SALES AND DISTRIBUTION MANAGEMENT UNIT - 2 [Autosaved].pptx

PPT, Marketing management, marketing, 21st century management, Learning

1. SALES AND DISTRIBUTION MANAGEMENT UNIT - 2 By: Dr. Bhawna Singh

2. SALES ORGANIZATION STRUCTURE WHAT IS SALES ORGANIZATION STRUCTURE? Sales organization structure refers to the segmentation of your sales team into specialized groups. How you organize your sales team will be determined by the regions you serve, the number of products and services you offer, the size of your sales team, and the size and industry of your customers. Sales organization is a structural framework, specifying the formal authority and responsibility between persons working in the organization. It consists of group of individuals working jointly to attain qualitative and quantitative selling objectives .

3. Sales organization structure is important as it sets sellers up for success. After all, you wouldn’t put a new recruit in charge of your enterprise accounts; similarly, a rep with deep experience in healthcare would probably struggle to sell into tech. Thoughtful design of your sales organization will allow you to capitalize on individual capabilities and experiences, while also ensuring the right sellers are targeting the right customers.

4. Characteristics of sales organisation 1. Sales organiszation is a part of the total enterprise dealing with sales activities. 2. It consists of a group of people engaged in selling activities. 3. It works for the attainment of common objectives of selling. 4. There exist formal and informal relationships between persons engaged in selling activities. 5. It defines the duties, responsibilities and rights of people in the selling jobs. 6. It establishes departmentalization of selling activities separately. 7. It is a means to the efficient execution of the sales functions and accumulation of resources to perform those functions. 8. The success of sales organization depends on the unified and coordinated efforts of salespersons. 9. The selling organization acts under the direct control the sales manager.

5. Sales organizations can be classified into four basic types: Type # 1. Line Organizations: Line organizations are the oldest and simplest form of sales organization structure. Generally these kinds of structures are observed in smaller sales organizations who have small number of sales executives. The companies have been found to cover limited geographical areas or the sales executives are found to sell a narrow product line. The orders as such pass from top down. It is the top executives who exercise line authority and each lower level executive is supposed to report to one top boss. All managers have line authority to direct and control their subordinates.

6. 2. Line and Staff Sales Organizations: These kind of structures are generally observed in large and medium sized companies that employ large number of people as sales executives and they are found to sell diversified product lines across wide geographical areas. Specialist staff managers are available for sales managers. It is the staff manager who assists as well as advises the line managers. The difference between line organizations and line and staff organizations is that this kind of structure provides the top level executive with a group of specialists who are experts in various areas of sales and marketing like dealer and distribution relations, sales analysis, sales planning, sales promotion etc.

7. It is these experts who help the top boss to concentrate on various planning and policy related matters and not just focus on daily discipline and control. The staff sales executives do not however have the authority to issue orders or directives. It is only after the approval of top executive that necessary recommendations made by the staff executives are executed through line organization. Some of the advantages related to line and staff organizations are better marketing decisions and superior sales performance. Specialization is another advantage of these organizations.

8. High cost and coordination, slower decision making and conflicts are some of the disadvantages of line and staff organizations. Work of the staff specialists need to be coordinated and this gets costly.

9. Advantages of Line and Staff Organization 1. Benefit of specialization due to division of work 2.Executives receive expert advices from staff 3.Concentration of authority facilitates decision making 4.Scope of growth of employees Disadvantages of Line and Staff Organization 1. Dual  authority in a line and staff organization 2. Sometimes conflicts between the line executives and the staff managers 3. Sometimes the expert advice given by the staff is misunderstood or misinterpreted by the line executives. 4. staff and line system are costlier 

10. Comparison Chart BASIS FOR COMPARISON LINE ORGANIZATION LINE AND STAFF ORGANIZATION Meaning The organization in which the authority and responsibility moves downward, and accountability flows upward, is called line organization. The organization structure, in which specialist are added to the line managers to provide guidance and support, is called line and staff organization. Authority Command Command and Advise Discipline Strict Loose Executives Line executives are generalist. Line executives are generalist and staff executives are specialist. Degree of centralization Absolute centralization Partly centralized and partly decentralized Appropriate for Small organization with less number of employees. Large organization with a number of employees.

