Sales & Distribution Management Dr. A. ANANDA KUMAR Professor, Department of Management Studies, Christ College of Engg. & Tech., Puducherry, India. Mobile: +91 99443 42433 E-mail: [email protected]
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Sales & DistributionManagement
Dr. A. ANANDA KUMARProfessor,Department of Management Studies,Christ College of Engg. & Tech.,Puducherry, India.Mobile: +91 99443 42433E-mail: [email protected]
Sales & DistributionManagement
A. ANANDA KUMARDepartment of Management Studies,Christ College of Engg. & Tech.,Puducherry, India.Mobile: +91 99443 42433E-mail: [email protected]
MARKET & MARKETING total demand of potential buyers
all activities aimed consumer satisfaction
place or area (covers exchange functions) where buying & selling take place
other facilitating functions (financing, risk bearing, after sales services etc.)
SELLING & MARKETING Starting Focus Means Objectives point
SellingConcept
Market-ingConcept
Factory Product Selling & Profit through Promotion Sales Volume
Target Customer Integrated Profit throughMarket needs market customer satisfaction
SELLING & MARKETINGSl. No
SELLING MARKETING
1. Selling begins with the seller and the emphasis is on the product.
Marketing starts with the consumer and the emphasis is on the needs of the customers.
2. Narrow in scope. Considers business as a consumer satisfying process.
3. Considers business as a goods producing process
Considers business as a consumer satisfying process.
4. The product that is to be offered is determined by the seller.
The product that is to be offered determined by the buyer.
5. Packaging is considered as a mere protection or a mere container for the goods.
Packaging is designed to provide the maximum satisfaction and convenience to the customer.
Sl. No
SELLING MARKETING
6 Price is determined on the basis of cost.
Price is determined by the consumer.
7 Production is the central function and sales is a secondary function.
Marketing is the central function. The whole concern is organized around the marketing function.
8 Internal, company orientation External, marketing orientation.
MARKETING MIX – 4 P’S
Product
PlacePromotion
Price
Marketing Mix
The Marketing Mix
PRODUCT
1. Brand2. Style3. Color4. Design5. Product Line6. Package7. Warranty8. Service
PRICE
1. Price Strategy2. Pricing Policy3. Basic Price4. Terms of Credit5. Discount6. Allowances
PLACE
1) Distribution Channels1. Wholesalers2. Retailers3. Mercantile Agents
2) Physical Distribution1. Transport2. Warehouse3. Inventory
PROMOTION MIX
1. Personal Selling2. Advertising3. Publicity4. Sales Promotion
Personal SellingPersonal selling is the process in which a salesperson has a face-to-face interaction with the customer for the purpose of selling a product or service. Personal selling is one of the tools in a company’s promotional mix. It has greater significance than any other form of promotion as it allows the sales person to converse in detail with the customer about the product or the service.
Personal Selling“Personal Selling is oral presentation in a conversation with one or more prospective purchasers for purpose of making sales. It includes in-person sales presentations and telesales, sales meetings, samples. We have already referred to personal selling as a tool of marketing communication. Personal Selling is communicating directly with the target audience through paid personnel of the company or its agents.”
- American Marketing Association
Personal Selling“Personal Selling is the process effecting the transfer, with the profit to buyer and seller, of goods & services that gives such lasting satisfaction that the buyer is predisposed to come back to the seller for more of the same.”
- E.F. Schumakar“Personal Selling consists of contracting prospective buyers of a product personally.”
- Richard Buskirk
Objectives of Personal Selling1. To keep customers informed to changes in the
product line.2. To assist customers in selling the product line.3. To serve the existing customers.4. To secure and maintain customers’ co-
operation in stocking and promoting the product line.
5. To handle the sales personnel of middlemen.
Objectives of Personal Selling6. To collect and report market information on
interested matters to company management.7. To provide advice and assistance to
middlemen whenever needed.8. To provide technical advice and assistance to
customers.9. To search out and obtain new customers.10. Its goal is to actually make a sale.
Advantages of Personal Selling1. Personal Selling reduces the cost of
production2. It minimizes waste3. It helps to reduce marketing costs.4. It carries the advantage of flexibility5. It facilitates consumption6. It provides immediate & clear-cut feedback7. It is a two-way communication8. It helps to introduce new products & innovation
to the market.
Limitations Of Personal Selling1. Personal selling accommodates only a limited
number of consumers at a given time.2. It is quite expensive.3. It is especially on retail level, has poor image
in the eyes of a number of customers.4. It is not an effective tool for obtaining
consumer awareness about a product.5. Good and competent sales persons are not
easily found.
Personal Selling Tools
1. Sales presentations2. Sales meetings3. Incentive programs4. Samples5. Fairs and trade shows
Personal Selling Process
Pre-salePreparation
Approach
Pre approachProspectingand Qualifying
Follow up andMaintenance
HandlingObjections
Presentation &demonstration
Closing
A) Pre-sale PreparationIt involves all the preparations for getting ready for the selling process by the salesmen. The salesman has to be familiar with the product, the market, the techniques of selling and organization. He would be successful if he is aware of the unsatisfied needs and problems of the customers. He should prepare himself by knowing himself and his company, competition and market environment.
B) Prospecting and QualifyingThe potential customer is known as a prospect and the method of finding he potential customer is known as prospecting. Prospecting involves a significant amount of time, effort and money. Although the company will give the leads, the salesmen have to develop their own leads.
C) Pre ApproachIt involves finding out the needs, problems, preferences habits, attitudes, nature and interests of the prospects. The salesman should set best approach, which might be a personal visit, a phone call, or a letter. The best timing should be thought out because many prospects are busy at certain times and finally the sales presentation strategies are planned.
d) ApproachThe initial few minutes of the sales talk are known as the ‘approach’ to the prospect. The purpose of the talk is to arouse and sustain the customer’s attention. Before the talk, the salesman should introduce himself by using the telephone, by obtaining introduction from a customer and by handling his business card. In the first contact, he should attract the attention of the customers.
d) Approach1) Reference approach that involves reference of the
product by the friends of the prospects, 2) Benefit approach that indicates the benefits of the
products, 3) Sample approach that involves giving samples to theprospect and 4) Mutual approach that considers the prospect supreme.
E) Presentation and Demonstration
It refers to the presentation of the product to the
customer or prospect, a demonstration of its features
and benefits to the prospect and showing how the
product meets the customer’s needs. It stimulates the
buyer by using right stimulus words, pictures, terms and
actions. Sales demonstrations can be improved by using
demonstration aids such as booklets, flip charts, slides,
movies, audio, video and actual product samples.
