Sales Management

Sales Management
Sales management is a business discipline

which is focused on the practical application of sales techniques and the management of a firm's sales operations. It is an important business function as net sales through the sale of products and services and resulting profit drive most commercial business. These are also typically the goals and performance indicators of sales management.

American Marketing Association Definition:

The planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal salesforce.

 Sales Management is the management

of the personal selling component of an organizations marketing program.

Objectives of Sales Management

Sales Volume
Contribution to Profits Continuing Growth

Sales Planning
Sales planning involves strategy, setting

profit-based sales targets, quotas, sales forecasting, demand management and the writing and execution of a sales plan. A sales plan is a strategic document that outlines the business targets, resources and sales activities.

Activities of Salespeople
Generate Sales:
Precall Planning Prospecting

Make Sales Presentations

Overcome Objections Close by asking for orders

Arrange for Delivery

Entertain

Activities of Salespeople
Generate Sales:
Arrange for credit financing Collect payments

Participate in trade shows

Activities of Salespeople
Provide service to customers:
Provide management /technical

consulting Oversee installations and repairs Check inventory levels Stock shelves

Activities of Salespeople
Provide service to customers:
Provide merchandising assistance: Co-

op advertising, point-of-purchase displays, brochures Oversee product and equipment testing Train wholesalers and retailers salespeople

Activities of Salespeople
Territory Management:
Gather and analyze information on

customers, competitors general market developments Disseminate information to appropriate personnel within salespersons company Develop sales strategies and plans, forecasts and budgets.

Activities of Salespeople
Professional Development:
Participate in: Sales Meetings

Professional Associations
Training Programs

Activities of Salespeople
Company Service:
Train new salespeople Perform civic duties

Salespersons average time allocation

Waiting/Travel time-18% (8.5 hours)
Administrative Tasks-15% (7.2 hours) Selling over the phone- 11%(5.3 hours)

Selling face-to-face- 31% (14.3 hours)

Service Calls- 25% (11.6 hours)

 The three recruitment tasks used in sales

management are Job analysis; Job description and Job qualifications. Job analysis is performed to specify the certain tasks that a salesperson would be responsible for on a daily basis. It should identify what activities are deemed as being vital to the success of the company. The person that is responsible for completing a job analysis should have an in-depth comprehension of the daily activities of the salespeople.

 This job analysis is then written in an

explicit manner as a job description. The general information consists of: Title of job 2. Organizational relationship 3. Types of products and services sold 4. Types of customers called on 5. Duties and responsibilities related to the job 6. Job demands 7. Hiring specifications

 An effective job description will identify compensation

plans, size of workload, and the salespeoples duties. It is also primarily responsible for hiring tools such as application forms and psychological tests. The most difficult part of this process would be the determination of job qualifications. A reason for this difficulty is because hiring affects a companys competitive advantage in the market as well as the amount of revenue. Additionally, there should be a set of hiring attributes that is associated with each sales job that is within a company. If an individual does not excel in their assigned territory, it could be due to external factors relating to that persons environment.

Diversity of Personal-Selling Situations

Group A (Service Selling)
Inside Order Taker Delivery Salesperson

Merchandising Salesperson
Missionary Technical Salesperson

Diversity of Personal-Selling Situations

Group B (Developmental Selling)
Creative Salesperson of Tangibles Creative Salesperson of Intangibles

Diversity of Personal-Selling Situations

Group C (Basically Developmental

Selling, but requiring unusual creativity) Political, Indirect, or Back-Door Salesperson Salesperson Engaged in Multiple Sales

Sales Management Responsibilities

Communication, Co-ordination,

Integration Strategic Planning Organizing the salesforce Recruiting, selection, assimilation Training and Development Motivation and Supervision Performance Appraisal

Theories of Selling
AIDAS Theory of Selling
Right Set of Circumstances Theory of

Selling Buying Formula Theory of Selling Behavioral Equation Theory

Personal selling process

Prospecting and Qualifying
Preapproach (Precall Planning) Approach

Presentation and Demonstration

Overcoming objections Trial Close/Closing the sale

Follow-up and Service

Prospecting and Qualifying

Two steps in successful prospecting:
First step is generating leads-identifying

potential customers. Second Step is qualifying leads according to who is most likely to buy.

