Sales and Distribution Management

Chapter-1 Objective and Scope of Sales Management

A. Introduction
B. Objectives of Sales Management
C. Sales Management and Financial Results
D. Sales Management and Control
E. Siing u! t"e Situation
F. Setting #uantitative $erformance Standards
%. %at"ering and $rocessing Data on Actual $erformance
&. Evaluating $erformance
I. Action to Correct Controllable 'ariation
(. Adjusting for )ncontrollable 'ariation
*. Conclusion
Chapter- 2 Buyer Seller Dyads and ersonal Selling Situations
A. Bu+er,seller D+ads
Chapter- ! ersonal Selling Situation
A. $ersonal Selling
i. %rou! A -Service Selling.
ii. %rou! B -Develo!mental Selling.
iii. %rou! C -Basicall+ Develo!mental Selling/ but Re0uiring )nusual Creativit+.
B. 1"eories of $ersonal Selling
C. AIDAS 1"eor+ of Selling
D. %aining interest
E. *indling Desire
F. Inducing Actions
%. Building Satisfaction
&. Rig"t Set of Circumstances
I. 2Bu+ing Formula3 1"eor+ of Selling
(. 2Be"avioral E0uation3 1"eor+
*. Bu+er 4 Seller D+ad and Reinforcement
Chapter- " Selling rocess
A. Sale5s Influence $rocess
B. Sales!erson5s Role in Reducing Bu+er Dissonance
C. $ros!ecting
D. Formulating $ros!ect Definitions
E. Searc"ing Out $otential Accounts
F. #ualif+ing !ros!ects and Determining $robable Re0uirements
%. Relating Com!an+ $roducts to Eac" $ros!ect5s Re0uirements
&. Sales resistance and sale closing
I. Sales Resistance
(. Sales Objection
*. Closing Sales
Chapter- # Sales $orecasting
A. Sale Forecasting and Sale $otential
B. Sales Forecasting Met"ods
C. (ur+ of E6ecutive O!inion
D. 1"e Del!"i 1ec"ni0ue
E. $oll of Sales Force O!inion
F. $rojection of $ast Sales
%. 1ime,series Anal+sis
&. E6!onential Smoot"ing
I. Evaluation of $ast Sales $rojection Met"ods
(. Surve+ of Customer5s Bu+ing $lans
Chapter- % Organi&ations of Sales ersonnel
A. Functions of t"e Sales E6ecutive
B. #ualities of Effective Sales E6ecutives
C. Relation 7it" 1o! Management
D. Relations 7it" Managers Ot"er Mar8eting Activities
E. Relation 7it" $roduct Management
F. Relations 7it" $romotion Management
%. Relations 7it" $ricing Management
&. Relations 7it" Distribution Management
I. 1"e Sales Organiation
(. $ur!oses of Sale Organiation
*. 1o $ermit t"e Develo!ment of S!ecialists
9. 1o assure t"at All :ecessar+ Activities are !erformed
M. 1o Ac"ieve Coordination or Balance
:. 1o Define Aut"orit+
O. 1o Economie on E6ecutive 1ime
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OB,*C)-.* (/D SCO* O$ S(0*S M(/(1*M*/)
-ntroduction
Sales management originall+ referred e6clusivel+ to t"e direction of sales force !ersonnel.
9ater t"e term too8 on t"e broader significance,in addition to t"e management of !ersonnel selling.
2Sales management3 meant management of all mar8eting activities including advertising/ sales
!romotion/ mar8eting researc"/ !"+sical distribution/ !ricing and !roduct merc"andising. According to
American Mar8eting Association sales management means 2t"e !lanning/ direction and control of
!ersonnel selling/ including recruiting/ selecting/ e0ui!!ing/ assigning/ routing/ su!ervising/ !a+ing
and motivating as t"ese tas8s a!!l+ to t"e !ersonal sales force.
Sales managers are res!onsible for organiing t"e sales effort/ bot" 7it"in and outside t"eir
com!anies. ;it"in t"e com!an+ t"e sales manager builds formal and informal organiation structure
t"at ensures effective communication not onl+ inside t"e sales de!artment but in its relations 7it"
ot"er organiations units. Outside t"e com!an+/ t"e sales manager serves as t"e 8e+ contact 7it"
customers and ot"er e6ternal !ublics and is res!onsible for building and maintaining an effective
distribution net7or8.
Sales managers "ave still ot"er res!onsibilities. t"e+ are res!onsible for <!artici!ating for t"e
!re!aration of information critical to t"e ma8ing of 8e+ mar8eting decisions suc" as t"ose on
budgeting/ 0uotas and territories. 1"e+ !artici!ate, to an e6tent t"at varies 7it" t"e com!an+,in
decisions on !roducts/ mar8eting c"annels and distribution !olicies/ advertising and ot"er !romotion
and !ricing. 1"us/ t"e sales manager is bot" an administrator in c"arge of !ersonal selling activit+
and a member of t"e e6ecutive grou! t"at ma8es mar8eting decisions of all t+!es.
Objectives of Sales Management
From t"e com!an+ vie7!oint/ t"ere are t"ree general objectives of sales management= sales
volume/ contribution to !rofits and continued gro7t". Sales e6ecutive do not carr+ full burden of t"e
effort to reac" t"ese objectives but t"e+ ma8e major contributions. 1o! management "as t"e final
res!onsibilit+ because it is accountable for t"e success and failure of t"e entire enter!rise. )ltimatel+
to! management is accountable for su!!l+ing an ever increasing volume of sociall+ res!onsible
!roducts t"at final bu+ers 7ant at satisfactor+ !rices.
1o! management delegates to mar8eting management/ 7"ic" t"en delegates to sales
management/ sufficientl+ aut"orit+ to ac"ieve t"e t"ree general objectives. In t"e !rocess/ objectives
are translated into more s!ecific goals,t"e+ are bro8en do7n and restated as definite goals t"at t"e
com!an+ "as a reasonable c"ance of reac"ing. During t"e !lanning t"at !recedes goal setting/ sales
e6ecutives !rovide estimates on mar8et and sales !otentials/ t"e ca!abilities of t"e sales force and
t"e middlemen and t"e li8e. Once t"ese goals are finalied/ it is u! to t"e sales e6ecutive to guide
and lead t"e sales !ersonnel and t"e middlemen 7"o !la+ critical roles in im!lementing t"e selling
!lans.
Sales management t"en is influential in c"arting t"e coarse of future o!erations. It !rovides
"ig"er management 7it" informed estimates and facts for ma8ing mar8eting decisions and for setting
sales and !rofit goals. 9argel+ on sales management5s a!!raisal of mar8et o!!ortunities/ targets are
set for sales volume/ gross margin and net !rofit in units of !roduct and in dollars/ 7it" benc"mar8s of
gro7t" !rojected for sales and !rofits in s!ecific future dates. ;"et"er or not t"ese targets are
reac"ed de!ends u!on t"e !erformance of sales and ot"er mar8eting !ersonnel.
Sales Management and $inancial +esults
Sales management and financial results are closel+ related. Financial results are stated in
terms from t7o basic accounting formulas=
Sales 4cost of sales>gross margin
%ross margin,e6!enses>net !rofit
Sales management influences t"e numbers cran8ed into t"ese formulas. Sales/ gross margin
and e6!enses are affected b+ t"e caliber and !erformance of sales management and t"ese are t"e
major determinants of net !rofit. 1"e cost of sales factor cannot be affected directl+ b+ sales
management/ but it can be affected directl+ since sales volume must be large enoug" to !ermit
maintenance of targeted unit cost of !roduction and distribution. $eriodicall+/ t"ese formulas become
t"e com!an+ o!erating statement and are used b+ t"e board of directors and b+ stoc8"olders/ in
a!!raising to! management !erformance. Moreover/ to! management uses t"ese formulas in judging
t"e effectiveness of sales management.
Sales Management and Control
:o7/ sales management and control are closel+ related in an organiation. Sales e6ecutive
control t"e !ersonal selling effort of t"e organiational units t"e+ "ead. 1"e !ur!ose is to ensure t"at
sales de!artment objectives are reac"ed. Control is !art of management/ as are !lanning/ organiing
and coordinating. 1"e several !"ases of control are !resented in t"e follo7ing discussions in t"e
normal se0uence but in t"e real 7orld several !"ases can occur simultaneousl+ or overla! in time.
2/
Si&ing up the Situation
Sales e6ecutive start b+ revie7ing t"e !ersonal selling objectives of t"e firm? t"e+ realie t"ese
objectives 7it" res!ect to t"e !resent/ !ast and t"e future in an attem!t to ans7er t"e four 0uestions.
i. ;"ere are 7e no7@
ii. &o7 did 7e get t"ere@
iii. ;"ere are 7e going@
iv. &o7 do 7e get t"ere@
After satisf+ing t"emselves t"at t"e com!an+ !ersonnel selling objectives/ long range and
s"ort range/ are reconcilable/ sales e6ecutives a!!raise t"em relative to t"e !lans/ !olicies and
!rocedures t"at "ave been used/ are being used/ or are intended for use in t"e effort to reac"
!ersonnel selling objectives. In t"e coarse of siing u! t"e situation/ sales e6ecutives find and correct
7ea8nesses or im!erfections in t"e sales !lans and t"e !olicies and t"e !rocedures used in t"eir
im!lementation.
Setting 3uantitative erformance Standards
After ironing out !lanning 7ea8nesses/ sales e6ecutive set 0uantitative standards against
7"ic" to measure !erformance. Standard settings re0uire continual e6!erimentation and most
standards are far from !recise. 1"e ultimate standard of a !articular standard a!!ro!riateness is
7"et"er it contributes more to !ersonnel selling efficienc+ t"an it costs. Intelligent standard setting
re0uires identification of t"e individuals 7"o are res!onsible for t"e activit+ or grou! of activities being
!ut under control. :o t7o sales!ersons or e6ecutives !erform e6actl+ ali8e/ even t"oug" t"e+ ma+
o!erate in identical circumstances. 1"us standards are often e6!ressed as ranges of acce!table
!erformance. Alt"oug" it is convenient to t"in8 of a standard as a fi6ed value/ t"ere s"ould be an
u!!er and lo7er limit 7it"in 7"ic" "uman variation ma+ ta8e !lace. ;"en t"e !erformance of an
organiational unit !asses eit"er of t"ese control limits/ t"e danger flag is u!/ signaling t"at t"e
situation is out of control.
1athering and rocessing Data on (ctual erformance
1"e t+!e and amount of information needed for controlling sales de!end u!on t"e standard
selected. but regardless of t"e nature of t"is information it s"ould not be in e6cess of sales
management real needs/ nor s"ould its cost of collection and !rocessing be more t"an its 7ort".
Conse0uentl+/ sales management determines,at regular intervals,7"et"er t"e information being
re!orted is sufficientl+ im!ortant and being used often enoug" to justif+ its costs. Sales e6ecutives
also 8ee! in mind t"at c"anges in e6ecutives/ basic !olicies or ot"er matters ma+ alter t"e usefulness
of t"e information.
*valuating erformance
Evaluation of !erformance means com!aring actual results 7it" standards. Because of
differences in territorial and ot"er conditions/ it is difficult to com!are individual !erformances.
&o7ever/ it is !ossible to e6!lain eac" individual sales!erson variations from standard. De!artures
from standard are classified into controllable and uncontrollable variations. variations outside t"e
control of t"e !erson being a!!raised include t"ose caused b+ ra!id and une6!ected c"anges in
economic conditions/ c"anges in governmental activities and 7ars/ stri8es/ floods/ droug"ts and ot"er
natural disasters.
(ction to Correct Controllable .ariation
Management corrects t"e variation e6!lained b+ factors 7it"in t"e control of t"e !erson being
evaluated. Management ta8es ste!s to move t"e individual !erformance in t"e direction of t"e
standards. 1"e s!ecific actions ta8en differ 7it"in t"e nature of t"e variation. but management
assumes one or more of t"ree forms.
i. Direction or !ointing out more effective 7a+s to !erform certain tas8s
ii. %uidelines or !roviding additional instructions or training and
iii. Restraint or t"e installation of !rocedures and !ractices aimed at 8ee!ing results 7it"in
desired bounds.
(djusting for 2ncontrollable .ariation
1"e amount of uncontrollable variation in t"e com!arison indicates t"e relative need for
adjusting sales !lans and !olicies. If uncontrollable variation suggests t"at !resent sales objectives
are unrealistic or not in line 7it" t"e current e6!ectations/ basic revision in t"e objective is made.
1"us/ if t"e com!arison of results 7it" t"e standard reveals substantial uncontrollable variation/
adjustment of standards to attainable levels is in order.
Conclusion
&ere 7e "ave studied t"e meaning and objectives of sales management/ its relations"i! 7it"
control "a!!ening in t"e organiation. It5s not necessar+ t"at t"e control al7a+s !roduces desired
outcome but ma+ also indicate some variations. 1"ese variations need to be corrected t"ereafter.
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B24*+ S*00*+ D4(DS (/D *+SO/(0 S*00-/1 S-)2()-O/S
&aving understood t"e basics about sales management/ no7 lets understand t"e different
selling d+ads in various !ersonal selling situations.
$ersonal selling is a broader conce!t t"en salesmans"i!. $ersonal selling along 7it" ot"er
mar8eting elements suc" as !ricing/ advertising etc is a means for im!lementing mar8eting !rograms.
Salesmans"i! is one as!ect of t"e !ersonnel selling. Salesmans"i! is one as!ect of !ersonal selling=
It is t"e art of successfull+ !ersuading customers to bu+ !roducts or services from 7"ic" t"e+ can
derive suitable benefits t"ereb+ increasing t"eir total satisfaction. At one time/ t"e em!"asis in
salesmans"i! 7as almost 7"oll+ on !ersuasion toda+ 7"ile recogniing t"e significance of
!ersuasion t"e em!"asis is on t"e benefits attractive to !ros!ects and customers.
