ROU NO, 550725400 oni ease v0 11520 MBA 2Year 4th Semester (N. S.) & 5.10 Examination — May, 2011 SALES AND DISTRIBUTION MANAGEMENT Paper : 2422/51022 Time _: Three hours ] [ Maximum Marks : 70 Before answering the question, candidates should ensure that they have been supplied the correct and complete question paper. No complaint in this regard, will be entertained after examination. Note: Attempt four questions from Section A selecting at least one question from each Unit. The case study in Section B is compulsory. All questions carry equal marks. SECTION-A UNIT -1 1. What are the various techniques of motivating the sales force ? How is compensation of the sales people decided ? Describe various methods of nonfinancial compensation. 11520- 2,850-(P-8)(-9)(11) PTO.- "Personal selling is a two way communication best suited to a company marketing consumer product with a poor brand loyalty." Discuss. UNIT -II Why is it necessary to have sales territories ? Describe the factors that organizations consider while designing sales territories. Describe the advantages the firms reap in deciding territories. Describe the role and objectives of sales meetings. Describe various methods of setting sale quota. UNIT - Ill . What performance considerations would you use in the selection of channel structure for a newly introduced brand of frozen vegetables ? How the retail channels such as "Reliance Fresh" have adapted itself to serve such demands ? How ‘Mall’ culture has impacted the distribution channel strategies of the companies ? Highlight the 11520- 2,850-(P-8)(Q-9)(11) (2)advantages and disadvantages of such distribution media form the customer perspective. UNIT —IV 7. Write notes on the following : (a) Channel sharing among distributors (b) Information Systems in logistics. 8. What is the scope of logistics management ? What are the key elements and activitites of the physical distribution system ? SECTION - B CASE STUDY 9. Rebel Mills : The management of Bulldog Mills was concerned about a three-year sales decline of one of the products of one of its divisions. Bulldog Mills was a medium-sized manufacturer of textiles, with annual sales of over $98 million and with headquarters in Vicksburg, Mississippi. A Bulldog division, Rebel Mills, showed kitchen towel sales of $6 million for the previous year; however, it was the third consecutive year that 11520- 2,850-(P-8)(Q-9)(11) (3) : P.T.O.Rebel's sales had declined. In addition, costs had increased to a level of $5.8 million, leaving a profit margin of $200,000, the company's lowest in twelve years. Rebel Mills, located in Yazoo City, Mississippi, manufactured a limited line of textile products for household uses. For the household textiles market, Rebel Mills produced only kitchen textiles; with other divisions of Bulldog Mills producing bathroom and bedroom textiles. And, within the kitchen-textiles product line, which consisted of kitchen towels, dishcloths, and tablecloths, Rebel Mills made only kitchen towels. Also, no other division made the other two products in the kitchen textiles line. Rebel Mills’ kitchen towels were distributed nationwide by a sales organization of nineteen sales representatives through a network of wholesalers and retailers. There were eight company salespeople, seven of whom operated out of New York City and who had responsibility for the Northeastern United States, as well as all major department store chain accounts regardless of the location of the chain's home office. The other company salesperson specialized in selling to grocery chains, in addition to monitoring the performance of four food brokers who also sold the 11520- 2,850-(P-8)(Q-9)(11) (4)Rebel Mills line. All company sales personnel received a salary plus a commission based upon a quota. The four food brokers representing Rebel Mills sold to regional grocery chains located in different geographical areas of the United States. They received a3 percent commission of all sales. Besides the company sales staff and food brokers, Rebel Mills used seven manufacturers’ agents who handled non-competing lines of textile products. They received a 3 percent commission on all sales of Rebel Mills products. For the past five years, Rebel Mills had manufactured private-label kitchen towels for four large department store chains, including the Harmony House brand for Sears, Roebuck and Co. Each of the private labels was manufactured to the buyer's specifications. The result was that five different weaves, including its own Rebel Mills brand, required varying amounts of yarn and machine time, thereby making it very difficult for efficient scheduling of machinery. Rebel Mills’ cost of producing private labels was greater than had been anticipated and, coupled 11520- 2,850-(P-8)(Q-9)(11) (5) P.T.O.with heavy price competition for the business, was partly responsible for the steadily declining profit margin. At the same time, management was reluctant to abandon the private-label business, since it accounted for nearly 40 percent of Rebel's total kitchen towel sales. Sixty percent of Rebel Mills’ business was done through company- directed channels. Rebel Mills did a modest amount of advertising for its own brand. The company typically spent less than 2 percent of sales on advertising, with the previous year's expenditure amounting to $60,000. The entire amount was allocated to Good Housekeeping magazine for the sole reason of obtaining that publication's Seal of Approval. It was believed that displaying the Seal of Approval with Rebel Mills kitchen towels provided good point-of-purchase promotion. Recent developments concerning its own brand of kitchen towels caused great alarm for Rebel Mills’ management. During the past two years, a large number of accounts had been lost, and it was becoming increasingly difficult to obtain new accounts. Furthermore, there was growing customer dissatisfaction with Rebel Mills products. The sales 11520- 2,850-(P-8)(Q-9)(11) (6)staff strongly believed that these difficulties stemmed from the fact that Rebel Mills sold only kitchen towels and most customers, especially the volume buyers, preferred to purchase at least a complete line of kitchen textiles and, even more desirably, a complete line of household textiles, from a single manufacturer. As a result, the sales force recommended that Rebel Mills begin as soon as possible to manufacture a complete line of kitchen textiles, to include kitchen towels, dishcloths, and tablecloths. The sales force further recommended that when it became financially feasible, Rebel Mills should also produce a complete line of bathroom and bedroom textiles to round out its household textiles offering. Added to these difficulties, three other interrelated factors contributed to Rebel Mills’ competitive disadvantage : (1) of the three main groups of household textiles, kitchen textiles provided the lowest profit margin, with kitchen towels allowing the smallest margin in its category; (2) the greater sales volume of the larger manufacturers enabled them to realize economies of scale; and (3) the combination of the first two factors led the larger manufacturers to lower the price of the kitchentextiles product line to induce volume buyers to purchase the higher-margin 11520- 2,850-(P-8)(Q-9)(11) (7) P.T.O.bathroom and bedroom textiles. Cannon Mills, the industry leader, for example, followed this strategy. It was in this setting that the management of Rebel Mills decided to evaluate fully the prospects of its kitchen-towel product line. It was generally agreed that some action had to be taken soon. Question : What alternatives were available to Rebel Mills’ management with respect to its kitchen-towel product line ? Evaluate each alternative, suggesting and defending that which you believe represented the best course of action for Rebel Mills. 11520- 2,850-(P-8)(Q-9)(11) (8)