Sales Related Marketing

Policies

Agenda
Product Policies - What To Sell ?
Distribution Policies Who to

Sell ?
Pricing Policies What price to

Sell ?

Introduction
Sales related marketing policies directly

influence the jobs of sales executives.

These policies provide the direction to
organize ,manage and control the sales
effort .
These are generally company governed
and formulated policies which are
administered by sales executives.

Product Policies What to

Sell ?
The products a company sells determines

its basic nature.

These serve are guidelines for making
product decisions.
They are derived from product objectives

Product Policies
Product Line Policy
1. Short line(specialization) or full line (wide

selection) policies.
2. Governed by willingness to take risk.
Narrower the line greater the risk.
1. Changes in Product Offerings
-to determine the product tuning with market
-to determine products which needs to be dropped or
added

Product Policies
2. Reappraising the product line and line simplification
-adding or removal of profitable and non profitable product lines
and customer accounts.
3. Reappraising the product line and line diversification
-relative to growth objectives
4. Ideas for new products
-Internal and external sources for new ideas.
5. Appraisal of proposed new products.
-criteria is profitability, nature and size of likely markets,
competition, price policy, sales programs and legal implications.

Product Policies
Product Design Policy

Frequency of design change

2. Extent to which designs are to be protected from
copying.
1.

. Product Quality and Service Policy

High quality products require less service and low

quality products requires high service.
2. Guarantee policy serves either protective or
promotional purposes.
1.

Distribution Policies Who to

Sell ?
Policies on Marketing Channels

Channels should be chosen in order to obtain

the optimum combination of profit factors.
Time dimensions must be considered in
addition to :
1. Sales Volume Potential
2. Comparative distribution costs
3. Net Profit Possibilities

Distribution Policies
Policies on Distribution Intensity

Following distribution strategies are

implemented by company :
1. Mass Distribution
2. Selective Distribution
3. Exclusive Agency Distribution

Pricing Policies
Policy on Pricing Relative to

Competition
Meeting the competition
2. Pricing above the competition
3. Pricing under the competition
1.

. Policy on Pricing Relative to Costs

1. Full cost pricing

2. Promotion pricing
3. Contribution pricing

Pricing Policies
Policy on Uniformity of Prices to

Different Buyers.
Company choose between:
One-price policy (same price)
2. Variable price policy ( price determined by
individual bargaining)
1.

Here bargaining power of buyers varies with the

size of transaction.

Pricing Policies
Policy on List Pricing
List pricing takes variety of forms most common being

:
Printing the price on package
Sales personnel to suggest the resale price to buyers.
Policy on Discounts

1. Trade Discounts
2. Quantity Discounts

Pricing Policies
Geographical Pricing Policies
1.
2.
3.

Free on Board (F.O.B) pricing customer pays the

freight
Delivered pricing seller pays the freight
Freight absorption compromise between delivered
and F.O.B pricing.

. Policy on Price Leadership

. Price changes by Market Leader and Followers
. Decision depends upon marketers relative market

position and the image of leadership that it desires to

build and maintain

Pricing Policies
Product Line Pricing Policy
Different items in product lines compete with each other.
Price space between the individual members of the line
Bottom of line as traffic builders and top of line as

prestige builders
Competitive Bidding Policy
Industrial and government buyers solicit competitive

bids from potential suppliers and award the business to

the bidder offering the best proposal
Decision depending upon various factors such as price,
delivery dates, reputation for quality etc.

Chapter 5

FORMULATING
PERSONAL-SELLING STRATEGY

AGENDA

Competitive Settings
--Pure, Monopolistic, Oligopolistic, No Direct Competition

Personal Selling Objectives

-- Qualitative & Quantitative

Determining the kind of sales personnel

--Product Market Analysis, Salespersons role in securing

orders, choice of basic selling style
Determining the size of the sales force

--Workload, Sales Potential, Incremental

Individualizing selling strategies

Competitive Strategies
Pure
Large number of buyers and sellers
No one powerful enough to control or influence market

prices
No buyer or seller is so big which can impact the
products total demand and supply
All products are identical, no differentiation
All buyers are aware of all sellers prices

Not a real world situation and hence no company

concerns itself with a particular personal selling
strategy for Pure Competition

Monopolistic
Many competing producers sell products that are

differentiated from one another (ie. the products are

substitutes, but are not exactly alike)
Easy for additional competitors to enter the market
Advertising differentiates the brand in the minds of final

buyers and stimulates selective demand

Key element in marketing strategy is the ability to
differentiate the product ( by both Advertising and Personal
Selling)
Personal Sellings role is that of servicing the
distribution network and stimulating promotional
efforts by the middlemen

