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1.Objective of sales management

Sales is the art of creating a reason that will motivate someone else to do a favorable
action. It is described as follows by the American Marketing Association committee:
“Selling is the personal or impersonal process of assisting and/or persuading a
prospective customer to buy a commodity or a service or to act favorably upon an idea
that has commercial significance to the seller.”

Sales Management is the planning, direction, and control of a business unit’s selling
activities, including recruiting, selecting, training, equipping, assigning, routing,
overseeing, paying, and motivating the individuals of the sales force.

Read this article to learn about the importance of Sales Management and
the objectives of Sales Management.

A sales objective is a primary aim that an organization strives to attain. It is the element
of a marketing strategy in which other aspects, such as a profit margin, a target
demographic, distribution channels, and advertising, are considered. It is important to
integrate sales objectives with business targets and marketing operations.

Importance of Sales Management Objectives

It is vital to accurately distinguish the objectives of Sales Management in the long term.
They are used not just to measure success but also to help the business expand.

Planning and developing good Sales Management objectives may be advantageous in

the following ways:

• It can help the sales team focus on vital sales aspects

• Can contribute to an environment of continual improvement
• Make it easier to identify objectives and work on areas of improvement
• Sales management objectives assist in developing an efficient sales plan to help
you achieve the goals
• Assists in aligning personal sales goals with the goals of other departments

For example:

Jack Pearson formulated the objective of earning a 20% return on the capital
employed by 2023. He advises using SMART objectives:

• Specific
• Measurable
• Achievable
• Realistic
• Timed.

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He further divides them into three categories:

• Visionary – refers to the company’s long-term goals.

• Attainable – refers to the enterprise’s medium-term goals that can be met with
the help of research and development advancements.
• Immediate – refers to goals that can be attained in the current situation with
useful resources, the latest technology, and dedicated employees.

Objectives Of Sales Management

1. Generating Revenue

Sales management assists organizations by generating income. A goal centered on how

much income you want to make in a specific time frame will help to encourage the
employees. It can also assist in identifying and targeting the most profitable consumers.

2. Cycle Time

Cycle time refers to the duration of time it takes a sales process from start to end. This
Sales Management objective helps to keep the team competitive by instilling a sense of
achievement. Shortening the sales cycle can help the firm perform better by encouraging
customers to make swift decisions.

3. Profit Margins

Another objective of Sales Management, similar to boosting revenue, is to increase

profit margins. Sales representatives can boost their profit margins by building a brand’s
image and delivering the best value to consumers.

4. Qualified Lead

A qualified lead is a prospective customer who has been researched and evaluated and
is ready to proceed in the sales process. This is one of the most important objectives of
Sales Management. The sales force must have a continual pipeline of quality leads to
grow sales and revenues consistently.

5. Win Rate

The win rate in sales signifies the number of sales opportunities earned by your company.
The better your company’s win rate, the more income it makes. To raise the win rate, the
sales personnel should expand their online contacts, devote more time to selling,
introduce prospects to the goods more frequently and give relevant information at each
stage of the sales strategy and process.

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6. Customer Retention

A sales objective includes a customer retention goal: how a firm hopes to maintain
consumers and guarantee that they continue to buy from them. According to
one research, 80% of future profits come from just 20% of the existing customer base,
and getting new customers costs the business five times more than maintaining an
existing customer.

Having a sales target that helps you increase customer retention rates each year would
improve the team’s overall sales performance.

9. Upsells & Cross-Sells

Upselling is a sales strategy in which a salesperson gives a customer an improved version

of a product in which they are already interested. This can boost the sale price, increasing
the company’s income. Cross-selling is a sales strategy of presenting a product
comparable to the one the customer is presently purchasing. These sales metrics assist
your organization in selling more items and generating more income.

10. Sales Productivity

Sales productivity refers to a sales rep’s effectiveness and efficiency. According to the
research, only 24.3% of salespeople exceeded their quota in 2020. This implies that
businesses should keep an eye on sales strategies that will help to surpass the quota
with flying colors.

11. Create & Follow Operational Best Practice

The responsibilities, procedures, and activities that assist and eliminate friction in the
sales process are referred to as sales operations. Creating and adhering to operational
best practices results in data-driven procedures and workflows that equip salespeople for
profitability. Effective sales plan implementation differs from a thriving sales team to one
that fails.

12. Providing Sales Resources

Empowering your sales team with the resources to be productive is one of the critical
objectives of Sales Management. These Sales resources and tools include technology,
product or service knowledge, mentoring and insights, extensive training, or lead
databases or channels to assist with lead generation.

13. Monitoring Performance

Accurately measuring sales success is critical for driving growth. To gain greater insights,
sales managers should track sales metrics and KPIs. Continuously monitoring the sales

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performance status enables you to recognize possible difficulties before it is too late to
make changes.

14. Set Sales Quotas

Setting a sales quota defines actions such as the number of phone calls or emails to be
sent over a specific period. They can also be performance-based, with minimum
standards for revenue or agreements that must be completed. Sales quotas provide
production targets to promote individual skills and hold sales reps responsible.

15. Design your sales process

A Sales Management process is the way through which your representatives assist in
converting early-stage leads into loyal, happy customers. Designing the sales
process will assist the team in following and moving their prospects quickly and effectively
toward the close. This assures uniformity for all prospects, regardless of which rep they’re
dealing with, and professional interactions between representatives and prospects that
effectively reflect your product.

2. Personal selling objectives

Personal selling is an act of convincing the prospects to buy a given product or service.
It is the most effective and costly promotional method. It is effective because there is
face to face conversation between the buyer and seller and seller can change its
promotional techniques according to the needs of situation. It is basically the science
and art of understanding human desires and showing the ways through which these
desires could be fulfilled.

According to American Marketing Association, “Personal selling is the oral presentation

in a conversation with one or more prospective purchasers for the purpose of making
sale; it is the ability to persuade the people to buy goods and services at a profit to the
seller and benefit to the buyer”.

In the word of Professor William J. Stanton, “Personal selling consists in individual;

personal communication, in contrast to mass relatively impersonal communication of
advertising; sales promotion and other promotional tools”.

Personal selling is a different form of promotion, involving two way face-to-face

communications between the salesmen and the prospect. The result of such interaction
depends upon how deep each has gone into one another and reached the height of the
common understanding. Basically the essence of personal selling is the interpretation of
products and services benefits and features to the buyer and persuading the buyer to
buy these products and services.

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Objectives of Personal Selling:

The major objectives of salesmanship are as follows:

(i) Attracting the Prospective Customers:

The first and foremost objective of a salesperson is to attract the attention of people
who might be interested to buy the product he is selling.

(ii) Educating the Prospective Customers:

The salesman provides information about the features, price and uses of the product to
the people. He handles their queries and removes their doubts about the product. He
educates them as to how their needs could be satisfied by using the product.

(iii) Creating Desire to Buy:

The salesman creates a desire among the prospective customers to buy the product to
satisfy specific needs.

(iv) Concluding Sales:

The ultimate objective of personal selling is to win the confidence of customers and
make them buy the product. Creation of customers is the index of effectiveness of any
salesperson.

(v) Getting Repeat Orders:

A good salesperson aims to create permanent customers by helping them satisfy their
needs and providing them product support services, if required. He tries for repeat
orders from the customers.

3. Personal Selling Process

Personal selling process is a one-on-one selling technique where the salesperson

interacts directly with customers to sell a product or service.

Businesses can conduct personal selling via email, phone, video, or in-person.

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It is more common in B2B and luxurious goods trading than everyday consumer goods.

Steps in the Personal Selling Process

Now that you've known what personal selling is. Let's explore how it is conducted.
There are seven steps in the personal selling process:

1. Prospecting
2. Pre-approach
3. Approach
4. Sales presentation
5. Handling objections
6. Closing
7. Follow-up

Personal selling process: prospecting

Prospecting means looking for prospective customers or leads. Marketers can do this
through online research, in-person networks or cold calls.

One crucial part of prospecting is lead qualification. That means choosing the right
lead to contact and approach with a sales pitch. This step is vital as unqualified leads
can waste a lot of the company's time and resources. They won't make a purchase no
matter how much effort you put into the sales pitch.

Personal selling process: pre-approach

After selecting the qualified leads, the salesperson must prepare for the first contact
with them. This means contacting the prospect via email or call to learn more about their
needs and to set up a meeting for further discussion.

The primary objective of pre-approach is to collect customer data and prepare the sales
pitch. No selling takes place at this stage yet.

Personal selling process: approach

When the solution is ready, the salesperson can approach and meet the customers in
person (or by phone/video, depending on the situation).
The first impression is essential here as it can make or break the coming sales pitch.
The goal of the approach is simple, though not easily executed - "hook" the customers
and create a smooth transition into the sales demonstration.

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Personal selling process: sales presentation

The sales presentation is a crucial part of the personal selling process. A sales
presentation is a pitch the salesperson delivers to convince customers to buy. During
the pitch, the salesperson will discuss the product features and why the customers
should purchase them. The key to a good sales presentation is to follow the AIDA
model - capture attention, hold interest, arouse desire, and include a clear Call-To-
Action.

AIDA was developed by the advertising pioneer E. St. Elmo Lewis.

A landing page of a company's product or service is a good example of a sales
presentation in written form. It consists of a captivating headline to capture the
reader's attention, a list of product features and benefits, testimonials to justify claims
and an actionable CTA.

Personal selling process: handling objections

The sales presentation is tough, but the actual challenge lies in handling customer
objections. When you propose an idea, there's a good chance it will be rejected. This is
not to say the customer will never buy your product, but they might not be ready to
make the purchase quite yet.

Objections can be genuine or mere excuses. It would require the salesperson to learn
the reasons behind the objections to counter them.

Personal selling process: closing

Closing is where the sales process wraps up. Both parties have reached a decision.
Closing means bringing the negotiation to an end and coming to an agreement.

Personal selling process: follow-up

Even when the deal is closed, the salesperson has to follow up to assure customers
that the deal will be carried out correctly. After-sale follow-up is also an opportunity for
the company to build long-term relationships with customers.

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Personal Selling Process Examples

There are many examples of personal selling in real life. This section will look at three
examples in the travel, real estate, and automobile industry.

Personal selling process example: travel industry

A lot of personal selling takes place in the travel industry, especially in holiday deals and
packages. A good example is when a travel agent arranges a tour for clients in an
unfamiliar city. In this case, he might want to contact a local tour guide and ask for a
partnership.

The process may require the travel agent to meet the local guide face-to-face and then
discuss the reason and the benefits the tour guide can gain from the partnership. If the
tour guide agrees with the condition, the travel agent can discuss further details such
as customer needs and how the two parties will split the profit.

Personal selling process example: real estate

Personal selling is also commonplace in real estate. For example, in a property-buying

deal, the real estate agent will meet the customer in person to discuss their needs and
preferences for a home. He then looks actively in the market for property on sale and
directs it back to the customer.

If the customer likes the property, the travel agent will arrange a viewing date with the
host. After viewing several properties, the customer can pick the one they want, and the
travel agent will direct the buying request to the house owner. More negotiation will
follow, and the deal is closed when both parties, the host and prospective tenant, reach
an agreement.

Personal selling process example: the automobile industry

A car is also a product for personal selling as people spend a lot of money on them. A
car deal would require the car seller to first email, text, or call the prospective buyer to
see if they are genuinely interested and then arrange a test drive. During the test drive,
the car seller can discuss the car's features and learn about the customers' specific
needs and budget.

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4. Theories of selling
Definition: The theories of selling implies to the behaviour of the salesperson towards
the prospect or the customer, which ensures the active sale of goods or services. The
selling theories gained significance due to the emerging role of the salesperson
in marketing since a seller acts as a marketer too.

Building a strong relationship with the customers is essential for the salesperson to
create the brand image since he/she is the face of the company.

Terminologies Used

Selling: Selling is the exchange activity carried by the organizations and individuals to
fulfil the needs of the consumers to earn profit in return.

Salesperson: The one who represents the company in front of the customers and is
responsible for the sales of goods or services, is known as a salesperson.

Prospect: The prospect refers to the lead or prospective customer whom the
salesperson needs to convince for closing a sales deal.

Let us now understand the different selling theories in detail below.

Stimulus-Response Theory

The salesperson’s application of the correct stimulus with the appropriate efforts for
acquiring the desired response from the prospect is defined as the stimulus-response
theory.

Given below is the diagram, which clearly explains how this model functions:

Following are the four essential actions or stimuli over which the salesperson holds a
command and can modify according to the situation, are as follows:

1. Self: The salesperson can groom oneself to be presentable; in terms of body

language, physical appearance, communication skills, mannerism, voice pitch and
tone.
2. Price Concession: The salespeople have limited control over the discount or
price concession provided to the prospects who are considered to be valuable for
the organization.
3. Price Change Proclamation: The change in product price can be declared by the
salesperson anytime, according to his/her convenience.
4. Preferential Treatment to Valuable Customers: The buyers who usually procure
goods in bulk quantity and make instant payments on their purchase, are offered
various price concessions and other privileges by the salesperson.

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Shortcomings of Stimulus-Response Theory

There are certain limitations due to which this theory was criticized. Some of these are
as follows:

• The prospect has no say in the whole selling process and plays a passive role,
where he/she only needs to follow the salesperson blindly.
• In a case where the prospect is not fully assured with his/her purchase, may even
face the situation of post-purchase disagreement.
• At times, a manipulative salesperson cheats on the prospect, by using the
consumer’s weakness as a stimulus for selling a product.
• The application of this approach is limited to the selling oriented organizations,
which has a primary motive of increasing the sales volume.
• This theory ignored the role of relationship management in carrying out selling
activities.
• It emphasized the presentability and interactive skills of the sales personnel, along
with giving liberty to take decisions for closing the sales deals, which adversely
affects the profitability. Since the salespeople tremendously decreased the price
and increased the credit period.

In simple terms, the stimulus-response theory enlightens the repetitive actions of a

salesperson which initiates the customer’s positive response towards the product or
service.

Product-Oriented Selling Theory

In this theory, it is assumed that the prospect or buyer has no idea about the new
product and scientific or technological advancement. Neither they know about the
benefits or impact which the new products or technology can create for the prospects.

Therefore, in such a situation, the product-oriented selling style is adopted, where the
salespeople need to spread awareness about the product by specifying its features,
advantages, benefits and usage, to the prospects.

It is believed that this strategy will not only make the prospect familiar to the new
product but may also motivate or pursue him/her to purchase the product.

Here, the customer is targeted indirectly with slight influence through motivation. This
theory is usually applied in organizations dealing in software projects, computers,
machinery, pharmaceutical, etc.

The following image represents the working of product-oriented selling theory:

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In the above diagram, the maximum i.e., almost 85% of the time, interaction is carried
out by the salesperson, where he/she explains and presents the product features in
front of the prospect.

The only drawback of this theory is that, if the salesperson fails to understand the
present need of the prospect, or is unable to associate this requirement with the
benefits of the new product; then the buyer won’t show any interest in purchasing the
product.

Need Satisfaction Theory

The need satisfaction theory brings forward an interactive approach or a win-win

assumption, where the prospect and the salesperson communicate with each other to
ensure mutual satisfaction of both the parties.

The salesperson enquires and understands the requirements, wants and

expectations of the prospect and then presents a suitable product to achieve consumer
satisfaction.

Here, the salesperson gets a chance to associate the product features with the
prospect’s needs and desires. The salesperson has the power to convince the buyer
by highlighting the benefits the product will generate to satisfy his/her specific
requirements. In this approach, even the prospect feels valued and listened.

Stages of Need Satisfaction Theory

The process of need satisfaction theory can be identified through the following three
steps:

Need Development

The initial phase of this theory emphasizes on generating the need for the product. The
salesperson interacts with the prospects to take feedback about their contentment with
the former products along with proactive enquiry of their present needs and
requirements.

This step helps to gather sufficient information on what the consumer wants and past
product performance.

Need Identification

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In the next step, the salesperson sums up the information collected in the development
stage and thoroughly analyzes the needs of the prospect. Then he/she confirms this
requirement with the buyer, to ensure complete understanding and clarification.

Need Satisfaction

The last stage is all about meeting the buyer’s needs appropriately. The salesperson
prepares a complete presentation on the product offering and its features which have
the potential of meeting the identified needs and wants of the prospect.

The salesperson also exhibits his/her interpersonal skills by resolving the queries and
doubts of the buyer. Thus, finally convincing him/her to purchase the product.

It is a customer-oriented approach where the priority is given to building a long-term

relationship with the consumers rather than just selling the products.

5. Sales forecasting
Sales forecasting is one of the most important things a company does. It fuels sales
planning and is used throughout an enterprise for staffing and budgeting. Despite its
importance, many organizations use outmoded practices that produce bad forecasts.

A comparison could be drawn with times past, when farmers depended on signals like
cats washing behind their ears or the ache in an old-timer’s knee to forecast the
weather. With the advent of supercomputers, weather prediction has vastly improved.
But in large enterprises, the tools used to foresee sales remain only somewhat more
reliable than an arthritic knee.

Just how dubious are sales forecasts? A full 55% of sales leaders, and 57% of quota-
carrying sellers lack confidence in forecast accuracy, according to Gartner.
While you might think this state of affairs will improve over time, Gartner estimates that
even by 2025, “90% of B2B enterprise sales organizations will continue to rely on
intuition instead of advanced data analytics or their B2B CRM, resulting in inaccurate
forecasts, sales pipelines and quota attainment.”

Sales forecasting is the process of estimating a company’s sales revenue for a specific
time period – commonly a month, quarter, or year. A sales forecast is prediction of how
much a company will sell in the future.
Producing an accurate sales forecast is vital to business success. Hiring, payroll,
compensation, inventory management, and marketing all depend on it. Public
companies can quickly lose credibility if they miss a forecast.

Forecasting goes hand-in-hand with sales pipeline management. Getting an accurate

picture of qualification, engagement, and velocity for each deal helps sales reps and
managers provide data for a reliable sales forecast.

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A forecast is different than sales targets, which are the sales an enterprise hopes to
achieve. A sales forecast uses a variety of data points to provide an accurate prediction
of future sales performance.

