21st Century Unit 4

Block Basics of Sales Management
: I Ch-1 Sales Management Strategy
SALES MANAGEMENT IN 21ST CENTURY
Introduction
Sales management is defined as “the planning, direction and
control of personal selling, including recruiting, selecting,
equipping, assigning, routing, supervising, paying and motivating
as these tasks apply to the personal sales force”.
Definition Committee of the American Marketing Association.
Sales force is responsible for the sale of products of a company

and to add profit to the business operations and fulfill social
obligations. Sales force should be hardworking, result oriented,
Copyright © 2010, S L
Gupta
1-1 well educated

Sales and and
Distribution competent
Management to handle
Text & Cases changing situations.
(2nd Edition) Excel
Nature and Importance of Sales Management

 Sales management helps to achieve the organizational
objectives.
 The main objectives of sales management is that products
should be sold at that price which realizes profits.
 Buyers and sellers both have same types of business
relationships. This relationship is based on exchange of goods,
services and money.
 Sales person develops a positive relationship with the
customers. The role of sales team is interdependent and
success of one team member depends on the other.
 The sales team continuously monitor the customer
Cont….
preference, competitors‘ situation, governmentCopyright

policy
Gupta and
© 2010, S L
1-2 other regulatory

Sales and bodies.
Distribution Management Text & Cases (2nd Edition) Excel
Relationship-based selling
 Relationship-based selling works because people would

rather buy what they need to buy anyway from those they have
come to relationship.
 Relationship-based selling means doing business in such a

way that company is worthy of the customer's trust.
 Relationship selling is mainly personal not institutional, and

buying is heavily personal as well.
 It is not selling centric. It's buyer-based.
 The objective of relationship selling is to help the buyer do

the right thing for the buyer.
Gupta
1-3 Sales and Distribution Management Text & Cases (2nd Edition) Excel
Managing the Sales Force

Successful sales force management means:
 The right organisation and aggregation against product lines

and geographies.
 The right strength and qualification.
 The right compensation and incentive system.
Gupta
Steps in Designing and Managing a Sales Force

1. Objective Setting
2. Training for Sales Policies
3. Designing Sales Force: Structure and Size
4. Deciding Sales Force Compensation
5. Recruiting and Selecting Sales Force
6. Guiding and Motivating Sales Force
7. Performance Rating of Sales Force
Gupta
Sales Manager’s 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

Cont….
schemes, etc. Copyright © 2010, S L
Gupta
1-6 5. Monitoring
Sales theManagement
and Distribution company’sText
sales
& Casespolicies.
(2nd Edition) Excel
In the table that follows, 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 abilities. account.
Maintain the company standing
Keep pace with changes, trends and standards with all Point out the advantages of an
and developments in your customers. association with your company.
territory.
Inform the headquarters and Keep accounts current and up-
Study the latest products, your supervisors, through to-date on all company
promotion policies and established channels, about advertising and promotional
procedures. changes and developments in activities.
your territory.
Be alert to new sales and Suggest ideas, methods,
merchandising ideas. Be prompt in handling records, techniques and tips that can
reports, correspondence, etc. stimulate sales.
Cont…. Copyright © 2010, S L
Gupta
Grow, so that you can assume Cut selling costs by economical Inform the customers about the
greater responsibilities as routing, good use of time, trends in their areas.
opportunities permit. planning and greater awareness
of opportunity. Handle complaints effectively
Maintain the appearance and and to the complete satisfaction
goodwill expected of a territory Check demand and movement of the complainants.
sales manager. of products in the territory.
Suggest the best technique for
Analyse your weak and strong Report activities of the selling your products to the
points and then think about competitors. customers.
them.
Strive to reach the best goals. Organise presentations to
inform and save time.
Ask for help, when you need it.
Make the customers aware of
Cooperate with other the changes in the company’s
departments of the company. policies or procedures.
Stimulate and maintain

enthusiasm for your products.
Build and maintain goodwill.
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Problems of Sales Management

1. Designing and Managing Sales Force
Actual supervision of, and guidance to, individual salesmen is

also a sine qua non of a sound sales manager.
2. Sales Force Authority
sales force requires delegation of authority with respect to

the following:
 Changing or fixing prices
 Credit facilities to old and existing customers
 Assurance regarding quality and after-sale service Cont….