F) Handling Objectives The customers almost always pose objections during presentations or when asked for the order. The resistance can be psychological such as interference, preference for established supply or brands, relevance to give up something. The resistance can also be logical such as objections to price, delivery schedule or certain product or company characteristics.To handle these objections, the salesman has to maintain a positive approach, by classifying the objectives with valid reasons and turning objectives into reasons for buying.
G) ClosingThe sales person should try to close the presentation at the earliest possible moment to avoid the emergence of any reaction to the product. He should be expert enough to close the sales talk at the right moment and including physical actions, statements and comments.
H) Follow up and MaintenanceFollow up action begins when the prospect signs the order and asks for delivering the salesman arranges for the dispatch and delivery of the product, facilitates grant of credit and reassures the buyer about the wisdom of his decision. This step is necessary to ensure customer satisfaction and repeat business. The sales person has to develop an account maintenance plan to make sure that the customer is not forgotten or lost.
Personal Selling – Classification1. Industrial Selling
a. Resellersb. Selling to Business usersc. Institutional Sellingd. Selling to Government
2. Retail Selling3. Service Selling
Personal Selling – Types 1. Relationship Selling2. Tele Marketing3. Team Selling4. System Selling
1. Relationship SellingDeveloping a mutually beneficial relationship with selected customer on a regular basis over time is relationship selling. It may an extension of team selling or it may be developed by individual sales representative in their dealing with customer.In relationship selling, a seller discontinues the usual territorial practice of covering many accounts. Instead the seller attempts to develop a deeper, long lasting relationship built on trust with key customers usually large buyers.
2. TelemarketingTelemarketing is the innovative use of telecommunication equipments and systems as part of the “going to the customer” category of personal selling. Both field selling and over the counter selling sometimes utilize the telephones in such activities as prospecting for new customers and following up with existing customer. The telephone is also the basis for a third approach to personal selling that is “telemarketing” in which selling is conducted entirely by telephone.
2. Telemarketing(a) Outbound Telemarketing: It involve a sales force that use only the telephone to contact customer. This approach is designed to reduce the substantial cost entitled in making personal visits to customers’ home or business.
(b) Inbound Telemarketing: It typically involve toll free hundred of number that customer can call to obtain information and make purchases.
3. Team SellingThe sales person is joined by specialist from other functional areas of the firms during the selling process. In other words, a sales team (also called selling center) is a group of people representing the sales department as well as other functional areas in firm such as finance production, distribution and research and development.
3. Team SellingExample, i.e., relation to selling washing machine to a large buyer, a firm may assemble a team of sales people an engineers to educate such large buyer’s buying team in order to match the expertise on the buying side especially in industrial market. A growing number of firms on the selling has become the standard for successful selling, especially to large and important customers. Team selling is expensive and is use therefore only when there is potential for high sale volume and profit. Each team is assigned to cover large retailer including a large multinational firm.
4. System SellingThe concept of system selling means selling a total package of related goods and services (i.e., system) to solve a customer’s problem. The purpose is that the system (i.e., the total package of goods and services) will satisfy the buyer’s need more effectively than selling individual products separately.
Sales Force StructuresThe sales force strategy will have implications for structuring the sales force. If the company sells one product line to one end using industry with customers in many locations, the company would use a territorial sales force structure. If the company sells many products to many types of customers, it might need a product or market sales force structure.
Alternative Structures for the Sales Force
a) Territorial structured sales forceb) Product structures sales forcec) Market structured sales forced) Complex sales force structures
a) Territorial structured sales force
In the simplest sales organization, each sales representative is assigned an exclusive territory in which to represent the company’s full line. This structure has a number of advantages. First it results in a clear definition of the sales person’s responsibilities. As the only sales person working the territory, he or she bears the credit or blame from area sales. Secondly the territorial responsibility increases. Thirdly, travel expenses are relatively small, since the sales representative travels within a small geographical area.
b) Product structures sales forceThe importance of sales representatives knowing their products, together with development of product divisions and product management has led companies to structure their sales forces along product lines. Product specialization is particularly warranted where products are technically complex, highly unrelated or very numerous.
C) Market structured sales forceCompanies often specialize their sales forces along industry or customer lines. Separate sales forces can be setup for different industries or even for different customers. The advantage of market specialization is that each sales force can become knowledgeable about specific customer needs. The major disadvantages of structured sales forces arise when the various type of customers are scattered throughout the country as this requires extensive travel by each sales force.
d) Complex sales force structures
When a company sells a wide variety of products to many types of customers over a broad geographical area, if often companies several principles of sales force structure. A sales representative might then report to one or more line managers and staff managers.
Market / Sales PotentialA sales potential is an estimate of the maximum possible sales opportunities present in a particular market segment open to a specified company selling a good or service during a stated future period.
ANALYZING MARKET POTENTIAL1. Market Identification2. Market motivation3. Analysis of Market Potential
Sales ForecastA sales forecast is an estimate of sales, in dollars or physical units, in a future period under a particular marketing program and as assumed set of economic and other factors outside the unit for which the forecast is made. A sales forecast may for a single product or for an entire product line. It may be for a manufacturer’s entire marketing area, or for any subdivision of it.
Sales ForecastAccurate sales forecasting is essential for a firm to enable it to manufacture the required quantities at the right time and arrange well in advance for the various factors of production e.g., raw materials, equipments, machine accessories etc. Forecasting helps a firm to access the probable demand for its products and plan its production accordingly.
Importance of Sales Forecast Helpful in deciding the number of salesmen required to achieve the sales objective. Determination of sales territories. To determine how much production capacity to be built up. Determining the pricing strategy. Helpful in deciding the channels of distribution and physical distribution decision. To decide to enter a new market or not. To prepare standard against which to measure performance.
Factors Affecting Sales Forecast1. Purchasing power of customers2. Demography3. Price4. Replacement demand5. Credit Conditions6. Conditions within the industry7. Socio economic conditions
Methods of Sales Forecast1. Survey of buyer’s intentions/opinion survey
method2. Sales force composite method/collective
opinion survey method3. Executive judgment/jury of executive opinion
method4. Delphi method5. Time series analysis6. Market test method7. Correlation method
1. Survey of buyer’s intentions/opinion survey methodCustomers may be asked to communicate their buying intentions in a coming period. This requires identifying potential buyers and asking them if they intend to buy a certain product during a specific future time period and if so, how many units and from whom will they buy. Survey of this type is used especially for industrial products’ sales forecasting.
