Welcome to

collective
exploration
Sales and Distribution
Management

Faculty:-
Veena Kumar
 Assessment


Term End Exam – 70


Internal Assessment – 30
•Case Presentation – 10
•Field Project - 20

12/10/10 Sales and Distribution Management 2

 Marketing Mix Elements

Promotion => Communication

•Advertising
•Sales Promotion
•Direct Marketing
•Public Relations
•Publicity

12/10/10 Sales and Distribution Management 3

 Direct Marketing Mix
Elements

• Tele Marketing
• Cyber / Web Marketing
• Personal Selling
• Mail Marketing
• Multi Level Or Network Marketing

12/10/10 Sales and Distribution Management 4

 Personal Selling Vs. Advertising

•Reach
•Message – Standardised Vs. Customised
•Feedback from the Customer
•Type of Interaction - Personal
•Effectiveness Evaluation
•Cost to the Company
•
12/10/10 Sales and Distribution Management 5
 Current Trends
•Intense Foreign Competition
•Higher Customer Expectations
•Customer’s are empowered with more
knowledge
•Emerging Technologies
•Innovative ways of reaching out to the
customers – MLM, e-Choupal, Project
Shakti, Sangam etc.
•Controlling Costs
12/10/10 Sales and Distribution Management 6
 When Is Direct-Selling the Low-
Cost Alternative ?

High
Single Tiered Direct
Distribution Selling

Price

Multi Tiered Direct Selling / Multi

Distribution Tiered Distribution
Low
Low Margins High

12/10/10 Sales and Distribution Management 7

 When Is Direct-Selling the Low-
Cost Alternative ?

High

Multi Tiered Direct Selling / Multi

Distribution Tiered Distribution
Volume
Single Tiered Direct
Distribution Selling
Low
Low Demonstration High
Requirements

12/10/10 Sales and Distribution Management 8

 Selling Situations
Simple Complex

•Amount of Communication
•Degree of Negotiation
•Time Involved
•Number of Visits required
•Number of People present during the interactions
•Degree of Co-ordination
•Standardised Vs. Customised
•Customer’s awareness about the product
12/10/10 Sales and Distribution Management 9
 Selling Vs. Managing
Activity Selling Managing

Primary Responsibility Develop Accounts Develop People

Working Relationships Alone Through others

Role Player Coach

Part of Management No Yes

Diversity of Make Calls, Sell Develop people,

Responsibility and Service recruit, select,
train, motivate,
manage key A/c

12/10/10 Sales and Distribution Management 10

12/10/10 Sales and Distribution Management
Tr
11
 Anatomy Of A Sales Executive
Big nostrils to
smell prey
Eyes that can
look at dragons
squarely in Eyes
Thick skinned

Gift of the gab

Stout feet to prevent

Stomach for huge meaty doors from slamming
targets
12/10/10 Sales and Distribution Management 12
 Steps of the Selling Process

Prospecting Handling Objections

Pre-call planning
Negotiating

Opening a Call
Closing the sale

Developing a call
Follow-up
Presentation and
Demonstrations

12/10/10 Sales and Distribution Management 13

 Prospecting

 Steps Involved
– Identifying
– Qualifying
– Targeting

12/10/10 Sales and Distribution Management 14

 Sources of Identifying Prospects

• Newspapers and Magazines

• Telephone / Commercial Directories
• Road Shows and Trade Fair
• Friend & Contacts (Personal)
• Past Sales Records (Existing Customers)
• Field Observation
• Cold Calls
• Networking / Endless Chains

12/10/10 Sales and Distribution Management 15

 Sl.No. Pros
12/10/10
1
Sales and Distribution Management
Refer
16
 Pre-call Planning
Assignment - 1
List the complete information you would
like to have before meeting a customer to
make your sales call successful.
Group No. Segment

1, 4 & 6 Pharma – Doctors & Channel Members (CM)

2, 5 & 9 IT Hardware Solutions
3 & 10 Electrical Motors – Key Accounts & CM
7&8 FMCGs – Key Accounts & CM

12/10/10 Sales and Distribution Management 17

 Pre-call Planning

1 . Clients
2 . Market
3 . Your Company
4 . Your Product

12/10/10 Sales and Distribution Management 18

 Vulnerability Analysis

Customer How does How does customer

Criteria customer see you? see competitors?

