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1) Various ways of managing Channel Conflicts

There are many ways to proactively avoid conflicts between your internal sales team and
your channel partners, depending on the kinds of situations you anticipate. Here are a
few options to consider:
1) Adjust your pricing structure If you’re worried about direct sales reps
undercutting your channel partners, you might consider a pricing structure
that includes channel-specific discounts and a fixed price point for direct sales.
2) Adjust your compensation You may choose to compensate your internal sales
reps so that it doesn’t make any difference to their commissions whether the sale goes
through the channel or direct. Or you may even take it a step further and offer them an
additional incentive for channel sales.
3) Establish assigned segments and/or territories Other methods that can help
reduce channel conflict include segmenting products by seller type (direct or channel),
or making certain geographical or vertical territories exclusive to certain sellers.
4) Utilize a lead registration system HubSpot, like many other SaaS companies
with channel programs, uses a lead registration system to help ensure that there is only
one sales process for each lead. “Currently, partners can register up to 500 active leads,”
explains HubSpot VP Sales Peter Caputa. “Registration lasts for twelve months, and they
can re-register a lead if it’s still active after that period.”
5) Avoid direct sales altogether It may be a little extreme or only work for
particular situations, but the most straight-forward way of avoiding sales team vs.
channel partner conflict is to commit to a channel program 100%.

Q.2) 8 Essential Functions of a Wholesaler.

Various functions performed by a wholesaler are explained below.
(i) Buying and Assembling: The wholesaler purchases goods in large quantities from
different manufacturers and assembles them at one place and stores them in his
warehouse and resell to the retailers.
(ii) Warehousing: By preserving the goods received from different manufacturers in
stores, the wholesaler performs the function of warehousing. The storage of goods is
needed on account of time lag between production and consumption of goods.
(iii) Grading and Packaging: The assembled goods are graded in accordance with
their quality and packed in different containers before supplying to the retailers. In this
manner, the wholesaler performs important marketing functions of grading and
(iv) Transportation: The wholesalers purchase goods from manufacturers and carry
them to his godowns and then supply the same to the retailers. He may employ his own
vans or hire vehicles for carrying the goods on account of bulk purchases. They can avail
of economies in freight.
(v) Financing: The wholesaler provides credit facilities to the retailers and
manufacturers. They sometimes give advance to the manufacturers for the goods to be
received later. By selling goods on credit they help the retailers.
(vi) Risk Bearing: A wholesaler performs the marketing function of risk bearing also.
Goods are exposed to many risks such as destruction and spoilage in warehouses on
account of many avoidable and unavoidable reasons. The wholesaler is also confronted
with many other risks viz., sudden changes in demand of the product, prices of the
products going down and non recovery of payment from retailers in (bad debts) etc.
(vii) Providing Marketing Information: The wholesaler imparts valuable
information to both the manufacturer and the retailer. He keeps informing the
manufacturer about the tastes, preferences, likes and dislikes of the customers. He
gathers this information from the retailers. At the same time he informs the retailer
about the goods produced by the manufacturer. In order to gather the information the
wholesaler conducts various market surveys.
(viii) Dispersion of Goods: The wholesalers sell goods to largely scattered retailers.
When the stock of retailers is exhausted, they approach the wholesalers for purchasing
the goods. In this process, the wholesaler provides valuable service in the disposal of
goods. The wholesaler also undertakes extensive advertisement and also sales
promotion techniques for the dispersal of the goods

Q.3) Motivation techniques for Sales Team.

1. Implement performance-based incentives.

This is the most obvious of all motivational techniques. What you do and how well you
do it determines how much you will earn. It is a very simple concept. Keep in mind that
performance based incentives are more than just commission. The incentives need to be
fair, openly communicated and not impossible to achieve. Making the incentives grow in
value as sales numbers increase will motivate the team to achieve even more.
2. Provide regular and useful sales meetings.
Unfortunately, sales meetings can have the reputation of being time wasters and
actually become a demotivating force for your sales team. But, sales meetings that are
open, stimulating and provocative can be extremely motivating for your sales team.
Sales meetings give you the opportunity to build your team, train your sales staff, and
share information that is a strategic way to motivate your sales team. It is extremely
important that your sales team feel comfortable sharing openly and honestly in these
meetings so that they are open forums of discussion. These meetings should be full of
energy not just an hour of reporting facts and figures. Make it fun!
3. Be a leader, a coach and a cheerleader for your sales team. As a sales
manager, you motivate your team by being there for them. It also helps to build trust
between you and the members of your team. Whenever you get the opportunity to praise
good work, do it. Let your team know that you have an open door policy and you are
there for them. Lead by example. Coach members of the team to help them develop good
skills and drop bad habits. Cheer for a job well done. If there is a problem, talk to the
individual and never reprimand or embarrass members of your sales team in a public
way. When you earn the trust of your sales team, it becomes easy to learn what
motivates them.
4. Use non-monetary incentives to motivate your sales team. There are many
ways to motivate a sales team without using cash. These types of incentives can be used
regularly and cost very little.
Include members of the sales team in marketing or planning meetings.
-Give an added vacation day as an incentive.
-Provide direct access to upper management or the company CEO.
-Give local gift certificates for reasons other than sales quotas.
This is where you need to think outside the box. Also, by getting to know your sales
team, you can learn what motivates them individually enabling you to provide specific
motivators as incentive.
5. Provide opportunities for professional development. By providing
professional development and training opportunities to your sales team, you are
accomplishing many things.
-The members of your sales team will feel valued.
-You will increase the skill level of your sales team.
-The sales team will not become stagnant in their selling techniques and will feel more
loyalty to you and the company.
Motivating the sales team is key to obtaining and maintaining sales success. If
you can inspire your team to produce, you have found the key to building a great
sales team that can achieve and continue with great success.