11. Functional Organization Structure The functional structure is the most common model found in most organizations. Organizations with such a structure are divided into smaller groups based on specialized functional areas, such as operations, finance, marketing, Human Resources, IT, etc.

12. Advantages of Functional organisation 1. Manager has to perform a limited number of tasks which improves the accuracy of the work. 2. Improvement in product quality due to involvement of specialists. Disadvantages of Functional organisation 1. It is difficult to achieve coordination among workers as there is no one to manage them directly. 2. Conflicts may arise due to the members having equal positions.

13. esources, IT, etc.         

14. Product Organizational Structure This is another commonly used structure, where organizations are organized by a specific product type. Each product category is considered a separate unit and falls within the reporting structure of an executive who oversees everything related to that particular product line. For example, in a retail business the structure would be grouped according to product lines.

15. Organization structured by product category facilitates autonomy by creating completely separate processes from other product lines within the organization. It promotes depth of understanding within a particular product area and also promotes innovation. It enables clear focus with accountability for program results. As with every model, this model also has a few downsides like requirement of strong skills specializing in the particular product. It could lead to functional duplication and potential loss of control; each product group becomes a heterogeneous unit in itself.

16. Project Organisation :   A project organisation is a temporary form of organisation structure that is formed to manage projects for a specific period of time. This form of organisation has specialists from different departments who are brought together for developing a new product. Advantages of Project organisation 1. The presence of many specialists from different departments increases the coordination among the members. 2. Each individual has a different set of responsibilities which improves control of the process. Disadvantages of Project Organization 1. There can be a delay in completion of the project. 2. Project managers may find it difficult to judge the performance of different specialists.

17. Matrix Organisation :   Matrix organisation is the latest form of organisation that is a combination of functional and project organisation . In such organisations there are two lines of authority, the functional part of the organisation and project management part of the organisation and they have vertical and horizontal flow of authority, respectively. Advantages of Matrix Organisation 1. Since the matrix organisation is a combination of functional and project management teams, there is an improved coordination between the vertical and horizontal functions. 2. Employees are motivated as everyone will be working towards one project. Disadvantages of Matrix Organisation 1. Due to the presence of vertical and horizontal communication, there will be increased cost and paperwork. 2.Having multiple supervisors for the workers leads to confusion and difficulty in control.

18.  Geographical organization A geographical organizational structure organizes people within an organization by geographic location. This structure creates specific divisions for each location. Each division acts as if it is its own company, combining different types of personnel for various business functions. For example, each division may have its own marketing department, production department, sales department, distribution department and more. They may create geographic decisions based on different: Cultures Customer preferences Languages Rules

19. Advantages of geographical organizational structure Better efficiency for division Easier to coordinate Improved focus Leadership opportunities Ability to track profits Improved customer communication Flexible market response Logistical efficiencies

20. Disadvantages of geographical organizational structure Duplicate activities More expensive Competition for resources Difference in employee expertise Potential conflict Lack of company culture

21. SALES FORCE SIZE In most companies, the sales force is the most critical part of the business; thus determining the sales force size is critical in planning for sales governance. Although the corporate sales team is one of the most valued assets of the company, it can also be expensive to maintain. Increasing the size of the sales force may increase sales volume but at a higher cost to the company. It is therefore necessary to determine the optimal sales force size. The size of the sales force will also affect territory design. The three most commonly used methods to determine sales force size are as follows :

22. 1.Breakdown Method This is the simplest method among the three. In this method, each member of the corporate sales team is assumed to possess the same level of productivity. In order to determine the size of the sales force needed, the total sales figure forecasted for the company is divided by the sales likely to be generated by each individual. However, this method fails to account for differences in the ability of salespeople and the difference in potential of each market or territory. It treats the sales force as a function of the sales volume, and does not take profitability into account.

23. 2.Workload Method The workload method is also known as the buildup method. In this method, the total workload (i.e., the number of hours required to serve the entire market) is estimated. This is divided by the selling time available per salesperson to forecast the size of the sales force. This method is commonly used since it is easy to understand and to recognize the effort required to serve different categories of customers. However, this method also has some shortcomings. It assumes that all accounts in the same category require the same effort. Other differentiating factors such as cost of servicing, gross margins, etc. are not considered after the accounts are categorized. It also assumes that sales people are equally efficient, which is generally not true. 

