Encarnacion, Valerie Anne R.

Distribution Management
BSBA MM 2201 Notes / Reviewer

Lesson 1: Sales Management Recruiting

• Finding and attracting the right
Sales Management candidates to join the sales team.
• According to AMA - American • Identifying the skills and traits needed
Marketing Association in the sales role.
• It refers to the planning, direction, and
control of personal selling Selecting - Choosing the most qualified
• including recruiting, selecting, individuals from the pool of applicants.
equipping, assigning, routing,
Equipping - Providing sales team with
supervising, paying, and motivating, as
necessary tools and training, this includes sales
these tasks apply to the personal sales
force. techniques, product knowledge, and CRM
software.
Sales Manager
Assigning - Designating specific roles or
• The leader of the sales team,
territories to ensure the team operates
responsible for organizing, planning,
efficiently and avoids overlap.
and overseeing the entire sales process.
• Set goals for the sales team Routing – Planning and organizing the daily or
• Provide direction and support to sales weekly schedules to maximize efficiency.
representatives.
• Analyze sales performance to ensure Supervising – Overseeing to ensure they are
targets are being met. following the policies and meeting their goals.

Sales People Paying – A fair compensation system to reward

• The frontliners who directly interact their work, including salaries, commissions, etc.
with customers to sell products or
Evolution of Sales Management
services.
• Present and promote products or Pre Industrial Revolution (Before 1760)
services. • Small scale manufacturers
• Build strong relationships with • Manufacturer received most attention
customers. • Selling goods to nearby customer
• Follow up with leads and close sales.
Post Industrial Revolution (After 1760)
Planning - Creating a roadmap for sales • Large scale manufacturers
process, setting goals, defining target markets, • Separate functional department
and outlining strategies. • Selling goods was not adequate and
there was a need to expand the market
Direction - Providing guidance and leadership
to the sales team. This ensures that sales Nature and Importance of Sales
representatives understand their roles and Management
responsibilities clearly.
A. Its integration with marketing
Control management
• Monitoring and evaluating the sales
force’s activities and performance. • Field selling (or personal selling)
• Ensures that the team stays on track and team – are in their territories
achieves the organization’s objectives. contacting existing and prospective
customers.
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

• Head quarter marketing team – Global Perspective - Adapting sales strategies

performs support and service functions to different international markets, considering
to assist field salespeople cultural differences and economic conditions

B. Relationship selling Revolution in Technology - Integrating

• Transactional relationship / selling advanced technologies like artificial
• Value added relationship / selling intelligence, automation, and data analytics to
• Collaborative / partnering relationship enhance sales.

C. Varying Sales Responsibilities Customer Relationship Management (CRM)

- Using CRM software to manage customer
Skills of a Sales Manager data, track interactions, and improve customer
relationships.
People skills – ability to motivate, lead, and
communicate effectively Sales-Force Diversity - Building a diverse
sales team with different backgrounds and
Managing skills – administrative managing
skills to connect with various customer groups.
skills like planning, organizing, controlling,
and decision making. Team Selling Approach - A collaborative
selling method where sales representatives,
Technical skills – specific task like training,
technical experts, and customer service teams
selling, negotiating, use of computer, and
work together to close deals.
problem solving.
Managing Multi-Channels - Selling products
Types of Sales Manager / Sales
through multiple platforms such as physical
Management Position
stores and websites to reach more customers.
A. Strategic or Top – Level Managers
Ethical and Social Issues - Ensuring
• Highest level in sales management responsible sales practices by considering
such as vice president, general manager, ethical concerns, sustainability, and corporate
national sales manager. social responsibility in business strategies.
• Responsible for long-term marketing
or sales planning and developing E-Selling - The use of online platforms and
strategies. digital tools to sell products and services.

B. Tactical or Mid Level Managers Linking Sales and Distribution

• Regional, zonal, divisional sales Management
manager
Sales Management - setting goals and
• Manage branches or districts and
strategies
implement strategies and actions
Distribution Management - ensures products
C . Operational or First – Line Managers
reach customers on time
• Sales managers, area sales managers,
district managers Distribution Channels
• Responsible to achieve sales goals and
objectives by providing day-to-day Own salesforce—recruited and trained to
supervision. manage key accounts and the distribution
channels
Emerging Trends in Sales Management
C&FAS or Depots
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

