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Evolution of Sales Department: 1. Prior to Industrial Revolution manufacturers were concentrating more on production than selling as the demand was grater than supply. The reasons for the same were as following; a) Age-old technology. b) Lack of skilled workforce. 2. After Industrial Revolution by virtue of improved technology manufacturers were able to produce large quantities of goods. The earlier situation changed i.e. supply was greater than demand. 3. These necessitated the need for selling & market expansion as the local & nearby markets were not able to absorb the excess quantity of goods. For market expansion you need to have your own set up which includes land, building, machinery, workers & capital to raise the same. 4. This led to corporate form of business wherein separate functional departments were established.
Sales Management: Definition: “Sales Management is the planning, direction, & control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying & motivating, as these tasks apply to the personal sales force.”
Objectives of Sales Management
1. Sales volume. 2. Contribution to profit
3. Continuing growth
Major functions of Sales Management: a) Selection of sales force b) Training of sales force c) Motivating the sales force d) Controlling the sales force
Functions of Sales Manager: 1) 2) 3) 4) 5) 6) 7) 8) 9) Preparation of sales plan & budget Setting sales force objectives Estimating demand & forecast sales Determining the size & kind of sales force Recruiting , selecting & training sales persons Designing sales territories, setting sales quotas & defining performance standards Compensating, motivating & leading the sales force. Conduct sales volume, cost & profit analysis. Evaluating sales force performance & taking corrective actions.
Personal Selling: Personal selling is a method of communication, wherein a salesperson communicates prospect. on an individual basis with a
Salesmanship: It is an art of successfully persuading prospects or customers to buy products or services form which they can derive suitable benefits which in turn will increase their total satisfaction.
Setting Personal Selling objectives
Being one of the elements of Promotion Mix the exact role of Personal Selling is determined by Marketing Management in consultation with Sales Management. Marketing planners sets personal selling objectives, determines sales related marketing policies, formulates personal selling strategies & finalises the sales budget.
Types of Personal Selling objectives: 1) Qualitative objectives 2) Quantitative objectives
Qualitative Objectives: Qualitative objectives are generally carried over from one period’s promotional program to the next. On the basis of company objectives following qualitative objectives may be assigned; 1) 2) 3) 4) To do the entire selling job if there are no other elements of promotion mix. To service existing customers i.e. maintain contacts with present customers, take orders & so on. To search out & obtain new customers. To secure & maintain customers’ co-operation in stocking & promoting the product lines.
E. Quantitative objectives are either related or derived from sales volume objective. 9) To collect & report market information related to the company’s interests. E. Personal Computers. 8) To assist with the training of middlemen’s sales personnel. 1) 2) 3) 4) To capture & retain a certain market share.g. To obtain new accounts of given types. Quantitative objectives: Quantitative objectives are short term & adjusted from one promotional period to another.g.It is an estimation of sales in terms of Rupees or Units in a future period under a particular marketing programme & an assumed set of economic & other factors outside the unit for which the forecast is made.5) To keep customers informed on changes in the product line & other aspects of marketing strategies.it is an estimation of maximum sales opportunities present in a particular market segment open to a specified company during stated future period. YKG/SDM/06-07 4 . Some important terms that assists in setting sales volume objectives. Small car segment • Sales potential: . 6) To assist customers in selling the product line 7) To provide technical advice & assistance to customers in case the product is complex in nature & tailor made.it is an estimation of the maximum sales opportunities present in a particular market segment which open to all sellers of a good or service during a stated future period. Maruti Suzuki • Sales forecast: . To keep personal selling expenses within set limits. • Market potential: .g. E. They are as following. To obtain sales volume in ways that contributes to profitability.