Critical Strong Strong

Flexibility Price Flexibility
Quality Quality After Sales
After Sales After Sales Quality
Price Flexibility Price

Incidental Weak Weak

12/10/10 Sales and Distribution Management 19
 Dealing with Objections

Assert

Address

Assess

Acknowledge
12/10/10 Sales and Distribution Management 20
 Fundamental Of Successful Calls

✆In successful calls, clients talk more than

sellers
✆In successful calls, sellers ask more questions
✆In successful calls, sellers talk about products
and solutions later in the call . (Less
successful people can’t wait to talk about
what they can offer)

12/10/10 Sales and Distribution Management 21

 Training

• A Aim
• C Content
• M Methodology
• E Execution
• E Evaluation

12/10/10 Sales and Distribution Management 22

 FAB

FEATURES Describe characteristics of a

product or service.
Describe how a feature can be
ADVANTAGES used or can help any client
Describe how a feature,
advantagemeets an Explicit
BENEFITS Need expressed by the specific
client

12/10/10 Sales and Distribution Management 23

 FAB

“This new model of vacuum cleaner

has a high speed motor (feature)
feature
which works twice as fast as the old
one (advantage).
advantage It will save 15 to 30
minutes of your time (benefit).”
benefit

12/10/10 Sales and Distribution Management 24

 FAB

Target audience Feature Advantage Benefits

Nationally
Channel High Awareness Makes Higher
advertised easier to sell Profits
Members consumer product

Individual AC with Rotary Consumes 10% Reduce Elec.

Customer Motors less Power Bill by 10%

Lower
Individual Product made Replacement
Customer of stainless Will not Rust
Cost, Always look
steel new

12/10/10 Sales and Distribution Management 25

 Training
Training for Med Reps , ABMs and RBMs is an ongoing
thing:
•RBM conducts induction programme for new Reps in the
Regional office.
B
A •Field Training is given by ABM.
Y •RBMs and ABMs are trained by external faculty drawn
E from IIMs , XLRI
R •RBMs , ABMs undergo Personal Growth Lab
programme
•Annual Budget: Rs. 20,00,000/- per year on Training
•Training for the launch of New products

12/10/10 Sales and Distribution Management 26

 Training

•ABM and RM trained by the Product Development

Deptt. for product knowledge (both existing and
new launches).
C •
P •Induction training of 1 month @ factory for Sales
Reps, followed by field training by the AM.
L •
•Launch meetings will be conducted for the launch of
New products where Pricing of competitive brands,
market share , innovative ways of marketing of
competitors will be discussed

12/10/10 Sales and Distribution Management 27

 P&G

12/10/10 Sales and Distribution Management 28

 Performance Monitoring
System

1 . Defining
Performance
Standards
2 . Designing formats
for recording
performance
3 . Analysing Sales
Performance
12/10/10 Sales and Distribution Management 29
 Targets - Types

Ø Sales Volume Targets

Ø Financial Targets
Ø Activity Targets
Ø Combination Targets

12/10/10 Sales and Distribution Management 30

 Sales Volume Targets

Ø Volume targets in Units

Ø Volume Targets in Rupees
Ø Point System Targets

12/10/10 Sales and Distribution Management 31

 Financial Targets

Ø Profitability Targets
Ø Expense Targets
Ø Average Order Size
Ø Average Order Call Cost

12/10/10 Sales and Distribution Management 32

 Activity Targets

Ø Demo’s organised
Ø Order Call ratio
Ø Market Development
Ø Sales Reports

12/10/10 Sales and Distribution Management 33

 Combination Targets

Variables Target Actual % of Weightage Actual X Wt.

Achieved Target

Sales Volume 60000 40000 66 3 198

New A/c opened 20 10 50 2 100
Cash Realisation 35000 28000 75 1 75
No. of Displays 100 80 80 1 80

453 / ???

