SALES AND DITRIBUTION 14
-
Upload
rohanjangid8 -
Category
Documents
-
view
223 -
download
0
Transcript of SALES AND DITRIBUTION 14
-
8/13/2019 SALES AND DITRIBUTION 14
1/29
SDM –
Ch 14 Tata McGraw Hill Publishing 1
Chapter 14
Channel Information Systems
-
8/13/2019 SALES AND DITRIBUTION 14
2/29
SDM –
Ch 14 Tata McGraw Hill Publishing 2
Learning Objectives
• Understand importance of information
systems for management of channels
• Elements of channel information systems• How information systems are used to impact
channel service objectives
• Performance measures for channels• Understand principles of channel
implementation
-
8/13/2019 SALES AND DITRIBUTION 14
3/29
SDM –
Ch 14 Tata McGraw Hill Publishing 3
CIS Purpose
• CIS is Channel Information Systems• CIS is the orderly flow of pertinent operational
data both internally and between channel
members, for use as a basis of decision
making in specified responsibility areas of
channel management
• CIS is of primary use of sales managers.
-
8/13/2019 SALES AND DITRIBUTION 14
4/29
SDM –
Ch 14 Tata McGraw Hill Publishing 4
Information - Advantages
• Useful in marketing planning – helpsimprove quality of marketing decisions
• Can help tap market opportunities• Provides an alert against competition
• Helps spot trends – favourable or
otherwise• Helps develop action plans for growth
• Gives feedback on consumer needs
-
8/13/2019 SALES AND DITRIBUTION 14
5/29
SDM –
Ch 14 Tata McGraw Hill Publishing 5
Classification of Information
• Based on the use made of it by marketing – planning, operations, decision making orcontrol
• Based on subjects – consumers, products,competition, channels, promotions, pricing,sales volume, value etc
• Operations data – facts and figures• Also based on assumptions, anticipated
occurrences – forecasts relating to thechannel system
-
8/13/2019 SALES AND DITRIBUTION 14
6/29
SDM –
Ch 14 Tata McGraw Hill Publishing 6
Information Process
COLLECTION
USE
PROCESSING
STORAGE
-
8/13/2019 SALES AND DITRIBUTION 14
7/29
SDM –
Ch 14 Tata McGraw Hill Publishing 7
Information Process• Collection: acquiring and placing raw data –
monthly sales by each territory
• Processing: analyzing data to get meaningout of it – arranging, modifying andinterpreting the data by the user – comparison of sales between periods
• Storage: keeping the information intact till it isneeded
• Use: application of information formanagement decision making – sales data ofthe last 6 months to forecast the sales of thenext month. evelopment…
-
8/13/2019 SALES AND DITRIBUTION 14
8/29
SDM –
Ch 14 Tata McGraw Hill Publishing 8
Developing a Channel MIS
Decide what information is required
Decide who will use the information
when and for what purpose
Organize information in a manner suitable
for interpretation and action
-
8/13/2019 SALES AND DITRIBUTION 14
9/29
SDM –
Ch 14 Tata McGraw Hill Publishing 9
Use of Information
• Planning: sales forecasts or distributorindents
• Control: expenses against budget• There is always a cost of collecting
information.
• If data collected is not used properly, the data
provider will hesitate to give the information.• The channel MIS works at the sales
operational level. It has very little strategicintent.
-
8/13/2019 SALES AND DITRIBUTION 14
10/29
SDM –
Ch 14 Tata McGraw Hill Publishing 10
Sources of Data
• Reports (oral and written) and records ofchannel members, sales people
• Letters, statements and market research
• Any other info collected by the sales people
and the channel members from the market• External sources like business publications,
magazines, newspapers, trade journals.
• In a dedicated channel system the collection
of info is well streamlined – in the JC meeting• With use of IT enabled systems collection and
processing has become simpler.
