Sales & Distribution

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 Sales Models/ Processes and
Techniques

Prof Ramendra Singh

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 Personal Selling

Personal selling involves the

two-way flow of communication
between a buyer and seller, often in a
face-to-face encounter, designed to
influence a person’s or group’s
purchase decision.

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 How Salespeople spend their Time
Service
Calls
Selling
Face-to-Face
13%

Administrative 29%
16%
Tasks

25%
17%

Waiting and Selling over

Travel the phone

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 Transaction-Focused vs.
Relationship Focused
Transaction-Focused
• Short term thinking
• Making the sale has
priority over most
other considerations
• Interaction between
buyer and seller is
competitive
• Salesperson is self-
interest oriented
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Relationship-Focused
• Long term thinking
• Developing the
relationship takes
priority over getting
the sale
• Interaction between
buyer and seller is
collaborative.
• Salesperson is
customer-oriented
5
 Some ground realities
• According to a research in US by ES Research Group in 2008:
– 20% of the sales reps bring in 80% of the business
(standard bell-shaped distribution of salesforce
performance).
– Depending on the industry, 25 to 33% of sales people
are unsuited for their job.
– Only 37% of companies report forecast accuracy
greater than 50%.
– Only 43% of companies responding had a formal
sales training program.
– In 2006, 38.5% of salespeople missed their annual
objective , and the turnover among salespeople last
year was 40%.
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 Some more…
• 51% of sales organizations feel that marketing needs to improve
the quality and quantity of the leads they are providing to reps.

• More than 80% of deals lost due either or both of:

– Ineffective qualification
– Lack of sales planning

• Perception of sales being an “art” versus the “science”

• Many sales leaders exhibit competency deficits

• Quarter-by-quarter short-term pressures !

• Most companies look at lagging measures of performance( e.g.,

YTD, MTD) than leading indicators (e.g., behavioral measures).

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 Why is a salesperson important?

• Customers think that a salesperson is more important than

product or price

• Salespersons reduce perceived uncertainty in the buying

situation for the customer.

• Salespersons more important than their firms in sustaining

customer relationships

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 A Salesperson…
 Acquires new customers
 Builds relationship with customers

 Understands customer needs and fulfill them

 Provides information to customers

 Builds firm and product loyalty

 Services the distribution channel

 Collects competitive intelligence

 Brings new product and service ideas

 Collects dues from customers

 Ensures customer satisfaction

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 Selling Skills

• Communication Skills
• Selling Skills
• Listening Skills
• Negotiation Skills
• EQ Skills-Empathy
• Personality Aspects-Drive and Motivation

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 Classification of
Personal Selling Approaches

• Stimulus Response Selling

• Mental States Selling
• Need Satisfaction Selling
• Problem Solving Selling

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 Stimulus Response Selling

Continue
Salesperson Buyer
Process until
Provides Responses
Purchase
Stimuli Sought
Decision

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 Mental States Selling

Attention Interest Conviction Desire Action

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 Need Satisfaction Selling

Present Continue
Uncover and
Offering to Selling until
Confirm
Satisfy Purchase
Buyer Needs
Buyer Needs Decision

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 Problem Solving Selling

Continue
Generate Evaluate Selling
Define
Alternative Alternative until
Problem
Solutions Solutions Purchase
Decision

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 PERSONAL SELLING
PROCESS
• PRE-TRANSACTIONAL PHASE
– Prospecting, Qualifying, Precall Planning
• TRANSACTIONAL PHASE
– Approach, Needs Discovery, Presentation,
Handling Objections, Closing
• POST-TRANSACTIONAL PHASE
– Service and Follow-up

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 Distribution Channels

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 A Typical Channel of Distribution
Manufacturer/
C&F

Retailer
Distributor

Final
Consumer

Wholesaler

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 Flow of Goods (e.g. HUL distribution plan)

Unilever

Direct Trade Indirect Trade

Accounts Accounts

Strategic MT Direct to
Cash & Carry** Distributors Wholesalers
Customers Home

Sub Distributors/
Shoppers Shoppers Wholesalers
Wholesaler GT/MT Retailers

GT/MT
Retailers
Retailers
Shoppers

Shoppers Shoppers

Sub
Serviced by Retailers
Distributor
Unilever Sales Force
Shoppers Wholesaler

GT/MT
Serviced by Shoppers
Retailer
UL or 3P Sales Force
GT/MT
Retailer

GT/MT
Serviced by Retailer
RTM or Channel
Shoppers

Urban/Rural
Entrepreuner
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** Cash & Carry listed as Indirect Trade Account MM-I_S&D
as its primary role is as a RTM 19
Shoppers
 How Much to Cover - Directly and
Indirectly ?