• used to break bulk Distribution Management

• Depots are company-owned • Provides place, time, and possession
warehouses utility
• C&FAs are carrying and forwarding • ensures that the product is made
agents who are primarily transporters available to the consumer at a retail
with their own or hired warehouses. shop close to their residence.
• management of all activities that
Distributors, Dealers, Agents, Stockists facilitate movement and coordination
• The backbone of the distribution of supply and demand.
system • The art and science of determining
• They buy goods from the company and requirements, acquiring them,
sell them to customers such as distributing them, and maintaining
wholesalers, retailers, and institutions. them for their entire lifespan.
• Activities concerned with the
Transporters, Warehouse Operators
movement of finished products from
• They ensure the physical movement
the end of the production line to the
and safekeeping of goods
consumer
• They are usually managed by the
• the movement of raw materials from
logistics function rather than sales
the source of supply to the beginning of
management.
the production line.
Independent wholesalers in the market
Marketing Channels, Trade Channels, or
• already operating in various markets,
Distribution Channels - The route between
selling a variety of complementary
producers and consumers that goods companies
goods such as groceries, plumbing
take to reach their end user or customers
equipment, or food items.
Distribution Channel - involved in the process
Independent retailers in the market
of making a product or service available for use
• more relevant for consumer goods and
or consumption
pharmaceutical products
• These include corner stores or modern Discrepancies and Distribution Channels
retail formats.
Wroe Alderson
Maximizing Customer Service • One of the well-known researchers and
authors on channel management
Demand Management
• credited with the concept that
• a critical step in getting sales volumes
distribution channel take care of four
and earning revenues
discrepancies that exist in the
• Both sales managers and their channel
marketplace
members support this activity to meet
set volume targets. A. Spatial – Helps reduce the distance between
the producer and the consumer.
Supply Management - this is a major
responsibility of the distribution channel B. Temporal – Helps speed up in meeting the
working under the guidance of sales requirement of the consumer.
management.
C. Break Bulk – Reduces large quantities into
Lesson 2: Distribution Management and the acceptable lot sizes for the consumer.
Marketing Mix
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

D. Assortment – Provides variety to the Distribution Channel

consumer to choose from. • Transfer of title or ownership as the
product moves from the producer to the
E. Financial Support – Helps fund the ultimate consumer
activities of reaching the product to the
• American Marketing Association
consumer.
describes it as the structure of intra-
Time Utility - making the product available company organization units and extra-
when a consumer wants it. company agents through which a
commodity, product, or service is
Place Utility - making the product available marketed.
where he wants it.
Classifications of Distribution Channels
Possession Utility - provided when the
consumer can buy the product, and the 1. Sales Channel
ownership gets transferred to him at a time and • Motivating buyers
place convenient. • Sharing information between the
consumer and the company
Downstream channels - involved the • Negotiating fair bargains
distributors, wholesalers, and retailers. • Financing the transactions
Upstream channel members are closer to the 2. Delivery Channel - Only meant for physical
producer, and downstream channel members transactions
are closer to the consumers.
3. Service Channel - Performs after-sales
Corporate Strategy - part of the marketing service
effort, forms a critical part of the marketing
strategy. Distribution Channel Members

Evolution of Distribution Strategy – from Carrying & Forwarding Agents (C&FAs)

corporate strategy to marketing strategy to • Act as a midway point between the
distribution strategy company and its distributors.
• collect the products from the company
Categorizing their customers into A, B, and C plant and store them.
(Pareto's Law) to decide different levels of
• They take physical possession of the
service.
goods but do not pay for it.
• Category A customers - who • The goods in the warehouse still belong
contribute the maximum to the to the company.
company’s volumes and revenue, will
Consignment Selling Agents (CSAs)
obviously get special treatment.
• Also act as C&FAs.
• B category customers - are the next
• Sell the goods to the market.
set of customers who contribute
• Remit the value of the goods sold to the
regularly but at moderate levels to the
company.
business. They get second priority.
• C category customers - are low C&FAs & CSAs
contributors and may not even be • Known as facilitators.
regular. They can be handled as part of • Operate on a contract with the
the routine marketing plans. company.
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

Distributors Industrial products – technical in nature and

mostly B2B, the channels need to be shorter
• Required to invest in the product by
buying it Consumer product – The most evolved
• Work in the market and redistribute the channel system. Consumers are millions in
stocks to customers number and companies can use every possible
• Commission or margin is a percentage route to reach them.
of price
Consumer Durables –
• Mark-up is still percentage but based
• Need to be maintained in a properly
on selling price
operating condition throughout their
Dealers – only helping distribution with their life.
contacts in the market place • The producer has to rely on service
backup, which could be run by the
Stockist – invest in the products but expect the company itself or through a franchise
company to sell the products to customers route.
Agents – they don’t invest, only helping Pharmaceutical Products
distribution with their contacts • use dealers and stockists in smaller
towns
Consumer Products - The most evolved
• independent wholesalers who provide
channel system. Companies can use every
possible route to reach customers. reach to chemists.
• Doctors are required to prescribe the
Wholesalers medicines for chemists to sell them to
consumers.
• Operate out of the main markets
• Deal with larger number of products Chemicals and Fertilizers
and packs • wholesalers in feeder markets, where
• Have their own shops in trading areas farmers may be buying most of their
• Depend on large volumes of business agricultural inputs.
• Selling empty cases or cartons
Automotive & engineering - the sales could
• They choose and decide what products
be direct from the company through its sales
they will sell
people to customers.
• Not on contact with any company
• Negotiate about 15 days credits and Services
extend credit terms • the channel network for services is
normally the shortest.
Retailers
• There would be at most one
• Shopkeepers in the market place to
intermediary in the channel system.
cater the needs of hundreds customer
This channel partner would be an agent
• Makes the highest margins in the
or a franchisee.
supply chain
• Extends credits to only 25% Cellular services
• Started home delivery to their regular • The producer has to cater to a large
customer number of customers very similar to
the consumer products industry.
Different Kinds of Distribution Network
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

