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. Sizing up the Situation F. Setting Quantitative Performance Standards G. Gathering and Processing Data on Actual Performance H. Evaluating Performance I. Action to Correct Controllable Variation J. Adjusting for Uncontrollable Variation K. Conclusion

Chapter- 2 Buyer Seller Dyads and Personal Selling Situations
A. Buyer-seller Dyads

Chapter- 3 Personal Selling Situation
A. Personal Selling i. ii. iii. Group A (Service Selling) Group B (Developmental Selling) Group C (Basically Developmental Selling, but Requiring Unusual Creativity)

B. Theories of Personal Selling C. AIDAS Theory of Selling D. Gaining interest E. Kindling Desire F. Inducing Actions G. Building Satisfaction H. Right Set of Circumstances I. “Buying Formula” Theory of Selling J. “Behavioral Equation” Theory K. Buyer – Seller Dyad and Reinforcement

Chapter- 4 Selling Process
A. Sale’s Influence Process B. Salesperson’s Role in Reducing Buyer Dissonance C. Prospecting D. Formulating Prospect Definitions E. Searching Out Potential Accounts F. Qualifying prospects and Determining Probable Requirements G. Relating Company Products to Each Prospect’s Requirements H. Sales resistance and sale closing I. Sales Resistance J. Sales Objection K. Closing Sales

Chapter- 5 Sales Forecasting
A. Sale Forecasting and Sale Potential B. Sales Forecasting Methods C. Jury of Executive Opinion D. The Delphi Technique E. Poll of Sales Force Opinion F. Projection of Past Sales G. Time-series Analysis H. Exponential Smoothing I. Evaluation of Past Sales Projection Methods J. Survey of Customer’s Buying Plans

Chapter- 6 Organizations of Sales Personnel
A. Functions of the Sales Executive B. Qualities of Effective Sales Executives C. Relation with Top Management D. Relations with Managers Other Marketing Activities E. Relation with Product Management F. Relations with Promotion Management G. Relations with Pricing Management

H. Relations with Distribution Management I. The Sales Organization J. Purposes of Sale Organization K. To Permit the Development of Specialists L. To assure that All Necessary Activities are performed M. To Achieve Coordination or Balance N. To Define Authority O. To Economize on Executive Time

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 management 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
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.

The cost of sales factor cannot be affected directly by sales management. . 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. It provides higher management with informed estimates and facts for making marketing decisions and for setting sales and profit goals. Sales Management and Financial Results Sales management and financial results are closely related. Moreover. Periodically. 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. but it can be affected directly since sales volume must be large enough to permit maintenance of targeted unit cost of production and distribution. which then delegates to sales management. gross margin and net profit in units of product and in dollars. In the process. During the planning that precedes goal setting. Once these goals are finalized. these formulas become the company operating statement and are used by the board of directors and by stockholders. Sales management then is influential in charting the coarse of future operations. in appraising top management performance. gross margin and expenses are affected by the caliber and performance of sales management and these are the major determinants of net profit. top management uses these formulas in judging the effectiveness of sales management. 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.Top management delegates to marketing management. sales executives provide estimates on market and sales potentials. Sales. Largely on sales management’s appraisal of market opportunities. the capabilities of the sales force and the middlemen and the like. sufficiently authority to achieve the three general objectives. with benchmarks of growth projected for sales and profits in specific future dates. targets are set for sales volume. Whether or not these targets are reached depends upon the performance of sales and other marketing personnel.

iii. Thus standards are often expressed as ranges of acceptable . The ultimate standard of a particular standard appropriateness is whether it contributes more to personnel selling efficiency than it costs. long range and short range. UN Sizing up the Situation Sales executive start by reviewing the personal selling objectives of the firm. or are intended for use in the effort to reach personnel selling objectives. sales executives find and correct weaknesses or imperfections in the sales plans and the policies and the procedures used in their implementation. are being used. Intelligent standard setting requires identification of the individuals who are responsible for the activity or group of activities being put under control. they realize these objectives with respect to the present. Standard settings require continual experimentation and most standards are far from precise. Where are we now? How did we get there? Where are we going? How do we get there? After satisfying themselves that the company personnel selling objectives. past and the future in an attempt to answer the four questions. 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. Sales executive control the personal selling effort of the organizational units they head. ii.Sales Management and Control Now. Control is part of management. even though they may operate in identical circumstances. iv. are reconcilable. policies and procedures that have been used. sales executive set quantitative standards against which to measure performance. No two salespersons or executives perform exactly alike. The purpose is to ensure that sales department objectives are reached. as are planning. organizing and coordinating. sales management and control are closely related in an organization. sales executives appraise them relative to the plans. Setting Quantitative Performance Standards After ironing out planning weaknesses. i. In the coarse of sizing up the situation.

Management takes steps to move the individual performance in the direction of the standards. Gathering and Processing Data on Actual Performance The type and amount of information needed for controlling sales depend upon the standard selected. nor should its cost of collection and processing be more than its worth.performance. Sales executives also keep in mind that changes in executives. but regardless of the nature of this information it should not be in excess of sales management real needs. floods. it is possible to explain each individual salesperson variations from standard. When the performance of an organizational unit passes either of these control limits. strikes. Although it is convenient to think of a standard as a fixed value. Evaluating Performance Evaluation of performance means comparing actual results with standards. ii. basic policies or other matters may alter the usefulness of the information. Because of differences in territorial and other conditions. changes in governmental activities and wars. it is difficult to compare individual performances. variations outside the control of the person being appraised include those caused by rapid and unexpected changes in economic conditions. Departures from standard are classified into controllable and uncontrollable variations. However. signaling that the situation is out of control. Direction or pointing out more effective ways to perform certain tasks Guidelines or providing additional instructions or training and . The specific actions taken differ within the nature of the variation. Consequently. sales management determines-at regular intervals-whether the information being reported is sufficiently important and being used often enough to justify its costs. the danger flag is up. but management assumes one or more of three forms. there should be an upper and lower limit within which human variation may take place. Action to Correct Controllable Variation Management corrects the variation explained by factors within the control of the person being evaluated. i. droughts and other natural disasters.

It’s not necessary that the control always produces desired outcome but may also indicate some variations. Restraint or the installation of procedures and practices aimed at keeping results within desired bounds.iii. If uncontrollable variation suggests that present sales objectives are unrealistic or not in line with the current expectations. These variations need to be corrected thereafter. Adjusting for Uncontrollable Variation The amount of uncontrollable variation in the comparison indicates the relative need for adjusting sales plans and policies. basic revision in the objective is made. . its relationship with control happening in the organization. if the comparison of results with the standard reveals substantial uncontrollable variation. Thus. Conclusion Here we have studied the meaning and objectives of sales management. adjustment of standards to attainable levels is in order.

Buyer-seller Dyads Fundamental to understanding salesmanship is recognition that it involves buyer seller interactions. education) and variables that relate to personality factors (politics. advertising etc is a means for implementing marketing programs.CHAPTER-2 BUYER SELLER DYADS AND PERSONAL SELLING SITUATIONS Having understood the basics about sales management. Sociologists use the term “dyad” to describe a situation in which two people interact. Franklin Evans researched buyer seller dyads in the life insurance business. Furthermore. the greater was the likelihood that the sale would result. In both advertising and personal selling. At one time. the seller seeks to motivate the prospect buyer to behave favorably towards the seller. the emphasis in salesmanship was almost wholly on persuasion today while recognizing the significance of persuasion the emphasis is on the benefits attractive to prospects and customers. Whether or not the buyer reacts as the seller desires depends upon the nature of the interaction. . However. smoking). listening or viewing audience. other objective factors (income. Another is the interaction of a seller using advertising with a particular prospect in the reading. The opportunity for interaction is less in the advertising case than in personal selling. height). religion. advertising and personal selling often supplements or supports each other and the buyer reacts to their combined impact. now lets understand the different selling dyads in various personal selling situations. Prospects who bought insurance knew more about salespersons and their companies and felt more positively towards them than did prospects who did not buy. Salesmanship is one aspect of personal selling: It is the art of successfully persuading customers to buy products or services from which they can derive suitable benefits thereby increasing their total satisfaction. the more alike salespersons and their prospects were. This was true for physical characteristics (age. Salesmanship is one aspect of the personnel selling. Personal selling along with other marketing elements such as pricing. The salesperson and the customer interacting with each other constitute one example of buyer seller dyad. Personal selling is a broader concept then salesmanship.