Why is sales forecasting important for business?

Sales forecasting isn’t just about predicting numbers; it’s foundational to any
business strategy. Here’s why:

• Strategic decision making: Sales forecasts provide a clear picture of where a

business is headed, which factors into making decisions about product launches,
market expansions, or even potential mergers and acquisitions. Understanding
these forward looking projections can help businesses make informed decisions that
align with their long-term goals.
• Resource allocation: A close-to-accurate sales forecast ensures that resources –
whether it’s labor, capital, or technology – are allocated efficiently. Proper allocation
prevents over-spending in areas that might not yield returns, and ensures that high-
potential areas receive attention and investment.
• Budgeting and goal setting: Accurate and reliable sales forecast data is
foundational to estimating future revenue and costs, as well as setting realistic yet
challenging goals for revenue teams. Such data-driven insights help businesses
allocate resources efficiently, ensuring that teams are equipped to meet their targets
while also safeguarding a company’s financial health.
• Proactive problem solving: One of the most significant roles for sales forecasting
is the ability to spot potential issues before they become major problems. For
example, if a sales team is trending below its quota, sales managers can take timely
action, preventing minor setbacks from escalating into significant ones.

Essentially, sales forecasting is like a compass that guides a business through

unpredictable markets. It offers foresight and paves the way for sustained growth. It
may be a critical differentiator between businesses that stay ahead of the curve and
those that fall behind.

Three main sales forecasting methods and techniques

Although different organizations can have vastly different sales structures and
processes, the majority tend to use one or a combination of the following three primary
approaches to sales forecasting:

1. Use of historical data to forecast future results. Looking at historical data is

perhaps the most common as well as most straightforward approach. The data is
readily available, and it makes sense that variations based on factors like
seasonality and new product introductions would provide directional insight. The
limitation, of course, is that external, macro trends that impact sales aren’t
necessarily considered – at least not in a systematic fashion.

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2. Funnel-based forecasting. For many companies, the current state of the sales
funnel is viewed as the most accurate predictor of likely sales outcomes. As long as
sellers are providing accurate and frequently updated information about the state of
given pursuits, use of the funnel can be a reasonably reliable means upon which to
make forecasts.

3. Forecasting based on multiple variables. Given that both of the above

approaches have inherent limitations, some organizations are looking to build more
complex forecasting models that incorporate techniques such as intelligent lead
scoring alongside macro factors that are likely to impact the closing of deals. The
trick is to put in place an approach that’s sophisticated enough to be meaningful
without being too complex to manage and maintain.

Beyond these three foundational methods, there are other techniques often used for
sales forecasting, including:

• Regression-based analysis: Statistical analysis — specifically a regression-based

method — can help analyze the relationships between different micro and macro
variables to predict sales outcomes. For instance, it might analyze how a change in
advertising spend correlates with sales figures, offering businesses a clearer
understanding of market dynamics.
• Quantifying lead potential for revenue projection: This method analyzes various
value attributes such as past interactions, purchase history, and engagement
metrics, to assign a value to each lead. This approach can help prioritize efforts by
helping businesses focus on the most promising leads.
• Forecasting based on the length of the sales cycle: With this technique, an
enterprise takes into account the typical duration of a sales cycle in predicting future
sales. By understanding how long it generally takes to convert a lead into a sale,
businesses can better anticipate their revenue streams, making for more accurate
forecasting.
• Combining data with seasoned intuition: This approach combines hard data with
the seasoned intuition of veteran sales professionals. By leveraging the experience
and insights of a sales team, businesses can make predictions that account for
subtleties that might not be immediately evident in the numbers.

Many businesses combine forecasting techniques to navigate market fluctuations, while

other businesses might rely on a single forecasting method that they’ve found works
reliably well for their individual environment. The choice often hinges on the unique
challenges and nuances of each enterprise.

• Common sales forecasting mistakes

The pressure’s on for sales teams to deliver, putting the spotlight on forecasting. Facing
stiff competition and an uncertain market, expectations for salespeople keep rising –
and forecasts are the means by which sales activity, and by extension the health of the
business, is most readily monitored.

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Unfortunately, enterprises continue to make the same mistakes in their forecasting
processes. Here are some of the common pitfalls:

1. Sales data fails to provide insight into deal status. A limitation of existing
forecast approaches is they are heavily reliant on sellers to provide accurate
information about the status of specific opportunities. Given the pressure on sellers,
it’s not surprising that the information they provide is often rosier than the reality.

2. Time-consuming manual processes cut into valuable selling time. It’s estimated
that sales reps spend 2.5 hours per week on forecasting, while their managers
spend an average of 1.5 hours. Every hour that’s devoted to these time-consuming –
and manual – activities would be better spent on actual sales.

3. In the push to commit revenue, accuracy is often sacrificed. Under pressure to

provide positive numbers, sellers typically overestimate the number of deals that will
close. Perhaps not surprisingly, 79% of sales organizations report typically missing
their forecasts by more than 10%. Meanwhile, 54% of the deals forecast by reps
never close.

Sales audit process: 5 sales audit steps to better forecast & plan spend
Learn the best practices for the sales audit process, including what it is, who to include,
what questions to ask, and how to complete the audit.

Building the basics: Key steps to forecasting sales accurately

Fortunately, there are ways sales organizations can build a forecast process that
helps achieve greater accuracy – and, ultimately, better sales results.
At the most fundamental level, improving sales forecasting means using data to more
accurately predict performance and manage planning to ensure sales success. This
includes steps like:

1. Establish a common agreement about the sales process. Seems like a no-
brainer, right? Your sales teams operate from a common lexicon about the sales
funnel and the stages within it that your organization employs. In reality, there’s
frequently a genuine disconnect. To avoid this, codify a common sales process with
clear stages and a consistent vocabulary so that every team member structures their
work the same way, and the stages of the pipeline mean the same thing to
everyone.

2. Set realistic sales goals or quotas and communicate them. Again, this may
seem obvious. But many companies either set unrealistic sales quotas, or fail to
effectively communicate individual goals and how they ladder up to the broader plan.
Set realistic and measurable sales goals based on past performance and market
conditions, so every team member knows their targets and how they contribute to a
larger plan.

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3. Benchmark your basic sales metrics. Forecasting involves using historical data to
effectively estimate future results. Benchmarking ensures there’s a sound basis for
comparison with historic data, and is more effective when combined with a robust
CRM system to track leads, sales stages, and customer relationships with real-time
data and metrics for forecasting revenue.

4. Understand your current sales pipeline. If you want to achieve better forecasting,
accuracy starts now. New technologies provide sales teams with intelligence that
enables them to scrub leads that aren’t actually viable, realistically assess those that
are, rescue ones at risk, and commit to a higher degree of precision going forward.

5. Choose your forecasting techniques and test often. Determine a predictive

method that’s best suited for your business model and market complexity.
Continually test these methods to improve accuracy, and change the approach
based on market conditions.

6. Integrate data from marketing, product, and finance. Leverage data from across
departments to get a more realistic view of business performance. By integrating
data, you’ll not only get a more accurate representation of the market potential, but
also spot internal constraints. This can provide more realistic predictions that guide
business decisions.

7. Glean insights by reviewing previous forecasts against outcomes. Implement a

process of continuous improvement by conducting periodic assessments of past
forecasts versus realized results. This retrospective analysis can help identify
patterns in forecasting performance and areas where new methods might be
required.

8. Formalize and iterate the process. Document your forecasting process and make
it an integral part of the sales strategy. With every iteration, revisit the process and
improve with new data and insights so that sales forecasting remains relevant and
adaptable to changing conditions internally and externally.

6. Sales budgets

Sales budgets are typically monthly or quarterly presentations of what a company

expects to make in sales (both in dollar and unit amounts) for a specific budgeting
period. These sales expectations are calculated based on various departments’
knowledge of the products being sold, as well as their expectations for the future.

For example, marketing department managers might provide information of upcoming

holiday sales promotions which may drive more sales during that budgeting period than
a sales budget during a non-holiday season. Product managers might make note of an
upcoming release of a new product and how that might impact sales.

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In short, preparing a sales budget is a team effort that requires a lot of cross-department
collaboration and communication.

Objective of Sales Budgeting

The purpose of a sales budget is to set expectations for the sales period by leveraging
resources and maximizing a company’s profit. It also acts as a planning tool that also
allows specific departments to know exactly what to expect during the budgeted
timeframe to leverage their own resources and coordinate effectively with other
departments.

Sales budgets also provide sales teams a goal to strive for. Making more sales than
what is expected in the sales budget is a favorable condition that results in an overall
win for the company. That said, a lot more goes into creating a sales budget than just
setting low expectations to get a “win”.

Components of a Sales Budget

If you’re involved in corporate planning, you are likely already well-aware that most
collaborative planning takes place in a spreadsheet – rather, multiple spreadsheets. A
sales budget is no different, but it’s best to find a spreadsheet that you’re comfortable
working with. Using a spreadsheet that’s too simplistic might overlook some of the
things that your company will need to factor in. Too complex, and you may get too
bogged down in the details to focus on actually running your business.

Whatever spreadsheet you use, your sales budget should at least include the following
elements:

• Income Statement: Reports net income, providing insight into a company’s overall
operational effectiveness. Mathematically calculated: Net Income = (Revenue +
Gains) – (Expenses + Losses)
• Balance Sheet: Reports a company’s assets, liabilities, and shareholders’ equity
during a specific budgeting period.
• Cash Flow Statement: Put plainly, a cash flow statement reports inflows of cash
received and outflows of cash spent.

All three of these elements will help drive the creation and upkeep of your sales budget.
Find or create templates that work well for you and your business. These spreadsheets
will provide invaluable insight while you’re creating your sales budget.

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How to Prepare a Sales Budget

Besides having a handle on the basic components that go into creating a sales budget,
there are still plenty of other considerations that need to be taken into account. Here’s a
step-by-step guide for setting up your sales budget:

1. Select a Period for the Budget

Your first step is to decide what time period you want to budget for. Try to go with a
monthly or quarterly budget. Annual sales budgets offer a better high-level overview
from a full-year perspective, but might miss out on some of the more nuanced details
that can be picked up in a monthly or quarterly budget.

2. Gather Products and Sales Prices

Take inventory of all of the products that you’re currently selling and the price that they
are currently selling for. If you have any upcoming new products that you’re planning to
sell, be sure to note that information, as well as any upcoming price changes to your
current product offerings.

3. Take a Look at Historical Sales Data

Pull any previous sales data you may have that aligns with the timeframe that you’re
creating for your sales budget. For example, if you’re creating a sales budget for July of
this year, pull sales data from July of the previous years. This is an easy way to set
expectations for your sales budget while also being an opportunity to identify sales
trends that you can apply to your overall sales strategy.

4. Look at Industry Benchmarks

Get an idea of what the rest of the industry looks like by taking a look at the benchmarks
and sales data of other companies in your industry. The U.S. Bureau of Labor
Statistics provides financial data for public companies on its website. This is an
especially valuable step if you are a new business that doesn’t have historical sales
data.

5. Factor in Market Trends

Although historical sales data provides insight into how your company has trended in
the past, it doesn’t necessarily guarantee that trend will continue. Take a look at the
actual market trends within your industry – both past and present – to ensure your
expectations align with what’s happening in your industry.

6. Consider the Size of Your Sales Team

Sales reps will ultimately drive your sales so make sure to factor in the size of your team
to ensure your sales budget aligns with your sales team’s capacity.

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7. Talk to Your Sales Reps

Talking with your sales reps is a great way to set expectations since they are the ones
dealing with customers directly. They are also likely a wealth of knowledge when it
comes to gaining insights about current market trends.

8. Talk to Your Customers

Interacting with your customers directly is also a great way to learn more about their
expectations, as well as what they may be planning on purchasing from your company
in the future. This can have an added bonus of building positive relationships with your
customers, which can lead to repeat business.

9. Evaluate Your Sales Prospect Numbers

Prospective customers will play a large role in setting up your expectations. Take a look
at the percentage of prospective customers that were converted into actual sales from a
previous similar sales period and compare it with your current sales funnel.

10. Create the Budget

At this point, you should have plenty of insights to start building out your sales budget.
Be sure to keep reviewing your budget throughout the sales period to make sure
everything is on track or if you need to make any on-the-fly adjustments.

Example of a Sales Budget

Here are some examples of a sales budget to give you an idea of how they can look:

Example #1

This example is about as simple as it gets, capturing total budgeted sales for each
quarter based on how many units are expected to be sold multiplied by the unit selling
price. This is a great starting point for a sales budget, but it is recommended that you
factor in other considerations such as potential sales promotions. Of course, there may
be deeper context behind these expected sales numbers depending on if additional due
diligence has been conducted.

Example #2

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In this example, we see that the price per unit is scheduled to increase over time. We
also see that promotional sales are included on this sales budget, which ultimately
impacts the expected total net sales. Having this information available is helpful for
knowing what, if any, changes are coming up, empowering your sales reps to know
what kind of details they should include in their sales pitch when meeting with clients.

Example #3

Similar to Example #2, this table shows how a monthly sales budget can be a bit more
detailed. It shows off expected numbers for individual months rather than quarters. In
this example, sales should ramp up throughout the year. But the increases aren’t quite
as dramatic as they are when captured quarterly.

7. Determining 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:

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.

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.

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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 persons are equally efficient, which is generally not true. One
way to overcome this shortcoming is to adjust the sales force size, determined in the
last step, for efficiency. The sales force can be classified into different categories based
on their efficiency and the actual number of sales persons required can then be
calculated with this adjusted number.

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.

8. Staffing the sales force

Staffing the sales force involves recruiting, selecting, training, and managing individuals
who are responsible for selling a company's products or services. Here's a step-by-step
approach to staffing the sales force effectively:

1. Define Sales Objectives: Clearly outline the sales goals, targets, and performance
expectations that the sales force will be responsible for achieving. This provides a clear
direction for recruitment and performance evaluation.

2. Identify Sales Roles: Determine the specific roles and responsibilities within the sales
force, such as sales representatives, account managers, or sales specialists, based on
the company's sales strategy and customer needs.

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3. Recruitment and Selection: Identify candidates with the skills, experience, and
qualities necessary for success in sales roles. Utilize various recruitment channels, such
as job boards, social media, referrals, and recruitment agencies, to attract a diverse
pool of candidates. Conduct thorough interviews, assessments, and reference checks to
select the most suitable candidates.

4. Training and Development: Provide comprehensive training and ongoing

development programs to equip sales representatives with the knowledge, skills, and
tools needed to succeed in their roles. Training topics may include product knowledge,
sales techniques, customer relationship management (CRM) systems, and negotiation
skills.

5. Performance Management: Establish clear performance metrics and KPIs (Key

Performance Indicators) to measure the effectiveness and productivity of the sales
force. Regularly review performance against these metrics and provide feedback,
coaching, and support to help sales representatives improve their performance.

6. Motivation and Incentives: Implement motivational strategies and incentive programs

to inspire and reward sales performance. This may include commission-based
compensation, bonuses, recognition programs, sales contests, and career
advancement opportunities.

7. Team Building and Collaboration: Foster a positive and collaborative work

environment within the sales force to encourage teamwork, knowledge sharing, and
mutual support. Facilitate regular team meetings, brainstorming sessions, and
collaboration opportunities to enhance communication and synergy among team
members.

8. Technology and Tools: Provide sales representatives with access to technology tools
and resources that streamline sales processes, enhance productivity, and improve
customer interactions. This may include CRM software, sales enablement tools,
communication platforms, and mobile devices.

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9. Continuous Improvement: Encourage a culture of continuous learning and
improvement within the sales force. Regularly evaluate sales processes, strategies, and
outcomes to identify areas for optimization and innovation. Encourage feedback from
sales representatives and incorporate their insights into decision-making processes.

By following these steps and investing in effective sales force staffing and management
practices, companies can build a high-performing sales team capable of driving revenue
growth, building customer relationships, and achieving long-term business success.

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 UNIT-2

1. Motivation of sales force

Motivating the sales force is essential for driving performance, achieving sales targets,
and fostering a positive work environment. Here are some effective strategies for
motivating sales teams:

1. Set Clear Goals and Expectations: Clearly define sales goals, targets, and
expectations, and ensure that they are realistic, achievable, and aligned with the
company's overall objectives. Providing clarity on what needs to be accomplished helps
sales representatives focus their efforts and stay motivated.

2. Offer Incentives and Rewards: Implement incentive programs such as commissions,

bonuses, and performance-based rewards to recognize and reward sales
achievements. Tailor incentives to individual preferences and motivations to maximize
their effectiveness in driving desired behaviors and outcomes.

3. Provide Professional Development Opportunities: Invest in training, coaching, and

skill development programs to help sales representatives enhance their knowledge,
capabilities, and confidence. Offering opportunities for career advancement and
personal growth demonstrates a commitment to supporting the professional
development of sales team members.

4. Foster a Positive Work Environment: Create a supportive and inclusive work

environment where sales representatives feel valued, respected, and appreciated.
Encourage open communication, collaboration, and teamwork among team members to
build strong relationships and morale.

5. Offer Flexibility and Autonomy: Empower sales representatives by providing them

with flexibility and autonomy in how they manage their work and achieve their goals.
Trusting them to make decisions and take ownership of their tasks can increase
motivation and job satisfaction.

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6. Recognize and Celebrate Success: Acknowledge and celebrate individual and team
successes, milestones, and achievements. Publicly recognize outstanding performance,
share success stories, and express appreciation for the hard work and dedication of
sales team members.

7. Provide Constructive Feedback: Offer regular feedback and coaching to help sales
representatives improve their performance and overcome challenges. Focus on
providing specific, actionable feedback that highlights areas for improvement and offers
practical suggestions for development.

8. Promote Healthy Competition: Foster a spirit of healthy competition within the sales
team by setting up friendly contests, challenges, or leaderboards. Competition can
motivate sales representatives to push themselves to excel and achieve their goals.

9. Lead by Example: Sales leaders and managers should lead by example by

demonstrating enthusiasm, commitment, and a strong work ethic. Their positive attitude
and behavior can inspire and motivate sales team members to strive for excellence.