Identifying Leads
Referrals from customers
Referrals from internal company sources Referrals from external referral agencies

Published Directories
Networking by the salesperson Cold canvassing

Qualifying Leads
The customer has a need for the

products which are being sold. The customer can afford to buy the products. The customer is receptive to being called upon by the salesperson.

Preapproach-Planning the sale

Customer Research
Planning the Sales Presentation

 The Approach

Need Assessment
Situational questions
Problem Discovery questions Problem impact questions

Solution value question

Confirmatory questions

The Presentation
It is primarily a discussion of those

product and/or service features, advantages and benefits which the customers have indicated are important to them.

Product Demonstrations
A good sales presentation is built around

a forceful product demonstration.

Developing Effective Presentations

Keep the presentation simple
Talk the prospects language Stress the application of the product or

service to the prospects situation. Above all, seek credibility at every turn

Meeting objections
Listen to the buyer
Clarify the objection Respect the buyers concern

Respond to the objection

Gaining commitment
The salesperson must ask the buyer to

commit to some action which moves you further toward the sale. The key to obtaining commitment is first to plan realistic objectives for each sales call and second to ask for a commitment.

Common Sales Closes

The assumptive close
Special-offer close Summary close

Follow-Up
Good follow-up is the key to building a

loyal clientele. Satisfied customers voluntarily provide more business.

Salesmanship
It is the art of successfully persuading

prospects or customers to buy products or services from which they can derive suitable benefits, thereby increasing their total satisfaction.

Personal Selling Objectives

To do the entire selling job.
To service existing accounts. To search out and obtain new customers. To secure and maintain customers cooperation

in stocking and promoting the product line. To keep customers informed on changes in the product line and other aspects of marketing strategy.

Personal Selling Objectives

To assist customers in selling the product line.
To provide technical advice and assistance to

customers. To assist with the training of middlemens sales personnel. To provide advice and assistance to middlemen on management problems. To collect and report market information of interest and use to company management.

Personal Selling Objectives

To capture and retain a certain market share.
To obtain sales volume in ways that contribute

to profitability. To obtain some number of new accounts of given types. To keep personal-selling expenses within set limits. To secure targeted percentages of certain accounts business.

Setting Personal Selling Objectives

Market Potential
A market potential is an estimate of the maximum possible sales opportunities present in a particular market segment and open to all sellers of a good or service during a stated future period.

Setting Personal Selling Objectives

Sales Potential
A sales potential is an estimate of the maximum possible sales opportunities present in a particular market segment and open to a specified company selling a good or service during a stated future period.

Setting Personal Selling Objectives

Sales Forecast
A sales forecast is an estimate of sales, in rupees or physical units, in a future period under a particular marketing program and an assumed set of economic and other factors outside the unit for which forecast is made.

Types of Sales Forecast

Product Level
Total sales Industry sales

Company Sales
Product Line Sales Product Form Sales

Product Item Sales

Types of Sales Forecast

Time Period
Long range (Term) Medium range (Term)

Short range (Term)

Types of Sales Forecast

Geographic Area
World Nation (India)

Region (North/South)
Territory (Branch/District) Customer segment

Analyzing Market Potential

Market Identification
Market Motivation Analysis of market potential using

market factor. (A market factor is a market feature or characteristic related to the Products demand.)

Market Index
A market index is a numerical

expression indicating the degree to which one or more market factors associated with a given products demand is present in a given market segment-usually a given geographical market segment.

Sales Forecasting Methods (Qualitative Methods)

Jury of Executive Opinion

(The Delphi Technique) Poll of Sales Force Opinion Survey of Customers Buying Plans Test Marketing ((Full-blown, controlled, simulated)

Jury of Executive Opinion

Advantages Forecasting can be done quickly and easily. Less expensive than other methods. Popular, among small and medium sized companies.

Jury of Executive Opinion

Disadvantages Unscientific. Subjective. Difficult to break-down forecast into subunits (like regions, branches) of the organisation.