1) Market identification: . E.It includes finding out the motivating factors which led to the buying decisions of existing customers & potential customers. • Jury of Executive Opinion • Poll of Sales force opinion • Delphi Technique YKG/SDM/06-07 5 .The third logical step is to analyse the market potential. 3) Analysis of market potential: .It includes • Who buys the product? • Who uses it? • Who are the prospective buyers or users? 2) Market motivation: . In simple words it includes finding out answers to following questions • Why do people buy? • Why don’t people buy? Answers to these questions helps in estimating market potential & assists the sales executive in increasing the effectiveness of promotional programmes.) Sales Forecasting Methods: . Generally market potential cannot be analysed directly. so analysis makes use of market factors (market features or characteristics related to the product’s demand.g.Analysing market potential: .following are the steps involved in this process. no of males reaching an age where they start shaving.
Recruiting & Selecting sales personnel What is Recruitment? Recruitment is finding potential job applicants. as the entire Sales Organisation depends on a successful recruiting approach. telling them about the company & getting them to apply. Through this process the employer tries to find out applicants who are having potential to be a good employee. Process of Recruitment: Preparation of Job Description & specification Identification of sources of recruitment & methods of communication Designing an effective application form & preparing a short list Interviewing Selection YKG/SDM/06-07 6 .
g.at this stage following factors should be kept in mind. • Nature of the market: . speech • Attainment – qualifications. experience • Aptitude & qualities – ability to communicate.Aware prospects or high level Executives. self motivation 2) Identification of sources of recruitment: .E.: . • Recruiting Budget: - YKG/SDM/06-07 7 .1) Preparation of Job description & specification: . • • • • • • Internal source or persons within the company. • • • • • • The title of the job Duties & responsibilities Reporting Technical requirements Location & geographical area to be covered Degree of autonomy Personal specifications: • Physical requirements – appearance.Major sources of recruitment are as following .highly technical product requires an experienced & knowledgeable person. Recruitment agencies Educational institutes Competitors Other industries Advertisements Factors to be considered in evaluating the sources of recruitment: • Nature of the product: .
b) In case of inexperience it helps in achieving improved job performance as it acts as a substitute for or supplements experience c) It helps in reducing the rate of employee turnover & in turn helps in cutting down the recruitment & selection costs YKG/SDM/06-07 8 . Developing & conducting Sales Training Programmes: * Purpose of Sales Training: . It may start with application form which consists of details like qualifications.it varies from company to company depending on the size of the company. 4) Interviewing. • Initial screening interviews: .to eliminate undesirable recruits. Importance of sales training: Sales training is necessary for following reasons.• Legal Considerations. • Group discussions • Final interview • Reference check. the number of sales persons required etc. personal interview or test. experience. Purpose: . 5) Selection: .to achieve improved job performance. a) High employee turnover ratio.The selection process includes following steps. 3) Inviting applications & short listing.
Building sales training programmes: Building sales training programmes requires decision making related to training aims. a) Job specifications. 1.: . Improving sales performance Improving productivity of sales persons. 3. 4. training methods and execution of training programmes & evaluation procedures. c) Sales related marketing policies: - YKG/SDM/06-07 9 . In order to operationalise these general aims it needs to be converted into specific aims.. Defining Training Aims: In general. which derives from training needs.The gap between qualifications in the job specifications & the trainee’s qualifications decide the nature & amount of training required. Imparting product knowledge Improving communication skills & so on…. 2. content. all sales training programmes have the goals like. Identification of Initial Training Needs: While determining the initial training needs following factors needs to be analyzed. b) Trainee’s background & experience: . • Time Management • Approaches to selling etc.It helps in identifying the areas where new personnel requires training like.
YKG/SDM/06-07 10 . 2) Changes in the market condition. Sales Techniques. Sales Training Content: 1) 2) 3) 4) Product knowledge. identification of specific training needs of experienced sales personnel which arises due to 1) Changes in sales related marketing policies.Identification of Continuing Training Needs: Determining the specific aims for continuing sales training programme necessitates. Market Company information.
Books • CD-ROM On the Job Training • Mentoring • Job Rotation YKG/SDM/06-07 11 .Sales Training Methods: Classroom / Conference Training • Lectures • Demonstrations • Group Discussions Behavioral Learning • Role Playing • Case Studies • Simulation Games Online Training • EPSS • IMT • Distance Learning Sales Training Methods Absorption Training/ Self Study • Audio Cassettes • Manuals.
