SALES MANAGEMENT & PERSONAL SELLING

SALES DEPARTMENTS have responsibility to their Organizations – for obtaining sales volumes, providing profit contributions & continuous business growth. Customers – (wholesalers, retailers or users) expect them to supply easily saleable products & services, backed by supporting services & assurance that these are wise investments in the competitive market place. Society – looks to them to assure delivery of goods at prices that users are willing to pay & these products are not potentially damaging to the environment. EVOLUTION OF THE SALES DEPARTMENT • PRIOR TO INDUSTRIAL REVOLUTION Small Scale Enterprises-generally supervised by single owner. Selling mainly to nearby customers. Orders obtained easily. Selling / Marketing handled on part-time basis. Chief problem was to get enough production. • AFTER INDUSTRIAL REVOLUTION Industrial Revolution began in 1760 in England & shortly after in US. Newly built factories manufactured huge quantities of all kinds of goods. Large capital invested in solving problems of land, buildings & machinery as well as hiring large numbers of workers. Business adopted Corporate form of Organization – large scale manufacturing enterprises. First-hand administration became difficult leading to authority delegation and separate functional departments. Continued operation of enterprises demanded great expansions in sales coverage – increasingly necessary to find & sell to new markets.

Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

SALES MANAGEMENT & PERSONAL SELLING

Sales departments set up after activation of manufacturing & financial departments. • ADVENT OF SPECIALIZED SALES DEPARTMENTS o Sales departments solved organization problems of market expansion. o Communication with customers received next attention. o At first goods were sold to retailers, who sold them directly to consumers. o Large retailers began to purchase for resale to other retailers ultimately evolving into wholesale institutions. Addition of middlemen to channel of distribution complicated problem of market expansion. o Marketing activities conducted by manufacturer’s sales department grew in importance. Tasks such as Advertising, Sales Promotion became increasingly complex. New departments for carrying out specialized tasks and also involving sales departments and middlemen fragmented the marketing operations. o However Sales Departments continue to have underlying responsibility to make sales happen and it is the income-producing division of business. SALES MANAGEMENT Originally referred to direction of Sales Force Personnel For some time it took broader meaning – in addition to management of personal selling it included management of all marketing activities including advertising, sales promotion, marketing research, physical distribution, pricing & product merchandising. In time business adopting academic practice came to use the term MARKETING MANAGEMENT rather than Sales Management. AMA DEFINITION
Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

SALES MANAGEMENT & PERSONAL SELLING

AMA ultimately agreed SALES MANAGEMENT meant “the planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force.” OTHER RESPONSIBILITIES Sales Managers are also responsible for – Organizing the sales effort both within and outside the company Participating in preparation of information critical to key marketing decisions – budgeting quotas territories Participate in decisions on products marketing channels & distribution policies advertising & other promotion pricing OBJECTIVES OF SALES MANAGEMENT • Sales Volume • Contribution to Profits • Continuing Growth Objectives are translated into more specific goals, that the company has a reasonable chance of reaching. During the planning sales executives provide estimates on market & sales potentials, the capabilities of the sales force and the middlemen etc.

Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

com . Gross Margin & Expenses are affected by the caliber & performance of the sales management and these are major determinants of the Net Profits SALES EXECUTIVE AS A COORDINATOR • Organization & Coordination Coordination of different order getting methods under one Head Generally democratic administration – all subordinates consulted Subordinates & Superiors able to visualize circumstances of decisions • Planning & Coordination Coordination of marketing objectives and draft plans that achieve desired results at optimum cost Determine the relative amounts of elements like personal selling. Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING SALES MANAGEMENT & FINANCIAL RESULTS Sales – Cost of Sales = Gross Margin Gross Margin – Expenses = Net Profit Sales. display & other promotional efforts for desired results Advertising may prove uneconomical unless sales force capitalizes on the interest aroused If advertising & personal selling tell the same story the impact is magnified manifold Teaching notes of Vijay Bhandari. advertising in the Marketing Program to equate their marginal effectiveness Help in finalizing a marketing program. which is appropriate for market conditions & reflects contribution of the sales force • Coordination with other elements in the Marketing Program Personal selling efforts must be coordinated with advertising.

directional & POP displays in self-service retail stores and coordinating timing with campaigns Reconciling Business Goals Sharing business information and leads Special market survey reports Fair and impartial dealings with all outlets Sharing Promotional Risks Consent to share at time of selection Generally better appreciated in exclusive / selective marketing tie-ups • Coordination & Implementation of Overall Marketing Strategy Problems in coordination occur in timing and sequence of execution of various phases. Activities to be coordinated are Advertising Sales Calls Publicity releases Availabiliy of product Teaching notes of Vijay Bhandari.com . store signs. Email: vb73@hotmail. permissions for merchandising.SALES MANAGEMENT & PERSONAL SELLING Sales force should ensure proper timing and coordination for point of purchase (POP) displays in retail stores couponing . obtaining shelf-space. sampling or discount efforts at dealer end • Coordination with Distribution Network Gaining Product Distribution (specially for new products) Persuade middlemen to associate with product’s distribution Present convincing arguments of its salability & hence to stock New products face Distributor lethargy & Dealer indifference Obtaining Dealer Identification Advertising dealers – local advertisements.

never precise Appropriate if they contribute to personal selling efficiency Expressed as ranges of acceptable performance – human variation • Gathering & Processing Data on actual performance Information collection and its cost should be less than its worth Changes in executives. past & future Appraise short-term & long-term objectives relative to plans. Email: vb73@hotmail. policies etc may change usefulness Savings are possible by eliminating multiple sources and changing intervals of information gathering & processing Timely reporting of variations with suggested action to concerned unit Electronic data processing makes it easier if properly designed • Evaluating Performance Differences in territorial / other conditions make it difficult to compare individual performances Comparing actual with standard explains each individual performance Teaching notes of Vijay Bhandari.SALES MANAGEMENT & PERSONAL SELLING SALES MANAGEMENT & CONTROL • Sizing up the Situation Reviewing personal selling objectives – present. policies & procedures Correct weaknesses in plans. policies & procedures • Setting Quantitative Performance Standards Continual experimentation.com .

Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING Departure from standards classified into controllable & uncontrollable • Action to correct controllable variation Take steps to move individual’s performance in the direction of standards by one of the three forms: Direction – pointing out more effective ways Guidance – providing additional instructions / training Restraint – procedures & practices aimed at keeping results within bounds • Adjusting for uncontrollable variation Adjusting sales plans and policies Adjustment of standards to attainable levels SALES CONTROL – INFORMAL & FORMAL • Informal Control Effective sales executives have “Fingers on the pulse of the business” The larger the organization and higher up the executive the harder it becomes to use “fingertip” control • Formal Control & Written Sales Policies Sales policies in writing Limits within which action is to take place are specified Teaching notes of Vijay Bhandari.com .

com . a new policy is formulated and put in writing Policies evolve through study & evaluation of tangible information Become appropriate & good through successive revisions • Formal Control over Sales Volume Sales or Market forecast serves as a standard for evaluating sales performance Between forecasts sales executives monitor industry sales trends.SALES MANAGEMENT & PERSONAL SELLING Complex problems – less chance everyone will know what to do in every circumstance Written policies ensure substantial uniformity of action both among different persons handling same problem and same person handling the problem at different times • Policy Formulation & Review Written policies allow sales executives to spend more time for handling policy exceptions If they encounter enough exceptions of similar nature. competitor activities & market-share percentages • Budgetary Control Formal control requires setting up budgetary controls & setting up sales territories Represents extension of control over sales volume to control over margins & expenses and hence over profits SALES CONTROL & ORGANIZATION • Decentralization limited by caliber & experience of executives • Leads to greater control by executives lower in hierarchy Teaching notes of Vijay Bhandari. Email: vb73@hotmail.

Short Line – handles only part of the line. e.g. Risk is divided over many products.SALES MANAGEMENT & PERSONAL SELLING • Improves speed of initiating corrective action SALES RELATED MARKETING POLICIES Sales related marketing policies impact on the functions & operation of the sales department. PRODUCT POLICIES – WHAT TO SELL The products a company sells determine its basic nature. Full Line – handles all or most of the items in the product line. • Changes in Product Offerings All items should be re-appraised at regular intervals to continue. They derive from Product Objectives. Cornflakes. Sales executives role may be – to just administer the policies determined by top management – to bear sole responsibility for determining policies – subject to top management approval. They delineate guidelines within which the effort to reach personal selling objectives is made. Greater risk and product specialization enables achieving low unit costs hence greater profitability. e. all Breakfast cereals. add or drop. Email: vb73@hotmail.g.com . Product policies are guides to making product decisions. PRODUCT LINE POLICY Concerned with the width of a Product Line. • Reappraising the Product Line & line simplification Teaching notes of Vijay Bhandari.

Other sources are lists of inventions. A liberal service policy helps to reduce customer’s reluctance to buy a product. Teaching notes of Vijay Bhandari. Email: vb73@hotmail. • Extent to which designs should be prevented from copying PRODUCT QUALITY & SERVICE POLICY High-quality products require less service and low-quality products more service. Action is required to add products or product lines. competition.SALES MANAGEMENT & PERSONAL SELLING Each item is compared with similar and competing items in other manufacturer’s lines. • Ideas for new products Sales department identifies unsatisfied needs in its day-to-day contacts with customers & prospects. profitability. legal implications. which a customer can judge only after purchasing the product. • Reappraising the Product Line & line diversification Reappraisals are made relative to growth objectives. government patents etc. Generally an item is not retained in a product line if it does not meet profitability standards or shows no indications of meeting them. Production & R&D departments come with ideas for improvements in existing products or new products. PRODUCT DESIGN POLICY • Frequency of Design Change. • Appraisal of proposed new products Criteria for appraising are – nature & size of likely markets. These objectives get restricted in mature or dying markets. Product quality is a matter of characteristics built into the product. utilization of sales force capabilities.com .

DISTRIBUTION POLICIES – WHO TO SELL Important determinants of the sales force functions. Channels are chosen to obtain the optimum combination of profit factors. Decide first upon policy to be followed at the distribution level nearest to the final buyer as same decisions must be applied at other levels. • Mass Distribution Teaching notes of Vijay Bhandari. Email: vb73@hotmail. Decisions on marketing channels are required to be made .SALES MANAGEMENT & PERSONAL SELLING GUARANTEE POLICY It is a protection for the customer and is used as a sales promotion device.at the time of the initial organization of the enterprise .com . Decision on number of outlets at each distribution level affects the size and nature of sales organization and the scope of its activities. The most profitable combination of the following three factors should be sought over short-term and long-term: • Sakes volume potential • Comparative distribution costs • Net profit possibilities POLICIES ON DISTRIBUTION INTENSITY At each level of distribution decisions are made on the desired number of outlets.when making additions to the product line. POLICIES ON MARKETING CHANNELS Companies consider and use number of different marketing channels for selling their products.at the time of reappraising the effectiveness of the marketing channels .

POLICY ON PRICING RELATIVE TO THE COMPETITION • Meeting the Competition • Pricing above the Competition • Pricing under the Competition POLICY ON PRICING RELATIVE TO THE COSTS Teaching notes of Vijay Bhandari.SALES MANAGEMENT & PERSONAL SELLING Aim is to get maximum sales exposure by securing distribution through all those outlets from where users may expect to purchase the product.com . • Selective Distribution Selecting only those outlets which can best serve the interests of the manufacturer – generally attempting to make every outlet a profit contributor. Sales personnel are the company employees most directly involved in persuading customers to accept the products at the prices asked. Often manufacturers using this policy require several marketing channels. profitability. volume of purchases. Used in distributing consumer convenience items. Email: vb73@hotmail. type of operation & location are specified to make selections. • Exclusive Agency Distribution The manufacturer makes a written or oral agreement with a middleman in each market area to distribute the company’s product or products in that area through that middleman only PRICING POLICIES All sales executives are responsible for implementing the pricing policies. Criteria relating to size of orders.