Delphi Method
Advantages Objective forecast that is accurate. Useful for technology, new product and industry sales forecast. Both long and short-term forecasting possible.

Delphi Method
Disadvantages Difficulty getting a panel of experts. Longer time for getting consensus. Break-down of forecast into products or territories is not possible.

Salesforce composite method

Advantages Involvement of sales people. Forecasting is done by salespeople who are closest to the market and have better insight into sales trends. Detailed sales estimate broken down by customer, product, sales representative and territory are possible.

Salesforce composite method

Disadvantages Sales forecast often pessimistic or optimistic as salespeople are not trained in forecasting. Salespeople deliberately under estimate demand as sales quota are set based on sales forecast. Many salespeople are not interested in sales forecasting.

Survey of Customers Buying Plans

Purchase Probability scale
Not at all Slight possibility

Fair possibility
Good possibility High possibility

Certain Buying

Survey of Customers Buying Plans

Advantages Useful in forecasting sales for industrial products, consumer durables and new products. Relatively inexpensive and fast, when only a few customers are involved (example business buyers survey). It also gives customers reasons for buying or not buying.

Survey of Customers Buying Plans

Disadvantages Sometimes buyers are unwilling to reveal their plans. Buyers are sometimes over optimistic. Expensive and time consuming in consumer non-durable markets where consumers are very large in number.

Test Marketing-Full Blown

It consists of the company choosing a

few (two to six) representative cities, in which full promotion campaign is introduced. Buyer surveys are carried out to get information about consumer attitude, usage and satisfaction towards the new product.

Test Marketing-Controlled
The company hires a research firm that

delivers the new product to the panel of stores, arranges promotions at the stores and measures the sales of the new product.

Test marketing-Simulated
In this method, about 30-40 consumers

are selected, based on their brand familiarity and preferences in a particular product category. These consumers are given a small amount of money and asked to buy any items in a store. The researcher notes how many consumers buy the new product and competing products.

Test Marketing
Advantages Useful for forecasting the sales of new or modified products. Useful in deciding whether a company should go ahead for a National launch of a new product, without spending huge amount.

Test Marketing
Disadvantages The information on new products goes to the competitor. Test results difficult to measure if repurchase period is long.

Sales Forecasting Methods (Quantitative Methods)

Moving Averages Exponential Smoothing Regression Analysis

Projection of Past Sales

(Time-Series Analysis, Exponential Smoothing, Evaluation of past sales projection methods.) Decomposition Nave/Ratio method Econometric Model Building and Simulation

Moving Average Method

Sales Forecast for next year= Actual

sales for past 3 or 6 years divided by Number of years (3 or 6 years.)

Moving Average Method

Advantages Relatively simple method. Easy to calculate. Widely used for short-term and mediumterm sales forecasts.

Moving Average Method

Disadvantages Unable to predict a downturn or upturn in the market. Historical data is needed. Cannot predict long-term sales forecast accurately.

Exponential Smoothing Method

Sales Forecast for next year= (L) (actual

sales this year) + (1-L) (this years sales forecast). Where, (L) is a smoothing constant, or probability weighing factor.

(L) - smoothing constant

Based on: Review of sales data Knowledge and observation about the conditions in the forecasted period and conditions in previous period. Intuition.

Exponential Smoothing Method

Advantages Simple to operate. Forecasters knowledge or intuition can be used in forecasting. Useful when sales data have a trend or seasonal pattern. Used by many firms. Immediate response to a upturn or downturn in sales.

Exponential Smoothing Method

Disadvantages Smoothing constant somewhat arbitrary. Long-term and new product forecasting are not possible.

Decomposition Method
The companys previous periods sales

data is broken down into four major components, such as trend, cycle, seasonal and erratic events.

Decomposition MethodAdvantages
Conceptually a sound method.

Decomposition MethodDisadvantages
Historical data is needed.
Difficult and complex statistical methods

are needed to break down sales data into various components.

Nave/Ratio Method
It is a time series method of forecasting,

which is based on the assumption that what happened in the immediate past will continue to happen in the immediate future.