Sales & Distribution Management – Introduction
Sales refers to the exchange of goods/ commodities against money or service. It is the only revenue generating function in an organization. It has formed an important part in business throughout history. Even prior to the introduction of money, people used to exchange goods in order to fulfill the needs, which is known as the barter system.
Example of Barter System
A has 100 kg of rice and B has 50 kg of wheat. Here, A needs wheat and B needs rice. They agree to exchange 50 kg of rice and 25 kg of wheat upon mutual understanding.
Conditions of Sales
- There are two parties involved in the transaction, the seller and the buyer.
- The seller is the provider of goods or services and the buyer is the purchaser in exchange of money.
The seller of goods has to transfer the title of ownership of the item to the buyer upon an agreed price. A person who sells goods or services on behalf of the seller is known as the salesman/woman.
Distribution is the process of making a product or service available for use or consumption to the end consumer or business.
Distribution could be of the following two types −
It can be defined as expanding or moving from one place to another without changing direction or stopping. For example, Bata has no distribution channel; it sells its products directly to the end consumers.
It can be defined as means that are not directly caused by or resulting from something. For example, LG sells its product from the factory to the dealers, and it reaches the consumers through dealers.
The following image shows the end-products stored at a warehouse, ready for shipment to the dealers/consumers.
Sales management in an organization is a business discipline, which focuses on the practical application of sales techniques and the management of a firm’s sales operation. It is done in an efficient and effective manner through planning, staffing, training, leading and controlling organizational resources. Sales management is done by Sales Managers and they are responsible for generating sales, profits and customer satisfaction.
Skills of a Sales Executive
Sales management is an art where the sales executive or the salesperson helps the organization or individual to achieve its objective or buy a product with their skills.
The following are some skills that a sales executive needs to possess −
Conceptual skill includes the formulation of ideas. Managers understand abstract relationships, improve ideas, and solve issues creatively. The sales executive should be well versed with the concept of the product he/she is selling.
People skills involve the ability to interact effectively with people in a friendly way, especially in business. The term ‘people skills’ involves both psychological skills and social skills, but they are less inclusive than life skills.
Every person has a different mindset, so a sales executive should know how to present the product depending on the customer’s mindset.
Technical skills are the abilities captured through learning and practice. They are often job or task specific. In simple words, a specific skill set or proficiency is required to perform a specific job or task. As a part of conceptual skills, a sales executive should also have a good grasp on the technical skills of the product.
Decision skills are the most important because to tackle the questions from consumers, sales executive should always have the knowledge of competitors’ products and take a wise decision.
Sales executives should monitor the performance of the employees and report to higher management to improve the performance and fill the loop holes.
Thus, conceptual skills deal with ideas, technical skills deal with things, people skills concern individuals, technical skills are concerned with product-specific skills, and decision skills relate to decision-making.
Importance of Sales Management
Sales management is very crucial for any organization to achieve its targets. In order to increase customer demand for a particular product, we need management of sales.
The following points need to be considered for sales management in an organization −
· The first and foremost importance of sales management is that it facilitates the sale of a product at a price, which realizes profits and helps in generating revenue to the company.
· It helps to achieve organizational goals and objectives by focusing on the aim and planning a strategy regarding achievement of the goal within a timeframe.
· Sales team monitors the customer preference, government policy, competitor situation, etc., to make the required changes accordingly and manage sales.
· By monitoring the customer preference, the salesperson develops a positive relationship with the customer, which helps to retain the customer for a long period of time.
· Both the buyers and sellers have the same type of relationship, which is based on exchange of goods, services and money. This helps in attaining customer satisfaction.
Sales Management may differ from one organization to the other, but overall, we can conclude that sales management is very important for an organization for achieving its short- and long-term goals.
Objective of Sales Management
Every organization has an objective before initializing functions. We need to understand the goal of managing sales. Here we are discussing Sales Management in terms of its objectives.
It is the capacity or the number of items sold or services sold in the normal operations of a company in a specified period. The foremost objective of sales management is to increase sales volume to generate revenue.
Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue generating department. It can be calculated as the percentage or ratio of gain in total turnover.
One of the main objectives of Sales Management is to retain consumers to continue growth of the organization. There should be regular expansion of sales and demand for an item in the market with new advanced formulation.
These are the major objectives a sales executive has to focus on in sales management.