DESIGNING THE SALES FORCE

The original and oldest form of direct marketing is the field sales call. Today most industrial companies rely heavily on a professional sales force to: Locate prospects, Develop them into customers and Grow the business

Nearly 12 percent of the total workforce work full time in sales occupations. No one debates the importance of the sales force in marketing programmes. However, companies are sensitive to the high and rising costs of maintaining a sales force. The term sales representative covers a broad range of positions. Six can be distinguished, ranging from the least to the most creative types of selling:

1. Deliverer - A salesperson whose major task is the delivery of a product

2. Order taker - An inside order taker (standing behind the counter) or outside order taker (calling on the supermarket manager).

3. Missionary - A salesperson not expected or permitted to take an order but rather to build goodwill or educate the actual or potential user (the medical "detailer"

representing an ethical pharmaceutical house).

4. Technician – A salesperson with a high level of technical knowledge

5. Demand creator - A salesperson who relies on creative methods for selling tangible products or intangible products.

6. Solution vendor - A salesperson whose expertise is solving a customer's problem, often with a system of the company's products and services

Sales personnel serve as the company‘s personal link to the customers. The sales representative is the company to many of its customers. The sales representative brings back much needed information about the customer. Therefore, the company needs to carefully consider issues in sales force design, namely: Development of sales force objectives, Strategy, Structure, Size Compensation

Sales-Force Objectives and Strategy

The days when all the sales force would do was ―sell, sell, sell are long gone. Today, sales reps need to know how to diagnose a customer‘s problem and propose a solution. Salespeople show a customer-prospect how their company can help a customer improve profitability.

Companies need to define the specific objectives they want their sales force to achieve.

The specific allocation scheme depends on the kind of products and customers, but regardless salespeople will have one or more of the following specific tasks to perform:

1. Prospecting – searching for prospects or leads.

2. Targeting – deciding how to allocate their timing among prospects and customers.

3. Communicating – communicate the information about companies’ product or service

4. Selling – approaching, presenting, answering questions, overcoming objections and sales closing.

5. Servicing – providing various services to customers –consulting on problems, rendering assistance, arranging financing expediting delivery

6. Information gathering – conducting market research and doing intelligence work.

7. Allocating – deciding which customer will get scarce product during product shortage.

Tasks such as lead generation, proposal writing, order fulfillment, and post-sale support are turned over to others. As a result, salespeople handle fewer accounts, but are awarded for key account growth. Today‘s sales representatives act as ―account manager who arrange fruitful contacts between various people in the buying and selling organisations. Selling increasingly calls for teamwork requiring the support of other personnel such as top management, technical people, customer service representatives and office staff. To maintain a market focus, salespeople should know how to: Analyze sales data, Measure market potential, Gather market intelligence and Develop marketing strategies and plans

Once the company decides on an approach, it can use a direct or a contractual sales force. A direct (company) sales force consists of full- or part-time paid employees who work exclusively for the company. A contractual sales force consists of manufacturers‘reps, sales agents, and brokers who are paid a commission based on sales.

Sales-Force Structure

The sales-force strategy has implications for the sales-force structure. Established companies need to revise their sales-force structure as market and economic conditions change.

Sales-Force Size

Sales representatives are one of the company‘s most productive and expensive assets. Increasing their number will increase both sales and costs. Once the company establishes the number of

customers it wants to reach, it can use a workload approach to establish sales-force size. This method has five steps:

Group customers into size classes according to annual sales volume.

Establish desirable call frequencies (number of calls on an account per year) for each customer class.

Multiply the number of accounts in each size class by the corresponding call frequencyˇ to arrive at the total workload for the country, in sales calls per year.ˇ

Determine the average number of calls a sales representative can make per year.

Divide the total annual calls required by the average annual calls made by a sales representative, to arrive at the number of sales representatives needed.

Sales-Force Compensation

To attract top-quality sales reps, the company has to develop an attractive compensation package. A company must use the following four components in determining sales-force compensation:

The fixed amount The variable amount Expense allowances Benefits

Fixed compensation receives more emphasis in jobs with a high ratio of non-selling to selling duties and in jobs where the selling task is technically complex and involves teamwork. Variable compensation receives more emphasis in jobs where sales are cyclical or depend on individual initiative. Fixed and variable compensation give rise to three basis types of compensation plans:

Straight salary Straight commission

Combination salary and commission

Some companies see a new trend toward de-emphasising volume measures in favours of factors such as profitability, customer satisfaction, and customer retention. Other companies are basing the rep‘s reward partly on a sales team‘s performance or even company wide performance.