Buyer-seller Dyads
Fundamental to understanding salesmans"i! is recognition t"at it involves bu+er seller
interactions. Sociologists use t"e term 2d+ad3 to describe a situation in 7"ic" t7o !eo!le interact. 1"e
sales!erson and t"e customer interacting 7it" eac" ot"er constitute one e6am!le of bu+er seller
d+ad. Anot"er is t"e interaction of a seller using advertising 7it" a !articular !ros!ect in t"e reading/
listening or vie7ing audience. In bot" advertising and !ersonal selling/ t"e seller see8s to motivate
t"e !ros!ect bu+er to be"ave favorabl+ to7ards t"e seller. ;"et"er or not t"e bu+er reacts as t"e
seller desires de!ends u!on t"e nature of t"e interaction. 1"e o!!ortunit+ for interaction is less in t"e
advertising case t"an in !ersonal selling. &o7ever/ advertising and !ersonal selling often
su!!lements or su!!orts eac" ot"er and t"e bu+er reacts to t"eir combined im!act.
Fran8lin Evans researc"ed bu+er seller d+ads in t"e life insurance business. $ros!ects 7"o
boug"t insurance 8ne7 more about sales!ersons and t"eir com!anies and felt more !ositivel+
to7ards t"em t"an did !ros!ects 7"o did not bu+. Furt"ermore/ t"e more ali8e sales!ersons and t"eir
!ros!ects 7ere/ t"e greater 7as t"e li8eli"ood t"at t"e sale 7ould result. 1"is 7as true for !"+sical
c"aracteristics -age/ "eig"t./ ot"er objective factors -income/ religion/ education. and variables t"at
relate to !ersonalit+ factors -!olitics/ smo8ing..
Evans finding "ave significance for sales management. ;"atever !ossible/ sales !ersonal
s"ould be assigned to !ros!ects 7"ose c"aracteristics are similar to t"eir o7n/ t"us im!roving t"e
c"ance of successful d+adic relations"i!s/ $airing sales!ersons 7it" customers of similar
bac8grounds is more easil+ accom!lis"ed in industrial selling/ 7"ere t"ere are fe7er !ros!ects about
7"om information is needed/ t"an in consumer goods selling/ 7"ere t"e number of !ros!ects and t"e
customers !er sales!erson is muc" larger.
&enri 1osi studied d+ads of 7"olesale drug sales !eo!le and retail !"armacists 7"o made
bu+ing decisions. ;"en t"e bu+er !erceived t"e sales!erson5s !erformance to be similar to "is or "er
conce!t of <ideal5 !erformance/ t"e number of sources of sources from 7"ic" !urc"ases 7ere made
7as lo7. Alt"oug" t"is did not necessaril+ result in a larger !ercentage of !urc"ases from t"e
sales!ersons/ customer satisfaction 7it" t"e sales!erson be"avior did allo7 t"e sales!erson to get in
t"e store. 1osi concluded t"at in addition to t"e !"+sical c"aracteristics and !ersonalit+ and objective
factors cited b+ Evans/ t"e customers !erce!tion of 7"at t"at be"avior s"ould be a necessar+
condition for t"e continuation of d+adic interaction. Anot"er factor influencing bu+er,seller d+adic
interaction is t"e bu+ers initial conditioning 7it" res!ect of selling. Sales!eo!le "ave been maligned
and t"e butt of nast+ stories for generations. $eo!le are taug"t from c"ild"ood to be7are of tric8+
sales!erson.
1"ere are indications t"at sales!eo!le/ not as stereot+!ed/ but as t"e+ actuall+ !erform/ leave
muc" to be desired in t"e im!act t"e+ ma8e on customers. Studies of t"e attitudes of bu+ers and
!urc"asing agents reveal t"at man+ are critical of t"e sales!ersons lac8 of !roduct 8no7ledge/ failure
to follo7,u!/ general unreliabilit+/ and slavis" ad"erence to canned !resentations/ blatant use of
flatter+/ bad manners/ commercial dis"onest+ and so fort".
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ersonal Selling
1"e different !ersonal selling situations encountered b+ salesmen. Considerable diversit+
e6ists among !ersonal selling situations and it is "el!ful to distinguis" bet7een service and
develo!mental selling. Service selling aims to obtain sales from e6isting customers 7"ose "abits and
!atterns of t"oug"t are alread+ conducive to suc" sales? Develo!mental selling aims to convert
!ros!ects into customers. in ot"er 7ords it see8s to create customers out of !eo!le 7"o do not
currentl+ vie7 sales!erson com!an+ favorabl+ and 7"o li8el+ are resistant to c"anging !resent
sources of su!!l+.
Different sales !ositions re0uire different amount and 8inds of service and develo!mental
selling. Mcmurr+ and Arnold classif+ !ositions on a s!ectrum ranging from t"e ver+ sim!le to t"e
"ig"l+ com!le6. 1"e+ categorie sales !ositions into t"ree mutuall+ e6clusive grou!s eac" containing
subgrou!s total of nine subgrou!s in all=
1roup ( 5Service Selling6
i. Inside order ta8er,27aits on= customers? for e6am!le/ t"e sales cler8 be"ind t"e
nec87ear counter in a men5s store.
ii. Deliver+ sales!erson,Mainl+ engages in delivering t"e !roduct? for e6am!le/ !ersons
delivering mil8. Bread or fuel oil
iii. Route or Merc"andising sales!erson,O!erates as an order ta8er but 7or8s in t"e field,
t"e soa! or s!ice sales!erson calling on retailers is t+!ical.
iv. Missionar+,aims onl+ to build good7ill or to educate t"e actual or !otential user and is
not e6!ected to ta8e an order? for e6am!le/ t"e distiller5s missionar+ and t"e
!"armaceuticals com!an+5s 2detail !erson3
v. 1ec"nical sales!erson,em!"asies tec"nical 8no7ledge? for e6am!le/ t"e engineering
sales!erson/ 7"o is !rimaril+ a consultant to 2client3 com!anies.
1roup B 5Developmental Selling6
i. Creative sales!erson of tangibles,for e6am!le/ sales!ersons selling vacuum cleaners/
automobiles/ siding and enc+clo!edias
ii. Creative sales!erson of intangibles,for e6am!le/ sales!ersons selling insurance/
advertising services and educational !rograms
1roup C 5Basically Developmental Selling7 but +e8uiring 2nusual Creativity6
i. 2$olitical/3 2indirect/3 or 2bac8,door3 sales!erson,sell big,tic8et items/ !articularl+
commodities or items 7it" no trul+ com!etitive features.Sales are consummated
t"roug" rendering "ig"l+ !ersonalied services to 8e+ decision ma8ers in customers
organiations? for e6am!le/ t"e sales!erson 7"o lands large orders for flour from ba8ing
com!anies b+ catering to 8e+ bu+ers interests in fis"ing/ golfing /blondes or t"e li8e.
ii. Sales!erson engaged in multi!le sales,involves sale of big tic8et items 7"ere t"e sales
!erson must ma8e !resentations to several individuals in t"e customers organiation/
usuall+ a committee/ onl+ one of 7"ic" can sa+ 2+es3/ but all of 7"om can sa+ 2no5? for
e6am!le t"e account e6ecutive of an advertising agenc+ 7"o ma8es !resentations to
t"e 2agenc+ selection committees3 of advertisers,even after t"e account is obtained/ t"e
sales!erson "as to 7or8 to retail it.
)heories of personal selling
;"at do +ou t"in8 about selling@ Is selling a science 7it" easil+ taug"t basic conce!ts or an art
learned t"roug" e6!erience@ In a surve+ of ABC mar8eting e6ecutives/ DE !ercent !erceived selling as
an art/ F !ercent as a science and a DE !ercent as an art evolving into a science. t"e fact t"at some
as science and considers selling b+ some as art "as !roduced t7o contrasting a!!roac"es to t"e
t"eor+ of selling. 1"e first a!!roac" distilled t"e e6!eriences of successful sales!eo!le and to a
lesser e6tent/ advertising !rofessionals. Man+ suc" !ersons succeeded because of t"eir gras! of
!ractical or learned t"roug" e6!erience !s+c"olog+ and t"eir abilit+ to a!!l+ it in sales situations. It is
not too sur!rising t"at t"ese selling t"eories em!"asie t"e 27"at to do3 and 2"o7 to do 2rat"er t"an
t"e 27"+3. 1"ese t"eories/ based on t"e e6!erimental 8no7ledge accumulated from +ears of 2living in
t"e mar8et3 rat"er t"an on a s+stematic fundamental bod+ of 8no7ledge/ are subject to &o7ard5s
dictum/3 E6!erimental 8no7ledge can be unreliable3. 1"e second a!!roac" borro7ed findings from
t"e be"avioral sciences. 1"e late E.*.Strong/ (r. !rofessor of !s+c"olog+ at t"e Stanford %raduate
Sc"ool of Business/ 7as a !ioneer in t"is effort and "is 2bu+ing formula3 t"eor+ is !resented later in
t"is course !ac8.
In t"is course !ac8/ 7e 7ill e6amine four t"eories. 1"e first t7o/ t"e 2AIDAS3 t"eor+ and t"e
2rig"t set of circumstances3 t"eor+ are seller oriented. 1"e t"ird/ t"e 2bu+ing formula3 t"eor+ of selling
is bu+er oriented. 1"e fourt"/ t"e be"avioral e0uation em!"asies t"e bu+er decision !rocess but
also ta8es t"e sales!ersons influence !rocess into account.
(-D(S )heory of Selling
1"is t"eor+ is t"e basis for man+ sales and advertising te6ts and is t"e s8eleton around 7"ic"
man+ sales !rograms are organied. &ere AIDAS stands for attention/ interest/ desire/ action and
satisfaction. During t"e successful selling intervie7/ according to t"is t"eor+/ t"e !ros!ect mind
!asses t"roug" five mental states= attention/ interest/ desire/ action and satisfaction. Im!licit in t"is
t"eor+ is t"e notion t"at t"e !ros!ect goes t"roug" t"ese five states consciousl+/ so t"e sales
!resentation must lead t"e !ros!ect t"roug" t"em in t"e rig"t se0uence if a sale is to result. 1"e goal
is to !ut t"e !ros!ect into a rece!tive state of mind. 1"e first fe7 minutes of t"e intervie7 are crucial.
1"e sales !erson "as to "ave a reason/ or an e6cuse/ for conducting t"e intervie7. If t"e sales!erson
!reviousl+ "as made an a!!ointment/ t"is !"ase !resents on !roblem/ but e6!erienced sales
!ersonnel sa+ t"at even 7it" an a!!ointment/ a sales!erson must !ossess considerable mental
alertness/ and be a s8illed conversationalist/ to survive t"e start of t"e intervie7.
1"e !ros!ect5s guard is naturall+ u!/ since "e or s"e realies t"at t"e caller is bent on selling
somet"ing. 1"e sales!erson must establis" good ra!!ort at once. 1"e sales!erson needs an am!le
su!!l+ of 2conversation o!eners.3 Favorable first im!ressions are assured b+/ among ot"er t"ings/
!ro!er attire/ neatness/ friendliness/ and a genuine smile. S8illed sales !ersonnel often decide u!on
conversation o!eners just before t"e intervie7 so t"at t"ose c"osen are as timel+ as !ossible
%enerall+ it is advantageous if t"e o!ening remar8s are about t"e !ros!ect -!eo!le li8e to tal8 and
"ear about t"emselves. or if t"e+ are favorable comments about t"e !ros!ect5s business.
A good conversation o!ener causes t"e !ros!ect to rela6 and sets t"e stage for t"e total
!resentation. Conversation o!eners t"at cannot be readil+ tied in 7it" t"e reminder of t"e
!resentation s"ould be avoided/ for once t"e conversation starts to 7ander/ and great s8ill is re0uired
to return to t"e main t"eme.
1aining -nterest
1"e second goal is to intensif+ t"e !ros!ect5 attention so t"at it evolves into strong interest.
Man+ tec"ni0ues are used to gain interest. Some sales!eo!le develo! a contagious ent"usiasm for
t"e !roduct or a sam!le. ;"en t"e !roduct is bul8+ or tec"nical/ sales !ortfolios/ fli!c"arts/ or ot"er
visual aids serve t"e same !ur!ose. 1"roug"out t"e interest !"ase/ t"e "o!e is to searc" out t"e
selling a!!eal t"at is most li8el+ to be effective. Sometimes/ t"e !ros!ect dro!s "ints/ 7"ic" t"e
sales!erson t"en uses in selecting t"e best a!!roac". 1o encourage "ints b+ t"e !ros!ect/ some
sales!eo!le devise stratagems to elicit revealing 0uestion.
Ot"ers as8 t"e !ros!ect 0uestions designed to clarif+ attitudes and feelings to7ard t"e
!roduct. 1"e more e6!erienced t"e sales!erson/ t"e more "e or s"e "as learned from intervie7s 7it"
similar !ros!ects. But even e6!erienced sales !ersonal do considerable !robing/ usuall+ of t"e
0uestion and ans7er variet+/ before identif+ing t"e strongest a!!eal. In addition/ !ros!ects interests
are affected b+ basic motivations/ closeness of t"e intervie7 subject to current !roblems/ its
timeliness/ and t"eir mood,rece!tive/ s8e!tical/ or "ostile,and t"e sales!erson must ta8e all t"ese into
account in selecting t"e a!!eal to em!"asie.
9indling Desire
1"e t"ird goal is to 8indle t"e !ros!ect5s desire to t"e read+, to , bu+ !oint. 1"e sales!erson
must 8ee! t"e conversation running along t"e main line to7ard t"e sale. 1"e develo!ment of sales
obstacles/ t"e !ros!ect5s objections/ e6ternal interru!tions/ and digressive remar8s can sidetrac8 t"e
!resentation during t"is !"ase. Obstacles must be faced and 7a+s found to get around t"em.
Objections need ans7ering to t"e !ros!ect5s satisfaction.