Gupta
1-9
 Payment terms and settlement
Sales and Distribution Management
of claims.
Text & Cases (2nd Edition) Excel
3. Target-setting
Sales targets are fixed on the basis of past experience, time

period and brand positioning in the market. The targets should
be fixed in such a manner that they are achievable.
4. Sales Forecasting
Sales forecasts must change as conditions change. Accuracy

depends on meticulous planning and dynamic strategies.
Gupta
Sales Management — Formulation of Sales

Strategy
The following are key decision areas in sales management which
are particularly relevant to strategy formulation:
 Determining the size of the sales force
 Decision regarding type and quality of sales force required
 Designing the sales organisation
 Territory designing
 Recruitment and training procedures
 Task allocation
 Compensation of sales force
 Performance appraisal and control system
 Feedback mechanism to be adopted
 Managing channel relationships Copyright © 2010, S L
Gupta
1-11  Coordination
Sales and Distributionwith marketing
Management Text &departments.
Cases (2nd Edition) Excel
Different Sales Strategies
Relationship Strategy
 In this strategy, a major key to success in selling is the ability

to establish working relationships with customers in which
mutual support, trust and goals are nurtured over time.
 The sales force that builds effective relationships with the

customer and provides valuable service are usually high
performers and top achievers.
Cont….
Gupta
A Selling Partner
A Selling Partner
P - Prepares strategically for a long-term, high-quality relationship that
P - Prepares strategically for a long-term, high-quality relationship that
solves customer’s problems.
solves customer’s problems.
A - Asks questions to get on the customer’s agenda.
A - Asks questions to get on the customer’s agenda.
R - Restates customer needs with confirmation questions.
R - Restates customer needs with confirmation questions.
T - Teams with support people to provide the customer with solutions.
T - Teams with support people to provide the customer with solutions.
N - Negotiates double-win solutions with joint decision making.
N - Negotiates double-win solutions with joint decision making.
E - Exceeds customer expectations whenever possible.
E - Exceeds customer expectations whenever possible.
R - Re-examines the ongoing quality of the relationship frequently.
R - Re-examines the ongoing quality of the relationship frequently.
In this model, a customer is treated as a partner. Therefore,
maintaining a good relationship with the customer is important.
Cont….
Gupta
The Double-Win Strategy
 In this strategy, both the customer and the salesperson come

out of the sale with a sense of satisfaction. The
salesperson not only obtains the order but sets the stage for a
long-term relationship, repeat business and future referrals.
 They both come out of the sale feeling satisfied, knowing that
neither has taken advantage of the other and that both have
profited, personally and professionally, from the transaction.
 However, some salespeople have still not accepted the

merits of the win-win approach. They have adopted a win-lose
approach which means that the salesperson wins at the
Cont….
buyer’s expense. Copyright © 2010, S L
Gupta
Win – Lose approach vs. Win – Win attitude

The starting point to the development of a double-win philosophy
is to compare the behaviour of persons who have adopted the
win-lose approach with that of persons who have adopted the
win-win approach (Figure).
Double-Win Strategy
Win - Lose People Win - Win People

See a problem Help others solve their problem
Fix the blame Fix what caused the problem
Let life happen to them Make life a joyous happening for others
and themselves
Live in the past Learn from the past, live in the present
and set goals for the future
Make promises they never keep Make commitments to themselves and
to others and keep both of them Cont….
Gupta
Instant Service
 It is in this context of providing almost “instant service” to
the customer that the concept of “supply chain management”
has caught the imagination of managements the world
over.
 No matter how efficiently and effectively goods/services are
produced, if they cannot be delivered to the customer in the
quickest possible time, all efforts made earlier are in vain,
particularly in the context of very short product life cycle –
counted in months rather than years.
 As depicted in Figure below, a combination of effective
process plus supply chain management is what is required to
cope with the challenges of the international market-place.
 One cannot survive in a highly competitive market without Cont….
conforming to the so called Q-C-D triangle – Highest Quality,

