ContentsContentsContentsContents

Introduction to sales management

Selling skills and selling strategies

Selling process

Managing sales information

Sales Organization

Management of sales territory

Management of sales Quota

Recruitment of sales Force

Training sales force

Sales force motivation

Sales force compensation

Evaluation of sales force

Sales promotion Strategies, Characteristics, application, planning & designing

1. Sales Management

Introduction and basic concepts

Sales management is a professional & scientific procedure to plan & implement

Sales. Organizations-small or big, selling something or the other for survival &
Growth. It could be product like steel, shampoo, toothpaste or services like
Airline, hotel, insurance or Ideas like patriotism, religion or concepts like
family
planning or destination such as India, Swiss or persons ( politician, sports
person, actor)

Sales Management Evolution

Sales management is as old as human civilization. A sales persons were not held
in high esteem by the society. The Roman meaning of sales person was ‘cheater”
India w as great destination for traders and resellers in the medieval age for
carpet, spice, jewellery. British came to India to expand their business and
trade. Yankee peddlers in US carried clothes, spices from one part to another.
Pheriwallas in India-moved from village to village with sarees, dress material and
spices. Baniyas were known as trading communities in India who established stores
and started storing goods. In the19thcentury peddlers persuaded buyers to buy
their products and as competition grew buyers had choice which called for
modification of products, prices & services. This led to the emergence of
Management of territories, generate profits & retain customers in the 90’s

John Henry Paterson – Father of modern sales management. He was the first one to
refine selling techniques. He printed and distribute to his sales persons the best
sales approach and asked others to follow it .He assigned exclusive sales
territories & sales quotas in order to stretch their efforts. He also held sales
meetings for training and socialization

Today numerous changes with strategy & Technology adaptation, the sales person is
not just an order taker but a
• Consultant to customers
• Solve customers’ problems
• Retain customers( it costs 5 times more to create a new customer than to
sell products & services to an existing customer – low lying fruits )

Sales Manager manages multiple stakeholders viz. customers, suppliers ,sales

force and also top management

Marketing Concepts
“ Customer do not buy products & services merely for the utility value but for
obtaining value higher than what is embedded in the physical product”
Successful companies
- Cared for the customers
- Offering products and services better than what is available in the market

Marketing Concepts

Production concept: customer prefer prod widely available &higher value at lower
cost
Product concept: prefer product with high quality & Technology
Sales concept: buy only on persuasion – motivate them to buy ( vacuum cleaner,
Insurance)
Marketing concept: create, deliver& communicate better value proposition through
market offer
Take care of social need as well: fulfill customer satisfaction & society’s well
being

Role of sales management:

• Maintain good customer relationship

• Managing profitability to the firm
• Building brand value
The best market program may fail if Sales Force is ineffective & poorly managed

Sales man- functions as a delivery boy to a creative person

Sales manager – not only manages sales but man management

Types of personal selling

Industrial selling retail selling Service selling
Selling to reseller Sale of goods & intangible not
Business users services to ultimate stored like
Industrial selling customers(wall physical goods
Govt & Govt agencies mart, Big Bazaar insurance, airline

Difference between selling &marketing

Selling has product focus & product driven and short term goal of achieving
Market share. The objective of selling is to maximize profit through sales
maximization. In other words sell whatever production has manufactured.
Marketing concept on the other hand is much wider. The focus is on the customer
than the product. Create value satisfaction which the customers are willing to
exchange for their money.

Selling
- Emphasis on product
- Mfg prod & decide to sell
-Management sales volume oriented
- Stresses need of seller
- Business-good producing process
- Stay with existing tech & cost
- Working-water tight
- Cost determines price
- Consumer- last link of business
- Inward looking-
- Sell what is manufactured
Marketing
- Consumer need & wants
- Determine customer needs
- Profit oriented
- Buyer
- Consumer satisfying process
- innovation, better value
- All depts. Integrated manner
- Consumer
- Consumer beginning of business
- Outward looking-
- Match customer request

Role of sales management in marketing

Sales & Marketing are separate but complimentary
Both are done by the same person ( relationship manager)
Eg. customer relationship program (CRP) & customer relationship management (CRM)
Today sales person spends only 1/3 of his selling time in actual selling
Rest of time in territory analysis, sales research, market planning & sales promo
Medical reps- provides service, imparts knowledge, collect market intelligence

