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By :

Prof. Amit Kumar

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“A student pursuing management education from IILM-

Graduate School of Management, for example may find

himself or herself placed in a firm as a Sales Manager.

Our goal is to prepare the student for the exciting

challenges related to leading sales organizations in

today’s hyper-competitive global economy”.

IILM-GSM

Importance of this course

Selling & Sales Management

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Contents

• Definition of Direct Selling– Operational Perspective

– Tactical Perspective

– Strategic Perspective

• Problems in Direct Marketing

• Designing a Direct Marketing Channel

• Case: Growth of Amway India

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Definition of Direct Selling

• A Method of distribution of consumer goods and services through personal (sell to buyer) contract away from fixed business locations, primarily in a home.

---- Industry Trade Association in Washington DC

• A form of selling without retail outlets, distributors, wholesalers or any type of middlemen.

---- Baker (1984)

• The marketing of consumer goods and services directly to consumers in their homes by way of explanation and/or demonstration through a salesperson. The location can also be a friend’s home, the workplace of the customer during breaks or other places away from shops –

----Federation of European Direct Selling Association

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What is Direct Selling?

Direct selling is a dynamic, vibrant, rapidly expanding channel of

distribution for quality products through independent business people

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Definition: Direct Selling

The sale of a consumer product or service, in a person-to-person

manner, away from a fixed retail location, where the company offers

opportunities to an independent contractor sales force

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Definition: Multilevel Marketing/Network Marketing

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A compensation system within direct selling, where a distributor/salesperson can earn

money not only on their own personal sales, and not only on the sales of a person

personally recruited by them, but also on sales of persons recruited by their personal

recruits

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Multilevel Marketing / Network Marketing

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• A marketing system where individual direct sellers recruit, train and develop a team of product users

• These new direct sellers also recruit, train and develop their own team of product users, who also recruit, train and develop their own team …

• BASIC CONCEPT is that any individuals sales performance can be multiplied by using the efforts of others through a network of people who work directly for themselves and indirectly for the person who introduced them into the network

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Direct Selling Systems

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• Classical Direct Selling, Multi-Level Marketing (MLM), Network Marketing and Referral Marketing are selling systems

• Variety of compensation plans (financial reward) and administrative systems

• Main difference between Multi-Level Marketing and Network Marketing - structure and benefits of the COMPENSATION PLAN

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Face-to-face selling

Away from a fixed retail location

Direct selling is distinct from direct marketing in that at an operational level it does not involve mailed catalogs, telemarketing, direct response advertising, infomercials, or the like.

Operational Perspective

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Direct Selling can be characterized by

The type of salesperson used.Whether selling agents are part-time or fulltime.Whether the selling effort occurs in a home or elsewhere.Whether it is transaction-oriented or relationship-oriented.Whether it follows a party plan format.Whether personification is used. Whether it is multi-level.The extent to which selling agents are customers.Whether selling agents take physical possession of productsThe manner in which purchases are delivered and payment is obtained.

Tactical Perspective

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Direct Selling as a Distribution Channel

Strategic Perspective

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Direct Selling as a Means of Gaining Access to a market

◆Direct selling is a push marketing strategy

Direct Selling as a Way of Doing Business

◆ Direct selling is the preferred channel of distribution because it is “ invisible” .There are no products on shelves that competitors can monitor.

◆ Direct selling can be undertaken by a firm with relatively little start-up capital, especially capital for marketing and distribution purposes.

Strategic Perspective

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What can be sold through Direct Selling ?Vacuum cleanersEncyclopediasCosmeticsNutritional itemsKitchenware

Who buys from Direct Sellers ?In the United States are more likely to be female, younger,

and possess more education and higher incomes than individuals who have not purchased from a direct selling company .

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What are the characteristics of Direct Sellers ?

72% of direct salespeople are married90% are women. 8%are under age 25. 63% between 25 and 44 and 24%between 45 and 64.To be a successful direct selling agent, an individual must be a good communicator and be highly motivated.Sales performance and job satisfaction were independent but higher levels of effort led to higher levels of performance and satisfaction.Persistence and initiative are major characteristics of success in direct selling.

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