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 Overall Market Coverage
Sales Field
selling to retail
High
Micro
Branch & Hub Distributor

Exclusive
Distributor
Channel /
Category
Non-exclusive Specialised
Distributor Distributor

Wholesaler
with sales
force
Wholesaler Sub-distributor
without
sales force

Urban / Rural
Entrepreneur
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Low Market T/O High
 General Trade Channels
Family Grocers General Stores

Deals mainly in grains, Deals in items of day-to-

provisions, groceries, day requirements and
spices, edible oil, stocking numerous
Vanaspati etc. Most of the products. Does not stock
merchandise from this sacks of grains.
store is weighed and sold

Cosmetic Stores Food Stores

Sells substantial volumes Primarily sells more of

of cosmetics & beauty Food Products (Branded,
accessories Unbranded and own
brands)

Paan Plus Stores Chemists

Sells primarily tobacco Sell ethical allopathic

products & Paan, in drugs and FMCG
addition to FMCG products, mainly
products. Personal Care

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 AC Nielsen
• AC Neilson is an Independent Research Agency that does Audit
of Retail outlets across the country

• About 500 towns and 4500 villages are covered in this Audit.
Wholesale is not covered. All types of channels are represented.

• The Auditor goes to the pre selected outlets – measures the

SKUwise stocks at the retailer, checks the purchases since last
Audit and derives offtakes during this period

• Estimation for All India measures such as market share is done

based on the sample data
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 Market Share
Brand Off Takes X 100
Market Share = %
Category Off Takes
E.g. in Bihar,
 Washing powders Category offtake in July was 17 Crores.
 Wheel Offtake was 3.69 Crores
 Value Market Share of Wheel in Bihar in July ??

3.69*100/17= 21.7%
Note :
 Category offtakes & Brand offtakes are as measured by Nielsen
 And may not exactly match with secondary sales in that month

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 Market Share
Dishwash Liquids 2000 500 1000 500 5000
Offtake in the
Shop (Rs)

Brand offtake
(Rs) 200 1800 500 800 200 500 1000 500 3500

Market Share ??
(200+500+200+1000) / 9000 = 21.1%

(800+3500) / 9000 = 47.8%

(1800+500+500) / 9000 = 31.1%

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 Numeric Distribution
Numeric Outlets carrying Brand A
Distribution Of = %
Brand A
Outlets carrying any Product from the Category

Dishwash Liquids
Offtake in the 2000 500 1000 500 5000
Shop (Rs)

Numeric Distribution ??

80% 60% 40%

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 Value Weighted Distribution (VWD)
Category Offtakes in outlets
Weighted Carrying Brand A X 100
Distribution Of = %
Brand A Category Offtakes in all
Outlets out together

Dishwash Liquids 2000 500 1000 500 5000

Offtake in the Shop
(Rs)

Weighted Distribution ??

(2000+500+1000+5000)/9000= 94.4% (1000+5000)/9000 = 66.7%

(2000+500+5000)/9000 = 83.3%
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 Share Among Handlers (SAH)
Share Amongst Handlers Share of Offtake in the outlets
=
of Brand A where Brand A is present
Dishwash Liquids 2000 500 1000 500 5000
Offtake in the
Shop (Rs)

200 1800 500 800 200 500 1000 500 3500

SAH ??

(200+500+200+1000)/(2000+500+1000+5000) = 22.4%

(1800+500+500)/(2000+500+5000) = 37.3%

(800+3500)/(1000+5000) = 71.7%
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 Stock Turnover Ratio (STR)
Total

Avg Sales in a month 20kg 100kg 10kg 130kg

Stocks 5 kg 50 kg 3 kg 58 kg
STR = (58/130)*30= 13.4 Days

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 HUL Sales & Distribution
• Almost 1 million outlets ; 4000 stockist; 9000 salespersons to take
orders from these million retail oulets.
• Apart from product HUL offers its retailers a service- mix which has 6
elements.
• Frequency of service to be given to a retailer (ex- once a week, twice
a week or bi-weekly).
• Range of products are going to be offered to him.
– HUL has a range of 550 SKUs (Stock Keeping Units); how many of
these will be offered to the retailer.
• Credit for distributor point of view (ex- 7 days, 10 days, not at all).
• What investment will be made in form of paid display,
planogramming or category captaincy.
• Policy for taking back expiry / damaged goods from a certain retailer.
– Not all retailers get this service, it depends on the laid out matrix.
• Management attention to be given to a retailer.