1ime is saved and t"e c"ance of ma8ing sale im!roved if objections are antici!ated and
ans7ered before t"e !ros!ect raises t"em. E6ternal interru!tions cause brea8s in t"e !resentation/
and 7"en conversation resumes/ good sales!eo!le summarie 7"at "as been said earlier before
continuing. Digressive remar8s generall+ s"ould be dis!osed of tactfull+/ 7it" finesse/ but sometimes
distracting digression is best "andled bluntl+/ for e6am!le/ 27ell/ t"at5s all ver+ interesting/ but to get
bac8 to t"e subjectGG.3
-nducing (ctions
If t"e !resentation "as been !erfect/ t"e !ros!ect is read+ to act t"at is/ to bu+. &o7ever/
bu+ing is not automatic and/ as a rule/ must be induced. E6!erienced sales !ersonnel rarel+ tr+ for a
close until t"e+ are !ositive t"at t"e !ros!ect is full+ convinced of t"e merits of t"e !ro!osition. 1"us/
it is u! to t"e sales!erson to sense 7"en t"e time is rig"t. 1"e trial close/ t"e close on a minor !oint/
and t"e tric8 close are used to test t"e !ros!ect5s reactions. Some sales !ersonnel never as8 for a
definite 2+es3 or 2no3 for fear of getting a 2no3/ from 7"ic" t"e+ t"in8 t"ere is no retreat. But it is better
to as8 for t"e order straig"tfor7ardl+. Most !ros!ects find it is easier to slide a7a+ from "ints t"an
from fran8 re0uests for an order.
Building Satisfaction
After t"e customer "as given t"e order/ t"e sales!erson s"ould reassure t"e customer t"at t"e
decision 7as correct. 1"e customer s"ould be left 7it" t"e im!ression t"at t"e sales!erson merel+
"el!ed in deciding. Building satisfaction means t"an8ing t"e customer for t"e order/ and attending to
suc" matters as ma8ing certain t"at t"e order is filled as 7ritten/ and follo7ing u! on !romises made.
1"e order is t"e clima6 of t"e selling situation/ so t"e !ossibilit+ of an anticlima6 s"ould be avoided,
customers sometimes un7ell t"emselves and t"e sales!erson s"ould not linger too long.
2+ight Set of Circumstances: )heory of Selling
2Ever+t"ing 7as rig"t for t"at sale3 sums u! t"e second t"eor+3 1"is t"eor+/ sometimes called
t"e 2situation,res!onse3 t"eor+/ "ad its !s+c"ological origin in e6!eriments 7it" animals and "old t"at
t"e !articular circumstances !revailing in a given selling situation cause t"e !ros!ect in a !redictable
7a+. If t"e sales!erson succeeds in securing t"e attention and gaining t"e interest of t"e !ros!ect/
and if t"e sales!erson !resents t"e !ro!er stimuli or a!!eals/ t"e desired res!onse -t"at is/ t"e sale.
7ill result.
Furt"ermore/ t"e more s8illed t"e sales!erson is in "andling t"e set of circumstances/ t"e
more !redictable is t"e res!onse. 1"e set of circumstances includes factors e6ternal and internal to
t"e !ros!ect. 1o use a sim!lified e6am!le/ su!!ose t"at t"e sales!erson sa+s to t"e !ros!ect/ 2let5s
go out for a cu! of coffee.3 1"e sales!erson and t"e remar8 are e6ternal factors. But are least four
factors internal to t"e !ros!ect affect t"e res!onse. 1"ese are t"e !resence or absence of desires
i. 1o "ave a cu! of coffee/
ii. 1o "ave it no7/
iii. 1o go our/ and
iv. 1o go out 7it" t"e sales!erson
$ro!onents of t"is t"eor+ tend to stress e6ternal factors and at t"e e6!ense of internal factors.
1"e+ see8 selling a!!eals t"at evo8e desired res!onses. Sales !ersonnel 7"o tr+ to a!!l+ t"e t"eor+
e6!erience difficulties traceable to internal factors in man+ selling situation/ but t"e internal factors are
not readil+ mani!ulated.
1"is is a seller,oriented t"eor+= it stresses t"e im!ortance of t"e sales !erson controlling t"e
situation/ does not "andle t"e !roblem of influencing factors internal to t"e !ros!ect/ and fails to
assign a!!ro!riate 7eig"t to t"e res!onse side of t"e situation,res!onse interaction.
2Buying $ormula: )heory of Selling
In contrast to t"e t7o !revious t"eories/ t"e t"ird em!"asies t"e bu+er5s side of t"e bu+er,
seller d+ad. 1"e bu+er5s needs or !roblems receive major attention/ and t"e sales!erson5s role is to
"el! t"e bu+er find solutions. 1"is t"eor+ !ur!orts to ans7er t"e 0uestion= ;"at t"in8ing !rocess
goes on in t"e !ros!ect5s mind t"at causes t"e decision to bu+ or not to bu+@ 1"e bu+ing formula is a
sc"ematic re!resentation of a grou! of res!onses/ arranged in !s+c"ological se0uence. 1"e bu+ing
formula t"eor+ em!"asies t"e !ros!ect5s res!onses -7"ic"/ of course/ are strongl+ influenced b+
internal factors. and deem!"asies t"e e6ternal factors/ on t"e assum!tion t"at t"e sales!erson/
being naturall+ conscious of t"e e6ternal factors/ 7ill not overloo8 t"em. Since t"e sales!erson5s
normal inclination is to neglect t"e internal factors/ t"e formula is a convenient 7a+ to "el! t"e
sales!erson remember. 1"e origin of t"is t"eor+ is obscure/ but recogniable versions a!!ear in a
number of earl+ boo8s on advertising and selling b+ aut"ors 7"o "ad e6!eriential 8no7ledge of
salesmans"i!.
Several !s+c"ologists also advanced e6!lanations similar to t"e bu+ing formula. 1"e name
2bu+ing formulas3 7as given to t"is t"eor+ b+ t"e late E.*.Strong/ (r./ and t"e follo7ing ste!b+, ste!
e6!lanations ada!ted from "is teac"ing and 7ritings. Reduced to t"eir sim!lest elements/ t"e mental
!rocesses involved in a !urc"ase are :eed -or !roblem. solution $urc"ase
Because t"e outcome of a !urc"ase affects t"e c"ance t"at a continuing relations"i! 7ill develo!
bet7een t"e bu+er and t"e seller/ and because nearl+ all sales organiations are interested in
continuing relation s"i!s/ it is necessar+ to add a fourt" element. 1"e four elements t"en/ are :eed
-or !roblem. Solution $urc"ase satisfaction 7"enever a need is felt or a !roblem recognied/ t"e
individual is conscious of a deficienc+ of satisfaction. In t"e 7orld of selling and bu+ing/ t"e solution
7ill al7a+s be a !roduct or service or bot" and t"e+ 7ill belong to a !otential seller. In !urc"asing/
t"ose/ t"e element 2solution3 involve t7o !arts=
i. $roduct -andHor service. and
ii. 1rade name -name of manufacturer/ com!an+/ or sales !erson.
In bu+ing an+t"ing/ t"e !urc"aser !roceeds mentall+ from need or !roblem to! !roblem to
!roduct or service/ to trade name/ to !urc"ase/ and/ u!on using t"e !roduct or service/ "e or s"e
e6!erience satisfaction or dissatisfaction. 1"us/ 7"en a definite bu+ing "abit "as been establis"ed/
t"e bu+ing formula is= :eed or !roduct and Hor trade name !urc"ase satisfactionHdissatisfaction
$roblem service 1o ensure !urc"ase/ t"e !roduct or service and t"e trade name -t"at is/ t"e source of
su!!l+. must be considered ade0uate/ and t"e bu+er must e6!erience a -!leasant. feeling of
antici!ated satisfaction 7"en t"in8ing of t"e !roduct and Hor service and t"e trade name. In man+
cases/ an item vie7ed as ade0uate is also li8ed/ and vice versa/ but "is is not al7a+s so. Some
!roducts and services t"at are 0uite ade0uate are not li8ed/ and some t"ings are li8ed and boug"t
t"at are admittedl+ not as good as com!eting items. Similar reasoning a!!lies to trade names. Some
sources of su!!l+ are bot" ade0uate and li8ed/ ot"ers are ade0uate but not li8ed/ still ot"ers are li8ed
but !atronied even t"oug" t"e+ are inade0uate com!ared to com!eting sources.
;"en a bu+ing "abit is being establis"ed/ t"e bu+er must 8no7 7"+ t"e !roduct or service is
ade0uate solution to t"e need or !roblem/ and 7"+ t"e trade name is t"e best one to bu+. 1"e bu+ers
also must "ave a !leasant feeling to7ard t"e !roduct or service and t"e trade name. 1"en/ 7"enever
t"e bu+er5s bu+ing "abit is c"allenged b+ a friend5s remar8/ a com!eting sales!erson5s !resentation/
or a com!etitor5s advertisement/ t"e bu+er needs reason to defend t"e !urc"ase/ and/ in addition/ "e
or s"e needs a !leasant feeling to 7ard bot" t"e !roduct or service and t"e trade name. All t"is is
re!resented b+ t"e das"ed lines in t"e formula.
1"e !rimar+ elements in a 7ell establis"ed bu+ing "abit are t"ose connected b+ solid lines/ on
t"e central line of t"e formula. Most !urc"ases are made 7it" scarcel+ a t"oug"t as to 7"+/ and 7it"
a minimum of feeling and its association.
Reasons -ade0uac+ of solution. and !leasant feelings constitute t"e elements of defense in
t"e bu+ing "abit. As long as t"e+ are !resent/ re!eat bu+ing occurs.
1"e ans7er to eac" selling !roblem is im!lied in t"e bu+ing formula/ and differences among
ans7ers are differences in em!"asis u!on t"e elements in t"e formula. ;"ere t"e em!"asis s"ould
be !laced de!ends u!on a variet+ of circumstances. ;it"out going into detail/ it ma+ be said t"at==
i. If t"e !ros!ect does not feel a need or recognie a !roblem t"at can be satisfied b+ t"e
!roduct or service/ t"e need or !roblem s"ould be em!"asied.
ii. If t"e !ros!ect does not t"in8 of t"e !roduct or service 7"en "e or s"e feels t"e need or
recognies t"e !roblem/ t"e association bet7een need or !roblem and !roduct or
service s"ould be em!"asied
iii. If t"e !ros!ect does not t"in8 of t"e trade name 7"en "e or s"e t"in8s trade name
s"ould be em!"asied.
iv. If need or !roblem/ !roduct or service/ and trade name are 7ell associated/ em!"asis
s"ould be !ut u!on facilitating !urc"ase and use.
v. If com!etition is felt/ em!"asis s"ould be !ut u!on establis"ing in t"e !ros!ects5 minds
t"e ade0uac+ of t"e trade,named !roduct or service/ and !leasant feelings to7ard it.
vi. If sales to ne7 !ros!ects are desired/ ever+ element in t"e formula s"ould be
!resented.
vii. If more sales to old customers are desired/ t"e latter s"ould be reminded. -Develo!ing
ne7 uses is com!arable to selling to ne7 uses is com!arable to selling to ne7
customers..
2Behavioral *8uation: )heory
)sing a stimulus,res!onse model-a so!"isticated version of t"e 2rig"t set of circumstances3./
and incor!orating findings from be"avioral researc"/ (.A. &o7ard e6!lains bu+ing be"avior in terms
of t"e !urc"asing decision !rocess/ vie7ed as !"ases of t"e learning !rocess.
Four essential elements of t"e learning !rocess included in t"e stimulus res!onse/ and
reinforcement/ described as follo7s=
Drives are strong internal stimuli that impel the buyer;s response< )here are t=o >inds
i. Innate drives stem from t"e !"+siological needs/ suc" as "unger/ t"irst/ !ain/ cold/ and
se6.
ii. 9earned drives/ suc" as striving for status or social a!!roval/ are ac0uired 7"en !aired
7it" t"e satisf+ing of innate drives. 1"e+ are elaborations of t"e innate drives/ serving
as a faIade be"ind 7"ic" t"e functioning of t"e innate drives is "idden. Insofar as
mar8eting is concerned/ t"e learned drives are dominant in economicall+ advanced
societies
Cues are =ea> stimuli that determine =hen the buyer =ill respond
i. 1riggering cues influence t"e decision !rocess for an+ given !urc"ase.
ii. :o triggering cues influence t"e decision !rocess but do not activate it? an+ ma+
o!erate at an+ time even t"oug" t"e bu+er is not contem!lating a !urc"ase
1"ere are t7o 8inds
a. $roduct cues are e6ternal stimuli received from t"e !roduct directl+/ for e6am!le/ color
of t"e !ac8age/ 7eig"t/ or !rice.
b. Informational cues are e6ternal stimuli t"at !rovide information of a s+mbolic nature
about t"e !roduct. Suc" stimuli ma+ come from advertising/ conversations 7it" ot"er
!eo!le -including sales !ersonnel./ and so on.
S!ecific !roduct and information cues ma+ also "a!!en 7"en !rice triggers t"e bu+er5s
decision. Res!onse is 7"at t"e bu+er does@ Reinforcement is an+ event t"at strengt"ens t"e bu+er5s
tendenc+ to ma8e a !articular res!onse.
&o7ard incor!orates t"ese four elements into an e0uation
B > $ J D J *J '
;"ere
B > res!onse or t"e internal res!onse tendenc+/ t"at is/ t"e act of $urc"asing a brand or !atroniing a
su!!lier
$ > !redis!osition or t"e in7ard res!onse tendenc+/ t"at is/ force of "abit
D > !resent drive level -amount of motivation.
* > 2incentive !otential/3 t"at is/ t"e value of t"e !roduct or its !otential Satisfaction to t"e bu+er
' > intensit+ of all cues= triggering/ !roduct/ or informational
21"is is a condensed version of t"e e6!lanation contained in (.A. &o7ard5s Mar8eting
Management/ Anal+sis and $lanning/ re Ed. -&ome7ood/ III.= Ric"ard D. Ir7in/ AKEC. 7e are indebted
to t"e aut"or for !ermission to include t"is condensation.
1"is model 7as later refined furt"er b+ $rofessor &o7ard/ 7or8ing in collaboration 7it"jagdis" :.
Set"/ See t"eir 2A 1"eor+ of Bu+er Be"avior/3 in Reed Mo+er -ed../ C"anging Mar8eting S+stems=
!roceedings of t"e AKEB 7inter Conference of t"e American Mar8eting Association. AKEB. !ublis"ed
b+ t"e American Mar8eting Association.
