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Sales forecasting:
Sales forecasts are common and essential tools used for business planning, marketing,
and general management decision making. A sales forecast is a projection of the expected
customer demand for products or services at a specific company, for a specific time horizon,
and with certain underlying assumptions.
Types of forecast :
1. Market Potential: The best possible level of industry sales ina a given geographic area for
specific period.
2.Market Forecast: The expected level of industry sales given a specific industry strtegy in a
given geographic area for a specific period.
3. Sales Potential: The best possible level of firm sales in a given geographic area for
specific period.
4. Slaes Forecast: The expected level of firm sales given a specific strtegy in a given
geographic area for a specific period.
SALES QUOTAS
A Sales Quota refers to an expected routine assignment to sales units, such as
territory, districts or branches etc.
Sales Quotas can be set for individuals
Used to Plan, Control and evaluate the selling activities of a company.
TYPES OF QUOTAS:
1. Sales Volume Quotas
2. Financial Quotas
3. Activity Quotas
4. Quota Combinations
Product Line
Product range
Sales Divisions
Sales Territories
Sales Districts
Branch Offices
Sales Force (individuals)
2. Financial Quota:
These quotas are set gain a desired NP (Net Profit) and to control sales expenditure.
SRs have to spend their time on profitable products to improve NP. Expenses quotas
make the SRs conscious of keeping their expenditure within reasonable limits. Expense
quotas may demoralise the SRs and so are usedonly as supplementary quotas. The inputs
of SRs differ from territory to territory.
3.Activity Quota:
SRs have not only to generate sales, but develop the market too buy doing certain
activities for which quotas are set;
4.Quota Combinations:
Many companies use a combination of these quotas. The two most commonly
combined are sales volume and activity quotas. These quotas influence selling and non-
selling activities.
TERRITORY MANAGEMENT
A Sales Territory Comprises a group of customers or a Geographical area
assigned to a sales unit.
It many or may not have a geographical boundary.
It includes
Market potential
No of customer Accounts
Firms Experience
Market Share
Capability of sales person and frequency of calls made
Designing Teritories:
Select a basic geographical Unit
Determining the Sales potential in control units
Combining the Control units into tentative territories
Adjusting for coverage Difficulty and relocating tentative territories
Territory Shape:
Territorial shape affects both its coverage and the selling expenses. It facilitates time
management and simulates sales force morale. There are three widely prevalent shapes the
Wedge, the circle and the cloverleaf.
1.Wedge-shaped territorie :
Wedge – shapeed territories are suitable for urban as well as non-urban areas. It starts
form a thickly populated urban centre. Many size of the wages are possible. Two
neighbouring wages can help equalize the travel plan by balancing urban and non-urban
types of calls.
3. Clover-leaf territory:
Randomly located accounts call for cloverleaf type of arrangement. Each cloverleaf
represents a week’s work. A salesman is at home every weekend. Such arrangement is
common in industrail marketing. It is alsosuitable for extensive marketing.
SALES TERRITORY PERFORMANCE:
Accounts Market
(customers) potential
Geography Territory
worklod Sales
Experienc
e territory
Salesmen performance
Effort
Company
Experienc
e
Other
Effort influences
T= f (P, W, S, C, O)
T = Territory performance
F = function
P = Territory potential
W = workload
S = salesmen characteristics
C = company standing in the territory
O = other influences.
The states of each component will us to sales performance in the territory. However, the
exact relationship cannot be specified. Performance is partially determined by the salesmen.
Research findings support this premise.
Flat expense accounts are suitable where, exact amounts of expense are not required
to be changed frequently or where management keeps on reviewing the expense allowance.
Flat expenses must have an element of flexibility; imagine a situation where a salesman loses
sales opportunities just because his flat expense is not enough to top them.