2. Sales force composite method/collective opinion survey methodIn this method, the sales men are required to estimate expected sales in their respective territories in a given period. Then the individual sales force forecasts are combined to produce the total company forecast. This method is used based on the assumption that sales persons are closest to the customers and have direct contact with them.
3. Executive judgment/jury of executive opinion methodIt involves combining and averaging the sales projections of executives in different departments to come up with a forecast. If they are experienced and knowledgeable about the factors that influence the sales, and if they have up to date knowledge of current market developments.
4. Delphi method
It consists of an attempt to arrive at a consensus in an uncertain area by questioning a group of experts repeatedly until the responses appear to converge along a single line. The participants are supplied the responses to previous questions from others in the group by the coordinator. The coordinator provides each expert with the responses of the others including their reasons. Each expert is given the opportunity to react to the information or considerations advanced by others.
5. Time series analysis
Time series analysis is based on extrapolation, which is the process of projecting a past trend or relationship into the future on the belief that history will repeat itself. Unfortunately, this is not always the case, especially in the longer term.
6. Market test method
In a market test the firm distributes the product in one or more markets to total potential customer response to the marketing mix. The market test measures actual sales, not intentions to buy. If test markets are selected wisely and the test is conducted properly, the marketer can generalize test experience to the entire market and develop a sales forecast.
6. Correlation method
The method is based on historical sales data. When there is a close relationship between sales volume and a well-known economic indicator, correlation method can be used. The marketer could develop a mathematical formula that describes the relationship between sales and independent variable.
Direct MarketingMost companies rely primarily on advertising, sales promotion, and personal selling to move their products and services. They use advertising to create awareness and interest, sales promotion to provide an incentive to buy, and personal selling to close the sale. Direct marketing attempts to compress these elements to lead to a direct sale without using an intermediary.
Direct MarketingDirect marketing is the use of consumer-direct channels to reach and deliver goods and services to customers without using market middlemen.
Direct Marketing - Methods The mail (Direct Mail). Telephone (Telemarketing). Humans (Door-to-Door Selling, Party Plan Selling). E-mail (E-mail Marketing). Internet (Behavioral Targeting) Mobile phones.
Direct MailDirect marketers send single mail pieces-letters flyers, foldouts, and other “salespeople on wings”. Some direct marketers have been mailing audiotapes, videotapes and even computer diskette’s
TelemarketingTelemarketing is the innovative use of telecommunication equipments and systems as part of the “going to the customer” category of direct marketing. Both field selling and over the counter selling sometimes utilize the telephones in such activities as prospecting for new customers and following up with existing customer.
The Internet Provides buyers with infinite selection Available for access 24/7 Buyers chose when to interact with information Similar to catalogues Services can become sales arms with manufacturer handling fulfillment Presentation improves as broadband expands
Mobile Marketing
Mobile marketing can also be defined as “the use of the mobile medium as a means of marketing communication”, the “distribution of any kind of promotional or advertising messages to customer through wireless networks”. More specific definition is the following: “using interactive wireless media to provide customers with time and location sensitive, personalized information that promotes goods, services and ideas, thereby generating value for all.
Characteristics Of Direct Marketing
1) Non Public: The messages are addressed to specific
person and do not reach others.
2) Customized: The message can be customized to
appeal to the addressed individual.
3) Up to date: A message can be prepared very quickly
for delivery to an individual.
Relationship MarketingThe principles of personal selling and negotiation as described are transaction oriented; that is, their aim is to help salespeople close a specific sale with a customer. But in many cases, the company is not seeking simply a sale: it has targeted a major customer account that it would like to win and serve. The company would like to demonstrate to the account that it has the capabilities to serve the account’s needs in a superior way, particularly if a committed relationship can be formed.
SalesmanshipW.G.Cater - “Salesmanship is an attempt to induce people to buy goods”
Knox, T.S. – “Salesmanship is the power or ability to influence people to buy at a mutual profit that which we have to sell but which they may not have thought of buying until we call their attention to it. Salesmanship is the ability to persuade people to want what they already need.”
Characteristics of Salesmanship1. Salesmanship is an educative process.
Salesmanship educates people about their needs. Sometimes people are not aware of their needs or the way in which they could satisfy them. The salesman performs the function of educating the customers about their needs and their satisfaction.
2. Ideal salesmanship aims at serving the producer, distributor and consumer. The salesman helps the producer in disposing off his goods at a profit. While, for the distributor the salesman makes the distribution process smooth and easy for the consumer, the salesman assists to buy wisely.
Characteristics of Salesmanship3. Salesmanship aims at winning the buyers’ confidence.
Modern salesmanship does not use doubtful methods to influence buyers.
4. The person involved in selling must possess skill and ability to convince another. Salesmanship involves the ability to influence or persuade people. It is the art of persuasion, not pressure which is highly essential.
5. Modern salesmanship does not sell duplicate, fake products to customers.
6. The price of the product or service must be reasonable for both the buyer and the seller. In fact, salesmanship should benefit both the buyer and the seller.
Characteristics of Salesmanship7. Salesman always acts as a link between two parties,
the seller and the consumer and looks after the benefit of both the parties.
8. Salesmanship creates satisfied customers, not just cast producing sales. For a sale once made is end but a satisfied customer once made is the beginning. Modern salesmanship expects to create permanent customers and aims at repeat orders.
Functions of Salesmanship1. To introduce products to the customers.2. To help the customer to make buying decisions3. To see how the customer’s needs are transformed
into wants and demand4. To negotiate and conduct effective selling at least
cost5. To gather information about markets and competitor’s
products and transmit it to the company
Sales Force Management kind of personnel management centralized direction of their activities provides limited opportunities for face to face contact efficiency of sales people prime concern of the sales manager to field sufficient sales people to serve the needs of the prospecting customers for the company tasks complex problems make task of recruitment and selecting sales people more difficult than other employees. covering wide geographical area markets suitable to market
SALES FORCE MANAGEMENTRe
crui
tmen
t
JOB ANALYSIS
SelectionTraining & Supervision
Performance
Evaluation
Compensation & Motivation
Job SpecificationJo
b Ev
alua
tion
Job Description
Sales Force
Sales Force Recruitment Selection
TrainingSupervisionMotivation
Evaluation
Functions of Sales Force Mgt.1. Setting sales Force objectives2. Designing Sales Force strategy3. Recruitment & Selection4. Training5. Supervision6. Motivation7. Compensation8. Monitoring or controlling10. Performance Evaluation
Objectives / Goals of Sales Force Management
1. Maintaining continual growth2. Achieving sufficient sales volume3. Providing sufficient contribution to profits.
Sales Force CompensationCompensation is the amount received by salespeople in exchange of the work or services performed by them. Compensation is the form of salaries or commissions enables the sales people to meet their needs and those of their families. Financial compensation is a vital source of satisfaction.A proper compensation structure not only retains competent and efficient sales personnel – but also attracts others from outside the organisation. An appropriate compensation package gives employees a sense of satisfaction and motivates them to strive more and more to achieve the set objectives.
