More the demand more is the control of that entity on the market policies. The long retail chains are capturing role of manufacturers in the market. SALES & DISTRIBUTION MANAGEMENT (Page 12)

Ans-3(e) STAR PERFORMANCE Star performance means to perform better than others in the market in one or the other way. A small unit may be able to hold its position in the market against the large organisation only if it is a star performer. Star performer is the one who is outstanding in its quality, delivery, reliability, after sales service, appearance, price and many more. In that case, irrespective of its size it will make its stand in the market. Achieving this position for any small Organisation is not an easy task and even more difficult is to maintain this position in the market. The reason being that the large organisations always tries to buy off such star performing units. These units also grow very rapidly and with growth, they are not able to maintain their excellence. They often become complacent and arrogant and do not change with times. In present scenario it is must for any organisation to adapt the market conditions to survive.

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