Importance of Motivation: • Financial performance depends upon the achievement of sales volume objective. • Financial rewards/ Compensation. • Very few sales persons are confident. Sales Contests. Commission. hence they require encouragement & incentives from the management to achieve the set targets. • Non. Combinations. b) Sense of accomplishment. • Majority of the sales persons are not adequately motivated. a) b) c) d) e) f) Salary.financial rewards a) Promotion. Fringe benefits/ perquisites. YKG/SDM/06-07 12 . Bonus. ambitious & self motivated.Elements of motivational mix are as following. which induces a person to put in efforts for achieving the set targets.Motivating Sales Personnel:What is Motivation? • Motivation is nothing but a driving force. Motivational Mix: .
e) Job security etc. d) Recognition.c) Personal Growth Opportunities. YKG/SDM/06-07 13 .
Evaluate the Compensation Plan. Determine general levels of Compensation. 1) 2) 3) 4) 5) 6) 7) Examine Job description. Job security etc.It includes Fringe benefits/ perquisites c) Combinations: • Non. b) Indirect payment: . Recognition. 14 YKG/SDM/06-07 .It includes Salary. Sense of accomplishment. Personal Growth Opportunities. commission & bonus.Financial Compensation:a) b) c) d) e) Promotion. • Financial Compensation: a) Direct payment: . Designing effective Compensation Plan: The process of designing Compensation plan includes following steps. Pretest the Compensation Plan.Designing & administering Compensation Plan:The Structure of Sales force Compensation is as follows. Develop Compensation Mix. Administer the Compensation Plan. Set up specific objectives.
customer letters & complaints/ feedback.In this stage the Management establishes the basic policies regarding – a) b) c) d) Frequency of evaluation: . Procedure for evaluating & controlling sales force performance: 1) Set policies on performance evaluation & control: . It helps in determining the training needs of individual salespersons & the entire sales force. YKG/SDM/06-07 15 .g.like reports. half yearly. incentives & attrition etc. monthly & weekly etc. quarterly. It helps in decision making in regard to increments.Developing & Managing Sales Evaluation Programme: Objectives of Sales force Evaluation & Control – • To determine how they have performed? • To manage sales force in an effective way by using the outcome of their performance review. Benefits of Sales performance review: • • • • It helps in improving sales person’s performance by identifying the causes of unsatisfactory performance.E. supervisory calls. yearly.Who will evaluate the performance? Management by Objectives: Sources of information: . It helps in identifying the salespeople who deserve promotion by virtue of their performance. Evaluating Authority: .
2) Decide the bases of salespersons’ performance evaluation: 1) Result based viewpoint. In this session. 4) Recording actual performance. 7) Take corrective actions. YKG/SDM/06-07 16 .The Sales Manager conducts a review session with every salesperson on a predetermined day. • Immediately after the evaluation session is over the Sales Manager communicate to the salesperson about the performance evaluation results & the objectives for the future period. 6) Review performance evaluation with sales people: . 5) Compare actual performance with standards. & summerises the total performance evaluation. 2) Criteria based view point 3) Establish performance standards. • Salesperson reviews his/ her own performance in accordance with the set standards. date & time. • Sales Manager reviews the evaluation of each criterion.
lodging & boarding expenses YKG/SDM/06-07 17 .Insurance Policy Sale.g.Mumbai. fewer nights away from home. which in turn leads to reduction in the traveling cost. ii) to win over competitor’s customers 2) Better control on selling expenses of Salespeople: • By having a well designed Sales Territories the sales persons spend less time in moving from one place to another. Maharashtra & Goa Reasons/ benefits of setting up or reviewing Sales Territories: 1) Better coverage of market/customers: • A well designed Sales territory allows sales persons – i) to spend sufficient time with present & potential customers which improves market coverage.g. roping in members for MLM etc. E.: .Designing & Allocating Sales Efforts What is a Sales Territory? • Sales Territory is a territory or a market which is made up of present & potential customers rather than a geographical area. • But generally a salesperson is assigned to a geographical area consisting of present & potential customers.: . E.
