SALES MANAGEMENT AND SALES PROMOTION

SALES MANAGEMENT

• According to American Marketing Association

Sales Management is defined as the planning, direction and control of personal selling, including recruiting, selection, equipping, assigning, routing, supervising, paying and motivating as these tasks; apply to the personal sales force.

Job and Role of Sales Management in Organization

• Planning:– Building a profitable customer-oriented sales team

• Staffing:– Hiring the right people to sell and lead

• Training– Educating sales personnel to satisfy customers

• Leading– Guiding average people to perform at above average levels

• Controlling– Evaluating the past to guide the future

Sales Organization and Its Evaluation

• According to Still and Cundiff:

“A sales organization, like any organization, is a group of individuals striving jointly to reach certain goals and bearing formal as well as informal relations to each other”

Evaluation of Sales Organization

Effectiveness of a Sales

organization

Sales Analysis

Cost Analysis

Productivity Analysis

Sales Analysis

Methods of Sales Analysis:

Total Sales Volume

Sales by Region

Sales by Salesperson

Sales by Customer Classification

Sales Analysis by product Line

Sales Analysis by Distribution Channels

Sales Analysis by Units Sold

Cost Analysis

SOMETIMES CALLED AS PROFITABLE ANALYSIS OR MARKETING COST ANALYSIS

Methods of Cost Analysis:

Analysis of Ledger Expenses

Analysis of Activity Expenses

Personal Selling Expenses

Advertising and Sales promotion expenses

Warehousing and shipping expenses

Order Processing Expenses

Administration Expenses

Analysis of Activity Costs by Market Segments

Productivity Analysis

Productivity is a measure of output from a production process, per unit of input.

Productivity=Outputs Inputs

Selling Functions

• Product Planning and Development• Contactual Function• Creation of Demand• Negotiations• Sales Contract

System Selling

• System selling entails selling a set of interrelated components that fulfill all or a majority of a customer’s needs in a product or service area.

• The concept of system’s selling means selling a total package of related goods and services to solve a customer’s problems.

Importance of System Selling in Contemporary Environment

• Produces a larger Initial Sale

• Reduces Compatibility Problems• Supplier also Retained• Save Time• Consultative Role

• Maximizes Effectiveness

Selling of Services as Opposed to Selling of Tangible Products

• A service is the non-material equipment of a good.

• Hotel Business• Education• Medical Service• Transportation

• Insurance Service

• Coaching• Banking• Personal Care• Legal Services

Selling Services Versus Selling Products

• Basic Difference Tangibility Transfer of Ownership Pricing Features and Benefits Marketing Strategies Visuals Re-selling Customer Relationship Customer Relationship

Sales Management Planning

According to American Marketing Association;

“Sales planning are the work of setting up objectives for selling activities, determining and scheduling the steps necessary to achieve these objectives.”

Components of Sales Management Planning1) Selling Objectives: determining and achieving the objectives according to

the plan.2) Sales Policies: Guidelines made for deciding and performing various selling

activities.3) Sales Programme: Launching a new product, Sales promotion activities,

entering into new market, sales force training.4) Sales Procedure: Plans which determine sequence of different selling

activities.5) Sales Rules: What is to be done and what is not to be done in particular

situation. Applicable to all sales personnel without distinction.6) Sales Forecasts: is an estimate of sales in rupees or in units or in both for a

specified future period under proposed marketing plan.7) Sales Budgets: estimate of future sales, selling expenses and total profits

from sales orientations.8) Sales Strategy: to consider the plans and policies of competing business

units and plan our strategy accordingly9) Sales Quotas: individual sales target figure assigned to each sales units.

Types of Sales Management Planning

a. Sales Plan on the basis of Market area

b. On the basis of Selling Functions

c. On the basis of Types of Customers

d. On the basis of Types of Products

e. On the basis of Time period

SALES MANAGEMENT INFORMATION SYSTEM

SMIS is the system by which sales data are collected, analyzed, interpreted and distributed to a company’s sales managers.

It helps to spot important trends in market, changing customer needs and opportunities for market growth.

Information comprising the SMIS is collected from salespersons field reports, internal sales records, historical data.

Useful tool to spot problems and opportunities and to develop projections.

Features of SMIS• Access of Information

– Managers can access the information they need, the way they want it from own desktop

• Reports– Overall sales performance– Detailed break-down of sales by salesperson/by period against budgetary targets– Revenue projections based on contracts written– Comparison of salesperson performance against sales targets– Station inventory availability and yield

• Data Mining Tools:– Extract information from invoice sales to give custom ranking and analysis broken-down

by user-selected criteria; sales person, type of business, area, timeframe

• Real-Time Analysis: – Real-time analysis of projected sales revenue gives detailed break-downs of billing by

type of sale over a user selected timeframe.