12/10/10 Sales and Distribution Management 34

 Multiple Evaluation Criteria

EV. Criteria Weightage Norms Scoring: Max 12 for each

(6 points for achieving
the norm; + or – 1 for
deviation as given
below)
Market share 30 25% (+) (-) for increase (decrease)
by every 5% or part

Value of orders 15 Rs.10 Lac -do- by every Rs.1 lac or part

Order Size 10 Rs. 25,000 -do- by every Rs.5000 or part

P/V Ratio 15 40% -do- by every 5% or part

Mktg.ROI 20 20% -do- -do-

12/10/10 Sales and Distribution Management 35

 Monthly Reward - Gillette
• TSI (Mass) and ASM
– Category wise Value achievement
• Grooming : 16%
• Personal Grooming : 8%
• Oral Care : 8%
• Batteries : 8%
– Overall Value achievement : 20%
 (The above two will contribute to 60% of
Incentive.)
– Distribution : 10%
– Display : 10%
– Productivity : 20%
–
– Value Bonus on 120% : 25%
 No change in Total Value TSI- 4500 per month,
ASM- 7000 per month.

12/10/10 Sales and Distribution Management 36

 Criteria
Sales Person Distributors
Criterion Weightage Criterion Weightage

Qualitative 30% Sales volume 35%

Market share 10%
Quantitative 70%
Growth plans 15%
Frequency 1times/year Investment 35%
criterion

Merchandizing 5%

The company has set up a benchmark for their salesmen:- i.e.

The minimum they have to achieve is 80% of the set target
and rest 20 % is excused because of external environment
and other external factors.
12/10/10 Sales and Distribution Management 37
 Performance Appraisal
Wockhardt- TM


• The appraisal system in Wockhardt is very strong for

their T.M.
• The appraisal is done by the R.S.M for the T.M
• It is structured on the following parameters :
– Sales Achievement
– Power Brands Achievement
– Doctors Call Average
– Chemist Call Average
– Product Availability

– Sales Reporting
• They are appraised on a quarterly basis.

12/10/10 Sales and Distribution Management 38

 Performance Appraisal
 Elder


• Appraisal System - R.S.M for the Marketing

Representatives.
•
• It is structured on the following parameters :
– Job Involvement –Reporting
– Product Knowledge –Stockist Handling
– Doctors Call Average –Analytical Ability
– Chemist Call Average –Punctuality/Diligence
– Availability –Innovativeness
–Man Management

12/10/10 Sales and Distribution Management 39

 Performance appraisal – HUL

Ta rg e t a c h ie ve m e n t .
Be h a vio rs wit h re t a ile rs .
Effic ie n c y.
Sa le s re p o rt .
Crit ic a l in c id e n c e .
Ma rke t c o ve ra g e .

12/10/10 Sales and Distribution Management 40

 Performance appraisal – Cadbury
Sales Officer’s

Target achievement Vs Budget

Direct Sales as % of Total Sales
Growth Generated
New activities under taken
Competencies exhibited
New Channels explored
Key initiatives taken

12/10/10 Sales and Distribution Management 41

 Sales Targets
Factors taken into Account while assigning Quota
Nestle and Cadbury have identical factors taken
into account for assigning quota.

Nestle
 Outlet Expansion
 Product penetration
 Turnover growth – value
 Volume growth - ton
 Market share

12/10/10 Sales and Distribution Management 42

 Setting up Sales Targets
Hindustan Pencils Ltd.
•Last 5 years’ performance
•Individual market’s potential.
•Growth expected by the company.
•Introduction of new products.
•New target assigned is normally 120 – 130% of
the last year.
•Top – Down approach is used.

12/10/10 Sales and Distribution Management 43

 Setting up Sales Targets
Camlin Ltd.
•Last 3 years’ performance
•Competitors’ position in individual markets
•Individual market’s potential
•Expected growth of the company
•Expected growth of the industry
•New products to be launched
•No. of competitions (Drawing etc.) to be organized in
a particular market
•No. and type of promotional activities
•Top – Down approach is used

12/10/10 Sales and Distribution Management 44

 A FRAMEWORK FOR SALES ANAYLYSIS
SALES ANALYSIS
Levels In The Sales Different Types Of Different Types
Organisation Sales Of Analysis