1"e relation among t"e variables is multi!licative. 1"us/ if an+ inde!endent variable as ero
value/ B 7ill also be ero and t"ere is no res!onse. :o matter "o7 muc" $ t"ere ma+ be/ for
e6am!le/ if t"e individual is unmotivated -D > L./ t"ere is no res!onse. Eac" time t"ere is a res!onse,
a !urc"ase 4 in 7"ic" satisfaction -8. is sufficient to +ield a re7ard/ !redis!osition -!. increases in
value. In ot"er 7ords/ 7"en t"e satisfaction +ields a re7ard/ reinforcement occurs/ and/ tec"nicall+/
7"at is reinforced is t"e tendenc+ to ma8e a res!onse in t"e future to t"e cue t"at immediatel+
!receded t"e re7arded res!onse. After reinforcement/ t"e !robabilit+ increases t"at t"e bu+er 7ill t"e
!roduct -or !atronie t"e su!!lier. t"e ne6t time t"e cue a!!ears, in ot"er 7ords/ t"e bu+er "as
learned.
Buyer ? Seller Dyad and +einforcement
In t"e interactions of a sales!erson and a bu+er/ eac" can dis!la+ a t+!e of be"avior t"at is
re7arding/ t"at is reinforcing/ to t"e ot"er. 1"e sales!erson !rovides t"e bu+er 7it" a !roduct -and
t"e necessar+ information about it and its uses. t"at t"e bu+er needs? t"is satisfaction of t"e need is
re7arding to t"e bu+er/ 7"o/ in turn/ can re7ard t"e sales!erson b+ bu+ing t"e !roduct.
Eac" can also re7ard t"e ot"er b+ anot"er t+!e of be"avior/ t"at of !roviding social a!!roval.
1"e sales!erson gives social a!!roval to a bu+er b+ dis!la+ing "ig" regard 7it" friendl+ greetings/
7arm conversation/ !raise/ and t"e li8e.
In understanding t"e sales!erson,client relation/ it is "el!ful to se!arate economic as!ects
from social features. 1"e sales!erson 7is"es to sell a !roduct/ and t"e bu+er 7is"ed to bu+ itMt"ese
are t"e economic feat"ers. Eac" !artici!ant also !laces a value and cost u!on t"e social features.
Be"avior concerning t"ese features of t"e relations"i! consists of sentiments/ or e6!ressions of
different degrees of li8ing or social a!!roval.
Sales!ersons attem!t to receive re7ards -reinforcements. eit"er in sentiment or economic b+
c"anging t"eir o7n be"avior or getting bu+ers to c"ange t"eirs.
C'()*+-"
S*00-/1 +OC*SS
Salesperson;s -nfluence rocess
1"e !rocess b+ 7"ic" t"e sales!erson influences t"e bu+er is e6!lainable in term of t"e
e0uation B =P XD x k x v. 1"e sales!erson influences P -!redis!osition. directl+/ for e6am!le/ t"roug"
interacting 7it" t"e bu+er in 7a+s re7arding to t"e bu+er. 1"e greatest effect on P/ "o7ever/ comes
from using t"e !roduct. 1"e sales!erson e6erts influence t"roug" D -amount of motivation./ t"is
influence being strong 7"en t"e bu+er see8s information in terms of informational cues. If t"e ends to
be served are not clearl+ defined/ b+ "el!ing to clarif+ t"ese/ t"e bu+er5s goals/ t"e sales!erson again
e6erts influence t"roug" D. ;"en t"e bu+er "as sto!!ed learning,7"en t"e bu+er5s bu+ing be"avior
becomes automatic, t"e sales!erson influences D b+ !roviding triggering cues. ;"en t"e bu+er "as
narro7ed do7n t"e c"oices to a fe7 sellers/ t"e sales!erson/ b+ communicating t"e merits of t"e
merits of t"e com!an+ brand/ can cause it to a!!ear relativel+ better/ and t"us affect K -its !otential
satisfaction for t"e bu+er.. Finall+/ t"e sales!erson can ver+ t"e intensit+ of "is or "er effort/ so
ma8ing t"e difference in V -t"e intensit+ of all cues..
Salesperson;s +ole in +educing Buyer Dissonance
According to Festinger5s t"eor+ of cognitive dissonance/ 7"en individuals c"oose bet7een t7o
or more alternatives/ an6iet+ or dissonance 7ill almost al7a+s occur because t"e decision "as
unattractive as 7ell as attractive features. After decisions/ !eo!le e6!ose t"emselves to information
t"at t"e+ !erceive as li8el+ to su!!ort t"eir c"oice/ and to avoid information li8el+ to favor rejected
alternatives.
Alt"oug" Festinger evidentl+ meant "is t"eor+ to a!!l+ onl+ to !ost decision an6iet+/ it seems
reasonable t"at it s"ould "old for !re,decision an6iet+. &un8/ for instance/ 7rites t"at a bu+er ma+
!anic on reac"ing t"e !oint of decision and rus" into t"e !urc"ase as an esca!e from t"e !roblem or
!ut it off because of t"e difficult+ of deciding. It seems/ t"en/ t"at a bu+er can e6!erience eit"er
!rocession or !ost decision dissonance/ or bot".
Reducing !re,and !ost decision an6iet+ or dissonance is an im!ortant function of t"e
sales!erson. Recogniing t"at t"e bu+er5s dissonance varies bot" according to 7"et"er t"e !roduct is
an establis"ed or a ne7 one/ and 7"et"er t"e sales!erson client relation is ongoing or ne7/ t"ese are
four t+!es of cases involving t"e sales!erson5s role.
i. An establis"ed !roduct,an ongoing sales!erson,client relations"i!. )nless t"e mar8et is
unstable/ t"e bu+er tends to7ard automatic res!onse be"avior/ in 7"ic" no learning is
involved and t"us e6!eriences little/ if an+/ dissonance? but insofar as it does occur/ t"e
sales!erson is effective because t"e sales!erson is trusted b+ t"e bu+er.
ii. An establis"ed !roduct,a ne7 sales!erson,client relations"i!. 1"e sales!erson/ being
ne7/ is less effective in reducing dissonance
iii. A ne7 !roduct,and ongoing sales!erson,client relations"i!. )nless t"e bu+er
generalies from !ersonal e6!erience 7it" an establis"ed similar !roduct/ t"e bu+er
e6!eriences dissonance/ es!eciall+ if it is an im!ortant !roduct. Because of t"e
establis"ed relations"i! 7it" t"e bu+er/ t"e sales!erson can reduce dissonance
iv. A ne7 !roduct,a ne7 sales!erson,client relations"i!
1"e bu+er needs dissonance reduction/ and t"e sales!erson is less ca!able of !roviding it.
&o7 can a sales!erson facilitate t"e bu+er5s dissonance reduction@
17o 7a+s are
i. 1o em!"asie t"e advantages of t"e !roduct !urc"ased/ 7"ile stressing t"e
disadvantages of t"e forgone alternatives/ and
ii. 1o s"o7 t"at man+ c"aracteristics of t"e c"osen item are similar to !roducts t"e bu+er
"as forgone/ but 7"ic" are a!!roved b+ t"e reference grou!s. In ot"er 7ords/ t"e bu+er
e6!eriencing cognitive dissonance needs reassuring t"at t"e decision is or 7as a 7ise
one? t"e sales!erson !rovides information t"at !ermits t"e bu+er to renationalie t"e
decision.
rospecting
Efficient organiation of time and t"roug" !lanning of 7or8 is earmar8s of above,average
sales!ersons. 1"e+ loo8 for 7a+s to 2stretc"3 !roductive selling time. 1"e+ arrange travel and call
sc"edules to economie on time s!ent enroute and distance traveled. 1"e+ ma8e a!!ointments to
avoid !rolonged 7aiting for callbac8s. 1"e+ do not 7aste time tr+ing to sell to !eo!le 7"o cannot bu+
or are not li8el+ to do so. 1"e !lanning 7or8/ 7"ic" is essential in eliminating calls on no bu+ers/ is
called !ros!ecting.3
Im!rovement in !ros!ecting is one 7a+ to stretc" !roductive selling time. Man+ sales
!ersonnel devote too little time to !ros!ecting and/ as a conse0uence/ too muc" to calling on non,
!ros!ects. Sales!ersons 7"o are !roficient in !ros!ecting a!!l+ t"eir selling efforts !roductivel+? t"e+
do not call on non,!ros!ects and can devote t"eir full attention to t"ose li8el+ to bu+.
Some com!anies use s!ecialied !ersonnel for !ros!ecting/ but most regard it as one of t"e
sales!erson5s t"e+ often "ave access to information on li8el+ !ros!ects t"at is not available to central
office !ersonnel.
Step in rospecting
1"e ste!s in !ros!ecting are
i. Formulating !ros!ect definitions/
ii. Searc"ing out !otential accounts/
iii. #ualif+ing !ros!ects and determining !robable re0uirements/ and
iv. Relating com!an+ !roducts to eac" !ros!ect5s re0uirements
$ormulating rospect Definitions
$ros!ective customers must "ave t"e 7illingness/ t"e financial ca!acit+/ and t"e aut"orit+ to
bu+/ and t"e+ must be available to t"e sales!erson. Sales!ersons 7aste time 7"en t"e+ attem!t to
sell individuals 7"o "ave neit"er need for t"e !roduct or mone+ to !a+ for it. Sales!ersons 7aste time
if t"e+ tr+ to sell to t"e 7rong !ersons? so it is im!ortant to ascertain 7"ic" !ersons in eac" firm &ave
t"e aut"orit+ to bu+. Alt"oug" individuals ma+ 0ualif+ as !ros!ects in ot"er res!ects/ t"e+ ma+ be
inaccessible to t"e sales!erson. 1"e !resident of a large cor!oration/ for e6am!le/ ma+ need
insurance and be 7illing and able to !a+ for it/ but a !articular sales!erson ma+ "ave no 7a+ to ma8e
t"e contact.
In addition to meeting t"e stated re0uirements/ t"ere is ot"er re0uirement )ni0ue to eac"
com!an+5s customers. Starting 7it" data on t"e !rofitabilit+ of !resent accounts/ an+ c"aracteristics
t+!ical of !rofitable accounts but not s"ared b+ un!rofitable accounts s"ould be detected. 1"ese
identif+ing c"aracteristics ideall+ s"ould be ones recogniable from information a!!earing in
directories or lists. $ros!ects in man+ businesses and !rofessions/ for instance/ are readil+ identified
from classified listings in tele!"one and cit+ directories. *e+ c"aracteristics t"at identif+ !rofitable
accounts are assembled into descri!tions of t"e various classes of customers/ and t"ese are t"e
!ros!ect definitions.
Searching Out otential (ccounts
)sing t"e !ros!ect definations/ t"e sales!erson combs different sources for t"e names of
!robable !ros!ects/ or 2sus!ect/5 as t"e+ are called. Sources of !ros!ect information include
directories of all 8inds/ ne7s and notes in trade !a!ers and business magaines/ credit re!orts/
members"i! lists of c"ambers of commerce and trade and manufacturers5 associations/ lists
!urc"ased from list bro8ers/ and records or service re0uests. Ot"er sources are res!onses to
com!an+ advertising/ sales !ersonnel of no com!eting firms calling on t"e same general classes of
trade/ conventions and meetings/ ban8ers and ot"er 2centers of influence53 and t"e sales!erson5s
o7n observations. Sales!eo!le selling services/ insurance/3 for e6am!le/ uncover !ros!ects among
t"eir ac0uaintances? members of t"eir !rofessional/ religious/ and social organiations? and t"e
referrals of friends. Anot"er source of !ros!ects is t"e 2endless c"ain3 4satisfied customers suggest/
voluntaril+ or on re0uest/ ot"er leads to t"e sales!erson 7"o served t"em.
3ualifying prospects and Determining robable +e8uirements
As information is assembled on eac" tentative !ros!ect -i.e.3 sus!ect3./ it is easier to estimate
t"e !robable re0uirements of eac" for t+!es of !roducts sold b+ t"e com!an+. $ros!ect Com!an+.
$ros!ects 7it" re0uirements too small to re!resent !rofitable business are removed from furt"er
considered/ unless t"eir gro7t" !ossibilities s"o7 !romise. Even after ta!!ing all readil+ available
information sources/ additional information often is re0uired to 0ualif+ certain !ros!ects/ and !ersonal
visits b+ sales!ersons ma+ be t"e onl+ 7a+ to obtain it. 1"ese visits ma+ not bring in sales/ but t"e+
save time/ as !ros!ects are se!arated from non,!ros!ects.
+elating Company roducts to *ach rospect;s +e8uirements
1"e final ste! is to !lan t"e stratif+ for a!!roac"ing eac" !ros!ect. From t"e information
assembled/ it is usuall+ !ossible to determine eac" !ros!ect5s !robable needs. From 7"at t"e
sales!erson 8no7s about t"e com!an+5s !roduct needs. From 7"at t"e sales!erson 8no7s about t"e
com!an+5s !roducts/ t"eir uses/ and a!!lications/ "e or s"e selects t"ose t"at seem most a!!ro!riate
for a !articular !ros!ect.
1"e sales!erson5s !resentation is no7 eas+ to construct/ and it is tailored to fit t"e !ros!ect.
1"e sales!erson s"ould "ave clear ideas about s!ecific abjections t"e !ros!ect ma+ raise and ot"er
obstacles to t"e sale t"at ma+ be encountered. 1"e sales!ersons read+ to contact t"e !ros!ect/ t"e
onl+ tas8s remaining are ma8ing an a!!oiFntment/ deciding "o7 to o!en t"e !resentation/ and
determining "o7 to !ersuade t"e !ros!ect to become a customer.
Sales resistance and sale closing
Sales +esistance
$ros!ects s"o7 sales resistance b+ !ointing out real or imagined obstacles/ and b+ voicing
objections/ sincere or insincere. In anal+ing sales resistance/ t"e sales!erson needs s8ill in accurate
and ra!id a!!raisal of !eo!le and t"eir motivations. A !ros!ect5s e6!ressed sales resistance is eit"er
an obstacle or an objection. An obstacle is real or unreal? an objection is sincere or insincere.