Sales Management Process

Formation of sales management program consider environ issues affecting business.
Integrate comp personal selling efforts with market strategy,

Implementation of a strategic Sales Mange program, Selection of SP, training,

leading, motivating, policies that will motivate SP to achieve corporate goals

Evaluation & control of Sales Person’s performance. Motivation, evaluating

individual &group sales performance. Take corrective steps to achieve corporate
goals

Emerging trends in Sales Management

Customer orientation: Product & process designed around customer. Identify

customer needs & satisfy needs

Retaining Customers: thro relationship management ( frequent fly)

Technology: online service, order cycle linked to payment ( eg Maruti linked to
Gurgaon, Hallmark barcode etc)

Diversity: Diversity in experience, background, culture of sales personnel,

harassment free work place

Global ethical issues: maintain ethical norms of commercial success.

2. Selling skills & selling strategies

Selling is one of the most difficult and challenging profession in the modern
world. Success in selling determines the fate of the organization.
Of the many resources available the most important one is Human resource. Sales
people represent the company to the customer. If they are equipped with the
required skills and have a desired aptitude for selling they contribute to the
achievement of higher organizational goals. Selling is more stressful job.
Adequate skills help overcome these difficulties.

Skills & aptitudes: essential for achieving higher organizational goals

Effective Selling skills:

• Improve company image

• Achieve company’s long term business objectives

Sales skills take sales person towards growth path & life carrier

Sales skills are achieved through training & practice

Selling & buying styles

Vary depending upon the buyers capabilities to pay, quantity of purchase, ability
to take risks etc.

Innovators : Buy overnight, impulsive buyer

Laggards: cautiously buy after seeing the innovators

Government buying: low price without care on quality

Quality conscious organizations: price no bar but insist on better quality

Sales Tasks & functions

An effective Sales person requires various skills. Listening function (doubts

questions, apprehensions).Information discrimination function ( to give
information on existing product new products which are likely to come in the
market ) Negotiation & bargaining function ( when no list price is available or
the list price is available ability to bargain for better deal) Problem solving
function (customers do not want products but solutions to their problems)
If Sales Person doesn’t have these skills he will not be able to close the sales
properly. He requires Maintenance selling – the art of servicing existing account
&(sales service Executive) Development selling- meets potential customers & builds
sales ( Business Development Executive )

Communication skills

Verbal communication
Good vocabulary, ability to perceive & interpret verbal, nonverbal clues to
understand customer objections, quality of voice, truth of word, empathy avoidance
of jargons

Nonverbal communications
Facial expression, body language, personal appearance, posture, gesture, eye
contact, space distancing

Some of the barriers to listening are bias ,partiality, prejudice, pre judgment.
The sales manager should not bring his own problems. Depersonalize listening and
decrease emotional impact.

Conflict management skills

Goals are different in each level of the organizations & conflict is a natural and
inevitable outcome in a group

Frustration and aggression – major cause of conflict power ,status, level of

hierarchy – major source of conflict

Conflict management can be resolved through one to one mutual discussion &
negotiations or through representation between 2 parties or via third party
intervention

Negotiation skills

Someone else has what you want & you are prepared to bargain for it and vice a
versa. Attempt by 2 parties to achieve mutually acceptable solution- doesn’t
result in winner- loser. Negotiation can be managerial negotiations or Industrial
Negotiations. Negotiations done where there is no list price .Retail counters have
predefined price tag while bulk selling involves negotiations

In Every bargaining – 2 parties are involved either to minimize the loss or to

gain profit

Problem solving skills

Sales person not just an order taker but a problem solver & a consultant to the
customers

Define the problem (Sales Person, Sales Officer, or customer)

Generate alternate solution (brain storming, remove mental blocks)

Decide the solutions (prioritize problem, arrive at general solutions, functional

solution and specific solution) Implement the solutions (approval & cooperation
from other members of the group)

Evaluate solutions (measure it up thro qualitative/quantitative method )

3. Selling Process

Issues & steps involved in selling process

Every step in the selling process vary depending on the kind of product or
services that is being sold, the stage of product in the product life cycle and
the nature and speed of innovation.

