1

Dr. Rahul Pratap Singh

Kaurav
 Session I

SALES MANAGEMENT:
ITS NATURE, REWARDS, AND
RESPONSIBILITIES

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WHAT IS SALES MANAGEMENT?

Sales management is the attainment of sales force

goals in an effective and efficient manner through:

• Planning
• Staffing
• Training
• Leading
• Controlling organizational resources
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FIGURE: THE SALES MANAGEMENT PROCESS

Sales Management Functions

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PLANNING

The conscious, systemic process of making

decisions about goals and activities that an
individual, group, work unit, or organization will
pursue in the future and the use of resources
needed to attain them.

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STAFFING

Activities undertaken to attract, develop, and

maintain effective sales personnel within an
organization.

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SALES TRAINING

The effort put forth by an employer to provide the

salesperson job-related culture, skills, knowledge,
and attitudes that result in improved performance
in the selling environment.

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LEADING

The ability to influence other people toward

the attainment of objectives.

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CONTROLLING

Monitoring sales personnel’s activities,

determining whether the organization is on target
toward its goals, and making corrections as
necessary.

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 SALES PERFORMANCE

Sales Management is the attainment of

sales goals in an ethical, efficient, and
effective manner.

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Roles of Sales Manager: Duties and Responsibilities

The sales manager is the most important person in a sales organisation. All
activities are based on his functions and responsibilities. The following are
some of the principal duties of a sales manager:

1. Organising sales research, product research, etc.

2. Getting the best output from the sales force under him.

3. Setting and controlling the targets, territories, sales experiences,

distribution expenses, etc.

4. Advising the company on various media, sales promotion schemes, etc.

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5. Monitoring the company’s sales policies.
In the table, Al Reid gives the steps necessary for getting success in
selling:
Territory Sales Manager’s Job Responsibilities

To yourself To your company To your customers

Increase basic selling skills. Be proud of your association Work closely with decision-
with your company. takers and influencers in each
Develop management account.
abilities. Maintain the company
standing and standards with Point out the advantages of
Keep pace with changes, all customers. an association with your
trends and developments in company.
your territory. Inform the headquarters and
your supervisors, through Keep accounts current and
Study the latest products, established channels, about up-to-date on all company
promotion policies and changes and developments in advertising and promotional
procedures. your territory. activities.

Be alert to new sales and Be prompt in handling Suggest ideas, methods,

merchandising ideas. records, reports, techniques and tips that can
correspondence, etc. stimulate sales.
Cont…
.
Grow, so that you can assume Cut selling costs by Inform the customers about
greater responsibilities as economical routing, good use the trends in their areas.
opportunities permit. of time, planning and greater
awareness of opportunity. Handle complaints effectively
Maintain the appearance and and to the complete
goodwill expected of a territory Check demand and movement satisfaction of the
sales manager. of products in the territory. complainants.

Analyse your weak and strong Report activities of the Suggest the best technique for
points and then think about competitors. selling your products to the
them. customers.
Strive to reach the best goals.
Organise presentations to
Ask for help, when you need it. inform and save time.

Cooperate with other Make the customers aware of

departments of the company. the changes in the company’s
policies or procedures.

Stimulate and maintain

enthusiasm for your products.
Cont…
.
Build and maintain goodwill.
Functions of Personal Selling
Personal selling is an oral presentation in face to face conversation with one
or more prospective customers for the purpose of making sales. The main
functions of personal selling are as follows:

1. Provide service to customers (Introduce the product, explain the right

use, Convince them etc.)

2. To sell the product

3. Maintain the sales record

4. Executive Function

5. Develop goodwill
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6. Achieve sales target
Changing Face of Personal Selling
Modern sales approach is based on the following
parameters
1. Value Sharing.
2. Relation Building.
3. Role Playing.
4. Changing Approach.

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Benefits of personal selling
1. Availability of expertise

2. Early access to relevant market information

3. Availability to be flexible regarding processes, timing

4. Faster, shorter contracts

5. Economies of information sharing

6. Lower cost of selling

7. Knowledge of other uses or applications 16

Steps in Personal Selling
Successful personal selling calls for an integrated approach
devised from the experience of the sales personnel. The
approach comprises the steps as shown in the figure here. Each
of these steps are further described in brief.
Steps in Personal Selling

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Prospecting
Prospecting is the process of identifying prospective buyers of the
product. A prospect is qualified if he has the authority, need, ability
and eligibility to buy. There are different ways to identify prospects.
Some of the most frequently used methods are described below:
 Acquaintance References
 Cold Calling
 Centre of Influence Method
 Personal Observation Method
 Direct Mail or Telephone Method
 Company’s Records
 Newspapers
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 Retailers
Pre-approach
It emphasises that the salesman should know, after identifying the
prospect in the prospecting stage, the prospect’s likes and dislikes,
his needs, preferences, habits, nature, behaviour, economic and
social status etc.
Significance of Pre-Approach
1. Salesman concentrates only on the prospects and not the
suspects.
2. S/He is able to give a sales presentation more efficiently,
effectively and with confidence.
3. It does not waste the prospect’s time and energy since the
salesman is already aware of the needs and preferences of the
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prospect.
Approaching

 In this stage the prospect and the salesman come in contact with
each other face to face.