-
8/13/2019 SALES AND DITRIBUTION 14
11/29
SDM –
Ch 14 Tata McGraw Hill Publishing 11
A Good Channel MIS…
• Integrated system to handle all regular data• Useful decision support system
• Reflects the style of the marketingorganization
• User friendly and user oriented
• Convincing to the providers of the info as toits purpose
• Be cost effective• Not need for verification from other sources
• Be fast and totally reliable
-
8/13/2019 SALES AND DITRIBUTION 14
12/29
SDM –
Ch 14 Tata McGraw Hill Publishing 12
Element Importance
• In a good channel MIS, it is necessary
to define upfront for each element of the
MIS, the following: – Purpose of the info
– Source of the info
– Action possible – Impact on customer service
-
8/13/2019 SALES AND DITRIBUTION 14
13/29
SDM –
Ch 14 Tata McGraw Hill Publishing 13
Competition Tracking
Purpose Plan day to day corrective action to protect market
shares and shelf space
Source Trade, channel partners and sales people
Action
possible
Spot action while in the market and taken by
channel partners or sales people
Impact on
service
Timely action to provide better support to the trade
and retain their goodwill
Example
-
8/13/2019 SALES AND DITRIBUTION 14
14/29
SDM –
Ch 14 Tata McGraw Hill Publishing 14
Channel Performance
Evaluation
-
8/13/2019 SALES AND DITRIBUTION 14
15/29
SDM –
Ch 14 Tata McGraw Hill Publishing 15
Evaluation Criteria
• Channel system can be evaluated on howwell it provides time, place and possessionutilities
• Formal channel evaluation only withcontracted channel members
• Independent wholesalers and retailers may
not accept any evaluation by a company• Periodicity of evaluation and parameters like
achieving targets market coverage etc agreedwith channel partners.
-
8/13/2019 SALES AND DITRIBUTION 14
16/29
SDM –
Ch 14 Tata McGraw Hill Publishing 16
Distributor Evaluation
• Once a month by the sales people on
the performance of the previous month
on all agreed criteria• Criteria varies with the category of
channel member, nature of the product
and the nature of customers.
-
8/13/2019 SALES AND DITRIBUTION 14
17/29
SDM –
Ch 14 Tata McGraw Hill Publishing 17
Evaluation• Each of the primary criteria can be
given a weightage and performance
scores worked
Criteria Weightage
% - X
Criteria
score (1 to10) - Y
Weighted
score X*Y
Sales target achievement 50 7 3.50
Inventory management 15 8 1.20
Selling resources 15 7 1.05Market coverage 10 8 0.80
Back office support 10 6 0.60
Overall performance score –
7.15
-
8/13/2019 SALES AND DITRIBUTION 14
18/29
SDM –
Ch 14 Tata McGraw Hill Publishing 18
Evaluation• Each of the primary criterion can be broken down
into it components and also rated.
Criterion Weightage
% - X
Score 1
to 10 - Y
Weighted
score X*Y
Primary sales
15 8 1.20Secondary sales 50 7 3.50
Achievement of secondary
sales target20 7 1.40
Sales growth by period 10 8 0.80
Market share achievement 5 6 0.30
Sales target achievement –
Performance score
7.20
-
8/13/2019 SALES AND DITRIBUTION 14
19/29
SDM –
Ch 14 Tata McGraw Hill Publishing 19
Evaluation Overall Rankings
Channel
member
Overall performance
score
Ranking
A 7.39 1
B 7.20 2
C 7.15 3
D 6.89 4E 6.56 5
F 5.60 6
-
8/13/2019 SALES AND DITRIBUTION 14
20/29
SDM –
Ch 14 Tata McGraw Hill Publishing 20
Overall Rankings - Action
• Bottom 20% to be warned to improve
performance
• Top scorers have potential to give morebusiness to the company – to be
encouraged
• Consistent poor performance will entaildismissal
-
8/13/2019 SALES AND DITRIBUTION 14
21/29
SDM –
Ch 14 Tata McGraw Hill Publishing 21
Implementation Principles
• More relevant where member is bound by acontract. Wholesalers and retailers areinvolved in the implementation to the extentthat the company wants to cover them with itsproduct presence.