In mature industry – sales person has to face more objections on price, emerging
sector like IT adaptability of the technology to the relevant work environment. In
retail selling demonstration efforts are less significant and in business to
business selling demonstration of products and its functions are important. In
high tech consumer products demonstration and consumer education play a greater
role. Solution and service selling demand relationship for a longer period

Selling process
•Duties of Sales Persons vary in different selling situation

•Fundamental duty of SP is to provide product & service info to the customer

• SP works as a source of market intelligence

• Being close to customers, SP possess info about customer preference,

switching behavior & demand pattern

• SP helps the organization in forecasting territorial redesign, collecting

competitor information

• SP locates & identifies the prospects,

• Makes sales presentation
• Closes a call
• Follow up with existing customers measures success & customer satisfaction
levels.

Every selling process involves 90% of customer handling strategy and the sales
presentation is only 10%

Prospecting:

Process of identifying potential buyers. Sales person distinguishes prospects from

suspects. Stage of prospecting has 3 set of customers

Lead customers : Need & desire to buy but inadequate purchasing power

Prospect customers: They are the buying units, have current demand, get
substantial benefit

Qualified customers: Ability to buy exists but need further persuasion

Pre approach before selling:

Develop strategy by collecting customer data combine with product attributes. The
more he is knowledgeable about the customers’ behaviour & requirements, the better
equipped to do the presentation. Develop different selling strategies for the
price conscious, negotiating type and the intellectual ones

Sales person comes in contact with the potential customer & makes efforts to
influence them for a favorable decision. Seek appointment. Get customer attention,
generate interest.

Makes a sales presentation giving product unique selling points and probing for
further information. Attract customer attention, create interest and arouse desire
and build conviction
Handling customer objections:

Customers make objections after or during presentation. They are mere excuses for
not buying or to say I am not yet ready for the buying. Sales persons duty is to
remove all doubts and provide proofs. Satisfy his needs

Closing sales:

Never close a sale urging the customer to buy immediately.

In case the product is under scheme or for a specific time, explain the period of
availability etc first.

Follow up action :

To generate additional leads form satisfied customer an for repeat purchase follow
up is essential.

Given below is the ICICI bank model from prospecting stage to follow up

4. Managing sales information

Sales information is like circulatory system in the human body. Helps

organizations to plan & make appropriate business decisions. Helps Sales Managers
to analyze current market situation, sales persons performance and to build
customer data base, reward system by HR & forecasting. Most important use of sales
info is - forecast Market demand

Information flows in the organization both horizontally and vertically so that

everybody in the organization gets relevant information to aid and to take better
business decision. Sales information helps Sales Manager to assess sales persons,
forecasting, devise compensation plan etc.

Importance of forecasting
Success of business depends on how the forecasting is done. Supply & value chain
management depends on demand pattern. Procurement can be canalized as per demand.
Raw material & inventory control during production process
If forecast is not proper. High inventory, increased cost of product. Low
inventory- short supply, loss of revenue and customer

Forecasting Process
Step1: Determine objective ( Rs. sales / Units sales)

Step2: Determine dependable(unit/value) independent variables ( market factors

that has an influence).

Step3. Forecast procedures & methods for analyzing based on assumptions

Qualitative method:

Method of forecasting purely based on judgment either of experts or a collective

judgment of a knowledgeable people in the industry.

Expert opinion method: used for forecasting future demands of the product. Service
of expert in that area such as marketing professional. important member of
distribution channel (distributors and dealers) professional bodies like
industrial associates may be asked

Delphi method: Forecasting on a likely time period of occurrence. A group of

experts and a coordinator selected. Experts give their written opinion / forecast
individually to the coordinator. Coordinator processes and compiles results and
refers back to panel for revision

Sales Force composite method: The sales force comes up with the forecast

Survey of buyers: Surveying potential customers and their intention to buy & level
of customer demand

Historical analogy: Forecast the demand for a product or service where there is
no past demand data. Product may be new but company must have marketed other
similar products. Analysis between 2 products and arrive at the forecast for the
new product

Quantitative method:

Test Marketing: Take representative samples from select and extrapolate data for
national level forecast

Time series: collect past data for future forecast. Useful when market forces are
stable.

Trend projection : what has happened in the immediate past will continue to occur
in the immediate future)

Other Methods

Naïve method: simple method - sales of future period = sales of previous period
Graphic method: direction of trend based on past year data. The trend line
predicts the future.

Semi average: data divided into 2 parts with equal no. of years

Moving average: Average value of a no. of years and the trend. Averaging will have
lesser fluctuations

Exponential smoothing method: weighted moving average of all past data. Previous
years data gets greater weightage over the 5 year data.