Oligopolistic
Number of competitors are small enough that they are
individually identified and known to each other
Difficult for new competitor to enter the market
Successful organizations keep on growing and less successful

disappears
Oligopoly produces most aggressive competition
Strategies of one player has deep impact on the strategies of

other players
Personal Selling Strategy plays important role in
building and maintaining dealer cooperation, in servicing
distribution network and in gathering information on
competitors activities

 No Direct Competition
Both monopoly or oligopoly have indirect

competition
They vie sellers in other industries for the same
prospects interest and buying decisions
Even in case of no direct competition, personal
selling and advertising plays an important role
Both require the effective implementation
of personal selling strategy in terms of both
kind and number of sales personnel even in
case of indirect competition
Choosing pricing strategy calls for effective
implementation of personal selling strategy

Personal Selling Objectives

Qualitative
Vary with competitive setting
Long Term
Carried from one operating period to another
When qualitative objectives change, there are
changes in nature of sales jobs and size of the
sales force
Quantitative
Vary with competitive setting
Short Term
Adjusted from operating period to operating
period
Since short term, they impact more upon the size

Determining the kind of Sales Personnel

Each company deals with unique set of marketing
factors:
Strengths & Weakness of products
Motivations and buying practices of its customers and
prospects
Pricing Strategy
Competitive Setting
Different selling jobs require different levels of selling and non
selling activities, training, technical and other knowledge
We must understand what is expected of salesperson:
Job Objectives
Duties and Responsibilities
Performance measures

Product Market Analysis

Product Specialists

When product is highly technical

Requiring salespersons to advise on uses and applications

Market Specialists
Product is non technical
When different kinds of customers have unique buying

problems and require special sales approaches or need

special service
Combination of both
On the basis of Product-Market grid, you can chose

whether the sales personnel should be product or

market specialist

Types and Amount of Specialization

in Selling Organizations
Dominant
Interdependence
Dominant Expertise

Between Customers Between Products

Product Technologies

Product Specialists

Customers Applications

Customer Specialists Full-Line Salespersons

(specialized by kind of
customer)

Full-Line Salespersons
(supported by Product
Managers)

Analysis of Salespersons role in securing orders

Salespersons may be active or passive in

securing orders
The role influences the decision of kind of staff

required
Salespersons may seek order aggressively
They need only take orders coming their way
Salespersons may act as advisors to

middlemen or the customer

Choice of Basic Selling Style

Trade Selling
Develops and maintains long term relationships with a stable

group of customers
Low key selling with little or no pressure
Routine job
Advertising and other promotions more important than
personal selling
Help customer build up their volume through promotional
assistance

 Missionary Selling
Increase sales volume by assisting customers with their

selling efforts
Persuade indirect customers to by from the companys
direct customers
They also play a role in influencing people who do not
purchase the product but who influence its purchase
Technical Selling
Deals primarily with companys established accounts
Increase their volume of purchase by providing technical

advice and assistance

Performs advisory functions similar to the missionary
salesperson
In addition, sells direct to industrial users and other buyers
In this style, ability to identify, analyze and solve
customers problem is important

 New-business Selling
Find and obtain new customers
Convert prospects into customers
Usually salespersons are creative and ingenious and

posses high degree of resourcefulness

Sometimes salesperson doing trade selling engages

themselves in new-business selling also

Determining the size of the sales force

Workload Method

1. Classify customers, both present and prospective into sales

volume potential categories
2. Decide on the length of time per sales call and desired call
frequencies on each class
3. Calculate the total work load involved in covering the entire
market
4. Determining the total work time available per salesperson
5. Divide the total work time available per salesperson by task
6. Calculate the total number of salespeople needed

 Sales Potential Method

Concept of Sales Personnel Unit
A salesperson may represent more or less than one

sales personnel unit depending upon his/her skills

and expertise
Sales job descriptions are constructed on

management assumption that they describe what

the average salesperson with average performance
will accomplish
With above information, we can derive amount of

sales volume each salesperson should produce

Dividing the above amount into forecasted sales

Sales Potential Method

N = S/P (1 + T)
Where N = Number of sales personnel unit
S = Forecasted sales volume
P = Estimated sales productivity of one
sales personnel
unit
T = allowance for rate of sales force
turnover

 Incremental Model
Company develops a sales response function (a

quantitative function thats describes the relationship

between the amount of personal selling effort and the
resulting sales volume
Based on the proposition: Net profits will increase

when additional sales personnel are added if the

incremental sales revenue exceed the incremental
costs incurred
Information required: Incremental costs and

Incremental revenue
Calculate the net profit contribution resulting from the

addition of each salesperson

Incremental Model
Although conceptually correct, it is difficult to

apply
Not suited where personal selling is not the

primary means of making sales (where

advertising and other promotions play an
important role)
Fails to account for possible competitive reactions