Metros. Make tentative territories. Generally it is used by manufacturers of consumer products & services who want intensive distribution. Estimate workload capacity of a Salesperson. a) b) c) d) e) Decide call frequency Calculate total number of calls in each control unit. 3) Decide basic territories by using either Build up method or Break down method • Build up Method: .This is the first step in the designing of sales territory which is used for territory analysis. YKG/SDM/06-07 18 . Commonly used Control Units are States. Cities and Districts etc.The next step is to find location & sales potential of present & prospective customers in each control unit.3) Better evaluation of Sales force: 4) It helps in improving Customer Relations: 5) It helps in increasing Sales force effectiveness:- Procedure for designing Sales Territories:1) Select a Control Unit: . Develop final territories.This method helps in matching/ equalizing the work load of salespeople with Sales Territory. 2) Find location & potential of customers: .
of calls/year 192 192 336 720 A – High Sales & profit potential Customers B – Moderate Sales & profit potential Customers C – Low Sales & profit potential Customers District X: District Y: Number of Calls per Year = Column 2 * Column 3 * 12 Number of Calls per Year = Column 2 * Column 5 * 12 YKG/SDM/06-07 19 . of Type month Customers A 4 3 B 2 7 1 20 C Total 30 3 4 No. 1 2 District X District Y Customer Call frequency / No.This can be explained with the help of an example of call frequency & customer visits. calls/year 144 168 240 552 5 of No. of Customers 4 8 28 40 6 No.
YKG/SDM/06-07 20 . b) Forecasting sales potential for each control unit: - In order to forecast or estimate the sales potential the Sales Manager multiplies the total sales potential of the company by Multiple Factor Buying Index of each control unit. a) Estimate company sales potential: - The Sales Manager estimate the sales potential for the total market by using sales forecasting methods. – Population. E. Retail sales etc. Make tentative territories. Estimate sales volume expected from each salesperson.g. Estimation of sales potential for each control unit is explained with the help of following example.• Breakdown Method: .It shows the major factors that influence the sales of a product or service. Forecast sales potential for each control unit. Develop final territories.This is another method by which Sales Territories can be designed. Multiple Factor Buying Index. Personal income. Generally it is used by manufacturers of industrial products who want either selective or exclusive distribution. a) b) c) d) e) Estimate company sales potential for total market.
058 % of Rs. – A company manufacturing & marketing premium bathing soaps all over India wants to find out market potential for this kind of soaps in all major cities including Pune. i. the sales potential for Pune would be 0. the Sales Manager has to consider factors like cost of goods Sold & expected profit. 55 Crores for the year 2006-2007. 55 Crores. The Sales Manager has given weights to these factors 40%. 30% respectively.09) = 0. • Population • Personal Income& • Retail Sales.E.40(0.058 Based on the premium bathing soap industry forecast of Rs.07) + 0.19 Crores for the year 2006-2007. it has 7% of India’s population. 0. The major factors that influence sales of the said product are. While doing so. 30%.30(0.g.30(0.e. the Sales Manager estimates the sales to be generated by individual salespersons in order to Ensure profitable operation. c) Estimate the sales volume expected from each salesperson: In this stage. Then the Multiple Factor Buying Index Pune would be. In case of Pune. 1% of India’s disposable income & 9 % of India’s retail sales. Rs.01) + 0. 3. YKG/SDM/06-07 21 .
cultural & physical characteristics with those of the territories E. But on the other hand if a sales person who is born & brought up rural area will find it very comfortable in dealing with the customers from rural area as he is well versed with the local language & customs of the territory.It is based on key factors like. 1) Relative ability of a Salesperson: .This can be judged by comparing the salesperson’s social. product & market information. ability in verbal & written communication & selling skills.d) Make tentative territories: e) Develop final territories: - Assigning Salespeople to territories: After the designing of sales territories. YKG/SDM/06-07 22 . the Sales Manager allocates salespersons to each sales territory. 2) Salesperson’s effectiveness in a territory: .g. While doing so the Sales Manager should consider two criteria namely. past performance. A Salesperson who is born & brought up in urban area will find it difficult to deal with the customers from rural area.