• The most critical issue in implementation isthe ‘intensity’ of distribution desired. This is more relevant to FMCG, pharma kind ofproducts and not so much for consumerdurables or industrial products
-
8/13/2019 SALES AND DITRIBUTION 14
22/29
SDM –
Ch 14 Tata McGraw Hill Publishing 22
Influencing Factors
• Intense distribution allows consumer to shopwhere he likes for the product
• Intensive distribution increases sales – goodcompanies insist on retail distribution intensity
• Selective or exclusive distribution may resultin loss of sales opportunities
• Channel members feel widely distributedproduct must be a fast seller. Equitable efforts are required in selling all brands and packs ofthe same company
-
8/13/2019 SALES AND DITRIBUTION 14
23/29
SDM –
Ch 14 Tata McGraw Hill Publishing 23
Influencing Factors
• Intensive distribution is more expensive and requires more supervision
• For consumer electronics or durablesintensive distribution may result in ‘free-riding’ situations
• Channel members prefer selectivedistribution – the company should givethe products only to them
-
8/13/2019 SALES AND DITRIBUTION 14
24/29
SDM –
Ch 14 Tata McGraw Hill Publishing 24
Influencing Factors
• If a brand has a strong consumer franchise,
no outlet can ignore it – HLL brands –
distribution becomes intensive• Channel partner or reseller also has a choice
on what he wants to stock and sell
• If the product category is important and
competition is severe, selectivity is a costlyoption
-
8/13/2019 SALES AND DITRIBUTION 14
25/29
SDM –
Ch 14 Tata McGraw Hill Publishing 25
Implementing Rules
• Low value goods: cigarettes, soaps,
shampoos – intensive distribution – fmcg kind
of low investment but mass based.• High value goods: electronic goods or
consumer durables – buyer makes
comparisons across outlets – selective
• Specialty goods: Mont Blanc pen or TagHeuer watches – exclusive distribution.
-
8/13/2019 SALES AND DITRIBUTION 14
26/29
SDM –
Ch 14 Tata McGraw Hill Publishing26
Intensive - Factors
• Influence of channel principal decreases withintensity
• Channel member’s competitors also have
same products• Higher quality positioning does not match
higher intensity
• Depends on the target market
• Takes into account the importance of themarket and prevailing competition – moreintense the competition, more the intensity ofdistribution
-
8/13/2019 SALES AND DITRIBUTION 14
27/29
SDM –
Ch 14 Tata McGraw Hill Publishing27
Selective - Factors
• Can cut costs but may prove inadequate –
lower selling expenses, higher promotional
allocations, larger transactions, moreaccurate forecasting of demand
• Channel members margins may be better
• Better influence over channel members
• Manufacturer attracts more aspirants
• Suitable for new product or testing the market
-
8/13/2019 SALES AND DITRIBUTION 14
28/29
SDM –
Ch 14 Tata McGraw Hill Publishing28
Key Learnings
• Channel information systems is to collect andanalyse data about operations of channels
• CIS uses methods and sources to collect,process, store and use pertinent informationfor decision making
• Steps for development of a CIS are: decide
info required, organize info in a suitablemanner and decide users with purpose
• A CIS can include all elements of interest tosales managers to operate better
-
8/13/2019 SALES AND DITRIBUTION 14
29/29
SDM –
Ch 14Tata McGraw Hill Publishing 29
Key Learnings
• The channel evaluation system checks as tohow well the system reaches the products orservices to customers
• Channel implementation is guided by the‘intensity’ of the distribution required
• For products with a large consumer base,
intensive distribution is preferred• Under specific circumstances, selective orexclusive distribution has advantages.