National Level Sales Total Sales Of The Comparisons With Sales

Organization Company Quotas
Regional Level By Type Of Products Comparisons With Previous
Periods
Branch/ District Level By Type Of Distribution Comparisons With
Channels Industry/Competitors
Territory Level By Type Of Customer Comparisons Within Sales
Classifications Organization
Individual Customer Level By Size Of The Orders Comparisons With Sales
Forecasts
12/10/10 Sales and Distribution Management 45
 Different Types of Analysis
Northern Eastern Region Western Region Southern Region
Region
Sales ( Rs . 23 22 28 . 5 27
Million )
Sales Quota 25 20 30 25
( Rs . Million )
Effectiveness 92 110 96 108
Index
Sales Last 22 . 5 19 28 24
Year ( Rs .
Million )
Sales Growth 2 16 2 12
(%)
Industry 250 200 300 250
Sales ( Rs .
Million )
9 11 9.5 11
Market Share
(%)

12/10/10 Sales and Distribution Management 46

 Sales Analysis Based on Regions

Territory Targets Actual Performance

(Value in‘000 Rs)
East 825 850 103%
West 750 750 100%
North 890 870 98%
South 850 920 108%

12/10/10 Sales and Distribution Management 47

 North Region: Sales by Sales Persons

Territory Target Actual Perf as % of quota

Mukherjee 95 93 98%
Singh 115 117 102%
Sinha 110 109 99%
- 106 110 104%
- 108 107 99%
- 110 112 102%
Gulani 130 106 82%
Reddy 116 116 100%
890 870 98%
12/10/10 Sales and Distribution Management 48
 Sales Person: Gulani’s Sales

Product Line Target Actual Perf. As % of quota

Computers 22 23 104%
Portable typewriters 28 28 100%
Manual typewriters 30 06 20%
Elec.typewriters 24 24 100%
Spares &
consumables 26 25 96%

Total 130 106 82%

12/10/10 Sales and Distribution Management 49
 Sales Person: Gulani’s Sales of
Manual Typewriters
Accounts Target Actual Per. as %
of quota

Banks 2 2 100%
Fin. Insti. 1 1 100%
Educ. Insti 1 1 100%
Govt. Deptt 24 0 0%
Ind.undertak. 1 1 100%
Private parties 1 1 100%

Total 30 6 20%

12/10/10 Sales and Distribution Management 50

 Sales Report
•Frequency – varies depending upon the
level
•Components of Sales Report
ØProgress Report
ØWork plan component
ØExpense Report
ØNew Accounts Report
ØCustomer Feedback
ØCompetitor Tracking
ØLost Business Analysis

12/10/10 Sales and Distribution Management 51

 Why Motivation ?

þInherent nature of the sales job

þSalesperson’s boundary position and role
conflicts
þTendency towards apathy
þLacking a feeling of group identity

12/10/10 Sales and Distribution Management 52

 Motivation Techniques

þSufficient Reward / Timely Recognition

þRelationship between Superior &
Subordinates
þExperience Maturity & Common Sense
þCommunication

12/10/10 Sales and Distribution Management 53

 Compensation Plan – Types

üStraight Salary Plan

üStraight Commission Plan

üCombination Salary & Incentive Plan

12/10/10 Sales and Distribution Management 54

 Straight Commission Plans

ADVANTAGES DISADVANTAGES
C Aggressive CLittle Financial
Productivity Control
CHigh Level CPush on easiest to
volume sell low margin
CNon performance items
burnout

12/10/10 Sales and Distribution Management 55

 Combination Plans

 ADVANTAGES DISADVANTAGES


CBalance DClerical costs

are higher
CMore flexibility to
adjust DMore records
are required
CLess disagreements
on reallocation DComplication of
of territories plans

12/10/10 Sales and Distribution Management 56

 Sales Budget

Is a financial plan depicting the sources



of revenue and the heads of expenditure

for a given time period

•Planning Tool
•Co-ordination Tool
•Controlling Tool

12/10/10 Sales and Distribution Management 57

 Sales Budget - Approaches

• Affordability
• Percentage of Sales
• Competitive Parity
• Zero-base
• Objective & Task Method