SALES MANAGEMENT & PERSONAL SELLING • Full-Cost Pricing • Promotion Pricing • Contribution Pricing POLICY ON UNIFORMITY OF PRICES TO DIFFERENT BUYERS POLICY ON LIST PRICING POLICY ON DISCOUNTS • Trade Discounts • Quantity Discounts GEOGRAPHICAL PRICING POLICIES • FOB Pricing • Delivered Pricing POLICY ON PRICE LEADERSHIP PRODUCT LINE PRICING POLICY COMPETITIVE BIDDING POLICY MARKET POTENTIAL A market potential is an estimate of the maximum possible sales opportunities present in the market and open to all sellers of a good or service during a stated future period. Teaching notes of Vijay Bhandari.com . Email: vb73@hotmail.

Analysis of Market Potential Teaching notes of Vijay Bhandari. • The relative appropriateness of various promotional methods. SALES FORECAST A sales forecast is an estimate of sales in a future period under a particular marketing program and an assumed set of economic & other factors outside the unit for which the forecast is made. Market Motivation Detect why customers buy and why potential customers might buy the product.com . 2. Besides estimating market potential they assist in deciding: • How best to present the product to potential buyers? • The relative effectiveness of different selling appeals. Such forecasts are short-term or operating forecasts. It may be for the entire marketing are or any sub-division of it. Email: vb73@hotmail. (Long-range forecasts are used for planning production capacity & long-run financial planning) STEPS IN ANALYZING MARKET POTENTIAL 1. It may be for a single product or a for an entire product line.SALES MANAGEMENT & PERSONAL SELLING SALES POTENTIAL A sales potential is an estimate of the maximum sales opportunities present in the market open to a specified company selling a good or service during a stated future period. 3. Market Identification Who buys the product? Who uses it? Who are the prospective buyers / users? Use internal records or field research and define characteristics.

com . SALES POTENTIAL & SALES FORECASTING • Sales potential of a specified company are derived from market potentials after analysis of market-share relationships & adjustments for changes in companies’ & competitors’ selling strategies & practices. MARKET INDEXES A numerical expression indicating the degree to which one or more market factors associated with a given product’s demand is present in a given market segment – usually a given geographical market segment. Usually expressed in relative terms like percentages. Many reasons are possible: o Insufficient production capacity o Not developed distributive network o Limited financial resources o More profit oriented – seek to maximize profit not sales • Sales forecast indicates how much a company with a given amount of resources can sell if it implements a particular marketing program SALES FORECASTING METHODS Teaching notes of Vijay Bhandari. income. • Eliminate those segments that do not contain prospective buyers. age.SALES MANAGEMENT & PERSONAL SELLING Analysis makes use of market factors (it is a market feature or characteristic related to the product’s demand). Email: vb73@hotmail. 2-steps process: • Select the market factor(s) associated with the product’s demand. • A companies’ sales potential & forecast is usually not identical – in most cases potential being larger than forecast. Examples – population as a % of national total. Can be further refined into sub-indexes.

middlemen & sales force. An average estimate is calculated. Email: vb73@hotmail. same as LY. territories.SALES MANAGEMENT & PERSONAL SELLING 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. Panel responds to series of questionnaires in which one questionnaire is used to produce the next. Projection of Past Sales Simple methods apply different kinds of multipliers – e. Thus information available to some is disseminated to all enabling them to forecast on all available information. The Delphi Technique Rand Corp developed technique for predicting future: Members of jury are chosen for their expertise. 1. 3.com . Jury of Executive Opinion High-ranking executives estimate probable sales. Individual forecasts are combined & modified by management. Poll of Sales Force Opinion Individual sales personnel forecast for their territories. 2. moving average of past periods. Serves as best method to get alternative estimate for cross checking. No method is foolproof – each is subject to some error. customers.g. Time-Series Analysis Statistical procedure for studying historical sales data – involves isolating & measuring 4 main types of sales variation: Long-term trends Teaching notes of Vijay Bhandari. Easy to break down according to products. adding set % to LY. Good companies use a least 2 different methods to arrive at an acceptable forecast.

Evaluation of Past Sales Projection methods Key limitation lies in the assumption that past sales history is the sole factor influencing future sales. It involves fitting an equation to explain sales fluctuations in terms of related & presumably casual variables.SALES MANAGEMENT & PERSONAL SELLING Cyclical changes Seasonal variations Irregular fluctuations Practical application is mainly in making long-range forecasts. Teaching notes of Vijay Bhandari. 5. Email: vb73@hotmail. Regression Analysis Statistical process determines & measures the association between company sales & other variables. Survey of Customers’ Buying Plans Ask customers about their future buying plans. t is a type of moving average that represents a weighted sum of all past numbers in a time series. Past sales projection methods are best used as check forecasts.com . The accuracy largely depends on how close the company is to saturation point. Exponential Smoothing Another statistical technique. with the heaviest weight placed on the most recent data. substituting for these variables values considered likely during the period to be forecasted and solving the equation to arrive at the sales figure. Works best in Industrial marketing where: Potential market consists of small number of customers / prospects Substantial sales are made to individual accounts Manufacturer sells directly to users Customers are concentrated in few geographical areas. 4.

com . CONVERTING INDUSTRY FORECAST TO COMPANY SALES FORECAST Many companies use an econometric model to forecast Industry sales and then apply the company’s market-share % to the industry forecast to arrive at a first estimate of the company’s forecasted sales. multiple Regression Analysis techniques are used. 6. An econometric model unlike a regression analysis model is based upon an underlying theory about relationships among a set of variables & parameters are estimated by statistical analysis of past data. Email: vb73@hotmail. However they are best used to forecast Industry sales because number of independent variables affecting an individual company’s sales are more numerous & more difficult to measure than those determining the sales of an Industry. Econometric Model Building & Simulation This approach uses an equation or system of equations to represent a set of relationships among sales and different demand-determining independent variables.SALES MANAGEMENT & PERSONAL SELLING Where sales are influenced by two or more independent variables acting together. Econometric model building seems a nearly ideal way to forecast sales – it considers interaction of independent variables that bear logical & measurable relationship to sales and it uses regression analysis techniques to quantify these relationships. Teaching notes of Vijay Bhandari. Evaluation of Regression Analysis for sales forecasting If high coefficients of correlation exist between company sales and independent variables the forecasting problem is simplified specially if the variables lead the company sales.

It must be attainable at costs low enough to reach net profit objective and the company’s marketing forces (i. the dealer organization etc.) must be capable of achieving the objective set. Deriving company sales forecast from an industry forecast requires an appraisal of the company strengths & weaknesses and its marketing programs against those of competitors. The result is an expected market share hat results in a forecast of company sales. EVALUATION OF FORECASTS • Examine the assumptions on which it is based • Ask what would be the effect of removing or changing the assumption • Has sufficient account has been taken of competitor situation & strategies Teaching notes of Vijay Bhandari.com . Email: vb73@hotmail.e.SALES MANAGEMENT & PERSONAL SELLING In two of the above methods – poll of sales force opinion and projecting of past sales – it is normal to skip the industry sales forecast and forecast company sales directly. its sales force. A sales forecast estimate does not necessarily become the sales volume objective. The sales volume objective should be consistent with management’s profit aspirations and the company’s marketing capabilities. Adjustments are necessary when the Company alters its marketing program or changes occur in competitor’s marketing strategies. the advertising program. DERIVATION OF A SALES VOLUME OBJECTIVE A sales forecast contains the estimate of sales tied to a proposed marketing program and assumes a set of economic & other forces outside the unit for which the forecast is made. A sales volume objective for the coming period is the desired outcome of sales forecasting procedure.

• WHO is going to sell HOW MUCH of WHAT during the OPERATING PERIOD & to WHICH CUSTOMERS or CLASSES of TRADE. expense and profit goals for various sales units – which serve as a yardstick against which progress is measured.Marketing Channels .Products . Selling Expenses & Net Profits. • Sales Volume. Measured for . PURPOSES OF THE SALES BUDGET • MECHANISM OF CONTROL Completed budget is a composite of sales.com .Sales Regions .SALES MANAGEMENT & PERSONAL SELLING • Has account been taken of any new competitive products Accuracy of the forecast should be evaluated as the forecast period advances.Customers • INSTRUMENT OF PLANNING Teaching notes of Vijay Bhandari. Email: vb73@hotmail. Differences of actual results against forecast should be explained and adjustments made for the remainder period.Individual Sales Personnel . Comparison of achievements is done against relevant breakdowns of the budget. SALES BUDGET • Blueprint for making profitable sales.

. FORM & CONTENT • The completed sales budget is a statement of projected sales revenues & selling expenses. Some selling expenses would not be incurred if management did not look beyond the current budgetary period. Teaching notes of Vijay Bhandari. Profit maximization is the objective over the long run.and long-run sales plans are taken into account for estimating selling expense items included in the sales budget.Sales management expresses plan for forthcoming period in terms of required activities. Unit Sales by sales territory (&/ or region). Budgeted figures are readily adjustable for price changes.com .OPTIMUM not Maximum Net Profit is short-run objective. Unit Sales by Class of Account (or type of marketing channel) • Estimating Budgeted Selling Expenses. Formulate sales plan so that sales volume & net profit objectives are reached.SALES MANAGEMENT & PERSONAL SELLING Sales Forecast shows where it is possible for business to go. . • Summary of Sales Volume – both in value & units. .Both immediate. Calculate expenses of converting forecasted sales into actual sales.Other considerations like necessity for providing “business building” customer services and for scheduling calls on prospective “new accounts” make profit optimization the short-run goal. • Budget Section of Planned Sales – Total Unit Sales of each product. . Unit Sales by quarters or months. Email: vb73@hotmail. Budgeting process determines ways & means for business to get form WHERE IT IS to WHERE IT WANTS TO GO.

Using standard costs based on actual past average costs adjusted for standard performance by a standard employee under standard conditions. • Experts recommend bottom-up style as much as possible as participation in planning maximizes benefits from sales budgeting.SALES MANAGEMENT & PERSONAL SELLING . inflation etc. .Expense estimates in the budget have greater accuracy if historical unit costs are used to calculate individual selling expense items. business conditions. .In absence of standard costs some companies employ average cost per unit sold. This may or may not be adjusted for changes in competition. . Email: vb73@hotmail. • Steps in actual Budgetary Procedure .Then sales management 1) estimates the volume of performance of the activity and 2) multiplies that volume by the cost of performing a measurable unit of the activity. Teaching notes of Vijay Bhandari. • Planning Styles and Budgetary Procedures Top-Down – Bottom-Up • Tendency in top-down organizations is for subordinates to accept objectives passed down by superiors. .Lowest level in budgetary process is profit center.com .District budgets are submitted to the divisional / regional office where they are all added together and included in the divisional / regional budget. BUDGETARY PROCEDURE • Company budgetary procedure starts with the sales budget. Each district Sales Manager estimates district sales volumes & expenses for the coming period and contribution to overhead.

IMPORTANT ISSUES IN THE BUDGETARY PROCESS • Handling Competition for available funds within the Marketing Division. . thus simplifying the task of dividing up the same at lower levels.com . . • Using the Budget for Control purposes. selling and other marketing expenses for the company. . is distributed in the organization in a process exactly the reverse of that used in preparation. Teaching notes of Vijay Bhandari. • In the bottom-up planning procedure each subordinate has already prepared sales objectives. with changes necessitated due to changes in the company budget and with corrected details added back.SALES MANAGEMENT & PERSONAL SELLING .Each management level submits their budget for approval to the next higher level along with a detailed description of their unit’s plan for the coming period as support and justification. Email: vb73@hotmail. .Divisional budgets are submitted to the product sales manager or regional budgets to the sales manager. • Selling the sales budget to Top Management.Meanwhile staff departments in marketing have been making their budgets for the activities planned by them for the sales department during the year.At the end of the chain the top sales executive compiles a company-wide sales budget. .At each step an effort is made to reduce the detail to be passed upward so that the final budget is relatively simple and uncomplicated.The top marketing executive adds the sales department budget and the staff department budgets to his own budget to present the total sales revenues. estimate of expenses.The approved budget. .