Regression method: average relationship between 2 variables

Dependant variable ( sales ) & independent variable ( population, field force
size, income etc.) ie. If population increases sales increase and visa versa

5. Sales organization

Sales organizations are structural entities to execute a combined sales plan

Mutually agreed business goals with clear structure, roles, responsibilities,
duties, rights for each person, group & dept are well defined.

It is a vehicle for achieving goal, higher sales, M.S. & customer loyalty.

Formal authority & responsibility of various employees working under it and the
functions carefully planned & coordinated.

Upward downward communication for sales related decisions and serves as a

unified contact point with customers

Organizational principles

Creation of Strategic Business Units for better coordination, function & service

Span of control refers to the no, of sales staff & subordinates under the
supervision of Sales manager

Narrow span of control: more layers & supervision & fewer levels of supervision in
the case of broad span of control.

Centralized - selection, recruitment, territory allocation& supervision at

corporate level

Decentralized – responsibility rests with field SM

Many organizations follow both - Training, recruitment (De Centralized)
Customer service( Centralized)

Organizational design
Sales Manage is a representative of Top management in the chain of command –
divisional, district & branch heads to assist the Sales Manager

Line organization Organization by geographical specialization

(one man show)
VP Marketing
President / owner
NSM
VP sales
Div Managers (E/N/W)
5 Sales Persons
RSM

DSM

Sales staff

6. Management of sales territories

Sales Territory- group of present & potential customers assigned to an individual
Sales Person group or dealer, defined on the basis of geographical boundaries.

Poor territory management leads to opportunity loss lost to competitors and also
poor forecasting and allocation of quota leading to poor achievement and de
motivation of sales person

- Has direct bearing on company’s sales & profitability

- Improper territory management- high cost, loss of sales to competitors
- Helps in better sales planning & effective operational control

Management of sales territories – Advantages

• Ensure better market coverage

• Effective utilization of sales force
• Efficient distribution of work load among Sales Persons
• Convenient way to evaluate performance of Sales Person
• Control over direct, indirect cost of sales function
• Helps mgrs for better control & monitor sales, measurement
• Better understanding of customer needs, loyalty & personal rapport, quick
disposal of complaints
• Effective utilization of marketing resources

Territory may not be required for products like insurance, FD’s and other
investment products ( relationship selling )

Highly technical products like computers etc. reduce the scope of territory

Size of the territory: based on demand & nature of product, mode of physical
distribution, government regulations (tax etc.) density of populations & level of
competition and transportation and communication.

Allocation of sales territories

Sales Manager should consider uniform allocation & coverage

Avoid duplication of efforts (2 Sales Persons covering same area)

Specific time period to assess performance

Every Sales Person should have an equal distribution of opportunities &

responsibilities for correct evaluation

Designing factors:

• Size of the organization

• level of competition in each product category
• No. and quality level of product in the portfolio
• Territory redesigning when necessary when product line increases
• Merger and take over ( redesigning is necessary for better contro)

Territory design
Charts, maps, geographical /Topographical /demographical data, Transportation,
communication, settlement pattern, spread of retail outlet, Trading areas economic
factors, consumer buying habits, & normal trading pattern, Competitive position,
sales potential, present & prospect customer on the basis of age, sex, likes,
dislikes, location of SP in term of market accessibility and family proximity,
territory shape& traveling time.

7. Management of sales quota

Sales Quota are target that a sales person tries to achieve within a specific
period of time in order to contribute towards organizational goals. The process
involved is – develop plans, convert objective into targets, implement plans and
evaluate results.

Sales quotas are managerial device for defining & stimulating sales efforts,
expectation of top management expressed in volume or value for a specific future
period. It is c company’s expected market share assigned to sales person in each
territory, branch, distributor, selling agent of dealer

Importance of sales quota

To motivate sales people and link it with reward system
To receive feed back on their performance through the achievement of quota
To help weaker one pay attention to their knowledge & skills
To learn from high performers the basic elements

Principles of Quota setting

There is no specific formula available to be drawn from the market, taking into
prevailing conditions in each territory and flexibility keeping the market
condition and competition in mind.