Obstacles to Sales Obstacle are real or a!!arent reasons t"at t"e !ros!ect "as for not bu+ing. If t"e
obstacle is real/ it !recludes t"e consummation of t"e sale. But it is a!!arent/ t"ere are 7a+s to
circumvent it. A !ros!ect sa+s a tem!orar+ s"ortage of cas" !revents bu+ing an obstacle/ not an
objection and t"e sales!erson "el!s t"e !ros!ect to circumvent it b+ e6!laining a met"od for
financing t"e !urc"ase. Some obstacles can be circumvented/ ot"ers cannot/ 7"en an obstacle
arises/ t"e sales!erson determines 7"et"er or not t"ere is a 7a+ to get around it. If t"e sales!erson
recognies t"e s!ecific obstacle and 8no7s a 7a+ to circumvent it/ t"e ne6t move is to !resent t"e
solution to t"e !ros!ect.
Sales Objection
Objections are never good reason for failing to com!lete t"e sale/ but t"e+ nearl+ al7a+s divert
t"e sales!erson5s !resentation from its main course. At best/ an objection re0uires a satisfactor+
ans7er? at 7orst/ it bloc8s t"e sale. Adroitness in "andling objection is a difference bet7een effective
and ineffective sales!eo!le.
Sincere objections trace to incom!leteness/ inaccurac+/ or vagueness in t"e sales
!resentation. $ros!ects ma+ not recognie t"e nature of t"eir needs/ or t"e+ ma+ "ave doubt about
t"e a!!ro!riateness of t"e !roduct to fulfill t"ose needs.
$ros!ects ma+ be confused in some res!ect/ or ma+ react unfavorabl+ to t"e sales!erson5s
!ersonalit+. E6ce!t 7"en !ersonalit+ conflict cannot be resolved -a real obstacle/ not an objection./
sincere objections are overcome b+ !atient and t"oroug" e6!lanations.
$ros!ects raise insincere objections to discourage sales!ersons/ to get rid of t"em/ to test t"eir
com!etence/ and as false e6cuses for not bu+ing. ;"en sales !ersons sense t"at an objection is
insincere/ t"e+ see8 to regain t"e offensive as soon as !ossible.
1"e+ do not !ermit an insincere objection to !rovo8e an argument one of t"e surest 7a+s to
lose a sale. Some sales e6ecutives sa+ t"at ever+ objection/ no matter "o7 insincere/ s"ould be
treated 7it" t"e utmost courtes+. Ot"ers sa+ t"at insincere objections s"ould be ignored. 1"e best
defensive strateg+ often is t"e strong counterattac8/ and t"e sales!erson s"ould see8 to regain t"e
initiative as soon as "e or s"e can gracefull+ do so.
Closing Sales
1"e selling tactics follo7ed affect t"e ease of closing t"e sale. 9o7 !ressure sales are closed
more easil+ t"an are "ig" !ressure ones. On lo7 !ressure sales/ !ros!ects feel t"at t"e+ are
reac"ing t"e bu+ing decisions t"emselves/ and !rimaril+ t"roug" rational !rocesses of t"oug"t/ so
t"ere is no need for e6tra !us" just before t"e sales are consummated. In "ig" !ressure sales/ t"e
main t"rust is to t"e !ros!ects emotions/ so sales!ersons attem!t to !ro!el !ros!ects into bu+ing
decisions. Often/ t"e !ros!ect regains normal !ers!ective as t"e sale nears its clima6/ and/ if t"is
"a!!ens/ t"e sales!erson needs unusuall+ effective !ersuasion to close t"e sale. Ever+ sales!erson
a!!roac"es certain closings 7it" a!!re"ension.
At closing time/ eit"er t"e sales!erson sells t"e !ros!ect an order or t"e !ros!ect sells t"e
sales!erson on a 2no sale.3 closing time !rovides an o!!ortunit+ to register tangible !roof of selling
s8ill. Occasionall+ even t"e best sales!erson masterl+ u!on closing s8ill to ma8e t"e sale.
$ros!ecting/ if 7ell done/ !uts t"e sales!erson in t"e !ro!er frame of mind for t"e close. 1"e
sales!erson feels t"at a real service is being !erformed for t"e !ros!ect/ not t"at 2a bill of goods is
being sold.3 t"ere is no doubt t"at t"e !roduct is t"e best solution to t"e !ros!ect5s !roblems.
But even after an e6cellent !resentation/ and in s!ite of t"oroug" !ros!ecting/ some !ros!ects refrain
from !ositive commitments. 1"e natural tendenc+ of man+ !eo!le is to let inertia guide t"eir reactions
man+ are "a!!+ to leave t"ings as t"e+ are/ and sales!ersons leave em!t+ "anded unless t"e+ jolt
t"ese !ros!ects into bu+ing. 1"e s8illed closer gives t"e e6tra !us" t"at triggers a bu+ing res!onse.
But failures to get an order result as muc" from !oor !ros!ecting and ine!t !resentations as from
ineffective closing.
;"en an attem!ted close fails/ t"e sales!erson s"ould normall+ tr+ ot"er. 1"e refusal does not
necessaril+ im!l+ an un7illingness to bu+? it ma+ indicate t"e !ros!ect5s need for additional
information or for clarification of some !oint. Some e6ecutives recommend t"at sales !ersonnel
attem!t as man+ as five closes before giving u!. Earl+ closing attem!t s"ould be so e6!ressed t"at a
refusal 7ill not cut off t"e !resentation. A sales!erson judges t"e sincerit+ of a !ros!ect5s refusal/
surrendering gracefull+ 7"en it is clear t"at no sale 7ill be made. 1"e sales!erson first uses an
indirect close/ t"at is/ attem!ts to get t"e order 7it"out actuall+ as8ing for it. 1"e sales!erson ma+ as8
t"e !ros!ect to state a !reference from among a limited number of c"oice-as to models/ deliver+
dates/ order sie/ or t"e li8e./ so !"rasing t"e 0uestion t"at all !ossible res!onses are in t"e
sales!erson5s favor e6ce!t for one= 2none at all.3 Or t"e sales!erson ma+ summarie/ em!"asiing
features t"at visibl+ im!ress t"e !ros!ect/ s"o7ing "o7 t"e reasons for t"e !urc"ase out 7eig" t"ose
o!!osed to it. 1"en t"e sales!erson !auses for t"e !ros!ect5s res!onse/ 7"ic" is e6!ected to be/ 2%o
a"ead and 7rite t"e order.3 Sometimes/ t"e e6tra !us" ma+ be a concession t"at ma8es t"e sale. Or
t"e sales!erson ma+ assume t"at t"e sale is made/ 7rite out t"e order/ and "and it to t"e !ros!ect for
a!!roval if t"e !ros!ect bal8s/ t"e issue is clearer.
$er"a!s one last objection is voiced/ but after it is ans7ered/ t"e sale is made. Man+ indirect
closes are in common use/ and boo8s on selling contain numerous e6am!les. ;"en o!en or more
attem!ts at a indirect close fail/ t"e sales!erson uses t"e direct a!!roac". Fe7 !ros!ects res!ond
negativel+ to a fran8 re0uest for t"e order in fact/ man+ !eo!le/ es!eciall+ t"ose 7"o are t"emselves
engaged in selling/ do not bu+ unless t"e order is as8ed for outrig"t.
__
C'()*+ #
S(0*S $O+*C(S)-/1
Sale $orecasting and Sale otential
Sales !otentials/ as defined earlier/ are 0uantitative estimates of t"e ma6imum !ossible sales
o!!ortunities !resent in !articular mar8et segments o!en to a s!ecified com!an+ selling a good or
service during a stated future !eriod. 1"e+ are derived from mar8et !otentials after anal+ses of
"istorical mar8et s"are relations"i! and adjustments for c"anges in com!anies3 and com!etitors3
selling strategies and !ractices.
A firm5s sales !otential and its sales forecast are not usuall+ identical,in most instances? t"e
sales !otential is larger t"an t"e sales forecast. 1"ere are several reasons for t"is= some com!anies
do not "ave sufficient !roduction ca!acit+ to ca!italie on t"e full sales !otential? ot"er firms "ave not
+et develo!ed distributive net7or8s ca!able of reac"ing ever+ !otential customer? ot"ers do not
attem!t to realie t"eir total sales !otentials because of limited financial resources? and still ot"ers/
being mote !rofit oriented t"an sales oriented/ see8 to ma6imie !rofitable sales and not !ossible
sales. 1"e estimate for sales !otential indicates "o7 muc" a com!an+ could sell if it "ad all t"e
necessar+ resources and desired to use t"em. 1"e sales forecast is a related but different estimate,it
indicates "o7 muc" a com!an+ 7it" a given amount of resources can sell if it im!lements a !articular
mar8eting !rogram.
Sales $orecasting Methods
A sales forecasting met"od is a !rocedure for estimating "o7 muc" of a given !roduct -or
!roduct line. can be sold if a given mar8eting !rogram is im!lemented. :o sales forecasting met"od
is fool!roof,eac" is subject to some error. Some met"ods are unso!"isticated/ suc" as t"e jur+ of
e6ecutive o!inion or t"e !oll of sales force o!inion. Ot"ers involve t"e a!!lication of so!"isticated
statistical tec"ni0ues/ suc" as regression anal+sis or econometric model building and simulation. 17o
sales forecasting met"ods Am+ be eit"er so!"isticated or unso!"isticated/ de!ending u!on "o7 t"e+
are used 4t"e !rojection of !ast sales and t"e surve+ of customers3 bu+ing !lans.
;ell,managed com!anies do not rel+ u!on a single sales forecasting met"od but use several.
If different met"ods !roduce roug"l+ t"e same sales forecasts/ t"en more confidence is !laced in t"e
results. But if different met"ods !roduce greatl+ different sales forecasts/ t"en t"e sales situation
merits furt"er stud+.
,ury of *@ecutive Opinion
1"ere are t7o ste!s in t"is met"od
i. &ig" ran8ing e6ecutives estimate !robable sales/ and
ii. An average estimate is calculated.
1"e assum!tion is t"at t"e e6ecutives are 7ell informed about t"e industr+ outloo8 and t"e
com!an+5s mar8et !osition/ ca!abilities/ and mar8eting !rogram. All s"ould su!!ort t"eir estimates
7it" factual material and e6!lain t"eir rationales. Com!anies using t"e jur+ of e6ecutive o!inion
met"od do so for one or more of four reasons=
i. 1"is is a 0uic8 and eas+ 7a+ to turn out a forecast
ii. 1"is is a 7a+ to !ool t"e e6!erience and judgment of 7ell,informed !eo!le
iii. 1"is ma+ be t"e onl+ feasible a!! Nroac" if t"e com!an+ is so +oung t"at it "as not +et
accumulated t"e e6!erience to use ot"er forecasting met"ods
iv. 1"is met"od ma+ be used 7"en ade0uate sales and mar8et statistics are missing/ or
7"en t"ese figures "ave not +et been !ut into t"e form re0uired for more so!"isticated
forecasting met"ods
v. 1"e jur+ of e6ecutive o!inion met"od "as 7ea8nesses. Its findings are based !rimaril+
on o!inion/ and factual evidence to su!!ort t"e forecast is often s8etc"+. 1"is a!!roac"
adds to t"e 7or8 load of 8e+ e6ecutives/ re0uiring t"em to s!end time t"at t"e+ 7ould
ot"er7ise devote to t"eir areas of main res!onsibilit+/ and a forecast made b+ t"is
met"od is difficult to brea8 do7n into estimates of !robable sales b+ !robable sales b+
!roducts/ b+ time intervals/ b+ mar8ets/ b+ customers/ and so on
)he Delphi )echni8ue
Several +ears ago researc"ers at t"e Rand Cor!oration develo!ed a tec"ni0ue for !redicting
t"e future t"at is called t"e Del!"i tec"ni0ue t"is is a version of t"e jur+ of e6ecutive o!inion met"od
in 7"ic" t"ose giving o!inions are selected for t"eir 2e6!ertise.3 1"e !anel of e6!erts res!onds to a
se0uence of 0uestionnaires in 7"ic" t"e res!onses to one 0uestionnaire are used to !roduce t"e
ne6t 0uestionnaire. 1"us/ information available to some and not to ot"er e6!erts is disseminated to
all/ enabling all to base t"eir final forecasts on 2all available3 information. Some contend t"at 2t"is
tec"ni0ue eliminates t"e band7agon effect of majorit+ o!inion.3
oll of Sales $orce Opinion
In t"e !oll of sales force o!inion met"od/ often tagged 2t"e grass,roots a!!roac"/3 individual
sales !ersonnel forecast sales for t"eir territories? t"en individual forecasts are combined and
modified/ as management t"in8s necessar+/ to Form t"e com!an+ sales forecast. 1"is a!!roac"
a!!eals to !ractical sales managers because forecasting res!onsibilit+ is assigned to t"ose 7"o
!roducer t"e results. Furt"ermore/ t"ere is merit in utiliing t"e s!ecialied 8no7ledge of t"ose in
closest touc" 7it" mar8et conditions. Because t"e sales!eo!le "el! to develo! t"e forecast/ t"e+
s"ould "ave greater confidence in 0uotas based u!on it. An ot"er attractive features is t"at forecasts
develo!ed b+ t"is met"od are eas+ to brea8 do7n according to !roducts/ territories/ customers/
middlemen/ and sales force.
But t"e !oll of sales force o!inion a!!roac" "as 7ea8nesses. :ot generall+ trained to do
forecasting/ and influenced b+ current business conditions in t"eir territories/ sales!ersons tend to be
overl+ o!timistic or overl+ !essimistic about sales !ros!ect. 1"e+ are too near t"e trees to see t"e
forest,t"e+ often are una7are of broad c"anges ta8ing !lace in t"e econom+ and of trends in
business conditions outside t"eir o7n territories. Furt"ermore / if t"e 2forecasts3 of t"e sales staff are
used in setting 0uotas/ some sales !ersonnel deliberatel+ underestimate so t"at 0uotas are reac"ed
more easil+.