3.HONOUR SYSTEM:
This is a liberal system where all sales expenses are reimbursed in full against report
of the total expenses. Without asking for a detailed breakup of these expenses. It reflects the
faith management reposes in its salespersons. As this system is easy to administer, it
simplifies procedural aspects when used alone or in combination with any other method. It
provides sufficient funds to develop the territory, provided the salespersons use the amount
judiciously. This system does not allow management to control the sales force tightly. The
judicious use of money cannot be guaranteed. Some tend to over spend. Some use the amount
in non-productive activities and some misappropriate the funds.
4.EXPENSE QUOTA:
This plan controls the total expenses of the salespersons, but allows variations in
periodic reimbursements. The management sets up an expense quota considering the needs of
the sales territory and the sales potential. Sales quota gives an upper limit or ceiling on the
total expenses in a particular time period. This plan enables quick reimbursement of periodic
claims, despite the variations from period to period. The ceilings restrain the salespersons,
and they keep within the limits set.
In this scheme, the salespersons are allowed to control the expenses. This is major
weakness. The success of this scheme depends on how good the forecasts are. Salespersons
are likely to restrict their activities at the end of the budget period, considering the meagre
balance left in quota account.
SALES BUDGET
A budget is a financial plan. In the sales budget, resources are allocated to achieve the sales
forecast. It spells out what each one will sell, and how much. It also spells out what and what
and how much will be sold to the different classes of customers. A budget is an estimate of
sales either in units or value and the selling expenses likely to be incurred while selling. It,
thus, enables a net profit forecast on the basis of the selling operations.
Promotion
Other promotional
Advertising Personal selling method
Personal selling
objectives
Sales-related policies
Strategies
Sales budget
Evluation
Coupons:
Certificates giving buyers a saving when purchase specified product
Can be mailed, in ads or included with other products
Can stimulate sales of a mature brand or early trial of a new brand
Price packs:
Reduced prices offering savings off regular price of product
Reduced prices directly on label or pack (e.g. two for one)
Two related products banded together
Are very effective in stimulating short-term sales
Premiums:
Goods offered either free or at low cost as an incentive to buy a product
May come inside the package (in-pack) or outside the package (on-pack)
If reusable, the package itself may serve as a premium (e.g. a decorative tin)
Sometimes mailed to consumers who have sent proof of purchase (e.g. a box top)
Self-liquidating premium - sold below normal retail price to consumers who request it
Pre-testing:
How sales promotion is to be communicated and what would be communicated to
the target groups is important and can be pre-tested.
To test consumer’s behavioural response, such as trial purchase, or repeat purchase,
etc., pre-testing consists of experimenting in certain markets or individual stores
in a market. All other factors remain the same; only the sales promotion device
being tested in the variable is manipulated.
It is often quite helpful to evaluate the response of re-sellers before implementing the
promotions programme. The simplest way is to visit several important retailers and
wholesalers and discuss the programme and seek their opinion and suggestions. This
may prove to be quite favourable in case promotion results.
Concurrent Testing:
This testing is done when the sales promotion is in progress. Concurrent testing may
permit the promotion manager to modify the sales promotion, if needed. This type of testing
is conducted in terms of sales data, which can be obtained on a weekly or monthly basis.
Post-testing:
Post-testing is done after the promotion period is over. To assess the change in
consumer awareness and attitude, telephone calls, questionnaires mailed to
consumers and personal interviews can be used.
To measure the sales effect, sales figures before the promotion period can be
compared with figures at the end of the promotion, and one month after the
promotion ends.
1.Economic Factors
Not all of the world’s economies operate at the same level of efficiency; it is
necessary to form a clear idea of the economic situation of a particular host country in order
to develop an appropriate marketing strategy.
2.Cultural Factors
The cultural traits of a country have a profound effect on people’s lifestyle and
behaviour patterns, and the same are reflected in the market place.
3.Political Factors
4.Legal Factors
Different types of job descriptions should be developed for different countries. Duties
and responsibilities are different for different countries.
3.Sales Training