24. 3.Incremental Method The incremental method is the most precise method to calculate the sales force size. The underlying concept is to compare the marginal profit contribution with the incremental cost for each sales person. The optimal sales force size as per the incremental method is when the marginal profit becomes equal to the marginal cost and the total profit is maximized. Beyond the optimal sales force size, the profit reduces on addition of an extra sales person. Therefore, sales people need to be added as long as the incremental profit exceeds the incremental cost of adding sales people. The main shortcoming associated with this approach is that it is difficult to estimate the additional profit generated by the addition of one salesperson and is therefore difficult to develop. Thus sales force needs to be properly organized, motivated and compensated in order to have the right size to do the workload, alignment to cover all needs, and keeping them happy and selling. At the end of the day, they are the ones who get the customer to give up their money for the company’s product or service. 

25. RECRUITMENT AND SELECTION RECRUITMENT Recruitment means announcing job opportunities to the public and stimulating them in such a way so that a good number of suitable people will apply for them. Recruitment is the process of discovering the potential for actual or anticipated organizational vacancies. Recruitment is a continuous process whereby the firm attempts to develop a pool of qualified applicants for future human resources needs even though specific vacancies do not exist.

26. Recruitment Functions Assessing recruitment, Job design and development , Fixing standards, Advertisement and publicity, Making initial contact with prospective candidates, Identification and seeking applicants, Preliminary examination and assessment of applications, Shortlisting of probable candidates for selection, Calling the shortlisted candidates for interview, A selection process like interviewing or testing, Hiring the best candidates, Recording and documentation, Fixing pay packages to the selected candidates.

27. Sources of Recruitment There are basically two sources of supply from where potential employees can be drawn. These are internal sources and external sources. Internal sources indicate recruiting qualified people from within the organization itself (from the present working force). Whenever any vacancy occurs, someone from within the organization is upgraded, promoted, or transferred to another department also goes into the category of an internal source of recruitment. External recruitment is concerned with generating a pool of qualified candidates through external sources of employment. The external sources of recruitment include – employment at the factory gate, advertisements, employment exchanges, employment agencies, educational institutes, labor contractors, recommendations, etc.

28. Walks-ins and write-ins Employee referrals Advertising State employment agencies Private placement agencies Professional or executive search firms Educational institutions Professional associations Labour unions Voluntary organization Departing employees Internet recruiting Open house Methods of Recruitment

29. SELECTION Selection is the process of picking or choosing the right candidate, who is most suitable for a vacant job position in an organization. In others words, selection can also be explained as the process of interviewing the candidates and evaluating their qualities, which are required for a specific job and then choosing the suitable candidate for the position. The selection of a right applicant for a vacant position will be an asset to the organization, which will be helping the organization in reaching its objectives. Employee selection is a process of matching organization’s requirements with the skills and the qualifications of individuals.

30. Importance of Selection Selection is an important process because hiring good resources can help increase the overall performance of the organization. In contrast, if there is bad hire with a bad selection process, then the work will be affected and the cost incurred for replacing that bad resource will be high.

31. Advantages of Selection A good selection process offers the following advantages: It is cost-effective and reduces a lot of time and effort. It helps avoid any biasing while recruiting the right candidate. It helps eliminate the candidates who are lacking in knowledge, ability, and proficiency It provides a guideline to evaluate the candidates further through strict verification and reference-checking. It helps in comparing the different candidates in terms of their capabilities, knowledge, skills, experience, work attitude, etc.

32. Selection Process and Steps As we have discussed that Selection is very important for any organization for minimizing the losses and maximizing the profits. Hence the selection procedure should be perfect. A good selection process should comprise the following steps: Employment Interview: Employment interview is a process in which one-on-one session in conducted with the applicant to know a candidate better. It helps the interviewer to discover the inner qualities of the applicant and helps in taking a right decision. Checking References: Reference checking is a process of verifying the applicant’s qualifications and experiences with the references provided by him. These reference checks help the interviewer understand the conduct, the attitude, and the behavior of the candidate as an individual and also as a professional.

