SALES AND DISTRIBUTION MANAGEMENTUNIT I

LESSON 1:
OBJECTIVE AND SCOPE
OF SALES MANAGEMENT

Learning Objectives
On completion of this lesson,you should be able to
· Explain the objective of sales management.
· Relationship between sales management and control.
I welcome you all to this interesting subject of sales
management.Well,sales management is a topic every management
student should be aware of.To be a sales expert,one is
supposed to know this concept by heart.So what we are waiting
for.Lets start this interesting journey of sales management.
Sales management originally referred exclusively to the direction
of sales force personnel.Later,the term took on the broader
significance-in addition to the management of personnel
selling. sales management meant management of all
marketing activities including advertising,sales
promotion,marketing research,physical distribution, pricing and
product merchandising.According to American Marketing
Association sales managemet means the planning, direction
and control of personnel selling, including
recruiting,selecting,equipping,assigning,routing,supervising,paying
and motivating as these tasks apply to the personal sales force.
Sales managers are responsible for organizing the sales effort,
both within and outside their companies.Within the company
the sales manager builds formal and informal organization
structure that ensures effective communication not only inside
the sales department but in its relations with other organizations
units. Outside the company, the sales manager serves as
the key contact with customers and other external publics and is
responsible for building and maintaining an effective distribution
network.
Sales managers have still other responsibilities. they are responsible
for participating for the preparation of information critical
to the making of key marketing decisions such as those on
budgeting, quotas and territories. They participate- to an extent
that varies with the company-in decisions on products,
marketing channels and distribution policies, advertising and
other promotion and pricing.Thus,the sales manager is both an
administrator in charge of personal selling activity and a
member of the executive group that makes marketing decisions
of all types.
Objectives of Sales Management
Now,lets discuss the objectives of sales management.
From the company viewpoint, there are three general objectives
of sales management: sales volume, contribution to profits and
continued growth. Sales executive do not carry full burden of
the effort to reach these objectives but they make major
contributions. Top management has the final responsibility
because it is accountable for the success and failure of the entire
enterprise.Ultimately top management is accountable for
supplying an ever increasing volume of socially responsible
products that final buyers want at satisfactory prices.
Top management delegates to marketing management, which
then delegates to sales management, sufficiently authority to
achieve the three general objectives. In the process, objectives are
translated into more specific goals-they are broken down and
restated as definite goals that the company has a reasonable
chance of reaching. During the planning that precedes goal
setting,sales executives provides estimates on market and sales
potentials,the capabilities of the sales force and the middlemen
and the like.Once these goals are finalized, it is up to the sales
executive to guide and lead the sales personnel and the
middlemen who play critical roles in implementing the selling
plans.
Sales management then is influential in charting the coarse of
future operations.It provides higher management with
informed estimates and facts for making marketing decisions
and for setting sales and profit goals. Largely on sales
management s appraisal of market opportunities, targets are set
for sales volume, gross margin and net profit in units of
product and in dollors,with benchmarks of growth projected
for sales and profits in specific future dates.Whether or not
these targets are reached depends upon the performance of sales
and other marketing personnel.
Sales Management and Financial Results
Sales management and financial results are closely
related.Financial results are stated in terms from two basic
accounting formulas:
Sales cost of sales=gross margin
Gross margin-expenses=net profit
Sales management influences the numbers cranked into these
formulas.Sales,gross margin and expenses are affected by the
caliber and performance of sales management and these are the
major determinants of net profit.The cost of sales factor cannot
be affected directly by sales management, but it can be affected
directly since sales volume must be large enough to permit
maintenance of targeted unit cost of production and
distribution.Periodically,these formulas become the company
operating statement and are used by the board of directors and
by stockholders, in appraising top management
performance.Moreover,top management uses these formulas in
judging the effectiveness of sales management.
Sales Management and Control
Now,sales management and control are closely related in an
organization.