Q.4) Theories of Personal Selling.

AIDAS Theory of Selling:
This theory, popularly known as AIDAS theory (attention, interest, desire, action and
satisfaction), is based on experimental knowledge. This theory is very common.
According to this theory potential buyer’s mind passes through the
following stages:
1. Attention Getting: It is the crucial step in the AIDAS process. The objective is to
put the prospect into the right state of mind to continue the sales talk. The salesperson
has to convince the prospect for participating in the face-to-face interview. A good
beginning of conversation may set the stage for a full sales presentation. The
salesperson must apply his social and psychological skills to draw the attention of the
prospect to his sales presentation.
2. Interest Creating: The second step is to intensify the prospect’s attention so that it
involves into strong interest. To achieve this, the salesperson has to be enthusiastic
about the product. Another method is to hand over the product to the prospect and let
him handle it. Brochures and other visual aids serve the same purpose. Throughout the
interest phase, the hope is to search out the selling appeal that is most likely to be
3. Desire Stimulating: After the attention getting and creating interest, the prospect
must be kindled to develop a strong desire for the product. This is a ready-to-buy point.
Objection from the prospect will have to be carefully handled at this stage. Time is saved
and the chances of making a sale improved if objections are anticipated and answered
before the prospect raises them.
4. Action Inducing: If the presentation has been perfect, the prospect is ready to act,
that is, to buy. Very often there may be some hesitation on the part of the prospect at
this stage. The salesperson should very carefully handle this stage and try to close the
deal effectively. Once the buyer has asked the seller to pack the product, then it is the
responsibility of the seller to reassure the customer that the decision was correct.
5. Satisfaction: The customer should be left with the impression that the salesperson
merely helped in deciding. After the sale has been made, the salesperson should ensure
that the customer is satisfied with the product. The salesperson should sense the
prospect’s mind and brief his talks.
“Buying Formula” Theory of Selling:
The buyer’s needs or problems receive major attention, and the salesperson’s role is to
help the buyer to find solutions. This theory purports to answer the question: What
thinking process goes on in the prospects’s mind that causes the decision to buy or not
to buy? The name “buying formula” was given to this theory by strong.
The theory is based on the fact that there is a need or a problem for which a
solution must be found which would lead to purchase decision, as shown

Whenever an individual feels a need, he is said to be conscious of a deficiency of

satisfaction. The solution will always be a product or service or both and they may
belong to a producer or seller. The buyer develops interest in buying a solution.
In purchasing, the “solution” involves two parts:
1. Product or service or both,
2. The brand name, manufacturer or the salesperson of the particular brand name:

The product or service (Brand name) must be considered adequate to satisfy the need
and the buyer must experience a pleasant feeling or anticipated satisfaction. This ensure
the purchase.

Q.5) Methods of Evaluating performance of Salesperson.

Several methods were used to evaluate the capacity, talent and overall performance of
salespersons in a company. The most common methods used to evaluate the performance
are through
1.Sales Target 2. Sales Territory and 3.Sales Report
The organization sets sales. target for each salesman that he has to attain. Such targets may be
set either on the basis of units to be sold or based on the value of sales. However, while setting
the target it is important to consider the following points:
1. The target for sales must not be impossible to attain.
2.It must be reasonable.
3. It must be set taking into account the past records, market potentials, etc.
4. Sales target must not be rigid.
5. The incentives to be given to the salesmen shall be linked to the targets.


A sales territory is a small segment of the entire market for a product or service. Each salesman
is usually made in charge of a particular area or territory. For the trend in sales in each such
area, the salesman concerned becomes accountable. Thus, sales territory enables the business to
not only evaluate the performance of the salesman but also to know the sales trend.


Salesmen are duty bound to prepare reports on the progress of their work and forward the same
to their organization for necessary action. As the salesmen are the persons who know the
dealers, buyers and competitors in each area, they are expected to send periodical reports to
their office at regular intervals.
Contents of Sales report Such reports usually contain information on the names and
addresses of the customers, the orders received or to be received from them, the terms of the
deal, the preferences of the buyers, the action required on the order from the organization, etc.

Q.6) Trends in Retailing.

The top seven trends in retailing in India are as follows: 1. Shift from Unorganized to
Organized Retailing 2. Store Design 3. Competition 4. New Form of Retailing 5.
Technology 6. Consumer Buying Behaviour 7. Entertainment.

1. Shift from Unorganized to Organized Retailing:

Retailing in India is thoroughly unorganized. There is no supply chain management
perspective. The key factors that drive the growth of organized retailing in India are
higher disposable incomes, rising urbanization, growing consumerism, nuclear family
structure, growing number of educated and employed women population.
2. Store Design: Irrespective of the format, the biggest challenge for organized
retailing is to create an environment that pulls in people and makes them spend more
time in shopping and also increases the amount of impulse shopping.
3. Competition: Competition is increasing between different types of retailers.
Discount stores, departmental stores, supermarkets, etc. all compete for the same
customers. The small independent retailers survive by providing personal services to the

4. New Form of Retailing:

Modem malls made their entry into India in the late 1990s, with the establishment of
Crossroads in Mumbai and Ansal Plaza in Delhi. India’s first true shopping mall,
‘Crossroads’—complete with food courts, recreation facilities and large car parking
space—was inaugurated as late as 1999 in Mumbai. Malls have given a new dimension to
shopping experience.
5. Technology: Technology today has become a competitive tool. It is the technology
that helps the organized retailer to score over the unorganized players, giving both cost
and service advantages. Technology has also made possible the growth of non-store
6. Consumer Buying Behaviour: In India, there are no uniform trends with respect
to consumer buying behaviour. There are visible differences in the shopping pattern of
consumers across income segments. Organized retailing has definitely made headway in
the upper class. However, even in this segment, items such as milk, fruits, vegetables
and a significant portion of ‘through-the-month’ purchases seem to be done at tra-
ditional outlets. Organized retail outlets seem to be associated with branded
items/special purchases. Organized retailing does not seem to have made an impact on
the lower class, except for ‘curiosity’ shopping.
7. Entertainment: Modem retail formats provide a place for people to assemble, and a
means of entertainment, by providing facilities such as food courts, mini theatre,
children’s play spaces and coffee shops. These facilities help the customers enjoy

