Notes

Sales and Distribution Management

Q Discuss Maslow’s hierarchy of needs theory

Maslow first introduced his concept of a hierarchy of needs in his 1943 paper "A Theory of Human Motivation" and his subsequent book Motivation and Personality. This hierarchy suggests that people are motivated to fulfill basic needs before moving on to other, more advanced needs.

While some of the existing schools of thought at the time (such as psychoanalysis and behaviorism) tended to focus on problematic behaviors, Maslow was much more interested in learning about what makes people happy and the things that they do to achieve that aim.

As a humanist, Maslow believed that people have an inborn desire to be self-actualized, that is, to be all they can be. In order to achieve these ultimate goals, however, a number of more basic needs must be met such as the need for food, safety, love, and self-esteem.1

There are five different levels of Maslow’s hierarchy of needs. Let's take a closer look at Maslow’s needs starting at the lowest level, known as physiological needs.

Deficiency Needs vs. Growth Needs

Maslow believed that these needs are similar to instincts and play a major role in motivating behavior.2 Physiological, security, social, and esteem needs are deficiency needs, which arise due to deprivation. Satisfying these lower-level needs is important in order to avoid unpleasant feelings or consequences.

Maslow termed the highest level of the pyramid as growth needs. These needs don't stem from a lack of something, but rather from a desire to grow as a person.

Physiological Needs

The basic physiological needs are probably fairly apparent—these include the things that are vital to our survival. Some examples of physiological needs include:

Food
Water
Breathing
Homeostasis

Security and Safety Needs

As we move up to the second level of Maslow’s hierarchy of needs, the requirements start to become a bit more complex. At this level, the needs for security and safety become primary.

People want control and order in their lives. So, this need for safety and security contributes largely to behaviors at this level. Some of the basic security and safety needs include:

Financial security
Health and wellness
Safety against accidents and injury

==Social Needs

The social needs in Maslow’s hierarchy include such things as love, acceptance, and belonging. At this level, the need for emotional relationships drives human behavior. Some of the things that satisfy this need include:

Friendships
Romantic attachments
Family
Social groups
Community groups
Churches and religious organizations
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Q Discuss Herzberg’s dual factor theory

Herzberg’s Motivation Theory model, or Two Factor Theory, argues that there are two factors that an organization can adjust to influence motivation in the workplace.

These factors are:

Motivators: Which can encourage employees to work harder.
Hygiene factors: These won’t encourage employees to work harder but they will cause them to become unmotivated if they are not present.

Herzberg’s Theory of Motivation tries to get to the root of motivation in the workplace. You can leverage this theory to help you get the best performance from your team.

The two factors identified by Herzberg are motivators and hygiene factors.
1. Motivating Factors
The presence of motivators causes employees to work harder. They are found within the actual job itself.

2. Hygiene Factors
The absence of hygiene factors will cause employees to work less hard. Hygiene factors are not present in the actual job itself but surround the job.

The impact of motivating and hygiene factors is summarized in the following diagram. Note that you will often see motivators referred to as factors for satisfaction, and hygiene factors referred to as factors for dissatisfaction.

Motivating factors include:

Achievement: A job must give an employee a sense of achievement. This will provide a proud feeling of having done something difficult but worthwhile.
Recognition: A job must provide an employee with praise and recognition of their successes. This recognition should come from both their superiors and their peers.
The work itself: The job itself must be interesting, varied, and provide enough of a challenge to keep employees motivated.
Responsibility: Employees should “own” their work. They should hold themselves responsible for this completion and not feel as though they are being micromanaged.
Advancement: Promotion opportunities should exist for the employee.
Growth: The job should give employees the opportunity to learn new skills. This can happen either on the job or through more formal training.
Hygiene factors include:
Company policies: These should be fair and clear to every employee. They must also be equivalent to those of competitors.
Supervision: Supervision must be fair and appropriate. The employee should be given as much autonomy as is reasonable.
Relationships: There should be no tolerance for bullying or cliques. A healthy, amiable, and appropriate relationship should exist between peers, superiors, and subordinates.
Work conditions: Equipment and the working environment should be safe, fit for purpose, and hygienic.
Salary: The pay structure should be fair and reasonable. It should also be competitive with other organizations in the same industry.
Status: The organization should maintain the status of all employees within the organization. Performing meaningful work can provide a sense of status.
Security: It is important that employees feel that their job is secure and they are not under the constant threat of being laid-off.

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Q What are key characteristics of leadership??