OBJECTIVES OF SALES FORCE COMPENSATION
1. It should stimulate the salesmen to put forth his best efforts in the accomplishment of his tasks by establishing visible correlation between efforts plus results and rewards.
2. It should help in the early elimination of the men who do not fit into the long run plans of the firm.
3. It should ensure the full support of the sales force.4. It should enable the firm to attract, retain and develop a
contented, efficient and loyal sales force.5. It should enable the firm to control and direct the
activities of the salesmen.6. It should provide for extra benefits for doing duties
other than selling.
TYPES OF SALES FORCE COMPENSATIONMonetary compensation is the single most important factor to affect efficiency of salesman. Efficiency of salesman has direct relation with the method of remuneration adopted by the company. There are number of methods of rewarding salesmen, it can, however, be brought under the following three basic types of compensation plans.
1. Straight Salary method2. Straight commission method3. Combination of Salary and commission (other variable elements)
CommissionSalary
Combination
1. Straight Salary MethodThe most common form of rewarding a salesperson is to put him on a straight fixed monthly salary. This ensures that the salesperson takes home a fixed income every month and hence he can plan his living accordingly. It also ensures that the firm knows its financial commitment and that even the non-selling jobs like information gathering and customer service get adequate attention. The salesperson will not necessarily put all efforts in selling fast moving items.
2. Straight Commission methodA straight commission plan is like a straight piecework plan in that the salesperson’s earnings are in direct proportion to his or her sales. It is probably the oldest form of compensation program for sales personnel. In this method, salesmen only get a fixed percentage of the sales of profit volume. Naturally, his earnings are in direct proportion to his input and the results. This type of scheme is particularly popular while selling insurance, operating as agents to overseas suppliers, selling real estate etc.
3. Combination of Salary & CommissionThe limitations of the above two methods of compensation are sought to be overcome through combination plans. In these plans, a base salary is determined which the sales person will carry home each month, no matter what the sale or profits are in that month. This enables him to plan the monthly living. Normally, this is adequate enough to take care of the essential needs of the salesperson like food, clothing, children’s education and his other commitments like monthly rent etc.
Various Other Schemes
1. Sales contests and prizes2. Promotion3. Bonus4. Profit sharing plan
1. Sales Contests and PrizesSome companies use sales contests and offer prizes to boost the competitive spirit of the salesmen. As a result to win sales contest, salesmen make special efforts to increase sales volume. Special quotas are fixed or special targets are set and salesmen who are able to reach those targets are properly rewarded. These rewards may be in the form of cash or other benefits.
2. PromotionsSometimes salesmen are given incentive by way of promotion. Those salesmen who have performed exceptionally well or who are able to sell beyond a limit are given special promotions. Sometimes junior salesmen are also promoted for special efforts to increase sales.
3. BonusBonus is paid to salesmen who put extra efforts to increase the sales volume. This amount is given in recognition of services and talent of salesman, as it is paid over and above the regular income. They are used to reward salesman for performing tasks.
4. Profit Sharing PlanSome firms disburse a portion of their divisible profits amongst their sales men thus in effect given a share in the profits earned by them to their salesmen. The amount to be disbursed may be calculated on the basis of over all profits of the firm or the profits earned on sales in a given sales territory.
EXPENSES REIMBURSEMENTSalespeople should have an economic incentive for controlling their expenses and for using expenses money productively and efficiently. If no economic incentives exist because expenses are open-ended, salespersons use them as an additional form of compensation. Similarly, management cannot ask its salespeople to pay for expenses when this would lower their total compensation to an unacceptable level.
FRINGE BENEFITSFringe benefits include mandatory items such as Social security, medical care and unemployment insurance, plus expected items such as health, life, and disability insurance, vacations and retirement plans and optional items such as profit sharing, stock options, education reimbursement, clubs, dental/vision insurance, and moving expenses.
SALES FORCE TRAININGTraining is the act of increasing the knowledge and skills of an employee for doing a particular job. It is the responsibility of the employee to develop his skills by giving him adequate training concerning his job. The programme should particularly concentrate on understanding the behaviour of different kinds of people because a sales man has always to be in touch with the prospective and present customers.
Objectives of Training Programme1. A salesman is to be prepared for the various types of
buyers he will meet and give him an insight into their problems and ideas so as to enable him to vary his methods of approach behaviour and sales talk to suit the particular type of buyers. They are given training in sales technique.
2. A salesman must acquaint himself with the business principles of his firm and to make it clear to him just what product or service the firm offers to its customers, and at what price?
3. A salesman should be given a frank and true statement regarding the competition he has to face and the strong and weak points of the goods.
Training Methods1. Refresher Training2. Orientation / Induction Training3. Conference Training4. Promotion Training5. Remedial Training6. On the job Training7. Study Material8. Vestibule School9. Role Playing10.Discussion Method
Motivating the Sales ForceMotivation is an important factor which encourages persons to give their best performance and help in reaching enterprise goals. A strong positive motivation will enable the increase output of employees but a negative motivation will reduce their performance.
Importance of Motivating the Sales Force
1) Good Human Relations2) Low Absenteeism and Turnover3) Good Corporate Image4) Higher Efficiency
Methods of Motivating Sales Force
1) Sales contest2) Convention and meetings3) Recognition and honour4) Personal meet5) Promotion6) Personal Communication7) Freedom8) Timely Information
Evaluating Salesman PerformanceEvaluating salesman’s performance is a complex task not only because salesmen are required to perform a variety of activities, but also because different types of selling situations require different kinds of selling skills which may not lend themselves to equitable comparisons. In addition, salesmen differ in terms of selling acumen and personal qualities. Then, territories differ and they are required to spend a large part of their time away from their immediate manager. A good monitoring system becomes a basis for developing an evaluation system.
Control of Sales ForceThe success of planning depends greatly on supervision and control. Control of sales activities has gained much importance in modern competitive world. In fact, planning and controlling are two sides of a coin of all the problems of the sales management. Controlling is the act of checking and verifying an act to know whether everything takes place in accordance with the predetermined plan. In other words, control covers the direction and guidelines towards securing desired objectives.