10. Listen to Feedback: Actively listen to feedback and suggestions from sales team
members regarding their motivation, challenges, and needs. Incorporate their input into
decision-making processes and seek opportunities to address their concerns and
preferences.

By implementing these strategies and continuously evaluating and adjusting

motivational tactics, sales leaders can create an engaging and supportive environment
that empowers sales representatives to perform at their best and achieve outstanding
results.

2. Sales force compensation

Sales force compensation refers to the methods and structures used to reward sales
representatives for their performance and achievements. Designing an effective
compensation plan is crucial for motivating sales teams, driving desired behaviors, and
aligning their efforts with the company's sales objectives. Here are some key
components and considerations for designing sales force compensation plans:

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1. Base Salary: A fixed base salary provides stability and ensures a minimum level of
income for sales representatives. The base salary should be competitive and reflect
factors such as experience, skills, and market conditions.

2. Commission: Commission-based compensation ties a portion of the sales

representative's earnings directly to their sales performance. Commissions are typically
calculated as a percentage of the value of sales generated or the margin achieved on
sales. Higher levels of sales result in higher commission earnings, providing a strong
incentive for driving revenue growth.

3. Bonuses: Bonuses are one-time rewards given to sales representatives for achieving
specific goals or milestones, such as surpassing sales targets, acquiring new
customers, or closing large deals. Bonuses can be based on individual performance,
team performance, or company-wide achievements.

4. Incentive Programs: Incentive programs offer additional rewards or perks to sales

representatives for achieving certain objectives or behaviors. These may include
incentives for upselling or cross-selling products, increasing customer retention, or
participating in training and development activities.

5. Sales Contests: Sales contests are short-term competitions designed to motivate

sales representatives and drive specific outcomes. Contests may offer prizes, rewards,
or recognition for achieving specific sales targets, reaching milestones, or exhibiting
desired behaviors.

6. Performance Metrics: Define clear and measurable performance metrics to evaluate

sales performance and determine compensation eligibility. Common metrics include
sales revenue, sales volume, profit margin, customer acquisition, customer retention,
and sales pipeline metrics.

7. Tiered Structures: Consider implementing tiered compensation structures that reward

higher levels of performance with progressively higher commission rates or bonuses.

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Tiered structures provide additional motivation for sales representatives to exceed
targets and drive continuous improvement.

8. Non-Monetary Rewards: In addition to financial compensation, consider offering non-

monetary rewards such as recognition, awards, career advancement opportunities,
flexible work arrangements, or access to exclusive events or experiences.

9. Fairness and Transparency: Ensure that the compensation plan is fair, transparent,
and easily understood by sales representatives. Clearly communicate the criteria,
calculations, and payout mechanisms to avoid misunderstandings or disputes.

10. Regular Review and Adjustment: Continuously monitor the effectiveness of the
compensation plan and make adjustments as needed to align with changing business
objectives, market dynamics, and sales performance trends. Solicit feedback from sales
representatives and stakeholders to identify areas for improvement and optimization.

By carefully designing and implementing sales force compensation plans that balance
financial incentives with performance objectives and organizational goals, companies
can motivate sales teams, drive revenue growth, and achieve long-term success in
competitive markets.

3. Management of sales territories and sales quotas

Managing sales territories and setting sales quotas are critical aspects of sales
management that help optimize sales performance and drive revenue growth. Here's
how to effectively manage sales territories and set sales quotas:

Management of Sales Territories:

1. Segmentation: Divide the market into distinct segments based on factors such as
geographic location, industry verticals, customer size, or purchasing behavior. This
segmentation helps allocate resources efficiently and target specific customer groups
effectively.

2. Territory Design: Assign sales territories to sales representatives based on

segmentation criteria and factors such as territory potential, workload, travel time, and
account density. Territory design should aim to balance workload and revenue potential
while maximizing sales coverage and customer engagement.

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3. Territory Alignment: Align sales territories with overall business objectives, sales
strategies, and go-to-market plans. Ensure that each territory has clear sales goals,
target segments, and sales resources allocated to support sales activities effectively.

4. Account Assignment: Assign customer accounts or leads to sales representatives

within their respective territories based on factors such as customer value, potential,
and sales rep expertise. Regularly review and adjust account assignments to optimize
sales coverage and ensure equitable distribution of opportunities.

5. Territory Management Tools: Utilize sales territory management tools and software
solutions to streamline territory design, visualization, and analysis. These tools help
sales managers make data-driven decisions, optimize territory performance, and track
sales activity effectively.

6. Training and Support: Provide sales representatives with the training, resources, and
support they need to succeed in their territories. Offer training on territory management
best practices, sales techniques, product knowledge, and market insights to help sales
reps maximize their impact.

7. Performance Monitoring: Monitor and evaluate territory performance regularly using

key performance indicators (KPIs) such as sales revenue, customer acquisition,
retention, and market share. Identify high-performing territories and areas for
improvement, and take corrective actions as needed.

❖ Management of Sales Quotas:

1. Goal Setting: Set challenging yet achievable sales quotas that align with overall
business objectives, sales targets, and revenue goals. Quotas should be specific,
measurable, and time-bound, providing clear direction and motivation for sales
representatives.

2. Historical Data Analysis: Analyze historical sales data, market trends, and sales
forecasts to inform quota setting. Consider factors such as seasonality, market
dynamics, product lifecycle, and competitive landscape when setting quotas for different
territories or sales channels.

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3. Quota Allocation: Allocate sales quotas to individual sales representatives, teams, or
territories based on factors such as sales potential, historical performance, account
size, and market opportunity. Ensure that quotas are fair, equitable, and reflective of
each salesperson's capabilities and responsibilities.

4. Incentives and Rewards: Tie sales quotas to incentive compensation plans, such as
commissions, bonuses, or sales contests, to motivate sales representatives and drive
desired behaviors. Provide rewards and recognition for achieving or exceeding quota
targets, fostering a culture of performance excellence.

5. Flexibility and Adjustments: Be flexible and responsive to changing market

conditions, customer needs, and internal priorities when managing sales quotas.
Monitor quota performance closely and be prepared to adjust quotas as needed to
address unforeseen challenges or capitalize on emerging opportunities.

6. Communication and Transparency: Communicate sales quotas clearly and

transparently to sales representatives, providing context on how quotas were
determined, expectations for achievement, and the importance of quota attainment to
overall business success. Encourage open dialogue and feedback to ensure alignment
and buy-in from sales teams.

7. Performance Tracking and Evaluation: Track and evaluate sales quota performance
regularly, providing feedback and coaching to sales representatives to help them
achieve their targets. Analyze variance between actual performance and quotas,
identifying root causes and opportunities for improvement.

By effectively managing sales territories and setting sales quotas, sales managers can
optimize sales performance, drive revenue growth, and empower sales teams to reach
their full potential in achieving business objectives.

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4. Sales contests

Sales contests are a popular way to increase motivation and productivity among
employees, but do they actually work? This blog post looks at the pros and cons of
sales contests to help you decide if they’re right for your business.

I remember when I was working in sales, my company would hold these big contests
every quarter. The prize was usually a trip or some kind of bonus. Everyone would get
super pumped up for it and we would all go above and beyond to try to win.

Looking back, I’m not sure if those contests really did anything to improve our
performance long-term. Sure, we’d see a spike in sales during the contest period, but
afterward, things would always go back to normal. And sometimes the stress of trying to
win could even lead to burnout among employees.

What is a Sales Contest?

A sales contest is an event where salespeople compete against each other to see who
can sell the most products or services. The contest may last for a certain period, or it
may be based on a certain number of sales. The winner of the contest may receive a
prize, such as a cash bonus, a paid vacation, or a new car.

How to Run an Effective Sales Contest

In three decades of running sales teams, I’ve picked up some valuable lessons about
successful sales competitions. Here are my top six takeaways.

1. Keep It Simple.

Your sales team should have no problem understanding how your contests work. When
it’s difficult to understand how you can win — or who is currently in the lead — their
enthusiasm for participating in your promotions will wane.

A simple way to encourage your salespeople to make more sales is to hold a simple
competition. You could reward your top-performing sales reps by giving them a prize, or
you could simply give rewards to the top five performers. By keeping it simple, you can
ensure that everyone understands the rules of the competition and stays motivated.

30
 As an additional bonus, they may be able to point out any flaws in the contest rules that
you might have overlooked.

By only running one campaign at once, you can focus your team members on the task
at hand.

2. It Should Be Fun.

Competitions can be a fun way for your sales team to get to know each other better. It
also helps with bonding and makes the experience memorable.

My team used to love it when I gave away my services as a prize for whoever sold the
most. I would do anything the winner wanted, from washing their car to cleaning their
apartment. This showed my team that I was dedicated to their successes and had a
great sense of humor.

If you want to show your team members how dedicated you are to helping them
succeed, consider hosting a fun competition. You could base it around an inside joke
that everyone in the office enjoys, and the winner could receive a gift card to a
restaurant that everyone loves.

3. Plan Your Contest with the Sales Team.

Ask your sales team what prizes they want. I once hosted an all-hands meeting with my
team where I asked them, “Do you need a team incentive?”

The answer was almost always “yes”. I would explain the rules of the competition, then
ask, “What prize or prizes would you like?”

This tactic has three main benefits:

• Your sales team will be more invested.

• The reward is what you know they want.
• Your salespeople will like the idea that you handed over the reins.
4. Provide Updates.

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Give your salespeople frequent updates on where they stand in your competition.
Depending on how quickly each sales cycle moves, you may want to give an update
every day or every week.

5. Keep Your Word.

In 2002, a Toyota winner was upset when she was given a toy Yoda instead of the car
that was promised.

She sued her employer and won.

Before you offer any prizes, calculate how much you’ll be on the hook if your sales team
blows it out of the park. You don’t want to promise something you can’t deliver on.

6. Distribute Prizes ASAP.

I once awarded my sales team their prize winnings a full nine months after they had
earned them. As you can imagine, they were not pleased.

The most important part of running a contest is making sure you distribute the rewards
as quickly as possible. This will encourage your team members to participate in more
competitions in the future.

What is the Purpose of Sales Contests?

Sales contests are a great way to incentivize behavior that you want to see more of
from your sales team. By offering prizes for things like the most number of new sales,
the most upsells, or the most cross-sells, you can encourage your team to focus on
activities that will help grow your business.

Managers can set up their own custom goals for sales reps, whether that goal is setting
up demos, making a sale, or anything else.

Prizes are important to any competition, so make sure you have set aside a portion of
your marketing budget for this.

When deciding what prize to offer, you should take into account the compensation of
your sales reps, the difficulty of the task you’re asking them to do, the added work they’ll
have to do, and how long the contest will last.

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Keep the contest light and fun. Your sales reps are already dealing with a lot of
negativity and pressure.

Sales contests are a great way to motivate your team and promote healthy competition.
Regardless of the size of your sales team, you can implement a contest that will get
your representatives excited and improve performance.

By offering prizes for the top performers, you can create excitement and encourage
friendly competition among your team. Not only will this improve morale, but it can also
lead to increased sales numbers.

My first foray into professional sales was when I was 17 when I was hired to sell shirts
outside Fenway. While that job was its challenge, the monotonous nature of daily,
repetitive, and unsuccessful phone calls was not.

As a sales manager, part of your job is to keep your team feeling positive and
motivated. You also want to make sure they have the tools they need to overcome the
inevitable rejection.

Sales teams everywhere are finding creative ways to make their workplace more fun.
From blasting loud music to using nerf guns, these tactics are becoming more and more
popular.

As a sales coach at Kinnek, I’ve found that these contest ideas have been incredibly
successful at getting my team motivated.

5. evaluating and controlling the performance of salespeople

Evaluating and controlling the performance of salespeople is crucial for ensuring that
they are meeting their targets, driving revenue growth, and contributing to the overall
success of the organization. Here's how to effectively evaluate and control the
performance of salespeople:

1. Establish Clear Performance Metrics: Define key performance indicators (KPIs) and
metrics that align with the organization's sales objectives and expectations. Common
metrics include sales revenue, sales volume, profit margin, customer acquisition,
customer retention, and activity metrics such as calls made, meetings held, and
proposals submitted.

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2. Set Realistic and Achievable Targets: Establish challenging yet realistic sales targets
and goals for each salesperson based on historical performance, market potential, and
business objectives. Ensure that targets are specific, measurable, attainable, relevant,
and time-bound (SMART).

3. Provide Ongoing Training and Development: Invest in continuous training, coaching,

and development programs to equip salespeople with the knowledge, skills, and tools
they need to succeed in their roles. Offer training on sales techniques, product
knowledge, market trends, and customer relationship management (CRM) systems.

4. Implement Performance Reviews: Conduct regular performance reviews and

evaluations to assess the performance of salespeople against established goals and
metrics. Provide constructive feedback on strengths, areas for improvement, and
development opportunities, and set action plans for performance enhancement.

5. Utilize Performance Management Systems: Implement performance management

systems or software solutions to track and monitor sales performance data, KPIs, and
progress towards targets in real-time. These systems provide visibility into individual
and team performance, enabling informed decision-making and timely interventions.

6. Provide Incentives and Recognition: Reward and recognize high-performing

salespeople for achieving or exceeding their targets and goals. Offer incentives such as
commissions, bonuses, or sales contests to motivate salespeople and drive desired
behaviors. Publicly acknowledge and celebrate success to boost morale and
engagement.

7. Address Underperformance Promptly: Identify underperforming salespeople early

and take proactive measures to address performance issues. Provide additional
training, coaching, or support as needed, and set clear expectations for improvement. If
performance does not improve, consider implementing performance improvement plans
or making necessary personnel changes.

8. Encourage Collaboration and Knowledge Sharing: Foster a culture of collaboration

and knowledge sharing among sales teams by facilitating regular team meetings,
brainstorming sessions, and best practice sharing. Encourage salespeople to learn from
each other's successes and challenges, and provide opportunities for peer support and
mentorship.

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9. Monitor Sales Activities and Pipeline: Monitor sales activities such as calls, meetings,
proposals, and follow-ups to ensure that salespeople are effectively managing their time
and resources. Track the sales pipeline to identify opportunities, assess deal viability,
and forecast future revenue.

10. Review and Adjust Sales Strategies: Regularly review and adjust sales strategies,
tactics, and processes based on performance feedback, market dynamics, and
changing business needs. Continuously seek opportunities for optimization, innovation,
and improvement to drive sales effectiveness and efficiency.

By implementing these strategies for evaluating and controlling the performance of

salespeople, organizations can maximize sales productivity, drive revenue growth, and
achieve sustainable business success.

6. Emerging trends in Sales Management

Global competition is intensifying. Domestic companies who never thought about foreign
competitors are suddenly finding them in their backyard. This is a challenge which sales
managers and salesperson must take on, they have to improve their personal selling
efforts not only in their countries but also in foreign countries. Selling goods and services
in global markets presents a challenge due to differences in culture, language, needs and
requirements.

Technological Revolution

Digital revolution and management information system have greatly increased the
capabilities of consumers and marketing organizations. Consumer today can get
information about products, compare it with other brand, place an order and place an
order instantly over the internet. This has led to a different kind of sales force who collects
information about internet users, markets and prospects of internet buyers. It is
mandatory for all companies to have their website now.

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To compete effectively, sales person and managers will have to adopt the latest
technology.

Customer Relationship Management [CRM]

Combining information technology with relationship marketing has resulted in customer

relationship management. Interestingly, the concept of relationship marketing came about
earlier by bringing quality, customer service and marketing together.

Relationship marketing aims in building long term satisfying relations with

key customers distributors and suppliers in order to earn and retain their long term
preference and business. CRM enable companies to provide excellent real-time service
by focusing on meeting the individual needs of each valued customer, through the use
of CRM software packages.

Sales Force Diversity

The demographic characteristics of sales force is changing and becoming more varied.
For example, more and more women are taking up careers in sales management and
selling. Also the education level of sales people is going up most of them holding a college
degree or a post graduate degree. Sales managers now have to handle a sales force of

36
these varied demographic, expectations of each and every individual is different and sales
manager needs to use different motivational tools against each one of them.

Team Selling Approach

The practice of team selling is more widely followed by most companies in recent years.
Team selling approach is used when company wants to build a long term mutually
beneficial relationship with major customers, who have high sales and profitable potential.
It is used for selling a technically complex product or a service to a potential customer.
The composition of team may vary depending upon the customer from top management,
technical specialist, customer service, etc…

Managing Multi-Channels

Multi-channel marketing system occurs when organization uses two or more marketing
channels to target one or more customer segments. Major benefits of multi-channel
marketing system are:

1. Lower channel cost

2. Increased market coverage
3. Customized selling

Multi-channel may also lead to conflicts and control problems, as two or more channels
may compete for same customer. A successful sales manager will have to effectively
manage conflict between the channels.

Ethical and Social Issues

Sales managers have ethical and social responsibilities. Sales people face ethical issues
such as bribery, deception (or misleading) and high pressure sales tactics. Today’s sales
managers have no choice but to ensure ethical standards from sales force otherwise they
may be out of business or even land up in legal problems.

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 UNIT-3

1. Distribution management and marketing mix

Distribution management is the process used to oversee the movement of goods from
supplier to manufacturer to wholesaler or retailer and finally to the end consumer.
Numerous activities and processes are involved, including raw good vendor
management, packaging, warehousing, inventory, supply chain, logistics and
sometimes even blockchain.

What Is a Distributor?
A distributor is an entity that supplies products to retailers and other businesses that sell
directly to consumers. Take, for example, a wholesale liquor distributor that supplies
alcohol to restaurants, grocery stores and liquor stores.

Other examples include a produce distributor that supplies lettuce, tomatoes and other
produce to restaurants; and a pharmaceutical distributor that supplies a variety of
prescription-controlled drugs to pharmacies.

Distribution vs. Logistics

Logistics refers to the detailed planning and processes involved with the effective supply
and transportation of goods. Logistics includes activities and processes such as supply
management, bulk and shipping packaging, temperature controls, security, fleet
management, delivery routing, shipment tracking and warehousing. It is perhaps easiest
to think of logistics as physical distribution.