Q.7) Trends in Wholesaling

Increased Services. Regional Coverage. Productivity and quality. Global Expansion.
1. Increased Services.
Wholesalers have redesigned their services over time to suit customer
requirements. A number of wholesale druggists in the US now handle the
customer records of retail druggists. This serve to bind the retailer to one
wholesaler. In the grocery business Eg.Wholesale have shifted their focus
from providing basics services like extension of credit to offering more
sophisticated services such as merchandising support, inventory management
counseling, conduct profit analysis for the retailers, etc.The aggressiveness of
wholesaler in offering increased services is aimed at gaining a competitive
2. Regional Coverage.
Wholesalers use their subsidiaries to cater to the needs of the local market
segments by sorting limited fast moving inventory. These outlets have access to a
centralized warehouse to meet their inventory demands. This a common practice
among the distributor of plumbing, heating and cooling equipment. Wholesalers
are also making use of a leapfrogging strategy that involves implementing
backfire tactics. Under this strategy of market penetration, the wholesalers set up
branches that are about 1000 miles away from the main office so that spread
backward towards the home base.
3. Productivity and quality.
As the technology advancement takes place, new methods of marketing are
developed. Wholesalers are adopting new software technologies for efficient
distribution management systems.They are using computer systems to receive
orders from their customers rather than individually contacting them.Also
wholesalers supplying to industrial customers are tailoring their services quality
on the basis of their requirements.
4. Global Expansion
The increased deregulation environment in the global markets in which
manufacturer operates with the advance technology is making it easy for
wholesaler to fallow suit.Wholesalers are now operating in the global
environment and are supplying their goods and services to customers across the
world. This development in wholesaling has been possible due the changing
market dynamics and customer expectations.

Q.8) Role of Channel Members in adding Value.

Intermediaries connect manufacturers with end consumers. Manufacturers use intermediaries
to distribute and sell their products. They use their efficiency, connection, experience and scale
of operation to reach the target market. Manufacturers give up some control over how and to
whom they sell their products, but in return they get their products faster to the end user.
Marketing channel members buy large quantities from the manufacturer and then sell it in small
quantities to consumers. As a consumer, when I go to a retail store I don’t want to buy all the
toothpaste available on the shelves in one day, I would buy only the quantity needed. Retailers
play the role of intermediaries between the producer and the consumer; they match the supply
and demand in the market. Channel members add value to both producers and customers. They
match the time, place, and possession gap existed between producers and consumers.
Channel members gather information about consumers and producers to make products
available in the market. They develop promotion and communicate offers with potential buyers.
They match and shape offers to meet the needs of buyers. They negotiate the price of products
with producers. They transport and store merchandise. All of these are function performed by
intermediaries or channel members. If manufacturers perform these functions without the help
of intermediaries the cost of products will be higher. It will take them longer to deliver the goods
to consumers and they will be able to reach only a small target market because of the place. For
example, if I want to buy a pack of cereal, I don’t have to order it from the manufacturer
company and wait a week for it to arrive; I would go to Safeway to buy it instead.

Q.9) Advantages an organization gets by Motivating its Channel Members.

Marketing products through indirect channels such as retailers or distributor outlets is an
efficient way for your business to serve large numbers of customers that your sales force could
not reach. An effective distribution strategy can boost revenue and profitability, while poor
channel performance can have the opposite effect, according to Marketing MO. To encourage
channel members to stock and market your products, you must motivate them.

1.Build Preference for Your Brand

Motivational tools help to ensure that channel members give preference to your products over
your competitors. Distributors and retailers typically carry a wide range of products from many
different suppliers. They must therefore make decisions about the level of sales and marketing
resources they allocate to each product or manufacturer. Motivation plays an important role in
winning channel members’ mind share, according to the business school MMC Learning. By
winning mind share, you can ensure that channel members recommend or actively promote
your product.
2.Add Value to Your Product Offer
Motivating distributors and retailers is an important strategy for influencing channel members’
behavior, according to the marketing consultancy Pure Channels. Offering training programs or
marketing support to members adds value to the relationship between supplier and channel by
helping them to improve their performance and grow their own business. A strong relationship
makes it easier to launch new products or marketing campaigns through the channel, helping to
build your own revenue and profit.
3.Increase Sales Through the Channel
Financial incentives are an important source of motivation to channel members. By offering
discounts on purchases above an agreed level or rewarding sales above target with bonuses, you
can encourage channel members to stock and sell more of your products. Financial incentives
can help you launch new products, increase sales of existing products or widen your distribution
base, because channel members recognize that they will benefit from cooperating with you.
Improve Performance with Structured Programs
If you have a network of distributors or retailers, you will probably find that performance and
commitment to your brand varies across the network. By setting up a structured channel
program that offers different benefits at each level, you can motivate members to improve their
performance. The program might take the form of a tiered structure, with tier 3 members
receiving basic benefits and tier 1 members receiving a wide range of benefits that help them
grow their business. The benefits might include different bonus or discount levels, marketing
and training support, joint promotions and exclusive products. To reach higher tiers, you can set
requirements such as stocking certain products, achieving sales targets, participating in training
programs and agreeing to participate in promotions.
Q.10) Why Sales motivation is important
1) To keep the spirits up