• Scheduling salesperson’s time. Procedure for setting up a routing plan: • Identify present & potential customers on a territory map. • Classify customers into high. YKG/SDM/06-07 23 . • Improved territorial coverage. • Decide call frequencies for each class of customers. medium or low sales potential customers. • Better communication between Sales Manager & salespersons. It includes following activities. Routing: It is a travel plan used by salespersons for making customer calls in a territory.Managing territorial coverage: After designing of sales territories & allocation of salespersons to different territories the next logical step is to manage the territorial coverage. Advantages of routing: • Reduction in travel time & cost. • Planning of efficient routes for sales people.
In this type . the sales person starts from office or home base & makes calls in one direction.Customer • Circular route pattern: . • Straight Line + Hopscotch: . Base YKG/SDM/06-07 24 . This can be combined with Hopscotch pattern wherein a salesperson starts at the farthest point from home or office base & makes sales calls on the customer way back to home or office.Routing Patterns: The Routing patterns are as following. making sales calls ending at home base or office. Base C1 111 C4 C3 C2 C.In Circular route pattern a sales person starts from his base & moves in a circle.
in next trip a salesperson covers the adjoining circle & continues till the entire territory is covered.• Clover Leaf: . North West Pune East South YKG/SDM/06-07 25 .In clover leaf pattern the first route covers a part of the territory.
the tasks performed within the organizations also multiply. authority & establishing relationships for the purpose of enabling people to work most effectively.” Need for sales organization • Defines lines of authority A sound sales organization crystallizes the relationships between people in the organization.Sales Organization: What is Organization? “It is the process of identifying & grouping work to be performed. indicate where responsibility lies & who is accountable to whom. which have to be performed to achieve the sales objectives. together in accomplishing objectives. in terms of authority responsibility and accountability. defining & delegating responsibility. Sales organization ensures that all “necessary” activities are assigned to specific personnel. As companies grow. YKG/SDM/06-07 26 . In other words Sales Organization clearly defines the flow of instructions. • Ensures that all necessary activities are assigned and performed The process of organizing presupposes identification of necessary activities. and also helps in supervising the performance of all these activities.
YKG/SDM/06-07 27 . In short the organization chart depicts the normal promotion route to the subordinates. • Facilitates proper utilization of executives’ time As operations and activities in the sales department increase in number and complexity. the possible avenues of growth. delegation of authority becomes imperative. A sound organization design allows effective use of specialization so that executive may spend less time in operations and more on planning. A good use of the organization chart may be made by the management. In other words organization provides a framework within which sales managers & salespersons are able to discharge their duties efficiently & effectively as it clearly defines which task should be carried out by whom.• Provides insight into avenues of advancement The personnel in the sales department look at the organizational structures as one of the indications of the direction in which their future careers may grow. in communicating to the subordinates.
Types of Sales Organization 1) Line Sales Organization: V. Manager Sales Area Sales Manager 1 Sales people Area Sales Manager 2 Area Sales Manager 3 Area Sales Manager 4 Sales people Sales people Sales people YKG/SDM/06-07 28 . Degree of specialization. Degree of centralization. 4.Basic concepts of sales organization: 1. Marketing G. 2. 3. Span of control.P.M. Line & staff positions.
Functional Sales Organization. 2. 3. Field Sales Organization: • • • • Geographic Sales Organization. Hybrid Sales Organization. YKG/SDM/06-07 29 . Sales Organization with market specialization.+ Advantages of line sales organization: 1) Clarity in authority & responsibility: 2) Quick decision making: 3) Low cost: - Disadvantages of line sales organization: 1) Overburdened authorities: 2) Lack of time for sales planning & analysis: -May lead to inefficiency: Applicable for small firms. Sales Organization with product specialization.
YKG/SDM/06-07 30 .
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