 The salesman has an opportunity to understand and interact with

the prospect in a better way.

 Salesman should put forward his best efforts to make the best use
of this opportunity in getting the attention of the prospect and to
convince him to buy the product.

 Getting the attention of the prospect and persuading him to buy

Cont….

are the two main objectives of a salesman. 20

Key guidelines for successful approach

 Prior Appointment

 Timing

 Command

 Relaxed Atmosphere

 Open Mindedness

 Courtesies

 Effective Presentation

 Follow up Cont….

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Presentation
 Quick presentation creates a good impression.

 Attractively packaged, decorated and well-organised.

 Should explain the product with its features and price

advantage to the customer in simple and easy terms.

 Customer be shown the kind of quality that he is looking for.

 Helps the salesman to prove the features of the product and

Cont….

emphasise its genuineness. 22

Demonstration
 Demonstration is an exercise to prove the characteristics of the
product.

 It highlights various attributes of the product such as utility,

performance, service and quality.

 It is only during the demonstration that the customer gets an

opportunity to verify the facts about the product.

 Demonstration is imperative and essential for a prospect to make

Cont….

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a buying decision.
The Close

 This is the last stage of any sales presentation.

 The main aim of the close is to convince the prospect to sign

the order form or to place an order immediately rather than in
the future.

 It is also important that through proper planning, prospecting,

presentation and demonstration the salesman should try to
capture the attention of the prospect and not let the prospect
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change his mind.
Relationship of Salesmanship with Sales Management
and personal Selling
Salesmanship & Personal Selling

1. The ability to quickly develop rapport with their prospective

customers.

2. A desire to truly help their customers.

3. The habit of asking questions to gather information before making a

pitch.
Cont….

4. Sticking to a consistent, proven sales process. 25

 FORECASTING MARKET DEMAND

A marketing decision support system (MDSS) is an

ongoing, future-oriented structure designed to generate,
process, store, and later retrieve information to aid
decision making in an organization’s marketing
program.
It involves problem-solving technology composed of
people, knowledge, software, and hardware “wired”
into the sales management process.

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 USES OF SALES FORECASTS

A sales forecast is the estimated ` or unit sales for

a specific future time period based on
- proposed marketing plan
- assumed market environment.

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 A sales forecast is important for at least five reasons:
1. A sales forecast becomes a basis for setting and maintaining a
production schedule – manufacturing.
2. It determines the quantity and timing of needs for labor, equipment,
tools, parts, and raw materials – purchasing, personnel.
3. It influences the amount of borrowed capital needed to finance the
production and the necessary cash flow to operate the business –
controller.
4. It provides a basis for sales quota assignments to various segments of
the sales force – sales management.
5. It is the overall base that determines the company’s business and
marketing plans, which are further broken down into specific goals –
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marketing officer.
FIGURE: PLANNING/FORECASTING/BUDGETING SEQUENCE

Marketing Plan

Sales Forecasts Sales Force Budget

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 THE FORECASTING PROCESS

The forecasting process refers to a series of

procedures used to forecast.

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FIGURE: THE FORECASTING PROCESS

Forecast Determine Dependent and D

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Objective Independent Variables P
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FIGURE 5.3 BASIC STEPS IN BREAKDOWN METHOD OF FORECASTING SALES

General Environment Forecast

Industry Sales Forecast
Company Sales Potential
Company Sales Forecast
Product Lines
Individual Products for

Customers-Territories-Regions-Devisions-
India-World

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Industry sales forecast, or market potential, is
the estimated sales for all sellers.

Company sales potential is the maximum

estimated or potential sales the company may
reach in a defined time period under given
conditions.