• The producer has to support his to project about itself and its exclusive
customers through a combination of products.
hardware, software and services. • This may be dictated by the value of the
• provided through a combination of product.
appointed dealers or franchisees and
Exclusive distribution
the company sales team itself.
• This is more selective.
IT hardware • Only one outlet in a market may keep
• combination of own sales team (for the product.
high-value customers) and the channel • The outlets set up by companies for
partners like dealers/re-sellers to their own products could also be
service a larger number of smaller counted among these.
customers
• also use channels called as 'Value- Characteristics Of Channel Intensity
added Resellers' (VARS) who do not Intensive
just sell the 'boxes' but also make the
• It ensures widespread coverage,
hardware
volumes and availability
IT software/services and management • the channel control is not easy
consulting • Large number of channel partners are
• The selling part may be given 103 sales required
or business development team and the
Selective
implementation can be done by an
• ensures a good image, moderate market
execution team.
coverage and limited channel control.
Patterns of Distributions • The number of users are limited but
they are brand conscious.
• This determines the intensity of desired • will not provide a niche positioning.
distribution after a firm has decided on • managed with a moderate number of
the most appropriate channels of channel members.
distribution.
• There are three types of distribution Exclusive
intensity: Intensive distribution, • Create a premium and prestigious
Selective distribution, Exclusive image for the product.
distribution • Prices can be stable and margins kept
high.
Intensive distribution - make sure that the • Good channel control and loyalty are
product is made available in as many outlets as
possible.
possible so that consumer should be able to get
• Sales potential is limited. Limited
the product of his choice.
number of channel partners will do.
Selective distribution
Lesson 3: Marketing Channels
• only a few select outlets will be
permitted to keep the company Three Kind of Flows
products.
• The outlets are carefully selected by the 1. Forward flows - From the company to the
company in line with the image it wants customers-basically goods and services.

2. Backward flows
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

• from the customers to the company- 4. C&FA: They are on contract and provide
mostly the value of the goods or both time and place utility- both storage and
services bought by the customers. transport
• This may also be the goods returned
Seller Driven
from the or meant for reuse
• Payment for goods/returns 1. Existing retailers: established in the markets
and are used by end-users.
3. Flows Both Ways
2. Supermarkets: much bigger retailers who
Marketing Channels
not only sell a large number of branded
• A set of practices or activities to
products but also sell other grocery, stationery
transfer the ownership of goods, from
and clothing items.
the point of production to the point of
consumption 3. Specialty stores:- retailers who sell only one
• internal (own salesforce) or external type of merchandise only
(all kinds of channel contractual
organization) that operates to achieve 4. Discount stores: sell the same products and
distribution objectives. brands as the supermarkets but at much lower
prices
Formats Channel Possible
Channel Levels
Producer Driven • Zero-Level Channel
1. Company owned Retail outlets • One-Level Channel
• Two-Level Channel
2. Consignment selling agents:- passes the
physical stocks to the intermediary who pays Service channels
the company only after products have been sold. • key mediums or tools that help in
3. Brokers:- The intermediary contacts the user managing different services,
interactions, maintenance, and
and sells the product on behalf of the company
facilities of a service provider.
without taking any physical possession of
goods. He takes a commission when the sale is • It is used to expand the type and scope
consummated. of work that is supposed to get routed
automatically to the services.
4. Franchisees:- product and merchandising
are decided by the company and the franchisee What is the Expected Channel Expected To
has to pay from the company to sell. Deliver

Service Driven 1. Variety Products

1. Transporters: They provide service on 2. Convenient Location - The outlet has to be

contract for companies to reach their ultimate located close to the location of the consumer.
customers. 3. Speed of Delivery - The product or service
2. Warehouse owner: They provide space for should be available when the consumer wants
storage of products closer to consumer markets it.
and reach them with minimum waiting time. 4. Lot Size - The product should be available in
3. Couriers: It is similar to C&FA but handle a lot size to suit the consumer.
much smaller packets
Encarnacion, Valerie Anne R. Distribution Management
BSBA MM 2201 Notes / Reviewer

5. Additional Benefits - benefits like home

delivery, credit till pay day, and well packed
staple food items.

Prominent Channel System

1. Vertical Marketing System - This is at

variance with a conventional marketing channel
system of a producer, distributor and retailer.

• Corporate VMS - Successive stages

of production and distribution are
handled by one entity. Gives high
degree of control over the channel.
• Administered VMS - the ownership of
the different distribution channels is
not with one entity
• Contractual VMS - convenient
arrangements between channel
members when they get together to
obtain economies of scale. These are
rightly called "value-added
partnerships".

2. Horizontal Marketing System - operates

between two or more unrelated companies but
the arrangement of working together provides
benefits to both.

3. Multi -Channel Marketing System -

adopted by companies which use two or more
marketing channels to reach different customer.