33. Medical Examination: Medical examination is a process, in which the physical and the mental fitness of the applicants are checked to ensure that the candidates are capable of performing a job or not. This examination helps the organization in choosing the right candidates who are physically and mentally fit. Final Selection: The final selection is the final process which proves that the applicant has qualified in all the rounds of the selection process and will be issued an appointment letter.

34. Comparison Chart BASIS FOR COMPARISON RECRUITMENT SELECTION Meaning Recruitment is an activity of searching candidates and encouraging them apply for it. Selection refers to the process of selecting the best candidates and offering them job. Approach Positive Negative Objective Inviting more and more candidates to apply for the vacant post. Picking up the most suitable candidate and rejecting the rest. Key Factor Advertising the job Appointment of the candidate Sequence First Second Process Vacancies are notified by the firm through various sources and application form is made available to the candidate. The firm makes applicant pass through various levels like submitting form, written test, interview, medical test and so on. Contractual Relation As recruitment only implies the communication of vacancies, no contractual relation is established. Selection involves the creation of contractual relation between the employer and employee. Method Economical Expensive

35. TRAINING Sales training is a process of providing the sales force with specific skills for performing their task better and helping them to correct deficiencies in their sales performance. Sales training is a process by which an attempt is made to develop the selling skills so as to increase the ability, knowledge and experience of the salesmen. Characteristics: 1. Sales training is imparted to develop selling skills of the sales persons. 2. It develops principles and practice of selling. 3. Sales training is a planned and organized activity of the sales department. 4. The sales organization and the salesmen, both are benefited from the sales training. 5. Training programmes are organized for the interests of new and old salesmen. 6. Its aim is to provide maximum satisfaction to customers through the knowledge gained by salesmen. 7. Training is given to find out solutions to various problems related with sales.

36. TRAINING OF SALES PERSONNEL Following are the two methods followed : 1.Individual method a.) On the job training b.) Programmed instruction method 2.) Group training method a.)Induction and orientation training b.)On the job training c.)Off the job training d.)Organisation of lectures e.)Conducting seminars and conferences f.)Supplying sales manual g.)Arranging corresponding sales training h.)Arranging for field training i .)Visual training aids J.)Brainstorming K.)Case discussion method l.) Role playing

37. MOTIVATION OF SALES FORCE On an average, only a few  prospects  out of hundred actually become clients. But because there are sales targets for your sales staff, they have to keep approaching new customers so that they can achieve sales targets. Because of this  unsure and hectic life of sales, where  performance  is completely measurable against results, your sales staff requires  sales motivatio n from time to time. There are various ways to provide sales motivation to your staff. One core method used for motivation of any kind is  “Recognition, Rewards and remuneration”.  This can loosely stand for Recognition – Growing  people  in your organization Rewards – Rewarding them for their work and Remuneration – Offering incentives or salary hikes to appreciate them.

38. Objectives of Sales Motivation

39. COMPENSATION Compensation, here, stands for the monetary and non­monetary reward given by the firm to, its sales-force in return for the services rendered. Though, compensation stands for contractual payments, there can be non-contractual and ad-hoc payments. If sales-force recruitment and the training create and develop the manpower needs, the compensation aspect cares for its maintenance in the organisation for longer period.

40. Significance of compensation In fact, the importance of paying well lies in the following points: 1. To attract best salesmen: 2. To keep sales-force contented: 3. To have longing loyalty: 4. To have sound employer-employee relations:

41. Compensation Level: Level of sales-force compensation stands for what should be the reasonable compensation for the efforts of the sales-force. Level of compensation is significant to both the employers and the employees. It is but natural that sales-force expects higher rewards for its efforts and the management is intended to pay lesser amount. The actual level of compensation lies between what the companies intends to pay and the sales- force expects to receive.

42. Whether the level of compensation is going to be high or low is dependent on certain factors. In practice, the actual level of compensation is the compromise of the interacting forces which are outlined below: 1. Sales competence: 2. Extent of advertising: 3. Degree of training: 4. Financial viability: 5. Bargaining power: 6. Method of compensation: