Session

I
SALES MANAGEMENT:
ITS NATURE, REWARDS, AND
RESPONSIBILITIES

2
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
3
FIGURE: THE SALES MANAGEMENT PROCESS

Sales Management Functions

4
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.

5
STAFFING

Activities undertaken to attract, develop, and

maintain effective sales personnel within an
organization.

6
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.

7
LEADING

The ability to influence other people toward

the attainment of objectives.

8
CONTROLLING

Monitoring sales personnel’s activities,

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

9
 SALES PERFORMANCE

Sales Management is the attainment

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

10
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.

5. Monitoring the company’s sales policies. 11

In the table, Al Reid gives the steps necessary for getting success
in selling:
Territory Sales Manager’s Job Responsibilities
To yourself
Increase basic selling skills.
Develop management
abilities.
Keep pace with changes,
trends and developments in
your territory.
Study the latest products,
promotion policies and
procedures.
Be alert to new sales and
merchandising ideas.
To your company
Be proud of your association
with your company.
Maintain the company
standing and standards with
all customers.
Inform the headquarters and
your supervisors, through
established channels, about
changes and developments in
your territory.
Be prompt in handling
records, reports,
correspondence, etc.
To your customers
Work closely with decision-
takers and influencers in each
account.
Point out the advantages of
an association with your
company.
Keep accounts current and
up-to-date on all company
advertising and promotional
activities.
Suggest ideas, methods,
techniques and tips that can
stimulate sales.
Cont…
.
Grow, so that you can assume
greater responsibilities as
opportunities permit.
Maintain the appearance and
goodwill expected of a territory
sales manager.
Analyse your weak and strong
points and then think about
them.
Cut selling costs by
economical routing, good use
of time, planning and greater
awareness of opportunity.
Check demand and
movement
of products in the territory.
Report activities of the
competitors.
Strive to reach the
best goals.
Ask for help, when
you need it.
Cooperate with other
departments of the company.
Inform the customers about
the trends in their areas.
Handle complaints effectively
and to the complete
satisfaction of the
complainants.
Suggest the best technique for
selling your products to the
customers.
Organise presentations to
inform and save time.
Make the customers aware of
the changes in the
company’s policies or
procedures.
Stimulate and maintain
Coentn…thusiasm for your
products.
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

6. Achieve sales target 14

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.

15
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 a n 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

17
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
18
 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
19
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….

21
Presentation
 Quick presentation creates a good impression.

Attractively packaged, decorated and well-organised.

Should explain the product with its features price

and 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 t o

Con t… .

make a buying decision. 23

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
change his mind. 24
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 25

 F ORECASTING M ARKET D EMAND

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.
26
 U SES OF S ALES F ORECASTS

A sales forecast is the estimated ` or unit sales

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

27
 A sales forecast is important for a t 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 –
marketing officer. 28
FIGURE: PLANNING/FORECASTING/BUDGETING SEQUENCE

Marketing Plan

Sales Forecasts Sales Force Budget

29
 T H E F ORECASTING P ROCESS

The forecasting process refers to a series

of procedures used to forecast.

30
FIGURE: THE FORECASTING PROCESS

Forecast Determine Dependent and Develop Forec

Objecti Independent Variables ast
ve Procedure

SelectForecast
A nalysis Metho
Evaluate Resul d
ts
versusForecast Total Forec
ast
Procedure

Make and Finaliz PresentAsumptions

GatherandAnalyze
e Forecast aboutData Data

31
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 fo
Individual
Products Customers-Territories-Regions-Devisions-
India-World

32
Industry sales forecast, or m a rk e t 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

a n entire industry is referred to as m a rk e t
share.
33
 S ALES F ORECASTING M ETHODS

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.
34
FIGURE: THE MORE POPULAR OF MANY FORECASTING METHODS

SurveyMethods MathematicalMethods

Executiv User’s
e Expectatio Test Market Regression
Opinion n
Naive Trend
Sales Force Build-
to-
Composite Order Moving Exponentia
l
Averag Smoothing
e

35
S URVEY F ORECASTING M ETHODS

Four basic survey methods are

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

36
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.”
37
Delphi Method

Administering a series of
questionnaires to panels of
experts.

Sales Force Composite

Obtaining the opinions of

38
sales
 User’s Expectations

Consumer a nd industrial
companies often poll their actual
or potential customers.