12/10/10 Sales and Distribution Management 58

 Determining Size of Sales Force
• Step 1:
 Classify the customers/prospects into A, B and C Categories
• Step 2:
 Determine the call frequency and call length for each category
of customer
• Step 3:
 Calculate the total workload
• Step 4:
 Calculate the total time available with individual salesperson
• Step 5:
 Apportion sales person’s available time into selling and non-
selling activities
• Step 6:
 Calculate the number of sales persons required

12/10/10 Sales and Distribution Management 59

 Territory Management

A grouping of customers and prospects

assigned to an individual sales person
Basis of allotment
1. Geographic
2. Class of customers
3. Product
4. Credit Vs. Cash

12/10/10 Sales and Distribution Management 60

 Sales Territories - Reason

• To provide proper market coverage

• To control selling expenses
• To assist in evaluating sales personnel
• To contribute to sales force morale
• To aid in the coordination of personal
selling and promotional efforts

12/10/10 Sales and Distribution Management 61

 Setting-up Territory

Selecting a basic geographical control unit /

sales territory
• Districts
• Pin Code Areas
• Cities
• Trading areas
• States
12/10/10 Sales and Distribution Management 62
 Setting-up Territory
Determining sales potential in each control unit -
•Territorial planner must identify all classes of final
buyers
•How many potential buyers in each class or in
each control unit and the units’ total market
potential
Combining Control units into Tentative territories
•Assumption that no differences in the physical or
other characteristics of individual control unit
exists

12/10/10 Sales and Distribution Management 63

 Territory Shapes

C C
BASE

C C

C C

C C
12/10/10 Sales and Distribution Management 64
 Territory Shapes

First Call
Base

C C
C
12/10/10 Sales and Distribution Management 65
 Setting up Sales Organisation
Define Organisation Objectives •Define the relationship
•Growth / Survival between positions
•Market Share
•Market Leadership •Nature of authority for
•Customer Relations each position
•Assign personnel to each
position

•Define the various activities to

be performed
•Define the volume and cost of Check the organisation
each of these activities structure to ensure:
•Provision for co-ordination
•Provision for growth
•Provision for flexibility
•Provision for Control
•Identify positions to whom
these activities could be
assigned
12/10/10 Sales and Distribution Management 66
 A Matrix Sales Organization
Sales force Technical Sales
Manager services Mgr. Admn.Mgr

Mgr. Govt. Govt.

Sales
Mkt.

Mgr. Ind.
Sales Ind. Mkt.

Mgr.
Dealer
Dealers
Sales

12/10/10 Sales and Distribution Management 67

 Org. Structure : SIEMENS NIXDORF….2
Customer: Sales & Service Organisation
Regions Products & Technology Services
North
& East OEC PC & Retail Self ITS
RISC Intel Systems Service
TC
Servers Servers Products
West Tanmoy
Sanjay Paramjit Chakraborty Girish
Sanjeev
D.K.Das Mehta Puri Mulay
Borwankar
South
NN Solutions & Business Services

Teleco Utilities Transport

Amo Acting Sandeep
Labonte Baranowska Kaujalgi
12/10/10 Sales and Distribution Management 68
 Electrolux India Ltd.

The Sales Structure

 Zonal Manager


 Branch Manager


 Sales Manager


 Sales Executive
12/10/10 Sales and Distribution Management 69
12/10/2010 Distribution Management 69
 Goodlass Nerolac Ltd. (S C….2)
Sales Structure
 V.P. Sales


 Regional General
Manager


 Regional Sales
Manager


 Assistant Sales
12/10/10
Manager
Sales and Distribution Management 70
12/10/2010 Distribution Management  70
 Modern Engineering Works

sales

vContest vMotivation

vCompensation

12/10/10 Sales and Distribution Management 71

 Sales Contest helps in:

Ø Stimulating sales by improving sales force

performance
Ø In countering competitive moves in the
market
Ø Offloading the inventory during off-season
Ø Gaining sales force commitment
Ø Enhancing their morale


12/10/10 Sales and Distribution Management 72

 However ………

ØIt is a temporary incentive programme

with a short term perspective.
ØA long term perspective and a holistic
approach requires contest to be used as
one of the methods along with the regular
compensation plan.

12/10/10 Sales and Distribution Management 73

 Suggestions ….