Distribution is a management system within logistics that is focused on order

fulfillment throughout distribution channels. A distribution channel is the chain of agents
and entities that a product or service moves through on its way from its point of origin to
a consumer. Examples of distribution channels include ecommerce websites,
wholesalers, retailers and 3rd party or independent distributors. Distribution includes
activities and processes such as consumer or commercial packaging, order fulfillment
and order shipping. In short, distribution is most easily understood as commercial or
sales distribution.

Why Is Distribution Management Important?

Distribution management is first and foremost about organizing everything involved in

getting goods to the buyer in a timely fashion and with the least amount of waste.
Therefore, it has a direct impact on profits.

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What Is a Distribution Network and What Are the Benefits?

A distribution network is a connected group of storage facilities and transportation

systems. It is formed in accordance with a distribution strategy designed to move goods
from manufacturer to wholesalers, retailers or buyers.

Advantages of Distribution Management

Besides delivering higher profits, distribution management eliminates waste in a number

of ways, ranging from reduced spoilage to reduced warehousing costs since products
and goods can be delivered as needed (“just in time” inventory), rather than stored in
bigger bulk (“just in case” inventory).

Distribution management leads to decreased shipping charges and faster delivery to

customers, and it also makes things easier for buyers as it enables “one stop shopping”
and other conveniences and rewards, such as customer loyalty rewards programs.

Distribution Management Challenges

Distribution challenges can arise from a variety of disruptions. Natural disruptions

include severe weather events, raw material shortages (e.g. bad crop years), pest
damages, and epidemics or pandemics. Human disruptions include riots, protests, wars
and strikes.

Transportation disruptions include transport vehicle disrepair, maintenance downtimes

and accidents, as well as delayed flights and restrictive or new transportation
regulations such as those regularly seen in trucking.

Economic challenges include recessions, depressions, sudden drops or increases in

consumer or market demands, new or changes in fees or compliance costs, changes in
currency exchange values and payment issues.

Product disruptions include product recalls, packaging issues and quality control issues.
Buyer disruptions include order changes, shipment address changes and product
returns.

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Factors That Influence Distribution Management

Many things can influence distribution management. The five most common are:

1. Unit perishability – if it’s a perishable item then time is of the essence to prevent
loss,
2. Buyer purchasing habits – peaks and troughs in purchasing habits can influence
distribution patterns and therefore varying distribution needs that can be
predicted,
3. Buyer requirements — e.g. changes in a retailer’s or manufacturer’s just in time
inventory demands,
4. Product mix forecasting – optimal product mixes vary according to seasons and
weather or other factors and
5. Truckload optimization – relies on logistics and fleet management software to
ensure every truck is full to capacity and routed according to the most efficient
path.

Distribution Management Strategies

At the strategic level, there are three distribution management strategies:

1. Mass.
The mass strategy aims to distribute to the mass market, e.g. to those who sell to
general consumers anywhere.

2. Selective.
The selective strategy aims to distribute to a select group of sellers, e.g. only to
certain types of manufacturers or retail sectors such as pharmacies, hair salons,
and high-end department stores.

3. Exclusive.
The exclusive strategy aims to distribute to a highly limited group. For example,
the manufacturers of Ford vehicles sell only to authorized Ford dealerships, and
producers of Gucci-brand goods only sell to a narrow slice of luxury goods
retailers.

❖ Marketing Mix

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marketing mix?
Marketing mix is a selection of marketing tools that include several areas of focus that
can be combined to create a comprehensive plan. The term refers to a classification
that began as the 4 P’s: product, price, placement, and promotion, and has been
expanded to Product, Price, Promotion, Place, People, Packaging, and Process.
What are the 7 Ps of Marketing?
The 4 P’s marketing mix concept (later known as the 7 P’s of marketing) was introduced
by Jerome McCarthy in his book: "Basic Marketing: A Managerial Approach". It refers to
the thoughtfully designed blend of strategies and practices a company uses to drive
business and successful product promotion. Initially 4, these elements were Product,
Price, Place and Promotion, which were later expanded by including People, Packaging
and Process. These are now considered to be the “7 P’s” mix elements.

It can be difficult for a small business owner or marketing manager to know how to
establish a unique selling proposition or to reach the right customers, especially on new
platforms like the internet, with digital marketing.

Fortunately, the 7 Ps of marketing give you a framework to use in your marketing

planning and essential strategy to effectively promote to your target market.

You can also take into consideration elements of the mix in your day to day marketing
decision making process with the goal to attract the right audience to successfully
market to through your marketing campaigns.

The 7 elements of the marketing mix include the following:

1. Product (or Service)

Your customer only cares about one thing: what your product or service can do for
them. Because of this, prioritize making your product the best it can be and optimize
your product lines accordingly. This approach is called “product-led marketing.” In a
marketing mix, product considerations involve every aspect of what you're trying to sell.
This includes:

• Design
• Quality
• Features
• Options
• Packaging
• Market positioning

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There are five components to successful product-led marketing that are important for
product marketers to take into consideration:

• Get out of the way. Let your product or service sell itself. Focus your marketing
efforts on getting consumers to try what you have to offer so they can learn its
value for themselves.
• Be an expert (on your customers). Know your customer's needs and use that
knowledge to help communicate your product's value.
• Always be helping. Position yourself as an ally by creating informative content
that meets your target customers’ needs, and they'll be more likely to buy from
you. (This is also called content marketing.)
• Share authentic stories. Encourage happy customers to share their experiences
and tell others why they appreciate your brand.
• Grow a product mindset. Focus on your product before you consider how to
sell it. Invest in development, and the product quality will take care of the rest.

2. Price
Many factors go into a pricing model. Brands may:

• Price a product higher than competitors to create the impression of a higher-

quality offering.
• Price a product similar to competitors, then draw attention to features or benefits
other brands lack.
• Price a product lower than competitors to break into a crowded market or attract
value-conscious consumers.
• Plan to raise the price after the brand is established or lower it to highlight the
value of an updated model.
• Set the base price higher to make bundling or promotions more appealing.

Consider what you're trying to achieve with your pricing strategy and how price will work
with the rest of your marketing strategy. Some questions to ask yourself when selling
products:

• Will you be offering higher-end versions at an additional cost?

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 • Do you need to cover costs right away, or can you set a lower price and consider
it an investment in growth?
• Will you offer sales promotions?
• How low can you go without people questioning your quality?
• How high can you go before customers think you’re overpriced?
• Are you perceived as a value brand or a premium brand?

3. Promotion
Promotion is the part of the marketing mix that the public notices most. It includes
television and print advertising, content marketing, coupons or scheduled
discounts, social media strategies, email marketing, display ads, digital strategies,
marketing communication, search engine marketing, public relations and more.

All these promotional channels tie the whole marketing mix together into an
omnichannel strategy that creates a unified experience for the customer base. For
example:

• A customer sees an in-store promotion and uses their phone to check prices and
read reviews.
• They view the brand's website, which focuses on a unique feature of the product.
• The brand has solicited reviews addressing that feature. Those reviews appear
on high-ranking review sites.
• The customer buys the product and you’ve sent a thank you email
using marketing automation.

Here are the ways you can use these channels together:

• Make sure you know all the channels available and make the most of them to
reach your target audience.
• Embrace the move toward personalized marketing.
• Segment your promotional efforts based on your customers' behavior.
• Test responses to different promotions and adjust your marketing spend
accordingly.
• Remember that promotion isn't a one-way street. Customers expect you to pay
attention to their interests and offer them solutions when they need them.

4. Place
Where will you sell your product? The same market research that informed your product
and price decisions will inform your placement as well, which goes beyond physical
locations. Here are some considerations when it comes to place:

• Where will people be looking for your product?

• Will they need to hold it in their hands?
• Will you get more sales by marketing directly to customers from your own e-
commerce website, or will buyers be looking for you on third-party marketplaces?

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 • Do you want to converse directly with your customers as they purchase, or do
you want a third party to solve customer service issues?

5. People
People refers to anyone who comes in contact with your customer, even indirectly, so
make sure you're recruiting the best talent at all levels—not just in customer service and
sales force.

Here’s what you can do to ensure your people are making the right impact on your
customers:

• Develop your marketers’ skills so they can carry out your marketing mix strategy
• Think about company culture and brand personality.
• Hire professionals to design and develop your products or services.
• Focus on customer relationship management, or CRM, which creates genuine
connections and inspires loyalty on a personal level.

6. Packaging
A company's packaging catches the attention of new buyers in a crowded marketplace
and reinforces value to returning customers. Here are some ways to make your
packaging work harder for you:

• Design for differentiation. A good design helps people recognize your brand at a
glance, and can also highlight particular features of your product. For example, if
you’re a shampoo company, you can use different colors on the packaging to
label different hair types.
• Provide valuable information. Your packaging is the perfect place for product
education or brand reinforcement. Include clear instructions, or an unexpected
element to surprise and delight your customers.

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 • Add more value. Exceed expectations for your customers and give them well-
designed, branded extras they can use, like a free toothbrush from their dentist, a
free estimate from a roofer, or a free styling guide from their hairdresser.

7. Process
Prioritize processes that overlap with the customer experience. The more specific and
seamless your processes are, the more smoothly your staff can carry them out. If your
staff isn't focused on navigating procedures, they have more attention available for
customers—translating directly to personal and exceptional customer experiences.

Some processes to consider:

• Are the logistics in your main distribution channel cost-efficient?

• How are your scheduling and delivery logistics?
• Will your third-party retailers run out of product at critical times?
• Do you have enough staff to cover busy times?
• Do items ship reliably from your website?

If you get more than one customer complaint about any process, pinpoint what's going
wrong and figure out how to fix it.

2. Marketing channels
A marketing channel is the type of medium used to advertise your company. Learn how
to choose the right marketing channel for your business here.
Amarketing channel is the type of medium used to advertise your company. Learn how
to choose the right marketing channel for your business here.

Digital marketing channels have been around since the earliest days of the Internet, but
the marketing channel definition has changed with the times.

Back in October of 1994, if someone were to ask "What are marketing channels?" there
would have been only one answer: Display ads.

AT&T sponsored a banner reading "Have you ever clicked your mouse right HERE?
YOU WILL”. And, there being very few other sponsors of banner advertising, over 44%
of people who had the Internet at the time clicked on that one ad.

Fast forward to 2022, and Smart Insights tells us that only 0.1% of Americans and
0.09% of Canadians will click on any given Internet display banner. Clearly, if you were
to pose the question "What are marketing channels?" In 2022, the answer would not be
"Oh, they are display ads."

But the variety and complexity of Internet marketing channels have tremendously
increased in recent years. Digital marketing has evolved beyond paid advertising and
other paid marketing channels. There are a variety of effective marketing channels that
deliver content and promotion.

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Connect with people when it matters with our suite of automation features: customized
purchase paths, email scheduling, custom triggers, and more.
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Types of marketing channels
In 2022, the answer to the question "What are marketing channels?" includes digital
advertising, events, influencer marketing, search engine optimization (SEO), content
marketing, word-of-mouth, and traditional marketing through mass media and print.

No matter what your marketing channel's definition, your marketing goals probably
include raising awareness of your brand, generating leads, improving your conversion,
and boosting repeat business.

As you will see in our examples to answer the question of "What are channels in
marketing?" there is a digital marketing channel for every online business.

Digital advertisements

Digital advertisements enable you to use images, audio, and video marketing to
communicate your message, market products, and reinforce your brand presence
online. Display ads appear on websites, email platforms, social media posts, and many
other digital channels, usually in the form of a banner, like the digital advertisement for
AT&T we mentioned earlier.

Digital display advertising doesn't target keywords. It isn't limited to search engine
results. There are many more pages for digital advertising on websites than there are
for search ads on search engine results.

For those reasons, the cost per click for digital advertising is usually a lot lower than the
cost per click you would have to pay for Google ads. However, you have to do some

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research to make sure that you place your ads on pages that have content that attracts
site visitors who are interested in what you have to sell.

One of the advantages of display advertising is its capacity for tracking. If someone
clicks on your display ad to go to your website and then doesn't convert, you can track
them with a cookie. You can use this information to target your market with a more
effective ad later. When you achieve contextual relevance with your ads, digital
advertising becomes extremely cost-effective.

Email

Email marketing isn't exactly the most modern technology available to digital marketers,
but it is familiar, measurable, and well-understood.

Email marketing also allows you to take advantage of some of the latest tools of content
marketing, such as automation and personalization while staying within your marketing
budget. And even in 2022, 63% of digital marketers say that email is their top tool for
generating leads and 73% say email is their cost-effective driver of new revenues.

Here is a simple fact that can make the difference between failure and success for your
email marketing campaign:

In 2022, SuperOffice tells us, 62 percent of emails are read on a phone. Another 28
percent are read on a pad. Only 10 percent of emails are read on a desktop or laptop
computer.

If you want to attract potential customers with email marketing, your messages must be
framed for reading on a phone. And if your site must be fast-loading and responsive, or
potential customers will simply swipe to the next message.

Events

If you want to set your brand apart, you can't spend all your time building a digital
presence. You occasionally need to meet your target audience face-to-face. Product
reveals, brand reveals, client conventions, trade shows, and expos are all opportunities
to exercise your sales skills in person.

Event marketing is a strategy for promotion that involves in-person contact between the
people behind the brands, their influencers, and their customers. Every event is a little
different. It is always necessary to provide at least slightly different content for different
audiences, taking into consideration local culture.

Why is Event Marketing Important?

Most digital marketing professionals are finding that as the tools of online marketing
become increasingly sophisticated, maintaining a good return on investment on

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marketing dollars requires constant innovation. If you are frustrated with open rates and
click-through rates, consider hosting an event.

A survey sponsored by Aventri reported that 31% of marketers believe that event
marketing is their single most effective tool for increasing revenues. Perhaps more
importantly, 87% of executives believe in the power of events, and 84% of customers
attending events stated that they had a more positive view of the product, service,
brand, or company being promoted after they attended an event.

Influencer marketing

Influencer marketing has emerged as an alternative way of reaching consumers who

have grown tired of other forms of advertising.

Backlink reports that 45 percent of consumers have ad blockers on their computers and
24 percent have ad blockers on their phones. But nearly everyone is on social media.

Social influencers blog about their lives and their experiences with the brands that
sponsor them. The job of a social influencer is to establish online relationships. A
byproduct of those social media relationships is interest in sponsored products.

Influencer marketing is relational, not transactional. You are building relationships with
your brand, not sales of your products. But over time, you will get new customers who
want to try out your products that social influencers mention online.

Search engine optimization (SEO)

SEO is a fundamental tool of multichannel marketing. SEO is all about making sure that
your content is recognized by the search engines, namely, Google.

Google insists that the most important element of good SEO is useful content. If you are
providing the content searchers are looking for, Google will reward you with high
rankings, at least in theory. There are no magic algorithms that guarantee that your
pages will rank in the top of the search results. but Mailchimp offers online instruction in
SEO that will show you how to use headers, meta descriptions, and other tools of on-
page SEO to boost your rankings in Google search.

Content marketing

Digital marketers around the world rank content marketing as their most useful tool in
the day to day marketing efforts. The research service Statista reports that marketers
are four times to list content marketing as their most effective marketing tool as social
media, and three times more likely to prefer content marketing to improved U/X.

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Content marketing can keep customers coming back to your site to learn more. They
will not necessarily make a purchase every time they visit your site, but every visit
reinforces your brand and makes your products the first choice for consumer needs.

Social media

TikTok has become a tour de force of the digital marketing world in 2022. It has
overtaken Google as the most popular site worldwide, largely because its algorithms
give everyone an equal chance to go viral. With one billion subscribers, TikTok still
doesn't have the reach of Facebook. Every social media marketing strategy must
include Facebook, too. But for huge promotional potential, be sure that TikTok is part of
your social media plan.

Word-of-mouth

Word-of-mouth advertising is the natural outgrowth of great value and exceptional

service. If you delight your customers, they will tell their friends. Word-of-mouth is free,
and the benefit to your brand can be priceless.

Traditional marketing

Traditional marketing channels include direct marketing like television, radio, billboards,
signs, and print. Traditional marketing still works for reaching enormous numbers of
people at the same time. But you need to consider the cost of traditional marketing
versus its potential benefits to avoid overspending.
Benefits of using marketing channels
What are the benefits of using these marketing channels?

Having a clear plan for how you will use each marketing channel available to your
business helps you achieve a higher rate of return on your promotional dollars. Finding
the right pros to manage your marketing channels costs money, but gives you a greater
return than doing all the work yourself.

Marketing channels save time. You don't have to do all the work of distributing your
product by yourself. And pursuing several marketing channels helps you find far more
customers than you ever could on your own.

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The right marketing channel for your business is the channel that brings you the
greatest number of customers who spend the most money. Determining which
marketing channels work best for your business isn't something you should leave to
guesswork. The best way to choose the right marketing channels is to be SMART,
targeting specific goals with agreed-on metrics of success, keeping your goals
achievable, relevant, and time-bound.

Chances are you will test some marketing channels that you will later choose to drop.
That's just part of the cost of business. Do A/B testing to find the marketing methods
that work best for you, and use Mailchimp to keep up with the analytics that tell you that
your marketing campaigns are still working.

Mailchimp has all the channels you will need to connect to your customers every day.
You can create emails, ads, and landing pages all in one place, and test the tools
Mailchimp makes available to you to find which marketing channels deserve the most of
your time and your budget.

Mailchimp has discovered that marketing campaigns that involve different channels
outperform single-channel campaigns by an average of 300%. Mailchimp can empower
you to follow up on your digital campaign with a postcard campaign, automating the
analytics so you can focus your attention on the things you do best.

Ready to get started? Set up your account with Mailchimp. Or call our sales department
at (800) 315-5939. Mailchimp has all the tools you need for marketing success. You'll be
in good company.

3. Marketing channel formats

Marketing channel formats refer to the various ways in which products or services are
distributed and made available to customers. These formats can vary widely depending
on factors such as the nature of the product, target market, industry trends, and
technological advancements. Here are some common marketing channel formats:

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1. Direct Sales: In direct sales, products or services are sold directly to consumers
without intermediaries. This can include selling through company-owned retail stores, e-
commerce websites, catalogs, or direct sales representatives.