Pairing salespersons with customers of similar backgrounds is more easily accomplished in industrial selling.Evans finding have significance for sales management. There are indications that salespeople. Tosi concluded that in addition to the physical characteristics and personality and objective factors cited by Evans. customer satisfaction with the salesperson behavior did allow the salesperson to get in the store. Although this did not necessarily result in a larger percentage of purchases from the salespersons. Henri Tosi studied dyads of wholesale drug sales people and retail pharmacists who made buying decisions. than in consumer goods selling. where there are fewer prospects about whom information is needed. commercial dishonesty and so forth. but as they actually perform. People are taught from childhood to beware of tricky salesperson. thus improving the chance of successful dyadic relationships. Another factor influencing buyer-seller dyadic interaction is the buyers initial conditioning with respect of selling. When the buyer perceived the salesperson’s performance to be similar to his or her concept of ‘ideal’ performance. Studies of the attitudes of buyers and purchasing agents reveal that many are critical of the salespersons lack of product knowledge. blatant use of flattery. not as stereotyped. sales personal should be assigned to prospects whose characteristics are similar to their own. where the number of prospects and the customers per salesperson is much larger. the number of sources of sources from which purchases were made was low. Whatever possible. bad manners. general unreliability. and slavish adherence to canned presentations. failure to follow-up. the customers perception of what that behavior should be a necessary condition for the continuation of dyadic interaction. Salespeople have been maligned and the butt of nasty stories for generations. . leave much to be desired in the impact they make on customers.

Missionary-aims only to build goodwill or to educate the actual or potential user and is not expected to take an order. ii. Bread or fuel oil Route or Merchandising salesperson-Operates as an order taker but works in the fieldthe soap or spice salesperson calling on retailers is typical. for example. Service selling aims to obtain sales from existing customers whose habits and patterns of thought are already conducive to such sales. . Mcmurry and Arnold classify positions on a spectrum ranging from the very simple to the highly complex. for example. the engineering salesperson. persons delivering milk.CHAPTER-3 PERSONAL SELLING SITUATIONS Personal Selling The different personal selling situations encountered by salesmen. Considerable diversity exists among personal selling situations and it is helpful to distinguish between service and developmental selling. Developmental selling aims to convert prospects into customers. in other words it seeks to create customers out of people who do not currently view salesperson company favorably and who likely are resistant to changing present sources of supply. Technical salesperson-emphasizes technical knowledge. iii. Delivery salesperson-Mainly engages in delivering the product. They categorize sales positions into three mutually exclusive groups each containing subgroups total of nine subgroups in all: Group A (Service Selling) i. iv. for example. Different sales positions require different amount and kinds of service and developmental selling. the distiller’s missionary and the pharmaceuticals company’s “detail person” v. for example. Inside order taker-“waits on: customers. who is primarily a consultant to “client” companies. the sales clerk behind the neckwear counter in a men’s store.

“Political.blondes or the like. for example. ii.” or “back-door” salesperson-sell big-ticket items. Creative salesperson of tangibles-for example.Sales are consummated through rendering highly personalized services to key decision makers in customers organizations. 46 percent perceived selling as an art. automobiles. the fact that some as science and considers selling by some as art has produced two contrasting approaches to the theory of selling. Salesperson engaged in multiple sales-involves sale of big ticket items where the sales person must make presentations to several individuals in the customers organization. golfing . siding and encyclopedias Creative salesperson of intangibles-for example. salespersons selling vacuum cleaners. Theories of personal selling What do you think about selling? Is selling a science with easily taught basic concepts or an art learned through experience? In a survey of 173 marketing executives. usually a committee. particularly commodities or items with no truly competitive features. based on the experimental knowledge accumulated from years of “living in the market” rather than on a systematic fundamental body of knowledge. but Requiring Unusual Creativity) i. Many such persons succeeded because of their grasp of practical or learned through experience psychology and their ability to apply it in sales situations. the salesperson who lands large orders for flour from baking companies by catering to key buyers interests in fishing. 8 percent as a science and a 46 percent as an art evolving into a science. only one of which can say “yes”. advertising services and educational programs Group C (Basically Developmental Selling. salespersons selling insurance.Group B (Developmental Selling) i. are subject to Howard’s . but all of whom can say “no’. the salesperson has to work to retail it. The first approach distilled the experiences of successful salespeople and to a lesser extent. for example the account executive of an advertising agency who makes presentations to the “agency selection committees” of advertisers-even after the account is obtained. It is not too surprising that these selling theories emphasize the “what to do” and “how to do “rather than the “why”.” “indirect. These theories. advertising professionals. ii.

and great skill is required to return to the main theme. neatness. The first two. The salesperson needs an ample supply of “conversation openers. was a pioneer in this effort and his “buying formula” theory is presented later in this course pack.” Favorable first impressions are assured by. this phase presents on problem. interest. we will examine four theories. friendliness. for conducting the interview. according to this theory. or an excuse. action and satisfaction. interest. The third. The sales person has to have a reason. and a genuine smile. The first few minutes of the interview are crucial. action and satisfaction. for once the conversation starts to wander. since he or she realizes that the caller is bent on selling something.K. desire. The fourth. The goal is to put the prospect into a receptive state of mind. among other things. Jr. . AIDAS Theory of Selling This theory is the basis for many sales and advertising texts and is the skeleton around which many sales programs are organized. and be a skilled conversationalist. Conversation openers that cannot be readily tied in with the reminder of the presentation should be avoided. During the successful selling interview.” Experimental knowledge can be unreliable”. the prospect mind passes through five mental states: attention. In this course pack. a salesperson must possess considerable mental alertness. professor of psychology at the Stanford Graduate School of Business. Here AIDAS stands for attention. The prospect’s guard is naturally up.Strong. the “buying formula” theory of selling is buyer oriented. the “AIDAS” theory and the “right set of circumstances” theory are seller oriented. to survive the start of the interview. the behavioral equation emphasizes the buyer decision process but also takes the salespersons influence process into account. desire. so the sales presentation must lead the prospect through them in the right sequence if a sale is to result. The second approach borrowed findings from the behavioral sciences. The late E. proper attire. Skilled sales personnel often decide upon conversation openers just before the interview so that those chosen are as timely as possible Generally it is advantageous if the opening remarks are about the prospect (people like to talk and hear about themselves) or if they are favorable comments about the prospect’s business. If the salesperson previously has made an appointment. The salesperson must establish good rapport at once. but experienced sales personnel say that even with an appointment. A good conversation opener causes the prospect to relax and sets the stage for the total presentation. Implicit in this theory is the notion that the prospect goes through these five states consciously.dictum.

the prospect’s objections. with finesse. the more he or she has learned from interviews with similar prospects. prospects interests are affected by basic motivations. The more experienced the salesperson. Obstacles must be faced and ways found to get around them. The salesperson must keep the conversation running along the main line toward the sale. and their mood-receptive. Digressive remarks generally should be disposed of tactfully. or other visual aids serve the same purpose. and digressive remarks can sidetrack the presentation during this phase. usually of the question and answer variety. When the product is bulky or technical. External interruptions cause breaks in the presentation. Many techniques are used to gain interest. Some salespeople develop a contagious enthusiasm for the product or a sample. its point. Objections need answering to the prospect’s satisfaction. but sometimes distracting digression is best handled bluntly. good salespeople summarize what has been said earlier before continuing. The development of sales obstacles. Others ask the prospect questions designed to clarify attitudes and feelings toward the product. external interruptions. the hope is to search out the selling appeal that is most likely to be effective. In addition. the prospect drops hints.Gaining Interest The second goal is to intensify the prospect’ attention so that it evolves into strong interest. skeptical. or hostile-and the salesperson must take all these into account in selecting the appeal to emphasize. Kindling Desire The third goal is to kindle the prospect’s desire to the ready. but to get back to the subject……. But even experienced sales personal do considerable probing. for example. which the salesperson then uses in selecting the best approach. closeness of the interview subject to current problems. Throughout the interest . flipcharts.” . before identifying the strongest appeal. Sometimes. Time is saved and the chance of making sale improved if objections are anticipated and answered before the prospect raises them. some salespeople devise stratagems to elicit revealing question. “well. sales portfolios. To encourage hints by the prospect. and when conversation resumes. that’s all very interesting.

so the possibility of an anticlimax should be avoidedcustomers sometimes unwell themselves and the salesperson should not linger too long. Building satisfaction means thanking the customer for the order. Some sales personnel never ask for a definite “yes” or “no” for fear of getting a “no”. it is up to the salesperson to sense when the time is right. as a rule. had its psychological origin in experiments with animals and hold that the particular circumstances prevailing in a given selling situation cause the prospect in a predictable way. These are the presence or absence of desires . Building Satisfaction After the customer has given the order. and the trick close are used to test the prospect’s reactions. from which they think there is no retreat. the desired response (that is. The trial close. to buy. But it is better to ask for the order straightforwardly. However. To use a simplified example. the prospect is ready to act that is. “let’s go out for a cup of coffee. and attending to such matters as making certain that the order is filled as written. the close on a minor point. and if the salesperson presents the proper stimuli or appeals. Furthermore. suppose that the salesperson says to the prospect. and following up on promises made. If the salesperson succeeds in securing the attention and gaining the interest of the prospect.Inducing Actions If the presentation has been perfect. the sale) will result. Experienced sales personnel rarely try for a close until they are positive that the prospect is fully convinced of the merits of the proposition. the more skilled the salesperson is in handling the set of circumstances. The order is the climax of the selling situation. the more predictable is the response. buying is not automatic and. Thus. “Right Set of Circumstances” Theory of Selling “Everything was right for that sale” sums up the second theory” This theory. The customer should be left with the impression that the salesperson merely helped in deciding. The set of circumstances includes factors external and internal to the prospect. sometimes called the “situation-response” theory. must be induced. But are least four factors internal to the prospect affect the response. the salesperson should reassure the customer that the decision was correct.” The salesperson and the remark are external factors. Most prospects find it is easier to slide away from hints than from frank requests for an order.

