Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID:

: B 1220)

Q1. Explain the classification of retailer in detail. Answer: Retail industry includes all set of activities to sell the goods or services to the final consumers for personal, non business use. There are three types of retailers: 1) Store retailers: operates on a fixed point of sale and depending upon the certain criteria they are divided into Department store, Discount Stores, Specialty Store, Category Killer, Convenience Store, Off-Price Retailer, Warehouse Clubs. 2) Non-store retailers: use various methods such as broadcasting of "infomercials" direct response advertising etc. They are categorized as Direct Selling, Direct Marketing, Automatic Vending and Buying Service. 3)Corporate Organization: achieve economies of scale, greater purchasing power wider brand recognition and better trained employees because of the central buying of the merchandising. They are classified as Corporate Chain Store, Voluntary Chain, Retailer Co-operative, Consumer Co-operative, Franchise's Organization and Merchandising Conglomerate. Q2. Describe the four principal component of Physical Distribution management. Answer: There are four principle components of PDM and these are: Order processing: order processing is the first of the four stages in the logistics process. 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 he supplier performs satisfactorily. Very often contracts are drawn up and repeat order is made at regular intervals during the contract period. Taken to its logical

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

conclusion this effectively does away with ordering and leads to what is called partnership sourcing. 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. Few companies can say that they never run out of stock but if stock outs happen regularly then market share will be lost to more efficient competitors. The key lies in ascertaining the re-order point carrying stock at level below the re order point might ultimately mean a stock out whereas too high stock levels are unnecessary and expensive to maintain. Warehousing: Many companies function adequately with their own on site warehouse from where goods are dispatched direct to customer. When a firm markets goods that are ordered regularly but in small quantities it becomes more logical to locate warehouse strategically around the country. Transportation can be carried out in bulk from the place of manufacture to respective warehouses where tocks wait ready for further distribution to the customer. This system is used by large retail chains except that warehouses and transportation are owned and operated for them by logistics experts. Transportation: Transportation usually represents the bulk of distribution cost. It usually easy to calculate because it can be related directly to weight or numbers of units 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 he pressure caused by low stock holding and short lead times have made read transport indispensable. When the volume of goods being transported reaches a certain level some companies
2

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

purchase their own vehicles rather than using the services of haulage contracts. Q3. Discuss the formulation of Sales strategy in brief. Answer: Formulation of sales strategy: 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. Setting sales objectives: sales objectives are intended to direct the available sales resources to their most productive use. 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. Determination of the type and size of sales force needed: specifically it would depend upon the role that the salesman is expected to perform. Recruiting more than optimum number would mean that the company is bearing unnecessary costs at the expense of its net profits. Recruiting less than optimum would mean losing opportunities for exploiting sales prospects it is not easy to prescribe an ideal sales force size market size and potential competitive activity allocation of sales task between the channel and corporate organization differ from company to company.

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

Organizing the sales effort: while creating territories sales managers can choose from different type of bases: Geographical bases, sales potential basis, servicing requirements basis, workload basis. Establishing and managing channels support and coordination: the channels of distribution usually act as the only point of contract the final buyer has with the manufacturer. They together with the sales organization of the manufactures collectively bear the responsibility of consummating exchanges with the final buyers. When indirect distributing is adopted it is imperative that the sales organization initiates dealer cooperation programmed. Q4. Compare and contrast the various types of sales organization structures. Answer: Line and staff components: marketing organization also feature line and staff components. A line function is 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. Although the use of the terms line and staff has been criticized in many quarters the basic premise behind them remains applicable to marketing organization. Formal and informal organization: Every firm has a formal and informal organization. The formal organization is a fixed set of rules of intra organization procedure and structure that of 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 organization would be totally ineffective if it were not for supportive informal organization.
4