If sales budget estimates are consistently or frequently in error then more time should be spent in budgetary planning. . Email: vb73@hotmail.Some companies use budgetary procedures without definite sales forecasts due to difficulty in getting accurate forecasts. Efficiency of the selling effort can be measured even if there is wide variation in actual & expected sales volumes. . . Teaching notes of Vijay Bhandari. . budgeted sales and expenses and the difference between the two.A realistic attitude toward the dynamic nature of the market is part of effective sales budgeting.Each sales manager receives monthly or even weekly budget progress reports.SALES MANAGEMENT & PERSONAL SELLING . . This shows the actual sales and expenses for the week.Individual items in the budget serve as “quotas” or “standards”. . .com .If variance is due to changed conditions – the budget is revised to reflect the change. • Flexibility in Budgeting . Budgets can be prepared on the basis of assumed low-level and high-level sales.If competitors initiate actions not foreseen at the time of making the budget funds must be allocated to counteract them. month to date and year to date.If variance is due to poor performance – the concerned person is advised how to bring performance in line.Each level of management compares performance against standards.

SALES MANAGEMENT & PERSONAL SELLING QUOTAS Quotas are quantitative objectives assigned to sales organization units – such as individual sales persons.desired performance levels for sales volume .or some combination of these items. sales districts. OBJECTIVES IN USING QUOTAS • To provide Quantitative Performance Standards A well designed quota system with proper sales analysis helps in assuring that bad performance in selling one product in a territory is not hidden by good showings in other products. Teaching notes of Vijay Bhandari.and non-selling-related activities . All quotas have a time dimension – they quantify what managements expect within a given period. • To obtain tighter Sales & Expense Control Some companies reimburse expenses only up to certain % of sales volume.budgeted items like expenses. net profit & return on investment . gross margin.selling. dealers & wholesalers. Sometimes they are also set for middlemen like agents.com . Standards for appraising selling effectiveness – Quotas specify: . Email: vb73@hotmail.

SALES MANAGEMENT & PERSONAL SELLING

Others appraise sales personnel on their ability to stay within specified limits of expenses. • To motivate Desired Performance Quotas should be attainable goals so that they can inspire the sales personnel to achieve. Motivation also declines if quotas are too easily achieved. • To use in connection with Sales Contests “Performance against quotas” is main basis for giving awards in sales contests. Adjustments are made for differences - in territories (coverage difficulty & competitive position) - among sales personnel (experience with the company & in the territory) REASONS FOR NOT USING SALES QUOTAS • In certain industrial goods categories viz. capital equipment it is difficult to obtain accurate sales estimates; thus quotas are on subjective judgment. • Inordinate expenditure of time & money to estimate sales estimates. • Product is in short supply. QUOTAS, THE SALES FORECAST AND THE SALES BUDGET A sales forecast is a sales estimate tied to a marketing program and assuming certain environmental factors. A sales volume objective is decided, then expenses to achieve this are determined and net profit contributions are calculated in the sales budget.

Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

SALES MANAGEMENT & PERSONAL SELLING

Management decides how much sales volume should come from each territory, what expense should be incurred and consequently what profit contribution should be produced by the territory. Lastly management determines quantitative objectives i.e. quotas for individual sales personnel, units of sales department & customers or distribution outlets. TYPES OF QUOTAS • Sales Volume Quotas How much for what period. Set for individual sales personnel or other units of sales organization. Set for geographical areas, product lines or marketing channels. Quotas become more effective - the smaller the selling unit; for individual products rather than product lines; and for shorter periods rather than longer. • Value Sales Volume Quotas These are set for broad product lines where there are complications in setting unit quotas; where prices are not established; or where sales personnel have discretion to cut prices. • Unit Sales Volume Quotas Useful in situations of frequent price changes or narrow product ranges with stable but high prices. • Point Sales Volume Quotas Used where it is desirable for the sales volumes to be achieved in full range of product lines. If only value quotas are set then tendency is to achieve these by concentrating only on easy to sell products (perhaps lower contribution ones). BUDGET QUOTAS To control expenses, gross margin or net profit.
Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

SALES MANAGEMENT & PERSONAL SELLING

Makes clear that sales personnel job is something more than just obtaining sales volume. • Expense Quotas Used in combination with sales volume quotas as supplemental standards for keeping expenses in line with sales volume indirectly controlling gross margin & net profit contributions. Financial incentive is given to sales personnel to control expenses by tying performance to compensation plan or offering expense bonuses. • Gross Margin or Net Profit Quotas Gross margin or net profit quotas emphasize margin & profit contributions indirectly controlling sales expenses. Sales personnel operate more efficiently if they recognize that sales volume increases, expense reductions are important only if margins & profits result. Ideal for product lines containing both low & high margin items. ACTIVITY QUOTAS To control how sales personnel allocate their time & efforts amongst different activities – these need to be pre-defined – then setting performance frequencies. Activity quotas are generally set for non-selling activities e.g.: • Total sales call on particular classes of customers. • Calls on new prospects – number of new accounts opened. • Missionary calls, number of demonstrations, placement & erection of displays. • Making collections. COMBINATION AND OTHER POINT SYSTEM QUOTAS Combination quotas control both selling & non-selling activities.
Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

• Sales Volume Quotas based on executive judgment alone Teaching notes of Vijay Bhandari.com . Each activity or aspect of the sales job s weighted according to management’s evaluation of its importance. • Sales Volume Quotas derived from total market estimates Used as a top-down approach where neither statistics nor sales force estimate of territorial sales potentials are available. Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING To overcome difficulty of using different units of measurement performances are computed as percentages or points. Combination quotas summarize overall performance in a single measure. Management breaks down company sales estimate into territorial sales estimates on the basis of indices and adjustment is made for environmental factors and personnel effectiveness either at only territory level OR convert sales estimate to company volume quota and break it down territory wise and make adjustments both at company & territory level. • Sales Volume Quotas based on past sales experience alone It is a crude method of applying a uniform percentage increase to past year’s sales or the average sales of past few years. Implies carry forward of past mistakes. QUOTA-SETTING PROCEDURES • Sales Volume Quotas derived from territorial sales potentials Appropriate when territory sales potential is determined in conjunction with territorial design or when bottom-up planning & forecasting procedures are used.

• Letting sales personnel set their own sales volume quotas Usually done when management has no information and it is assumed sales force personnel are the best judge of the sales potential in their territory.Need for continuous managerial control – arrangements for gathering & analyzing performance statistics with minimum delay on monthly / weekly basis. ADMINISTERING THE QUOTA SYSTEM • Accurate. Teaching notes of Vijay Bhandari. Fair & Attainable Quotas • Securing & Maintaining Sales Personnel’s Acceptance of Quotas .Keeping Sales Personnel informed – of progress related to quotas. Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING Justified in cases where there is no past data such as for new products.Participation by Sales Personnel in Quota Setting – leads to understanding and acceptance of fairness . .com . • Sales Volume Quotas related to compensation plan Based on Salary & Commission or straight Commission plans of compensation to the sales force.

SALES MANAGEMENT & PERSONAL SELLING PROMOTIONAL STRATEGY / PROMOTIONAL MIX – To STIMULATE SALES companies resort to a variety of Activities: • Improving their products • Increasing their services • Extending their channels Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com .

4. PERSONAL SELLING – ORAL presentation in a CONVERSATION with one or more prospective purchasers for the purpose of making sales.SALES MANAGEMENT & PERSONAL SELLING • Reducing their prices • PROMOTION activities – i. 3.com . DIRECTING PERSUASIVE COMMUNICATIONS TO THE BUYERS Promotional activities are generally classified into FOUR subactivities: 1. goods & services by an IDENTIFIED SPONSOR. demonstrations & various NON-RECURRENT selling efforts not in the ordinary routine. that stimulate consumer purchasing and dealer effectiveness – such as displays. shows & exhibitions. other than ADVERTISING. 2. ADVERTISING – Any PAID form of NON-PERSONAL presentation & promotion of ideas. Email: vb73@hotmail. SALES PROMOTION – Those marketing activities. PERSONAL SELLING & PUBLICITY. PUBLICITY – NON-PERSONAL stimulation of demand for a product by PLANTING commercially significant NEWS about it in a PUBLISHED MEDIUM or obtaining FAVORABLE Teaching notes of Vijay Bhandari.e.

10. 4. PERSONAL SELLING OBJECTIVES QUALITATIVE These are long term and concern the contributions expected from Personal Selling to achieve long-term Company objectives. Some examples: 1. To assist customers in selling the product line. Email: vb73@hotmail. To secure & maintain customers co-operation in stocking & promoting the product line. (Contacts with & orders from current customers) 3.SALES MANAGEMENT & PERSONAL SELLING PRESENTATION of it on RADIO. Teaching notes of Vijay Bhandari.com . Generally carried over from one promotional program period to the next & so on. (Missionary Selling) 7. 5. (No other elements in the promotional mix) 2. To search out & obtain new customers. 6. Based on sales policies & personal selling strategies and their role in the total PROMOTIONAL PROGRAM. To do the entire selling job. 8. To collect & report market information to Company. To keep customers informed on changes in the product line. TV or STAGE that is NOT PAID FOR by the sponsor. To carry out the training of middlemen’s sales personnel. 9. To provide technical advice & assistance to customers. To service the existing accounts. To provide management advice & assistance to middlemen.

To get certain numbers of new customers of given types. 2. 5. To capture & retain a certain market share. 3.com . Marketing Channels & Distribution PERSONAL SELLING is one of the means of implementing Marketing Programs SALESMANSHIP Teaching notes of Vijay Bhandari. Advertising. Product Development & Research. To secure targeted % of certain accounts business. Other quantitative objectives derive from the Sales Volume objective and examples of these are: 1. To obtain sales volume and ensure profitability by selling “OPTIMUM MIX” of Company products. 4. To keep expenses within set limits. Email: vb73@hotmail. Pricing.SALES MANAGEMENT & PERSONAL SELLING QUANTITATIVE These are short term and adjusted from one promotional period to another. PERSONAL SELLING Along with other marketing elements like. SALES VOLUME is the key Quantitative objective.