They seek selling appeals that evoke desired responses. and To go out with the salesperson Proponents of this theory tend to stress external factors and at the expense of internal factors. iv. Several psychologists also advanced explanations similar to the buying formula. The buyer’s needs or problems receive major attention. but recognizable versions appear in a number of early books on advertising and selling by authors who had experiential knowledge of salesmanship.i. the formula is a convenient way to help the salesperson remember. the third emphasizes the buyer’s side of the buyerseller dyad. the mental processes involved in a purchase are Need (or problem) solution Purchase . but the internal factors are not readily manipulated. and the salesperson’s role is to help the buyer find solutions. ii. and the following stepby. iii. and fails to assign appropriate weight to the response side of the situation-response interaction. This theory purports to answer the question: What thinking process goes on in the prospect’s mind that causes the decision to buy or not to buy? The buying formula is a schematic representation of a group of responses. To have it now..step explanations adapted from his teaching and writings. does not handle the problem of influencing factors internal to the prospect. Sales personnel who try to apply the theory experience difficulties traceable to internal factors in many selling situation. Reduced to their simplest elements.K. being naturally conscious of the external factors. Jr. To go our. To have a cup of coffee. The origin of this theory is obscure. The buying formula theory emphasizes the prospect’s responses (which. on the assumption that the salesperson. “Buying Formula” Theory of Selling In contrast to the two previous theories. arranged in psychological sequence. Since the salesperson’s normal inclination is to neglect the internal factors. are strongly influenced by internal factors) and deemphasizes the external factors. The name “buying formulas” was given to this theory by the late E. This is a seller-oriented theory: it stresses the importance of the sales person controlling the situation. will not overlook them. of course.Strong.

the purchaser proceeds mentally from need or problem top problem to product or service. In purchasing. Then. the buying formula is: Need or product and /or trade name purchase satisfaction/dissatisfaction Problem service To ensure purchase. The four elements then. In the world of selling and buying. company. an item viewed as adequate is also liked. whenever the buyer’s buying habit is challenged by a friend’s remark. in addition. he or she experience satisfaction or dissatisfaction. The buyers also must have a pleasant feeling toward the product or service and the trade name. a competing salesperson’s presentation. still others are liked but patronized even though they are inadequate compared to competing sources. to purchase. to trade name. and. Some products and services that are quite adequate are not liked. those. . Most purchases are made with scarcely a thought as to why. In many cases. it is necessary to add a fourth element. upon using the product or service. or a competitor’s advertisement. Some sources of supply are both adequate and liked. or sales person) In buying anything. the buyer must know why the product or service is adequate solution to the need or problem. All this is represented by the dashed lines in the formula. and because nearly all sales organizations are interested in continuing relation ships. and why the trade name is the best one to buy. when a definite buying habit has been established. others are adequate but not liked. and vice versa. the source of supply) must be considered adequate. the product or service and the trade name (that is. but his is not always so. Similar reasoning applies to trade names. Thus. the solution will always be a product or service or both and they will belong to a potential seller. and with a minimum of feeling and its association. and some things are liked and bought that are admittedly not as good as competing items. are Need (or problem) Solution Purchase satisfaction whenever a need is felt or a problem recognized. the element “solution” involve two parts: i. he or she needs a pleasant feeling to ward both the product or service and the trade name. on the central line of the formula. Product (and/or service) and Trade name (name of manufacturer. and.Because the outcome of a purchase affects the chance that a continuing relationship will develop between the buyer and the seller. The primary elements in a well established buying habit are those connected by solid lines. the individual is conscious of a deficiency of satisfaction. and the buyer must experience a (pleasant) feeling of anticipated satisfaction when thinking of the product and /or service and the trade name. ii. When a buying habit is being established. the buyer needs reason to defend the purchase.

the association between need or problem and product or service should be emphasized iii. If more sales to old customers are desired. emphasis should be put upon establishing in the prospects’ minds the adequacy of the trade-named product or service. If the prospect does not think of the trade name when he or she thinks trade name should be emphasized. vi. iv. If sales to new prospects are desired. If the prospect does not think of the product or service when he or she feels the need or recognizes the problem. Without going into detail.Reasons (adequacy of solution) and pleasant feelings constitute the elements of defense in the buying habit. repeat buying occurs. If need or problem. If competition is felt.) . As long as they are present. vii. v. the latter should be reminded. and trade name are well associated. (Developing new uses is comparable to selling to new uses is comparable to selling to new customers. and differences among answers are differences in emphasis upon the elements in the formula. it may be said that:: i. If the prospect does not feel a need or recognize a problem that can be satisfied by the product or service. ii. every element in the formula should be presented. product or service. the need or problem should be emphasized. The answer to each selling problem is implied in the buying formula. emphasis should be put upon facilitating purchase and use. Where the emphasis should be placed depends upon a variety of circumstances. and pleasant feelings toward it.

described as follows: Drives are strong internal stimuli that impel the buyer’s response.“Behavioral Equation” Theory Using a stimulus-response model(a sophisticated version of the “right set of circumstances”). ii. are acquired when paired with the satisfying of innate drives. ii. any may operate at any time even though the buyer is not contemplating a purchase There are two kinds a. b. They are elaborations of the innate drives. cold. such as striving for status or social approval. pain. . viewed as phases of the learning process. Learned drives. Four essential elements of the learning process included in the stimulus response. or price.A. No triggering cues influence the decision process but do not activate it. serving as a façade behind which the functioning of the innate drives is hidden. Such stimuli may come from advertising. weight. Product cues are external stimuli received from the product directly. Informational cues are external stimuli that provide information of a symbolic nature about the product. Triggering cues influence the decision process for any given purchase. and sex. and reinforcement. and incorporating findings from behavioral research. thirst. and so on. Insofar as marketing is concerned. color of the package. Howard explains buying behavior in terms of the purchasing decision process. Innate drives stem from the physiological needs. There are two kinds i. J. for example. conversations with other people (including sales personnel). such as hunger. the learned drives are dominant in economically advanced societies Cues are weak stimuli that determine when the buyer will respond i.

or informational “This is a condensed version of the explanation contained in J. the value of the product or its potential Satisfaction to the buyer V = intensity of all cues: triggering. there is no response. that other words. Howard’s Marketing Management. . Each time there is a responsea purchase – in which satisfaction (k) is sufficient to yield a reward. what is reinforced is the tendency to make a response in the future to the cue that immediately preceded the rewarded response. technically.” that is. for example. the buyer has learned. that is. (Homewood. 1963) we are indebted to the author for permission to include this condensation. Response is what the buyer does? Reinforcement is any event that strengthens the buyer’s tendency to make a particular response. Seth. After reinforcement. 1967. In other words. No matter how much P there may be. III. working in collaboration withjagdish N. This model was later refined further by Professor Howard. product.).: Richard D. The relation among the variables is multiplicative. and.” in Reed Moyer (ed. published by the American Marketing Association. Changing Marketing Systems: proceedings of the 1967 winter Conference of the American Marketing Association. Irwin. re Ed. force of habit D = present drive level (amount of motivation) K = “incentive potential. predisposition (p) increases in value. if the individual is unmotivated (D = 0). the probability increases that the buyer will the product (or patronize the supplier) the next time the cue appears. when the satisfaction yields a reward. See their “A Theory of Buyer Behavior. Analysis and Planning.A.Specific product and information cues may also happen when price triggers the buyer’s decision. Howard incorporates these four elements into an equation B = P * D * K* V Where B = response or the internal response tendency. the act of Purchasing a brand or patronizing a supplier P = predisposition or the inward response tendency. B will also be zero and there is no response. reinforcement occurs. Thus. if any independent variable as zero value.