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

Q5. Explain the formulation of Sales organization Answer: Introduction: Introduction what is organization? What is sales organization? Its main component sales force Role & importance of sales force Role of a sales organization: Role of a sales organization Achieve customer & employee satisfaction through matching its structure & personal relationships Works as a medium of achieving objectives following are the specific roles Permit development of specialists Achievement of company objectives Achieve coordination and balance Economize on executive time Basis for designing a sales organization: Basis for designing a sales organization Mission & objectives of the company Target market segments Core competence Organizational relationships Flexibility Organizational culture Size & type of sales force Terms of employment Staffing activity Compensation system Market orientation Technology Company size Types of organization: Types of organization Following are the structural variables based on which organizations are classified Formalization Centralization Departmentalization Formal organization: Formal organization rigid structures & reporting relationships Bureaucratic structure Inflexible & slow Informal organization: Informal organization No rigid hierarchical structure No rigid communication channels No rigid reporting relationships Vertical organization: Vertical organization More hierarchical levels, narrow span of control Management holds the power of decision making, strategy formulation, control and allocation of capital Horizontal organization: Horizontal organization It is one in which both management levels & departmental boundaries are reduced greatly Helps in meeting customer
5

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

expectations Cross functional team approach Participative decision making Centralized organization: Centralized organization Authority & decision making power lies entirely with the top management Mostly followed in smaller organizations Low authority & limited freedom to sales force Decentralized organization: Decentralized organization Delegation of authority & resources to lower levels each division has its own sales force Line organization: Line organization It is the simplest form of organization Authority flows from top to bottom Advantages: Less expensive Quick decision making because of a well defined hierarchy Prevents conflicts arising due to differences in thinking Line & staff organization: Line & staff organization Added advantage of staff specialization Reporting relationships vary Advantages: Presence of staff personnel improves quality of decisions Best suited for organizations with few products Suits for organizations operating in a stable environment Types of sales force structure: Types of sales force structure Product based sales force structure Geographical based sales force structure Customer based sales force structure Combination sales force structure Product based sales force structure: Product based sales force structure Here sales force responsibilities and activities are divided according to the type of product sold Suits for companies that manufacture a variety of complex technical products that are dissimilar or unrelated Geographical based sales force structure: Geographical based sales force structure Here sales force is grouped by physical territories Advantages Reduces time & expenses on travel It is the simplest method to allocate equal territories and equal responsibilities Sales person gets better local knowledge Customer based sales force structure:
6

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

Customer based sales force structure Here the sales force is divided on the basis of customer needs Advantages: It is advantages when the company has a wide range of products to offer to customers Disadvantages: Different functions may have difference in emphasis resulting in lack of coordination Some sales personnel may pressurize the management for special favors like higher discounts and credits tailor made to specific customers Combination sales force structure: Combination sales force structure A structure which combines various types of structures and takes the best of each structure by eliminating the demerits Suitable for larger companies, with large sales force and a wide range of products Collaboration and net working relations between various departments and business units are needed Sales culture: Sales culture what is culture? Sales cultures success is dependent on the acceptance of sales people Organization differs in setting sales cultures Q6. Describe the types of sales strategies. Answer: The various types of sales strategies are discussed in following sub sections. Relationship strategy: establishing and maintaining a partnership type relationship initially as well as with the customer is a vital aspect of selling. In this strategy a major key to success in selling is the ability to establish working relationships with customers in which mutual support trust and goals are nurtured over time. Relationships with the support staff product service credit and training recruitment are also important to understand. Most sales personnel will readily admit that their productivity depends on the contribution of these people. Double win strategy: In this strategy both the customer and the salesperson come out of the sale with a sense of satisfaction. The
7

Master of Business Administration- MBA Semester 3 MK0010 Sales, Distribution and Supply Chain Management - 4 Credits (Book ID: B 1220)

salesperson not only obtains the order but sets the stage for a long term relationship repeat business and future referrals. The double win strategy is based on such irrefutable logic that it is difficult to understand why any other approach would be used. However some salespeople have still not accepted the merits of the win win approach. They have adopted a win lose approach which means that the salesperson wins at the buyers expense. When a salesperson sells a product that is not the best solution to the buyers problem the win lose strategy has been used.