Objectives of Control of Salesman
1. Spotting out negative performance2. Measurement of Sales performance
Sales Quota Sales quota, may be defined as the estimated volume of sales that a company expects to secure with in a definite period of time. Quota is the amount of business, in terms of value or in terms of units sales, which is fixed for every salesman. It may be fixed for a geographical area to be achieved with in a definite period of time, a month or a year.
Objectives of Sales Quota 1. To motivate salesman2. To provide quantitative performance standards3. To use in connection with sales contest4. To obtain an effective budgetary control over sales
Territory Sales ForceAccording to Philip Kotler, “by sales territory is meant the geographical area assigned to a salesman for his operations or selling activities”.Seles territories may be planned either on geographical basis or on the basis or on the basis of number or nature of customers. Once the territories are defined, personal selling resources as well as other marketing resources can more easily be allocated, monitored and controlled.
Benefits/Advantages of Sales Force Territories1. To evaluate performance2. Benefit to salespeople and the company3. To improve customer relations4. To obtain thorough coverage of the market5. To reduce sales expense6. To allow better matching of sales person to
customer’s needs7. To establish sales person’s responsibilities
Sales AuditThe sales audit is an objective total evaluation of marketing efforts including policies, objectives and even personnel. Sales audit is an important function of modern marketing executives.It has been defined as “a systematic, critical, unbiased review and appraisal of the basic objectives and policies of the marketing function and of the organisation, methods, procedures and personnel employed to implement those policies and to achieve those objectives.”
Case StudiesABC electronics is a seven year old company which manufactures power generating equipment and sells directly to customers as well as through distribution network. The sales force was recently expanded to cover several regions. The marketing manager felt an urgent need to institute a sales incentive programme so as to motivate sales managers to increase sales revenues at least by 30% over the previous year. The power generating equipment business was extremely competitive. Although ABC had an approved price list, sales managers would frequently come to their supervisors to allow lower pricing than approved price list. The marketing manager spent considerable amount
Page - 2of time reviewing pricing exceptions. He thought that in the long run this had to stop. The only way to discourage sales personnel from seeking exceptions was to give their clients a price that would win business. But then he had to devise a disincentive plan to sales personnel from arbitrarily dropping prices to generate larger revenues and obtain incentive bonus. The larger revenues at lower prices would have negative impact on the corporate bottom line. After many discussions with management, the marketing manager instituted the incentive programme as follows.
Page - 3(a) Sales personnel had price flexibility and could quote
lower prices if in their judgment it was the only way to win the business.
(b) At the lowest end of the discretionary price authority the incentive would be very minimal. The incentive would increase as the quoted price increased above the minimum price level. The incentive increased exponentially which meant much larger incentives at higher price levels.
The marketing manager presented this incentive scheme to the sales force expecting an enthusiastic support. However, there was virtually no reaction from the sales force.
Page - 4Questions:1. Do you feel the incentive programme so devised will
achieve the results as desired by the marketing manager? Justify your answer.
2. Suggest an alternative sales incentive programme to motivate the sales force.
3. What types of training can be provided to the sales force of ABC electronics to achieve their targets?
MARKETING MIX
Distribution Mix
Physical Distribution
Promotion MixProduct & Service Mix
Channels of Distribution
Advertising Personal Selling Publicity Public Relations Sales Promotion
Retailer Wholesaler (Middleman)
Transportation Inventory Mgt Materials Movement Communication Order Processing
Brand Trademark Service Product
Line StyleColour Design Warranty Guarantee
Physical Distribution“Physical distribution involves planning, implementing and controlling the physical flows of materials and final goods from point of origin to point of use to meet customer requirements at a profit.” - Philip Kotler
“Physical distribution (also called market logistics) involves planning, implementing, and controlling the physical flow of materials and final goods, from points of use, to meet customer requirements at a profit.”
- Kotler & Armstorng
Supplier
Manufacturer Customer
Materials manageme
nt
Physical distribution
management
Logistics Management
InboundLogistics
OutboundLogistics
Physical Distribution Logistics
1.Management of movement, inventory control, protection and storage of raw materials and of processed or finished goods to and from the production line.
2.Narrow scope than of logistics.3.Concerned with creation of time and place utilities.4.Deals with outbound activities only.
1. Process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw material, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of confirming customer requirements.2. Larger scope.
3. Creates time, place, form and possession utilities.4. Deals with both inbound and outbound activities.
SUPPLY CHAIN MANAGEMENTSupply chain is the network of organized activities that are co-ordinated, or in other words, upstream and downstream linkages of different processes and activities, so as to distribute the products, through channels, ultimately to the consumers. For example, a shirt manufacturer is a part of a supply chain that extends upstream through the weavers of fabrics to the manufacturer of fibers and downstream through distributors and retailers to the final consumers.
Elements / Functions of PD
Physical Distribution
Order processing Packaging Inventory
ControlWare
Housing
Material Handling
Transportation
Locational Analysis
Customer Services
Order ProcessingTime to complete the activities of the order cycle is at the very heart of customer service. It has been estimated that the activities associated with order preparation, transmittal, entry, and filling represent 50 per cent to 70 per cent order cycle time in many industries. Due to this, activities involved in processing company's orders are receiving more and more management attention. As it is closely related to sale and production, order processing should also be a part of physical distribution department.
Industrial PackagingPackaging cost is a part of the total cost of production. Container manufacturers, carriers, trade associations and government agencies are continuously working for improvements in packaging techniques. Physical distribution department, in order to fulfill this function, has to work in cooperation with sales and manufacturing department, and deliver the products in their best quality and condition in the consumer hands.
Inventory ManagementInventory (or stockholding) can be described as ‘the accumulation of an assortment of items today for the purpose of providing protection against what may occur tomorrow’. An inventory is maintained to increase profitability through manufacturing and marketing support. Manufacturing support is provided through two types of inventory system:An inventory of the materials for production;An inventory of spare and repair parts for maintaining production equipment.
WarehousingWarehousing refers to storing products while they wait to be sold. This function is necessary, as production and consumption functions rarely match. Organizations use either warehouses or distribution centers to process their products. The choice is made in regard to the transportation cost, amount of customer service and level of inventories.
Material HandlingEfficient and careful material handling methods in factory and distribution warehouses can contribute much to customer satisfaction. Proper material handling helps1. Decrease the damage;2. Maintain the quality of storage;3. Facilitate order processing; and4. Move right goods at right time to make them available to right customers.
Locational AnalysisWith the continuing growth of individual units of economic activity, there is greater expansion of organization, and new plant locations must be carefully chosen. Moreover, trend of decentralization of industries have further increased emphasis upon the site location that best fulfills the needs of the customers and companies. Physical distribution performs this function after analyzing aspects like market area, transportation facilities, transportation rates, and public and private warehouse facilities.