Gupta
1-16 Lowest
Sales and Cost and Least
Distribution Delivery
Management Text & Cases times.
(2nd Edition) Excel
Simplified Model for Ensuring Customer Delight
After sales service

Unique selling SUPPLY CHAIN
propositioning/brand management
equity
Exceeding customer
Customer expectations
Delight
On time delivery
Competitive price PROCESS

management
Reliability of product
or service
Novelty/uniqueness
of product/service
leading to customer
loyalty and lasting Cont….
relationship Copyright © 2010, S L
Gupta
Hard Sell Versus Soft Sell Strategy
Strategies for Identifying Customers
Hard Sell Soft Sell

Hard Sell Soft Sell
Concern for self Concern for customer
Concern for self Concern for customer
Canned presentation Questions for discussion
Canned presentation Questions for discussion
Talking Listening
Talking Listening
Pushing product Providing buying
Pushing product Providing buying
opportunities
opportunities
Presenting features Presenting benefits
Presenting features Presenting benefits
Advocating without acknowledging Acknowledging
Advocating without acknowledging Acknowledging
needs
needs
Cont….
Gupta
Product-centered Selling and Client-centered Selling
Product-centred Selling Client-centred Selling

1. Seller puts in efforts for research and 1. Seller puts in efforts on research and
development of product. development of relationship with clients.
2. Product centred selling emphasises 2. Client centred selling emphasises
knowledge of product. knowledge of client.
3. Selling strategies and tactics tend to be 3. Strategies and tactics tend to be directed
most influenced by past performances of more to considerations of future growth and
products and competition and present developments in the client’s world.
situations.
4. Representative seeks to be accepted as a 4. Representative strives to raise client’s
reliable, credible source of information and expectations of personal excellence.
service.
Gupta
Selling Process
 The selling process is defined as a process by which a
salesperson identifies and locates the prospects,
separates the prospects from the suspects approaches them and
makes a sales presentation, handles their objections. He also
follows up the existing customers to identify further sales leads
and measures the success and customer satisfaction level of
the current products and service offerings.
 Selling concept refers to the exchange of goods or services
for an amount of money or its equivalent in kind. Selling
helps an organization achieve its organizational goals. Thus,
managing sales in an organization is a critical activity. A
sales manager needs to ensure that the salesman are motivated
to give their best performance.
 The sales team continuously look out the changes taking
place in the external environment regarding competitors,
customers, government policy and other regulatory
Gupta
agencies, advances in technology, and industry trends. This
1-20 Sales and Distribution Management nd
Text & Cases (2 Edition) Excel
 The economic slowdown is receding and budgets of

companies are increasingly receptive to alternative direct
marketing tools to sell their products.
 Telemarketing (TM), that is marketing products and services
on the telephone, a direct marketing tool, which has touched a
high in the last three years.
 Apart from professional TM service outfits, many companies,
including MNCs, have set up their in-house TM cells.
 A TM outfit works through a well networked team of trained
telemarketers who make calls to potential clients and
customers and establish direct contact with them. The key
lies in convincing the customer about the value of the product or
service and fixing up an appointment.
 Direct customer marketing system allows customers
complete flexibility to purchase our products. Orders can
be placed via the Internet, over the phone, by Cont…. mail,Copyright
through
Gupta
our
© 2010, S L
1-21 catalogue or through

Sales and Distribution the company
Management personnel.”
Text & Cases (2nd Edition) Excel
Mail Order Sales
 Mail order houses are retail trading organisations engaged in

the mail order business.
 This is also known as carrying on business through post or

mail. In this method, customers do not visit the seller’s
business premises, nor do they make a personal examination
of the goods before they are purchased. In this system, orders
are received from customers by post and the goods are
dispatched usually by VPP (Value Payable Parcel) or registered
post.
Cont….
Gupta
In case of the mail order business, the selling function is

performed without the intervention of the personal salesman.
 The goods should be known for their utility so that there is no

need of convincing prospective buyers about their
usefulness.
 They must fetch a sufficient price to have a wide profit

margin.
 They must command wide demand.
 They must not be easily perishable.
 They should be available in large quantities throughout the