Build-to-Order

Companies build final products only

after firm orders are placed.
39
MATHEMATICAL FORECASTING
METHODS

Test markets are a popular method of

measuring consumer acceptance of
new products.

40
Time Series Projections

Time series methods use chronologically

ordered raw data.

Naïve Method

T h i s Year’s
Next Year’s Sales = This Year’s Sales X Sales
Last Year’s
Sales
41
Moving Average

Moving averages are used to allow

for marketplace factors changing a t
different rates and a t different times.
Regression Analysis

Regression analysis is a statistical

method used to incorporate
independent factors t h a t are thought
to influence sales into the forecasting 42
FIGURE: REGRESSION ANALYSIS

Linear Relationship Curvilinear Relationship

Sale

Sale
s

s
0 0
Populatio Populatio
n (A) n (B)

43
FIGURE: QUESTIONS TO ANSWER TO IMPROVE CHANCES OF HITTING THE
FORECASTING BULL’S-EYE

M Youra ed
er
id

et ur cy
ca lecing tons
so

ld (s )
Fo d Srea sicu C

d?
cc

? u st
in tinA

ho
g
anInc BeaYo

s e ho ca
U d S re
heav

o u o Fo
es
tH

g
140

Y et h h
M hic
st
%

W
re
130
%
F
120
Breakdow O %
Have You Developed n 110%
Use Multiple
a Good R
Market Decision Support System Forecasting
Sales Forecasting E C
Methods
Process A
? Buildup
S
T 90
Co C %
So uld an oul
ur O d dt 80
ce u So he %
s H tsi ftw C
elp de ar om
e p
70
? H ut %
elp er 60
?
%

44
 TABLE: GUIDE TO SELECT BEST FORECASTING METHOD

FORCASTING MATHEMATICAL COMPUTER

METHOD TIME SPAN SOPHISTICATIO NEED ACCURACY
N
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 Short to Medium Needed Essential Accurate if variable

Analysis relationships stable

45
 B UDGET
T H E S ALES M ANGAGER’S B UDGET P URPOSES
•
Planning

The sales force budget is the • Coordination

• Control
amount of money available or
assigned for a definite
period, usually one year.
46
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
47
BUDGETS SHOULD BE FLEXIBLE

Sales, costs, prices, or the competition’s

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

48
 W HAT IS A S ALES T ERRITORY?

A sales territory is composed of

a groupof customers or a
geographic area assigned to a
salesperson.
W HO IS R ESPONSIBLE FOR
T ERRITORIAL D EVELOPMENT?

Development of sales territories

is usually the responsibility of
the sales manager overseeing
the larger sales units within the
organization.
W HY E STABLISH S ALES
T ERRITORIES?
• 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.
F ACTORS TO C ONSIDER WHEN D ESIGNING S ALES
T ERRITORIE S
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

SelectBasic Analyze DetermineBa

Control U Workload sic
nit Teritories

Evaluate, Rev Customer Asignto

ise Contact Pl
ifNeded an Territor
ies
S ELECT B ASIC C ONTROL U NITS
• 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.
D ETERMINE B ASIC T ERRITORIES
The breakdown approach uses
factors such as sales, population,
or number of customers.

Sales Force Size = Forecasted Sales 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 territories.
potentials.
2.Determine the sales 5. Determine the number
volume needed for of accounts for each
each territory. territory.
6. Finalize the
3.Determine the number of territories, and draw the
territories. boundary lines.
C USTOMER C ONTACT P LAN
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
Bas c
e c c c c Work Back

Cloverleaf Pattern c
c c

Major-City Pattern
c c
c c c c

c Bas c 2 3
e
c c c c
c c c c 1

5 4
c
c
c
Each Leaf Out and 1 - Downtown
Back Same Day
 T H E S ALE S T ERRITORY IS A B USIN ESS
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 a nd the time
required for the new salesperson to
produce a t average.
 W HAT IS A Q UOTA?

A quota refers to an expected performance

objective.
Quotas are tactical in nature and thus derived
from the sales force’s strategic objectives.
 W HY ARE Q UOTAS I MPORTANT?

• Quotas provide performance targets.

• Quotas provide standards.
• Quotas provide control.
• Quotas provide change of direction.
• Quotas are motivational.
 T YPES OF Q UOTAS

• 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 a t 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.
 M ETHODS FOR S ETTING S ALES Q UOTAS

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

SMART

Specific
Measurable
Attainable
Realistic
Time specific