1o some e6tent/ t"e 7ea8nesses of t"is met"od can be overcome t"roug" training t"e sales
force in forecasting tec"ni0ues/ b+ orienting t"em to factors influencing com!an+ sales/ and b+
adjusting for consistent biases in individual sales!ersons3 forecasts. For most com!anies/ "o7ever/
im!lementing corrective actions is an endless tas8/ because sales !ersonnel turnover is constantl+
gong on/ and ne7 staff members -7"ose biases are un8no7n at t"e start. submit t"eir forecasts
along 7it" t"ose of veteran sales !ersonnel 7it" 8no7n biases. In s"ort/ t"is met"od is based to suc"
a large e6tent on judgment t"at it is not a!!ro!riate for most com!anies to use is as t"e onl+
forecasting met"od. 1"e !oll of sales force o!inion serves best as a met"od of getting an alternative
estimate for use as a c"ec8 on a sales forecast obtained t"roug" some ot"er a!!roac".
rojection of ast Sales
1"e !rojection of !ast sales met"od of sales forecasting ta8es a variet+ of forms. 1"e sim!lest
is to set t"e sales forecast for t"e coming +ear at t"e same figure as t"e current +ear5s actual sales/
or t"e forecast ma+ be made b+ adding a set !ercentage to last +ear5s sales/ or to a moving average
of t"e sales figures for several !ast +ears/ for instance/ if it is assumed t"at t"ere 7ill be t"e same
!ercentage sales increase ne6t +ear
As t"is +ear/ t"e forecaster mig"t utilie a naOve model !rojection suc" as t"is +ear5s sale
:e6t +ear5s sales > t"is +ear5s sales J last +ear5s sales
1"is +ear5s sales are inevitabl+ related to last +ear5s. Similarl+/ ne6t +ear5s sales are related to t"is
+ear5s and to t"ose of all !receding +ears. $rojecting !resent levels is sim!le and ine6!ensive for
forecasting met"od and ma+ be a!!ro!riate for com!anies in more or less stable or 2mature3
industries 4 it is rare in suc" industries for a com!an+5s sales to var+ more t"an AP !ercent !lus or
minus from t"e !receding +ear.
)ime-series (nalysis
:ot greatl+ different in !rinci!le from t"e sim!le !rojection of !ast sales is time series anal+sis/
a statistical !rocedure for stud+ing "istorical sales data. 1"is !rocedure involves isolating and
measuring four c"ief t+!es of sales variation= long term trends/ c+clical c"anges/ seasonal variations/
and irregular fluctuations. 1"en a mat"ematical model describing t"e !ast be"avior of t"e series is
selected/ assumed values for eac" t+!e of sales variation are inserted/ and t"e sales forecast is
2cran8ed out.3
For most com!anies/ time series anal+sis finds !ractical a!!lication mainl+ in ma8ing long
range forecast. $redictions on a +ear,to,+ear basis/ suc" as are necessar+ for an o!erating sales
forecast/ generall+ are little more t"an a!!ro6imations. Onl+ 7"ere sales !atterns are clearl+ defined
and relativel+ stable from +ear to +ear is time series anal+sis a!!ro!riatel+ used for s"ort term
o!erating sales forecasts. One dra7bac8 of time series anal+sis is t"at is is difficult to 2call t"e turns.3
1rend and c+cle anal+sis "el!s in e6!laining 7"+ a trend/ once under 7a+/ continues/ but !redicting
t"e turns often is more im!ortant. ;"en turns for t"e better are called correctl+/ management can
ca!italie u!on sales o!!ortunities? 7"en turns for t"e 7orst are called correctl+/ management can
cut losses.
*@ponential Smoothing
On e statistical tec"ni0ue for s"ort range sales forecasting/ e6!onential smoot"ing/ is a t+!e of
moving average t"at re!resents a 7eig"ted sum of all !ast numbered in a time series/ 7it" t"e
"eaviest 7eig"t !laced on t"e most recent data. 1o illustrate/ consider t"is sim!le but 7idel+ used
form of e6!onential smoot"ing a 7eig"ted average of t"is +ear5s sales is combined 7it" t"e forecast
of t"is +ear5s sales to arrive at t"e forecast for ne6t +ear5s sales. 1"e forecasting e0uation/ in ot"er
7ords/ is ne6t +ear5s sales > a -t"is +ear5s sales. Q -A, a. -t"is +ear5s forecast. t"e a in t"e e0uation is
called t"e 2smoot"ing constant3 and is set bet7een L.L andA.LL if/ for e6am!le/ actual sales for t"is
+ear came to CRL units of !roduct/ t"e sales forecast for t"is +ear 7as CPL units / and t"e smoot"ing
constant 7as
-L.CL.-CRL.Q -L.B.-CPL. > CDA units of !roducts
Determining t"e value of a is t"e main !roblem. If t"e series of sales data c"ange slo7l+ s"ould be
small to retain t"e effect of earlier observations. If t"e series c"anges ra!idl+/ s"ould be large so t"at
t"e forecasts res!ond to t"ese c"anges. In !ractice is estimated b+ tr+ing several values and ma8ing
retros!ective tests of t"e associated forecast error. 1"e value leading to t"e smallest forecast error is
t"en c"osen for future smoot"ing.
*valuation of ast Sales rojection Methods
1"e 8e+ limitation of all !ast sales !rojection met"ods of lies in t"e assum!tions t"at !ast sales
"istor+ is t"e sole factor influencing future sales/ :o allo7ance is made for significant c"anges made
b+ t"e com!an+ in its mar8eting !rogram or b+ its com!etitors in t"eirs. :or is allo7ance made for
s"ar! and ra!id u!s7ings or do7nturns in business activit+/ nor is it usual to correct for !oor sales
!erformance e6tending over !revious !eriods.
1"e accurac+ of t"e forecast arrived at t"roug" !rojecting !ast sales de!ends largel+ u!on
"o7 close t"e com!an+ is to t"e mar8et saturation !oint. If t"e mar8et is nearl+ ALL !ercent
saturated/ some argue t"at it is defensible to !redict sales b+ a!!l+ing a certain !ercentage figure to
2cumulative !ast sales of t"e !roduct still in t"e "ands of users3 to determine annual re!lacement
demand. &o7ever/ most often t"e com!an+ 7"ose !roduct "as ac"ieved nearl+ AL !ercent mar8et
saturation finds/ since most com!anies of t"is sort mar8et durables or semi durables/ t"at its
!ros!ective customers can !ost!one or accelerate t"eir !urc"ase to a considerable degree.
$ast sales !rojection met"ods are most a!!ro!riatel+ used for obtaining 2c"ec83 forecasts against
7"ic" forecasts secured t"roug" ot"er means are com!ared. Most com!anies ma8e some use of
!ast sales !rojection in t"eir sales forecasting !rocedures. 1"e availabilit+ of numerous com!uter
!rograms for time series anal+sis and e6!onential smoot"ing "as accelerated t"is !ractice.
Survey of Customer;s Buying lans
;"at more sensible 7a+ to forecast t"an to as8 customers about t"eir future bu+ing !lans
industrial mar8eters use t"is a!!roac" more t"an consumer goods mar8eters/ because it is easiest to
use 7"ere t"e !otential mar8et consists of small numbers of customers and !ros!ects/ substantial
sales are made to individual accounts/ t"e manufacture sells direct to users/ and customers are
concentrated in a fe7 geogra!"ical areasS -all more t+!ical of industrial t"an consumer mar8eting.. In
suc" instance/ it is relativel+ ine6!ensive to surve+ a sam!le of customers and !ros!ects to obtain
t"eir estimated re0uirements for t"e !roduct/ and to !roject t"e results to obtain a sales forecast.
Surve+ results/ "o7ever/ need tem!ering b+ management5s s!ecialied 8no7ledge and b+
contem!lated c"anges in mar8eting !rograms. Fe7 com!anies base forecasts e6clusivel+ on a
surve+ of customer5s bu+ing !lans. 1"e main reason lies in t"e in"erent assum!tions t"at customer
8no7 7"at t"e+ are going to do and t"at bu+ers !lans/ once made/ 7ill not c"ange.
Even t"oug" t"e surve+ of customer5s bu+ing !lans is generall+ an unso!"isticated forecasting
met"od/ it can be rat"er so!"isticate t"at is/ if it is a true surve+ -in t"e mar8eting researc" sense.
and if t"e selection of res!ondents is b+ !robabilit+ sam!ling.
&o7ever/ since it gat"ers o!inions rat"er t"an measures actions/ substantial nonsam!ling
error is !resent. Res!ondents do not al7a+s "ave 7ell formulated bu+ing !lans/ and/ even if t"e+ do/
t"e+ are not al7a+s 7illing to relate t"em. In !ractice/ most com!anies using t"is a!!roac" a!!ear to
!a+ little attention to t"e com!osition of sam!le and devote minimum effort to measuring sam!ling
and non,sam!ling errors.
C'()*+-%
O+1(/-S()-O/ O$ S(0*S *+SO//*0
$unctions of the Sales *@ecutive
Man+ sales e6ecutives get !romoted into t"eir !ositions because of t"eir !revious
!erformances as sales!ersons. In some com!anies/ outstanding sales !ersons "ave in inside trac8
7"en sales e6ecutives jobs are being filled. 1"e assum!tion is t"at outstanding sales!ersons 7ill be
outstanding sales e6ecutives.
:ot"ing could be fart"er from t"e trut". 1"e sales e6ecutive5 job demands administrative s8ills
muc" be+ond t"ose re0uired of sales!eo!le. $ersonal selling e6!erience is not unim!ortant/ as sales
e6ecutives manage !eo!le 7"o do !ersonal selling. But !ersonal selling e6!erience and outstanding
!ersonal selling !erformance are t7o different t"ings most com!anies can recount instances 7"ere
an outstanding sales!erson failed in a sales e6ecutive5s job.
Basicall+/ t"e sales e6ecutive "as t7o sets of function= o!erating and !lanning. 1"e o!erating
functions include sales force management/ "andling relations"i!s 7it" !ersonnel in ot"er com!an+
de!artments and 7it" t"e trade -middlemen and Hor customers./ communicating and coordinating 7it"
ot"er mar8eting e6ecutives/ and re!orting to some su!erior e6ecutive -suc" as t"e mar8eting vice
!resident..
In addition/ in some com!anies and fairl+ commonl+ in lo7er level sales e6ecutive sells some
accounts !ersonall+ -to 8ee! a 2"and in 2 and to 8ee! abreast of current selling !roblems and
conditions.. 1"e sales e6ecutive5s !lanning function includes t"ose connected 7it" t"e sale !rogram.
1"e sales organiation and its control/ t"e sales e6ecutive is res!onsible for setting !ersonal selling
goals/ for develo!ing sales !rograms designed to ac"ieve t"ese goals/ for formulating sales !olicies
and !ersonal selling strategies/ and for !utting toget"er !lans for t"eir im!lementation. Sales
!rograms are !ut into effect t"roug" t"e sale organiation/ and t"e sales e6ecutive is res!onsible for
designing and s"a!ing t"e sales organiation/ for staffing it/ for develo!ing t"e s8ills of t"ose 7"o are
!art of it/ and for !roviding leaders"i! to it. Ac"ievement of sales de!artmental goals re0uires controls
over selling activities/ sales volume/ selling e6!enses/ and t"e li8e. 1"e sale e6ecutive is res!onsible
for t"ese and related control activities. 1"e relative em!"asis t"at sales e6ecutives give to t"e
o!erating and !lanning functions varies 7it" -A. t"e t+!e of !roducts/ -R. t"e sie of com!an+/ and -C.
t"e t+!e of su!ervisor+ organiation. Customaril+/ sales e6ecutives at all organiational levels devote
more time and attention to sales force management t"an t"e+ do to an+ ot"er single activit+.
1"e significance attac"ed to o!erating and !lanning functions varies 7it" t"e !roduct. If t"e !roduct is
a consumer good/ sales e6ecutives attac" t"e greatest im!ortance to !lanning function= develo!ment
of sales !rograms/ coordination of !ersonal selling 7it" advertisings/ and building and maintaining
relations"i!s 7it" dealers and customers. If t"e !roduct is an industrial good/ sales e6ecutives attac"
t"e greatest im!ortance to t"e o!erating function managing and directing t"e sales force/ ma8ing
calls 7it" sales!eo!le/ and selling !ersonal account. Consumer goods sales mangers/ in general/
s!end more time on !lanning and less on o!erating t"an do t"eir counter!arts in industrial goods
com!anies.
1"e amount of sales e6ecutive5s time devoted to !lanning and o!erating functions is influenced
b+ sie of t"e sales organiation. Sales e6ecutives in small com!anies s!end less time on !lanning
and more on o!erating. As t"e sie of t"e com!an+ increases/ t"e sales e6ecutive devotes more time
to !lanning and less to o!erating.
E6erting im!ortant influences on t"e 7a+ sales e6ecutives distribute t"eir time and effort/ too/
is t"e t+!e of su!ervisor+ organiation. ;"en t"e sales e6ecutive su!ervises t"e field sales force
directl+/ "e or s"e s!ends most of t"e time on o!erating function. ;"en t"e sales e6ecutive
su!ervises t"e field sales force t"roug" subordinate sales e6ecutives/ more attention is devote to
!lanning and less to o!erating. Sales e6ecutives 7"o "ave "ig" caliber subordinates generall+ are
more 7illing to delegate most of t"e !erformance of t"e o!erating functions to t"em and/
conse0uentl+/ "ave time left for !lanning.
3ualities of *ffective Sales *@ecutives
;"at 0ualities s"ould sales e6ecutives !ossess@ It is difficult to list 2success3 0ualification.