Due to the reasons mentioned above (cold calls, target pressure) a sales person might become
demotivated and disinterested much easier than any other employee in the organization. As a
result, sales motivation is required maximum in the sales department so that the sales staff has a
positive spirit towards sales.
2) For the growth of the company and to achieve targets
This is a no brainer. If your sales force is positive towards the target they are asked to achieve,
your organization will get better revenues from sales. More the revenues from sales, more is
the bottomline of the company and more can be the future investments in better products or
services. There are many firms which have produced good products but have lost market share
due to poor sales. Thus, motivating your sales force is important for the growth of the
company and there is actual profit when you are investing in incentives for the sales force.
3) To show importance of sales in the organization A reason for sales guys to be
demotivated is that they don’t know whether they are in the right position in their life. However,
if you communicate to your sales employees, of their importance in the organization and how
they are helping this whole big machinery to move forward, the result will be a
higher motivation of sales staff. This ultimately helps the company move forward.
4) To improve co ordination within the team A sales person might be frustrated or
ignored when he is demotivated or when he is not achieving his sales targets. In a high
performance situation like sales, poor performance can affect an individual for the worse and
make him inferior to his high performing team.Providing sales motivation and backing to the
sales person (that such things do happen) can increase his confidence. When the whole team is
motivated, the bonding and co ordination between the team rises and they help each other out,
thereby helping your organization in the long run.
5) To develop their skills Sales motivation can help sales person to improve their skills so
that they perform better for the organization. These skills may be various such as their soft
skills, their computer skills, their product knowledge, their grooming or whatnot. In essence, if
the sales person wants to perform better, and he is motivated to do that, he will automatically
improve his own skills.
6) To reach more customers and cover more territory We always demand MORE from
the sales person. We want more sales, we want more territory to be covered, we want
more dealers, we want more distributors etc. This naturally puts the sales person under too
much pressure.
7) To introduce a new product in the market
Sales motivation in the form of incentives is most needed when the going is tough. Whenever a
company enters a new territory or brings a new product in the market, then the sales staff has to
work very hard in convincing their customers or their channel into buying the product.

Q.11) Objectives of Staffing Function in an Organization

Staffing is such function which is performed almost by every organization for the purpose of
appointing the right person, at the right job and at the right time. Because we know that man
powers are the real assets for every organization. Hence, they should appoint at the right job in
order to do a variety of tasks in a well manner.
Some important purposes or objectives of staffing can be described as under:
To Determine the source of Recruitment of the Employees: An important purpose of
staffing function is to determine the sources of recruitment of the prospective employees to fill
up the vacant positions in an organization.
To Appoint the Deserved Employees: It is also an essential objective of staffing to appoint
the deserved candidates at the right job.
To Train the Employees: Training of the employees (if they need) is also an important
purpose of staffing to do specific jobs in a well manner.
To Proper Allocation of Jobs: The purpose of staffing is to allocate the jobs among the
employees according to their ability, talent, aptitude and specializations.
To Appraisal the Performance of the Employees: It is one of most important purpose of
staffing, because to improve the over all performance of the organization, the appraisal of the
employees performance is vital.

Q.12) Importance of International Sales Management

International sales management plays an important role in
implementing the marketing policies and selling programs of the
company in the foreign market at the ground level.
The international sales manager plays the crucial role of planning
and organizing this effort and ensuring that the desired results are
obtained. A thorough understanding of the overall operations of the
organization in the global context, an open approach to multi-
cultural differences and the ability to implement both the basic and
advanced levels of sales management functions is necessary for the
sales manager to succeed. Companies enter foreign markets in
search of opportunities.
The chances of diversifying the market base, attaining low costs of labor and manufacturing, economies of
scale, first-mover advantage and faster growth rate of the economy in comparison to the home market, are
some of attractions that woo companies to enter these markets. An awareness of the pitfalls that
accompany entry into foreign markets is also necessary to fully reap the benefits. These pitfalls may be in
the form of economic, socio-cultural and legal factors. The decision to enter and operate in international
markets is a strategic one. An awareness of various strategic issues is necessary to ensure success in
foreign markets.

The strategic issues to be considered pertain to the marketing mix, sources of information and mode of
entry into the foreign market. The timing, scale and mode of entry are also crucial to the success of a
company. The modes of entry include long-distance selling, direct or indirect exporting, franchising,
licensing agreements, strategic alliances, turnkey contracts, greenfield investments, joint-ventures and
wholly-owned subsidiaries. Variations in economic, socio-cultural and political conditions in different
countries makes selling in international markets a challenging task. It requires a great deal of sensitivity
to local customer needs, expectations, business approach and personal philosophy.

Companies can adopt different structures while operating in foreign markets. These include use of long-
distance selling, piggybacking with local distributors, using intermediaries or operating independently by
establishing a direct sales force. Finally, due to differences in culture and traditions and associated
problems, most organizations employ local people to sell their products. An awareness of the recruitment,
selection, training and compensation procedures for the sales force appropriate for the host country is
necessary to successfully operate in different regions of the world.

Q.13) Sales Quotas

Def:- Sales Quota is the sales goal or figure set for a product line, company division or sales
representative. It helps the managers to define and stimulate sales effort.Sales quota is the
minimum sales goal for a set time span. Sales Quota can be individual or group based e.g.
for a business unit or a team.
Sales quota is a way or a parameter to drive the sales organization to achieve and realize its
targets before hand. It also helps in growth and investments required.
Generally sales quotas are set slightly higher than the estimated sales so as to stretch the
sales force effort.
Sales quotas are developed through the study of annual territory marketing plan. In this the
plan for developing new accounts and expanding existing accounts is given by the

Sales quota is imposed in an organization to fulfill various objectives required to increase the
sales of product and maximize profit.
Sales objectives help an organization in the following ways −

 They provide a standard to measure the performance.

