UNIT 1 INTRODUCTION TO SALES MANAGEMENT

Structure

1.1 Introduction

Objectives

1.2 Marketing Approaches

1.2.1 Production Concept

1.2.2 Product concept

1.2.3 Selling Concept

1.2.4 Marketing Concept

1.3 Marketing Vs Sales

1.3.1 Good Selling Process

1.3.2 Sales approaches

1.3.2.1 Direct Sales

1.3.2.2 In-Direct sales

1.3.3 Types of personal sales

1.4 Evolution of sales department

1.5 Domains of the Marketing Mix

1.5.1 Personal Selling Vs Other Promotional Tools

1.6 Functions of the sales manager

1.7 Sales Management Model

 1.8 Summary

1.9 Glossary/ Keywords

1.10 References

1.11 Suggested Readings

1.1 Introduction

“Sales management” as the term implies would means management of sales. Often it is
considered synonymous with the management of personal sales. It involves an
understanding of the effort that goes into the management & various processes that
apply to sales force personal.

Sales management initially was meant to be the direction of sales force personnel. Later
the term took on a broader significance apart from personal selling, “sales
management” meant managing of all the sales related activities including below the line
advertising, sales promotion, physical distribution, pricing & product merchandising.

The Definitions Committee of the American marketing association defined sales

management as “ the planning , direction and control of personal selling, including
recruiting, selecting, equipping, assigning, routing, supervising, paying & motivating as
these tasks apply to the personal sales force”.

Objectives

After studying this chapter you will be able to describe the following:-

1) Identify clearly the differences between the functions of marketing and sales

2) Describe various marketing and sales approaches

3) Describe the marketing mix & the sales management model

4) Identify the various functions of a sales manager & his/her objectives

1.2 Marketing Approaches

Marketing is defined by the American Marketing Association [AMA] as "the activity, set
of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large."

Marketing deals with the company orientation towards the market place. It deals with
mainly four concepts namely the production concept, product concept, Marketing
concept & selling concept.

1.2.1 Production concept

The primary objective of Production concept is the customers favors those products that
are highly available and affordable to them. So the concept says the cheap products are
sold well. So this concept relies on the improved production & distribution activities.
Companies try to attain profits by exploiting economics of sale. Improved production
and distribution was an important factor rather than the quality or features of the
product/service. This concept is also known as manufacturing concept. This type of
strategy for a business works well in the developing countries and the demand is more
than the supply.

Important questions the firm has to address in this process are:-

1) Can the product be produced?

2) If the product can be produced, can it be done in required quantities?

China highly practiced this production concept in making the goods/services available
all the times at very low rates and increased efforts to compete in international markets.

This concept perfectly suits when the company distributes the products/services for the
masses and not to a specific target group. This concept works well when the demand
for the product is high and the customer preference doesn’t change for a long period of
time.
Production concept works perfectly fine for some companies like in the FMCG sector.
Coke is sold at the same rate for all the customer groups and is highly available.
However it was found later that some products did not sell adequately irrespective of all
the measures taken by the production concept.

Then this situation demanded another concept known as product concept.

1.2.2 Product concept

Product concept relies on the assumption that the customers buy those products that
offer the most quality, performance, and innovative features. This concept suggests that
quality of the product is an important factor in the customer buying process and
customer would always prefer to buy these e products.

Computer industry is a best example where production concept worked earlier but later
on product concept took over. Customers where they are in the masses or niche
required more and more features and quality while choosing a computer/ laptop. As
more and more companies joining this business and introduction of foreign brands
made the local players to adopt the product concept.

Quality however needs to be defined. Attributes of quality may differ from customer to
customer. To some customer quality means faster processing technologies & to some it
may be the lot of features in the product. So companies must take enough care in
designing a product which would be according to the quality of the target group. Timing
the product in the market also plays a vital part in the success of a product. Earlier
technological or innovational products have failed when they are realized in the markets
and the customer was unaware of the benefits. So educating the customers before
releasing a product is important.

For instance the Golden Eye technology was introduced by Videocon but the customers
were not clueless about what benefit it provides. After some period of time when the
customers understood about that technology it was introduced by LG which became a
marketing success for its products.
In some industries the customer would not be able to understand the product benefits or
may be lacking a little motivation to buy the product even if they know it’s necessary. In
such cases product concept might fail to make the customer buy the product.

Later the other concept namely “Selling Concept” had come into picture.

1.2.3 Selling Concept

This concept relies on the assumption that “We need to compel the customer to buy the
product”, so the customer will buy the product only if the company aggressively
promotes/sells their products/ services. This concept believes that customer is usually
inert and would not buy the product/service if the choice is left for them. So the
company would push its products/services towards the customers and make them to
buy. Hence a strong network of sales force is created for this purpose and they
convince the customers to buy the products/services through advertising and personal
selling. This kind of approach works well with products/ services like insurance, vacuum
cleaners, water purifiers, and various other household items etc.

Important questions the firm has to address in this process are:-

1) Can the product be sold?

2) How much can we charge for the product or what can be the maximum discount
be given and have a decent profit?

This concept would work well for the first time sale to a customer who might take the
product/service when persuaded by the sales representative. After buying the
product/service if the customer is not satisfied then he/she might not be interested in
entertaining the sales person for the next time.

It was later realized that most of the customers will buy the products which they need
and want. Hence the marketing concept has come into picture.

1.2.4 Marketing concept

The marketing concept underlines the following principles:-

 1) Identify the needs and wants of the customer

2) Design the products and services to fulfill the same

3) Use various promotion techniques to communicate the benefits of the product

4) Realizing the profit by satisfying customer needs over a long term

The needs and wants of the customer have been described by Maslow in the marketing
management module.

SAQ 1

1) Identify any two products for which you would prefer to follow the production
concept?

2) Explain which concept would work well in selling a cell phone to a CEO of the
company and to a small farmer?

3) Identify which model does Dell Company follow in selling the computer products
and explain how it benefited them?

1.3 Marketing Vs sales

Sales as a process imply selling the products or services in exchange for money in such
a manner that what you get from it is more than what you put into it. In other words, the
difference between the realized sales price and the cost of manufacturing is the profit
for the organization from sales.

Marketing on the other hand includes understanding the value of proposition in the
minds of the customer and designing the products and services accordingly.

1.3.1 Good Selling Process

Good Marketing makes sales easy. However the marketing process is good, the sales
process needs to be handled carefully.
Good selling implies:-

1) Identifying the right customer

2) Communicating the product benefits to the customers

3) Exchange of goods/ services for money

Sales are the culmination of all the marketing efforts & in a nut shell it is the exchange
of good & services.

So, Marketing is all the activities conducted to prepare for sales. Sales are all activities
required to close the deal.

Clearly customers will buy those products which they need and also where the
perceived value of the product is greater than the selling price of the product. The task
of marketing is to enhance the value proposition in the minds of the customer &
increase the perceived value.

It is ideal that the customer came and demanded the product/ service. However the
customer may not do so because of several reasons such as:-

1) He/ She doesn’t know that the product is available

2) May not know where the product is available

3) And have no idea of whom to contact

4) Have no clear idea of the value proposition and the benefits

5) May not be clear of the utility of the product in solving his / her problem

So here the sales force plays an important role such as:-

1) To reach out the customer & inform him/ her about the product benefits

2) Make the product easily available to the customer

The product can be made easily available by the following methods:-

 1) Meeting the customer one-one basis and delivering the product at the door step.
This is referred to as personal sales.

2) Make the product available at place which is easily approachable by the

customer. This is refereed to Indirect or channel sales.

So, sales management begins with identifying the process of sales. And sales strategy
determines the route the sales would take.

1.3.2 Sales Approaches

The possible approaches the sales would take place can be classified mainly into:-

1) Direct

2) In-direct

Depending upon the product & the availability of the customer one of the above
approach would be followed by sales personnel

1.3.2.1 Direct sales approach

1) Personal Selling

2) Selling to offices- Office Automation Products

3) Selling to Industries- B2B

4) Door-to-door selling

1.3.2.2 In-Direct sales approach

1) Company to retailer

2) Company to wholesaler/distributor & then to retailer

3) Company to wholesaler and then to distributor

An attempt is made to introduce these various sales approaches, but the following text
is primarily focused on Personal selling.
The issues of channel management/ indirect sales approaches are also covered in the
course work of “Distribution& Logistics” and “Supply Chain Management”.

1.3.3 Types of Personal Sales

Personal sales can be classified into broad areas like:-

1) Office sales

2) Industrial/ Institutional sales

(In some countries like India there is significant difference in the approaches to
be followed for Industrial/ Institutional sales and the government sales)

3) Door-to-door sales

The kind of sales strategy to be adopted is the function of the product / service, the
market, buying process, & the competition.

SAQ 2

1) If you were a sales person for agricultural products like fertilizers, quality seeds
etc., which sales approach would best fit in and why?

2) In the above question, what steps would you follow if the customer has no
knowledge about the benefits of your product?