Logistics ManagementLogistic Management is a field of management which primarily deals with the coordination of resources in an organisation. These resources may be in the form of men, money, materials, machines and time and requires most efficient use of existing organisation resources. Many projects in developing countries do not succeed due to lack of attention in coordination logistic function. As such there are delays in completion of projects.
Case StudiesPratap has an outstanding track as a sales person at Everest Electric Company. His behaviour towards customers is excellent and can serve as a role model. But with his peers and even with the sales groups manager is best described as offensive even though his ideas are good ones. He never actually hears what others are proposing or suggesting. He is argumentative and downright unpleasant in the way he interacts with the group. He laughs at the quotas set for him by the company. He says the company does not know customers and their potential. His sales group has
Cont…Spent immeasurable amount of time and energy trying to persuade him to consider other options and approaches to problems whose solutions are vital to the sales group. The group’s resentment towards Pratap is interfering with its group and development as a team.Questions:1. If you were the Pratap’s manager, what would you do
about his behaviour?2. What alternatives would you consider and which
course of action would you select?
The Environment of PD1. Demand characteristics
a) Populationb) Incomec) Demand variations
2. Product characteristicsa) Value of the productb) Seasonality of the productc) Product line
3. Dynamic environment.
Distribution ChannelDistribution channel comprises a group of people and firms involved in the transfer of title of ownership (of the product), as the product moves from producer to ultimate consumer or a buyer. A channel of distribution includes producer, consumer as well as many middlemen such as retailers and wholesalers.
Channels of Distribution“A channel of distribution or marketing channel, is the structure of intra company organisation units and extra company agents and dealers, wholesale and retail through which a commodity, product or service is marketed.” - American Marketing Association
“Marketing channels are the combination of agencies through which the seller, who is often, though not necessarily the manufacturer, markets his product to the ultimate user.” - John A. Howard
Levels of Channels1. Direct Marketing Channels/Zero Level Channel
Producer Consumer
2. Indirect Marketing Channelsa. One-Level Channel
Producer ConsumerRetailer
Producer ConsumerDistributor
b. Two – Level Channel
c. Three – Level Channel
Producer Wholesaler/Distributor Retailer Consumer
Producer Distributor Wholesaler Retailer
Consumer
d) Four – Level Channel
Producer Agent Distributor Wholesaler
RetailerConsumer
Functions / Role of Marketing Channels
1. Buying2. Carrying Inventory3. Selling4. Transporting5. Financing6. Promoting7. Negotiating8. Marketing Research9. Servicing
CHANNEL STRUCTURE
Channel Structure
Direct
Indirect Horizontal
Multi-ChannelVertical
Factors Influencing the Channel Selection Decision1. Product or Market Characteristics Factors
a. Number of customers and frequency of purchase
b. Cost of the productc. Level of service requiredd. Technical nature of the producte. Geographical concentration of the marketf. Type of the product
2. Company Characteristics factorsa. Degree of channel control desiredb. Financial position of the company
Cont….c. Propensity of assumed riskd. Ability of Management
3. Middlemen considerationa. Services provided by middlemenb. Financial position of the companyc. Attitude of middlemen towards
manufacturer’s policies4. Environment Characteristics factors
Channel Selection Process / Designing distribution Channels
Identify Target Customer
Determining Consumer buying habits for the type of goods
Locate Potential Customer Geographically
Pinpoint Channel Alternatives
Evaluate Channel Alternatives
Select Channel Members
Selecting Channel Members - Variables1. Financial strength of the prospective partner2. Sales strength3. Product lines4. Reputation of the intermediary5. Market coverage6. Sales performance7. Management strength8. Equipment and facilities9. Ordering and payment procedures
Functions of Intermediaries1. Information2. Promotion3. Physical Possession4. Financing5. Retail6. Consumers
Types of Intermediaries1. Merchant Wholesaler2. Brokers and Agents
a. Manufacturers Agents b. Selling Agentsc. Purchasing Agentsd. Commission Agents
1. Merchant WholesalerA wholesaler or distributor is an independent commercial establishment that purchases products from various manufacturers for stock and offers complete assortments of special merchandise for resale to the retail store. A merchant wholesaler provides the widest variety of marketing functions an services. They are independently owned, and take title to merchandise. Merchant wholesalers can be further divided into full service wholesalers and limited service wholesalers.
2. Brokers and AgentsBrokers and agents do not take title to the products, and offer their customers a very limited number of services. Brokers are middlemen who bring the buyer and seller together and assist in price, product and delivery negotiations. Agents are wholesalers contracted to represent the producer or the buyer. These are of several types.
a. Manufacturers agentsThese are independent agents who usually represent two or more manufacturers who produce complementary products. They usually represent the manufacturer with whom they have entered into a contract. This contract usually contains details concerning pricing policies, territories, order handling procedures, delivery service and warranties and commission rates. These are firms composed of highly skilled sales people who are contracted by the small firms who cannot afford to have an extensive sales force of their own.
b. Selling agentsThese are intermediaries who are contracted by the manufacturer to sell the entire production output. This type of agents are taken on by companies incapable of employing individual fulltime sales force.
c. Purchasing agentsAgents adopted by the customers are purchasing agents. These agents are able to get best goods and prices for the customer and also provide consultative services.
d. Commission agentsThese are intermediaries who purchase goods from the manufacturer and then sell it in the market for the best possible price. After deducting their fee and miscellanies, the balance is on to the manufacturer.
Channel Distribution Strategies and PolicesAfter deciding the channel of distribution, the manufacturer has to decide how many middlemen should be there in the channel i.e., the intensity of distribution to be used at the wholesaling and retailing levels in the channels has to be decided.
A major channel of distribution decision is determining the intensity of distribution. It is referred to as the extent to which company wants to saturate existing outlets with the product. It is usually measured by the percentage of all potential outlets that a firm wants to carry its products. There are three basic coverage strategies:
INTENSITY OF DISTRIBUTION
Exclusive Selective Intensive
Distribution through every
reasonable outlet in market
Distribution through multiple,
but not all, reasonable outlet
in the market
Distribution through single
wholesaling middlemen in a
market
Distribution Intensity
ExclusiveDistribution
IntensiveDistribution
SelectiveDistribution
1. Intensive DistributionIt means maximum market coverage. Under this strategy, a marketer sells its product(s) through every available outlet in a market where the consumer might look for it. Marketers of convenience products like cigarettes, chewing gum, salt, biscuits, bread, soaps, detergents and soft drinks want intensive distribution.A manufacturer’s ability to achieve intensive distribution depends a great deal on the willingness of relevant middlemen to stock the product. Trade promotions such as big discounts may be introduced to motivate middlemen to push the product.