2. Retail Stores: Retail stores are physical locations where customers can purchase
products directly from shelves or displays. These stores may be owned and operated by
the manufacturer (company-owned stores) or independent retailers (third-party retail
stores).

3. Online Retail: Online retail involves selling products or services through e-commerce
websites, digital marketplaces, or online platforms. This format allows customers to
browse, purchase, and receive products conveniently from their computers or mobile
devices.

4. Wholesale Distribution: Wholesale distribution involves selling products in bulk

quantities to retailers, businesses, or other intermediaries who then sell them to end
consumers. Wholesale distributors act as intermediaries between manufacturers or
producers and retailers.

5. Franchise Retail: Franchise retail involves licensing the rights to use a company's
brand name, trademarks, and business model to independent franchisees who operate
their own retail outlets. Franchisees benefit from brand recognition and support from the
franchisor.

6. Shop-in-Shop: Shop-in-Shop arrangements involve setting up dedicated sections or

branded areas within larger retail stores to showcase specific brands or products. This
format allows brands to increase visibility and influence purchasing decisions within
high-traffic retail environments.

7. Multi-Level Marketing (MLM): MLM involves selling products or services through a

network of independent sales representatives who earn commissions on their own sales
and the sales of their recruits. MLM companies typically use direct selling techniques
and incentivize representatives to recruit and build their own sales teams.

8. Distribution Partnerships: Distribution partnerships involve collaborating with other

companies or organizations to distribute products through their existing channels or
networks. This can include co-branding agreements, strategic alliances, or distribution
agreements with complementary businesses.

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9. Telemarketing: Telemarketing involves selling products or services over the phone
through outbound or inbound sales calls. Telemarketers use targeted calling lists and
scripts to engage with potential customers and generate sales leads.

10. Catalog Sales: Catalog sales involve promoting products or services through printed
catalogs distributed to customers by mail or available for online browsing. Customers
can place orders by mail, phone, or online using catalog reference numbers.

These are just a few examples of marketing channel formats, and many businesses
may use a combination of different channels to reach their target audience effectively.
The choice of channel format depends on factors such as product characteristics,
customer preferences, market dynamics, and business objectives.

4.Prominent channel systems

it refer to the primary methods or structures through which products or services are
distributed to customers. These channel systems are often characterized by their
prominence in the market and their widespread use by businesses across various
industries. Here are some prominent channel systems:

1. Direct Sales Channels: Direct sales channels involve selling products or services
directly to consumers without intermediaries. This can include company-owned retail
stores, e-commerce websites, catalogs, or direct sales representatives.

2. Retail Channels: Retail channels encompass physical or online stores where

customers can purchase products directly from shelves, displays, or digital platforms.
These channels may include company-owned retail stores, independent retailers, chain
stores, department stores, or specialty boutiques.

3. Wholesale Distribution Channels: Wholesale distribution channels involve selling

products in bulk quantities to retailers, businesses, or other intermediaries who then sell
them to end consumers. Wholesale distributors act as intermediaries between
manufacturers or producers and retailers.

4. E-commerce Channels: E-commerce channels involve selling products or services

through online platforms, digital marketplaces, or e-commerce websites. These

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channels allow customers to browse, purchase, and receive products conveniently from
their computers or mobile devices.

5. Franchise Channels: Franchise channels involve licensing the rights to use a

company's brand name, trademarks, and business model to independent franchisees
who operate their own retail outlets. Franchisees benefit from brand recognition and
support from the franchisor.

6. Multi-Level Marketing (MLM) Channels: MLM channels involve selling products or

services through a network of independent sales representatives who earn
commissions on their own sales and the sales of their recruits. MLM companies typically
use direct selling techniques and incentivize representatives to recruit and build their
own sales teams.

7. Telemarketing Channels: Telemarketing channels involve selling products or services

over the phone through outbound or inbound sales calls. Telemarketers use targeted
calling lists and scripts to engage with potential customers and generate sales leads.

8. Catalog Sales Channels: Catalog sales channels involve promoting products or

services through printed catalogs distributed to customers by mail or available for online
browsing. Customers can place orders by mail, phone, or online using catalog reference
numbers.

9. Distribution Partnership Channels: Distribution partnership channels involve

collaborating with other companies or organizations to distribute products through their
existing channels or networks. This can include co-branding agreements, strategic
alliances, or distribution agreements with complementary businesses.

These prominent channel systems represent the primary avenues through which
businesses distribute their products or services to customers, each offering unique
advantages, challenges, and opportunities for reaching target audiences effectively.

5.Retailing
Retailing is defined as a set of activities or steps used to sell a product or a service
to consumers for their personal or family use. It is responsible for matching
individual demands of the consumer with supplies of all the manufacturers.

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Retailing has become such an intrinsic part of our everyday lives that it is often
taken for granted. The nations that have enjoyed the greatest economic and social
progress have been those with a strong retail sector.

A retailer is a person, agent, agency, company, or organization, which is

instrumental in reaching the goods, merchandise, or services to the ultimate
consumer. Retailers perform specific activities, such as anticipating customers’
wants, developing assortments of products, acquiring market information, and
financing.

A retailer is an individual or an entity that sells products in small quantities directly to

customers for the purpose of consumption rather than reselling. Retailers act as
intermediaries between manufacturers and consumers, purchasing bulk to sell fewer
products at marked-up prices.

Manufacturers constitute the first step in the retail mechanism, as they create goods
from raw materials and tools. Retailers can buy their goods from wholesalers or directly
from manufacturers. Wholesalers are stockists; they stock many goods and sell them to
retailers at low prices. Retailers then resell these items to end users for profit.

The main aim of retailers is to satisfy their customers by fulfilling their expectations and
providing exceptional service. For this, they set up big stores in malls and markets to
curate different types of products and make them available to customers.

The Role of Retailer

Retailers play an important role in modern business, efficiently linking producers with
consumers. As a result, retailers play an important role in stimulating economic growth
and employment creation. Apart from this, they also ensure product promotion and
brand recognition.

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#1 – Purchasing and Stocking
Retailers need to curate and stock different kinds of products to avail them for their
customers. They need to ensure that the product is in good condition before selling it
and, at the same time, provide customers with a positive shopping experience to keep
them returning for more.

#2 – Influencing consumers
Customers place their trust in retailers. This allows retailers to convince customers to
purchase a particular product. Retailers can upsell and cross-sell products by
influencing their customers. Retailers should also be aware of the value offered to their
customers and communicate it to them.

#3 – Assumption of Risk
Being the final participant in the supply chain, retailers must delve into many risks, such
as inventory deterioration, changes in trends, technological changes, stockouts, etc.
Also, even after having enough inventory, retailers may have to send back products
because of some defects, resulting in losses.

#4 – Providing Credit
Retailers provide products to their customers on credit for holding their customers for a
long time. For instance, local convenience stores provide customers with monthly credit
and help them deliver essential items.

#5 – Promotion and Advertising

Retailers are the ones who also need to market and promote their products by providing
certain offers and discounts. Retailers push products by placing hoardings, flyers, and
billboards to invite customers to their stores.

Types of Retailers
Depending upon their services and the kind of market they serve, there are many types
of retailers:

Departmental Stores
Department stores, as retailers, sell various goods, from clothing to electronics to home
goods. The department stores are often located in shopping malls and carry a high-end
feel. Examples of department stores include Big Bazaar, Lifestyle, Shopper Stop, etc.

Supermarkets

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Supermarkets are establishments that sell primarily groceries and household goods.
They are frequently found in urban areas and provide a wide selection of goods, such
as groceries, meat, dairy, and baked items. Examples of supermarkets include D-Mart,
More, Walmart, etc.

Speciality Retailers
Speciality stores are the ones that keep only one type of product, such as toys, pet
supplies, video games, etc. These stores have a more specialised product selection
than department stores or supermarkets. Examples include GameStop, Apollo
Pharmacy, Music World, etc.

Convenience Stores
Convenience stores are usually open 24 hours, seven days a week, and sell very few
products, such as snacks, drinks, ready-to-eat meals, etc. Examples of convenience
stores include Seven-Eleven, 24-Seven, Spencers, etc.

6. Retail strategies

Retail strategy encompasses the comprehensive plan and approach that a retailer
employs to achieve its business objectives and serve its target market effectively. It
involves various elements aimed at enhancing the shopping experience, optimizing
operations, and driving sales and profitability. Here are key components of retail
strategy:

1. Target Market Identification: Define the target market segments that the retailer aims
to serve based on demographics, psychographics, purchasing behavior, and other
relevant factors. Understanding the needs, preferences, and shopping behaviors of the
target audience is crucial for tailoring the retail strategy accordingly.

2. Merchandise Assortment: Develop a merchandise assortment plan that aligns with

the preferences and demands of the target market segments. This involves selecting
the right mix of products, brands, styles, sizes, and price points to meet customer needs
and differentiate the retailer from competitors.

3. Store Layout and Design: Design the store layout, interior decor, and visual
merchandising displays to create an inviting and engaging shopping environment.
Consider factors such as traffic flow, product placement, signage, lighting, and
ambiance to enhance the overall customer experience and drive sales.

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4. Omni-Channel Integration: Embrace omni-channel retailing by integrating various
sales channels, including physical stores, e-commerce websites, mobile apps, social
media platforms, and other digital channels. Provide seamless and consistent shopping
experiences across channels, allowing customers to browse, purchase, and receive
products conveniently.

5. Customer Service Excellence: Prioritize customer service excellence by training and

empowering store staff to provide personalized assistance, product recommendations,
and support throughout the shopping journey. Encourage a customer-centric culture
focused on exceeding customer expectations and building long-term relationships.

6. Pricing Strategy: Develop a pricing strategy that reflects market dynamics,

competitive positioning, product value, and customer perceptions. Consider factors such
as pricing elasticity, promotional strategies, discounts, and loyalty programs to attract
and retain customers while maximizing profitability.

7. Inventory Management: Implement effective inventory management practices to

optimize stock levels, minimize out-of-stocks, and improve inventory turnover. Utilize
data analytics, demand forecasting, and inventory replenishment strategies to ensure
the right products are available at the right time and place.

8. Marketing and Promotion: Develop targeted marketing and promotional campaigns to

raise brand awareness, drive traffic to stores, and stimulate sales. Utilize a mix of
traditional advertising, digital marketing, social media engagement, email marketing,
and in-store promotions to reach and engage with customers effectively.

9. Technology Adoption: Embrace technology solutions such as point-of-sale (POS)

systems, inventory management software, customer relationship management (CRM)
systems, and data analytics tools to streamline operations, enhance decision-making,
and improve the overall efficiency and effectiveness of retail operations.

10. Continuous Improvement: Continuously monitor market trends, customer feedback,

sales performance, and competitive landscape to identify opportunities for innovation
and improvement. Regularly review and refine the retail strategy to adapt to changing
consumer preferences, market dynamics, and business objectives.

7. Retail performance measures

Retail performance measures are key metrics used to evaluate the effectiveness,
efficiency, and success of retail operations. These measures provide insights into
various aspects of retail performance, including sales, profitability, customer

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satisfaction, operational efficiency, and inventory management. Here are some common
retail performance measures:

1. Sales Revenue: Total revenue generated from retail sales, including sales from
physical stores, e-commerce websites, and other sales channels. This measure
indicates the overall sales performance and growth of the retail business.

2. Same-Store Sales Growth: Percentage change in sales revenue from existing stores
over a specific period, excluding the impact of new store openings or closures. Same-
store sales growth is a key indicator of the underlying sales performance and customer
demand.

3. Gross Margin: The difference between sales revenue and the cost of goods sold
(COGS), expressed as a percentage of sales revenue. Gross margin reflects the
profitability of retail sales after accounting for the direct costs associated with producing
or acquiring goods.

4. Net Profit Margin: Net profit (or net income) divided by total revenue, expressed as a
percentage. Net profit margin measures the overall profitability of the retail business
after accounting for all expenses, including cost of goods sold, operating expenses,
taxes, and interest.

5. Average Transaction Value (ATV): Average amount spent by customers per

transaction. ATV indicates the average size of customer purchases and helps evaluate
the effectiveness of sales strategies, pricing strategies, and cross-selling initiatives.

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6. Customer Traffic: Number of customers entering retail stores or visiting e-commerce
websites over a specific period. Customer traffic measures the volume of foot traffic or
online visits and provides insights into store popularity and marketing effectiveness.

7. Conversion Rate: Percentage of customer visits that result in a purchase. Conversion

rate measures the effectiveness of retail sales associates, merchandising displays, and
sales strategies in converting customer visits into sales.

8. Inventory Turnover: Number of times inventory is sold and replaced within a specific
period. Inventory turnover indicates how efficiently retail inventory is managed and
helps assess the effectiveness of inventory planning, purchasing, and sales strategies.

9. Customer Satisfaction and Loyalty: Measures such as customer satisfaction scores,

Net Promoter Score (NPS), and customer retention rates. These measures reflect
customer perceptions, loyalty, and likelihood to recommend the retail brand to others.

10. Operational Efficiency: Measures such as labor productivity, inventory shrinkage

(e.g., theft, loss, damage), and store operating expenses as a percentage of sales.
Operational efficiency measures help assess the effectiveness of retail operations and
identify opportunities for cost savings and process improvements.

11. Online Metrics: Metrics specific to e-commerce operations, such as website traffic,
conversion rate, average order value (AOV), cart abandonment rate, and return on ad
spend (ROAS). These metrics help evaluate the performance of online channels and
digital marketing efforts.

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By tracking and analyzing these retail performance measures, retailers can gain
valuable insights into their operations, identify areas for improvement, and make
informed decisions to drive sales, profitability, and customer satisfaction.

8. Electronic retailing

The e-retailing(lessfrequently; e-Retailing, e-Tailing, etc.) is the concept of selling of

retailgoods using electronic media, in particular, the internet. The vocabularyelectronic
retailing, that used in internet discussions as early as 1995, theterm seems an almost in
evitable addition to e-mail, e-business and e-commerce,etc. e-retailing is synonymous
with business- to- consumer (B2C) transactionmodel of e-commerce. Although e-
retailing is an independent businessmodel with certain specific constituents like; trust
model, electronictransaction process, etc, but in reality it is a subset of e- commerce
bynature.

E-Retailing stores sell online promotion only for goods that can be sold easilyonline, e.g.,
Amazon did for Books & CDs, etc. The online retailing requirelots of displays and
specification of products to make the viewers have apersonal feel of the product and its
quality as he gets while physicallypresent in a shop.

E-Retailing refers to retailing overthe internet. Thus an e-Retailing is a B2C (Business to

customer) business model thatexecutes a transaction between businessman and the
final consumer. E-Retailers can be pure play businesses like amazon.com or businesses
that haveevolved from a legacy business such as tesco.com. The e-retailing is asubset
of e-commerce. Thus, e-commerce is the master domain defining thee-retailing
operation.

Essentials ofE-Retailing

Electronic retailing ore-tailing, as it is generally being called now, is the direct sale of
products,information and service through virtual stores on the web, usually
designedaround an electronic catalogue format and auction sites. There arethousands
of storefronts or e-commerce sites on the Internet that areextensions of existing retailers
or start-ups. Penetration of computers and proliferation of the Internet has given riseto
many new forms of businesses, such as business process outsourcing, callcentre based
customer relationship management, medical transcription, remotelymanaged educational
and medical services and of course, electronic retailing.

There are certainessential ingredients for an electronic retailing business to

besuccessful. One must consider these components well in advance beforesetting up an
electronic storefront. These essential components are:
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• Attractive business-to-consumer (B2C) e-commerce portal
• Right revenue model
• Penetration of the Internet

E-Catalog It is a database ofproducts with prices and available stock.

Shopping Cart The customers selecttheir goodies and fill shopping cart. Finally, as in a
real store, at thetime of checkout, the system calculates the price to be paid for the
products.

A payment gateway Customer makespayments through his/her credit card or e-

cash. The payment mechanismmust be fully secure.

Support Services inE-Retailing

The electronic retailbusiness requires support services, as a prerequisite for

successfuloperations. These services are required to support the business, onlineor
offline, throughout the complete transaction-processing phases. Thefollowing are the
essential support services:

• Communication backbone
• Payment mechanism
• Order fulfillment
• Logistics

Advantages of E-Retailing

E-Retailing, either as an extension of the existing retail/distribution business or an

altogether new start-up, has many advantages. Traditional brick-store retailers are
placing more emphasis on their electronic channels and evolving into multi-channel
retailers to increase their reach and support their retail channels. The new start-ups in e-
retailing can be launched from a small room with one PC attached with the outside world
through the Internet.

1. The electronic channel gives the existing brick-store retailers an opportunity to reach new
markets.
2. For the existing retailers, it is an extension to leverage their skills and grow revenues and
profits without creating an altogether new business.
3. E-Retailing overcomes some limitations of the traditional formats, for instance the
customers can shop from the comfort of their homes.
4. The e-commerce software that also traces the customers activities on the Net enables e-
retailers to gain valuable insights into their customers shopping behaviour.
5. The e-retail channels transcend all barriers of time and space. The retailers server must
be on 24*7. An order can come from any customer living any place at any time of the
day.

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6. E-Commerce channels are definitely efficient and retailers do not have to pay a heavy
price for brick-n-mortar shops in costly shopping malls.

Shortcomings of e-retailing

The online retailing {e-retailing} process is not an ultimate in the field of retailing methods;
it also suffers various drawbacks that are the qualifications of traditional marketing. Some
of the drawbacks need mention.

1. It has no theatrical ambience which can be the customer.

2. It lacks an emotional shopping experience that the customer can get in a personal
shopping store.
3. It being container of intangible merchandise (i.e., virtual display of merchandise) does not
provide sensory support to the customer, these the customer cannot hold, small, feel, or
try the product.
4. On line customers are reluctant to part with their credit card details on net, fearing they
may be misused. It arises security issues. The customers are not yet convinced about the
foolproof status of this method, especially in Indian environment.
5. It provides, to a large extent, impersonal services which the Indian customers are not
exposed to; they are rather used to the tangible personalized services whichs they miss
in online retailing services.
6. It is lacking in family shopping experience which the Indian customers enjoy at the
weekends, and particularly during festive seasons and marriage marketing.