 They help to control sales expenses for customer acquisition.
 They help define a target; this further facilitates motivation and enhanced performance.
 These help to identify and monitor the performance of salespersons
Sales quotas are quantitative goals set by managers to measure and compare the performance
of individual salespeople and to help determine their compensation. Three major types of
quotas are volume-based, profit-based and combination quotas, and all three can be used
either for measurement or for compensation.

Volume-Based Quotas
When based on sales volume, quotas may be expressed either in dollars or in number of units.
Both are widespread because they are easy to compute and understand. Sales volume quotas
can be broken down into quotas for individual products, brands or lines, which can help
managers ensure that all offerings get appropriate attention. Dollar-based quotas may
encourage salespeople to focus on items that are expensive but do not yield the highest profits.

Profit-Based Quotas
Sales quotas may be based on either net or gross profit margins of a product, brand or line.
The advantage to the manager of this type of quota is that it eliminates the temptation to
overemphasize highly visible, popular or trendy items over profitable ones. However,
measurements of progress are generally less clear when goals are expressed in profits instead
of in dollars or units. For this reason, profit-based quotas may encounter some resistance from
Combination Quotas In a growing number of firms, managers are designing new types of
sales quotas -- called combination quotas -- that combine two or more activity- or behavior-
based goals. These goals are chosen to reinforce a set of skills that salespeople are expected to
master and continually improve. For example, a combination quota could include: number of
customer calls, percentage reduction in sales expenses, number of product demonstrations,
frequency of conversions from trial to sale, percentage of customers who repeat or increase
purchases or number of new accounts opened.

Other Measurement Dimensions

With increasing global competition and product customization, many companies are trying to
differentiate themselves based on customer satisfaction. Their challenge is to motivate their
salespeople to focus on building long-term relationships instead of making one-time sales.
One motivational approach is to incorporate data from customer satisfaction surveys into
traditional quota targets. For example, each salesperson may be tasked not only to sell certain
numbers of items but also to attain satisfaction ratings at or above the median for his division.

Q.14) Steps involved in designing a compensation plan

1. Determine the main plan objectives

An effective compensation plan outlines clear goals while keeping a couple of things in mind.
Compensation plans must take into account new product launches and the atmosphere
of the industry. What sort of motivation do your employees need? Are you looking to recruit
new team members or simply retain who you have?
2. Identify controllable, measurable job elements
Employees need to know exactly what is expected of them to know how they can go above
and beyond. Just as your business as a whole needs to have clear objectives, so too does each

3. Determine method of compensation

All compensation plans should work toward employee motivation and reward for pre-
determined successes. Is your compensation plan based off a specific quota filled by
employees or a certain amount of revenue earned?

4. Test and establish administrative process

Once designed, implementation becomes the most important factor of a compensation
plan. What systems will be in place to hold employees accountable? How will
administrative processes guide and test the system?

5. Perform compensation analytics.

Once established, a compensation will probably need to be re-adjusted and salary
ranges moved around. How does it work with your company? Are employees
meeting desired goals and quotas?

6. Stay consistent and perform regular updates

An effective compensation plan doesn’t just sit still. It is constantly being developed
and modified to fit the needs of the company.

Q.15) Ethical and Social Issues in Sales & Distribution Management

Ethics is the set of rules or standards that govern the conduct of
person or members of a profession. Ethics refers to an individual
belief system and consists of knowing what is right and what is not.

It forms a very important part of sales and is essential for lending

integrity to a salesperson's behavior. No discussion on ethics is
complete without a reference being made to social responsibility.
Social responsibility exemplifies ethical behavior and is defined as an
individual's or institution's concern for the consequences of his/its
actions as these might affect the interests of others in the society.

Companies doing business with no regard to social responsibility run

the risk of attracting the attention of environmental groups, earning
negative publicity, and losing the goodwill of society.

Therefore, companies try to instill a sense of ethics in their employees and conduct business in a socially
responsible way. Indian companies are now more concerned with corporate social responsibility than ever
before. Companies in the past were concerned more about making profits than anything else.

But in recent times, firms have realized the importance of corporate social responsibility. Corporate social
responsibility has been defined as the commitment made by businesses to contribute to sustainable
economic development, to work with employees, their families, the local community, and society at large
to improve the quality of life. CSR is a process that helps a firm to function ethically and make a positive
contribution to the welfare of society.

All companies are expected to imbibe values pertaining to corporate social responsibility in their mission
and make CSR a part of the organizational policies. In order to fulfill their social responsibility, companies
need to effectively communicate to the public about the company's ethical policies, set high ethical
standards for themselves, and evaluate themselves on ethical performance from time to time through
means of ethical audits.

Several countries have passed declarations and policies regarding CSR. The Indian Government has
amended the Indian Companies Act, 1956, making it mandatory for companies to conform to certain
provisions of this law in order to be accepted as responsible corporates. Although Indian companies have
been indulging in philanthropic activities of some kind or the other, corporate social responsibility is a
totally different field altogether.

There is a much wider scope for corporate social responsibility in the Indian corporate scenario with its
coverage extending to human rights, labor standards, as well as environmental issues. Companies in the
current scenario are operating in an intensely competitive environment. Especially during the past 20
years, competition has been rapidly increasing due to globalization.In organizations, the management is
largely responsible for the ethical or unethical behavior of its employees. A sales manager faces ethical
issues that cover the ethical dilemmas of his sales people as well as the ethical aspects pertaining to his
decisions regarding hiring and evaluating of salespersons, assigning territories, etc. The ethical issues
facing a sales manager may be studied with regard to the sales manager's relationship with his
subordinates, the company, customers, and competitors. On the other hand, the ethical issues facing a
salesperson pertain to the salesperson's accountability to the top management, and his relationship with
other salespeople and with customers.
Q.16) Need hierarchy theory of Maslow.

 Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier

model of human needs, often depicted as hierarchical levels within a pyramid.
 Needs lower down in the hierarchy must be satisfied before individuals can attend to
needs higher up.
From the bottom of the hierarchy upwards, the needs are: physiological, safety, love and
belonging, esteem, and self-actualization.
 1. Physiological needs - these are biological requirements for human survival, e.g. air, food,
drink, shelter, clothing, warmth, sex, sleep.
If these needs are not satisfied the human body cannot function optimally. Maslow considered
physiological needs the most important as all the other needs become secondary until these needs
are met.

 2. Safety needs - protection from elements, security, order, law, stability, freedom from fear.

 3. Love and belongingness needs - after physiological and safety needs have been fulfilled,
the third level of human needs is social and involves feelings of belongingness. The need for
interpersonal relationships motivates behavior

 Examples include friendship, intimacy, trust, and acceptance, receiving and giving affection and
love. Affiliating, being part of a group (family, friends, work).

 4. Esteem needs - which Maslow classified into two categories: (i) esteem for oneself (dignity,
achievement, mastery, independence) and (ii) the desire for reputation or respect from others
(e.g., status, prestige).

 Maslow indicated that the need for respect or reputation is most important for children and
adolescents and precedes real self-esteem or dignity.

 5. Self-actualization needs - realizing personal potential, self-fulfillment, seeking personal

growth and peak experiences. A desire “to become everything one is capable of becoming”

Q.17) What is Compensation?

Compensating sales force means giving monetary and non monetary benefits in return for the
services rendered by sales force. The basic sales force compensation elements are salary ,
commission , bonus, fringe benefits or any combination of these.
A sound sales compensation plan must have three elements: Attract skilled and wellmotivated
sales personnel towards organisation. Motivate sales persons. Retain efficient sales persons
in the organization

Methods of sales force compensation/ How manager treat compensation as a tool

for motivating sales people.

1. Straight salary method :- This is simplest compensation plan in which salesman receive
fixed salary at regular interval of time . Generally , salary is paid to sales force according to
salary grade approved at the time of appointment . Under this grade , generally sales force
continue to get annual increments and are paid other allowances like dearness allowance
,meals allowance, travelling allowance , medical allowance.
2. Commission Method:- In this remuneration plan , sales force is paid according to their
performance, efficiency and productivity. This plan pay fixed or floating rate of commission
on the sales volume achieved by the salesman. Commission can be paid on the basis of sales
volume, sales value ,profits ,collections , order size etc. If sales level achieved by a salesman
is high , then he will paid more commission ; and if sales level achieved is low , then he will
be paid less.
Commission at fixed rate • This method is known as straight commission method,
commission percentage is fixed. The same rate of commission is used at all level of sales
,whether actual sale are below the sales quota or above the sales quota.
Commission at progressive rates • In this method, rates of commission vary with the
level of sales . The rate of the commission increases with the increase in sales level and
decrease with decrease with sales level. • For example :- a salesman may be paid 6%
commission on sales upto rs. 60,000 , 7% commission on sales from rs. 60,000 to rs.
1,20,000 and 8% on sales above rs. 1,20,000
3. Salary plus commission plans Some firms combine salary and commission plans. This
plan is designed to avail the advantages and remove the disadvantages of both salary plan
and commission plan. Salary plus commission method may take any of the following two

1) Salary + commission on total sales In this method , the commission is paid on total sales
affected by the salesmen.

2) Salary +commission on sales over and above the quota In this , a minimum quota is fixed
for each salesmen. No commission is paid until the salesmen crosses this sales quota. So the
salesmen will be entitled to commission only on sales over and above sales quota fixed for
4. Bonus is an additional financial reward to the sales force for achieving results beyond a
predetermined level. Bonus plan can be attached either with salary and commission plans. It is
paid in addition to normal remuneration as a reward for better performance . Bonus is never
used alone . Bonus is not a continuing liability to the mgt. It is given for achieving sales quota,
performing extra selling activities, for reducing selling expenses, for attracting new customers,
selling particular products above a specific level etc.

Q.18) Distribution resource planning

Distribution resource planning (DRP) is a method used in business administration for planning
orders within a supply chain. DRP enables the user to set certain inventory control parameters (like a
safety stock) and calculate the time-phased inventory requirements. This process is also commonly
referred to as distribution requirements planning.
DRP uses several variables:

 the required quantity of product needed at the beginning of a period

 the constrained quantity of product available at the beginning of a period
 the recommended order quantity at the beginning of a period
 the backordered demand at the end of a period
 the on-hand inventory at the end of a period
DRP needs the following information:

 the demand in a future period

 the scheduled receipts at the beginning of a period
 the on-hand inventory at the beginning of a period
 the safety stock requirement for a period