• History– Salesperson performance history– Monitoring actual sales against individual monthly targets

Components of SMIS

• Sales Support:– Product information– Product Price– Discount information– Sales incentives – Sales promotions– Financing plans for customer– Strengths and weaknesses of competitors’ products– The histories of customer relations with the company.– Sales policies and procedures established by company– Product that have not yet been introduced– Product inventory level

• Sales Analysis:– Product sales trends– Product profitability on a product-by-product basis– The performance of each sales region and sales branch– Salesperson’s performance

• Customer Analysis:– To establish a profile of buying habits – To determine the profitability of each customer on a contribution margin basis

APPLICATIONS OF SMIS• Business Processes:

– Contacting customers– Selling the products and services– Taking orders– Following up on sales

• Monitor Trends:– To monitor new product and sales opportunities– Support planning for new products and services– Monitor the performance of competitors

• Supports Marketing Research:– Supporting market research– Analyzing advertising and promotional campaigns, pricing decisions

• Provide Aids for Operational Management:– Aids to locating and contacting prospective customers – Tracking sales and processing orders– Providing customer service support

• Tracking of Sales:– Determine sales revenue– Identify hot-selling items and other sales trends

Sales Forecasting

• According to American Marketing Association:“Forecasting is an estimate of sales in dollars or physical units for a specified future period under a proposed marketing plan or program and under an assumed set of economic and other forces outside the unit for which the forecast is made. The forecast may be for a specified item of merchandise or for an entire line”

Objectives of Sales Forecasting

• Short-Run Objectives:– Formulation of suitable production policy so as to meet the demand as per the sales forecast.– To make provision for the regular supply of raw material– To make the best utilization of the machines– To make the regular supply of the labour force– To determine appropriate price policy for a given period– Estimate and provide the requisite working capital – To establish the sales quotas targets for different market segments– To estimate stock requirements for unfinished, semi-finished and finished products for a specific

period of time.

• Long-Run Objectives:– Estimating cash inflow from sales– Provision for capital expenditure– Planning of plant capacity so as to meet rising future demand– Manpower planning– Planning for acquisition of raw materials– Determining the dividend policy– Establishing coordination between various functions of an organization– Reducing selling cost– To facilitate budgeting and budgetary control– To estimate future profits of the business enterprise.

TECHNIQUES OF SALES FORECASTING

• A sales forecasting technique is a procedure for estimating how much of a given product (or for product line) can be sold if a given marketing program is implemented.

• Well managed companies do not rely upon a single forecasting technique but use several.

• Sales forecasting techniques can be broadly classified as qualitative techniques:

Executive Opinion Trend Projection MethodDelphi Method Exponential SmoothingSales Force Composite Method Naïve/Ratio MethodSurvey of Buyers Expectations Regression AnalysisHistorical Analogy Method Econometric Method

FORECASTING TECHNIQUES

QUALITATIVE METHODS QUANTITATIVE METHODS

SALES BUDGETING

• Budgeting is an art of presenting future plans in quantitative terms. Sales budget is an estimate of future sales-units, sales-value, selling expenses and total profit from sales operations.

• Sales budget generally has two parts;1. Revenue Part: is related to estimating sale-units and sale-value for a certain future period of time.

2. Expense Part: is related to estimating selling expenses to be incurred to achieve estimated sales.

Purpose and Significance of Sales Budgeting

• Planning• Better Communication and Coordination• Control and Performance Evaluation• Psychological Benefits

Sales Budgeting Process• Preliminary Situation Analysis• Development of Sales Forecast• Fixation of Preliminary Sales Targets• Determination of Sales Activities• Fixation of Sales budget• Finalization of Projections at Department Level• Presentation before Top Management• Review of Sales Budget• Approval of Sales Budget

Methods of Sales Budgeting

• Budgeting by percentage of Sales Method• Budgeting by the Objective and Task Method• Affordability Method• Competitive Parity Method• Return Oriented Method

SALES QUOTAS

• A sales quota is a part of a company’s total estimated sales assigned to a salesman, a territory, a branch, a distributer or dealer or to some other selling unit, as a goal to be attained in a designated future period of time.