Encyclopedias 2. Missionary – Only build goodwill & educate customers e. entertainment Teaching notes of Vijay Bhandari. Automobiles. Engineering Group B (Developmental Selling) 1. often described as “salesmanship in print” utilizes non-personal presentations.g.g. who can identify differences among buyers and make presentations according to individual peculiarities. Pharmaceutical 5. Advertising Group C (Developmental Selling but requiring unusual creativity) 1. Advertising.g. Creative Salesperson of Intangibles – Insurance. Delivery Salesperson – Delivers products e.com . Route or Merchandising Salesperson – Order Taker in field e. Political / Indirect / Back-Door Salesperson – High Value based on contacts.g. Technical Salesperson – Consultant / Providing technical knowledge e. which are generally less flexible than those made by sales personnel. Inside Order Taker – Counter salespersons 2. thereby increasing their total satisfactions. Spices 4. CATEGORIES OF SALES POSITIONS Group A (Service Selling) 1. Creative Salesperson of Tangibles – Vacuum Cleaners. Email: vb73@hotmail.” Both Personal Selling & Advertising make use of salesmanship techniques.SALES MANAGEMENT & PERSONAL SELLING One of the skills used in Personal Selling “ is the art of successfully persuading prospects or customers to buy products or services from which they can derive suitable benefits. Milkmen 3. Soaps.

g. Email: vb73@hotmail. AIDAS Theory of Selling Attention Interest Desire Action Satisfaction 2.com . “Right Set of Circumstances” Theory of Selling Situation-Response Theory holds that the particular circumstances prevailing in a given selling situation cause the prospect to respond in a predictable way. Salesperson engaged in Multiple Sales – Presentations to several individuals / committees – Only one can say YES but all can say NO e.SALES MANAGEMENT & PERSONAL SELLING 2. “Buying Formula” Theory of Selling Adequacy Adequacy ⇑ ⇑ Need or  Product &/or  Trade Name  Purchase  Satisfaction Problem Services ⇓ ⇓ Pleasant Pleasant Feelings Feelings Teaching notes of Vijay Bhandari. Account Executive in Ad Agency THEORIES OF SELLING 1. 3.

force of habit D = present drive level (amount of motivation) K = “incentive potential” i.e. act of purchasing a brand or patronizing a Supplier P = predisposition or the inward response tendency i.e. • They arrange travel & call schedules to economize on time spent en route and distance traveled • They make appointments to avoid prolonged waiting for callbacks • They do not waste time trying to sell to people who cannot or will not buy Teaching notes of Vijay Bhandari.e. product or informational PROSPECTING Efficient organization & thorough planning of work are the earmarks of above-average Salespersons. Behavioral Equation Theory B=PxDxKxV Where B = response or the internal response tendency i. value of the product or its potential satisfaction to the buyer V = intensity of all cues: triggering. Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING 4.com .

Real or apparent reasons for not buying. • Relating company products to each Prospect’s requirements. CLOSING SALES Teaching notes of Vijay Bhandari. Email: vb73@hotmail. which is essential in eliminating calls on non-buyers is called PROSPECTING. If obstacle can be circumvented – say providing loans in case of finance shortage – present the solution. • Searching out Potential Accounts – Comb different sources like directories of all kinds. • SALES OBJECTIONS Never good reasons for failing to complete the sale – but divert attention from the presentation.SALES MANAGEMENT & PERSONAL SELLING The planning work. news & notes in trade papers & business magazines. STEPS IN PROSPECTING • Formulating Prospect Definitions – Identifying characteristics of profitable accounts should be recognizable from information appearing in Directories or Lists. SALES RESISTANCE • OBSTACLES TO SALES Not sales objections .com . Sincere objections trace to incompleteness. • Qualifying Prospects & determining probable requirements – Last resort to qualify could be a personal visit. membership lists. credit lists. They are overcome by patient & thorough explanations. Another important source is customer leads. inaccuracy or vagueness of the sales presentation.

Advertising and personal selling are the critical elements in implementing such an overall marketing strategy. KINDS OF COMPETITIVE SETTINGS 1. All buyers are always informed about all sellers’ prices. Salesperson needs effective persuasion to close the sale – Ask for the Order. Sellers differentiate their offerings through individualizing one or several components of overall marketing strategy. Email: vb73@hotmail. 3. so buyers indifferent from whom they buy. All sellers’ products are identical.com . Pure Competition No single buyer or seller is large enough to affect the product’s total demand or supply. Refusal may indicate prospect’s need for additional information or clarification of some point. 2. Oligopolistic Competition Teaching notes of Vijay Bhandari. No artificial restraints or control of prices.SALES MANAGEMENT & PERSONAL SELLING Indirect Close – attempt to get order without asking for it – by asking prospect to state a preference for say model. Most ultimate consumers are not fully informed about the offerings of the competing sellers. color delivery requirement etc. Monopolistic Competition There may be a large number of sellers of a generic kind of product but each seller’s brand is in some way differentiated from every other brand (at least in final buyer’s mind). Provide this and try another close.

SALES MANAGEMENT & PERSONAL SELLING Number of competitors is small enough that they are individually identified and it is difficult for new competitors to enter the market. 4. Teaching notes of Vijay Bhandari. Both vie with sellers in other industries to attract customers. Advertising and personal selling are the critical elements in implementing overall marketing strategy. The successful firms keep growing and the less successful fail or disappear through mergers. Both must initiate and stimulate primary demand through promotional strategies. Personal selling strategy plays important roles in building & maintaining dealer cooperation. servicing the distribution network and in gathering information on competitor activities. Email: vb73@hotmail. No Direct Competition Monopolistic companies on long term basis and companies marketing new products in the initial pioneering stages have no direct competition.com . COMPANY’S COMPETITIVE POSTURE A company’s competitive posture is shaped by the • Competitive Setting • Overall Marketing Strategy • Effectiveness of Strategy Implementation PERSONAL SELLING STRATEGY Sales-related marketing policies provide guidelines for making decisions in personal-selling strategy on the kinds and sizes of sales force required. Each competitor is large enough and has a substantial market share that changes in its overall marketing strategy has repercussions on the others.

Missionary Selling 3. Email: vb73@hotmail.com . New-Business Selling DETERMINING THE SIZE OF THE SALES FORCE • Work Load Method • Sales Potential Method • Incremental Method INDIVIDUALIZING SELLING STRATEGIES TO CUSTOMERS The acid test of appropriateness of personal-selling strategy comes when particular sales people interact with particular customers. DETERMINING THE KIND OF SALES PERSONNEL • Product Market Analysis • Analysis of Salesperson’s Role in Securing Orders • Choice of Basic Selling Style 1. Technical Selling 4. the kind of sales personnel needed). Quantitative objectives on the other hand impact more upon the size of the sales force more than upon the nature of the sales job. Trade Selling 2. Teaching notes of Vijay Bhandari.e.SALES MANAGEMENT & PERSONAL SELLING Qualitative and quantitative personal-selling objectives vary with the kind of competitive setting and concern the nature of contribution management expects from personal selling towards long-term company objectives and achievement of short-term volume objectives. Qualitative objectives and long-term company objectives influence the nature of the sales job (i.

Classify customers. WORK LOAD METHOD – 6 STEPS 1.SALES MANAGEMENT & PERSONAL SELLING From the composite of all such interactions evolves the company’s achievement of its personal-selling objectives.) Assume there are 880 present & prospective customers in the following classes: • Class A Large Customers 150 accounts • Class B Medium Customers 220 accounts • Class C Small Customers 510 accounts 2. both present & prospective. Decide on the length of time per sales call and desired call frequencies on each class: • Class A: 60 minutes/call x 52 calls/year = 52 hours/year • Class B: 30 minutes/call x 24 calls/year = 12 hours/year • Class A: 15 minutes/call x 12 calls/year = 3 hours/year Teaching notes of Vijay Bhandari. (it should be possible to distinguish the selling effort required for each class. Email: vb73@hotmail.com . into sales volume potential categories.

com . Disregards profit as a consideration. Email: vb73@hotmail. Divide the work time available per salesperson by task: • Selling Tasks 45% 864 hours • Non-selling Tasks 30% 576 hours • Traveling 25% 480 hours TOTAL 100% 1920 hours 6. Calculate the total work load involved in covering the entire market: • Class A: 150 accounts x 52 calls/year = 7800 hours • Class B: 220 accounts x 24 calls/year = 2640 hours • Class A: 510 accounts x 12 calls/year = 1530 hours TOTAL 11970 hours 4. Calculate the total number of salespeople needed: 11970 hours / 864 hours = 14 salespeople needed Assumptions: 1. Determine the total work time available per salesperson Assume 4 weeks are allowed for holidays. Optimum length and frequencies of sales call depends on many factors besides sales volume or sales volume potential – as has been considered here. Teaching notes of Vijay Bhandari. 4. 3. sickness etc: 40 hours/week x 48 weeks = 1920 hours/week 5. All salespersons should have equal workloads.SALES MANAGEMENT & PERSONAL SELLING 3. All salespeople utilize their time with equal efficiency. 2.

Control 3.SALES MANAGEMENT & PERSONAL SELLING NATURE OF SALES MANAGEMENT POSITIONS SALES MANAGER Reporting to Vice President (Marketing) Job Objectives Maximize sales volume by effective development & execution of sales programs & policies for all products sold by the Division Duties & 1.com . Communications 6. Internal & External Relations 5. Organization 3. Profit contribution is as per plan 3. District sales value & volume exceed budgets 2. Sales value & Criteria volume exceed budgets 2. Sales Program Responsibilities 2. Turnover of District Sales Teaching notes of Vijay Bhandari. Sales Force Management 4. Turnover of Sales Personnel are DISTRICT SALES MANAGER Sales Manager Maximize sales volume in the sales district as per established sales programs & policies within limits of sales budget 1. District expenses are below budgeted amounts 3. Communications 1. Profit contributions of District. Control Performance 1. Sales plans are in writing & acceptable to marketing management 4. Email: vb73@hotmail. Warehouse etc. Supervision of Sales Personnel 2. Administration 4. are as per plans 4.

SALES MANAGEMENT & PERSONAL SELLING

within satisfactory limits FUNCTIONS OF SALES EXECUTIVES

Personnel are within satisfactory limits

1. Administrative Skills for handling Sales Personnel – personal selling experience is desirable. 2. Operating functions like sales force management, handling relationships with other departments and with trade & customers, communicating & coordinating with marketing, reporting to superiors and selling to some customer accounts. 3. Planning functions include setting personal selling goals, developing sales programs, formulating sales policies & personal selling strategies and establishing plans for implementation; designing & shaping the sales organization while providing leadership; and taking responsibility for achieving goals & controlling activities & expenses. 4. Relative emphasis on Operating and / or Planning functions depends on (1)the types of products, (2)the size of the company and (3)the type of supervision. QUALITIES OF EFFECTIVE SALES EXECUTIVES 1. Ability to define the position’s exact functions & duties in relation to the goals the company should expect to attain. 2. Ability to select and train capable subordinates and willingness to delegate sufficient authority to enable them to carry out assigned tasks with minimum supervision. 3. Ability to utilize time efficiently. 4. Ability to allocate sufficient time for thinking and planning.
Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

SALES MANAGEMENT & PERSONAL SELLING

5. Ability to exercise skilled leadership. RELATIONSHIP WITH TOP MANAGEMENT • Harmonizing personal goals with company goals and if necessary reconcile them through interaction with top management. • Accept responsibility for all activities related to their positions but avoid becoming indispensable by delegating authority and training their own replacements. • Qualified problem solvers and decision makers requiring minimum close supervision by top management. • Keep top management informed on important decisions, department plans and accomplishments. Communicate their thinking about the market. RELATIONSHIP WITH MANAGERS OF OTHER MARKETING ACTIVITIES • RELATIONS WITH PRODUCT MANAGEMENT Product planning and formulation of Product Policies • RELATIONS WITH PROMOTION MANAGEMENT Key source of market knowledge – contribute to formulating promotional policies and plans. Strategic position in implementing promotional plans – coordinating the activities of sales personnel, distributors & dealers. • RELATIONS WITH PRICING MANAGEMENT Compared to other company executives they have much clearer ideas of the prices final buyers are willing to pay.

Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

SALES MANAGEMENT & PERSONAL SELLING

Once pricing policy is established its implementation is the sales executive’s responsibility – as sales department has the closest relationship with the market. • RELATIONS WITH DISTRIBUTION MANAGEMENT Selection of distribution channel sets the pattern of sales force operations – nature of their jobs, number of sales persons, need for supervision. THE SALES ORGANIZATION The sales organization is the vehicle for implementing Personal Selling strategy. It should be adjusted to fit – ideally to anticipate – changing situations. It should have in-built adaptability to respond appropriately to marketing conditions. PURPOSES OF SALES ORGANIZATIONS • To permit the development of specialists – assignment of responsibility and delegation of authority. • To assure all necessary activities are performed – formal responsibility for carrying out activities becomes necessary with growth to avoid forgetting. • To achieve coordination or balance – gain synergistic effects of team-work – reconciliation of personal goals to organizational goals. • To define authority - line (power to require execution of orders); - staff (power to suggest methods to those holding line authority); or - functional (enables specialists to enforce their directives in their particular areas).