The advantages of e Retailing outweighs its draws, thus it is showing a positive growth
rate across the boundary.

Success factors for e-retailing

The success of e-retailing depends on multiple factors that are required to be taken into
consideration as prima-facie, missing even a single small consideration is quite liable to
create a greater negative impact on entire business, since the customers and business
both are far from each-other. The customer is aloof from reality of the business regarding
with whom he is going to enter into a business relation; whether the relation will go for a
short-term or for over a long-term, no matter.

The e-Retailing business pattern is sophisticated as well as quite delicate; rather it may
be defined more correctly as fragile. Thus, every consideration requires equal importance
in its own status.

Following are some of the factors to be taken care of, however it is neither exhaustive nor
the ultimate, since it may change according to the nature of business too. At the same

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 time the business ambience, magnitude and type of competition, changing need of
consumer and many more external factors may influence it to a larger extent. Thus, the
early recognition of necessary current requirements and its implementation along with
time is always a wise proposition.
The important factors are:

• Strong Branding
• Unique Merchandising
• Value Addition
• Competitive Pricing
• Better CRM
• Better Distribution Efficiency
• Soothing Website Design
• Transparency in Services.

As e-retailer is alone in the e-Retailing market rather he is also surrounded with a number
of competitors, thus to ensure sale he has to think competitive pricing so that he can
attract his customer. The competitive pricing finds scope from potential decrease in
charges and expenditures that he had to bear while in brick-and-mortar mode of
marketing. It is a matter of careful exercise to enclose a real competitive price to its
products or services.

The first abroad of the customer is website. The aesthetic and easy handling facilities
are two important terms in this relation. The aesthetic provides initial attraction along with
keeping the visitor long held with the site. The maneuvering easiness keeps the visitor
surfing it for long.

The aesthetics of the website must provide soothing look and feel and clarity of objects
or scripts to the visitor along with sufficient ergonomic considerations, so that the visitor
does not feel tired at the earliest. The careful placement of buttons and links provides
ease in handling it.

Finally, the transparency of services creates faith on the visitor of the site as well as on
the customer of the business. Transparency of services is identified with the truth.

Challenges of E-Retailing

1. Unproven Business Models

In the formative years of dot-com era, most of the businesses on the Net were
experiments in new areas and did not provide enduring sources of profit. This was the
primary reason behind closing down of 90 per cent of the purely e-commerce companies
in the beginning of this century. Today, dot-com businesses have matured a little. Still
some of the businesses are at experimental level and do not guarantee regular revenue.

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 2. Requirement to Change Business Process

The process of procurement, storage and logistics in e-businesses is different from that
in traditional brick-store businesses. The e-retail organization has to carefully redesign
and integrate various processes to suit the new e-business. Traditional sections of
departments and management hierarchy may pose hindrances and bottlenecks in the
process of order processing and shipments, for example, the traditional business may
require the goods to be present at the warehouse and inspected before being shipped to
the customer, but in electronic retailing, shipping of goods from one place to another to a
customer would not be possible. The retailer may appoint a local supplier at the city
where the customer resides and instruct the supplier to deliver the goods. This would
require by passing certain business rules and a lot of faith on the local supplier. It would
require business confidence that the supplier would follow the instructions and deliver the
same product in good quantity and perfect quality. Merchandise planning and demand
analysis is also difficult in e-retailing, as compared to traditional retail businesses.

3. Channel Conflicts

Companies selling through the Internet as well as through brick stores may find their
interest conflicting at many places. In electronic storefront orders, the goods directly
reach the end-consumer and so the distributors and sellers may feel the threat to their
existence. Most of the time, it is seen that retailers tend to reduce price over the Net. The
sale at the brick store may store may drop because the retailer may tend to sell more
through the Internet as a result of reduction of prices.
5. Legal Issues

Proper laws have not yet evolved for Internet based transactions. Validity of e-mails,
digital signatures and application of copyright laws is being checked by various
government authorities. E-mail and digital signatures are now being recognized as valid
for any legal purpose. Value Added Tax (VAT) is yet another area that creates
problems. Taxes on goods and services are still an issue. Since the taxes are levied and
shared by multiple government agencies at local, state or federal level, there are no clear
rules to guide retailers on that. In e-retailing, the place of billing, the place of dispatch of
goods and the place of delivery all differ. If these three places fall in different jurisdictions
of governments, levy and submission of taxes would be a problem.

6. Security and Privacy

Security is one of the major challenges in the digital world. Despite a lot of security
arrangements, such as passwords and firewalls, we come across the news of website
hacking and data pilferages. The Internet being on public domain is more susceptible to
unauthorized peeping. People are wary of divulging information regarding their credit
cards and personal details on the Net because they can be misused. Cyber criminals
have exploited the Internet weaknesses and have broken into computer systems,
retrieving passwords and banking information. Security of payment gateway is a major
concern, which has to be taken care of by the retailer by putting up proper security layers.

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9. Wholesaling

Wholesaling involves purchasing goods in bulk from the manufacturer and then reselling
them to the retailer for a profit. A wholesaler is an individual or business connecting the
producer with the retailer and constituting an integral component of the supply chain.
They can sell a single product, a wide range of products, or both.
Besides physical product distribution, wholesalers are popular in banking and finance,
telecommunications, and energy. They provide business-to-business (B2B) services to
enterprises in industrial, commercial, and other professional sectors at discounted
prices. Though they sell items to retailers at a higher price, it is still much less than the
typical retail price.

Wholesaling means purchasing large quantities of goods from the producer and
reselling them to retailers, who then sell them to end-users. This entire process
depends on the concept of economies of scale.
To begin, a wholesaler invests in buying and storing large amounts of products. They
then profit from selling those products in small quantities to merchants in a town, city, or
marketplace. The concept gained traction in the 19th century, following the success
of mass production and marketing strategies.

There may be multiple wholesalers selling similar or diverse products from a single
manufacturer. Similarly, a single wholesaler may sell to a large number of retailers. It is
worth mentioning that companies, such as producers and service providers, can be
wholesalers in some situations. Since wholesaling is a vital component in
the distribution channel, it has a significant economic impact.
Manufacturers connect with wholesaling companies to get their products efficiently
delivered to retailers and ultimately consumers. The manufacturer, wholesaler, retailer,

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 and consumer form the part of the supply chain in this fashion, each functioning on
their level and reliant on the one above them.
10.Functions

• In addition to wholesaling products, wholesalers perform many other functions, such as

promotion, warehousing, transportation, financing, management and consulting, market
intelligence, risk-taking, etc.
• Wholesalers have a greater price control due to operating or warehousing expenses
that fluctuate based on process efficiency, costs of goods and services, and inventory
turnover.
• They usually do not provide after-sales service or product support as they are not
manufacturers and primarily sell competitive products.

Wholesaling involves the distribution and sale of goods or merchandise to retailers,

businesses, or other organizations for resale or use in their operations. Wholesalers
play a vital role in the supply chain by connecting manufacturers or producers with
downstream buyers and facilitating the movement of goods efficiently. Here are some
key functions of wholesaling:

1. Procurement: Wholesalers procure goods directly from manufacturers, producers, or

importers in large quantities. They negotiate purchasing terms, including prices,
quantities, delivery schedules, and payment terms, to obtain favorable deals and ensure
a reliable supply of products.

2. Inventory Management: Wholesalers maintain inventory of a wide range of products

to meet the diverse needs of their customers. They manage inventory levels, storage
facilities, and logistics to ensure that products are available when needed and minimize
stockouts or overstock situations.

3. Warehousing and Storage: Wholesalers operate warehouses or distribution centers

to store and manage inventory efficiently. They organize and maintain inventory, handle
incoming and outgoing shipments, and implement storage systems to optimize space
utilization and product accessibility.

4. Order Fulfillment: Wholesalers process customer orders received from retailers,

businesses, or other buyers. They pick, pack, and ship products accurately and
promptly to fulfill orders according to customer requirements and delivery schedules.

5. Logistics and Transportation: Wholesalers coordinate transportation and logistics to

move products from suppliers to customers efficiently. They arrange transportation

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services, negotiate freight rates, track shipments, and manage logistics operations to
ensure timely delivery and minimize transportation costs.

6. Bulk Breakdown: Wholesalers often break down bulk shipments received from
manufacturers into smaller, more manageable quantities suitable for resale by retailers
or businesses. This allows retailers to purchase the quantities they need based on
demand and shelf space limitations.

7. Product Distribution: Wholesalers distribute products to retailers, businesses, or other

buyers through various channels, including direct delivery, distribution centers, or third-
party logistics providers. They ensure that products are delivered to the right locations in
the right quantities and condition.

8. Sales and Marketing Support: Wholesalers provide sales and marketing support to
manufacturers or producers by promoting their products to retailers and businesses.
This may include providing product information, marketing materials, sales training, and
promotional assistance to help generate demand and increase sales.

9. Credit and Financing: Wholesalers may offer credit terms or financing options to
customers to facilitate purchases and improve cash flow. They extend credit lines,
provide trade credit, or offer financing arrangements to help customers manage their
cash flow and inventory investment.

10. Customer Service: Wholesalers provide customer service and support to retailers,
businesses, or other buyers throughout the purchasing process. They address inquiries,
resolve issues, and provide assistance to ensure a positive buying experience and
foster long-term relationships with customers.

Overall, wholesalers play a critical role in the distribution channel by efficiently moving
goods from producers to end-users, adding value through procurement, inventory
management, order fulfillment, logistics, and customer support.

❖ Types wholesaling

Following are the different types of Wholesalers are as follows :

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1) Merchant Wholesalers :–

These wholesale suppliers own and produce a product or service and resell their products
to resellers, retailers, distributors and other wholesalers. If you can buy the products you
require direct from the supplier you will usually be able to obtain the best prices and profit
margins.

2) General Wholesalers :-

Wholesalers that fall into this category will usually buy large quantities of products from
one or more suppliers and will be intending to add value to them by reselling in smaller
quantities to distributors, retailers and resellers. This type of wholesale supplier will often
have multiple suppliers adding diversity to their product range and choice for their
customers. This type of wholesaler may resell products from a number of different
industries and in several different categories.

3) Speciality Wholesalers :-

This type of wholesaler will resell products in a specific industry or product category, but
may have products from multiple suppliers. Because specialty wholesalers specialize in
a specific industry or product type they tend to have good product knowledge and good
pricing.

4) Specific Product Wholesalers :-

These are wholesalers who only supply 1 type of product for example footwear or
computers. They may supply several brands but only within one product category.
Manufacturers often use this type of wholesaler to distribute one or more of their
products.

5) Discount Wholesalers :–

This type of wholesaler will supply significantly discounted stock. Generally the stock is
discounted because the products are discontinued lines, returned goods or refurbished
goods.

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6) Drop Ship Wholesalers : -

This type of wholesaler will complete the sale of a product but will have it dispatched
from their supplier directly to their customer without actually handling the goods.

7) On-line Wholesaler :-

Wholesalers who sell their products on-line offer discounted prices as they can reduce
their overheads such as rent and rates of physical premises. This type of wholesaler is
therefore able to add a lower percentage to their purchase price and still make margin.

12. Key Task wholesaling

Key tasks in wholesaling involve various activities aimed at efficiently distributing goods
from manufacturers or producers to retailers, businesses, or other organizations. These
tasks are essential for ensuring a smooth flow of products through the supply chain and
meeting the needs of customers. Here are some key tasks in wholesaling:

1. Procurement: Negotiating and securing agreements with manufacturers, producers,

or importers to purchase goods in bulk quantities. This involves evaluating suppliers,
negotiating prices, terms, and conditions, and ensuring a reliable supply of products to
meet customer demand.

2. Inventory Management: Managing inventory levels, storage facilities, and stock

replenishment to ensure that products are available when needed. This includes
forecasting demand, monitoring inventory turnover, minimizing stockouts and overstock
situations, and optimizing inventory holding costs.

3. Warehousing and Storage: Operating warehouses or distribution centers to store and

manage inventory efficiently. This involves organizing inventory, implementing storage
systems, handling incoming and outgoing shipments, and maintaining proper storage
conditions to preserve product quality.

4. Order Processing: Receiving and processing customer orders received from retailers,
businesses, or other buyers. This includes verifying order accuracy, picking products
from inventory, packing orders, and preparing them for shipment or delivery according
to customer requirements.

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5. Logistics and Transportation: Coordinating transportation and logistics to move
products from suppliers to customers. This involves arranging transportation services,
negotiating freight rates, scheduling shipments, tracking deliveries, and managing
logistics operations to ensure timely and cost-effective distribution.

6. Sales and Marketing Support: Promoting and marketing products to retailers and
businesses to generate demand and increase sales. This includes providing product
information, marketing materials, sales training, and promotional assistance to help
customers sell products effectively.

7. Customer Service: Providing customer service and support to retailers, businesses,

or other buyers throughout the purchasing process. This involves addressing inquiries,
resolving issues, handling returns or exchanges, and providing assistance to ensure a
positive buying experience and foster long-term relationships with customers.

8. Credit and Financing: Offering credit terms or financing options to customers to

facilitate purchases and improve cash flow. This includes extending credit lines,
providing trade credit, or offering financing arrangements to help customers manage
their cash flow and inventory investment.

9. Quality Control: Ensuring the quality and integrity of products through rigorous quality
control processes. This includes inspecting incoming shipments, verifying product
quality and specifications, and implementing measures to prevent counterfeit or
defective products from entering the supply chain.

10. Market Analysis and Forecasting: Analyzing market trends, customer demand, and
competitor activities to anticipate future demand and adjust inventory levels accordingly.
This involves conducting market research, analyzing sales data, and forecasting
demand to optimize inventory management and procurement decisions.

By performing these key tasks effectively, wholesalers play a crucial role in the
distribution channel by efficiently moving goods from producers to end-users, adding
value through procurement, inventory management, logistics, and customer support.

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13. Strategic wholesaling
Strategic issues in wholesaling encompass challenges and opportunities that
wholesalers face in achieving their business objectives, adapting to market dynamics,
and staying competitive in the industry. These strategic issues shape the direction and
priorities of wholesalers' operations and decision-making processes. Here are some key
strategic issues in wholesaling:

1. Market Dynamics: Wholesalers must navigate evolving market dynamics, including

changes in customer preferences, competitive pressures, technological advancements,
and regulatory requirements. Understanding market trends and anticipating shifts in
demand are crucial for staying ahead of the curve.

2. Supply Chain Disruptions: Wholesalers are susceptible to supply chain disruptions

such as raw material shortages, transportation delays, geopolitical instability, and
natural disasters. Developing robust supply chain management strategies, diversifying
suppliers, and building resilience are essential to mitigate risks and ensure continuity of
operations.

3. Digital Transformation: The rise of e-commerce and digital technologies has

transformed the wholesale industry, impacting how wholesalers conduct business,
interact with customers, and manage operations. Embracing digital transformation
initiatives, investing in e-commerce platforms, and leveraging data analytics are critical
for staying competitive in the digital age.

4. Channel Disintermediation: Wholesalers face the risk of channel disintermediation as

manufacturers or producers bypass traditional distribution channels and sell directly to
retailers or end customers. Wholesalers must demonstrate their value proposition,
provide added services, and strengthen relationships with suppliers and customers to
remain relevant in the distribution channel.

5. Customer Expectations: Meeting the evolving expectations of customers, including

retailers, businesses, and other buyers, is essential for maintaining loyalty and
competitiveness. Wholesalers must focus on delivering exceptional customer service,
offering customized solutions, and adapting to changing customer needs and
preferences.

6. Globalization and Trade Dynamics: Wholesalers operate in an increasingly globalized

marketplace, facing challenges and opportunities related to international trade, tariffs,
trade agreements, and cross-border logistics. Navigating trade complexities, exploring

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new markets, and building strategic partnerships are essential for expanding global
reach and mitigating trade risks.

7. Sustainability and Environmental Concerns: Wholesalers are under pressure to

address sustainability and environmental concerns by adopting eco-friendly practices,
reducing carbon footprint, and promoting sustainable sourcing and supply chain
management. Embracing sustainability initiatives not only contributes to environmental
stewardship but also enhances brand reputation and competitiveness.

8. Technological Innovation: Rapid advancements in technology, such as artificial

intelligence, automation, Internet of Things (IoT), and blockchain, offer opportunities for
wholesalers to streamline operations, improve efficiency, and innovate value-added
services. Embracing emerging technologies and investing in digital capabilities are key
to driving innovation and staying ahead of competitors.

9. Regulatory Compliance: Wholesalers must comply with a complex landscape of

regulations, standards, and industry guidelines governing areas such as product safety,
labeling, trade practices, and data privacy. Staying abreast of regulatory changes,
implementing compliance programs, and mitigating legal risks are essential for
maintaining integrity and reputation.

10. Talent Management and Skills Gap: Wholesalers face challenges in attracting,
retaining, and developing talent with the necessary skills and expertise to drive business
growth and innovation. Investing in workforce development, fostering a culture of
learning and development, and embracing diversity and inclusion are critical for building
a skilled and resilient workforce.

By addressing these strategic issues effectively, wholesalers can adapt to market

dynamics, capitalize on emerging opportunities, mitigate risks, and position themselves
for sustainable growth and success in the evolving wholesale industry.

14. Major wholesaling decisions

Major wholesaling decisions involve strategic choices that wholesalers make to
effectively manage their operations, optimize their supply chain, and achieve their
business objectives. These decisions impact various aspects of wholesaling, including
procurement, inventory management, distribution, sales, and customer service. Here
are some major wholesaling decisions:

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1. Supplier Selection: Wholesalers must decide which suppliers to partner with to
procure goods for resale. This decision involves evaluating suppliers based on factors
such as product quality, pricing, reliability, geographic proximity, and terms of sale.

2. Product Assortment: Wholesalers need to determine the range of products to offer to

their customers. This decision involves selecting the right mix of products, brands,
SKUs, and categories to meet customer demand, differentiate from competitors, and
optimize sales and profitability.