Concept of SMART
Specific, Measurable, Attainable, Realistic and Time bound
Specific- clear and concise, leave no doubt
Measurable- measure performance in terms of volume or rupee value
Attainable goals are realistic goals based on market facts
Time bound- short term, long term ( weekly or monthly, quarterly of annual)

Procedure of setting Quotas

Process built on one to one discussion between Sales manager and Sales person
Democratic way motivate SP to achieve it
Fill in individual goal setting forms
Conferencing with each sales person discuss together create a win win situation
through several meetings.
Prepare written summary of goals mutually agreed upon
Types of sales quotas

Sales volume quota - determine what amount and what period ( annual broken down )

Value quota – determine the value to be achieved in a specific period. This is

done to protect the price fluctuations

Points quota – fix the points at say 1000 & SP achieves through combination of
different product mix.

Sales budget quota – SP not only achieves desired sales volume but to control
expenses and gain profits

Sales activity quota – In addition to direct sales SP has to perform some non
selling activity (eg. in insurance continuous prospecting to develop new business

Combination quota – of both. Target (1000 units ) + 100 prospects + bring back 50
lost customers

Method of setting sales quota

Base on past sales forecast: Organization sets total forecast for entire market
and breaks down the same to territories and individual SPs.

Quota based on past sales : add an arbitrary percentage to previous years sales to
arrive at the current year’s sale.

Executive judgment: no info available about the market . sales manager relies
on past experience for making future predictions

Quota based on sales people’s judgment: Ask SP to set the quota as he is familiar
with his territory.

8. Recruitment and selection of sales person

For many organization it is only a filling up vacancies

For successful organizations it’s planned process where scientific principles of

management are utilized

Sales job is stressful –attrition rate is high. Requires ability & aptitude

Hiring process is costly. Frequent recruitment adds up to company’s cost

Therefore , company should be careful in selection process

Hiring process
Step1 HR planning stage: decide on hiring objectives & the no of SP for the
particular period of time

Step2 Recruitment stage: Decision made on identifying best source & pool of
candidates for selection

Step3 Technique used to select the right candidate

Step 4 Socialization: Orientation towards the Organization

A sales person is on the front end of the organization and represents company to
the customers. Effective recruitment & induction improves the organization’s image

Planning for recruitment:

Starts with analysis of annual turnover of a company to arrive at the manpower

forecast. Forecast determines no of sales person required by the organization.
Once the hiring objective is determined, sales manager determines the number and
type required.

Strategic position analysis: determines the qualification & experience of the

applicant required. It is a procedure that describes the way sales job is to be
performed 7 the skills & abilities to perform the job.

On the basis of this Sales manager evaluates the Sales Persons history and divides
them into 3 categories – ineffective, effective and over performing

Turnover: refers to the average % of sales force that leave the organization in
the given period of time.

Job analysis: Gathering and organization of information concerning the duties &
responsibilities of a specific job

Job qualification & Job description : refers to skills ,aptitude & knowledge &
personality traits required to perform the job successfully- serves as selection
criteria for best talents

Sales force recruitment

Recruitment : process of generating a pool of qualified candidates for a

particular job

Source: internal - within the organization, existing employees, employees

referrals. external - ( Industry, agent, campus etc)

Selection of sales person

• Collect data base of candidates to be selected

• Assess if candidate meets qualification for specified job
• Select applicant most likely to perform the job

Procedures: blank application, personal / group interview ,discussion, reference

checks, physical examination ,psych test, intelligence, personality, aptitude &
skills, appointment
Socialization: the new recruit is introduced to the work environment, job and
territory. He passes through various stages expectations, faces reality, seeks
further information and finally feels part of the organization.

Training

The Sales Manager should exploit talents of the new recruits and utilize their
services with effective trainging for increasing the

Objective of sales training

To improve performance of SP

To meet various challenges(environmental, compensation)

Guidelines for various steps involved in selling- prospecting to closing sales

Improve performance, morale & achieving goals

Training process

Training need assessment ( organizational, task level & individual level)

Design & conduct of a Training .Program ( class room, on the job, off the job,
role play, actual work setting)

Evaluation of Training program (assess effectiveness & ROI)

Training methods:

Direct teaching, visual support, participative, conference, seminars, discussions,

role plays, case studies, fishbowl, workshop, transcendental Analysis

Sales Force Motivation

Motivation – Stimulation to increase efficiency –achieve higher goals

Motivation and satisfaction achieved through compensation& reward ( eg circus

animals)The sales manager’s job is to constantly motivate his team to meet
commitments. Motivation is an inspirational process and the sales persons pull
their weight to give their loyalty to the organization.