Teaching notes of Vijay Bhandari. Email: vb73@hotmail.com

• Sales executives must have adequate time for coordinating efforts of those reporting to them Teaching notes of Vijay Bhandari. Assigning personnel to positions. Delineating the necessary activities. • Qualitative – Achieve Sales Volumes. Five major steps in setting up sales organization are : 1. Providing for coordination and control. • Determining all necessary activities • Estimating their volume of performance 3. Effective coordination limits number of subordinates to proper “span of control”. • Activities are classified and grouped so that closely related tasks are assigned to the same positions • Activities of crucial importance to sales success are assigned high up • Groups of related jobs are brought together to form departmental sub-divisions 4. It is appropriate to approach organization problems as though a completely new organization were being built. • General positions can be filled by many people (suitably qualified or trained) • Planners prefer to have individuals grow into jobs rather than modify job specifications to suit individuals having unique talents and abilities 5. Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING • To economize on executive time – delegation of authority to subordinate levels. SETTING UP A SALES ORGANIZATION Most problems of sales organization are problems of reorganization. Long-term Growth • Quantitative – Assigned specific definite Operating Goals 2. Grouping activities into “jobs” or “positions”. Make Profits.com . Defining the Objectives.

com .reporting relationships. Email: vb73@hotmail.yardsticks for appraising self-performance • ORGANIZATIONAL CHART .reduces confusion about individual’s role • ORGANIZATIONAL MANUAL .contains company & department organizational charts . duties & responsibilities and performance measurements . job objectives.SALES MANAGEMENT & PERSONAL SELLING • Formal instruments of control are necessary to improve effectiveness of sales executives.summaries of major company & department objectives and policies BASIC TYPES OF SALES ORGANIZATIONAL STRUCTURES LINE SALES ORGANIZATION General Manager Sales Manager Assistant Assistant Sales Sales Manager Manager Division 1 Division 2 Salespeople Salespeople Assistant Sales Manager Division 3 Salespeople Assistant Sales Manager Office Office Teaching notes of Vijay Bhandari.useful for employee selection and basis for training . Some of the important formal instruments are: • WRITTEN JOB DESCRIPTION .provide clear picture of roles in the sales organization .shows formal relations among different positions .write-up of job-descriptions & specifications .

com Sales Promotion Manager Dealer & Distributor Relations Manager Salesman . Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING Staff LINE & STAFF SALES ORGANIZATION President Advertisin General Marketin g Manager Sales g Manager Research Manager Director Director Assistant Assistant Sales Sales General to General Training Personnel Sales Sales Manager Manager District Sales Manager s Branch Sales Manager Sales Personnel FUNCTIONAL SALES ORGANIZATION General Sales Manager Installation Sales Sales Sales & Service Training Supervisio Promotio Manager Manager n Manager n Manager Salesman Salesma Salesman Salesman n COMMITTEE SALES ORGANIZATION Teaching notes of Vijay Bhandari.

More effective control. implementation of plans & policies to individual executives. FIELD ORGANIZATION OF THE SALES DEPARTMENT The field organization consists of all employees of the sales department who work away from the home office. Improved sales force morale – closer contacts with executives & lesser traveling 6. Email: vb73@hotmail. Improved customer service 4. The two main purposes of the field organization are: 1. CENTRALIZATION VERSUS DECENTRALIZATION With growth the advantages of decentralized sales force management increasingly outweigh the costs. These advantages are: 1.SALES MANAGEMENT & PERSONAL SELLING It is a method of organizing only the executive group for planning and policy formulation while leaving the actual operations. DIVIDING LINE AUTHORITY IN SALES ORGANIZATION • Geographic Division of Line Authority General Sales Teaching notes of Vijay Bhandari. improved supervision & increased sales productivity 3. Built-in management development program – Branch & District offices provide realistic training and serve as proving grounds for future sales executives.com . Lower travel expenses 7. to improve the chances that salespeople will achieve their goals. to facilitate the selling task 2. More intensive cultivation of the market 2. Reduced need for and costs of territorial break-in time due to local recruitment 5.

com Sales Manager Product 2 Sales Personne l Product 2 Sales Manager Product 3 Sales Personnel Product 3 Sales Manager Constructio n Industry Sales Manage Mining Industr .SALES MANAGEMENT & PERSONAL SELLING Director Sales Analysis Director Training & Sales Personne l Director Advertisin g & Sales Promotion Manager Eastern Division Sales Manager Branch Sales Manager Salesme n Central Division Sales Manager Branch Sales Manager Salesme n Western Division Sales Manager Branch Sales Manager Salesmen • Product Division of Line Authority General Sales Manager Director Director Director Sales Sales Training Advertisin Manager Analysis & Sales g & Sales Product 1 Personne Promotion l Sales Personne l Product 1 • Customer Division of Line Authority General Sales Manager Director Director Director Sales Sales Training Advertisin Manager Analysis & Sales g & Sales Lumber Personne Promotion Industry Teaching notes of Vijay Bhandari. Email: vb73@hotmail.

Email: vb73@hotmail.SALES MANAGEMENT & PERSONAL SELLING l Branch Sales Manager Salesme n Branch Sales Manager Salesmen` Branch Sales Manage Salesme • Marketing Channel Division of Line Authority General Sales Manager Director Director Director Sales Sales Sales Training Advertisin Manager Manager Analysis & Sales g & Sales Wholesal Institutiona Personne Promotion e Sales l Sales l Branch Branch Sales Sales Manager Manager Salesmen Salesmen Sales Manage Export Sales Branch Sales Manage Salesme SALES FORCE MANAGEMENT Special kind of personnel management due to following features: • No close and constant supervision • Work away from coworkers & immediate superiors • Freer rein – plan & control own activities • Visit office infrequently – most direction by phone & mail Teaching notes of Vijay Bhandari.com .

job objectives . Email: vb73@hotmail. 2. RECRUITING & SELECTING SALES PERSONNEL 1. Evaluate the sources from which sales personnel with good potentials are available. SALES JOB DESCRIPTION It is the output of sales job analysis covering . SALES JOB ANALYSIS Assembling and analyzing factual information on specific jobs.which ones all new recruits should possess – personality characteristics & qualifications .component duties & responsibilities . Listing of activities to be performed. 3.and which ones will be provided through training. PREPARATION OF SALES JOB SPECIFICATIONS Focus on the duties & responsibilities portion of the job description Determine qualifications needed to perform the job satisfactorily: . Teaching notes of Vijay Bhandari.reporting relationships.com .performance criteria .SALES MANAGEMENT & PERSONAL SELLING • Away from home & family for extended periods • Success or failure depends on prospect’s & customer’s actions • Disheartening rebuffs & order turndowns require salespersons to repress normal responses & to suppress natural tendency to become discouraged INITIAL STEPS OF SALES FORCE MANAGEMENT 1.

)Recommendation of Company Executives 3. ORGANIZATION FOR RECRUITING & SELECTION Can be handled by the following departments in a company: . SOURCES OF SALES FORCE RECRUITS • RECRUITING SOURCE EVALUATION Analysis of each source should be done to reveal how many were recruited and ratio of success to failures. Select those who have the highest probability of success.Sales department (if it has a personnel staff function under the Sales Manager) . Names are collected from volunteer walk-ins.Personnel Dept handles some aspects of recruitment & screening activities and the Sales Dept to handle other aspects and to make the hiring decision. File should be regularly updated.Other departments Teaching notes of Vijay Bhandari. THE PRE-RECRUITING RESERVOIR This is a file of individuals who can be recruited when needed.SALES MANAGEMENT & PERSONAL SELLING 2. 1.Company Personnel Manager (if sales force size is small) . references etc. 2.Non-selling section of sales department . Tap the identified resources and build a supply of prospective sales personnel.)Internal Transfers from . Email: vb73@hotmail.)Individuals recommended by Company Sales Personnel 2. • SOURCES WITHIN THE COMPANY 1.com . 3. and may have gone through a pre-interview evaluation.

e.)Sales Force of non-competing Companies 7. THE RECRUITING EFFORT Differs mainly in respect of the source of recruits and the recruiting method.)Sales Force of competing Companies – require minimal training 8.)Older persons 3. Determined by selling style appropriate for the companies products & customers.Outlining sales career opportunities to applicants .Prospective candidates contacted through centers of influence – i.)Employees of Customers – with prior approval 5.Classified Ads (Situations wanted & Situations Vacant) .SALES MANAGEMENT & PERSONAL SELLING • SOURCES OUTSIDE THE COMPANY 1.)Direct Unsolicited Applications – Walk-in or Write-in 2.)Salespeople making calls on the Company – Purchase Director 4.)Educational Institutions – specially where educational qualification is required 9. Email: vb73@hotmail.)Employment Agencies 3. 2.Display Ads • RECRUITING BROCHURES . • PERSONAL RECRUITING 1.)Sales Executives Clubs – placement Services 6.com .)Recruiting Consultants • INDIRECT RECRUITING Newspaper advertisements . people occupying positions where they Teaching notes of Vijay Bhandari.)Recruiting Direct-to-Consumer sales personnel 3.)College Recruiting – Company-wide campus interviewing.

1. The total profile rather than any single item determines the predictive value.Interaction (Stress) interview . SELECTING SALES PERSONNEL Simple one-step – informal personal interview. Email: vb73@hotmail. Complex multi-step systems .)How many interviews? 3. • PRE-INTERVIEW SCREENING & PRELIMINARY INTERVIEW It is the lowest cost step for eliminating obviously unqualified applicants.Patterned interview .SALES MANAGEMENT & PERSONAL SELLING regularly meet people who have high potential as possible sales people and who are often seeking jobs.Rating Scales – to bring in objectivity.Non-directive interview . Can also be considered as a standard written interview. • REFERENCES Teaching notes of Vijay Bhandari. • THE INTERVIEW Most widely used and sometimes the only step in the selection system.incorporating diverse mechanisms. • FORMAL APPLICATION FORM Serves as a central record for all pertinent information collected during the selection process.)Who should do the interviewing? 2.)Interviewing Techniques .com . 4. Objective Scoring of Personal History Items.)Interviewing the Spouse – mainly to find acceptance of frequent over-night travel and being away for long periods.

)Interest Tests – basically assumes related to motivation. objectivity. Email: vb73@hotmail. 4.com . personal.)Tests of ability – intelligence. Basis for evaluation of Tests – reliability. 2. PHYSICAL EXAMINATIONS SALES TRAINING PROGRAMS Building a sales training program requires 5 major decisions: A C M E E AIM CONTENT METHODS EXECUTION EVALUATION Teaching notes of Vijay Bhandari. 3.)Tests of habitual characteristics – attitude. Types of Tests 1. aptitude.)Achievement Tests – how much one knows about subject. cost.SALES MANAGEMENT & PERSONAL SELLING - Present or former employers Former customers Reputable citizens Mutual Acquaintances • CREDIT CHECKS • PSYCHOLOGICAL TESTS Validation of Tests – it measures what it purports to measure. etc.

)Trainee’s background and experience.)Job Specifications. procedures & organization.)Basic changes in products & markets. Mainly arise due to: 1. Email: vb73@hotmail.)Changes in sales personnel – specially their productivity.SALES MANAGEMENT & PERSONAL SELLING • DEFINING TRAINING AIMS Defining specific training aims – training needs to e identified. 2.)Sales-related marketing policies. 2.com . • DECIDING TRAINING CONTENT Product Data Sales Technique Markets Company Information • SELECTING TRAINING METHODS The Lecture The Personal Conference Demonstrations Role Playing Case Discussion Impromptu Discussion Gaming On-the-Job Training Teaching notes of Vijay Bhandari. IDENTIFYING INITIAL TRAINING NEEDS Requires analysis of 3 main factors: 1. 3. 3. IDENTIFYING CONTINUING TRAINING NEEDS Identification of specific training needs of experienced personnel.)Sales-related marketing policies of the company.