Q.19) Planning for Recruiting Successful Sales Executive/ Procedure should sales
manager follow to select manpower for his organization.
• What sales human resource management is and what its key relationships are.
• The importance of planning for sales personnel needs.
• What people planning and employment planning are.
• What recruitment means and why it is so important.
• The recruiting process: what it is, who does it, and where recruits are sought. Planning for
Recruiting Successful Sales Executive Selected Characteristics of Successful Sales
Executive • High energy level • High self-confidence • Need for material things •
Hardworking • Requires little supervision • High perseverance • Competitive • Good Physical
Appearance • Likable • Self-Disciplined • Intelligent • Achievement Oriented • Good
Communication Skills
Profiling the Successful Candidate
• Intelligence • Prospecting ability • Ability to create a follow-up system • Ability to influence
people’s decisions and opinions • Ability to built/cultivate long-term client relationships •
Ability to negotiate contracts and prices. • Ability to determine prospects’/customers’ needs (hot
buttons). • Computer skills. • Selling ability. • Conceptual ability.
Recruitment & Selection Process
• Job Analysis • Job Qualifications • Job Description • Recruitment & Selection Objectives •
Recruitment & Selection Strategy Job Analysis It includes investigation of following quality of
sales executive:
•Task •Duty •Responsibility
Job Qualifications It refers to following quality required in Sales executive: •Knowledge
•Skills •Aptitude •Personal Traits •Education/Qualification
Job Description A written summary of the job containing the job title, duties, administrative
relationships, types of products sold, customer types, and other significant requirements.
Recruitment and Selection Objectives The things the organization hopes to accomplish as
a result of the recruitment and selection process. They should be specifically stated for a given
Q.20) Importance of Sales Forecasting:
1. Supply and demand for the products can easily be adjusted, by overcoming temporary
demand, in the light of the anticipated estimate; and regular supply is facilitated.
2. A good inventory control is advantageously benefited by avoiding the weakness of under
stocking and overstocking.
3. Allocation and reallocation of sales territories are facilitated.
4. It is a forward planner as all other requirements of raw materials, labour, plant layout,
financial needs, warehousing, transport facility etc., depend in accordance with the sales volume
expected in advance.
5. Sales opportunities are searched out on the basis of forecast; mid thus discovery of selling
success is made.
6. It is a gear, by which all other activities are controlled as a basis of forecasting.
7. Advertisement programmes are beneficially adjusted with full advantage to the firm.
8. It is an indicator to the department of finance as to how much and when finance is needed;
and it helps to overcome difficult situations.
9. It is a measuring rod by which the efficiency of the sales personnel or the sales department, as
a whole, can be measured.
10. Sales personnel and sales quotas are also regularized-increasing or decreasing-by knowing
the sales volume, in advance.
11. It regularizes productions through the vision of sales forecast and avoids overtime at high
premium rates. It also reduces idle time in manufacturing.
12. As is the sales forecast, so is the progress of the firm. The master plan or budget of a firm is
based on forecasts. “The act of forecasting is of great benefit to all who take part in the process,
and is the best means of ensuring adaptability to changing circumstances. The collaboration of
all concerned leads to a unified front, an understanding of the reasons for decisions, and a
broadened outlook.”
Q.21) Benefits of using telemarketing
The main benefit of using telemarketing to promote your business is that it allows you to
immediately gauge your customer's level of interest in your product or service. Additionally it
allows you to do the following:

 provide a more interactive and personal sale service

 create an immediate rapport with your customers
 explain technical issues more clearly
 generate leads and appointments
 sell from a distance to increase your sales territory
 reach more customers than with in-person sales calls
 sell to both existing and new customers
 achieve results that are measurable
Disadvantages of telemarketing
There can be as many negatives using telemarketing as there are positives. In particular, you
need to consider that:
 telemarketing can be resented - particularly when dealing with business-to-consumer
customers, and when calls are made in the evenings
 customer lists may not always be clean and opted-in - this leaves you with a potential risk of
breaking the law
 customer lists can be very costly
 telemarketing has a negative image that could damage your business' reputation - if carried out
 telemarketing has the potential to replace a sales team and this could lead to negative feelings
among employees
 training staff can be time-consuming and costly
 an outside service provider can result in your losing control over your sales processes because
the people doing the work aren't your employees

Q 22) Major elements which determine Distribution Cost.

1) Direct Selling Expenses
Any expense made towards selling the product to the target customer is a direct selling. Many
manufacturers, wholesalers, and distributors carry out direct selling in the regions that they
want to expand. They also would like to know the distribution cost of that region. Thus, they
consider all direct selling expenses as the primary expense made by the firm.
Such Expenses will include – Salary of Field Salespeople (only for target customer sales), Travel
of salespeople, Entertainment for sub-dealers, Training costs, Postage or office supplies needed
for sales etc. All these different headers are categorized as direct selling expenses. They are one
of the major contributors to distribution cost. The more you spend in sales, ultimately the more
profit you will have.
2) Advertising & Sales promotion expenses
If a company wants to establish itself in a new region, it needs to have advertising, it needs to
run in-store branding, it needs to run ads in local newspapers or local channels. Thus, the
company will be spending a lot towards advertising and promotions which are various forms of
distribution expenses.
Example – Spends in Hoardings, Banners, Standees, ATL marketing, Advertising agencies, In-
store branding and any administrative expense towards advertising and sales promotion will fall
under that header only.
3) Product and Packaging expenses
Packaging is a cost to the company and should be added as one of the distribution expenses.
Besides this, some other forms of product costs include raw materials, depreciation of the
product in stock, salaries for employees involved in product development or related to product
and packaging.
4) Trade discounts
Besides sales promotion exercises like advertising and marketing, a company launches several
trade promotional exercises as well. This includes giving discounts to retailers, distributors, and
suppliers on achieving certain targets.
Quantity discounts, sales allowances, and other such trade discounts are considered as
distribution expenses and ultimately distribution cost.
5) Credit, Outstanding and Overdue
A distributor who operates in a regional market needs the huge amount of money to conduct
business. To arrange this money, the distributor takes a loan from the banks. This is known as
an Overdue account.
As a result, Overdue accounts, Market outstanding and credit are given in the market to
contribute to the distribution cost. The more credit given in the market, the higher is the value
of interest applied. There are also expenses towards collecting the outstanding from the market
and to close all bad debt. Thus, all these distribution expenses related to credits, outstanding
and overdue contribute to distribution cost and must be taken into account.