§To improve declining sales performance as sales

were falling substantially below target
§Focus on group performance since every
individual members effort automatically leads
to better group performance
§Encourage the group to have harmonious
interpersonal relationships and healthy
competitive spirit.
§

12/10/10 Sales and Distribution Management 74

 What are Marketing Channels?

Marketing channels are sets of

interdependent organizations involved in
the process of making a product or
service available for use or consumption

12/10/10 Sales and Distribution Management 75

12/10/2010 Distribution Management 75
 Why use Channel Members?

•Time Utility
•Assortment Utility
•Breaking the Bulk
•Economic Reasons
•Economy of Effort

12/10/10 Sales and Distribution Management 76

12/10/2010 Distribution Management 76
 Functions Performed by the
Channel Members

•Information
•Financing
•Promotion
•Risk taking
•Negotiation
•Cash flow
•Ordering
•Title flow
•Warehousing

12/10/10 Sales and Distribution Management 77

12/10/2010 Distribution Management 77
 Channel Structure

Types Levels
Ways to reach The number of
the customer intermediaries
between the
manufacturer and
the customer

12/10/10 Sales and Distribution Management 78

12/10/2010 Distribution Management 78
 Channel Structure
Dabur India Limited
Plant 1 Plant 2 Plant 3 Plant Nepal

Central Warehouse

CFA

Authorised Dealers
Customers
Retailers

12/10/10 Sales and Distribution Management 79

12/10/2010 Distribution Management 79
 NESTLE FACTORY

Owned by Company Mother Godowns

C & S Agents
Cash Distributors

Retailer Re -distributor
Consumer
12/10/10 Sales and Distribution Management 80
12/10/2010 Distribution Management 80
 Channel Structure
LG India

Company

Website LG Shoppe Direct Distributor

Dealers

Retailer

Customer
12/10/10 Sales and Distribution Management 81
12/10/2010 Distribution Management 81
 Channel Structure

Factory

Mother Godown

CSD /
CFA Institutions

Redistributor Stockist

Wholesaler

Retailer Customers

12/10/10 Sales and Distribution Management 82

12/10/2010 Distribution Management 82
 Steps in Designing Channel Structure

Step 1
Identify the desired service output levels of the target
customers wrt waiting time, payment terms, availability,
lot size, freshness etc.

Step 2
Convert these service output levels into quantified
channel objectives

12/10/10 Sales and Distribution Management 83

12/10/2010 Distribution Management 83
 Steps in Designing Channel Structure

Step 3
Identify channel alternatives:
Exclusive / Selective / Intensive / Extensive

Step 4
Evaluate each channel alternative

12/10/10 Sales and Distribution Management 84

12/10/2010 Distribution Management 84
 Criterion for selection of
channel members

12/10/10 Sales and Distribution Management 85

 QU
12/10/10 Sales and Distribution Management
S
86
 Coke

Criterion Weightage
Investment 28%

Godown ownership 25%

Man power 35%

Vehicle ownership 7%

personal involvement 5%

12/10/10 Sales and Distribution Management 87

 • Pepsi
Financial Soundness of
Distributor(min. 70
lakhs
investment other than
land

Good social network

Well known goodwill

Good entrepreneurial
drive

Excellent managerial
&
administrative
qualities
12/10/10 Sales and Distribution Management 88
 Britania

89 sales and distribution examples Friday, 10 December 2010

12/10/10 Sales and Distribution Management 89
 LENOVO
• The channel member selection is mainly based on the
previous goodwill of the member, i.e. their regularity in
their payments and the previous sales record.


12/10/10 Sales and Distribution Management 90

 Coke
Process and frequency
The company appoints auditor who regularly visits the
distributor and keeps record for sales. The auditor records
the stock bought by distributor and the sales made. The
company on other side also does market survey for the supply
of stocks, quality and quantity of stock that the retailer
gets. If this is found to be unsatisfactory, then the
distributor is held liable for not matching the benchmark
performance. If these responses occur regularly, then the
company may take the distribution ship back from the
distributor .
vPerformance is measured :
Annually
Quarterly
vPeople Involved :
Head (Sales & Marketing)
Corporate Sr. Manager
HR Personnel.