Performance(P) = Ability (A) x Motivation ( P = A x M )

Importance of Motivation

Retain talents & reduce attrition rate

Energizer of behaviour – leads to positive attitude to achieve individual &

organizational goals(Berger paints during festive season incentive trips)

Sales persons push hard to achieve targets

Principles of Motivation

Sales Manager derives the principle after analyzing the sales person’s
expectation from the job, motives behind their functioning

Eg. Berger paints offered incentive of Goa, Singapore and US prize trip for 10
lac, 20 lac and 40 lac achievement and during festive season. Sales persons push
hare to achieve more than what has been targeted for.

Security: Every motivation plan should aim to provide sense of security to the
sales person ( Glenmark – Performing beyond target get company bonds and
securities)

Achievement: Sales person should know in advance achievement he will have from the
motivation program. (LIC crorepati scheme )

Approval: Look for social approval. Sales manager appreciates & praises his good
work.

Loyalty: Motivation leads to interpersonal relationships and high amount of

loyalty towards the organization.

Leadership : The Sales Manager being a good leader himself develops more leaders
in the long run

Human behaviour: Sales Manager treats SP as a human being with emotions and
aspirations, mutual respect and value his suggestions for decision making.

Theories of Motivation:

Other theories

Alderfer’s theory:
People don’t move up and down in a hierarchy of needs. It is possible for more
that on set of needs to be achieved at the same time. Satisfaction leads to
progression & frustration leads to increased importance for lower needs.

McGregor theory of X & Y:

Theory X : most people prefer to be directed. Not interested in assuming
responsibilities, not ambitious

Theory Y : Dynamic view of individual. Individual having growth and development

potential. People are not inherently lazy or unreliable. Can be creative at work
if motivated. Management should know how to tap potential through motivation

Z theory of William Onchy: Integrate individual & his life with whole organization
to produce efficient results ( Japanese vs US ) Z theory – great stress is laid on
the long term employment which contributes to enhancing employee’s morale

Equity theory: Each Sales Person measures himself against a comparison person or
someone in comparable sort If comparable person is treated well, the sales persons
feels he is treated fairly and equitably.

Sales Force Compensation

The most important motivating factor- pay structure for the sales person

Objectives of Sales compensation plan

• To attract quality sales people

• To improve productivity level of existing SP
• Optimize sales efforts by Sales Persons
• Retaining quality manpower & reduce attrition rate

Effective compensation plan

Fair wages & regular flow of income

Compensation plan should be linked to efforts and performance
No uniform way of designing compensation plan. Organizations to take various
aspects into consideration such as type of work, nature of product, Sales Persons
age, qualification, experience etc

Type of compensation

Financial
Straight salary, straight commission, Bonus + incentive,
Salary + incentive, drawing acc + commission, profit Sharing

Non-financial
Promotions, recognition, personal development, medallion, certificates, crorepati
scheme ( LIC)
Fringe benefits (medical, retirements, stock option, gratuity, pension,
reimbursements
Perks ( car, driver, housing) sales contest, incentive trip

Steps in designing compensation plan

Determine compensation objective: Target, achievement, customer, call etc.)

Determine major compensation issues( industry structure, competitors etc.)

Long /Short term compensation plan

Clarity in communication of plan & mutual benefit without bias

Appraise the compensation plan – periodic reviews & relationship of compensation

plan with attrition rate

Evaluation of sales force

Performance appraisal

Crucial part of evaluation, helps in promotion, reward & recognition, quality &
quantity of work done. Employees behavior on the job - good - bad – average

Relative method: compare performance with that of others

Absolute method: SM makes judgment based on sales volume, revenue etc.

Trait based: Reliability, honesty, loyalty not performance

Outcome based: amount of sales, number of products ,unit /value, profitability

Behavior based: Number of calls / working days, sales activities

Sales Promotion
Promotion is a comprehensive term covers entire gamut of Advertising , publicity,
public relations, personal selling and sales promotion

Sales promotion : part of promotion restricted to direct inducement on a short

term basis given to a customers on trade so as to stimulate purchase of a product
of a service.