The company’s share of the estimated sales for

an entire industry is referred to as market
share.
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 SALES FORECASTING METHODS

Two categories of sales forecasting methods exist:

• Survey methods are qualitative and include
executive opinion, sales force composite, and
customer’s intention surveys.
• Mathematical methods are test markets,
market factors, trend analysis, and
correlation analysis.
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FIGURE: THE MORE POPULAR OF MANY FORECASTING METHODS

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et
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et
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Executive User’s
Opinion Expectation Test Market Regression

N
a
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v
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Sales Force Build-to-
Composite Order
Moving Exponential
Average Smoothing

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SURVEY FORECASTING METHODS

Four basic survey methods are

• Executive Opinion
• Sales Force Composite
• User’s Expectations
• Build-to-Order

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Executive Opinion

Executive forecasting is done in two

ways:
1. By one seasoned individual (usually
in a small company).
2. By a group of individuals, sometimes
called a “jury of executive opinion.”

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Delphi Method

Administering a series of
questionnaires to panels of experts.

Sales Force Composite

Obtaining the opinions of sales

personnel concerning future sales.
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 User’s Expectations

Consumer and industrial

companies often poll their actual or
potential customers.

Build-to-Order

Companies build final products only after

firm orders are placed.
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MATHEMATICAL FORECASTING
METHODS

Test markets are a popular method of

measuring consumer acceptance of new
products.

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Time Series Projections

Time series methods use chronologically

ordered raw data.

Naïve Method

Next Year’s Sales = This Year’s Sales X This Year’s

Sales
Last Year’s
Sales
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Moving Average

Moving averages are used to allow

for marketplace factors changing at
different rates and at different times.
Regression Analysis

Regression analysis is a statistical

method used to incorporate independent
factors that are thought to influence
sales into the forecasting procedure. 42
FIGURE: REGRESSION ANALYSIS

Linear Relationship Curvilinear Relationship

Sales

Sales
0 0
Population Population
(A) (B)

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FIGURE: QUESTIONS TO ANSWER TO IMPROVE CHANCES OF HITTING THE
FORECASTING BULL’S-EYE

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 TABLE: GUIDE TO SELECT BEST FORECASTING METHOD

FORCASTING MATHEMATICAL COMPUTER

METHOD TIME SPAN SOPHISTICATION NEED ACCURACY
Executive Opinion Short to medium Minimal Not essential Limited

Delphi Method Medium to long Minimal Not essential Limited; good in dynamic
conditions
Sales Force Composite Short to medium Minimal Not essential Accurate under dynamic conditions

User’s Expectations Short to medium Minimal Not essential Limited

Test Markets Medium Needed Needed Accurate

Naïve Method Present to medium Minimal Not essential Limited

Moving Average Short to long Minimal Helpful Accurate under stable conditions

Exponential Smoothing Short to medium Minimal Helpful Accurate under stable conditions

Least Squares Short to long Needed Desirable Varies widely

Regression Analysis Short to Medium Needed Essential Accurate if variable relationships

stable

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 THE SALES MANGAGER’S BUDGET
BUDGET
PURPOSES
• Planning

The sales force budget is the • Coordination

• Control
amount of money available or
assigned for a definite period,
usually one year.
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TABLE: SALES FORCE OPERATING COSTS

1. Base salaries 4. Special incentives

a. Management 5. Office expenses
b. Salespeople 6. Product samples
2. Commissions 7. Selling aids
3. Other compensation 8. Transportation expenses
a. Social Security 9. Entertainment
b. Retirement plan 10. Travel
c. Stock options
d. Hospitalization
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BUDGETS SHOULD BE FLEXIBLE

Sales, costs, prices, or the competition’s

marketing efforts are some factors that may
be higher or lower than expected.

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 WHAT IS A SALES TERRITORY?

A sales territory is composed of

a group of customers or a
geographic area assigned to a
salesperson.
WHO IS RESPONSIBLE FOR
TERRITORIAL DEVELOPMENT?

Development of sales territories

is usually the responsibility of
the sales manager overseeing
the larger sales units within the
organization.
WHY ESTABLISH SALES
TERRITORIES?
• To obtain thorough coverage of the market.
• To establish a salesperson’s responsibility.
• To evaluate performance.
• To improve customer relations.
• To reduce sales expense.
• To allow better matching of salesperson to customer.
• To benefit salespeople and the company.
Why sales territories may not be developed?

• Salespeople may be more motivated if they

are not restricted.
• The company may be too small.
• Management may not want to take the time,
or have the know-how.
• Personal friendship may be the basis for
attracting customers.
FACTORS TO CONSIDER WHEN DESIGNING SALES
TERRITORIES
Sales force objectives may be based on
factors such as
- contribution to profits,
- return on assets,
- sales/cost ratios,
- market share, or
- customer satisfaction.
FIGURE: FACTORS TO CONSIDER WHEN DESIGNING TERRITORIES

S
electB asic Analyze Determ ineBa
sic
ControlU nit Workload T
err ito
ries

E va
luate,R
ev
ise C
ustomer Assignto
if Needed C
ontactPla
n T
erritories
SELECT BASIC CONTROL UNITS
• States
• Counties
• Cities and zip-code areas
• Metropolitan statistical areas
• Trading areas
• Major/ Key accounts
• A combination of two or more factors
ANALYZE SALESPEOPLE’S WORKLOADS

Workload is the quantity of work expected

from sales personnel. Three of the main
influences on workload involve
- the nature of the job,
- intensity of market coverage, and
- type of products sold.
DETERMINE BASIC TERRITORIES
The breakdown approach uses
factors such as sales, population, or
number of customers.