Types of Sales Quotas

• Sales Volume Quotas

a. Rupees Sales Volume Quotas

b. Unit Sales Volume Quotas

c. Point Sales Volume Quotas• Sales Budget Quotas

a. Expense Quotas

b. Gross Margin or Net Profit Quotas• Sales Activity Quotas• Combination and Other Point System Quotas

Methods of Setting Sales Quota

• Based on Sales Potential of Individual Units• On the basis of Sales Potential of Total Market• On The Basis of Last Year’s Sales• On the Basis of Judgment of High Officials• On The basis of Sales Force Own Estimates

SALES MANPOWER PLANNING

• A major function of sales force management is procuring the qualified sales personnel in sufficient numbers to meet the requirements of the organization.

Nature of Manpower Planning

• Dynamic Activity• Well-defined Objectives• Determines Sales Personnel Needs• Consists of Current Sales Person Inventory• Adjusting Demand and Supply• Creating Proper Work Environment• Development of Policies• Complementary to Organization Planning

Purpose of Sales Manpower Planning

• To workout the Compensation Levels• To Improve Systems of Selling• To Review Effective of Sales Policies• To Remove Deficiency from Individuals and make them Better Salesmen• Review Effectiveness of Supervisor

Sales Manpower Planning Process

• Establishing Responsibilities:• Deciding the number of Salespeople Needed• Outline the Type of Salespeople Needed

a. Sales force Job Analysis

b. Sales force Job Description

c. Sales Force Job Specifications

Significance of Sales Manpower Planning

• Reservoir of Talent• Prepare Sales Force for Future• Facilitates Smooth Expansion of Sales organizations• Cut Costs

Development of Sales Organization

• It supports to achieve organizational objectives. • It is related to the structure of organization which supports to the sales force

Principles of organization Development

• Should Reflect a Marketing Orientation• Should be built around activities, not around people• Responsibility and Authority should be related properly• Span of executive control should be reasonable• Organization should be stable but flexible• Activities should be balanced and coordinated

Steps in Developing Sales Organization

• Defining Objectives• Determination of Activities and their volume of Performance• Grouping activities into performance• Assignment of Personnel to Positions• Provision for Coordination and Control

Recruitment of Sales Personnel

• Recruitment is the process of locating and attracting job applicants. Recruiting and selecting e new sales force is an important aspect of the sales manager’s job.

• Recruitment is the set of activities and processes used to legally obtain a sufficient number of individuals in such a manner that the recruits and the sales force’s best interests are taken into consideration.

Sources of Recruitment

• Internal Sources

a. Present Employees Already Working in the Organization

b. Recommendation of the Existing Salesman

c. Promotions

d. Transfers

e. Re-employment of Former Employee

f. Employee Referral Programs

g. Interns and Cooperative Students

• External Sources:a. Direct Unsolicited Applications/ Walks-insb. Employment Agenciesc. Salespeople Making Calls on the Companyd. Customers as a Recruiting Sourcee. Sales Forces of Non-competing Companies/ Other Industry Sourcesf. Sales Forces of Competing Companiesg. Educational Institutions and Campus Placementh. Wholesalers, Retailers and Customersi. Advertisingj. Web-Sourcesk. Networking

Selection of Sales Personnel

• Selection is the process of making a hire or no hire decision regarding applicant for a job.

• The sales manager obtains the database of candidates to be selected from the recruitment stage.

• A sound selection of salesperson increases goodwill of the firm.• In the eyes of buyers, a salesperson represents the company. If he makes poor

impression, the company too suffers loss of reputation among its customers

Criteria Used for Selection Of Sales Personnel

• Mental Alertness• Business Terms and Memory Recall Aptitude• Communication Skill• Numerical Ability• Personality Dimensions• Honesty or Character Strength• High Energy Levels• Dominance• Competitiveness• Emotional Maturity• Work Motivation

Process of Selection of Sales Personnel• Pre-interview and Preliminary• Formal Application• Interview• Psychological Testing

1. Knowledge Tests

2. Ability Tests

3. Aptitude Tests

4. Achievement Tests

5. Personality Tests

6. Temperament Tests

7. Graphology

8. Simulation Exercise

• Reference Check• Physical Examination• Job Offer

Training and Development of Sales Personnel

• Training can be defined as the development of skills and faculties, to do a particular job in the given way through systematic teaching and guidance.

• According to Edwin B. Flippo, “Training is the act of increasing knowledge and skill of an employee for doing a particular job.”

• According to National Society of Sales Training Executives (USA), “ Sales training is the intentional and sound application of ordinary human sense to the problem of helping the sales personnel to make the most of its talents.”

Development

• Development is a long-term educational process utilising a systematic and organised procedure by which sales personnel get conceptual and theoretical knowledge.

• In other words, it refers not to technical knowledge and skills in operation but to philosophical and theoretical educational concepts.

• It involves broader education and its purpose is long-term development.