12/10/10 Sales and Distribution Management 91

 Resolving Cost Service Conflict – AP way

•15000+ Dealers in 3500+ towns

•6 Regional Distribution Centres catering to 55 Depots
•85 % Service Level ( No. of SKUs available as a % of
Total SKUs), Competitors Service Level: 50 – 60 %
•Business growth demanded greater investment in
manufacturing and distribution
•Consumer Price to be kept low in tune with the
marketing Philosphy
12/10/10 Sales and Distribution Management 92
12/10/2010 Distribution Management 92
 Resolving Cost Service Conflict – AP way
Four Pronged Strategy

•Strong commitment to distribution cost control

•Effective inventory management
•Control of credit outstandings
•IT initiatives in distribution cost control

12/10/10 Sales and Distribution Management 93

12/10/2010 Distribution Management 93
 Titan’s Channel Objective

•Changing buyer’s perception through channel

•Enabling the customer to see and feel the product
•Extensive penetration and reach

Titan’s Channel Strategy

•Classy Stores (Superior design and superior image)
•Superior Merchandising
•Full product range display
•Good customer service
•Locational convenience
12/10/10 Sales and Distribution Management 94
12/10/2010 Distribution Management 94
 Titan’s Channel Structure

•Company Owned Showrooms

•Franchisees
•Titan Shops / Time Zones (Semi Exclusive,
70:30)
•Titan Dealers – Traditional / Non-traditional
watch shops
•Institutional Buyers (Minimum Rs. 10,000)
•CSDs

Multiple retail modes to match

multiple segments !!!
12/10/10 Sales and Distribution Management 95
12/10/2010 Distribution Management 95
 Coke

12/10/10 Sales and Distribution Management 96

 Commission and Compensation (Coke)
•
•
•
 

12/10/10 Sales and Distribution Management 97

 Credit Norms (Coke)


•
•

12/10/10 Sales and Distribution Management 98

EXPECTATIONS OF CHANNEL MEMBERS
AND THE
COMPANY FROM EACH OTHER
( PEPSI )

Proper , Appropria
and te
timely Returns
delivery Distribut and
of its or rewards
goods expects a for
to the sense of their
channel belonging efforts
members ness by
the
company

12/10/10 Sales and Distribution Management 99

 ITC

12/10/10 Sales and Distribution Management 100

12/10/10 Sales and Distribution Management 101
 Rajdhani
 The company expects each channel
member to
•
•
•

12/10/10 Sales and Distribution Management 102

 DI
Sl.No. Criteria
12/10/10 Sales and Distribution Management 103
 Controlling Channel Members

Transaction Measures Movement Measures

•Cost of stock out •Total distribution cost
•% of bad debt
•Customer Service level •Transportation cost per unit
•Product & Mkt. Segment •Warehousing cost.
•No. of new markets entered •% of damaged merchandise
•% of S.volume in each new •% of obsolete inventories
mkt. •% of astray shipment
•Size of orders •Less than truckload Vs
•No.of complaints truckload

12/10/10 Sales and Distribution Management 104

12/10/2010 Distribution Management 104
 Strategies for Building Effective
Channel Relationships

1. Strive to be a Reliable Supplier

- Provide a continuing flow of quality products
- Ensure consistent lead time
- Deliver on time
- Manage the product replacement cycle
2. Facilitate Profitable Relationships
- Avoid over distribution
- Provide competitive margins
- Ensure terms and conditions of sale promote broad participation in
offerings

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 Strategies for Building Effective
Channel Relationships
3. Strengthen Field Coverage
- Increase account manager / product specialists presence
- Focus on sales programmes
- Provide field training on product and sales techniques
4. Provide Extensive Outlet Support
- Move sales and service training closer to outlets
- Advertise to create visibility and demand
- Supply quality promotional materials
- Provide on-line marketing support
- Offer comprehensive technical support
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12/10/2010 Distribution Management 106
 Channel Conflicts

•Vertical Channel Conflict

•Horizontal Channel Conflict
•Multi-channel Conflict

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 Channel Conflicts-Reasons
•Goal Divergence
•Drive for Autonomy
•Competition over channel resources
•Role clarity
•Non-fulfillment of role by manufacturers
•Non-fulfillment of role by dealers
•Perception divergence
•Expectation divergence
•Inter-channel communication noise