8 key characteristics for good leadership
1. Do you have a vision?
A leader with a vision has a clear picture of where they want to go and how goals can be achieved. However, just that alone is not enough. Leaders must share their ideas with others. Jack Welch, former CEO of General Electric Co., believed the following: “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion”. A leader must be able to use his/her vision, and communicate it well, so that customers and employees alike also believe it. He or she must find clear and passionate words to make their vision attractive to others.

2. Acting instead of merely analyzing
The one who has a vision must also be able to implement it. A leader does not suffer from “analysis paralysis” but arranges everything in accordance with their vision. As a leader, you must be able to inspire your colleagues and mobilize them into action. Be the motor that drives new ideas – If the engine stops, the whole project falters. This means a lot of responsibility, but also the ability to create a strong impact. It can be a great experience to see how one’s own vision can lead others towards motivation for action, while adding a little spark that can kindle a great fire of innovation. Would you think of yourself as someone who’s always pushing boundaries, within the necessary time and energy limitations, and ultimately ends up finishing successfully? A good leader does everything to complete the next step in their vision, and is thus leading by example. A leader shows his team that there are always opportunities to achieve something great.

3. Integrity and fairness
A person of integrity showcases the same values in all environments (private and public). Such leaders convey trust and leave colleagues with no doubts about their communication. This means: Honest action, predictable reactions, controlled emotions and a total absence of any tantrums. An executive with strong integrity and balance is much more desirable for employees. In addition, it is important to be fair. Fairness means measuring others consistently with the same measure. A leader must listen to all opinions before making a judgment. He/She should avoid making decisions without the necessary data.

4. Appreciation is a necessity!
Be honest, is it easy for you to praise others for the work they do? Would you describe yourself as confident but humble? These points are essential to establish yourself as a leader. Strive to give credit, where it is due, for the many achievements of your employees and teams. On the flip side, it takes a good leader to professionally accept responsibility for errors. In this kind of environment employees will feel safe, as they know compliments to their work are genuine, and the team will become stronger as a result.


5. Openness
This means being able to listen and be open to new ideas – even if it does not necessarily correspond to the current ways of thinking. Good leaders are able to accept ideas from employees and use them effectively. Openness creates mutual respect and trust between executives and employees. The team is also always eager to share fresh ideas. Do you think Steve Jobs came up with all the ideas for Apple’s products and campaigns by himself? We don’t think so either.

6. Creativity!
The ability to “think outside the box” is important as a boss struggles with resourceful solutions to tough situations. Creativity allows managers to explore different ideas that might not be so apparent on the surface, and the team can thus be steered in new directions. The most important question you can ask yourself as a boss is: “What if …?” The worst thing that you can tell a manager, however, is: “I know this is probably a stupid question…”

7. Asserting the right way
The rule is: Assertiveness is not synonymous with aggression. Rather, it is meant to be the ability to clearly express what is expected in order to avoid misunderstandings. A manager must be assertive to get the desired results. Employees must also be assertive, as it’s also important to understand what employees want and expect from their boss. Leaders are not intended to be dictators who only iterate commands. A definitive structure and the right amount of assertiveness from both sides is necessary, but always with the utmost respect.

8. Sense of humor
The grim punctuality, fanatic obsession with control and structure – all this has its advantages, however with a little humor you can usually work in a bit more relaxed manner. Humor is important to resolve tensions, defuse hostilities or to break up spells of boredom. Effective leaders know how to use humor to motivate employees. Humor is not inconsistent with the obligations of conscious work, quite the contrary, working under a humorous leader is much more relaxed and the employees tend to be more committed, since it may feel more humane. That is something that should never be lost on you as a leader.

So, how would you assess yourself now? Take advantage of the ideas listed above as inspiration for sharpening your leadership skills. Or if you are looking for your next top position, keeping these characteristics in mind can surely help steer your next interview in the right direction.


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Q Discuss the factors responsible for interdependence of sales and distribution

Money, as is often quoted, is the fuel that keeps a business going. And the income derived from sales, is the prime source of money for the business. It is therefore, vitally important for a company that its sales remain buoyant. Which is why companies constantly track and report their primary, secondary and retail sales.

Sales is the outcome of supply and demand, and it needs to be, therefore, tracked and analysed through a suite of metrics that relate to these fundamental components that drive the market.