Training Aids .Timing group versus Individual Training .Other Printed Materials .Initial Sales Training .com .SALES MANAGEMENT & PERSONAL SELLING Programmed Learning Correspondence Courses • ORGANIZING THE SALES TRAINING (EXECUTION) PHILOSOPHIES OF SALES TRAINING .Insight-Response Who will be the Trainees? Who will do the Training? .Training the Sales Trainers .Manuals .Sales Training Staff .Outside Experts When will the Training take place? .Continuing Sales Training .Timing Continuous Sales Training Programs Where will the Training site be? Instructional Materials & Training Aids: . Email: vb73@hotmail.Timing Initial Sales Training Programs .Advance Assignments • EVALUATING SALES TRAINING PROGRAMS Teaching notes of Vijay Bhandari.Conditioned-Response .

Teaching notes of Vijay Bhandari.g. The main criteria being that they can be called upon conveniently & economically by the individual salesperson concerned.E. . In some companies and in some peculiar selling situations geographically defined territories are meaningless: .com .Salespeople selling to personal acquaintances. . where technical selling style is predominant – salespersons because of their specializations are assigned entire classes of customers regardless of their location.Localized markets such as when selling real estate & property insurance.Small companies and companies introducing new products.SALES MANAGEMENT & PERSONAL SELLING SALES TERRITORY CONCEPT A Sales Territory is operationally defined as a grouping of customers and prospects assigned to an individual salesperson. . Email: vb73@hotmail. Many refer to sales territories as geographic areas. investment securities & even automobiles.

O.Extremely large customers who demand to deal with H. CONTRIBUTING TO SALES FORCE MORALE 5. They are: . AIDING IN COORDINATING PERSONNEL SELLING & ADVERTISING Teaching notes of Vijay Bhandari. CONTROLLING SELLING EXPENSES 3.SALES MANAGEMENT & PERSONAL SELLING In most marketing situations it is advantageous to “assign” sales personnel to territories in consideration of customer’s service requirements and costs of providing service. PROVIDING PROPER MARKET COVERAGE 2. ASSISTING IN EVALUATING SALES PERSONNEL 4. . Email: vb73@hotmail.com . Establishing of Sales Territories: • Facilitates matching selling efforts with sales opportunities • Lends direction to planning & control of sales operations • Allows accumulation of knowledge on company’s strengths & weaknesses in serving different markets HOUSE ACCOUNTS An account not assigned to any individual salesperson but handled by sales executives or home office personnel.Responsible for significant shares of company’s total business REASONS FOR ESTABLISHING OR REVISING SALES TERRITORIES 1.

Teaching notes of Vijay Bhandari. • Circle Appropriate when accounts & prospects are evenly distributed throughout the area. SELECTING A BASIC GEOGRAPHICAL CONTROL UNIT Counties (Districts) Zip Code Areas Cities Metropolitan Statistical Areas (Metropolitan Regions) Trading Areas States 2. Sales person assigned is based near the center.SALES MANAGEMENT & PERSONAL SELLING PROCEDURES FOR SETTING UP OR REVISING SALES TERRITORIES 1.by combining contiguous control areas . Email: vb73@hotmail. COMBINING CONTROL UNITS INTO TENTATIVE TERRITORIES . 3 shapes are generally used: • Wedge Appropriate for territories containing both urban & non-urban areas. Based on how much % of the total sales potential the average sales person should realize number of sales personnel units & therefore number of territories is decided.each resulting territory containing approximately the same sales potential. It radiates out from a densely populated urban center.com . TERRITORY SHAPES The shape of the territory affects selling expenses & ease of sales coverage. DETERMINING SALES POTENTIAL IN EACH CONTROL UNIT 3.

4. Email: vb73@hotmail.)Calculate the number of calls possible within a given period. Optimum territorial arrangement is reached when incremental sales for marginal selling expense is equated in all territories.)Estimate time required for each sales call.)Adjust the number of calls possible during a given period by the desired call frequencies for different classes of customers and prospects. Large cities have greater sales potential than states requiring lesser coverage time at lower expense. time required to travel from one customer to the next. 3. Home base is near the center.SALES MANAGEMENT & PERSONAL SELLING • Clover Leaf Desirable when accounts are located randomly. Teaching notes of Vijay Bhandari. Ultimately territories defined have varying amounts of sales potential and different-sized workloads.)Decide call frequencies. 4. Control units are taken away from difficult to cover territories and added to easily covered territories. Total workload in any territory must not exceed the MAXIMUM DESIRABLE WORKLOAD. location and size of customers and prospects in each tentative territory. Differences in coverage difficulty represent differences in workloads.com .)Determine number.)Determine length of time between calls.e. 6. 5. i. ADJUSTING FOR COVERAGE DIFFICULTIES AND REDISTRICTING TENTATIVE TERRITORIES To remove unrealistic assumption that geographical control units have similar characteristics. STEPS FOR REDISTRICTING TERRITORIES 1. Each cloverleaf area is best designed if it can be covered in a week. 2.

Reasonable & desirable workload for each sales person can differ.500 0 0 Total 1.00 2 0.00 125.00 100. Assignment of Sales Personnel to Territories of Equal Potential Territory Potential Salesperson Ability Predicted Contribution Assigned Index Sales (25% of Sales) A 500.0 500.” ILLUSTRATION OF ASSIGNING SALES PERSONNEL TO TERRITORIES 1.SALES MANAGEMENT & PERSONAL SELLING 7. Sales personnel vary in ability. Effectiveness can also vary with the territory assigned.500 0 0 Teaching notes of Vijay Bhandari.00 1 1.00 312. In assigning sales personnel to territories. DECIDING ASSIGNMENT OF SALES PERSONNEL TO TERRITORIES In territorial planning implicit assumption is that all sales persons are average.)Finally check out the adjusted territories with sales personnel who work or who have worked in each area and make further adjustments as required.500.7 350.000 0 0 C 500. Email: vb73@hotmail.00 87.com .000 0 0 B 500. management seeks the most profitable alignment of SELLING EFFORT to SALES OPPORTUNITY.250.8 400. initiative & effectiveness as well as in physical condition & energy.00 1.00 3 0. The principle is to “ Assign each sales person to the particular territory where his/her relative contribution to profit is highest.

Assignment of Sales Personnel to Territories where Ability Indexes vary with the Assignment.000. Email: vb73@hotmail.7 294. Assignment of Sales Personnel according to ability to Territories containing different Sales Potentials Territory Potential Salesperson Ability Predicted Contribution Assigned Index Sales (25% of Sales) A 1.00 1.000 0 0 C 200. Assignment of Sales Personnel to Territories containing Sales Potentials proportionate to Salesperson’s abilities Territory Potential Salesperson Ability Predicted Contribution Assigned Index Sales (25% of Sales) A 600.500 0 0 Total 1.500.00 2 0.SALES MANAGEMENT & PERSONAL SELLING 2.00 319.com .00 345.00 1 1.000 0 0 C 420.0 600.00 3 0.00 96.8 384.00 2 0.00 3 0.00 73.00 150.8 240.000 0 0 B 480.000 0 0 B 300.00 1 1.278.000 0 0 Total 1.000 0 0 4.00 2 0.500.000 0 0 Teaching notes of Vijay Bhandari. Territory Potential Salesperson Ability Predicted Contribution Assigned Index Sales (25% of Sales) A 600.9 540.00 135.00 250.7 140.000.00 1.00 60.380.500 0 0 3.0 1.00 35.

00 0 120.0 0 0.trading area boundaries arising out of natural travel barriers • Minimize wasted time .7 480. Teaching notes of Vijay Bhandari.00 0 1.00 0 1 3 1.the means & methods of transportation connecting customer concentrations .Backtracking.500 ROUTING AND SCHEDULING SALES PERSONNEL • Maintain lines of communication • Optimize sales coverage Detailed information is required on .314.000 73.SALES MANAGEMENT & PERSONAL SELLING B 0 C Total 480. travel time & non-selling time is reduced NOTE: A sales person has a different route each time he travels in a territory if he has to achieve the desired call frequencies and to incorporate calls on new prospects.500 328.the numbers & locations of customers .00 420. Routing Scheduling & Control Call reports are compared with route & call schedules.00 294. Email: vb73@hotmail.00 0 1.500.com .

Conflict of Identification – Customer or Company? .Conflict in interests of customer & company versus own interests of earning based on selling as much as possible.Dealing with same customers in same territory over years leads to losing interest & enthusiasm . Email: vb73@hotmail.Succession of ups & downs .Working time as well as after-work hours away from home – missing out on family life.including salesperson’s behavior – is directed towards satisfying certain needs.SALES MANAGEMENT & PERSONAL SELLING MOTIVATION Motivation is goal-directed behavior to achieve NEEDS – lack of something that reaching a goal could satisfy DESIRES – positive ardor or strength of feeling Aspects affecting quality of salesperson’s job and why additional motivation is necessary: • Inherent nature of Sales Job .com . • Maintaining a group identity .Working alone most of the time – team spirit is weak .Interaction with pleasant & courteous people on one extreme to unpleasant & rude people .Participating in a cooperative endeavor requires motivation & working conditions to promote group feeling for achieving group performance standards. • Salesperson’s boundary position & Role Conflicts .Advocacy Conflict – Identifies with & advocates customer’s position to other groups in Company . Teaching notes of Vijay Bhandari. • Tendency towards Apathy .Familiarity on both sides leads to incomplete use of effective techniques. NEED GRATIFICATION & MOTIVATION • All human activity .

water.Physiological needs like food. HIERARCHY OF HUMAN NEEDS – As Visualized by A.Inborn and fulfillment is basic to life itself . 1. belonging & social relations. • SECONDARY NEEDS .H. self-esteem & self-respect. MOTIVATION HYGIENE THEORY – Fredrick Herzberg Teaching notes of Vijay Bhandari. . rest. air etc.Develop with maturity . Email: vb73@hotmail. Maslow Self-Actualization Needs Esteem Needs Belonging & Social Relations Needs Safety & Security Needs Basic Physiological Needs 2. • Particular persons behave according to the nature of their fulfilled & unfulfilled needs. sleep. • PRIMARY NEEDS .Arise from individual’s interaction with the environment .Until these are satisfied others have little motivational influence.com .Include safety & security.SALES MANAGEMENT & PERSONAL SELLING • Different patterns of behavior arise out of different sets of needs.

Supervisors & Subordinates Company Policy Job Security Work Conditions Salary Personal Life ACHIEVEMENT. At the “fair Day’s work” point the individual is ready for influence by motivation factors.com .SALES MANAGEMENT & PERSONAL SELLING Basic Premise – Job Dissatisfaction is not the opposite of Job Satisfaction Deficiency in fulfilling Hygiene needs cause job Dissatisfaction WHEREAS fulfilling Hygiene needs does not lead to Job Satisfaction but in reaching a “Neutral Point” – Fair Day’s Work. MOTIVATION FACTORS Nature of Work itself Achievement Growth Potential Recognition Responsibility Advancement HYGIENE FACTORS Interpersonal Relations – Peers.MOTIVATION THEORY – David McClelland Teaching notes of Vijay Bhandari. Email: vb73@hotmail.