year. Cont….
Gupta
Sales through Large Scale Fixed Shop Retailers

Concentration of population in urban areas, increasing flow of
manufactured goods and improved methods of organising
business have led to the expansion of retail business. This
expansion was effected in different ways, giving rise to different
types of retail establishments, which operate on a large scale.
More prominent among them are the following:
 Departmental stores
 Chain stores
 Mail order houses
 Hire purchase shops
 Super markets
 Fixed price shops Cont….
 Cooperative stores Gupta
Sales through Wholesalers and Retailers
Wholesalers perform a number of functions in the marketing of

goods as listed below
 Assembling and buying
 Storing or warehousing
 Transporting
 Financing
 Risk-bearing
 Grading, packing and packaging
 Providing market information. Cont….

Gupta
In the process of acting as a link between the wholesaler and the

consumer, a retailer performs many functions. The more
important of them are given below:
 Buying and assembling
 Warehousing or storing
 Selling
 Grading and packing
 Financing
 Supply of market information
 Advertising. Cont….
Gupta
Direct Selling
 Direct selling identifies the unfulfilled needs of ordinary

customers.
 Direct marketing companies have an advantage over

conventional marketers in that the relationship between the
company and the customer starts building even before a sale is
made.
Lessons From Direct Selling
 THE STRATEGY: Eureka Forbes structures its demos

according to the time at the customer’s disposal.
Cont….
 The Lesson: Keep the process flexible enough
Gupta to
How to Add Value Through Direct Selling
Create direct Make Choose suitable Ensure product

Identify the Close deal
selling appointment time for demo Performance
customer quickly
process with customer and pitch at demo
Follow up sale
with prompt
service
Ensure
increase in
Is the Is salesman customer value
process clearly empowered to be
structured? flexible?
Yes Yes
No Yes
Cont….
Gupta
 THE STRATEGY: Modi Telstra uses a clearly structured sales

call process to market its cell phone services.
 THE LESSON: Simplify the process of negotiation to save the

customer’s time.
 THE STRATEGY: Oriflame uses multilevel marketing to enlist

direct sales agents from its customer base.
 THE LESSON: Use your customer to sell your product to other

customers.
 THE STRATEGY: INDAL empowers its sales force to take

pricing decisions on the spot when closing sales.
 THE LESSON: Ensure that your direct seller can conclude a

deal immediately. Gupta
National Sales Manager

In carrying out these responsibilities, sales mangers do the
following things:
1. Prepare sales plans and budgets
2. Set sales force goals and objectives
3. Estimate demand and forecast sales
4. Determine the size and structure of the sales force
organization
5. Recruit, select and train sales people
6. Design sales territories, set sales quotas and define
performance standards
7. Compensate, motivate and lead the sales force
8. Conduct sales volume, cost and profit analysis Cont….
9. Evaluate sales force performance Copyright © 2010, S L

Gupta
1-30 10. Monitor

Sales the ethical
and Distribution and social
Management conduct
Text & Cases of the sales force.
(2nd Edition) Excel
Sales Manager
Regional Manager Regional Manager Regional Manager Regional Manager Regional Manager
(North) (South) (East) (West) (Staff)
BM BM BM BM BM BM BM BM BM BM BM BM BM BM BM BM BM BM BM BM
Field Staff Field Staff Field Staff Field Staff Field Staff
Cont….
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Stand Points of Sales Representative
The stand points of sales representatives and the managers are

as follows:
1. To protect drastic fluctuations in income so that regular

monthly expenses for home mortgage, food and utilities
can be paid/balanced without hardship.
2. Expenses in direct relations to the amount of effort
3. Earnings to be equitable in terms of experience, ability, cost

of living.
Cont….
Gupta
Organization uses two types of compensations:
1. Financial
2. Non-Financial
Financial includes compensation, salary, incentives and fringe

benefits.
Non-financial includes motivation and its implications to sales

management.
But monetary compensation is one of the most direct and least

ambiguous ways of communicating to sales people about their
performance.
Gupta
Reasons for Providing Financial Compensation