Forecasted Sales
Sales Force Size = Average Sales per Salesperson
TABLE: SIX STEPS TO CONSIDER WHEN
DETERMINING A FIRM’S BASIC TERRITORIES

1. Forecast sales and 4. Tentatively establish

determine sales potentials. territories.

2. Determine the sales 5. Determine the number of

volume needed for each accounts for each territory.
territory.
3. Determine the number of 6. Finalize the territories,
territories. and draw the boundary
lines.
CUSTOMER CONTACT PLAN
The customer contact plan involves
scheduling sales calls and routing a
salesperson’s movement around the
territory.
Scheduling refers to establishing a fixed time when
the salesperson will be at a customer’s place of
business.

In theory, strict formal route designs enable the salesperson to:

1. Improve territorial coverage.

2. Minimize wasted time.
3. Establish communication between management and
the sales force in terms of the location and activities
of individual salespeople.
FIGURE: THREE BASIC ROUTING PATTERNS

Straight-Line Pattern
First Call
Base c
c c c c Work Back

Cloverleaf Pattern c
c c

Major-City Pattern
c c
c c c c

c Base c 2 3
c c c c
c c c c 1

5 4
c c
c
Each Leaf Out and
Back Same Day 1 - Downtown
 THE SALES TERRITORY IS A BUSINESS
THE RIGHT SALESPERSON PAYS OFF

OPEN SALES TERRITORIES

Open sales territories are those left vacant until
new salespeople are assigned to them. Vacant
territories experience the following:
• Lost sales due to the vacancy.
• Lost sales due to the time needed for the
new salesperson to build sales productivity.
Sales leakage refers to the lost sales
due to both the vacancy and the time
required for the new salesperson to
produce at average.
 WHAT IS A QUOTA?

A quota refers to an expected performance

objective.
Quotas are tactical in nature and thus derived
from the sales force’s strategic objectives.
 WHY ARE QUOTAS IMPORTANT?

• Quotas provide performance targets.

• Quotas provide standards.
• Quotas provide control.
• Quotas provide change of direction.
• Quotas are motivational.
 TYPES OF QUOTAS

• Sales volume quotas.

• Breakdown total sales volume.
• Profit quotas.
• Expense quotas.
• Activity quotas.
• Quota combinations.
Sales volume quotas includes ` or
product unit objectives for a
specific period of time.
• Product lines.
• Individual established and new products.
• Geographic areas based on how the sales
organization is designed, which would
include:
• Sales division.
• Sales regions.
• Sales districts.
• Individual sales territories.
The two types of profit quotas:

• Gross margin quota determined by

subtracting cost of goods sold from sales
volume.
• Net profit quota determined by subtracting
cost of goods sold and salespeople’s direct
selling expense from sales volume.
Expense quotas are aimed at controlling
costs of sales units. Often expenses are
related to sales volume or to the
compensation plan.
Activity quotas set objectives for job-
related duties useful toward reaching
salespeople’s performance targets.

Customer satisfaction refers to feelings

about any differences between what is
expected and actual experiences with the
purchase.
 METHODS FOR SETTING SALES QUOTAS

• Quotas based on forecasts and potentials.

• Quotas based on forecasts only.
• Quotas based on past experience.
• Quotas based on executive judgments.
• Quotas salespeople set.
• Quotas related to compensation.
 TABLE: LEVELS OF ORGANIZATIONAL SALES PLANNING

LEVEL PURPOSE: WHAT IS WHO (USUALLY) IS

PLANNED INVOLVED
1. Marketing •Organizational goals (increase in Upper management and sales and
market share or penetration, marketing executives
increase in customers, increase in
sales dollars and units sold)
2. Regional plan •Priorities (which regions, markets, Regional and district sales managers
and products to emphasize) (which input from sales reps)
3. District plan •Dollar allotment (for promotion, District managers and sales
advertising, new employees, sales representatives
incentives, and so on)
4. Territorial plan •Goals for number of new Sales representatives
customers and for increased
business with old customers in each
region and territory
A GOOD OBJECTIVE AND QUOTA PLAN IS
SMART

Specific
Measurable
Attainable
Realistic
Time specific