Behavior concerning these features of the relationship consists of sentiments. Salespersons attempt to receive rewards (reinforcements) either in sentiment or economic by changing their own behavior or getting buyers to change theirs. to the other. it is helpful to separate economic aspects from social features. In understanding the salesperson-client relation.Buyer – Seller Dyad and Reinforcement In the interactions of a salesperson and a buyer. that of providing social approval. in turn. or expressions of different degrees of liking or social approval. each can display a type of behavior that is rewarding. warm conversation. Each can also reward the other by another type of behavior. that is reinforcing. The salesperson provides the buyer with a product (and the necessary information about it and its uses) that the buyer needs. Each participant also places a value and cost upon the social features. The salesperson wishes to sell a product. this satisfaction of the need is rewarding to the buyer. praise. who. and the buyer wished to buy it—these are the economic feathers. The salesperson gives social approval to a buyer by displaying high regard with friendly greetings. can reward the salesperson by buying the product. and the like. .

people expose themselves to information that they perceive as likely to support their choice. for instance. Salesperson’s Role in Reducing Buyer Dissonance According to Festinger’s theory of cognitive dissonance. It seems. Reducing pre-and post decision anxiety or dissonance is an important function of the salesperson. When the buyer has stopped learning-when the buyer’s buying behavior becomes automatic. or both. Recognizing that the buyer’s dissonance varies both according to whether the product is . anxiety or dissonance will almost always occur because the decision has unattractive as well as attractive features. then. The greatest effect on P. through interacting with the buyer in ways rewarding to the buyer. this influence being strong when the buyer seeks information in terms of informational cues. when individuals choose between two or more alternatives. so making the difference in V (the intensity of all cues). and to avoid information likely to favor rejected alternatives. for example. comes from using the product. The salesperson exerts influence through D (amount of motivation). Although Festinger evidently meant his theory to apply only to post decision anxiety. can cause it to appear relatively better. If the ends to be served are not clearly defined.the salesperson influences D by providing triggering cues. the salesperson. the salesperson again exerts influence through D. The salesperson influences P (predisposition) directly. Finally. by communicating the merits of the merits of the company brand. by helping to clarify these.CHAPTER-4 SELLING PROCESS Salesperson’s Influence Process The process by which the salesperson influences the buyer is explainable in term of the equation B =P XD x k x v. however. When the buyer has narrowed down the choices to a few sellers. the buyer’s goals. and thus affect K (its potential satisfaction for the buyer). the salesperson can very the intensity of his or her effort. that a buyer can experience either procession or post decision dissonance. Hunk. writes that a buyer may panic on reaching the point of decision and rush into the purchase as an escape from the problem or put it off because of the difficulty of deciding. it seems reasonable that it should hold for pre-decision anxiety. After decisions.

Unless the buyer generalizes from personal experience with an established similar product. They look for ways to “stretch” productive selling time. the salesperson is effective because the salesperson is trusted by the buyer. In other words. the salesperson provides information that permits the buyer to renationalize the decision. the buyer experiences dissonance. dissonance. ii. and the salesperson is less capable of providing it. i. if any. They arrange travel and call schedules to economize on time spent enroute and distance traveled. They make appointments to avoid prolonged waiting for callbacks. To emphasize the advantages of the product purchased. They do not waste time trying to sell to people who cannot buy . A new product-a new salesperson-client relationship The buyer needs dissonance reduction. while stressing the disadvantages of the forgone alternatives. and whether the salesperson client relation is ongoing or new. Unless the market is unstable. the salesperson can reduce dissonance iv. the buyer tends toward automatic response established or a new one. Prospecting Efficient organization of time and through planning of work is earmarks of above-average salespersons. Because of the established relationship with the buyer. but which are approved by the reference groups. being new. and To show that many characteristics of the chosen item are similar to products the buyer has forgone. especially if it is an important product. these are four types of cases involving the salesperson’s role. in which no learning is involved and thus experiences little. The salesperson. An established product-an ongoing salesperson-client relationship. is less effective in reducing dissonance iii. How can a salesperson facilitate the buyer’s dissonance reduction? Two ways are i. An established product-a new salesperson-client relationship. but insofar as it does occur. A new product-and ongoing salesperson-client relationship. ii. the buyer experiencing cognitive dissonance needs reassuring that the decision is or was a wise one.

the financial capacity. any characteristics typical of profitable accounts but not shared by unprofitable accounts should be detected. Some companies use specialized personnel for prospecting. Prospects in many businesses and professions. and Relating company products to each prospect’s requirements Formulating Prospect Definitions Prospective customers must have the willingness. iii. Searching out potential accounts. iv. Salespersons waste time when they attempt to sell individuals who have neither need for the product or money to pay for it.” Improvement in prospecting is one way to stretch productive selling time. is called prospecting. for instance. Salespersons waste time if they try to sell to the wrong persons. they do not call on non-prospects and can devote their full attention to those likely to buy. These identifying characteristics ideally should be ones recognizable from information appearing in directories or lists.or are not likely to do so. The planning work. Step in Prospecting The steps in prospecting are i. but most regard it as one of the salesperson’s they often have access to information on likely prospects that is not available to central office personnel. may need insurance and be willing and able to pay for it. The president of a large corporation. Formulating prospect definitions. there is other requirement Unique to each company’s customers. Starting with data on the profitability of present accounts. In addition to meeting the stated requirements. and they must be available to the salesperson. which is essential in eliminating calls on no buyers. Salespersons who are proficient in prospecting apply their selling efforts productively. Qualifying prospects and determining probable requirements. so it is important to ascertain which persons in each firm Have the authority to buy. too much to calling on nonprospects. but a particular salesperson may have no way to make the contact. and the authority to buy. for example. Although individuals may qualify as prospects in other respects. are readily identified from classified listings in telephone and city directories. Many sales personnel devote too little time to prospecting and. they may be inaccessible to the salesperson. ii. Key characteristics that identify profitable . as a consequence.

other leads to the salesperson who served them. uncover prospects among their acquaintances. From the information assembled.” for example. unless their growth possibilities show promise. Searching Out Potential Accounts Using the prospect definations. additional information often is required to qualify certain prospects.’ as they are called. bankers and other “centers of influence’” and the salesperson’s own observations. From what the salesperson knows about the company’s products. and records or service requests. Another source of prospects is the “endless chain” –satisfied customers suggest. or “suspect. the salesperson combs different sources for the names of probable prospects. Even after tapping all readily available information sources. From what the salesperson knows about the company’s product needs. members of their professional. religious. sales personnel of no competing firms calling on the same general classes of trade. and personal visits by salespersons may be the only way to obtain it. Prospects with requirements too small to represent profitable business are removed from further considered. credit reports. Other sources are responses to company advertising. lists purchased from list brokers.e. it is usually possible to determine each prospect’s probable needs. and applications. news and notes in trade papers and business magazines.” suspect”). and these are the prospect definitions. it is easier to estimate the probable requirements of each for types of products sold by the company. insurance. Sources of prospect information include directories of all kinds.accounts are assembled into descriptions of the various classes of customers. Relating Company Products to Each Prospect’s Requirements The final step is to plan the stratify for approaching each prospect. . Prospect Company. membership lists of chambers of commerce and trade and manufacturers’ associations. and the referrals of friends. and social organizations. These visits may not bring in sales. as prospects are separated from non-prospects. Qualifying prospects and Determining Probable Requirements As information is assembled on each tentative prospect (i. their uses. conventions and meetings. he or she selects those that seem most appropriate for a particular prospect. but they save time. voluntarily or on request. Salespeople selling services.

or vagueness in the sales presentation. But it is apparent. at worst. the only tasks remaining are making an appoi8ntment. there are ways to circumvent it. A prospect’s expressed sales resistance is either an obstacle or an objection. and it is tailored to fit the prospect. an objection is sincere or insincere. the salesperson needs skill in accurate and rapid appraisal of people and their motivations. it precludes the consummation of the sale. Sales resistance and sale closing Sales Resistance Prospects show sales resistance by pointing out real or imagined obstacles. If the obstacle is real. The salesperson should have clear ideas about specific abjections the prospect may raise and other obstacles to the sale that may be encountered. Sales Objection Objections are never good reason for failing to complete the sale. or they may have doubt about the appropriateness of the product to fulfill those needs. others cannot.The salesperson’s presentation is now easy to construct. when an obstacle arises. inaccuracy. Some obstacles can be circumvented. it blocks the sale. Sincere objections trace to incompleteness. A prospect says a temporary shortage of cash prevents buying an obstacle. . the salesperson determines whether or not there is a way to get around it. Obstacles to Sales Obstacle are real or apparent reasons that the prospect has for not buying. not an objection and the salesperson helps the prospect to circumvent it by explaining a method for financing the purchase. and determining how to persuade the prospect to become a customer. In analyzing sales resistance. sincere or insincere. An obstacle is real or unreal. the next move is to present the solution to the prospect. but they nearly always divert the salesperson’s presentation from its main course. If the salesperson recognizes the specific obstacle and knows a way to circumvent it. At best. Adroitness in handling objection is a difference between effective and ineffective salespeople. The salespersons ready to contact the prospect. an objection requires a satisfactory answer. and by voicing objections. Prospects may not recognize the nature of their needs. deciding how to open the presentation.

