1. Employee Work
2. Document Management
3. Management Reporting
4. Data Entry
1. Campaigns & Correspondance
2. Opportunity Generation
3. Lead Generation
4. Offer Preparation
5. Order Entry
1. Duplicate Work
3. Repetitive Work
What is sales and distribution management?.
Sales refers to the exchange of goods/ commodities against money or service. It is the only revenue generating function in an organization. It has formed an important part in business throughout history. Even prior to the introduction of money, people used to exchange goods in order to fulfill the needs, which is known as the barter system.
Example of Barter System
A has 100 kg of rice and B has 50 kg of wheat. Here, A needs wheat and B needs rice. They agree to exchange 50 kg of rice and 25 kg of wheat upon mutual understanding.
Conditions of Sales
There are two parties involved in the transaction, the seller and the buyer.
The seller is the provider of goods or services and the buyer is the purchaser in exchange of money.
The seller of goods has to transfer the title of ownership of the item to the buyer upon an agreed price. A person who sells goods or services on behalf of the seller is known as the salesman/woman.
Distribution is the process of making a product or service available for use or consumption to the end consumer or business.
Distribution could be of the following two types −
It can be defined as expanding or moving from one place to another without changing direction or stopping. For example, Bata has no distribution channel; it sells its products directly to the end consumers.
It can be defined as means that are not directly caused by or resulting from something. For example, LG sells its product from the factory to the dealers, and it reaches the consumers through dealers.
Sales management is very crucial for any organization to achieve its targets. In order to increase customer demand for a particular product, we need management of sales.
The following points need to be considered for sales management in an organization −
The first and foremost importance of sales management is that it facilitates the sale of a product at a price, which realizes profits and helps in generating revenue to the company.
It helps to achieve organizational goals and objectives by focusing on the aim and planning a strategy regarding achievement of the goal within a timeframe.
Sales team monitors the customer preference, government policy, competitor situation, etc., to make the required changes accordingly and manage sales.
By monitoring the customer preference, the salesperson develops a positive relationship with the customer, which helps to retain the customer for a long period of time.
Both the buyers and sellers have the same type of relationship, which is based on exchange of goods, services and money. This helps in attaining customer satisfaction.
Sales Management may differ from one organization to the other, but overall, we can conclude that sales management is very important for an organization for achieving its short- and long-term goals.
Objective of Sales Management
Every organization has an objective before initializing functions. We need to understand the goal of managing sales. Here we are discussing Sales Management in terms of its objectives.
It is the capacity or the number of items sold or services sold in the normal operations of a company in a specified period. The foremost objective of sales management is to increase sales volume to generate revenue.
Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue generating department. It can be calculated as the percentage or ratio of gain in total turnover.
One of the main objectives of Sales Management is to retain consumers to continue growth of the organization. There should be regular expansion of sales and demand for an item in the market with new advanced formulation.
These are the major objectives a sales executive has to focus on in sales management.
What are methods of Sales and distribution?
Sales method can be explained as one of several techniques used to recognize revenue specifically when revenue and expense are recognized at the time of cash collection rather than at the time of sale.
Marketing channel can be defined as the procedure of activities that need to be performed to distribute the finished goods at the point of production to the customer at the point of consumption.
Manufactures use different channels to distribute the finished goods to customers. However, the most common methods are wholesale or retail, which are discussed further.
The profit is distributed between the elements of distribution channel, so if the channel is longer, each element has lower profit margin and there is less scope for discounts for the consumer. In a shorter channel, the distribution is divided between fewer elements, profit is higher for each element and higher discounts can be provided to the customer.
Thus, we can say that Sales Methods are the different ways to sell the product or service. The Sales Personnel help to sell the end products to the consumer. Some sales methods are given below.
In this distribution channel, wholesalers buy the products and then distribute to consumers. Wholesalers directly purchase goods from the manufacturer in large quantity at a discounted price. Several service taxes and sales taxes are also reduced, which in turn reduces the cost of the final product.
The wholesaler then sells the product to the consumer. From the consumer’s perspective, wholesale is a cheaper option as the cost of the product is lower than retail value and for wholesalers, the profit margin is higher because of bulk purchase from the producer.
In retail distribution channel, the finished goods are purchased by a wholesaler or distributor, the wholesaler sells to retail shops and then the product is sold to the consumer.
The wholesalers buy the product in bulk; then the product is sold to the retailers in lesser quantities; further, the retail shops sell the product to the customers. Here the distribution channel is longer than wholesale, so the profit margin for each element is comparatively lower and the customer gets a higher cost than wholesale.
Direct sale is the sale of good/services involving person contact. It can be defined as the most important method that is used, as most of the consumers prefer to purchase goods through a direct contact with the seller, during which they understand the features and get to know about the needs and benefits.
The above illustration depicts the seller in the middle as A. Buyers are seen reaching out to the seller. It is an example of direct sales where the buyers (in green) are approaching the seller in orange.
Example − Boeing airlines sells it air buses directly to the consumer with no intermediary involved.
Pro forma Sales
The term pro forma is a Latin word, which means, "as a matter of form" or "for the sake of form". It is commonly used to describe a practice or document that is provided as a courtesy and that satisfies limited requirements, conforms to a norm or doctrine, tends to be performed perfunctorily and/or is considered a formality.
Pro forma financial statements are fashioned to reflect a proposed change, like a merger or acquisition or to emphasize certain figures when a company issues an earnings announcement to the public.
It can be termed as the practice or document that is provided as a courtesy or satisfies the minimum requirements which contain the details of the buyer and the receiver. It can also be termed as an invoice of the product.
