Understand of the Topic

1. Sales Quota and its importance

2. Case Study- NPL: Annual Planning

SHRUTI MIDDHA | PGDM (C) | JN180332 | 1-March-2019

Submitted to: Dr. S.R. Singhvi

Sales Quota :
Sales quotas are sales goals set by a company for its marketing units for a certain period of time
This includes a sales region
 A sales territory,
 A branch office,
 A sales person,
 A distributor,
 A dealer.

Now, these sales quotas can be on sales volumes i.e. rupees or unit volume, selling expense,
profit margins, selling and non-selling activities, customer satisfaction or both.
To exemplify, each sales person is given a sales volume goal and a selling expense budget as a
sales quota FY. These units are broken down to quarterly and monthly quotas.

 After preparing the sales forecast, a company decides its annual sales budget, that
includes the company’s goals for sales volumes and selling expenses.
  Next, This sales budget is broken down to sales quotas for regions, branches and sales
territories.

Importance:
1. Providing performance standards:
 It measures the performances of a salesperson
 Also, provides a goal/target to a salesperson
 Actual performance is measured against standard

2. Controlling performance:
e.g. when a quota of 8 calls per day on retail units is set, the salesperson know that they have to
make those many no. of calls which is monitored by a sales manager.

3. Motivating salespeople:
Influencing salespeople’s motivation level and amount of energy. As the salesforce compensation
is tied to the extent or degree of achievement of sales quotas. This includes salaries+ commission.
3. Identifying strengths and weaknesses:
This way the manager can identify successful and unsuccessful performers.
Types :
1. Sales volume quota:
Volume quotas for districts /branches within a region i.e. North , West, South, East.
Similarly, for products for specific period of time.
2. Rupee sales volume quota
It is easier to manage when quotas are set in rupees rather than in units.
3. Unit sales volume quota
Companies set sales volume quotas in units i.e. numbers, tons, liters of products varying
from situation to situation.

4.Gross margin/Profit Contribution quotas :

 It is decides by subtracting COGS from sales volume.
Some companies calculate it as :
Sales-(COGS)-(Gross margin)-(salary)-(direct selling expense)-(total selling expense)- (profit
contribution)
Therefore, (Profit contribution/ sales )% is calculated.

Expense quotas:-
 This is done to control the cost of selling i.e. travelling, lodging and food
 It is advisable to administer the expense quotas intelligently and with flexibility.
Activity Quotas:
 These are done to direct salespeople to carry out important job activities. This includes
defining important activities,
 Finding out time required to carry out these activities.
 Deciding the priorities to be given among the various activities.
 Deciding the quotas/frequency for important activities.
For my sales executive :

Activity of a Time period Priority Quotas

salesperson (Frequency)
 Combination Quotas :

Calculating points to overcome the problem of different measurers.

Type of quota Quota Actual % Quota(Q) Weight(W) Q*W

Sales volumes

Selling expense

New customers

Total point score = …………/ weight =

Methods for setting sales quotas:

1. Territorial sales potential

2. Past sales experience
3. Total market estimates
4. Executive judgement
5. Sales person’s estimates
6. Compensation plan
7. For effective administration of sales quotas, the company’s sales dept should:
 Set realistic quotas,
 Understand problems in setting quota,
 Ensure salespersons understand quota
 Make sure flexibility in administration
 Know relationship between quotas selection and marketing environment.

Some companies don’t use sales quotas. These companies should have forceful reasons, because
if they don’t have sales quotas, they may not achieve the company goals.
 Case Study: NATIONAL PHARMACEUTICALS LTD.
ANNUAL MARKETING PLANNING

HISTORY OF NPL:

 Started in 1910

 Small Indian Pharmaceuticals Co.

Producing more than 200 products

 PRODUCT LINE

Life Saving Drugs Drugs for curing common diseases

1. Antibiotics

2. Vitamin Preparations

3. Sulpha Drugs

4. Anti-Diarrhoeal

5. Tonics

6. Health Restorers

7. Cough and Cold Remedies

MARKETING ORGANISATION
 MARKETING
MANAGER

ADVERTISING TRAINING
DISTRIBUTION MANAGER, MANAGER
3 Production MANAGER EXPORT MEDICAL
MANAGER (Advertising, Product (Organizing
Managers MANAGER SERVICES
(Receiving and Literature, Mailing Training
Executing sales (Export sales (Medical programmes
Campaigns, of company) Doctor)
orders) Designing and for
Execution) personnel in
marketing
function)

ORGANIZATION STRUCTURE

 Field Organization- North, East, South, West

 Each Division- Divisional Manager

39 Branches ,15 Depots

 Under each DM- SDM (Sales Divisional manager)

SAM (Sales Administrative Manager)

 Each Branch- Branch Manager (Overall sales and resource planning and implementation of
company plans in branch territory)

Field Sales Organizer (190), Medical representative (10)

 •DOCTORS

•(A) GENERAL
PRACTITIONERS,
Substantial Practise, •(C) Old doctors with declining
•(B) Between A and practise Non clinical doctors in
Trend Setters or C Categories
attached with hospitals Doctors in administration
Medical Colleges or of hospitals or other institution
Hospitals)

MARKETING PLANNING FOR GROWTH

 “Growth through Diversification”

 Goal- Searching 2 new product committees and formulating new product areas

 NPCC (NEW PRODUCT AND PROJECT COMMITTEE)

 Developing Project proposals

 Used input of search sub committee as starting point

 NPC (NEW PRODUCT COMMITTEE)

 Scanning industry environment for new product areas

 Modifications to be brought in existing products
 Dropping of old products

ANNUAL MARKETING PLAN

1. Preparation of Marketing plan at Head office

 Selection of products for active promotion

1. MR could actively talk about 2-3 products

 2. Company selected 6-8 products on active promotion
3. 20-30 products selected
4. Potential demand for the product, life span of therapy, competitive position
5. Promotion products targeted roughly for 70-80 % of the sales volume products till 4-5
cycles

 Sampling Plan & Mailing Plans

 Potential demand, promotional input, number of doctors, amount of communication

pressure keeping competitive aspects
 Roughly 12 mailing were prepared each year, having literature of 4 products on average.
 Important aspects printed on envelops
 AM, Medical Services Department, PM, MM participated: what to highlight, which types
of doctors to be selected

 Call norms

 Sales Targets

 A: 10-12 visits

 B: 6-9 visits

 C: 3-4 visits per year

 Sales target specified in terms of rupees as well as standard pack sizes.

2. Holding BSFC for arriving at tentative targets

3. Consolidation of branch plans at divisional offices

4. Preparation of Final marketing plan for each branch

5. Working out detailed marketing plan at the branch

6. Prospect product planning conference at Branch

Planning process involved each of the member’s efforts in the annual marketing process

Field Sales Organizer had to set their own targets

Branch Sales Forecasting Conference:

• Preliminary marketing plan from HO sent to FSO & BMs 4-6 months before the start of
next financial year

• Conference attended by all MRs, FSO, DM or SDM & a head office rep.

• MR receives product group-wise & product-wise information

1. Target for current year

2. Previous years total sales

3. Current years sales up to last month

4. Previous years sales up to corresponding month