As can be seen from the list of contents, this chapter covers the analysis and diagnosis of sales and distribution, in considerable detail. It is devoted to addressing five key managerial objectives:

building distribution network,
targeting the right channels and chains,
optimizing assortment,
securing retailer support and
managing stocks in trade.
A wide array of metrics are reviewed to address these priorities, including measures for stock and distribution, metrics for depth of sales such as share in handlers, rate of sales, cash rate of sale and rate of gross profits. The chapter also covers a host of techniques and metrics for evaluation of assortment including average number of items stocked, stock turns, portfolio analysis and fragmentation analysis
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Q Define the differences between a sales forecast and a market forecast.

Differences between Demand Forecasting and Sales Forecasting for Inventory Replenishment
The differences between demand forecasting and sales forecasting are subtle in some places; for example, they both use sales history. The major difference is in what history is input into the algorithms. Demand forecasting must correct for a variety of external factors (like promotional events) to calculate base demand. Planning inventory replenishment requires scrubbing the sales data of events that will not repeat. Likewise, it also necessitates the ability to buy inventory for future, new events.
Demand Forecasting and Sales Forecasting are different and their respective uses should not be the same for the many reasons highlighted today. Technology hardware and the resulting software runs faster for less money and more accurately than even 5 years ago. That means today you have better choices to pick and choose for your business need. These choices provide significant opportunities to improve your inventory replenishment practices and achieve higher sales, lower operating costs, and better service for your customers.

==========================Retail Management
Q Discuss Retailing Model
Some retailers assume that a little tinkering with the value proposition is all it takes to adapt to changes in the marketplace. Although it is almost always necessary to keep the value proposition aligned with shifts in the market, the most successful retailers make significant improvements in their operating model as well, because the value proposition and operating model together are responsible for the entire business model’s success. (See the exhibit.)

The value proposition is the differentiating offer the company makes to its customers. It includes the following elements:

The product or service, including the depth and breadth of assortment, private-label options, and product quality
The customer’s shopping experience, including the physical layout of the store and the arrangement of merchandise
The pricing and revenue model, including the pricing strategy (such as high-low or everyday low prices) and value-added services, such as free delivery
The operating model supports the value proposition by enabling the retailer to fulfill its pledge to its customers. It includes the cost model (sourcing and store operations), the value chain structure (degree of integration with suppliers and logistics, for example), and the organizational processes.
Most managers’ time and resources tend to be focused on changes to only one or two elements of the business model. Few companies think about changing it entirely.

We recommend that a retailer begin optimizing its business model by using deep “customer discovery” techniques to identify what its target customers like and dislike in the product and shopping experience, as well as their shopping patterns. It can then develop a value proposition that serves those target customers and an operating model that enables the company to effectively deliver it.

A business model developed in this way evolves with changes in the environment, and the value proposition continues to be aligned with the needs of consumers. The retailer should also leverage opportunities that the operating model provides to create differentiating features in its value proposition.

Consider Grand Frais, a growing French retailer specializing in ultrafresh fruits, vegetables, fish, cheese, and meat. It leveraged the abilities and know-how of its owners—most of which are wholesalers specializing in specific categories, such as fish (Zeus Faber) and fruits and vegetables (Prosol Gestion)—to create a competitive offering in each category combining optimized product assortment and very attractive prices. The result was a new business model that has succeeded in capturing a growing share of the highly competitive French market.
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Q important is the role of pricing in retail marketing mix

Importance of Pricing – Helps in Determining Return, Determines Demand, Sales Volume and Market Share, Countering Competition, Builds Product Image and A Tool of Sales Promotion
Pricing is an important decision making aspect after the product is manufactured. Price determines the future of the product, acceptability of the product to the customers and return and profitability from the product. It is a tool of competition.

1. Helps in Determining Return:

The primary motive of all firms is to earn profit. Firms aim at maximising profit. When the product is manufactured the manufacturer determines the price of the product. Price includes the return or profits that the manufacturer or marketer intends to earn. Price is fixed by the marketer by adding a certain percentage of profit on cost.

2. Determines Demand, Sales Volume and Market Share:

Price is the most flexible tool in the marketing mix. A marketer can regulate the demand for a product by increasing or decreasing the price. Price is an important factor influencing consumer buying behaviour. Most of the time consumer put importance on price of the product rather than on value, at the time of purchase. Thus a change in price influences the demand, sales volume and market share.

3. Countering Competition:

Companies regularly revise their pricing strategies to counter the competition. A market leader who dominates the market designs the pricing strategy to prevent new competitors entering into the market. While a price follower sets their price in accordance to the competitor’s price and market leader’s price. A marketer’s pricing strategy mostly depends upon competitor’s pricing policy.