3. Pricing Strategy: Wholesalers must establish pricing strategies for their products to
remain competitive in the market while ensuring profitability. This decision involves
setting wholesale prices, negotiating discounts with suppliers, and managing pricing
dynamics in response to market trends and competitive pressures.

4. Inventory Management: Wholesalers need to make decisions regarding inventory

levels, stock replenishment, and product allocation to ensure sufficient stock availability
while minimizing carrying costs and inventory obsolescence. This involves forecasting
demand, monitoring sales trends, and optimizing inventory turnover.

5. Warehousing and Distribution: Wholesalers must decide on the location, size, and
layout of their warehouses or distribution centers to efficiently store and manage
inventory. This decision involves considering factors such as proximity to suppliers and
customers, transportation infrastructure, and storage capacity.

6. Logistics and Transportation: Wholesalers need to make decisions regarding

transportation modes, carriers, and logistics partners to ensure timely and cost-effective
delivery of goods to customers. This involves optimizing shipping routes, negotiating
freight rates, and tracking shipments to ensure on-time delivery.

7. Sales and Marketing Strategies: Wholesalers must develop sales and marketing
strategies to attract and retain customers, generate demand, and increase sales. This
decision involves defining target markets, segmenting customers, designing promotional
campaigns, and allocating resources to sales and marketing activities.

8. Customer Service Policies: Wholesalers need to establish customer service policies

and standards to ensure a positive buying experience for their customers. This decision
involves defining service levels, handling inquiries and complaints, processing returns,
and providing after-sales support.

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9. Technology Investments: Wholesalers must decide on technology investments to
streamline operations, improve efficiency, and enhance customer service. This decision
involves selecting and implementing systems such as inventory management software,
order processing systems, and customer relationship management (CRM) software.

10. Expansion and Growth Strategies: Wholesalers may need to make decisions
regarding expansion into new markets, geographic regions, or product categories to
drive growth and profitability. This decision involves assessing market opportunities,
evaluating risks, and developing strategic plans for expansion.

By making informed decisions in these key areas, wholesalers can effectively manage
their operations, optimize their supply chain, and achieve their business objectives in a
competitive marketplace.

15. Managing distributors

Managing distributors involves effectively overseeing and supporting the activities of
third-party distributors who play a crucial role in the distribution channel. Distributors act
as intermediaries between manufacturers or producers and retailers or end customers,
facilitating the movement of goods and expanding market reach. Here are some key
aspects of managing distributors:

1. Selection and Onboarding: Carefully selecting distributors based on criteria such as

market coverage, industry expertise, financial stability, and alignment with the
manufacturer's goals and values. Once selected, properly onboarding distributors by
providing training, resources, and support to ensure a successful partnership.

2. Clear Communication: Establishing clear lines of communication with distributors to

convey expectations, objectives, and performance metrics. Maintaining open and
transparent communication channels fosters trust, alignment, and collaboration between
manufacturers and distributors.

3. Relationship Building: Building strong and mutually beneficial relationships with

distributors based on trust, respect, and cooperation. Investing time and effort in
building rapport, understanding distributor needs, and addressing concerns helps foster
long-term partnerships.

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4. Performance Management: Setting clear performance objectives, targets, and KPIs
for distributors to measure performance and track progress. Regularly monitoring
distributor performance, providing feedback, and implementing performance
improvement plans as needed to drive results.

5. Training and Support: Providing distributors with the training, resources, and support
they need to effectively promote, sell, and support the manufacturer's products or
services. This may include product training, sales techniques, marketing materials, and
technical support.

6. Market Development: Collaborating with distributors to identify market opportunities,

develop market strategies, and expand market presence. This may involve conducting
market research, identifying target segments, and implementing marketing and
promotional initiatives.

7. Channel Conflict Resolution: Proactively managing channel conflicts that may arise
between distributors, retailers, or other channel partners. Addressing conflicts through
effective communication, conflict resolution techniques, and channel management
strategies to maintain channel harmony.

8. Performance Incentives: Offering performance incentives, rewards, and bonuses to

motivate distributors and drive desired behaviors. Incentive programs may include
volume-based discounts, sales bonuses, performance rebates, or recognition programs.

9. Supply Chain Coordination: Collaborating closely with distributors to coordinate

supply chain activities, including order processing, inventory management, and logistics.
Ensuring timely delivery of products, optimizing inventory levels, and minimizing
stockouts to meet customer demand.

10. Compliance and Governance: Ensuring distributors comply with contractual

agreements, legal requirements, and ethical standards. Implementing governance
mechanisms, monitoring compliance, and addressing any violations promptly to protect
the manufacturer's brand reputation and integrity.

By effectively managing distributors, manufacturers can leverage their expertise,

networks, and resources to expand market reach, drive sales growth, and achieve
strategic objectives in the distribution channel.

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 UNIT-4

1. Channel management; channel power

Channel management refers to the strategic planning and implementation of various
channels through which a company sells its products or services to customers. It
involves the coordination, organization, and optimization of these channels to maximize
sales revenue and enhance customer satisfaction.
These channels can include direct sales teams, distributors, resellers, e-commerce
platforms, retail stores, and more. Effective sales channel management ensures that
each channel is aligned with the company's sales objectives, target market, and overall
business strategy.
The primary goal of sales channel management is to create a seamless and consistent
experience for customers across all channels. It involves developing and implementing
channel strategies that optimize the customer journey, from initial awareness to
purchase and post-sales support. This may include designing sales processes,
establishing pricing structures, and defining sales territories to ensure efficient and
effective sales operations.
What is channel management ?
Channel management is the process of developing and maintaining distribution
channels through which a company's products or services are marketed and sold to
customers. This includes managing relationships with resellers, distributors,
wholesalers, and retailers.
The goal of channel management is to ensure that the right products reach the right
customers at the right time, while maximizing profitability for all parties involved.
Effective channel management involves developing strategies for channel selection,
partner recruitment, training, and support, as well as monitoring and analyzing channel
performance.
Ultimately, successful channel management requires a deep understanding of customer
needs and behavior, as well as the ability to adapt to changing market conditions and
competitor activity.

Why is channel management important?

Channel management is a critical aspect of Search Engine Optimization (SEO) that
involves the optimization of online distribution channels for the purpose of promoting
brand awareness, achieving sales targets, and improving customer experience.
Effective channel management involves maintaining a healthy relationship between
brands and their marketing channels, such as social media platforms, email marketing
campaigns, pay-per-click (PPC) advertising, and search engine results pages (SERPs).
When properly executed, channel management helps businesses achieve the following:
1. Increased visibility and brand awareness: Through effective channel
management, businesses can showcase their brand across multiple channels, thereby
increasing their visibility and brand awareness.

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2. Improved customer engagement: By utilizing targeted marketing strategies on
different channels, businesses can reach more customers and engage with them
effectively.
3. Higher conversion rates: Channel management helps businesses improve
conversions by aligning their marketing messages with specific channels and target
audiences.
4. Enhanced customer experience: By optimizing their channels, businesses can
improve the overall customer experience, ultimately leading to increased customer
loyalty and retention.

What are the best channel management strategies?

Channel management refers to the process of managing a company’s distribution

channels to maximize sales and ensure customer satisfaction. Here are some of the
best channel management strategies for a company focusing on SEO:
1. Search Engine Optimization (SEO) - Optimize your website for search engines to
drive organic traffic. Conduct keyword research, optimize meta tags, and create high-
quality content.
2. Content marketing - Develop content that provides value to your customers and
helps them understand your product or service. Use social media and other channels to
distribute the content.
3. Influencer marketing - Collaborate with influencers in your niche to promote your
product or service and reach a wider audience.
4. Email marketing - Use email marketing to keep your customers up-to-date on new
products, promotions, and other updates.
5. Affiliate marketing - Partner with other businesses to promote your products or
services and provide a commission for each sale.
6. Online advertising - Use pay-per-click (PPC) advertising to drive traffic to your site
and increase brand awareness.
7. E-commerce - Develop an online store to sell your products or services directly to
customers.

How to manage channel sales effectively?

Channel sales management involves coordinating with multiple sales channels to

achieve maximum sales growth. Here are some steps to manage channel sales
effectively:
1. Establish clear communication: It is crucial to communicate effectively with all the
sales channels, including distributors, resellers, and retailers, to ensure everyone is on
the same page. Develop a system for regular communication to keep everyone
informed about new products, promotions, and incentives.
2. Set performance expectations: Clearly define the performance metrics expected
from each sales channel. This will help you identify potential problem areas and address
them promptly.

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3. Provide training and support: Invest in training programs that help channel partners
learn about your product/service, target audience, and marketing strategies. Offer
continuous support to help them meet their targets and resolve issues quickly.
4. Use technology to streamline operations: Automate your sales processes and use
sales enablement tools to track leads, sales, and customer behavior. This can help you
identify trends and patterns to improve performance.
5. Monitor channel performance: Continuously monitor each sales channel's
performance against their goals and adjust your strategy accordingly. Analyzing the
performance data will help you identify areas of improvement and optimize your sales
channels.

How does channel management works?

Channel management refers to the process of developing and maintaining relationships

with various distribution channels used to sell products and services. In the context of
SEO, channel management specifically pertains to managing the different platforms and
channels used to publish and promote content, such as social media, email, and search
engines.
The primary goal of channel management in SEO is to optimize the reach and impact of
a business's content. This requires an understanding of the unique characteristics and
requirements of each channel, as well as an ability to strategically use these channels
to drive traffic, engagement, and conversions.
Effective channel management involves several key activities, including:
1. Identifying and analyzing the various channels available for content distribution
2. Developing a strategic plan for channel utilization and optimization
3. Creating and optimizing content for each specific channel
4. Monitoring and analyzing performance metrics to refine and improve channel
performance
5. Continuously testing and experimenting with new channels to identify opportunities
for growth and improvement.

2. Channel Power
Definition: The Channel Power refers to the ability of any one channel member to alter
or modify the behavior of other members in the distribution channel, due to its relatively
strong position in the market.

Generally, the manufacturers are seen, dominating the behavior of other channel
partners and influencing their actions according to its requirements.

Types of Channel Power

In this article, we will discuss the powers of the manufacturer, that he can use in order
to control the behavior of other channel partners.

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1. Coercive Power: The manufacturer threatens to terminate the relationship with other
channel partners or withdraw the resources deployed with them. With this power, the
manufacturer can dominate the others and keep them under his control.
But the negative side is, the channel partners may lose their faith in the manufacturer
and may enter into inter-conflicts.

2. Reward Power: The manufacturer provides several additional benefits to the

intermediaries, with the intention to motivate them to perform certain activities as
required.
This power is very useful since it brings in the maximum efforts from each channel
partner, but this may sometimes be negative as the channel partners may always seek
for the benefits in case, they are required to do some other activity.

3. Legitimate Power: Here the manufacturer reminds the channel partner to carry out
their activities in accordance with the contract they have entered into at the time they
became the channel partners.
The manufacturer may find it convenient to keep a check on the channel partners in
terms of their signed agreement, but the partners may feel humiliated for the continuous
reminder for their code of conduct.

4. Expert power: The manufacturer has the expertise that he transfers to the channel
partners, and once they acquire it, the power of expertise reduces. Thus, the
manufacturer should focus on creating the new expertise, thereby keeping the channel
partners updated with the day to day operations.
The manufacturer uses this power to retain the interest among the channel partners to
work, but the intermediaries may not feel to learn any new things apart from what they
have learned.

5. Referent Power: The manufacturer should develop its image in such a way, that the
intermediaries must feel proud to be associated with it. The manufacturer with the
influential image can get varied options with regard to the channel partners.
But if the manufacturer is weak then intermediaries may not like to get associated with it
because that might spoil their market image.

Thus, the manufacturer is the one who provides the goods and services to be sold via
intermediaries and, therefore, the channel partners are dependent on the manufacturer
for their individual businesses.

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3. Channel Conflict

Definition: Channel conflict can be explained as any dispute, difference or discord

arising between two or more channel partners, where one partner’s activities or
operations affect the business, sales, profitability, market share or similar goal
accomplishment of the other channel partner.

As we know that every manufacturing company needs to plan its distribution

and marketing channel appropriately, to ensure market captivity and customer
satisfaction along with growth and profitability.

In the process of the constant supply of products in the market, several channel
partners and intermediaries join the supply chain of the brand. Any clash and
disturbance among these trading partners can be considered as a channel conflict.

Types of Channel Conflict

The channel conflict can be classified majorly into the following four categories
depending upon its flow and the parties involved:

Vertical Level Conflict

In the vertical level conflict, the channel partner belonging to a higher level enters into a
dispute with the channel member of a lower level or vice-versa.

For instance, channel conflict between dealers and retailers or wholesalers and
retailers.

Horizontal Level Conflict

The conflict among the channel partners belonging to the same level, i.e., issues
between two or more stockists or retailers of different territories, on the grounds of
pricing or manufacturer’s biases, is termed as horizontal level conflict.

Inter-type Channel Conflict

These type of conflicts commonly arise in scrambled merchandising, where the large
retailers go out of their way to enter a product line different from their usual product
range, to challenge the small and concentrated retailers.

Multi-channel Level Conflict

When the manufacturer uses multiple channels for selling the products, it may face
multi-channel level conflict where the channel partners involved in a particular
distribution channel encounters an issue with the other channel.

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Conflict Magnitude

The level to which the conflict is considered critical or needs the attention of the channel
leader, i.e., manufacturer, is known as its magnitude.

The magnitude of conflict can be determined through the proper analysis of the change
in market share and the company’s sales volume in a particular area or region.

Causes of Channel Conflict

What are the reasons responsible for a channel conflict?

Following are some of the key reasons for which the organizations need to face channel
conflict:

Role Ambiguity: The uncertain act of an intermediary in a multi-channel arrangement

may lead to disturbance in the channel of distribution and cause conflict among the
intermediaries.

Incompatible Goals: When the manufacturer and the intermediaries do not share the
same objectives, both work in different directions to meet their ends, this results in
channel conflict.

Marketing or Strategic Mis-Alignment: Sometimes, two-channel partners promote the

manufacturer’s product in a different manner, which created two different images of the
same product in the consumers’ mindset, which creates conflicting brand perception.

Difference in Market Perception: The manufacturer’s understanding of the potential

market and penetration into a specific region or territory, may vary from the perception
of the intermediaries, which can create conflict and reduce the intermediary’s interest in
capturing that particular market.

Change Resistant: When the channel leader plans to modify the distribution channel,
the intermediaries may or may not accept this change. Thus, it may result in a condition
of discord or non-cooperation.

Improper Geographic or Demographic Distribution: If the sales territory has a

narrow consumer base, and the channel leader allows many selling partners, they tend
to lose interest soon because of low profit and limited sales.

Consequences of Channel Conflict

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Now that we know about the causes of such conflicts, we must also understand how
dangerous these may prove to be for an organization.

Given below are some of these outcomes:

• Price Wars: Due to channel conflict, the partners compete with each other on the
grounds of price, and therefore, the consumer may defer the purchase searching
for the best deal.
• Customer Dissatisfaction: If there exists a channel conflict, then the distributors
or retailers may show much interest in the company’s products and resist to assist
the consumers, which results into their resentment towards the brand.
• Sales Deterioration: Conflicts can adversely affect the sales of the products due
to the decline in distributors’ interest and an increasing number of consumers
shifting to competitors’ products.
• Distributors Exit: For the manufacturers, it is essential to retain the distributors or
partners to increase product sales. When there is a channel conflict, the chances
of various distributors leaving the channel increases.
• Poor Public Relations: The unsatisfied distributors may negatively publicize the
brand and its products as a result of manufacturer’s unhealthy public relations with
them.

Channel Conflict Management

It is a universal fact that the conflicts cannot be eliminated, though these can be
handled smartly to reduce its negative impact on business.

Following are some of the ways to manage the channel conflicts:

Mediation, Arbitration and Diplomacy

To resolve a dispute, the manufacturer can adopt the strategy of intervention where a
third person intervenes to create harmony. The other option is arbitration, where an
arbitrator listens to the argument of the parties involved in a conflict and declares a
decision. Or, the parties can resort to diplomacy where the representatives of both the
parties conversate and find a solution.

Co-optation

The manufacturer should hire an expert who has already gained experience in
managing the channel conflicts in other organizations, as a member of the grievance
redressal committee or board of directors, for addressing such conflicts.

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Dealer Councils and Trade Associations

To handle the horizontal or vertical conflicts, the manufacturer forms a dealer council
where the dealers can unanimously put up their problems and grievances in front of the
channel leader. To bring in unity among the channel partners or intermediaries, they
can be added as members in trade association which safeguards their interest.

Superior Goals

Establishing a supreme goal of the organization and aligning it with the individual goals
or objectives of the channel partners, may reduce the channel conflicts.

Regular Communication

The channel leader should take regular feedback from the channel partners through
formal and informal meetings to know about market trends and dynamics. Also, the
channel partner’s issues and conflicts can be addressed through frequent interactions.

Legal Procedure

When the conflict is critical and uncontrollable by the channel leader, the aggrieved
party can seek legal action, by filing a lawsuit against the accused party.

Fair Pricing

Most of the channel conflicts are a result of the price war, and therefore, these can be
resolved by ensuring that products are equally priced in all the territories and a fair
margin is provided to the channel partners.

3. Channel policies

Channel policies refer to the guidelines, rules, and strategies that govern the
management and operation of distribution channels. These policies are established by
manufacturers or producers to guide the behavior and interactions of channel partners,
such as distributors, wholesalers, retailers, and other intermediaries. Channel policies
help ensure consistency, alignment, and efficiency in the distribution of goods or
services. Here are some common types of channel policies:

1. Product Distribution Policies: These policies outline criteria for selecting and
managing distribution partners, including distributors, wholesalers, and retailers. They
may define geographic territories, market segments, or customer types that distributors
are authorized to serve.

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2. Pricing and Discount Policies: These policies specify pricing guidelines, discount
structures, and terms of sale for channel partners. They may include minimum
advertised price (MAP) policies, suggested retail prices (SRP), volume discounts, and
promotional allowances to ensure consistent pricing and protect brand value.