2. Selective DistributionHere the manufacturer sells its product through multiple, but not all-possible outlets. It is the distribution in the geographical area restricted to middlemen on the basis of their performance capability. Selective distribution is appropriate for consumer shopping products such as various types of garments, appliances etc.
Selective distribution benefits middlemen by limiting the number of rival outlets that carry the brand. This often helps build co-operation among channel members.
3. Exclusive DistributionThe most restrictive form of market coverage is exclusive distribution. It is an extreme form of selective distribution – one outlet in a geographical area. Exclusive distribution is frequently used in the marketing of consumer specialty products. Exclusive distribution is also attractive to middlemen. The manufacturer’s promotion effort benefits middlemen exclusively in their market areas.
In this policy the crux of the matter is the exclusivity in mutual loyalty between a manufacturer and his middlemen developed by virtue of a contract or an understanding.
Intensity of Distribution
Intensive
Distributio
n
Selective
Distributio
n
Exclusive
Distributio
n
Intensity of
Distributio
n
SpecialityGoods
ShoppingGoods
ConvenienceGoods
Little or noEffort Some Effort Much Effort
Intensity of
Distributio
nTy
pes
of P
rodu
ct
Motivating Channel MembersA major challenge to a marketer today is to keep channel members motivated such that they give their best performance. Motivation of channel members is often achieved through financial and non-financial rewards. Financial rewards include higher margins, extended credit time, bonuses and reimbursement of expenses. The problem with most financial rewards, particularly higher margins and bonus, is that the wholesalers use them to reduce their prices for their customers.
Cont…There are three basic things involved in motivation management:1. Finding out the needs and problems of channel members2. Offering support to the channel members that matches with the needs & problems.3. Providing leadership through the effective use of power
Channel Member PerformanceEvaluating of middlemen is carried out by the middlemen to determine how well each middlemen is performing. The criteria used for evaluation may include the total sales made by middlemen, the relationship with the customers, the maintenance of the inventory etc. If after the evaluation, the performance of the middlemen is found unsatisfactory, the decision for the replacement is being made and the same process repeats.
Factor affecting scope & frequency of evaluation1. Degree of manufacturer’s control over channel members2. Relative importance of channel members3. Nature of the product 4. Number of channel members
Cont….
Degree of control: depends on• Contractual agreements• Acceptance of manufacturer’s product• Market position of the manufacturer
Importance of channel members: depends onWhether the manufacturer sells all its outputs
through intermediaries or relies less on intermediaries.
Cont….
Nature of productWhether reseller sells a high volume product of
low unit value or products of high unit value which is more complex. Importance of channel members:
Generally for intensive it’s a routine sales data whereas for selective it’s a more comprehensive evaluation.
Evaluation verses Monitoring
Performance Evaluation
Day to day Monitoring
Overall performance reviews that give
management a complete & objective analysis of each
distributor’s operations
Appraisals that assist management in
maintaining current operating control of distributors’ efforts
Channel Member Performance Audit
1. Developing Criteriaa. Sales Performanceb. Inventory Maintenancec. Selling Capabilitiesd. Attitudes of Channel Memberse. Competitionf. General Growth Prospects
2. Applying Performance Criteriaa. Separate Performance Evaluationsb. Multiple Criteria Combined Informallyc. Multiple Criteria Combined formally
Vertical Market System (VMS)One of the most significant recent channel developments is the rise of vertical marketing systems, which have emerged to challenge conventional marketing channels. A conventional marketing channel comprises an independent producer, wholesaler and retailer. Each is a separate business seeking to maximize its own profits. No channel member has completed a substantial control over the other members.A vertical marketing, marketing system by contrast, comprises the producer, wholesaler and retailer acting as a unified system. One channel member owns the others a franchises them or has so much power that they all cooperate. The vertical marketing system can be dominated by the producer, the wholesaler or the retailer.
Vertical Market System (VMS)Conventional
Marketing Channel
Vertical MarketingChannel
Manufacturer
Consumer
Retailer
Wholesaler
Manufacturer
Retailer
Who
lesa
ler
Consumer
Types of Vertical Market System
VerticalMarketing Systems
Corporate
Contractual
Administrated
Vertical Market System (VMS)(1) Administered: It is a system in which a single dominant firm in effect administers the channel by virtue of its market power. It is a channel situation where a manufacturer who dominates a market through its size and strong brands may exercise considerable power over intermediaries even though they are independent. In the administered vertical system, a channel leader exerts power over the behaviour of other channel members and can influence their decisions and actions.
Vertical Market System (VMS)(2) Contractual: In this system, the independent organisations like wholesalers, retailers, etc. operate under contract specifying how they will try to improve distribution efficiency and effectiveness. It is a franchise arrangement typing producers and resellers together. Contractual VMS consists of independent firms at different levels of production and distribution integrating their programmes on a contractual basis to obtain larger economies of scale and or sales impact than they could achieve along.
Vertical Market System (VMS)(3) Corporate: It is a system in which a single company owns all of the manufacturing, wholesaling and retailing operations. It is a channel situation where an organization gains control of distribution through ownership. The corporate VMS is closest to total channel systems concept. In corporate VMS, successive stage from production to distribution are under single ownership of any of the channel members.
Horizontal Marketing SystemAnother channel development is the horizontal marketing system, in which two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity. Each company lacks the capital, know-how, production, or marketing resources to venture along, or it is afraid of the risk.
Retail“Retailing includes all the activities involved in selling goods or services directly to final consumers for their personal, non business use ”. - Philip KotlerSRetailing outlets are shops from whom the consumer ultimately buys.” - R.S. Davar
Product Issues in channel mgtEffective channel management requires that the channel manager be aware of how channel management interfaces with product, price, promotion, and logistics in the marketing channel. Three basic areas of product management are considered: (1) new product planning and development, (2) the product life cycle, and (3) strategic product management.
Price Issues in channel mgtPricing strategy should incorporate channel considerations before being implemented. If the channel members perceive a manufacturer’s pricing strategy to be congruent with their own interests, they are likely to have a higher level of cooperation and the reverse is also true.
Promotion Issues in channel mgtOne of the major tools the manufacturer uses for implementing an integrated promotional program is selling support by channel members. A manufacturer must carefully administer promotional strategies to help assure a high degree of channel member cooperation in the promotion of its products. Research shows that merely offering more monetary incentives is not sufficient to secure promotional cooperation from channel members.