4. Builds Product Image:

Price often builds an image of the product. Consumers often believe that high priced products are of high value and benefit than low priced product. Marketers also use price to position their products superior in the minds of the consumer.

5. A Tool of Sales Promotion:

Price is an important tool of sales promotion. Companies often resort to short term price reduction like offering discounts to increase sales during a short time period.

Importance of Pricing – Cost-Based Pricing, Competition-Based Pricing, Demand-Based Pricing and Value-Based Pricing

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Q Discuss the internationalization of the Retailing.

Integration and globalization of world market have resulted in retail trade internationalization. In manydeveloped countries, the retail trade is faced with the problem of limited sales growth for the sake of saturationon the domestic market, and the enter on overseas markets is seen as a sustainable growth strategy. Therefore,this study was initiated by the basic research problem: increasing growth through internationalization ofbusiness.This paper aims to investigate and present the international activities of the European and global retailersand thus to show that the internationalization of retailing enables higher growth. During studies there are useddifferent scientific methods: normative methods, data collection methods, content analysis, comparative,statistical, generic and other methods. Methods of data collection focused on the use of secondary data frombooks, magazines and websites.The research results show that the trend of internationalization of retailing is significantly present inEuropean retailers and sales abroad represents a significant proportion of total sales and growth. However, topretailers the majority of their sales perform on the european market. The internationalization of retailing in theUS is significant, but not as intense in developed EU countries. The internationalization of retailing in Japan isevident, but less than in Europe and the United States.Although, there is no doubt that the retail internationalization rhytm is speeded up, the majority of retailersrealizes the maximum percentage of its turnover on the home market.

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Q
What are the types of decision making processes

Types of Decision-Making:
The decisions taken by managers at various points of time may be classified thus:

1. Personal and Organizational Decisions:

Decisions to watch television, to study, or retire early are examples of personal decisions. Such decisions, pertain to managers as individuals. They affect the organisation, in an indirect way. For example, a personal decision to purchase a Maruti rather than an Ambassador, indirectly helps one firm due to the sale and hurts another because of the lost sale. Personal decisions cannot be delegated and have a limited impact.

Organisational decisions are made by managers, in their official or formal capacity. These decisions are aimed at furthering the interests of the organisation and can be delegated. While trying to deliver value to the organisation, managers are expected to keep the interests of all stakeholders also in mind—such as employees, customers, suppliers, the general public etc. they need to take decisions carefully so that all stakeholders benefit by what they do (Like price the products appropriately, do not resort to unethical practices, do not sell low quality goods etc.)

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2. Individual and Group Decisions:

Individual deci­sions are taken by a single individual. They are mostly routine decisions.

Advantages and Disadvantages of Group Decision-Making:

Group decisions, on the other hand are decisions taken by a group of individuals constituted for this purpose (for example, Admission Com­mittee of a College, Board of Directors in a company). Group decisions, compared to individual decisions, have far reaching consequences and impact a number of persons and departments. They require serious discussion, deliberation and debate. The following are the advantages and disadvantages of group decision making.

Advantages:

i. A group has more information than an individual. Members, drawn from diverse fields, can provide more in­formation and knowledge about the problem.

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ii. A group can generate a greater num­ber of alternatives. It can bring to bear a wider experience, a greater variety of opinions and more thorough probing of facts than a single individual.

iii. Participation in group decisions in­creases acceptance and commitment on the part of people who now see the solution as their own and acquire a psychological stake in its success.

iv. People understand the decision better because they saw and heard it devel­op; then paving the way for smooth implementation of the decision.

v. Interaction between individuals with varied viewpoints leads to greater creativity.

Disadvantages:

i. Groups are notorious time-wasters. They may waste a lot of time and energy, clowning around and getting organized.

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ii. Groups create pressures towards con­formity; other infirmities, like group think, force members to compromise on the least common denominator.

iii. Presence of some group members, who are powerful and influential may intimidate and prevent other members from participating freely. Domination is counter-productive; it puts a damper on the groups’ best problem solvers.

iv. It may be very costly to secure partic­ipation from several individuals in the decision-making process.

v. The group consists of severed individu­als and hence, it is easy to pass the buck and avoid responsibility.

3. Programmed and Non-Programmed Decisions:

A programmed decision is one that is routine and repetitive. Rules and policies are established well in advance to solve recurring problems quickly. For example a hospital establishes a procedure for admitting new patients and this helps everyone to put things in place quickly and easily even when many patients seek entry into the hospital. Programmed decisions leave no room for discretion. They have to be followed in a certain way. They are generally made by lower level personnel following established rules and procedures.