Sales executive control the personal selling effort of the
organizational units they head.The purpose is to ensure that
sales department objectives are reached.Control is part of
management,as are planning,organizing and coordinating.The
several phases of control are presented in the following
discussions in the normal sequence but in the real world several
phases can occur simultaneously or overlap in time.
Sizing up the Situation
Sales executive start by reviewing the personal selling objectives
of the firm.They realize these objectives with respect to the
present,past and the future in an attempt to answer the four
questions.
1.
Where are we now?
2.
How did we get there?
3.
Where are we going?
4. How do we get there?
After satisfying themselves that the company personnel selling
objectives,long range and short range,are reconcilable, sales
executives appraise them relative to the plans, policies and
procedures that have been used, are being used, or are intended
for use in the effort to reach personnel selling objectives.In the
coarse of sizing up the situation, sales executives find and
correct weaknesses or imperfections in the sales plans and the
policies and the procedures used in their implementation.
Setting Quantitative Performance Standards
After ironing out planning weaknesses,sales executive set
quantitative standards against which to measure
performance.standard settings requires continual experimentation
and most standards are far from precise..The ultimate
standard of a particular standard appropriateness is whether it
contributes more to personnel selling efficiency than it costs.
Intelligent standard setting requires identification of the
individuals who are responsible for the activity or group of
activities being put under control. No two salespersons or
executives perform exactly alike,even though they may operate in
identical circumstances.Thus ,standards are often expressed as
ranges of acceptable performance.Although it is convenient to
think of a standard as a fixed value, there should be an upper
and lower limit within which human variation may take
place.When the performance of an organizational unit passes
either of these control limits, the danger flag is up, signaling
that the situation is out of control.
Gathering and Processing Data on Actual
Performance
The type and amount of information needed for controlling
sales depend upon the standard selected. but regardless of the
nature of this information it should not be in excess of sales
management real needs, nor should its cost of collection and
processing be more than its worth.Consequently,sales management
determines-at regular intervals-whether the information
being reported is sufficiently important and being used often
enough to justify its costs.Sales executives also keep in mind
that changes in executives,basic policies or other matters may
alter the usefulness of the information.
Evaluating Performance
Evaluation of performance means comparing actual results
with standards.Because of differences in territorial and other
conditions, it is difficult to compare individual
performances.However,it is possible to explain each individual
salesperson variations from standard.Departures from standard
are classified into controllable and uncontrollable variations.
variations outside the control of the person being appraised
include those caused by rapid and unexpected changes in
economic conditions, changes in governmental activities and
wars,strikes,floods,droughts and other natural disasters.
Action to Correct Controllable Variation
Management corrects the variation explained by factors within
the control of the person being evaluated. Management takes
steps to move the individual performance in the direction of
the standards. The specific actions taken differ within the nature
of the variation. but management assumes one or more of
three forms.
1.
Direction or pointing out more effective ways to perform
certain tasks.
2.
Guidelines or providing additional instructions or training
and
3.
Restraint or the installation of procedures and practices
aimed at keeping results within desired bounds.
Adjusting for Uncontrollable Variation
The amount of uncontrollable variation in the comparison
indicates the relative need for adjusting sales plans and policies.
If uncontrollable variation suggests that present sales objectives
are unrealistic or not in line with the current expectations, basic
revision in the objective are made.Thus,if the comparison of
results with the standard reveals substantial uncontrollable
variation, adjustment of standards to attainable levels is in
order.
Conclusion
Here we have studied the meaning and objectives of sales
management,its relationship with control happening in the
organization.Its not necessary that the control always produces
desired outcome but may also indicate some variations.These
variations needs to be corrected thereafter.
Questions
1.
What do you mean by sales management.Why is it
important to study?
2.
What are the objectives of sales management?
3.
Explain the relationship between sales management and
controlling?
Notes:
SALES AND DISTRIBUTION MANAGEMENT

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11.623.2