3. Inventory and Stocking Policies: These policies govern inventory management

practices, including stock levels, replenishment schedules, and product allocation. They
may establish minimum order quantities, lead times, and return policies to optimize
inventory turnover and minimize stockouts or overstock situations.

4. Marketing and Promotion Policies: These policies define marketing and promotional
activities that channel partners are expected to undertake to promote the manufacturer's
products or services. They may include guidelines for advertising, branding, co-op
advertising programs, and trade promotions.

5. Training and Support Policies: These policies outline the training, resources, and
support that manufacturers provide to channel partners to enhance their capabilities and
effectiveness. They may include product training, sales support, technical assistance,
and marketing materials to empower channel partners.

6. Channel Conflict Resolution Policies: These policies establish procedures for

resolving conflicts or disputes that may arise between channel partners, such as
distributors, retailers, or competing intermediaries. They may include mechanisms for
mediation, arbitration, or escalation to address conflicts promptly and fairly.

7. Compliance and Governance Policies: These policies ensure that channel partners
comply with contractual agreements, legal requirements, and ethical standards. They
may include provisions related to anti-corruption, anti-bribery, intellectual property
rights, data privacy, and fair competition.

8. Performance Measurement and Evaluation Policies: These policies define

performance metrics, targets, and incentives to assess the effectiveness and

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contribution of channel partners. They may include sales targets, market share goals,
customer satisfaction metrics, and incentive programs to reward high-performing
partners.

9. Technology and Data Policies: These policies govern the use of technology
platforms, data sharing, and information systems within the distribution channel. They
may include guidelines for data security, confidentiality, and access control to protect
sensitive information and intellectual property.

10. Sustainability and Corporate Social Responsibility (CSR) Policies: These policies
reflect manufacturers' commitments to sustainability, environmental stewardship, and
social responsibility. They may include requirements for sustainable sourcing, ethical
labor practices, community engagement, and environmental protection initiatives.

By establishing and enforcing channel policies effectively, manufacturers can align the
behavior and incentives of channel partners with their strategic objectives, ensure
consistency and compliance across the distribution network, and drive mutual success
in the marketplace.

4. Channel information system

A Channel Information System (CIS) is a technology platform or software solution used

by manufacturers, distributors, and other channel partners to facilitate the exchange of
information and collaboration within the distribution channel. A CIS serves as a central
hub for managing and sharing critical data, communications, and transactions among
channel members. Here are some key components and functions of a Channel
Information System:

1. Data Management: A CIS collects, stores, and manages various types of data
relevant to the distribution channel, including product information, pricing data, inventory
levels, sales performance, customer data, and order history. It ensures data integrity,
accuracy, and accessibility for all channel partners.

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2. Communication Tools: A CIS provides communication tools such as email,
messaging, chat, and discussion forums to facilitate real-time communication and
collaboration among channel members. It enables efficient communication of important
updates, announcements, and inquiries within the distribution channel.

3. Order Management: A CIS enables electronic ordering and order processing between
manufacturers, distributors, and retailers. It streamlines the order-to-cash process by
automating order entry, processing, fulfillment, invoicing, and payment reconciliation,
reducing errors and delays in order processing.

4. Inventory Management: A CIS helps manage inventory levels and replenishment

across the distribution channel. It provides visibility into inventory levels, forecasts
demand, and triggers automated replenishment orders based on predefined rules,
ensuring optimal stock levels and minimizing stockouts or overstock situations.

5. Product Information Management (PIM): A CIS centralizes product information and

specifications for easy access and sharing among channel partners. It provides a single
source of truth for product data, including descriptions, images, specifications, pricing,
and availability, ensuring consistency and accuracy across channels.

6. Sales and Performance Analytics: A CIS provides reporting and analytics tools to
track sales performance, monitor key performance indicators (KPIs), and analyze
channel effectiveness. It generates reports, dashboards, and insights on sales trends,
market share, customer behavior, and channel performance metrics.

7. Channel Marketing Support: A CIS supports channel marketing activities by providing

access to marketing materials, promotional campaigns, and co-op advertising
programs. It facilitates the distribution of marketing collateral, sales tools, and campaign
assets to channel partners to promote products effectively.

8. Channel Training and Enablement: A CIS offers training and enablement resources
to educate channel partners on product features, sales techniques, marketing
strategies, and operational processes. It provides online training modules, certification

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programs, and knowledge bases to empower channel partners with the skills and
knowledge needed to succeed.

9. Compliance and Governance: A CIS enforces compliance with channel policies,

contractual agreements, and regulatory requirements. It ensures that channel partners
adhere to pricing policies, sales terms, branding guidelines, and legal standards to
maintain integrity and consistency across the distribution network.

10. Integration with Enterprise Systems: A CIS integrates seamlessly with other
enterprise systems such as ERP (Enterprise Resource Planning), CRM (Customer
Relationship Management), and SCM (Supply Chain Management) systems to
exchange data and synchronize business processes. It enables seamless data flow and
collaboration between front-end channel operations and back-end business systems.

Overall, a Channel Information System plays a vital role in streamlining channel

operations, improving collaboration, and driving efficiency and effectiveness within the
distribution channel. It enables manufacturers and channel partners to work together
seamlessly, optimize performance, and deliver value to customers.

5. Channel performance evaluation

Channel performance evaluation is the process of assessing the effectiveness,

efficiency, and overall performance of distribution channels in achieving strategic
objectives and delivering value to customers. It involves measuring key performance
indicators (KPIs), analyzing performance metrics, and identifying areas for improvement
within the distribution channel. Here are some steps involved in channel performance
evaluation:

1. Define Objectives and Metrics: Clearly define the objectives and goals of the
distribution channel, such as increasing market share, improving customer satisfaction,
or maximizing profitability. Identify relevant performance metrics and key performance
indicators (KPIs) aligned with these objectives, such as sales revenue, market share,
customer retention rate, inventory turnover, and order fulfillment time.

2. Data Collection and Analysis: Collect data on channel performance metrics from
various sources, including sales reports, inventory records, customer feedback, and

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market research. Analyze the data to assess the performance of the distribution channel
against predefined KPIs and benchmarks. Identify trends, patterns, and outliers that
may indicate areas of strength or areas needing improvement.

3. Performance Dashboard and Reporting: Develop performance dashboards and

reports to visualize channel performance metrics and trends effectively. Present key
findings, insights, and recommendations in a clear and concise manner to stakeholders,
such as manufacturers, distributors, and retailers. Use visualizations such as charts,
graphs, and tables to facilitate data interpretation and decision-making.

4. Channel Partner Feedback: Gather feedback from channel partners, including

distributors, wholesalers, and retailers, on their experiences and perceptions of the
distribution channel. Conduct surveys, interviews, or focus groups to solicit input on
areas such as product availability, pricing, marketing support, customer service, and
overall satisfaction. Use this feedback to identify areas for improvement and address
partner concerns.

5. Customer Feedback and Satisfaction: Collect feedback from end customers on their
experiences with the distribution channel, including product availability, delivery speed,
service quality, and overall satisfaction. Use customer surveys, reviews, and feedback
mechanisms to gauge customer perceptions and sentiment. Incorporate customer
feedback into the evaluation process to assess the impact of channel performance on
customer satisfaction and loyalty.

6. Benchmarking and Comparative Analysis: Benchmark channel performance against

industry standards, best practices, and competitors' performance. Conduct comparative
analysis to assess how the distribution channel stacks up against peers in terms of key
metrics such as market share, sales growth, operational efficiency, and customer
satisfaction. Identify areas where the channel excels and areas where improvements
are needed based on benchmarking results.

7. Identify Improvement Opportunities: Based on the analysis of performance metrics,

feedback from channel partners and customers, and benchmarking results, identify
areas for improvement within the distribution channel. Prioritize improvement
opportunities based on their potential impact on strategic objectives, feasibility of

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implementation, and resource requirements. Develop action plans and initiatives to
address performance gaps and drive continuous improvement.

8. Monitor and Review Performance: Continuously monitor channel performance over

time to track progress, evaluate the effectiveness of improvement initiatives, and identify
emerging trends or issues. Conduct regular reviews and performance evaluations to
assess the impact of changes and adjustments made to the distribution channel. Adapt
strategies and tactics based on performance insights to maintain competitiveness and
drive sustainable growth.

By systematically evaluating channel performance and identifying opportunities for

improvement, organizations can optimize the effectiveness and efficiency of their
distribution channels, enhance partner relationships, and deliver greater value to
customers.

6. Market logistics and supply chain management

Marketing Logistics is defined as a process involving the planning, execution, and

control of the movement of goods, services, and information from their origin
(manufacturers) to the point of consumption (consumers). It encompasses a series of
interconnected activities that streamline processes like storage, transportation,
inventory management, and information flow. The primary goal is to ensure that the
right products reach the customers at the right time. Marketing Logistics is also
referred to as Distribution Logistics. The goal is to ensure that customers receive
their desired products in a manner while also saving costs for the company.
Marketing Logistics simply refers to the organised process a company follows to
produce and deliver its products to customers. It entails planning how goods are
stored moved and tracked in a manner.
Functions of Marketing Logistics
Marketing logistics consists of functions each fulfilling a distinct role within the supply
chain.
1. Planning: Marketing logistics starts with planning. This involves identifying the
routes for distributing products, optimising inventory levels, and selecting suitable
transportation methods. Planning also includes forecasting customer demand to
ensure that products are available when and where they are needed.
2. Warehousing: Warehousing plays an important role in the logistics process. It
ensures the storage, easy accessibility, and timely distribution of goods. It acts as a
link between production and distribution, optimising transit times and efficiently

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managing inventory. This enables production cycles. This also ensures on-time
deliveries.
3. Inventory Management: Effective inventory management is essential for balancing
supply and demand. It involves different aspects, including forecasting, replenishing
stock, and strategically positioning inventory to meet fluctuations in customer demand.
By implementing techniques like in-time (JIT) and vendor-managed inventory (VMI)
carrying costs can be reduced significantly while enhancing overall supply chain
efficiency.
4. Transportation: Transportation is the backbone of marketing logistics as it
facilitates the movement of goods from one location to another. Traditional modes
such as road, rail, sea, and air transportation have been augmented with technologies
like GPS tracking and route optimisation software. These technologies play an
important role in monitoring and making decisions in time which ultimately leads to
cost-efficient and timely deliveries.
5. Managing Logistics Information: In this era of digitalisation, efficient information
management is vital for coordinating all logistics operations. Sophisticated software
and systems enable the tracking of shipments, monitoring inventory levels, and
ensuring communication throughout the supply chain. By adopting a data-driven
approach, it becomes possible to solve problems, make faster decisions, and optimise
logistics processes to enhance customer satisfaction and operational efficiency.
6. Control: Effective control mechanisms are vital in marketing logistics. This entails
monitoring the movement of goods throughout the supply chain. Technologies like
GPS tracking systems, RFID (Radio Frequency Identification), and inventory
management systems play a role in maintaining control over operations.
Components of Marketing Logistics
Different aspects contribute to marketing logistics ensuring a flow of products and
information:
1. Customer Profiling: To understand customer preferences, demands, and buying
habits, businesses now utilise data analytics and Customer Relationship Management
(CRM) systems to create marketing and logistics strategies. This data-driven
approach helps with forecasting by offering tailored products and efficient supply chain
management.
2. Goods Distribution: Delivering goods goes beyond physical transportation. It
involves an approach to reach customers, which includes integrating e-commerce
platforms using distribution channels and implementing last-mile delivery solutions.
These strategies ensure that products are delivered efficiently while providing
convenience for consumers, thus enhancing the customer experience.
3. Transportation: With advancements like vehicles and drone deliveries,
transportation in marketing logistics has changed. Businesses are exploring methods
to reduce costs and delivery times while considering sustainability and minimising the
carbon footprint. This thinking approach aligns marketing logistics with societal goals.
4. Information: Packaging now serves not as protection for products but as a tool for
sustainable branding and information dissemination. Businesses are showing a
growing inclination towards using packaging materials that are environmentally
friendly to reduce their impact on the environment. In addition, they are implementing
packaging technologies like QR codes and RFID tags to offer consumers access to

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product details and interactive experiences, thereby enhancing the overall value of
their purchases.
5. Customer Service: In the age of online shopping and e-commerce, providing
customer service is crucial. This not only includes efficient customer support, but also
features such as order tracking, hassle-free returns, and personalised
recommendations after purchase. Building trust and loyalty by delivering customer
service remains an aspect of marketing logistics.
6. Reverse Logistics: With the increasing importance placed on sustainability reverse
logistics has become a component. Companies now take measures to manage
product returns, recycling processes, and waste disposal. This not only reduces
impact, but also aligns businesses with the growing demand from consumers for
responsible and eco-friendly practices.
Importance of Marketing Logistics
Marketing logistics holds significance in today’s business landscape for various
reasons:
1. Customer Satisfaction: Delivering products on time and ensuring their availability
is crucial for satisfying customers. Efficient logistics play an important role in making
sure customers receive products when and where they need them. This leads to
customer loyalty and encourages the repetition of business.
2. Cost Reduction: Effective management of logistics can result in cost savings by
optimising transportation routes, minimising inventory carrying costs, and reducing
warehousing costs.
3. Market Expansion: If a company is using efficient logistics, the function can make
companies explore markets and reach customers, both locally and internationally. This
opens up opportunities for business growth.
4. Profitability: Efficient management of logistics leads to profit margins by
minimising wastage, optimising resource utilisation, and enhancing operational
efficiency.

❖ Supply chain management

Supply chain management is the handling of the entire production flow of goods or
services—starting from the raw components to delivering the final product to
consumers. A company creates a network of suppliers that move the product from raw
materials suppliers to organizations that deal directly with users.
Why is supply chain management important?

Effective supply chain management systems minimize cost, waste and time in the
production cycle. The industry standard has become a just-in-time supply chain where
retail sales automatically signal replenishment orders to manufacturers. Retailers can
then restock shelves almost as quickly as they sell products. One way to further
improve on this process is to analyze the data from supply chain partners to see where
to improve further.

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By analyzing partner data, CIO identifies three scenarios where effective supply chain
management increases value to the supply chain cycle:1

Identifying potential problems

When a customer orders more products than the manufacturer can deliver, the buyer
can complain of poor service. Through data analysis, manufacturers might be able to
anticipate the shortage before the buyer is disappointed.

Optimizing price dynamically

Seasonal products have a limited shelf life. At the end of the season, retailers typically
scrap these products or sell them at deep discounts. Airlines, hotels and others with
perishable “products” typically adjust prices dynamically to meet demand. By using
analytic software, similar forecasting techniques can improve margins, even for hard
goods.

Coordinate customer orders, schedule deliveries, dispatch loads, invoice customers and
receive payments.
Returning
Create a network or process to take back defective, excess or unwanted products.
Key features of effective supply chain management

The supply chain is the most obvious “face” of the business for customers and
consumers. The better and more effective a company’s supply chain management is,
the better it protects its business reputation and long-term sustainability.

IDC defines supply chain management by identifying the five Cs of the effective supply
chain management of the future:2

• Connected: Accessing unstructured data from social media, structured data

from the Internet of Things (IoT) and more traditional data sets available through
traditional enterprise resource planning (ERP) and business-to-business (B2B)
integration tools.

• Collaborative: Improving collaboration with suppliers increasingly means the

use of cloud-based commerce networks to enable multi-enterprise collaboration
and engagement.

• Cyber-aware: Hardening systems and protecting them from cyber-intrusions and

hacks is a crucial enterprise-wide concern for the supply chain.

• Cognitively enabled: Collating, coordinating, and conducting decisions and

actions across the chain, the AI platform serves as the modern supply chain's
control tower, enabling most of the supply chain to be automated and self-

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 learning.

• Comprehensive: Scaling analytics capabilities with data in real time to ensure

that insights are comprehensive and fast is cr

7. International sales and distribution management

International sales and distribution management involves overseeing the process of

selling products or services across different countries and managing the distribution
channels to reach customers effectively. Here's an overview of key aspects:

1. Market Research and Analysis: Understanding the target markets in various

countries is crucial. This includes analyzing consumer behavior, market trends,
competition, and cultural differences that may affect sales and distribution strategies.

2. Strategic Planning: Developing a comprehensive sales and distribution strategy

tailored to each market. This involves setting goals, determining pricing strategies,
selecting distribution channels, and establishing marketing plans.

3. Channel Management: Identifying and managing distribution channels such as

wholesalers, retailers, agents, and distributors. This includes selecting the right
partners, negotiating contracts, and ensuring effective communication and
collaboration.

4. Sales Force Management: Building and managing a sales team capable of selling
products or services internationally. This may involve hiring, training, and motivating
sales personnel, as well as setting sales targets and monitoring performance.

5. Logistics and Supply Chain Management: Ensuring smooth movement of products

from manufacturing facilities to end customers in different countries. This includes
managing transportation, inventory, warehousing, and customs clearance processes.

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6. Legal and Regulatory Compliance: Adhering to international trade regulations,
customs requirements, and legal frameworks in each market. This includes
understanding import/export laws, tariffs, taxes, and intellectual property rights.

7. Technology and Tools: Leveraging technology and software solutions for sales
forecasting, order management, inventory tracking, and customer relationship
management (CRM). This helps streamline operations and improve efficiency.

8. Risk Management: Identifying and mitigating risks associated with international

sales and distribution, such as currency fluctuations, political instability, trade barriers,
and supply chain disruptions.

9. Customer Relationship Management: Building and maintaining strong relationships

with customers across different countries. This involves understanding their needs,
providing excellent customer service, and adapting to cultural preferences.

10. Performance Measurement and Analysis: Monitoring key performance indicators

(KPIs) to evaluate the effectiveness of sales and distribution efforts. This includes
tracking sales revenue, market share, customer satisfaction, and profitability metrics.

Successful international sales and distribution management require a combination of

strategic thinking, cultural sensitivity, operational efficiency, and adaptability to
changing market conditions. It's a dynamic and challenging field that requires
continuous learning and innovation to stay competitive in the global marketplace.

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