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Non-programmed decisions deal with unique/unusual problems. Such problems crop up suddenly and there is no established procedure or formula to resolve them. Deciding whether to take over a sick unit, how to restructure an organisation to improve efficiency, where to locate a new company warehouse, are examples of non-pro­grammed decisions.

The common feature in these decisions is that they are novel and non-recurring and there are no readymade courses of action to resort to. Because, non-programmed decisions often involve broad, long-range consequences for the organisation, they are made by higher-level personnel only.

Managers need to be creative when solving the infrequent problem; and such situations have to be treated de novo each time they occur. Non-programmed decisions are quite common in such organisations as research and development firms where ‘situa­tions are poorly structured and decisions being made are non-routine and complex.

The characteristics of programmed and non-programmed decisions are discussed as under:

Programmed vs. Non-Programmed Decisions:

i. Concerned with relatively routine problems. They are structured and repetitive in nature.

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ii. Solutions are offered in accord­ance with some habit, rule or procedure

iii. Such decisions are relatively sim­ple and have a small impact.

iv. The information relating to these problems is readily available and can be processed in a pre-determined fashion.

v. They consume very little time and effort since they are guided by predetermined rules, policies and procedures.

vi. Made by lower level executives.

vii. Concerned with unique and novel problems. They are unstructured, non-repetitive and ill defined.

viii. There are no pre-established poli­cies or procedures to rely on. Each situation is different and needs a creative solution.

ix. Such decisions are relatively com­plex and have a long-term impact

x. The information relating to these problems is not readily available.

xi. They demand lot of executive time, discretion and judgment.

xii. Top management responsibility

4. Strategic, Administrative and Routine Decisions:

Strategic decision-making is a top management responsibility. These are key, important and most vital decisions affecting many parts of an organisation. They require sizeable allocation of resources. They are future-oriented with long-term ramifications. They can either take a company to commanding heights or make it a ‘bottomless pit’!

Administrative decisions deal with operational issues—dealing with how to get various aspects of strategic decisions implemented smoothly at various levels in an organisation. They are mostly handled by middle level managers.

Routine decisions, on the other hand, are repetitive in nature. They require little deliberation and are generally concerned with short-term commitments. They ‘tend to have only minor effects on the welfare of the organisation’. Generally, lower-level managers look after such mechanical or operating decisions.

The Concept of Bounded Rationality:

The classical model thus prescribes a consistent and value maximizing proce­dure to arrive at decisions. It turns the decision maker into an economic being trying to pick up the best alternative for achieving the optimum solution to a problem. According to the classical model, the decision-maker is assumed to make decisions that would maximize his or her advantage by searching and evaluating all possible alternatives.

The decision-making process, described in based on certain assumptions:

i. Decision-Making is a Goal-Oriented Process:

According to the rational economic model, the decision-maker has a clear, well-defined goal that he is trying to maximize. Before formulating the goal, the decision-maker can identify the symptoms of a problem and clearly specify one best way to solve the same.

ii. All Choices are Known:

It is assumed that in a given decision situation, all choices available to the decision-maker are known or given and the consequences or outcomes of all actions are also known. The decision maker can list- (i) the relevant criteria; (ii) feasible alternatives; and (iii) the consequences for each alternative.

iii. Order of Preference:

It is assumed that the decision maker can rank all consequences, according to preference and select the alternative which has the preferred consequences. In other words, the decision maker knows how to relate consequences to goals. He knows which consequence is the best (optimality-criterion).

iv. Maximum Advantage:

The decision maker has the freedom to choose the alternative that best optimises the decision. In other words, he would select that alternative which would maximise his satisfaction. The decision maker has complete knowledge and is a logical, systematic maximiser in economic-technical terms.

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QDirect Selling & Personal Sellin

With direct selling, distributors avoid intermediaries in the supply chain and sell products directly to consumers. In traditional retail settings, products are sold online or at a physical store, but direct selling relies heavily on salespeople getting in front of customers in nontraditional settings.

Personal selling is also known as face-to-face selling in which one person who is the salesman tries to convince the customer in buying a product. It is a promotional method by which the salesperson uses his or her skills and abilities in an attempt to make a sale.

Description: Personal selling is a face-to-face selling technique by which a salesperson uses his or her interpersonal skills to persuade a customer in buying a particular product. The salesperson tries to highlight various features of the product to convince the customer that it will only add value. However, getting a customer to buy a product is not the motive behind personal selling every time. Often companies try to follow this approach with customers to make them aware of a new product.

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