Occasionally even the best salesperson masterly upon closing skill to make the sale. Prospecting.” there is no doubt that the product is the best solution to the prospect’s problems. and the salesperson should seek to regain the initiative as soon as he or she can gracefully do so. But even after an excellent presentation. Often. Others say that insincere objections should be ignored. At closing time. prospects feel that they are reaching the buying decisions themselves. they seek to regain the offensive as soon as possible. the salesperson needs unusually effective persuasion to close the sale. The best defensive strategy often is the strong counterattack. Low pressure sales are closed more easily than are high pressure ones. When sales persons sense that an objection is insincere. On low pressure sales.Prospects may be confused in some respect. to get rid of them. if this happens. the main thrust is to the prospects emotions. so salespersons attempt to propel prospects into buying decisions. either the salesperson sells the prospect an order or the prospect sells the salesperson on a “no sale. Except when personality conflict cannot be resolved (a real obstacle. and as false excuses for not buying. the prospect regains normal perspective as the sale nears its climax. some prospects refrain from positive commitments. so there is no need for extra push just before the sales are consummated. not that “a bill of goods is being sold. . and primarily through rational processes of thought. and. They do not permit an insincere objection to provoke an argument one of the surest ways to lose a sale. if well done. and in spite of thorough prospecting. The skilled closer gives the extra push that triggers a buying response. Prospects raise insincere objections to discourage salespersons. or may react unfavorably to the salesperson’s personality. Every salesperson approaches certain closings with apprehension. no matter how insincere. should be treated with the utmost courtesy. and salespersons leave empty handed unless they jolt these prospects into buying. In high pressure sales. puts the salesperson in the proper frame of mind for the close. not an objection).” closing time provides an opportunity to register tangible proof of selling skill. to test their competence. Some sales executives say that every objection. sincere objections are overcome by patient and thorough explanations. The natural tendency of many people is to let inertia guide their reactions many are happy to leave things as they are. Closing Sales The selling tactics followed affect the ease of closing the sale. The salesperson feels that a real service is being performed for the prospect.

and hand it to the prospect for approval if the prospect balks. write out the order. the sale is made. A salesperson judges the sincerity of a prospect’s refusal. especially those who are themselves engaged in selling. The salesperson first uses an indirect close. surrendering gracefully when it is clear that no sale will be made. Some executives recommend that sales personnel attempt as many as five closes before giving up. attempts to get the order without actually asking for it. many people.” Sometimes. Then the salesperson pauses for the prospect’s response. “Go ahead and write the order. The salesperson may ask the prospect to state a preference from among a limited number of choice(as to models.But failures to get an order result as much from poor prospecting and inept presentations as from ineffective closing. __ . the extra push may be a concession that makes the sale. emphasizing features that visibly impress the prospect. the issue is clearer. showing how the reasons for the purchase out weigh those opposed to it. or the like). do not buy unless the order is asked for outright. but after it is answered. it may indicate the prospect’s need for additional information or for clarification of some point. order size. and books on selling contain numerous examples. Few prospects respond negatively to a frank request for the order in fact. Or the salesperson may assume that the sale is made. the salesperson should normally try other. which is expected to be. Many indirect closes are in common use. When open or more attempts at a indirect close fail. Early closing attempt should be so expressed that a refusal will not cut off the presentation.” Or the salesperson may summarize. so phrasing the question that all possible responses are in the salesperson’s favor except for one: “none at all. The refusal does not necessarily imply an unwillingness to buy. When an attempted close fails. delivery dates. Perhaps one last objection is voiced. the salesperson uses the direct approach. that is.

others do not attempt to realize their total sales potentials because of limited financial resources. Well-managed companies do not rely upon a single sales forecasting method but use several. such as the jury of executive opinion or the poll of sales force opinion. If different methods produce roughly the same sales forecasts. seek to maximize profitable sales and not possible sales. then more confidence is placed in the . They are derived from market potentials after analyses of historical market share relationship and adjustments for changes in companies” and competitors” selling strategies and practices. Some methods are unsophisticated. the sales potential is larger than the sales forecast. are quantitative estimates of the maximum possible sales opportunities present in particular market segments open to a specified company selling a good or service during a stated future period. such as regression analysis or econometric model building and simulation.CHAPTER 5 SALES FORECASTING Sale Forecasting and Sale Potential Sales potentials. and still others. The estimate for sales potential indicates how much a company could sell if it had all the necessary resources and desired to use them. other firms have not yet developed distributive networks capable of reaching every potential customer. No sales forecasting method is foolproof-each is subject to some error. There are several reasons for this: some companies do not have sufficient production capacity to capitalize on the full sales potential. depending upon how they are used –the projection of past sales and the survey of customers” buying plans. Two sales forecasting methods Amy be either sophisticated or unsophisticated. as defined earlier. A firm’s sales potential and its sales forecast are not usually identical-in most instances. being mote profit oriented than sales oriented. Sales Forecasting Methods A sales forecasting method is a procedure for estimating how much of a given product (or product line) can be sold if a given marketing program is implemented. The sales forecast is a related but different estimate-it indicates how much a company with a given amount of resources can sell if it implements a particular marketing program. Others involve the application of sophisticated statistical techniques.

by time intervals. by customers. capabilities. ii. then the sales situation merits further study. requiring them to spend time that they would otherwise devote to their areas of main responsibility. Companies using the jury of executive opinion method do so for one or more of four reasons: i. Thus. and An average estimate is calculated. High ranking executives estimate probable sales. information available to some and not to other experts is disseminated to . The assumption is that the executives are well informed about the industry outlook and the company’s market position. and so on The Delphi Technique Several years ago researchers at the Rand Corporation developed a technique for predicting the future that is called the Delphi technique this is a version of the jury of executive opinion method in which those giving opinions are selected for their “expertise. or when these figures have not yet been put into the form required for more sophisticated forecasting methods v.results. and factual evidence to support the forecast is often sketchy. Jury of Executive Opinion There are two steps in this method i. by markets. This approach adds to the work load of key executives.” The panel of experts responds to a sequence of questionnaires in which the responses to one questionnaire are used to produce the next questionnaire. The jury of executive opinion method has weaknesses. Its findings are based primarily on opinion. But if different methods produce greatly different sales forecasts. iv. iii. and a forecast made by this method is difficult to break down into estimates of probable sales by probable sales by products. and marketing program. This is a quick and easy way to turn out a forecast This is a way to pool the experience and judgment of well-informed people This may be the only feasible app [roach if the company is so young that it has not yet accumulated the experience to use other forecasting methods This method may be used when adequate sales and market statistics are missing. ii. All should support their estimates with factual material and explain their rationales.

however.all. as management thinks necessary. and new staff members (whose biases are unknown at the start) submit their forecasts along with those of veteran sales personnel with known biases. The poll of sales force opinion serves best as a method of getting an alternative estimate for use as a check on a sales forecast obtained through some other approach. Some contend that “this technique eliminates the bandwagon effect of majority opinion. An other attractive features is that forecasts developed by this method are easy to break down according to products. they should have greater confidence in quotas based upon it.” Poll of Sales Force Opinion In the poll of sales force opinion method. there is merit in utilizing the specialized knowledge of those in closest touch with market conditions. often tagged “the grass-roots approach. enabling all to base their final forecasts on “all available” information. They are too near the trees to see the forest-they often are unaware of broad changes taking place in the economy and of trends in business conditions outside their own territories. the weaknesses of this method can be overcome through training the sales force in forecasting techniques. and influenced by current business conditions in their territories. customers. some sales personnel deliberately underestimate so that quotas are reached more easily. and sales force. For most companies. Furthermore . implementing corrective actions is an endless task. if the “forecasts” of the sales staff are used in setting quotas. to Form the company sales forecast. To some extent. territories. salespersons tend to be overly optimistic or overly pessimistic about sales prospect. by orienting them to factors influencing company sales. Furthermore. In short. and by adjusting for consistent biases in individual salespersons” forecasts. middlemen.” individual sales personnel forecast sales for their territories. Because the salespeople help to develop the forecast. This approach appeals to practical sales managers because forecasting responsibility is assigned to those who producer the results. this method is based to such a large extent on judgment that it is not appropriate for most companies to use is as the only forecasting method. because sales personnel turnover is constantly gong on. But the poll of sales force opinion approach has weaknesses. . Not generally trained to do forecasting. then individual forecasts are combined and modified.