E-COMMERCEE-commerce involves the exchange of products, services, information and payment through the electronic medium of computers/networks. E-commerce means business done on line. Ecommerce is the umbrella term used for the entire spectrum of activities such as electronic data inter-change (EDI), electronic payment systems, order management, information exchange and other business applications, with electronic/paperless documentation.
SIZE OF E-MARKETInternet usage varies from country to country and is growing rapidly. It is creating opportunities and challenges for e-marketers to target and operate in countries that are less developed. Some of the most recent researches indicate the continuing rapid global growth of Internet connection and e-business generation.According to the Internet audience measurement service, Nielsen/Net Ratings, a total of 498 million people had Internet access in their home by the end of 2001. The analysis showed that 24 million people gained Internet access from home during the last quarter of 2001.
DEVELOPMENT OF E-COMMERCEE-commerce development varies widely by geography. The countries in the north are by far the most advanced in terms of Internet development; the countries in the south, the least developed, with the countries in central Western Europe generally falling somewhere in between in terms of Internet development and sophistication.Furthermore, mobile technologies, including mobile Internet access, are relatively widespread in the region, given that Finland and Sweden are home to mobile phone giants Nokia and Ericsson, respectively. Finally, much of the area’s population is fluent in English, the predominant language of today’s Web.
E-COMMERCE AS A CHANNEL OF DISTRIBUTION
1. Commercial Channels2. The Internet
1. Commercial ChannelsIn this the various companies have set up on-line information and marketing services that can be accessed by those who have signed up for the service and pay a monthly fee. These channels provide information (news, libraries, education, travel, sports, reference), entertainment like fun & games, shopping services, dialogue opportunities and e-mail etc.
1. www.olx.in2. www.quikr.com3. www.amazon.com4. www.justdail.com
5. www.techsatish.net
2. The InternetThe internet is a global web of computer networks that has made instantaneous and decentralized global communication possible. Internet usage has surged with the recent development of the user friendly world wide web and web browser software such as net scope navigator and micro soft internet explorer. Users can surf the internet and experience fully integrated text, graphics, images and sound. Users can send e-mail, exchange views, shop for products, and access news, recipes, art and business information.
FEATURES OF E-COMMERCE AS A CHANNEL OF DISTRIBUTION It allows to sell to a geographically disperse market. It makes the firms able to target and focus on specific segments. It has relatively low set-up costs. It makes possible the use of e-commerce technology (for payment, shopping, software, etc). It brings in a pattern shift in commerce and consumption.
E-RETAILINGE-retailing means using of interactive computer technology to present a sales message and consummate the sale. E-retailing includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use. E-retailer or retail store is any business enterprise whose sales volume comes primarily from e-retailing.
E-RETAILE-retailers need to consider the following issues:
- Product / content issues- Software interface issues- Process issues- Pricing issues- Payment issues- Market penetration issues
HIGHLIGHTS OF E-RETAIL A complete package to suit the businesses’ entire sales related requirements such as order, purchase, payment, delivery, customer service, returns and replacements. Good prices and continuous stock availability. Immediate pre-sales information on product quality, prices etc. Satisfying the buyer’s curiosity about the product. Provides knowledge about the psychological needs, motives and choices of the customers.
FEATURES OF E-RETAIL Electronic interface between retailer and manufacturer. Customer interaction and personalization. Order processing and order tracking. Shopper self service option. Product management. Service integration (payment systems, tax and shipping). Post-sales customer service. Inventory management.
ONLINE RETAILERSOnline retailers are business firms that buy products and resell them online. Here the consumers can access pictures of products, read the specs, shop among online retailers for the best prices and terms, and click to order and pay. Business-to-business purchasing is growing fast on the internet. Purchasing agents can use book-marked websites to shop for routine items. Personal selling can increasingly be conducted electronically, with buyer and seller seeing each other on their computer screens in real time.
DIGITAL PRODUCTSIn electronic commerce, digital goods is a general term that is used to describe any goods that are stored, delivered and used in its electronic format. Digital goods are shipped electronically to the consumer through e-mail or download from the Internet. Usually when you purchase digital goods online, after payment has been received the merchant will provide you with your digital item as an e-mail attachment or they may provide you with a secure link where you can download the item. Examples of digital goods include e-books, music files, software, digital images, Web site templates, manuals in electronic format, and any item which can be electronically stored in a file or multiple files.
DISINTERMEDIATIONDisintermediation describes the process of eliminating traditional intermediaries. Eliminating intermediaries can potentially reduce costs since each intermediary must add to the price of the product in order to profit. Taken to its extreme, disintermediation allows the supplier to transfer goods and services directly to the consumer in a direct channel. Complete disintermediation tends to be the exception because intermediaries can often handle them. An intermediary that specializes in one function, such as product promotion, tends to become more proficient in that function than a non-specialist.
REINTERMEDIATIONReintermediation can be defined as the reintroduction of an intermediary between end users (consumers) and a producer. This term applies especially to instances in which disintermediation has occurred first. Reintermediation occurred due to many new problems associated with the e-commerce disintermediation concept, largely centered on the issues associated with the direct-to-consumers model. The high cost of shipping many small orders, massive customer service issues, and confronting the wrath of disintermediated retailers and supply channel partners all presented real obstacles.
E-enabled Tracking SystemThe term ‘tracking’ in logistics management means getting information about the status of inventory and the location of inventory carrying vehicles etc. When this information or tracking system uses some electronic devices for it then it is called e-enabled tracking system. The need for tracking is necessary for knowing about the exact location of the inventories and to take some decisions on the basis of this information. The orders can be tracked by order number, waybill number, customer's name or telephone number. Status information includes inventory on hand, delivery information, purchase order validation, shipment transit information, EDD (estimated delivery dates) and other information that enhances product visibility through the supply chain.
RADIO FREQUENCY IDENTIFICATION DEVICE (RFID)
Radio Frequency Identification Device (RFID) is the technology that is associated with tracking wildlife or enabling drivers to speed past electronic tollbooths on the highway. Its working is simple. A radio frequency transponder that contains a microchip (RFID tag) is placed on something being tracked and it will emit or reflect a signal whenever it passes under a scanner. Decreasing chip prices have made RFID technology cost effective for the supply chain.
RFID Technology and Tracking Systems
RFID Technology has an improvement over the bar-code technology. Bar-code technology requires the forklift driver or warehouse operator to scan the label on each carton manually to track what's being moved. RFID technology would enable the same tracking by equipping an archway or doorway with an RFID scanner that registers what's in the load when the forklift drives through. The scanner simply reads the signals of tags within radio transmission range. No human effort is required to track the load, except to drive it through.
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