In agency-based sales, the organization hires an agent on contract basis. That sales agent acquires the right to negotiate the sale of the organization’s goods or services in exchange of a fixed commission or fee. The commission is calculated on the basis of the percentage of the sales generated. Example: Insurance Policy, opening of bank accounts etc.
Door to Door
In door to door sales, the sales executive walks from the door of one house to another to sell the product or service. For this type of sale, the sales agent should be versatile and capable of quickly creating a relationship with the customers.
Door to Door
The following are some major duties of sales personnel for door to door sales −
Striking a conversation with a stranger.
Getting the form filled and completing the administrative tasks.
Getting the payments processed from customers.
Building rapport with customers.
Providing training to new team members.
These are some of the major responsibilities that a door to door sales executive needs to manage in order to maintain or increase productivity.
Hawking is associated with a hawker (seller) who sells the goods that can be easily transported. A hawker sells not-so-expensive goods on the streets by shouting in loud voice and chitchatting with the passers-by to develop rapport and convince them to buy his goods.
In the above figure, we can see hawkers selling products on the roadside. In India, there are 10 million street vendors, Mumbai and Delhi contributing the most to the number. Many consumers also prefer street shopping because of the low price of the products.
B2B selling is known as Business to Business selling. It refers to a situation where one business makes a transaction with another.
B2B occurs where −
Factory produces goods and sells them to wholesalers.
Example – Food products manufacturers, shoes, bags, etc.
Organization outsources its process to other companies to reduce the labor cost.
Example – BPO (Business Process Outsourcing)
Company purchases raw materials from another company to make the final product.
Example – Symphony purchases goods from its ancillary companies
Electronic sales or e-Commerce is known as trading of goods or services through the internet. The figure given below depicts how e-Commerce works. We can conclude that the e-commerce business has been increasing day by day due to easy access and simplicity.
E-commerce businesses may employ some or all of the following −
Online shopping web sites for retail sales direct to consumers.
Providing or participating in online marketplaces, which process third-party business-to-consumer or consumer-to-consumer sales.
Business-to-business buying and selling.
Gathering and utilizing demographic data through web contacts or social media.
Marketing to prospective and established customers by e-mail or fax (for example, with newsletters).
Engaging in prevailing market for launching new products and services.
Thus, e-commerce can be defined as the business conducted through the application of computers, telephones, fax machines, barcode readers, credit cards, automated teller machines (ATM) or other electronic appliances (whether or not using the internet) without the exchange of paper-based documents.
Request for Proposal
Request for proposal is a type of bidding procedure by a company who is interested in procurement of goods or services from potential suppliers to submit business proposals. Given below are the salient features of a Request for Proposal.
It informs the suppliers that a company is looking to solicit and inspire them to make their best effort.
The company has to provide specifications regarding the proposal to purchase and if the analysis regarding the requirement is prepared, accordingly it can be easily integrated into a Request document.
It also signals suppliers that the selection process is competitive.
It ensures that suppliers respond factually to the identified requirements.
The selection process is structural so that there is no partiality in the process.
Thus, a request for proposal is a proposal that a company ensures for procurement of products. The above points enlist the functions of a general request for proposal used by a company.
Auction is organized on website or in person to sale a product. e.g. OLX, eBay are examples of online auction based sales.
Take away selling techniques have become very famous in recent times. As the name suggests, in this type, the buyer takes the product and moves on. In the traditional system, the regular and take away counter used to be the same and people had to wait for long even to take a small parcel.
In the following illustration, we can see a modern take away counter, where the buyer can easily grab a parcel and move on. Such take away counters help the buyer to the get the product in less time.
Sales outsourcing is a way by which one company outsources its process or part of the process to the other company. The company outsources its work to increase the sales volume without link to the sales team that carries on the sales campaigns.
The company that undertakes the process will be paid on a contract basis or the as per the mutual understanding between both the parties. The other party is accountable and answerable regarding all sales activities while representing the brand to the client. That party is responsible for all the operations associated with direct sales activities.
The main purpose of sales outsourcing is to reduce the cost of production. For example, in London, the labor cost is high as compared to India. So the company would like to outsource the process to India and get the work done in less cost as compared to the home country.
Reverse selling refers to a situation where the buyers get a chance to respond to the sales negotiation or feedback regarding the product or service. If we observe keenly, in most of the cases, the seller talks too much and is always ready to question.
Reverse selling is just the opposite. The buyers have to provide the feedback, which helps to develop a long term relationship between the buyer and the seller. By doing this, the company can understand the pros and cons of its products and services, which helps to improvise and make changes accordingly.
The traditional way of selling a product used by a salesperson is that he/she pressurizes the prospective buyer.
Sales negotiation refers to the mutual discussion between the buyer and the seller for a transaction or agreement. The negotiation can be a formal event at a specific date and time. It can also be an ongoing process at different points in sales process.
Why does a salesperson negotiate? The answer is because of a customer’s attitude towards the product or service. A customer’s attitude can be categorized in four categories −
In this category, the customer shows an opposition to the product or service. The customer is not satisfied with the product and opposes and raises a query against the product.
The customer is not interested or shows less interest in the product; the reason could be no perceived need for its benefits.
The customer has the perception of the product and its benefits but is in dilemma if the product offered can really provide any benefit.
In this category, the customer agrees with the benefits as advised by the salesperson and has no objections or negative feedback towards the product.
Thus, we can conclude that negotiation skills are required to change a customer’s perception towards a product or service.