Projecting present levels is simple and inexpensive for forecasting method and may be appropriate for companies in more or less stable or “mature” industries – it is rare in such industries for a company’s sales to vary more than 15 percent plus or minus from the preceding year. and the sales forecast is “cranked out. management can cut losses. Predictions on a year-to-year basis. Similarly. One drawback of time series analysis is that is is difficult to “call the turns. once under way.Projection of Past Sales The projection of past sales method of sales forecasting takes a variety of forms. Then a mathematical model describing the past behavior of the series is selected. When turns for the better are called correctly. such as are necessary for an operating sales forecast. the forecaster might utilize a naïve model projection such as this year’s sale Next year’s sales = this year’s sales * last year’s sales This year’s sales are inevitably related to last year’s. or the forecast may be made by adding a set percentage to last year’s sales. The simplest is to set the sales forecast for the coming year at the same figure as the current year’s actual sales. or to a moving average of the sales figures for several past years. generally are little more than approximations. assumed values for each type of sales variation are inserted. if it is assumed that there will be the same percentage sales increase next year As this year. a statistical procedure for studying historical sales data. but predicting the turns often is more important. and irregular fluctuations. seasonal variations. This procedure involves isolating and measuring four chief types of sales variation: long term trends. cyclical changes. for instance. time series analysis finds practical application mainly in making long range forecast. continues. Time-series Analysis Not greatly different in principle from the simple projection of past sales is time series analysis.” Trend and cycle analysis helps in explaining why a trend. management can capitalize upon sales opportunities. Only where sales patterns are clearly defined and relatively stable from year to year is time series analysis appropriately used for short term operating sales forecasts. . when turns for the worst are called correctly.” For most companies. next year’s sales are related to this year’s and to those of all preceding years.

If the series of sales data change slowly should be small to retain the effect of earlier observations.00 if.Exponential Smoothing On e statistical technique for short range sales forecasting. consider this simple but widely used form of exponential smoothing a weighted average of this year’s sales is combined with the forecast of this year’s sales to arrive at the forecast for next year’s sales. The forecasting equation. The accuracy of the forecast arrived at through projecting past sales depends largely upon how close the company is to the market saturation point. To illustrate. is next year’s sales = a (this year’s sales) + (1. The value leading to the smallest forecast error is then chosen for future smoothing. most often the company whose product has achieved nearly 10 percent market saturation finds. in other words. is a type of moving average that represents a weighted sum of all past numbered in a time series. . No allowance is made for significant changes made by the company in its marketing program or by its competitors in theirs. with the heaviest weight placed on the most recent data. However. In practice is estimated by trying several values and making retrospective tests of the associated forecast error. and the smoothing constant was (0. Evaluation of Past Sales Projection Methods The key limitation of all past sales projection methods of lies in the assumptions that past sales history is the sole factor influencing future sales. some argue that it is defensible to predict sales by applying a certain percentage figure to “cumulative past sales of the product still in the hands of users” to determine annual replacement demand. should be large so that the forecasts respond to these changes. If the market is nearly 100 percent saturated.a) (this year’s forecast) the a in the equation is called the “smoothing constant” and is set between 0.7)(350) = 341 units of products Determining the value of a is the main problem. nor is it usual to correct for poor sales performance extending over previous periods. Nor is allowance made for sharp and rapid upswings or downturns in business activity.30)(320)+ (0.0 and1. actual sales for this year came to 320 units of product. the sales forecast for this year was 350 units . that its prospective customers can postpone or accelerate their purchase to a considerable degree. since most companies of this sort market durables or semi durables. for example. exponential smoothing. If the series changes rapidly.

The availability of numerous computer programs for time series analysis and exponential smoothing has accelerated this practice. In such instance. and. even if they do. Few companies base forecasts exclusively on a survey of customer’s buying plans. Even though the survey of customer’s buying plans is generally an unsophisticated forecasting method. In practice. Respondents do not always have well formulated buying plans.Past sales projection methods are most appropriately used for obtaining “check” forecasts against which forecasts secured through other means are compared. and customers are concentrated in a few geographical areas\ (all more typical of industrial than consumer marketing). Survey of Customer’s Buying Plans What more sensible way to forecast than to ask customers about their future buying plans industrial marketers use this approach more than consumer goods marketers. if it is a true survey (in the marketing research sense) and if the selection of respondents is by probability sampling. Survey results. Most companies make some use of past sales projection in their sales forecasting procedures. the manufacture sells direct to users. substantial nonsampling error is present. However. most companies using this approach appear to pay little attention to the composition of sample and devote minimum effort to measuring sampling and non-sampling errors. because it is easiest to use where the potential market consists of small numbers of customers and prospects. . once made. The main reason lies in the inherent assumptions that customer know what they are going to do and that buyers plans. they are not always willing to relate them. however. since it gathers opinions rather than measures actions. it is relatively inexpensive to survey a sample of customers and prospects to obtain their estimated requirements for the product. and to project the results to obtain a sales forecast. need tempering by management’s specialized knowledge and by contemplated changes in marketing programs. it can be rather sophisticate that is. substantial sales are made to individual accounts. will not change.

CHAPTER-6 ORGANISATION OF SALES PERSONNEL Functions of the Sales Executive Many sales executives get promoted into their positions because of their previous performances as salespersons. The operating functions include sales force management. outstanding sales persons have in inside track when sales executives jobs are being filled. as sales executives manage people who do personal selling. communicating and coordinating with other marketing executives. for developing the skills of those who are part of it. The sale executive is responsible for these and related control activities. and the sales executive is responsible for designing and shaping the sales organization. Personal selling experience is not unimportant. The sales executive’ job demands administrative skills much beyond those required of salespeople. Achievement of sales departmental goals requires controls over selling activities. and the like. sales volume. Basically. for staffing it. selling expenses. the sales executive has two sets of function: operating and planning. handling relationships with personnel in other company departments and with the trade (middlemen and /or customers). But personal selling experience and outstanding personal selling performance are two different things most companies can recount instances where an outstanding salesperson failed in a sales executive’s job. and for putting together plans for their implementation. for developing sales programs designed to achieve these goals. The sales organization and its control. the sales executive is responsible for setting personal selling goals. Sales programs are put into effect through the sale organization. The relative emphasis that sales executives give to the . and reporting to some superior executive (such as the marketing vice president). and for providing leadership to it. in some companies and fairly commonly in lower level sales executive sells some accounts personally (to keep a “hand in “ and to keep abreast of current selling problems and conditions). Nothing could be farther from the truth. The assumption is that outstanding salespersons will be outstanding sales executives. The sales executive’s planning function includes those connected with the sale program. In some companies. for formulating sales policies and personal selling strategies. In addition.

Nevertheless. and marketing channels. If the product is a consumer good. Exerting important influences on the way sales executives distribute their time and effort. and selling personal account. is the type of supervisory organization. sales executives attach the greatest importance to the operating function managing and directing the sales force. Qualities of Effective Sales Executives What qualities should sales executives possess? It is difficult to list “success” qualification. The amount of sales executive’s time devoted to planning and operating functions is influenced by size of the sales organization. qualifications in common. Sales executives calculate what is entailed in their responsibilities. Sales executive’s jobs cover a gamut of products. When the sales executive supervises the field sales force through subordinate sales executives. making calls with salespeople. he or she spends most of the time on operating function. Consumer goods sales mangers. coordination of personal selling with advertisings. and there would seem to be few. As the size of the company increases. spend more time on planning and less on operating than do their counterparts in industrial goods companies. in general. Customarily. The significance attached to operating and planning functions varies with the product. sales executives attach the greatest importance to planning function: development of sales programs. consequently. sales executives at all organizational levels devote more time and attention to sales force management than they do to any other single activity. have time left for planning. Whether or not the company provides them with a job description. if any.operating and planning functions varies with (1) the type of products. can be identified: i. (2) the size of company. they . too. and (3) the type of supervisory organization. When the sales executive supervises the field sales force directly. five qualities (or abilities) common to effective sales executives. markets. Ability to define the position’s exact functions and duties in relation to the goals the company should expect to attain. whatever their fields. more attention is devote to planning and less to operating. and building and maintaining relationships with dealers and customers. the sales executive devotes more time to planning and less to operating. Sales executives who have high caliber subordinates generally are more willing to delegate most of the performance of the operating functions to them and. If the product is an industrial good. Sales executives in small companies spend less time on planning and more on operating.