Sales e6ecutive5s jobs cover a gamut of !roducts/ mar8ets/ and mar8eting c"annels/ and t"ere 7ould
seem to be fe7/ if an+/ 0ualifications in common. :evert"eless/ five 0ualities -or abilities. common to
effective sales e6ecutives/ 7"atever t"eir fields/ can be identified=
i. Abilit+ to define t"e !osition5s e6act functions and duties in relation to t"e goals t"e
com!an+ s"ould e6!ect to attain. Sales e6ecutives calculate 7"at is entailed in t"eir
res!onsibilities. ;"et"er or not t"e com!an+ !rovides t"em 7it" a job descri!tion/ t"e+
dra7 u! t"eir o7n descri!tions consistent 7it" t"e res!onsibilities assigned b+ "ig"er
management. Revision is necessar+ 7"enever c"anges occur in t"e assigned
res!onsibilities or in com!an+ goals.
ii. Abilit+ to select and train ca!able subordinates and 7illingness to delegate sufficient
aut"orit+ to enable t"em to carr+ out assigned tas8 7it" minimum su!ervision. Abilit+ to
delegate aut"orit+ is must. Effective e6ecutives select "ig" caliber subordinates and
!rovide t"em 7it" aut"orit+ to ma8e decisions. ;it"in e6isting !olic+ limits/ decision are
made b+ subordinates? 7"en an e6ce!tion falling outside t"ese limits occurs/ t"e su!erior
decides. 1"e more ca!able t"e subordinates/ 7ider !olic+ limits can be and t"e more t"e
su!erior5s time is freed for !lanning.
iii. Abilit+ to utilie time efficientl+. 1"e time of sales e6ecutives is valuable/ and t"e+ budget it
and use it carefull+. 1"e+ allocate 7or8ing time to tas8s +ielding t"e greatest return. 1"e+
arrive at an o!timum division bet7een office 7or8 and field su!ervision. Even t"e use of off
dut+ "ours is im!ortant. E6cessive 7or8 time and too little leisure reduce efficienc+.
Successful sales e6ecutive balance suc" leisure time activities as communit+ service and
!rofessional meeting against !ersonal social activities/ recreation/ and self im!rovement.
iv. Abilit+ to allocate sufficient time for t"in8ing and !lanning. Able administrators ma8e t"eir
contributions t"roug" t"in8ing and !lanning. 1"e+ 8no7 "o7 and are 7illing to t"in8. 1"e+
recognie t"at revie7ing !ast !erformances is a !rere0uisite to !lanning. 1"e+ strive to
gain ne7 insig"t t"at 7ill bring !roblems into better focus. Effective sales e6ecutives s"ield
t"emselves from routine tas8s and interru!tions. Failing t"is/ t"e+ retreat to s"angro las
7"ere surroundings are conductive to t"in8ing and !lanning.
v. Abilit+ to e6ercise s8illed leaders"i!. Com!etent sales e6ecutives develo! and im!rove
t"eir s8ills in dealing 7it" !eo!le alt"oug" t"e+ rel+ to a certain e6tent on an intuitive gras!
of leaders"i! s8ills/ t"e+ de!end far move on careful stud+ of motivational factors and
s"re7d anal+sis of t"e ever c"anging !atterns of unsatisfied needs among t"ose 7it"
7"om t"e+ 7or8. S8illed leaders"i! is im!ortant in dealing 7it" subordinates and 7it"
ever+one else.
+elation =ith )op Management
Effective sales e6ecutives are 7ell above average in initiative and !ersonal drive realiing t"e
sales e6ecutive5s !otential/ "o7ever/ de!ends largel+ u!on relations 7it" to! management. Sales
e6ecutives s"ould 7ant to get a"ead/ for !ersonal goals are as vital to t"em as t"e objectives t"e+ set
for t"e sales de!artment/ but if t"e+ are to ac"ieve t"ese goals/ not onl+ must t"e+ 8no7 7"ere t"e+
are going. But t+!e management must be 8e!t abreast of t"eir !rogress.
Effective sales e6ecutives !lan and im!lement t"eir o7n self develo!ment o7n foals 7it" t"ose
of t"e organiation/ t"is being im!ortant for ma6imum !rogress of individual and com!an+ ali8e.
;"enever t"e sales e6ecutive and t"e com!an+ cease to move to7ard mutuall+ com!atible goals/
friction causes bot" to fall s"ort. ;"en t"is "a!!ens/ eit"er t"e t7o sets of goals must be reconciled/
or t"e e6ecutive s"ould leave t"e firm.
Sometimes/ sales e6ecutives unilaterall+ reconcile suc" goal conflicts -usuall+ b+ adjusting
!ersonal goals to fit t"ose of t"e organiation.. More often/ t"e+ reconcile t"em t"roug" interaction
7it" com!an+ to! management.
Effective sales e6ecutives acce!t res!onsibilit+ for all activities related to t"eir !ositions/ but
t"e+ avoid becoming indis!ensable.
Indis!ensable is undesirable for bot" t"e e6ecutive and t"e com!an+. For t"e sales e6ecutive/
it means bloc8ing o!!ortunities for !romotion? for t"e com!an+/ it means t"at too muc" is being
sta8ed on one individual. One 7a+ to avoid becoming indis!ensable is to !ractice and advocate
delegation of aut"orit+/ and effective sales e6ecutives !lace "ig" !riorit+ on training t"eir o7n
re!lacements. (unior sales e6ecutives are 7ell advised to learn and master t"e duties and
res!onsibilities of t"e !ositions immediatel+ above t"eirs. $romotions come to t"ose !re!ared for
t"em/ are !re!aration consist of setting definite career goals and ad"ering to !rograms of continuing
self develo!ment.
Effective sale e6ecutives are "ig"l+ 0ualified as !roblem solvers and decision ma8ers.
Conse0uentl+/ sales e6ecutives guard against ta8ing too man+ of t"eir !rDoblems to to!
management. As8ing for "el! in deciding !roblems is as8ing for closer su!ervision -and less
aut"orit+.. Com!etent sales e6ecutives do not re0uire a close 7atc" over t"eir activities. Effective
sales e6ecutives 8ee! to! management informed on im!ortant decisions and t"e de!artment5s !lans
and accom!lis"ments. 1"e+ transmit all ordinar+ re!ots !rom!tl+/ and s!ecial re!orts 7"en
a!!ro!riate. 1"e+ e6ercise restraint in re!orting t"eir o7n activities/ but t"e+ see t"at t"eir su!eriors
"ave all t"e information needed to evaluate t"eir !ersonal effectiveness. 1"eir re!orts ensure t"at to!
management 8no7n in broad outline t"e !roblems encountered in selling t"e com!an+5s !roduct/ t"e
7a+s t"e+ are "andled/ and t"e results accom!lis"ed.
Effective sales e6ecutives !a+ attention to t"e manner in 7"ic" t"e+ communicate 7it" to!
management. 1"e+ don not "esitate to give t"eir su!eriors t"e benefit of t"eir t"in8ing/ but/ unless
matters of "ig" !rinci!le are involved/ t"e+ are 7illing to modif+ !reconceived ideas.
;"en t"e sale e6ecutive "as a great idea/ is absolutel+ sure of it/ and to! management is
unconvinced/ t"e sale e6ecutive must !la+ t"e role of su!er salesmen5s and 2sell to t"ose 7it" t"e
aut"orit+ to decide. ;"en t"e facts do not s!ea8 for t"emselves 7"en t"ose ion aut"orit+ fail to gras!
t"eir full significance t"e sales e6ecutive/ li8e an+ com!etent e6ecutive/ s"ould bring to bear "is or
"er full !o7ers of !ersuasion? Effective sales e6ecutives listen and learn. 1"e+ 8ee! dated record of
im!ortant conversations. 1"e+ refrain from voluntaril+ discussing t"e !ersonal t"eir e6ecutive contact/
never missing sc"eduled engagements 7it"out reason. Sales e6ecutives follo7ing suc" rules of
conduct e6!erience little difficult in 7inning to! management5s confidence and res!ect.
+elations =ith Managers Other Mar>eting (ctivities
Sales e6ecutives s!end most of t"eir time on sale force management? t"e+ also are concerned
7it" ot"er mar8eting activities. 1"e degree of res!onsibilit+ over t"ese activities/ and t"e amount of
time allocated to t"em/ var+ 7it" t"e !articular job/ but sales e6ecutives are almost al7a+s concerned
7it" !roducts/ !romotion/ !ricing/ and distribution. 1"e+ ma+ also "ave a role in ac"ieving control
over t"ese activities and coordination among t"em.
+elation =ith roduct Management
$roduct !lanning and t"e formulatioLn of !roduct !olicies re0uire numerous decisions.
$eriodicall+ eac" !roduct needs a!!raising in terms of its !rofitabilit+ and its abilit+ to fulfill bu+er
7ants. Decisions are made on 7"et"er eac" s"ould be retained/ c"anged or im!roved/ or dro!!ed
from t"e line. Ot"er decision is made on adding ne7 !roducts and on c"anges on !roduct designed
and ot"er features. Still t"eir decisions concern !roduct 0ualit+/ services rendered in connection 7it"
sales/ and !ac8aging.
$roduct decisions are often t"e s"ared res!onsibilit+ or mar8eting/ !roduction/ researc" and
develo!ment/ and financial e6ecutives/ o!erating as a !roduct committee. Sales e6ecutives !rovide
in!uts for t"ese decisions. 1"eir contact 7it" mar8et t"roug" subordinates and sales !ersonnel
!rovide t"em 7it" feedbac8 about !roduct !erformance and acce!tance generall+ not available from
ot"er sources.
+elations =ith romotion Management
C"ief mar8eting e6ecutives are res!onsible for setting !romotional !olicies/ but sales
e6ecutives !artici!ate in t"eir formulation. 1"eir 8no7ledge of t"e mar8et and t"eir control over
!ersonal selling activit+ ma8e sales e6ecutives a 8e+ source of information/ and t"e+ occu!+ a
strategic !osition ion im!lementing !romotional !lans. Sales !ersonnel are res!onsible not onl+ for
transmitting sales messages to !ros!ects but for securing t"e use of !oint of !urc"ase dis!la+s and
for coordinating dealer efforts 7it" advertising !rograms. Sales e6ecutives/ because of t"eir 8e+ roles
in ma8ing and im!lementing !romotional !olicies/ must coordinate closel+ 7it" ot"er e6ecutives in t"e
formulation and im!lementation of t"e !romotional !rogram.
Almost ever+ !roduct relies on !ersonal selling as a !romotional met"od at one or more !oints
in t"e mar8eting c"annel. $ersonal selling5s effectiveness traces to t"e use of !ersonal contact in
conve+ing t"e sales message to !ros!ective bu+ers. But !ersonal selling is t"e most e6!ensive
!romotional met"od in terms of cost !er sales message transmitted. 1"e !ro!ortion of !ersonal
selling in t"e !romotional miK6generall+ must be limited/ and it is t"e sales e6ecutive5s res!onsibilit+
to 8ee! selling costs do7n.
1"e sales e6ecutive ma8es certain t"at sales!eo!le 8ee! abreast of current advertising
cam!aigns. Sales !ersonnel need briefing on s!ecific advertising a!!eals/ enabling t"em to ada!t
t"eir selling a!!roac"es in 7a+s t"at en"ance t"e total !romotional im!act. 1"e sales force s"ould
8no7 7"ic" media are sc"eduled to carr+ advertisements for 7"ic" !roducts and t"e timing of eac"
ad5s a!!earance. Advertising !ersonnel need access to t"e sales e6ecutive/ since t"is e6ecutive is an
im!ortant source of information about customers/ t"eir needs/ be"avior/ and motives.
Sales e6ecutives !la+ similar roles 7it" res!ect to ot"er !romotional met"ods. Decisions
regarding t"e usage of t"ese met"ods in t"e !romotional mi6 are normall+ made b+ t"e c"ief
mar8eting e6ecutive or b+ ot"er s!ecialists. Besides serving as an im!ortant source of information/
t"e sales e6ecutive secures coordinative efforts b+ t"e sales force to ensure t"at eac" !romotional
activit+ obtains o!timum results.
+elations =ith ricing Management
;"en major decisions on !ricing !olic+ are re0uired/ bot" t"e c"ief mar8eting e6ecutive and
t"e sales e6ecutive occu!+ influential !ositions in to! management councils. Relative/ to ot"er
e6ecutives/ t"e+ generall+ "ave muc" clearer ideas of t"e !rices final bu+ers are 7illing to !a+/ t"e
sales e6ecutive/ because of close and continuing contacts 7it" t"e mar8et and t"e mar8eting
e6ecutive because of access to !ricing information gat"ered and inter!reted b+ t"e mar8eting
researc" staff.
In s!ite of t"e fact t"at t"ese t7o e6ecutives are 7ell 0ualified to s!ea8 7it" aut"orit+ on !ricing
matters/ !rice !olicies s"ould be formulated and !rices s"ould be set b+ a grou! of e6ecutives. Eac"
de!artment affected s"ould be re!resented/ for !ricing !olic+ ma8ing is/ b+ nature/ an
interde!artmental activit+.
Include in t"e !olic+ma8ing grou! s"ould be re!resentative not onl+ of t"e mar8eting
de!artment but also of suc" de!artments as !roduction/ cost accounting/ credit/ advertising/ legal/
and !ublic relations. $ricing !olicies s"ould result from t"e coo!erative action of t"e grou! rat"er t"an
from com!romises among its members. Once !ricing !olic+ is establis"ed/ its im!lementation is t"e
res!onsibilit+ of t"e sales e6ecutive. For e6am!le/ t"e !ricing committee mig"t ado!t suggested list
!rices/ but t"e sales e6ecutive is t"e one res!onsible for information distributors and dealers and
obtaining t"eir conformance. Res!onsibilit+ for administering !rices s"ould be assigned to t"e sales
e6ecutive/ because t"e sales de!artment "as t"e closest relations"i! 7it" t"e mar8et.
+elations =ith Distribution Management
Distribution !olicies are major determinants of t"e breadt" and com!le6it+ of t"e sales
de!artment5s organiation and function.
Selection of a mar8eting c"annel/ or c"annels/ sets t"e !attern for sales force o!eration/ bot"
geogra!"icall+ and as to t"e classes of customers. It is also necessar+ to determine t"e number of
outlets for t"e !roduct at eac" distribution level/ and t"is affects t"e sie and nature of t"e
manufacturer5s sales organiation and t"e sco!e of its activities. Furt"ermore/ mar8eting
management determines !olicies on t"e amount and e6tent of coo!eration of it desires 7it" members
of t"e distributive net7or8 also influencing t"e sie of t"e sales force/ t"e nature of t"e sales!erson5s
job/ t"e need for sales su!ervision/ and t"e li8e. Because of t"e im!act of distribution !olicies u!on
t"e sales organiation and its activities/ sale e6ecutives !la+ 8e+ roles in !roviding information
needed for t"eir formulation/ since t"e+ are res!onsible for Im!lementation of t"ese !olicies.