The compensation plan is undoubtedly to reward the salesman
for his performance. The plan includes.
1. The plan should provide a regular income at least at minimum

level. In addition to this regular income, it should provide
adequate incentive to induce minimum performance from
the salesman.
2. The plan should be simple and easy to understand for the

salesman.
3. It should be economical and should induce competition

amongst salesman.
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4. It should be fair to both the sales force and management.
1-34 Sales and Distribution Management nd
Text & Cases (2 Edition) Excel
Methods of Remuneration
The sales force can be remunerated in the following ways:
1. A straight salary
2. A straight commission on sales
3. Salary and commission on sales
4. Salary and commission on sales above a certain amount
5. Salary and different rate of commission on varying totals or

for different types of goods
6. Salary and share in the profits
Gupta
Expenses Accounts
The major sales expenses accounts are categorized as follows:
1. Salary accounts
2. Commission accounts
3. Bonuses
4. Meals and entertainment
5. Air travel
6. Automobiles rentals
7. Lodging
8. Travel accounts
9. Tour expenses accounts (Advance accounts)
10. Communication and services expenses accounts. Copyright © 2010, S L
Gupta
Fringe Benefits
Types of fringe benefits are:
1. Company Car
2. Supplemental life insurance and medical insurance
3. Tax-return preparation
4. Personal tax and financial planning
5. Low or no interest loans
6. Deferred compensation
7. Supplemental retirement benefits
8. Air travel and First class A.C. for Train Travel
9. Relocation allowance
Cont….
10. Stationary facilities Copyright © 2010, S L

Gupta
11. Laundry benefits, while on the tour
12. Special perquisites for outstanding performance by

getting travel prizes recognition for
outstanding performance
13. Medical expenses
14. Special business associations membership
15. Exclusive developmental programs by IIM, Ahmedabad, by

Shiv Khera, etc.
Gupta

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Block Basics of Sales Management

: I Ch-1 Sales Management Strategy

SALES MANAGEMENT IN 21ST CENTURY

Definition Committee of the American Marketing Association.

Sales force is responsible for the sale of products of a company

1-1 well educated

Nature and Importance of Sales Management

preference, competitors‘ situation, governmentCopyright

1-2 other regulatory

 Relationship-based selling works because people would

 Relationship-based selling means doing business in such a

 Relationship selling is mainly personal not institutional, and

 It is not selling centric. It's buyer-based.

 The objective of relationship selling is to help the buyer do

Managing the Sales Force

 The right organisation and aggregation against product lines

 The right strength and qualification.

 The right compensation and incentive system.

Steps in Designing and Managing a Sales Force

2. Training for Sales Policies

3. Designing Sales Force: Structure and Size

4. Deciding Sales Force Compensation

5. Recruiting and Selecting Sales Force

6. Guiding and Motivating Sales Force

7. Performance Rating of Sales Force

Sales Manager’s Duties and Responsibilities

1. Organising sales research, product research, etc.

3. Setting and controlling the targets, territories, sales

4. Advising the company on various media, sales promotion

To yourself To your company To your customers

Stimulate and maintain

Problems of Sales Management

Actual supervision of, and guidance to, individual salesmen is

2. Sales Force Authority

sales force requires delegation of authority with respect to

 Changing or fixing prices

 Credit facilities to old and existing customers

 Assurance regarding quality and after-sale service Cont….

Sales targets are fixed on the basis of past experience, time

Sales forecasts must change as conditions change. Accuracy

Sales Management — Formulation of Sales

Different Sales Strategies

 In this strategy, a major key to success in selling is the ability

 The sales force that builds effective relationships with the

The Double-Win Strategy

 In this strategy, both the customer and the salesperson come

 However, some salespeople have still not accepted the

Win – Lose approach vs. Win – Win attitude

Win - Lose People Win - Win People

conforming to the so called Q-C-D triangle – Highest Quality,

Simplified Model for Ensuring Customer Delight

After sales service

Competitive price PROCESS

Hard Sell Versus Soft Sell Strategy

Strategies for Identifying Customers

Hard Sell Soft Sell

Product-centered Selling and Client-centered Selling

Product-centred Selling Client-centred Selling

 The economic slowdown is receding and budgets of

1-21 catalogue or through

Mail Order Sales

 Mail order houses are retail trading organisations engaged in

 This is also known as carrying on business through post or