Tend to set achievable goals (reasonable possibility of reaching) 3.accomplishing something unusual or important or . Such individuals 1. 2.SALES MANAGEMENT & PERSONAL SELLING If a person spends enough time thinking about . Like problem situations in which they take personal responsibility for finding solutions.com I I I Effort-Performance_ I I . These individuals are Self-Motivated & continually strive to improve their performance. Email: vb73@hotmail.doing his job better. EXPECTANCY MODEL – Vroom Perceived ___ PerformanceRewards/_ I Punishments I I Relationship I I Perceived I __ I I Relationship I Teaching notes of Vijay Bhandari. . McClelland and his co-investigators used Thematic Apperception Test (TAT) to identify such individuals for targeting for selection as salespersons.advancing his career such a person has a high need for achievement. Want feedback on how they are doing.

In practice on many occasions there is a little problem in having orders & directions put into effect. and the salesperson is obligated to carry out the superior’s orders. A wholly dependent salesperson accepts the superior’s exercise of authority as fully appropriate – leading to almost blind obedience. Each salesperson has a “zone of acceptance” over which he accepts direction from the superior and each superior has a similar zone over which he honors requests from the salesperson.com . Theoretically the superior has the authority (the formal right to require action of others) to require the sales person to take action. Teaching notes of Vijay Bhandari. It depends on upon the relationship between the salesperson & the superior. The usual situation is of partial dependence and the salesperson regards the superior’s exercise of authority as appropriate in some circumstances and not in others. On the other extreme they are equally interdependent like friends and authority is meaningless. Email: vb73@hotmail. which is equated with power (the ability to get things done).SALES MANAGEMENT & PERSONAL SELLING Individual Needs (Goals) I I I I I Individual Behavior (Effort) I I I I Individual Performance I I Organizational Rewards Punishments I I I___________________RECYCLING______________________I INTERDEPENDENCE & MOTIVATION In the formal Organization Plan each salesperson reports to someone.

Through effective supervision the superior satisfies many of the salespersons needs and in turn gets better cooperation from them in striving for organizational goals. which varies according to the exact circumstances.SALES MANAGEMENT & PERSONAL SELLING Within their respective zones also the salesperson & the superior exhibit a degree of acceptance. It means free discussion of problems & freedom of expression. MOTIVATION & LEADERSHIP Effective sales executives are leaders of sales personnel – earning voluntary cooperation and motivating them individually & as a group to reach departmental goals: • Setting good example • Treat salespersons fairly in respect of assignments. • Interpersonal Contact • Motivational Interviews • Written Communications UNIONIZATION OF SALES PERSONNEL Little progress as it is difficult to develop strong group identification. MOTIVATION & COMMUNICATION Good communication is essential to maintain good morale and high productivity. Teaching notes of Vijay Bhandari. Email: vb73@hotmail. promotions & pay • Commend good work and discuss shortfalls privately • Consultative approach to changes.com .

com . DEVISING A SALES COMPENSATION PLAN 1.SALES MANAGEMENT & PERSONAL SELLING REQUIREMENTS OF A GOOD SALES COMPENSATION PLAN 1. Does not conflict with motivational program – belonging to a team 3. Consider the Company’s General Compensation Structure .Job Evaluation procedure is not scientific but judgment based . Helps to attain objectives of the sales organization.Purpose to arrive at fair compensation relationship amongst jobs. Define the Sales Job 2.Use Job Evaluation systems to compare with different jobs .Job Evaluation Methods: (i) Simple Ranking – only overall appraisal Teaching notes of Vijay Bhandari. . Fair – does not penalize for factors beyond the salespersons control 4.Ranking / Ordering of jobs without considering individuals doing it . Economical to administer 7. Provides a living wage preferably a secure income 2. Adjusts pay to changes in performance 6. Easy for sales personnel to understand 5. Email: vb73@hotmail.

supervision given & received. responsibility.Many sales executives feel sales personnel compensation levels should be based on the external demand & supply factors. Each factor is given minimum & maximum points. Different bands of point scores signify different compensation classes. (iii) Point System – establishing & defining factors common to most jobs e.Job Evaluations are made whenever decisions are made about the relative worth of jobs – sometimes informally . Generally evaluated in value terms. skills required. All jobs in same class or grade have same base compensation. personality required. Email: vb73@hotmail.g. 3. mental & physical skills. minimum education required etc. (iv) Factor Comparison Method – resembles point system but uses a scheme of ranking & crosscomparisons. the ranges depending on the relative importance of the factors. supervision given & received.com (ii) .SALES MANAGEMENT & PERSONAL SELLING Classification or Grading – based on job responsibility. Consider Compensation Patterns in Community & Industry (i) What compensation systems are being used? (ii) What is the average compensation for similar positions? (iii) How are other companies deciding their compensation plans? (iv) What are the pros & cons of departing from the industry or community patterns? Teaching notes of Vijay Bhandari. exposure to unfavorable / hazardous working conditions. . Appraised factor scores are combined into total point values for each job.

6. Consult present Sales Force 8. life insurance. Email: vb73@hotmail.Controlling traveling & other expenses and making collections .Gathering market information & reporting. Special Company Needs & Problems A company can usually construct a plan.More effort on non-selling activities like more displays / local advertisements by dealers / retailers . (iv) Element for Reimbursement of expenses or payment of expense allowances.Emphasizing high margin products . sickness & accident benefits.To obtain large volume orders . bonus or profit-sharing to serve as an incentive (iii) Element covering Fringe benefits – or “plus factor” benefits like paid vacations.Focusing on getting new customers .SALES MANAGEMENT & PERSONAL SELLING 4. Provide for various Compensation Elements Four basic elements: (i) Fixed element –either salary or drawing account to provide some stability of income (ii) Variable element – commission.com . Proportions of different elements vary – most however split the fixed to variable elements on a 60:40 to 80:20 basis. which increases marketing effectiveness to solve specific problems like: . Most companies choose various combinations depending on their particular selling situation. pensions etc. Reduce tentative Plan to writing & pretest it Normally pre-testing is done mathematically – usually computerized re-working on past year/s data. 5. Determine Compensation Level The company decides what type of sales personnel it wants to employ for achieving its personal selling objectives and what should be the average amount of compensation. Teaching notes of Vijay Bhandari. 7.

jobs requiring extensive missionary / educational work. salespersons doing considerable sales promotion / non-selling work.Since there are no monetary incentives many sales people end up doing just an average job. Implement the Plan & provide for Follow-up Periodic checkups indicate needs if any for further adjustments / revisions.com . jobs including servicing and providing technical & engineering advice. Straight Salary Plan . Revise the Plan 10.Sales persons paid according to their productivity – sales volume is usually considered the best productivity measure .Fixed sum at regular intervals – total payments for their services . . 2. Straight Commission Plan . trade selling ordertaking salespersons .Different commission rates for different products OR different categories of customers OR during different selling seasons Teaching notes of Vijay Bhandari.Provides strong financial control over sales personnel and management can direct their activities along most productive lines with minimum opposition.Common amongst industrial goods companies.Provides stability of income & freedom from financial uncertainties to the sales personnel .Progressive or Regressive changes in rates of commissions as sales volume rises to different levels .SALES MANAGEMENT & PERSONAL SELLING 9.Advances may OR may not be paid against earned commissions . Email: vb73@hotmail.Straight commission with sales personnel paying their own expenses OR company paying their expenses . TYPES OF COMPENSATION PLANS 1.

Costs of checking & auditing are higher . Teaching notes of Vijay Bhandari.Clerical costs are higher than in straight salary or straight commission plans. new customer prospecting. Combination Salary & Incentive Plan . resist reductions or change in territory etc. avoid selling high-margin hard-to-sell products.Efficiency may decline due to uncertainty of income. • Never used alone but in combination with one of the three compensation plans. FRINGE BENEFITS • Do not bear direct relation to job performance. 3.These are designed so that sales personnel can have both the security of stable incomes and the stimulus of direct financial incentives .Provides little financial control over sales persons activities – they give secondary importance to nonselling activities like reporting.Greater cooperation from the sales force and a morale booster .Provides greater flexibility to management for adjustment to changing conditions . . • Additional financial reward for achieving results beyond a pre-determined minimum.SALES MANAGEMENT & PERSONAL SELLING . • Given to all employees .com . sales promotion.some of these benefits are required by law. USE OF BONUSES • Bonus is different from commission – it is paid for accomplishing a specific task.Provides maximum direct monetary incentive to sales persons to strive for higher volumes .Means of cost control as sales compensation becomes virtually a variable expense – except for traveling and miscellaneous expenses . Email: vb73@hotmail.

2 % Expenses : Company Sales 0.4 % Expenses : Total Sales Force Expenses 9. • Contribute to safety & security needs and some to fulfillment of esteem & higher order needs.Such companies regard the sales personnel as independent businesspeople.Most of them also pay straight commission only.6 % Total Sales Force Expenses : Company Sales 1.3 % • Sales Expenses – covering traveling.2 to 1. Teaching notes of Vijay Bhandari. Email: vb73@hotmail.Technical & New Business require long calls on large customers as well as entertainment thus making this type of selling more expensive. .4 to 8.3 to 33.1 to 10. lodging.Missionary & Trade selling styles are lower as entertainment is not involved.SALES MANAGEMENT & PERSONAL SELLING • Range from 25 to 50 % of the total sales compensation package. • Field selling expenses vary by type of pre-dominant selling style: . . • Degree of formal control over sales expenses varies from company to company.com . meals & entertainment – in most industries varies from 25 % to 50 %. REIMBURSEMENT OF SALES EXPENSES • Sales Personnel pay their own expenses . Keeping expenses within certain bounds is important on one hand whereas a degree of liberality is desirable to ensure sales personnel do not fail to capitalize on market opportunities due to lack of adequate funds. MANAGING EXPENSES OF SALES PERSONNEL • General Expense Ratios Compensation : Company Sales 0.

com . . .Little management control over their route & call schedules. • Reimburse sales personnel for all or part of their expenses .Reimbursable expenses should be enough to perform assigned work in expected manner. .Should keep expenses reasonable and should be economical to administer. with emphasis on the latter. .Compensation levels reflect the fact that sales personnel pay their own expenses. Teaching notes of Vijay Bhandari. . METHODS OF CONTROLLING & REIMBURSING SALES EXPENSES • Flat Expense Account • Flexible Expense Account • Honor System • Expense Quota REIMBURSEMENT OF AUTOMOBILE EXPENSES • Flat Mileage Rates • Graduated Mileage Rates • Fixed Periodic Allowance • Combination Fixed Periodic Allowance & Mileage Rates • Runzheimer Plan SALES MEETINGS Important for both COMMUNICATION & MOTIVATION purposes.No expense records are necessary.When expenses are reimbursable sales management needs control.SALES MANAGEMENT & PERSONAL SELLING .Should take into account customary living standards of salesperson & customers. Email: vb73@hotmail.

Orienting on advertising program & coordinating tie-in activities .Clearly defined objectives – jokingly called “excuses holding a meeting”. Provide occasions for management to stimulate the group to improve its performance. Planning a sales meeting requires 5 major steps: • A AIMS .SALES MANAGEMENT & PERSONAL SELLING Since sales people generally work alone.g.Increasing effectiveness of time management .Introducing new services – inventory control.Improving quality of sales reports . meeting site & time . • E EXECUTION .New insights into customer attitudes & behavior . Seminar leaders.Room & seating arrangements Teaching notes of Vijay Bhandari.New product introduction . : . • C CONTENTS Agenda – List or outline of things to be considered or done during a meeting – depends to large extent on the Aims.Application of proper sales techniques . it is a good idea to hold periodic group meetings for exchanging information & ideas. Email: vb73@hotmail.New company policies or sales goals requiring explanation . • M METHODS Local – Short & participative – group discussions best Regional / National – 2/3 days with wider mix of aims & contents – hence use a mix of different methods.com . e.Speakers.