Managing the Sales Force

Once the company has established objectives, strategy, structure, size and compensation, it has to recruit, select, train, supervise, motivate, and evaluate sales representatives.

Recruiting and Selecting Representatives

At the heart of a successful sales force is the selection of effective representatives. One survey revealed that the top 27 percent of the sales force brought in over 52 percent of the sales.

Selecting sales reps would be simple if one knew what traits to look for. One good starting point is to ask customers what traits they prefer. Finding what traits will actually lead to sales success

is challenging. Numerous studies have shown little relationship between sales performance and background and experience variables. Once management develops its selection criteria it must then recruit.

Training and Supervising Sales Representatives

Today‘s customers expect salespeople to have deep product knowledge, to add ideas to improve the customer‘s operations, and to be efficient and reliable. Companies use sales-promotion tools to draw a stronger and quicker buyer response. These demands have required companies to make a much higher investment in sales training. New reps may spend a few weeks to several months in training. Training time varies with the complexity of the selling task and the type of person recruited into the sales organisation. New methods of training are continually emerging.

Companies vary in how closely they supervise sales reps.

Sales Rep Productivity

Some research has suggested that today‘s sales reps are spending too much time selling to smaller, less profitable accounts when they should be focusing more of their efforts on selling to larger, more profitable accounts.

Norms for Prospect Calls

Companies often specify how much time reps should spend prospecting for new accounts.

Companies set up prospecting standards for a number of reasons. Left to their own devices, many reps will spend most of their time with current customers. Some companies rely on a missionary sales force to open new accounts.

The appeal of public relations and publicity is based on the following three distinctive qualities:

(1) Using Sales Time Efficiently

Studies have shown that the best sales reps are those who manage their time effectively. One planning tool is time-and-duty analysis. Companies are constantly seeking ways to improve sales-force productivity. To cut costs, reduce time demands on their outside sales force, and take advantage of computer and telecommunications innovations, many companies have increased the size and responsibilities of their inside sales force. Inside salespeople are of three types:

Technical support people Sales assistants

Telemarketers

The inside sales force frees the outside reps to spend more time:

Selling to major accounts

1. Identifying and converting new major prospects

2. Placing electronic ordering systems in customers‘ facilities 3. Obtaining more blanket orders and systems contracts (2) Motivating Sales Representatives

The majority of sales representatives require encouragement and special incentives. Most marketers believe that the higher the salesperson‘s motivation, the greater the effort and the resulting performance, rewards, and satisfaction, and thus further motivation. Such thinking is based on several assumptions. Sales managers must be able to convince salespeople that they can sell more by working harder or by being trained to work smarter.

Sales managers must be able to convince salespeople that the rewards for better performance are worth the extra effort. To increase motivation, marketers reinforce intrinsic and extrinsic rewards of all types.

(3) Evaluating Sales Representatives

We have been describing the feed-forward aspects of sales supervision - how management communicates what the sales reps should be doing and motivates them to do it, but good feed-forward requires good feedback, which means getting regular information from reps to evaluate performance.

Q. 39. Define the term “marketing channels.” Being a “channel manager” for your firm, you have been asked by senior managers to identify new distribution channels for the launch of a new LCD television set. Describes a channel- design and channel management decisions for the same, in detail for your presentation to top management.

OR

What decisions do companies face in designing their channels? What are the steps involved in designing a channel system? Explain with examples.

OR

List and explain the channel management decisions with the help of a suitable example OR

How shall you decide on each of the major channel design decisions for devising a channel structure for distribution of ready to eat snacks?

Answer:

INTRODUCTION:-

 Successful value creation needs successful value delivery. Holistic marketers are increasingly taking a value network view of their businesses. Instead of limiting their focus to their immediate suppliers, distributers, and customers, they are examining the whole supply chain that links raw materials, components and manufactured goods and shows how they move toward the final consumers.

 Companies are looking at their suppliers’ suppliers upstream and at their distributors’’

customers downstream. They are looking at customer segments and considering a wide range of new and different means to sell, distribute and service their offerings.

 Most producers do not sell their goods directly to the final users between them stands a set of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel ( also called a trade channel or distribution channel).

DEFINITION:-

“Marketing channels are sets of interdependent organization participating in the process of making a product or service available for use or consumption. They are the set of pathways a products or service follows after production, culminating in purchase and consumption by the final end users.”