Contents of Sales Training

• Training about a Product• Training on the After Sales Service• Training on Company• Training on Sales Organization• Training on Sales Policy• Training in Reporting Systems• Training in Business Ethics• Training in Selling Skills

Sales Training Methods

• Group Training Methodi. Lecture Methodii. Audio-Visual Methodiii. Discussion Methodiv. Conference Methodv. Role Playing Method

• Individual Training Methodi. Training on the Jobii. Training through Correspondenceiii. Training through Special Assignmentsiv. Observation Methods

Types of Sales Training

• Skills Training• Refresher Training• Cross-Functional Training• Team Training

– Content Tasks– Group Processes

• Creativity Traininga. Breaking Away

b. Generate New Ideas

c. Delaying Judgement

• Diversity Training• Literacy Training

Importance of Sales Training

• Higher Sales Volumes• Better Product Knowledge• Eliminates Waste• Influences Prospects in Better Way• Reduces Control and Supervision• Develops High Morale• Low Turnover of Sales Force

Evaluation Of Sales Training

• Reactions• Learning• Behaviour• Results

Time and Territory Management

Time Management

• Time is utmost importance in business.• The productivity of sales force can be

improved by developing effective strategies for time management.

• In this age of the internet and mobile communications, the time required for communicating has reduced drastically.

Methods of Time Management

• Developing a Series of Personal Goals• Preparing a Daily To Do List• Maintain a Planning Calendar• Organising Selling Tools• Using High-Tech Equipments

Improved Customer

Accurate Evaluation of Sales force Personnel

Reduced Selling Costs

Better Market Coverage

Importance of Time Management

Territory Management

• According to Still and Cundiff, “Operationally a sales territory is a particular grouping of customers and prospects assigned to an individual sales person.”

• According to Maynard and Davis, “ Sales territory is a basic unit of sales planning and sales control.”

• Sales territory is composed of a group of customers or a geographic area assigned to a sales person.

• Sales territory may or may not have geographic boundaries.

Territory Planning Procedure

Selecting a Basic Geographic Control Unit

Determining Sales Potential Present in Each Control Unit

Combining Control Units into Tentative Territories

Adjusting for Coverage Difficulty

Establishing and Revising Sales Territories: Reasons

1. To Obtain Thorough Coverage Of The Market

2. To Establish A Salesperson’s Responsibility

3. To Evaluate Performance

4. To Improve Customer Relations

5. To Reduce Sales Expense

6. To allow better matching of salesperson to customer

7. To benefit salesperson and company

8. To increase profitability of sales

9. To improve sales planning

10. To improve control on sales force

Bases of Territory Design

On the bases of country

On the Bases of

StateOn the

Bases of District Units

Other Bases

Kingsoft Office

Methods of Territory DesignBuild Up Method1.Determine Optimal Call Frequencies2.Determine the Total Number of Calls Needed in Each Control Unit3.Determine Workload Capacity4.Draw Tentative Territorial Boundary Lines5.Modify the Tentative Territories as Needed

Breakdown Method1.Determine Sales Potential2.Determine Sales Potential in each Control Unit3.Determine the Sales Volume Expected from each Salesperson4.Draw Tentative Territorial Boundaries5.Modify Tentative Territories as Needed

Computers in Territory Design

• Geographic Information System (GIS)– Combines multiple layers of information to provide in-depth

understanding of a sales territory.• Elements of a complete GIS:

– Software– Hardware– Data– Trained people

Assigning Salespeople in Territories

1. Preventing from duplication of efforts

2. Opportunities should be equally divided

3. Should facilitate the effective control on Sales force

4. Develop Healthy Competition amongst the salesmen

5. Should provide proper and efficient routing of salesmen

6. Should be flexible

7. Provide equal income to salesmen

8. Provide even coverage

9. Territories should be done on the basis of demand

10.Should not be given independent charge

Routing Patterns

• Territorial routing is devising a travel plan or pattern to use when making sales calls to efficiently cover a territory.

• A properly designed routing system has three primary advantages:– reduced travel time and

selling costs– improved territory coverage– improved communication

(since managers know where salespeople are)

• Before developing a routing plan, the salesperson must determine the following:

• the number of calls to be made

each day

• the call frequency on each class

of customer• the distance to each account• the method of transportation

‘

5.Outer-ringapproach

5.Outer-ringapproach

4.Hopscotch

pattern

4.Hopscotch

pattern

3.Cloverleaf

route

3.Cloverleaf

route

2. Circularpatterns

2. Circularpatterns

1. Straight-line

route

1. Straight-line

route

Territorialroutingpatterns

Territorialroutingpatterns

Here are some types of routing patterns

1. Straight-line route • Salesperson starts at the office and

makes calls in one direction until reaching the end of the territory.