It is difficult to find convenient time to take off the entire sales force from the field unless sales are seasonal. REGIONAL SALES MEETINGS Head office sales executives & personnel attend the regional sales meetings – reducing travel costs & loss of selling time. refreshments etc. provision of materials. breaks. Focus on unique problems of the region. If factory is also located at the same place or nearby there is an opportunity for product training with exposure to manufacturing details.Audio-Visual equipment & supplies. Smaller attendance increases participation per person attending. Smaller percentage of HO / management participation depreciates the importance of the meeting in eyes of the sales force and smaller attendance also not conducive to spirit of contagious enthusiasm. NATIONAL SALES MEETINGS National meetings can introduce comprehensive marketing / sales policy changes rapidly & uniformly. The costs of bringing the entire sales force to a central site are substantial. Major executives in the company attend a national sales meeting – difficult for them to attend a series of decentralized ones. LOCAL SALES MEETINGS Weekly or biweekly – last from 15 minutes to couple of hours. Teaching notes of Vijay Bhandari.SALES MANAGEMENT & PERSONAL SELLING . Sales personnel meet counterparts from other regions & exchange experiences.Feedback for future program planning. • E EVALUATION . HO executives learn about the current problems first hand.Whether meeting accomplished its aims . Meeting Head Office personnel leads to better coordination. Email: vb73@hotmail.com .

REMOTE CONTROL & TRAVELING SALES MEETINGS • Closed-circuit television • Sales meetings by telephone • Sales meetings at home – essentially by post / written mail • Traveling sales meetings – where meetings require physical props – new product demonstration.SALES MANAGEMENT & PERSONAL SELLING Informally conducted meetings – with each sales person having an opportunity to pose questions and to state personal views. displays etc. Teaching notes of Vijay Bhandari. SALES CONTESTS A Sales Contest is a special selling campaign offering incentives in the form of cash. Email: vb73@hotmail. prizes or awards beyond those in the compensation plan. Strengthen group identity.com . – they can be done by out-fitting on trucks / trailers / vans etc. Purpose is to provide extra incentives to increase sales volume and / or more profitable sales volume.

Let’s hunt for hidden treasure (new customers) .g. To obtain larger orders per sales call 3. boost morale & make personal selling efforts more productive.com .SALES MANAGEMENT & PERSONAL SELLING Fulfills individual needs for achievement and recognition (Herzberg’s Motivation-Hygiene theory) or for esteem and selfactualization (Maslow’s Hierarchy of Needs). To improve the performance of distributors’ sales personnel. 9. Travel 4. To obtain new customers 2. Email: vb73@hotmail. 10. Special Honors or Priveleges CONTEST DURATION Teaching notes of Vijay Bhandari. 5. which focuses on a current event e. . high-margin goods or new products. 6. 8.Lets go after new customers • NOVELTY Uses a theme. SPECIFIC OBJECTIVES 1. 7. 4. To obtain more product displays by dealers.Let’s start panning gold (more profitable orders) CONTEST PRIZES 1. To get reorders. To sell more profitable mix of products. To promote special deals to distributors / dealers. CONTEST FORMATS • DIRECT Contest theme describing the specific objective e. To push slow-moving items.g. To promote seasonal merchandise. . Cash 2. To overcome seasonal sales slump. Merchandise 3. Develops team spirit.

Bunching of sales during the competition and sales slumps occur both before & after the contest.SALES MANAGEMENT & PERSONAL SELLING CONTEST PROMOTION MANAGERIAL EVALUATION OF CONTESTS • The Contest versus Alternatives • Short. Email: vb73@hotmail. 2. 4. 3. Contests are temporary motivating factors & if used frequently they have a narcotic effect.& Long-Term Effects • Design • Fairness • Impact on Sales Force Morale OBJECTIONS TO SALES CONTESTS 1. overstocking of dealers. 5. High caliber & more experienced sales personnel consider contests as juvenile & silly. 7. Contests lead to increased returns & adjustments. Teaching notes of Vijay Bhandari. Competitive atmosphere weakens team spirit. The dissappointment suffered by contest losers lead to general decline in sales force morale.com . 6. Sales people are paid for their services and there is no need to reward them further for performing regular duties.

SALES MANAGEMENT & PERSONAL SELLING SALES FORCE MANAGEMENT PROCESS 1. promotional programs & campaigns are mapped out and other needed actions. departmental policies are formulated and plans designed. Company Goals are defined and appropriate objectives for the sales department. To facilitate achievement of objectives. Teaching notes of Vijay Bhandari. such as making changes in the sales organization are taken. 2. 3. Email: vb73@hotmail. are derived.com . To execute the policies and implement the plans.

Quantitative performance standards are set and criteria for appraising qualitative aspects of performance are selected. Teaching notes of Vijay Bhandari. Actual performance is recorded. To increase the degree of attainment of the objectives. b. To take “no action” at this time. To lower or raise objectives or the standards and / or criteria used in measuring their degree of attainment to make them more realistic. or the various strategies used in their implementation to better fit the achievement of objectives. To revise the policy and / or plan. 7. 6. Indicated actions are taken after deciding: a.com .SALES MANAGEMENT & PERSONAL SELLING 4. c. 8. d. The last four steps of the above process have to do with EVALUATING & SUPERVISING and constitute what is known as CONTROL. Actual performance is compared with quantitative performance standards and qualitative performance criteria and judgment is reached on the significance of the variations. 5. Various sales department activities are coordinated with each other and with related activities performed by other organizational units and middlemen. Email: vb73@hotmail.

SALES MANAGEMENT & PERSONAL SELLING PERFORMANCE STANDARDS • Requires consideration of the Nature of the Selling Job i.Call-frequency ratio .Quotas . Specific company standards could be a combination of the following: .e.Non-selling activities • Qualitative Performance Criteria are used for appraising performance characteristics that affect sales results – specially over the long-run – which defy exact definition but whose degree of excellence can be evaluated only subjectively. • They measure progress made toward achievement of sales department objectives – which could vary with changes in the company’s marketing situation. • Quantitative Performance Standards provide description of what the management expects by defining performance aspects being measured and the measurement units. These could be a combination of the following: Teaching notes of Vijay Bhandari. The measurement could be on continuous or discrete point scales.Territorial market share . sales job analysis.com .Average order size .Sale Coverage effectiveness index .Territorial net profit or gross margin ratio .Selling expense ratio .Order call ratio .Calls per day . Email: vb73@hotmail.Average cost per call .

Job Factors (i) Product Knowledge (ii) Awareness of Customer Needs (iii) Relationship with Customers (iv) Number of Sales Calls (v) Quota Performance (vi) Service Follow-up .Strongest Point . Email: vb73@hotmail.Reports of Sales Personnel & lower levels of Sales Management • • Collect the Information SYSTEMS OF FIELD SALES REPORTS Teaching notes of Vijay Bhandari.Weakest Point RECORDING ACTUAL PERFORMANCE Define Information Needs – based on Performance Standards & vice versa • Determine Sources of Information .Personal Factors (i) Punctuality (ii) General Attitude (iii) Dress & Appearance (iv) Diligence (v) Cooperation (vi) Accuracy (vii) Adaptability (viii) Reliability .com .SALES MANAGEMENT & PERSONAL SELLING .Sales & Expense records .

Consistent with purpose & short as possible Teaching notes of Vijay Bhandari. • Design & Construction of Reports . • Number of Reports .Minimum necessary to produce the desired information. Email: vb73@hotmail.com . reactions & complaints (iv) To gather & record information on competitor activity (v) To report changes in local business & economic conditions (vi) To log important information about territory to take care of change in sales person looking after the territory (vii) To keep the mailing list updated (viii) To provide information required by marketing research.SALES MANAGEMENT & PERSONAL SELLING • Purposes of Field Sales Reports (i) To provide data for evaluating performance (ii) To help sales person plan the work (iii) To record customers suggestions. • Types of Sales Force Reports (i) Progress or Call report (ii) Expense report (iii) Sales work plan (iv) New-Business report (v) Lost sales report (vi) Report of Complaint and / or adjustment. • Reports from Field Sales Management (i) Actual achievement versus planned (ii) Individual personnel performances (iii) Sales meetings (iv) Complaints (v) Competitor information (vi) Local economic conditions.

District (Regional) Manager . Teaching notes of Vijay Bhandari.Low ratio of order to sales calls . Email: vb73@hotmail.Easy checking-off.Sales supervisor .SALES MANAGEMENT & PERSONAL SELLING . convenient size & shape . lack of enthusiasm.Can be easily summarized CONTROLLING SALES PERSONNEL THROUGH SUPERVISION • Conditions under which Supervision is needed .High turnover of accounts .Increasing ratio of selling expenses to sales .Increased complaints from customers .Low morale.Assistant / Sales Manager from HO. negative attitude to company.Total number of calls very low or very high .Mail or phone orders increasing for no known reasons .Sales personnel turnover rate excessive . • Who should supervise? .com .Branch Manager .

Banks & Advertisers assist in the distribution process but do not negotiate or take possession – FACILITATORS.com . constitute the marketing (trade or distribution) channel. Warehouses. CONSUMER & INDUSTRIAL MARKETING CHANNELS Teaching notes of Vijay Bhandari.SALES MANAGEMENT & PERSONAL SELLING DISTRIBUTION NETWORKS • Most producers do not sell their goods directly to the final users. Email: vb73@hotmail. Sales Agents search for customers & may negotiate on producer’s behalf but do not take possession – AGENTS. • Sets of interdependent organizations involved in the process of making a product or service available for use or consumption is a MARKETING CHANNEL. take title & resell the goods – MERCHANTS. performing different functions. Manufacturers’ Representatives. • Wholesalers & Retailers buy. • In-between intermediaries. • Transporters. • Brokers.

com .SALES MANAGEMENT & PERSONAL SELLING CONSUMER MARKETING CHANNELS 0-level 1-level 2-level 3-level Manufacturer Manufacturer Manufacturer Manufacturer Wholesaler Wholesaler Jobber Retailer Consumer Consumer Retailer Consumer Retailer Consumer INDUSTRIAL MARKETING CHANNELS 0-level 1-level 2-level Manufacturer Manufacturer’s Representative Industrial Distributor Consumer Consumer Industrial Distributor Consumer Manufacturer Manufacturer Teaching notes of Vijay Bhandari. Email: vb73@hotmail.

• Developing Managerial efficiency in Distributive Organizations o Dealer training programs o Assistance in Sales Force management o Advice & assistance on general management problems o Shelf-allocation programs Teaching notes of Vijay Bhandari. • Stimulating Distributive Outlets to greater selling effort • Changing policies • Sharing promotional risks with dealers • Using forcing methods • Incentives to the Distributive outlet • Incentives to the distributive outlets’ sales personnel • Incentives to ultimate consumers.SALES MANAGEMENT & PERSONAL SELLING SETTING UP DISTRIBUTIVE NETWORKS ROLE OF THE MANUFACTURER’S SALES FORCE • Sales Departments are the initiators of the co-operative programs • Sales representatives regarded as the Company • Communication & Interpersonal-relations skills are important. OBJECTIVES & METHODS OF MANUFACTURER – DISTRIBUTION NETWORK CO-OPERATION • Building Distributive Network loyalty to the Manufacturer • Appraisal of manufacturer’s policies and their implementation • Analysis of communication System. Email: vb73@hotmail.com .

com . DISTRIBUTIVE NETWORK CHANGES & MAINTAINING RELATIONS • Evolution of new types of distributive outlets • Conflict in interests with the old existing network • Best policy neither to assist nor to throw roadblocks in the way of the newer institutions • If the new types are capable of becoming important outlets for the product. Teaching notes of Vijay Bhandari. Email: vb73@hotmail. • Identify Source of Supply at Final Buyer Level o Local Advertising o Point-of-purchase identification.SALES MANAGEMENT & PERSONAL SELLING o Missionary sales personnel. changes in the marketing channels & sales policies should be considered.