Sales & Distribution Management - Methods
Sales method can be explained as one of several techniques used to recognize revenue specifically when revenue and expense are recognized at the time of cash collection rather than at the time of sale.
Thus, we can say that Sales Methods are the different ways to sell the product or service. The Sales Personnel help to sell the end products to the consumer. Some sales methods are given below.
Direct Sales
Direct sale is the sale of good/services involving person contact. It can be defined as the most important method that is used, as most of the consumers prefer to purchase goods through a direct contact with the seller, during which they understand the features and get to know about the needs and benefits.
The above illustration depicts the seller in the middle as A. Buyers are seen reaching out to the seller. It is an example of direct sales where the buyers (in green) are approaching the seller in orange.
Example − Boeing airlines sells it air buses directly to the consumer with no intermediary involved.
Pro forma Sales
The term pro forma is a Latin word, which means, "as a matter of form" or "for the sake of form". It is commonly used to describe a practice or document that is provided as a courtesy and that satisfies limited requirements, conforms to a norm or doctrine, tends to be performed perfunctorily and/or is considered a formality.
Pro forma financial statements are fashioned to reflect a proposed change, like a merger or acquisition or to emphasize certain figures when a company issues an earnings announcement to the public.
It can be termed as the practice or document that is provided as a courtesy or satisfies the minimum requirements which contain the details of the buyer and the receiver. It can also be termed as an invoice of the product.
Agency-based Sales
In agency-based sales, the organization hires an agent on contract basis. That sales agent acquires the right to negotiate the sale of the organization’s goods or services in exchange of a fixed commission or fee. The commission is calculated on the basis of the percentage of the sales generated. Example: Insurance Policy, opening of bank accounts etc.
Door to Door
In door to door sales, the sales executive walks from the door of one house to another to sell the product or service. For this type of sale, the sales agent should be versatile and capable of quickly creating a relationship with the customers.
The following are some major duties of sales personnel for door to door sales −
- Striking a conversation with a stranger.
- Getting the form filled and completing the administrative tasks.
- Getting the payments processed from customers.
- Building rapport with customers.
- Providing training to new team members.
These are some of the major responsibilities that a door to door sales executive needs to manage in order to maintain or increase productivity.
Hawking
Hawking is associated with a hawker (seller) who sells the goods that can be easily transported. A hawker sells not-so-expensive goods on the streets by shouting in loud voice and chitchatting with the passers-by to develop rapport and convince them to buy his goods.
In the above figure, we can see hawkers selling products on the roadside. In India, there are 10 million street vendors, Mumbai and Delhi contributing the most to the number. Many consumers also prefer street shopping because of the low price of the products.
B2B
B2B selling is known as Business to Business selling. It refers to a situation where one business makes a transaction with another.
B2B occurs where −
Factory produces goods and sells them to wholesalers.
Example – Food products manufacturers, shoes, bags, etc.
Organization outsources its process to other companies to reduce the labor cost.
Example – BPO (Business Process Outsourcing)
Company purchases raw materials from another company to make the final product.
Example – Tata Steel purchases goods from its ancillary companies
Electronic Sales
Electronic sales or e-Commerce is known as trading of goods or services through the internet. The figure given below depicts how e-Commerce works. We can conclude that the e-commerce business has been increasing day by day due to easy access and simplicity.
E-commerce businesses may employ some or all of the following −
Online shopping web sites for retail sales direct to consumers.
Providing or participating in online marketplaces, which process third-party business-to-consumer or consumer-to-consumer sales.
Business-to-business buying and selling.
Gathering and utilizing demographic data through web contacts or social media.
Marketing to prospective and established customers by e-mail or fax (for example, with newsletters).
Engaging in prevailing market for launching new products and services.
Thus, e-commerce can be defined as the business conducted through the application of computers, telephones, fax machines, barcode readers, credit cards, automated teller machines (ATM) or other electronic appliances (whether or not using the internet) without the exchange of paper-based documents.
Request for Proposal
Request for proposal is a type of bidding procedure by a company who is interested in procurement of goods or services from potential suppliers to submit business proposals. Given below are the salient features of a Request for Proposal.
It informs the suppliers that a company is looking to solicit and inspire them to make their best effort.
The company has to provide specifications regarding the proposal to purchase and if the analysis regarding the requirement is prepared, accordingly it can be easily integrated into a Request document.
It also signals suppliers that the selection process is competitive.
It ensures that suppliers respond factually to the identified requirements.
The selection process is structural so that there is no partiality in the process.
Thus, a request for proposal is a proposal that a company ensures for procurement of products. The above points enlist the functions of a general request for proposal used by a company.