6) Market research
When reputed companies like Samsung, LG or Sony want to establish themselves in a new
market, they buy market research reports from the likes of IMRB or Nielson. These reports may
cost hundreds or thousands of dollars. Not only in a new market, even in an old market, a
company might want to conduct a satisfaction survey or a survey of new ideas regarding
7) Warehousing and handling within warehouse
Warehousing is a major cost of distribution. When a company expands to newer markets, it
needs to have new warehouses in each new territory. Domino’s or McDonald’s practically have
warehouses for every 3-4 towns so that they can supply to local retail outlets very fast. Because
of Domino’s and McDonald’s handle frozen goods (burgers or fries), their expenses are even
higher because they need cold rooms and cold chains to deliver the products.
Thus, the various warehousing costs include rent of the warehouse, salaries of warehouse
managers and material handlers, electricity expenses, administrative expenses for warehouse
management, supplies and utilities, specialized equipment etc.
8) Shipping and Delivery
Shipping and delivery are important to the firm and hence companies ensure they are operating
above capacity. Companies can choose to use their own transportation and company-owned
trucks or they can use outsourced transportation. Consumer durables and FMCG use outsourced
transportation because the movement of goods is erratic.
Overall, the costs of transportation include – freight charges, manpower for loading and
unloading, utilities, insurance of product, repairs and maintenance, salaries of truck and vehicle
driver, management of records etc.
9) Commercials & Accountancy
It is a government requirement to present all your sales and purchases as well as balance and
profit sheets to the government to determine profit earned by your firm. The distribution
expenses towards commercials and accountancy include – Processing of orders and maintaining
accounts receivables, sales invoices, payment proof’s, clerical jobs, invoicing and accountancy
software, printing and stationery expenses, utility expenses. All these expenses together form
the distribution cost of commercials and accountancy.
10) Customer Service
In the industrial segment, there exist industrial distributors who take care of both – Sales and
service of the product. In such cases, it is the distributor who must take care of the service of the
product as well. As a result, customer service expenses become distribution expenses and
contribute to distribution cost.
The running of a customer service centre, the salaries of customer service executives, the
utilities and tools required, specialized equipment, rent, electricity, administrative and clerical
expenses are all various distribution expenses filed under customer service.

Types of Wholesalers

The types of wholesalers can be discussed as under:

1. Manufacturer Wholesalers

Manufacturer wholesalers are the persons engaged in manufacturing activities as well as in

distribution activities. The manufacturers who sell their goods to the retailers are known
as manufacturer wholesalers. They may also make a large scale from other manufacturers so
that the demands of retailers may be met. The main object to act as a manufacturer wholesaler is
to play a double role in marketing. It increases their sales considerably. It also reduces their
overhead expenses and increases their profits.
2. Retailer Wholesaler
Retailer wholesalers are the wholesaler who purchases goods directly from manufacturers and
sells them to the customers. Thus, the manufacturers who retail their goods direct to the
consumers through their own shops, are also called retailer wholesalers. In this manner, retailer
wholesalers also play a double role in marketing it also helps them in minimizing the cost and
increasing the sales and profits.

3. Mini Supply Wholesalers

Mini supply wholesalers are the wholesalers, who supply goods to the mills or manufacturers.
Such wholesalers deal in Raw materials, capital goods, equipment, and other supplies.They
Purchase these materials and equipment from a large number of manufacturers in large
quantities and supply to the industrial users. Such wholesalers generally sell their goods
throughout a state or country through their agents.

4. Single Line Wholesalers

Single line wholesalers are the wholesaler who deals in a particular product line only. The
Purchase and sell different product items from different manufacturers of their line. In this
manner, they maintain large varieties of goods of their line and sell them to the retailers.

5. Complete Line Wholesalers

Complete line wholesalers are the wholesalers who deal incomplete line of goods required by a
particular industry or a trade. Such wholesalers concentrate upon the needs and requirements of
a particular trade only and they deal in all necessities of such trade. For example, Hospital
supply wholesaler can supply all the requirements of hospitals.

6. Local Wholesalers

Local wholesalers are the wholesalers who purchase goods from a number of manufacturers and
resell these goods in a particular area or city only.Such wholesalers generally deal in the goods
according to the requirements of retailers of their area. All these wholesalers are very close to
the retailers, retailers feel it very Convenient to purchase their requirements from such

7. Regional Wholesalers
Regional wholesalers of the wholesalers who Purchase goods in large quantities from different
manufacturers and sells them to the retailers of a particular region. This region maybe is a state
of some particular districts of state or a particular district. This type of wholesalers is very
common these days.

8. National Wholesalers
The national wholesaler is the wholesalers, who purchase goods from different manufactures
and distribute these goods to retailers all over the country. Such wholesalers supply goods to the
local or regional wholesalers also.

9. Jobbers

Jobbers are the wholesaler who purchases goods from different manufactures and store these
goods in their own godowns and sell them to the retailers. These wholesalers perform the
activities of purchasing and selling only. They do not enagage themselves in production
activities. Such wholesaler is also known as pure wholesalers.

10. Processors

Processors are the wholesalers who purchase goods from different manufacturers for grading
and processing. They classify the goods into different grades and sell these goods according to
these grades, generally in small packets. Sometimes, they sell these goods under their own
brand name.

11. Exporters

Such wholesalers purchase goods from different manufacturers in their country and sell these
goods in foreign countries. They may sell these goods in the same form or after processing.

12. Importers

Such wholesalers purchase goods from foreign manufacturers and sell these goods to the
manufacturers or wholesalers or retailers of their country. These wholesalers may sell the goods
in the same form or after processing.

13. Industrial Distributors

Such wholesalers act as a wholesalers distributor for a single manufacturer. These wholesalers
collect goods from a single manufacturer only and sell the goods to the retailers in their
authorized area.