Pro active:
• To gain additional market share or revenue
• To expand the target market
• To develop favorable consumer experience with the product
• To add extra value to the product & develop brand franchise

Reactive:
• In response to competitor’s move
• When excessive inventory piles up
• To generate short term revenue
• When decision is to discontinue product of close down business

Objectives of Sales promotion

To create seasonal demand / check fluctuations in sale
To reduce inventories before financial year closing
To increase stockholding of old / slow moving brand before introduction of new
brands
To encourage repeat purchase or deflect customer attention from price increase
To motivate sales person ,dealer & retailer
To increase store traffic and shelf space

Sales promotion fills the gap between advertising & personal selling by
coordination & supplementation of these 2 activities. Ales promotion acts at e
levels
Consumer : consumer promotion ( free gifts, samples, price off etc)
Dealer & distributor : trade promotion ,free goods, display contest, pop materials
At Sales Person’s level: Sales man’s contest, bonus ,sales tallies etc)

Sales promotion & consumer behavior

Consumer behavior is based on conditioned behavior
Classical conditioning: Stimulus ----- response (Pavlov’s food – bell---
salivation)
Instrumental conditioning: response --- reinforcement ( If behavior is reinforced
it is more likely to be repeated in future

Attribution theory : consumer adapts various approaches to explain their own

behavior and that of others

• Self perception: favorable brand attitude base on the past behavior

• Object perception: Judge quality of a brand on promotion by the event
• Other persons perception: asks “why “ about the action of other person

Consumer price perception:

The list price and the promoted price should be hi enough to be noticed ( Rs. 50
on 3000 is not noticeable promotional price)

Consumer decision making:

Starts with need to purchase the product. Sales promotion is to remind the
customer that he needs the product. Awaken the latent demand / need for the
product ( . Exchange offer, interest fee installment)

How are sales affected by Sales Promotion?

Brand switching: Encourage the customer to purchase the promoted brand

Repeat buying: Induce customer to buy the same brand again in future by rewarding
and reinforcing
Purchase more: Purchase more quantity than their immediate need ( D Mart )
Increasing category expansion & consumption: Sales person stimulates demand hy
creating new occasions for purchase or increased consumption (eg. Milk maid canes
with 2 recipe booklets )

Sales promotion design:

Promotional choice: Singly of in combination ( consumer, trade, Sales person)

Product choice: Entire product range or select items High priced or low priced, on
product with high contribution or low
Choice of market area: National or regional programs( regional programs to protect
brand form competitor moves )
Promotional time, duration & frequency – not advisable when retail shelf is full
of competitor’s brand. Seasonal product at the right season

Sales promotion tools and techniques

Price deals: reduce the price & the customer saves money on purchase. Stimulate
customer to try a new product. Encourage new uses to try existing product or
encourage customers to increase purchase quantity, multiple units

Discounts : Defensive ---- to protect form competition

Offensive ----- to increase sales volume & market share

Prize pack deals: Bonus offer, banded packs, buy one get one free etc

Refund and Rebate: – Part or in full ( Maruti – rebate one model if you buy
another, Gillette Buy one model and get entire amount deducted on the value of
another brand )

Coupons: Through print media, direct mail, product package or through retailer
Reach suitable target audience to reduce wastage ( sport, or women’s magazines

Contests: Write slogans, choose name etc (consumer, electronic items )

Premiums: gift given to consumer for a purchase ( eg. Computer magazine with CD
disc free)

Scheme selection and support:

Scheme must be novel and innovative and benefit must reach the consumer
Unscrupulous dealers and transport bottlenecks might hamper scheme.
Product availability during the entire scheme period is a must. Hence proper
forecasting and sourcing is required
Should take into confidence the trade channel and sales persons
Support the activity through advertisement, teaser mails followed by written
testimonials
Follow up : Market assessment, competitor’s moves, reminder ads, additional
deployment of Sales persons would further enhance the promotional activities

Consumer level contests:

Contest should be simple, clear and unambiguous. Media advertised supported by

trade and sales persons

Trade level contests:

Motivate trade to support brand more than push, carry large inventory and use
Point of publicity material more effectively and build buyer seller relationships

Sales rep level:

Special incentives to boost morale of sales persons , launch new products,
increase seasonal sale and revive old products.

Sales person in Industrial goods promotion: Dealer meets, vendor meets, Trade
seminars, free domo etc. In pharmaceutical industry Key opinion leader meets,
medical conference participation, foreign speakers, symposia, journal
subscription, medical equipments. In service Industry