Skilled leadership is important in dealing with subordinates and with everyone else. wider policy limits can be and the more the superior’s time is freed for planning. They recognize that reviewing past performances is a prerequisite to planning. Able administrators make their contributions through thinking and planning. Ability to allocate sufficient time for thinking and planning. Excessive work time and too little leisure reduce efficiency. ii. They arrive at an optimum division between office work and field supervision. decision are made by subordinates. Effective executives select high caliber subordinates and provide them with authority to make decisions. They strive to gain new insight that will bring problems into better focus. Even the use of off duty hours is important. The more capable the subordinates.draw up their own descriptions consistent with the responsibilities assigned by higher management. The time of sales executives is valuable. Competent sales executives develop and improve their skills in dealing with people although they rely to a certain extent on an intuitive grasp of leadership skills. Ability to select and train capable subordinates and willingness to delegate sufficient authority to enable them to carry out assigned task with minimum supervision. the superior decides. Within existing policy limits. Ability to utilize time efficiently. They know how and are willing to think. they depend far move on careful study of motivational factors and shrewd analysis of the ever changing patterns of unsatisfied needs among those with whom they work. v. Failing this. when an exception falling outside these limits occurs. Ability to exercise skilled leadership. They allocate working time to tasks yielding the greatest return. iv. Successful sales executive balance such leisure time activities as community service and professional meeting against personal social activities. and they budget it and use it carefully. . Ability to delegate authority is must. Revision is necessary whenever changes occur in the assigned responsibilities or in company goals. Effective sales executives shield themselves from routine tasks and interruptions. iii. and self improvement. recreation. they retreat to shangro las where surroundings are conductive to thinking and planning.

Junior sales executives are well advised to learn and master the duties and responsibilities of the positions immediately above theirs. this being important for maximum progress of individual and company alike. Asking for help in deciding problems is asking for closer supervision (and less authority). Competent sales executives do not require a close watch over their activities. Indispensable is undesirable for both the executive and the company. Effective sale executives are highly qualified as problem solvers and decision makers. however. for the company. or the executive should leave the firm. they reconcile them through interaction with company top management. are preparation consist of setting definite career goals and adhering to programs of continuing self development. but if they are to achieve these goals. for personal goals are as vital to them as the objectives they set for the sales department. Sometimes. either the two sets of goals must be reconciled. but they avoid becoming indispensable. depends largely upon relations with top management. But type management must be kept abreast of their progress. When this happens. it means that too much is being staked on one individual. friction causes both to fall short. not only must they know where they are going. Effective sales executives accept responsibility for all activities related to their positions.Relation with Top Management Effective sales executives are well above average in initiative and personal drive realizing the sales executive’s potential. One way to avoid becoming indispensable is to practice and advocate delegation of authority. More often. Consequently. Sales executives should want to get ahead. sales executives unilaterally reconcile such goal conflicts (usually by adjusting personal goals to fit those of the organization). and effective sales executives place high priority on training their own replacements. Effective sales executives plan and implement their own self development own foals with those of the organization. Whenever the sales executive and the company cease to move toward mutually compatible goals. For the sales executive. Effective sales executives keep top management informed on important decisions and the department’s plans . it means blocking opportunities for promotion. sales executives guard against taking too many of their pr4oblems to top management. Promotions come to those prepared for them.

They don not hesitate to give their superiors the benefit of their thinking. They keep dated record of important conversations. services rendered in connection with sales. but sales executives are almost always concerned with products. they also are concerned with other marketing activities. is absolutely sure of it. and special reports when appropriate. and top management is unconvinced. like any competent executive. vary with the particular job. Relations with Managers Other Marketing Activities Sales executives spend most of their time on sale force management. Sales executives following such rules of conduct experience little difficult in winning top management’s confidence and respect. Other decision is made on adding new products and on changes on product designed and other features. never missing scheduled engagements without reason. and the amount of time allocated to them. they are willing to modify preconceived ideas. Still their decisions concern product quality. The degree of responsibility over these activities. When the sale executive has a great idea. Effective sales executives pay attention to the manner in which they communicate with top management. Decisions are made on whether each should be retained. Relation with Product Management Product planning and the formulatio0n of product policies require numerous decisions. should bring to bear his or her full powers of persuasion. . changed or improved. the ways they are handled. and distribution. They refrain from voluntarily discussing the personal their executive contact. promotion. They transmit all ordinary repots promptly. pricing. the sale executive must play the role of super salesmen’s and “sell to those with the authority to decide. Their reports ensure that top management known in broad outline the problems encountered in selling the company’s product. Periodically each product needs appraising in terms of its profitability and its ability to fulfill buyer wants. They may also have a role in achieving control over these activities and coordination among them. When the facts do not speak for themselves when those ion authority fail to grasp their full significance the sales executive. Effective sales executives listen and learn. but they see that their superiors have all the information needed to evaluate their personal effectiveness. or dropped from the line. and packaging. but.and accomplishments. unless matters of high principle are involved. They exercise restraint in reporting their own activities. and the results accomplished.

Almost every product relies on personal selling as a promotional method at one or more points in the marketing channel. since this executive is an important source of information about customers. Their knowledge of the market and their control over personal selling activity make sales executives a key source of information. The sales executive makes certain that salespeople keep abreast of current advertising campaigns. operating as a product committee. Advertising personnel need access to the sales executive.Product decisions are often the shared responsibility or marketing. Sales executives provide inputs for these decisions. because of their key roles in making and implementing promotional policies. Decisions regarding the usage of these methods in the promotional mix are normally made by the chief marketing executive or by other specialists. behavior. Relations with Promotion Management Chief marketing executives are responsible for setting promotional policies. Besides serving as an important source of information. Sales executives play similar roles with respect to other promotional methods. must coordinate closely with other executives in the formulation and implementation of the promotional program. But personal selling is the most expensive promotional method in terms of cost per sales message transmitted. their needs. Their contact with market through subordinates and sales personnel provide them with feedback about product performance and acceptance generally not available from other sources. Sales personnel are responsible not only for transmitting sales messages to prospects but for securing the use of point of purchase displays and for coordinating dealer efforts with advertising programs. research and development. Personal selling’s effectiveness traces to the use of personal contact in conveying the sales message to prospective buyers. Sales executives. production. The sales force should know which media are scheduled to carry advertisements for which products and the timing of each ad’s appearance. Sales personnel need briefing on specific advertising appeals. The proportion of personal selling in the promotional mi9xgenerally must be limited. but sales executives participate in their formulation. and it is the sales executive’s responsibility to keep selling costs down. and they occupy a strategic position ion implementing promotional plans. enabling them to adapt their selling approaches in ways that enhance the total promotional impact. . and financial executives. and motives.

by nature. Selection of a marketing channel. Responsibility for administering prices should be assigned to the sales executive. In spite of the fact that these two executives are well qualified to speak with authority on pricing matters. legal. credit. they generally have much clearer ideas of the prices final buyers are willing to pay. Furthermore. an interdepartmental activity. Pricing policies should result from the cooperative action of the group rather than from compromises among its members. or channels. sets the pattern for sales force operation. but the sales executive is the one responsible for information distributors and dealers and obtaining their conformance. Each department affected should be represented. Include in the policymaking group should be representative not only of the marketing department but also of such departments as production. its implementation is the responsibility of the sales executive. It is also necessary to determine the number of outlets for the product at each distribution level. for pricing policy making is. and public relations. the sales executive. Relations with Pricing Management When major decisions on pricing policy are required. because of close and continuing contacts with the market and the marketing executive because of access to pricing information gathered and interpreted by the marketing research staff. to other executives. the pricing committee might adopt suggested list prices. For example. both the chief marketing executive and the sales executive occupy influential positions in top management councils. advertising. Once pricing policy is established. marketing .the sales executive secures coordinative efforts by the sales force to ensure that each promotional activity obtains optimum results. because the sales department has the closest relationship with the market. Relative. Relations with Distribution Management Distribution policies are major determinants of the breadth and complexity of the sales department’s organization and function. both geographically and as to the classes of customers. price policies should be formulated and prices should be set by a group of executives. and this affects the size and nature of the manufacturer’s sales organization and the scope of its activities. cost accounting.