)he Sales Organi&ation
Effective sales e6ecutives insist u!on sound organiation. 1"e+ recognie t"at t"e sales
organiation must ac"ieve bot" 0ualitative and 0uantitative !ersonal selling objectives. Over t"e long
"aul/ it must ac"ieve 0ualitative objectives t"ose concerning !ersonal selling5s e6!ected contributions
to ac"ievement of overall com!an+ objectives. In t"e s"ort run/ it must attain t"e 0uantitative !ersonal
4selling objectives not onl+ sales volume but ot"er objectives related to 2!rofit3-suc" as 8ee!ing
selling e6!enses 7it"in certain limits. and to 2com!etitive !osition3-suc" as attaining given mar8et
s"ares..ac"ieving s"ort,run 0uantitative !ersonal selling objectives !recedes attainment of t"e long,
run 0ualitative !ersonal selling objectives.
1"e effective sales e6ecutive loo8s u!on t"e sales organiation bot" 7it" res!ect to 2"ere and
no73 and to t"e 2future.3 but t"e sales organiation ma8es its major contribution in t"e !resent and
t"e near term,recogniing t"is/ t"e effective sales e6ecutive builds bot" sales,minded less and !rofit,
mindedness into t"e sales organiation.
A sales organiation is bot" an orienting !oint for coo!erative endeavor and a structure of
"uman relations"i!s. It is grou! of individuals striving jointl+ to reac" 0ualitative and 0uantitative
objectives/ and bearing informal and formal relations to one anot"er. Im!licit in t"e conce!t of a sales
organiation is formal relations to one anot"er. im!licit in t"e conce!t of a sales organiation is t"e
notion t"at individual members coo!erate to attain ends. 1"e sales organiation is not an end in itself
but rat"er t"e ve"icle b+ 7"ic" individuals ac"ieve given ends.
E6istence of a sales organiation im!lies t"e e6istence of !atterns of relations"i! among
subgrou!s and individuals establis"ed for !ur!oses of facilitating accom!lis"ment of t"e grou!5s
aims.
Organiation defects often trace to lac8 of attention given to sale organiation during t"e earl+
e6istence of a com!an+. ;"en setting u! business/ management is more concerned 7it" financing
and non,mar8eting !roblems. E6ecutives of ne7 enter!rises consider organiation/ but most often
t"ese relate to no mar8eting activities. In manufacturing/ for e6am!le/ as !roducts are im!roved/
!roduction 0uantities increased/ ne7 !roducts added/ and !roduction !rocesses develo!ed/ t"e
manufacturing organiation is ada!ted to c"anged situations. Similar alterations in t"e sales
organiation are fre0uentl+ neglected or !ost!oned. &er organiations in man+ com!anies evolve
7it"out regard for c"anging conditions. 1"e basic setu! designed 7"en t"e com!an+ 7as ne7
remains/ des!ite/ for e6am!le/ c"anges in selling st+le and sie of sales force. 1"e sales
organiation/ after all/ is t"e ve"icle t"roug" 7"ic" !ersonal,selling strateg+ is im!lemented. A 7ell
designed sales organiation/ li8e a 7ell 4designed automobile/ accom!lis"es more/ and more
economicall+/ t"an does one t"at is an arti,fact.
1"e sales organiation s"ould be adjusted to fit,ideall+/ to antici!ate c"anging situations. S"ifts
in mar8eting/ in com!etition/ and in ot"er business factors calls for c"anges in t"e sales organiation?
1"e ideal sales organiation "as a built in ada!tabilit+ allo7ing it to res!ond a!!ro!riatel+ in fluid and
diverse mar8eting environments.
urposes of Sale Organi&ation
In t"e ideall+ organied sales de!artment/ 7asted motion and du!lication of effort 7ould be
eliminated/ friction 7ould be minimied/ and coo!eration ma6imied .d+namic c"aracteristics in"erent
in mar8eting !reclude t"e ac"ievement of suc" !erfection. But 7"en sufficient attention is given to
sales organiation/ t"e ideal is a!!roac"ed/ if not attained/ and !ersonal selling efforts increase in
!roductivit+. E6ecutive effort e6!ended on sales organiation need not/ indeed s"ould not / go
e6clusivel+ to 0uestion of design/ t"at is/ of t"e <formal3 organiation !lan . "o7 an organiation 7or8s
is more im!ortant t"an "o7 is is su!!osed to function.
Sales management s"ould direct its main organiational efforts to7ard t"e 2informal3
organiation. 1"roug" intelligent leaders"i! and related 2"uman relations3 talents/ t"e s8illed manager
moves bot" individuals and informal grou!s along lines t"at facilitate ac"ievement of t"e !ur!oses of
formal organiation.
)o ermit the Development of Specialists
As a business e6!ands/ mar8eting and selling activities multi!l+ and become increasingl+
com!le6. It is difficult to fi6 res!onsibilit+ for !erformance of all necessar+ activities/ !articularl+ 7"en
e6ecutives are reluctant to delegate aut"orit+. One !ur!ose of reorganiing t"e sales de!artment is to
facilitate assignment of res!onsibilit+ and delegation of aut"orit+. 1"is often re0uires res"a!ing t"e
structure so t"at it is easier for s!ecialists to develo!. In fact/ s!ecialiations/ or division of labor as
economists call it/ are t"e c"ief means t"roug" 7"ic" t"e !rocesses of organiation and
reorganiation are effected. As tas8s gro7 in number and com!le6it+/ t"e+ are bro8en do7n into
manageable units and are assignments to s!ecialied !ersonnel. 1"is involves fi6ing res!onsibilit+ for
s!ecific tas8s 7it" s!ecific individuals -or/ occasionall+/ 7it" certain grou!.. 1"e assignments made
are called 2delegation of aut"orit+.3 1"is is conductive to develo!ment of s!ecialists.
)o assure that (ll /ecessary (ctivities are performed
As a sales organiation gro7s and s!ecialiation increases/ it is increasingl+ im!ortant to
!erform all necessar+ activities. ;"at are 2necessar+3 c"anges over time 7"en jobs are "ig"l+
s!ecialied/ danger e6ists t"at t"e organiational !lan 7ill not !rovide for su!ervision of all activities.
Essential tas8s ma+ not be !erformed/ sim!l+ because t"e+ are not assigned to s!ecific individuals.
;"en a com!an+ is small/ for instance/ its e6ecutives are in close contact 7it" users of t"e !roduct.
As a com!an+ gro7s/ as mar8eting c"annels lengt"en/ and as t"e mar8eting area e6!ands
geogra!"icall+/ to! e6ecutives become fart"er and fart"er removed from t"e customers. As soon as
e6ecutives begin to lose t"eir informal contacts 7it" customers/ an individual s"ould be assigned
res!onsibilit+ for maintaining suc" relations"i!s. If t"ese contacts are "ig"l+ im!ortant/ res!onsibilit+
for maintaining t"em s"ould be assigned to an e6ecutive s!ecialiing in customer relations.
)o (chieve Coordination or Balance
%ood organiation ac"ieves coordination or balance. Individuals var+ in com!etence/ !otential/
and effectiveness. $articularl+ forceful e6ecutives ma+ !revent a basicall+ sound organiation from
functioning smoot"l+. 1"eir !ersonalities ma+ be suc" t"at t"roug" assum!tion of aut"orit+/ failure to
delegate it. Or bot"/ t"eir !ositions are magnified out of all !ro!ortion to t"eir im!ortance. ;orse+et/
total accom!lis"ments of t"e organiation are less t"an t"e+ could "ave been if/ so to s!ea8/ grater
advantage "ad been ta8en of t"e s+nergistic effect 7"en t"e sum of combination effort e6ceeds t"e
efforts of t"e same individuals 7or8ing alone. B+ getting !eo!le to !ull toget"er as a team rat"er t"an
as an assortment of individuals/ t"e organiation accom!lis"es more collectivel+ t"an its members
could inde!endentl+.
Motivating individuals to 7or8 toget"er to7ard common objectives is/ t"en/ im!ortant in
ac"ieving coordination. Individual goals are subordinated to or reconciled 7it"/ organiational goals/
some of t"e means for accom!lis"ing t"is are indoctrination and training !rograms/ grou! meetings/
su!ervision and guidance/ and t7o 7a+ communication. 1"roug"out t"e sales organiation different
activities are 8e!t in !ro!er relation to one anot"er in order t"at t"e greatest organiational
effectiveness is realied.
As s!ecialists emerge in a gro7ing sales organiation/ management must guard against a
tendenc+ of eac" to searc" for 7a+s to justif+ "is or "er o7n e6istence. One form of justification is to
devise tec"nical nomenclatures t"at no s!ecialists in ot"er areas "ave difficult+ understanding. 1"is/
in turn/ leads to increasing communication difficulties 7it" ot"er s!ecialists and a reduction in overall
organiational effectiveness. 1"ese instances of uncoordinated !roliferation suggest t"at to! sales
e6ecutives s"ould concern t"emselves continuall+ 7it" orc"estration of effort. Modern organiational
t"eor+ suggests t"at sales de!artments s"ould be divided into small/ freel+ communicating face to
face grou! to decrease t"e !ossibilit+ of uncoordinated !roliferation.
)o Define (uthority
Sales e6ecutives s"ould 8no7 7"et"er t"eir aut"orit+ is line/ staff/ or functional. 9ine aut"orit+
carries t"e !o7er to re0uire e6ecution of orders b+ t"ose lo7er in t"e organiational "ierarc"+. Staff
aut"orit+ is t"e !o7er to suggest to t"at "olding line aut"orit+ t"e met"od for im!lementation of an
order. Functional aut"orit+ enables s!ecialists in !articular areas/ suc" as in tec"nical !roduct
service/ to enforce t"eir directives 7it"in a s!ecific and limited field. 9ine e6ecutives ma8e decisions
on t"e need/ !lace/ and time of action over a 7ide range of matters. Staff e6ecutives advise line
e6ecutives about met"ods but "ave no formal !o7er to re0uire or enforce t"e e6ecution of t"eir
recommendations. Functional e6ecutives are s!ecialist5s e6!erts in some as!ect of t"e business 7"o
assist e6ecutives "olding general line aut"orit+. For e6am!le/ suc" s!ecialists advise on ne7 !roduct
introduction. 1"e+ do t"is b+ issuing orders/ mainl+ on routing tec"nical !roblems/ directl+ to lo7er
organiational levels. All e6ecutives s"ould understand t"e nature of t"eir aut"orit+ 7it" res!ect to
eac" as!ect of t"e o!eration? ot"er7ise/ friction develo!s. ;"en/ for instance/ staff e6ecutives
attem!t to e6ercise line aut"orit+/ t"e+ are "eaded for trouble 7it" t"e line e6ecutives 7"ose aut"orit+
is usur!ed.
A sales organiation receives directions from several sources. A sales!erson/ for instance/
ma+ get instructions on merc"andising t"e advertising from an advertising s!ecialist/ directions for
administering a 0uestionnaire to customers from t"e district sales manager. 1"ese conflicts 7it"
traditional organiational t"eor+/ 7"ic"/ in general/ "as said= no !erson s"ould "ave more t"an one
boss. 1"e su!!orting argument is t"at/ if individuals receive instructions from multi!le sources/ t"e+
ma+ get conflicting and confusing directing directions. 1"e argument is a good one/ but t"e 2one
boss3 rule does not necessaril+ follo7.
Modern organiational t"eor+ !oints out / and rig"tl+ so/ t"at t"e real !roblem is on e not of
avoiding t"e multi!le boss situation but "armoniing orders and directives from different sources. A
smoot"l+ o!erating sales organiation "as built on 7a+ of ac"ieving "armon+. 17o im!ortant 7a+s
are continuing coordination of t"e 7or8 of different e6ecutives and free flo7ing communications
s+stem.
)o *conomi&e on *@ecutive )ime
As a sales de!artment5s o!erations and activities increase in com!le6it+ and number/
additional subordinates are added. 1"is !ermits "ig"er ran8ing sales e6ecutives to delegate more
aut"orit+. It also allo7s for t"e more effective use of s!ecialiation/ 7"ile "ig"er e6ecutives devote
less time to o!erations and more to !lanning. One !ur!ose/ t"en of organiation and one often
overloo8ed is ac"ieving economies in t"e use of e6ecutive time. 1o! sales e6ecutives need not
concern t"emselves !ersonall+ 7it" all t"e sales de!artment5s !roblems and activities/ !articularl+
routine or tec"nical ones/ 7"en t"e+ "ave ca!able and 7ell trained subordinates.
&o7ever/ as sales e6ecutives gain subordinates/ t"e+ must devote more attention/ and
!robabl+ more time/ to coordinating t"eir efforts. )nless t"e e6ecutive is an effective coordinator/
subordinates ma+ not 7or8 in "armon+ or disc"arge assignments in line 7it" e6!ectations.
In building t"e sales organiation/ t"en/ t"e need for effective coordination limits t"e number of
subordinates 7"o re!ort directl+ to certain e6ecutives. 1"is limit is t"e 2s!an of control.3
It is not !ossible to s!ecif+ t"e !ro!er number of subordinates.
But t"e greater t"e abilities of coordinator and of t"ose re!orting to "im or "er/ t"e larger t"e
number t"at can be effectivel+ coordinated. 9o7er level sales e6ecutive/ "o7ever/ t"ose 7it"
sales!eo!le re!orting directl+ to t"em/ "ave a 7ider s!an of control t"an "ig"er e6ecutives devoting
muc" time to !lanning and !olic+ formulation and little to administrative and o!erating details. One
must consider not onl+ relative abilities of t"e coordinator and t"e subordinates/ but t"e nature and
im!ortance of t"e coordinator5s ot"er duties. Furt"ermore/ in deciding o!timum s!an of control for a
!articular !osition/ ot"er factors are ta8en into account. 1"e s!an of control is 7idened= -A. 7it"
im!rovements in efficienc+/ s!eed/ and reliabilit+ of t"e communications s+stem?-R. 7"en
subordinates !erform routine/ similar/ or re!etitive tas8s? and -C. 7"en subordinates are concentrated
at t"e same location as t"e e6ecutive.