Individualizing Selling Strategies to customers

Each salesperson must individualize his or her dealings

with the customer

Regardless of the basic selling style or the role of order
getter or order taker, the salespersons success depends
upon the outcome of interaction with the customers
Behavior and sales pitch of the salesperson varies from
customer to customer
Selling skills is a function of both
preplanning of each sales call
performance on the call itself
Individual salespersons performance ultimately determine
the success or failure of companys overall personalselling strategy, sales management has a very important
role in helping them develop and improve selling skills

The Effective Sales Executive

Agenda
Nature of Sales Management Positions
Position Guide Sales Manager
Position Guide District Sales Manager
Functions of Sales Executive
Qualities of Effective Sales Executive
Relations with Top Management
Relations with Managers of Other Marketing Activities
Compensation Pattern
Conclusion

Effective Sales Executive

The job of the sales executive is more action oriented and

less planning oriented

Main concern of sales management is the present the

here and now

Their decisions not only affect the sales department, but

may have significant implications elsewhere in the

organization

Nature of Sales Management

Positions
Requirements of the sales executives job position vary from

company to company and from position to position in a company

It is possible to generalize about activities and responsibilities of

sales managers, district sales managers, product managers and

other sales or marketing executives
Some companies have formulated concise statements of duties

associated with various positions, known as job or position

descriptions

Position Guide Sales Manager

Reports to the vice president of marketing
The primary objective is to secure maximum volume of dollar sales through

the effective development and execution of sales programs and sales

policies for all products sold by division
Duties and responsibilities:
Sales Program
Organization
Sales Force Management
Internal and External Relations
Communications
Control

 Performance is satisfactory when,

Departments dollar or unit sales are equal to or exceed the

quantities budgeted
Profit contribution of the sales department is in line with

plan
Details of sales plan are in writing and are acceptable to

marketing management
Turnover of sales personnel is maintained at a level regarded

as satisfactory by marketing management

Position Guide District Sales Manager

Reports to the sales manager
The primary objective is to secure maximum dollar sales of the

companys products in the sales district in accordance with

established sales policies and sales programs, within the limits
of sales budget
Duties and Responsibilities:
Supervision of Sales Personnel
Control
Administration
Communications

 Performance is satisfactory when,

Districts dollar and unit sales are equal to or exceed the

quantities budgeted
Districts total expenses are no higher than the amounts

budgeted
Profit contribution of the district office and warehouse and

stock facilities is in line with plan

Turnover rate of district sales personnel is maintained at a

level regarded as satisfactory by the (general) sales manager

Functions of sales Executive

Basically has two sets of functions

- Operating
- Sales Force Management
- Handling relationships with personnel in other company
departments and with trade
- Communicating and coordinating with other marketing
executives
- Reporting to some superior executive

- Planning
- Setting personal-selling goals
- Developing sales program designed to achieve these
goals
- Formulating sales strategies and personal-selling
strategies
- Putting together plans for their implementation
These functions varies with
. The type of products
. The size of the company
. The type of supervisory organization

Qualities of Effective Sales Executive

He should have
Ability to define the positions exact functions and duties in

relation to the goals the company should expect to attain

Ability to select and train capable subordinates and willingness to

delegate sufficient authority to enable them to carry out assigned

tasks with minimum supervision
Ability to utilize time efficiently
Ability to allocate sufficient time for thinking and planning
Ability to exercise skilled leadership

Relations with Top

Management
Effective sales executives need to keep the top management

abreast of their progress as their personal goals are

intertwined with companys goals
They should not be dispensable to the company and should

be able to delegate tasks effectively

They update the top management of all the latest activities

through periodic reports and presentations

Relations with Product management

Product planning and formulation of product policies

requires numerous decisions

Sales executives provide input for these decisions
Their contact with the market through subordinates and

sales personnel provide them with feedback about product

performance and acceptance generally not available from
other sources

Relations with Promotion

Management
Sales executives play a very important role in promotional

activities as they are the one who actually implement them

They must be involved in formulating policies as they are

very close to the customers

The sales force must be kept updated about all the latest

promotional activities

Relations with Pricing Management

Sales executives have much clearer ideas of the prices the

buyers are willing to pay, because of the close and

continuing contacts with the market
Pricing policies need to be formulated by a committee

comprising of members from different departments

Once the policy is established, its implementation is the

responsibility of the sales executive

Relations with Distribution

Management
Distribution policies are major determinants of the breadth

and complexity of sales departments organization and

functions
It has an impact on the sales organization and its activities
Sales executives play key roles in providing information

needed for their formulation

Compensation Pattern For Sales

Executives
Compensation pattern differs on the basis of position of the

sales executive in the hierarchy and the size of the company

Sales executive receive some of their pay as bonuses,

commissions and other incentive payments

These payments are based upon relative profit performances

at higher executive levels and upon sales volume achieved

relative to sales potentials at lower executive level
More than half of the sales executives have stock options

Thank You !