2. Circular patterns • Salesperson starts at the office and

moves in a circle of stops until ending up back at the office.

3 . Clo ve rle a f ro ute– A cloverleaf route is similar to a circular pattern.– But rather than covering an entire territory, the route

circles only part of a territory.– The next trip is an adjacent circle and the pattern

continues until the entire territory is covered.

4. Ho p s c o tch p a tte rn– The salesperson starts at the farthest point from the

office and hops back and forth calling on accounts on either side of a straight line back to the office.

5 . O ute r-ring a p p ro a ch – The salesperson first draws an outer ring around the

customers to be called upon.– Then, those customers inside the ring are

connected to the outer-ring route using angles that are as obtuse as possible.

Sales Incentives

and Sales Compensation

Compensation includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate employee to strive for higher

levels of productivity

Objectives of Compensation PlanSa le s m a na g e r’s O bje c tive s :1 . Attra c ting the Be s t ta le nt2 . De vis ing Pla n within Co s t Budg e t3 . Utiliz ing the a t O p tim um Co s t4. Co ntro lling O p e ra tio na l Ac tiv itie sSa le s Fo rc e ’ s o b je c tive s :1 . Ac c e p ta ble Sta nda rd o f Living2 . Co ns is te nc y In Inc o m e3 . Pe rfo rm anc e Linke d Inc e ntive s4. Fa ir a nd Tra ns p a re nt5 . Tim e ly Pa ym e nts6 . Sc o p e o f Future ra is e

Types of Compensation Plan

Monetary Compensation

Straight Salary Method

Straight Commission Method

Combination of Salary and Commission

Non- Monetary Compensation Promotions Recognition Programs Fringe Benefits Travelling Expenses Perks Sales Contents

According to Wil l iam J. Stanton, ‘ Sales promotion is an exercise in information, persuasion and influence .’

Categories of Sales Promotion

Consumer Promotion

Trade Promotion

Sales Force Promotion

Characteristics and Applications of Consumer Promotion

Role of Consumer Prom

otionIncrease Trial and Re-purchase

Increases the Frequency or Quantity of Purchase

Countering Competitive Offers

Building Customer Database and Increase Customer Retention

Cross-Selling and Extending the Use of a Brand

Reinforcing the Brand Images and Strengthening Brand Relationships

Characteristics and Applications of Consumer Promotion

Marketing Intermediaries

Impacts the Sales

Building Demand

Cooperative Marketing Activity

Boost Short-term Sales

Not for the Mass Public

Roles o f Trade Promotions

Obtain Distribution for New Products

Obtain Distribution for New Products

Maintain Trade Support for Established Brands

Obtain Distribution for New Products

Encourage Retailers to Display Established Brands

Build Retail Inventories

Obtaining Prime Retail Shelf Space or Location

Enhancing Channel Relationship

Reducing Excess Manufacturer Inventories

Increasing Order Sizes

Countering Competitive Actions

Sales Promotion StrategiesSales Promotion Strategies

• Promotion is a communication process by which the producers of the products or services draw attention of the consumers or prospective consumers towards their products and services

Below the Line StrategiesBelow the Line Strategies

• Price PromotionsPrice Promotions• CouponsCoupons• Gift with PurchaseGift with Purchase• Competitions and PrizesCompetitions and Prizes• Money RefundsMoney Refunds• Frequent User/Loyalty IncentivesFrequent User/Loyalty Incentives• Point-of- Sale DisplaysPoint-of- Sale Displays

Process of Sales Promotion Research

Desk Desk ResearchResearch

Pre-TestingPre-Testing

Testing of Testing of Sales Sales

Promotion Promotion CampaignCampaign

Monitoring The Monitoring The ResearchResearch

Planning and Designing Sales Promotion Programme: Special Contexts

Sales Contest Trade Discounts CouponsSet an objective for the contest

Evaluate Goals

Design Levels of Achievement

Designate Prizes of different types

Make everyone feel like a winner

Track the progress

Set a time limit

Keep energy an commitment high

Purpose of the programme

Pay for membership

Create a membership form

Record all the information

Decide the promotional item or service

Determine distribution

Write essential information

Give an ending date

Code the coupon

Setting Goals to Measure and Test Sales Promotion Setting Goals to Measure and Test Sales Promotion EffectivenessEffectiveness

Exposure: Define Target CustomerDetermine their numbersChoose the Promotion MediaDetermine the Promotion Budget

Attention

Attitude Change

Comprehension

Behaviour/Action:Buy the Brand for the first timeContinue to buy the brandBuy more of the brandUrge friends to buy brandVisit a store Try out a brand