Sales and Channel Management
What this domain tests
Route-to-market design, distributor economics, channel conflict, sales-force sizing, pipeline management and compensation.
Core rules
- Channel functions (assortment, logistics, financing, information) can be shifted but not deleted.
- Coverage intensity: intensive for convenience goods, selective for comparison goods, exclusive for luxury and franchised formats.
- Push incentives pay the channel; pull builds consumer demand. Push-heavy spending often buys volume that is not incremental.
- Margin stacks are computed on selling price, never on cost, and are solved backwards from the consumer price.
- Sales-force size by workload method: (accounts times call frequency) divided by calls per rep per period.
- Quotas should reflect territory potential, not prior-year sales alone.
Worked example
Consumer price 1,000. The retailer takes 30% of retail and buys at 700. The distributor takes 15% of its selling price and buys at 595. With COGS at 400, the manufacturer margin is 195, or 32.8% of its selling price. If the retailer demands 35%, retail buys at 650, the distributor buys at 552.5, and the manufacturer margin falls to 152.5, a 22% margin cut from a five-point retail demand.
Traps
Computing trade margin on cost rather than price; treating all channel conflict as failure, when some signals genuine demand; rewarding sell-in rather than sell-out and inflating pipeline inventory; sizing reps on revenue instead of call coverage; ignoring disintermediation risk when going direct.