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 Selling in HUL-Order taking &
Delivery
• In HUL, order taking and delivery are 2 different activities. First
call and then deliver within 2 days; but these are 2 different cycles.
• A salesperson is an order-taker, and his purpose is to replenish the
store with that SKUs as per off-take and add new launches, which
has not been added so far.
• Order taker has 3 primary jobs:
• Taking closing stock. For example if 10 unit sold last week
and 2 unit is closing stock, then 8 unit becomes the order for that
week.
• After taking order, generate a certain assortment agreed
with the retailer. E.g.,assortment could be Lifebuoy, Lux, Hamam
or Rexona in his geography, to ensure that he sells this assortment
of 4 brands depending upon demand/availability.
• Replenishing as per off-take. For ex- if 10 units of lifebuoy is
sold / week and if order taker visits weekly then min. closing stock
should be of 1.5 weeks. Reason for that is STR (stock turnover ratio)
should be 3-4 because of supply chain logic, safety-level stock and
variable demand.
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 Order taker Activities
• Order taker has to keep in mind:
– Credit limit assigned to that retailer;
– At an aggregate level, distributor credit should not vary
too much.
– Control credit limit, and inventory levels at retailer
level, which is under his control.
– Any abnormal offtake should be monitored properly.
• If suddenly there is a disproportionate order of stocks left over
then there is cause for concern, which should be highlighted to
distributor.
• If sometime if there is disproportionate off-take, he needs to
understand demand triggers.

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 Order taker Activities

• The order taker apart from taking orders is also responsible for
introducing the new launches particularly if the new SKU is designed
for rural area.
– For example if a sachet of surf excel is introduced which the retailer was
not stocking, the order taker ensures that retailer stocks it and rural
customer gets it.
– From historical trend the order taker know fast moving SKUs and he will
be aggressive on them compared to slow moving SKUs.
– Therefore, service for retailers improves.
– Rotation of inventory also increases so ROI increases drastically.

• All the activities such as taking stocks, inventory, actual sales, and
time taken to call each retailer are recorded on PDAs.

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 Order taker Activities

• Get competitor information if there are any new launches

of specific SKUs.
• Getting first hand information about any damages/expiry
it can be addressed immediately. This is very important
because in rural areas:
– Expiry goods should not be pushed to consumers as this might
damage brand image, and consumer will not get the desired
results from such products.
• Knowing about the demand drivers at outlets- has
demand grown because of (a) population in that area
has grown (b) neighborhood store got closed (c)
marketing activities.
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 Delivery man

• Delivery man has to ensure that he is delivering it

in proper form without any damages, to retailer
and at appropriate time.
• Unlike small companies where delivery persons
take care of merchandising, HUL have different
workforce for merchandising.
• Therefore, after stocks are delivered,
merchandiser goes to the outlets, and starts
stacking up the SKUs as per planogram agreed
with the retailer.
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 Nokia Distribution

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 Retail Classification:

• 4 broad category of stores:

• Organised Trade: This channel is not serviced Distributors and is serviced directly
by HCL. This includes large chains like Croma, Spice, Reliance, etc.

• Nokis Branded Retail: These are the “Nokia Priority Partners” – our exclusive stores
across the country
•
• Experience Channel: The are the big standalone Multi-brand outlets that contribute
to majority of sales of the high-end phones (above Rs, 5k. Its important to have the
live demo devices and trained promoters to give the right experience to the shoppers
in these stores
•
• Value Channel: All stores that do not fall in the above category are classified as
Value Channel. These are the mass set of stores which do not contribute much to the
high end phones segment. These are further classified into Diamond, Platinum &
Gold depending on the size of business, Diamond being the highest and Gold being
the lowest.

• Our retail margins vary from 3% to 6%

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 Distributor Performance
Measurement
• The Distributor performance is measured in 2 key areas:
• · Sales &
• · Distribution
•
• Each of these is divided into sub-parts. The details are given below:
• ·Sales
• o Value Sales Growth – Quarter on Quarter
• o Focus Models Value Sales Growth – Q on Q
• o Gear Value Sale Growth – Q on Q
•
• · Distribution
• o Width of Distribution (WoD) – The no of outlets billed once every month by the
Distributor
• o Must Sell SKU (MSS) score – This measures the availability of our key models
(pre-defined) in our select set of stores –(Value Diamond & Value Platinum)
• o Visibility Index for Nokia (ViNo) score – Quantifiable measure of our visibility in
the stores
• o Stock Availability Index (SAI) – Measures the health of Distributor inventory

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