sale executives play key roles in providing information needed for their formulation. A sales organization is both an orienting point for cooperative endeavor and a structure of human relationships. the need for sales supervision. The Sales Organization Effective sales executives insist upon sound organization. It is group of individuals striving jointly to reach qualitative and quantitative objectives. Over the long haul. The sales organization is not an end in itself but rather the vehicle by which individuals achieve given ends.” but the sales organization makes its major contribution in the present and the near term-recognizing this. The effective sales executive looks upon the sales organization both with respect to “here and now” and to the “future. the effective sales executive builds both sales-minded less and profitmindedness into the sales organization. management is more concerned with financing . and the like. the nature of the salesperson’s job.achieving short-run quantitative personal selling objectives precedes attainment of the longrun qualitative personal selling objectives. Existence of a sales organization implies the existence of patterns of relationship among subgroups and individuals established for purposes of facilitating accomplishment of the group’s aims. implicit in the concept of a sales organization is the notion that individual members cooperate to attain ends. it must attain the quantitative personal –selling objectives not only sales volume but other objectives related to “profit”(such as keeping selling expenses within certain limits) and to “competitive position”(such as attaining given market shares). it must achieve qualitative objectives those concerning personal selling’s expected contributions to achievement of overall company objectives. Because of the impact of distribution policies upon the sales organization and its activities. Implicit in the concept of a sales organization is formal relations to one another. Organization defects often trace to lack of attention given to sale organization during the early existence of a company. When setting up business. They recognize that the sales organization must achieve both qualitative and quantitative personal selling determines policies on the amount and extent of cooperation of it desires with members of the distributive network also influencing the size of the sales force. since they are responsible for Implementation of these policies. and bearing informal and formal relations to one another. In the short run.

dynamic characteristics inherent in marketing preclude the achievement of such perfection. as products are improved. particularly when . for example. that is. despite. is the vehicle through which personal-selling strategy is implemented. Her organizations in many companies evolve without regard for changing conditions. and in other business factors calls for changes in the sales organization. to anticipate changing situations. Shifts in marketing. The basic setup designed when the company was new remains. Sales management should direct its main organizational efforts toward the “informal” organization. and production processes developed.and non-marketing problems. accomplishes more. Through intelligent leadership and related “human relations” talents. production quantities increased. go exclusively to question of design. In manufacturing. the skilled manager moves both individuals and informal groups along lines that facilitate achievement of the purposes of formal organization. wasted motion and duplication of effort would be eliminated. but most often these relate to no marketing activities. in competition. if not attained. But when sufficient attention is given to sales organization. and more economically. and personal selling efforts increase in productivity. The sales organization. To Permit the Development of Specialists As a business expands. The sales organization should be adjusted to fit-ideally. the manufacturing organization is adapted to changed situations. of the ‘formal” organization plan . The ideal sales organization has a built in adaptability allowing it to respond appropriately in fluid and diverse marketing environments. like a well –designed automobile. Purposes of Sale Organization In the ideally organized sales department. Executives of new enterprises consider organization. It is difficult to fix responsibility for performance of all necessary activities. marketing and selling activities multiply and become increasingly complex. the ideal is approached. and cooperation maximized . Executive effort expended on sales organization need not. than does one that is an arti-fact. changes in selling style and size of sales force. after all. Similar alterations in the sales organization are frequently neglected or postponed. A well designed sales organization. indeed should not . for example. how an organization works is more important than how is is supposed to function. new products added. friction would be minimized.

or division of labor as economists call it. As soon as executives begin to lose their informal contacts with customers. they are broken down into manageable units and are assignments to specialized personnel. Worseyet. so to speak. Essential tasks may not be performed. This involves fixing responsibility for specific tasks with specific individuals (or. To Achieve Coordination or Balance Good organization achieves coordination or balance. as marketing channels lengthen. If these contacts are highly important. When a company is small. danger exists that the organizational plan will not provide for supervision of all activities. Particularly forceful executives may prevent a basically sound organization from functioning smoothly. To assure that All Necessary Activities are performed As a sales organization grows and specialization increases. By getting people to pull together as a team rather than as an assortment of individuals. top executives become farther and farther removed from the customers. The assignments made are called “delegation of authority. As a company grows. and as the marketing area expands geographically. potential. . specializations. their positions are magnified out of all proportion to their importance. are the chief means through which the processes of organization and reorganization are effected.” This is conductive to development of specialists. What are “necessary” changes over time when jobs are highly specialized. for instance. One purpose of reorganizing the sales department is to facilitate assignment of responsibility and delegation of authority. its executives are in close contact with users of the product. Or both. failure to delegate it. simply because they are not assigned to specific individuals. occasionally. with certain group). it is increasingly important to perform all necessary activities. Their personalities may be such that through assumption of authority. In fact. As tasks grow in number and complexity. total accomplishments of the organization are less than they could have been if.executives are reluctant to delegate authority. grater advantage had been taken of the synergistic effect when the sum of combination effort exceeds the efforts of the same individuals working alone. the organization accomplishes more collectively than its members could independently. and effectiveness. responsibility for maintaining them should be assigned to an executive specializing in customer relations. an individual should be assigned responsibility for maintaining such relationships. Individuals vary in competence. This often requires reshaping the structure so that it is easier for specialists to develop.

place. staff executives attempt to exercise line authority. Staff authority is the power to suggest to that holding line authority the method for implementation of an order. and two way communication. supervision and guidance. Line executives make decisions on the need. Line authority carries the power to require execution of orders by those lower in the organizational hierarchy. leads to increasing communication difficulties with other specialists and a reduction in overall organizational effectiveness. important in achieving coordination. directions for . One form of justification is to devise technical nomenclatures that no specialists in other areas have difficulty understanding. and time of action over a wide range of matters. such as in technical product service. Modern organizational theory suggests that sales departments should be divided into small. they are headed for trouble with the line executives whose authority is usurped. staff. to enforce their directives within a specific and limited field. freely communicating face to face group to decrease the possibility of uncoordinated proliferation. Individual goals are subordinated to or reconciled with. These instances of uncoordinated proliferation suggest that top sales executives should concern themselves continually with orchestration of effort. otherwise. For example. A salesperson. Functional authority enables specialists in particular areas. group meetings. some of the means for accomplishing this are indoctrination and training programs. friction develops. in turn. Throughout the sales organization different activities are kept in proper relation to one another in order that the greatest organizational effectiveness is realized. for instance. A sales organization receives directions from several sources.Motivating individuals to work together toward common objectives is. mainly on routing technical problems. may get instructions on merchandising the advertising from an advertising specialist. directly to lower organizational levels. As specialists emerge in a growing sales organization. All executives should understand the nature of their authority with respect to each aspect of the operation. for instance. They do this by issuing orders. then. This. management must guard against a tendency of each to search for ways to justify his or her own existence. or functional. To Define Authority Sales executives should know whether their authority is line. such specialists advise on new product introduction. When. Functional executives are specialist’s experts in some aspect of the business who assist executives holding general line authority. organizational goals. Staff executives advise line executives about methods but have no formal power to require or enforce the execution of their recommendations.

Modern organizational theory points out . when they have capable and well trained subordinates. they must devote more attention. In building the sales organization. as sales executives gain subordinates. which. These conflicts with traditional organizational theory. then of organization and one often overlooked is achieving economies in the use of executive time. This permits higher ranking sales executives to delegate more authority. The supporting argument is that. Top sales executives need not concern themselves personally with all the sales department’s problems and activities. has said: no person should have more than one boss. in general.” It is not possible to specify the proper number of subordinates. in deciding optimum span of control for a . However. and rightly so. A smoothly operating sales organization has built on way of achieving harmony. To Economize on Executive Time As a sales department’s operations and activities increase in complexity and number. the need for effective coordination limits the number of subordinates who report directly to certain executives. while higher executives devote less time to operations and more to planning. however. The argument is a good one. Unless the executive is an effective coordinator. Furthermore. One must consider not only relative abilities of the coordinator and the subordinates. But the greater the abilities of coordinator and of those reporting to him or her. they may get conflicting and confusing directing directions. Two important ways are continuing coordination of the work of different executives and free flowing communications system. if individuals receive instructions from multiple sources. those with salespeople reporting directly to them. but the nature and importance of the coordinator’s other duties. This limit is the “span of control. to coordinating their efforts. particularly routine or technical ones. have a wider span of control than higher executives devoting much time to planning and policy formulation and little to administrative and operating details. additional subordinates are added.administering a questionnaire to customers from the district sales manager. that the real problem is on e not of avoiding the multiple boss situation but harmonizing orders and directives from different sources. Lower level sales executive. and probably more time. then. the larger the number that can be effectively coordinated. It also allows for the more effective use of specialization. subordinates may not work in harmony or discharge assignments in line with expectations. but the “one boss” rule does not necessarily follow. One purpose.

other factors are taken into account. and reliability of the communications system. and (3) when subordinates are concentrated at the same location as the executive. similar. The span of control is widened: (1) with improvements in efficiency. speed. .particular position.(2) when subordinates perform routine. or repetitive tasks.

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