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12/10/2010 Distribution Management 108
 Channel Dynamics

Vertical Marketing System

 Corporate VMS
 Contractual VMS
 Administered VMS
Horizontal Marketing System

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 Major Retailer – Types

• Specialty Stores
• Department Stores
• Supermarkets
• Convenience Stores
• Discount Stores
• OFF- Price retailers- factory outlets ,
Warehouses
• Superstores – Combination stores
hypermarkets
• Catalog Showrooms
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 Retailing Problems

z Property
z Personnel
z Systems – Internal
z Inefficiencies in the distribution systems
 -Labeling, Volumes , Distribution
z Margin / Profits
z Inventory Management (SS keeps 150,000
 SKU’s with different brands )

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 Strategy for the physical
distribution
Step 1 Determine customer service goals in terms of
the output from PD System
Step 2 Identify the strategies to enable the system to
reach goals
Step 3 Based on 1 & 2, determine warehousing,
transportation, inventory and order- processing
strategy.
Step 4 Plan for investment in inventory, warehousing,
transportation and information system hardware
to suit information flows for
Effective mgmt of PD.

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 Supply Chain Activities…1

• Physical Distribution :
• Physical supply :
• Manufacturing Planning and Control :

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 Supply Chain Activities…2

•Distribution :

•Extended supply chain : It refers to the integrated set of

activities completed by the full supply chain participants
(suppliers, manufacturers, distributors, retailers/
customers, and consumers / end users).

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 Telco’s Indica Logistics Management

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 5 Cost Cutting Innovations

•Coca-Cola India uses Geographical Information Systems to

optimise sales route plans
•Dabur is replacing regional warehouses with C&F agents to
save 10 days in delivery-time
•Hero Cycles ships bicycles in CKD form to treble the freight
capacity of its trucks
•JK Industries uses a stock replenishment plan to minimise
the costs of in-transit tyre inventory
•VVF, which makes the children’s soap, Doy, outscored its
sales to save distribution costs

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 Companies Benefitted Using Logistics…1

• Procter & Gamble – Streamlining the number of

Stock-points & vendors , reducing inventory
based on consumer-pull, rationalising delivery
based on customer-demand and price
realisation .


• Jindal Vijaynagar Steel – Delivering hot rolled and

cold – rolled steel coils to customers – on a JIT
basis . Logistics helps in arranging the fleet of
Volvo trucks to run round the clock , with
drivers relieving one another every 8 hours ,
for optimum utilisation .

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12/10/2010 Distribution Management 117
 Companies Benefited Using Logistics..2

•Hewlett-Packard (H-P )- For speedy execution of orders, zero

defect delivery and clear customer communications , H-P
created 2 tools , namely Service mail information system to
monitor cycle time between despatch and receipt and Net based
customised re-seller infrastructure for distributors to track
deliveries and cycles and put pressure on the company .
•

•Result : The time between order and delivery cut by 66

percent , from 42 to 15 days, cutting operating costs by 15
percent .

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12/10/2010 Distribution Management 118
 Companies Benefitted Using Logistics …3
• McDonald’s Fast food Chain – Logistics operation made
customer – satisfaction their goal , because it converts
data on daily orders into accurate forecasts of supplies
needed making lead time between order and delivery as
low as possible . Result : Cut cycle time as well as ensure
an optimum cost – service mix.
•
• Dabur India Ltd. – Dabur made use of supply chain and linked
delivery to price–realisation. Under the new system, Dabur
switched to varying delivery–frequencies ranging from
weekly to monthly, depending upon the sales being
generated by each dealer .
•


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 Companies Benefitted Using Logistics …4
•Ceat Tyres Ltd – Using logistics as its tool , Ceat managed to
halve its inventory of finished goods from 50 days to 25 days
•. Logistics helped Ceat to deal with Transit time delays on
account of multiple manufacturing locations , 125 selling
points, and 200~300 stock – keeping units (SKU’s).
Mismatch between tyre and tube production, lack of
coordination between purchase and marketing, and
production not in synchronization with planning. Logistics
helped Ceat to streamline deliveries and transit by identifying
that the problem lay in the long distances between dispatch
centres and selling points .

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