1.4 Evolution of sales department

As described by Richard (2001), before the Industrial revolution the small scale
industries were the leaders of the market and selling the products / services was not
much of a man problem. More emphasis was given on manufacturing activities. The
orders were in hand before the actual manufacturing process of those orders has
started. Meeting the demand was a major problem.
In many firms a small team used to supervise all the business activities. There was no
need of seperate teams for different functions like selling, marketing and manufacturing.
All the tasks are being performed by the team or many a times by a couple of
individuals. Most of the time was spend on manufacturing. It was an ideal situation for
most of the firms not to bother about the marketing & selling activities until the Industrial
revolution began.

With the Industry revolution which began in 1760 in England and shortly after the
American Revolution, in United States, the companies have started to focus on the
expansion of their territory by finding new market places.

Factories were producing huge quantities of goods with the improved technology and
machinery. The production process has become simple & now the main problem was
what to do with excess surplus after meeting the domestic demand in nearby markets.
Now the situation demanded for the expansion of their presence in new markets,
crossing the boundaries of the cities, countries & continents.

With increasing presence in many countries, it became difficult to manage all the
departments by a single individual as earlier before the industrial revolution. Now the
size and volume of business has increased to such an extent, it became compulsory to
delegate the authority to others. This process encouraged in establishment of various
functional units like manufacturing, finance, marketing etc. Each and every department
was to function and supervised by separate authority.

The creation of marketing department has solved the problem of understanding the
market place & helped in performing all activities to improve the market dominance of
the products. With increasing markets & customers various sales departments were
setup. But a major issue of how to communicate with customer has to be perfected to its
best. This is where the roles of marketing mix & personal selling as a function come into
picture.

Let’s understand what is marketing mix & the importance of its various domains.
 1.5 Domains of the Marketing Mix

As you have already studied in marketing, Marketing Mix involves several domains
which can be understood by the following diagram.

Marketing

Mix

Product Price Promotion Distribution

Advertising Public Personal Sales Internet Based

Relations Selling Promotion promotions

(Sales management)

The marketing mix consisting of various domains plays an important role in establishing
the market place/ dominance of a product.

According to the market needs the type of product, the pricing of product, the various
promotion mechanisms to be used & the type of distribution network followed should be
decided.

Various tools in promoting a product include advertising, public relations, personal

selling, sales promotion & Internet based promotions as the latest trend.

Personal selling can be understood as the one to one oral communication between the
sales personnel and the target group in such a way that both the parties benefit from
each other. The oral communication could be a personal meeting, a telephone
conversation or by using latest trends in technology such video conferencing.
The benefits for a sale personnel would be in terms of financial reward for closing the
sale successfully & the customer would be benefitted by the product/ service received.
Often the objective of personal selling may not be to close a sale. Most of the time,
objective may be just to pass on the information about the products/ services to the
target group. Maintaining a good relationship with the customer is often treated as one
of the important objective of the sales team.

1.5.1 Personal selling Vs Other Promotional tools

Let’s now understand how the personal communication differs from other tools such as
advertising, public relations, sales promotion and internet based promotion. We shall
also understand the situations in which the personal selling would be preferred over
other promotion tools & finally we shall discuss the disadvantages of the personal
selling.

Personal selling is preferred in cases where the customer cannot be reached or

communicated easily about the company product / services. Such as the rural areas
where the television or internet is not available, the personal selling plays an important
role. Secondly in the cases where the target group might be a CEO of a company or a
head of the institution, such customers cannot be communicated easily with other tools
as compared to personal selling.

1.6 Functions of the sales manager

Any organization that has the sales people demands a sales manager. What does every
sales manager have in common? They accomplish the tasks through their people and
organizations. The sales manager is responsible for generating sales, profits & meeting
the customer satisfaction levels as per the company objectives.

One manager, John Rozurat of W.W.Grainger, described management as “the art of

getting things done through people”.

As per the author “Charles Futrell(1998)” described in sales management book, the
functions of the sales manager can be as follows:-
 1) Planning :- Building a profitable customer oriented team
2) Staffing:- Hiring the right people to sell and lead
3) Training:- Educating sales personnel accordingly to company
Objectives
4) Leading:- Guiding average people to perform at above average levels
5) Controlling:- Evaluating the past to guide the future

The outcome of these several functions would be the attainment of objectives such as:-

1) Obtained goals
2) Product sales and profits
3) Better Customer satisfaction levels
4) Efficiency
5) Effectiveness

Sales management has several functions like planning, budgeting, recruiting &
selection, training, motivating, compensation, designing territories & evaluating
performance.

1.7 Sales Management Model

Describing
the personal
selling
function

Defining the Designing Developing Directing Determining

strategic role the sales the sales the sales sales force
of the sales organization force force effectiveness
function and
performance
Source: Thomas N. Ingram (1989)

The 1st step “describing the personal selling function” deals with understanding the job
activities and the sales process involved in personal selling

The 2nd step “Defining the strategic role of sales function” will deal with the corporate,
business & marketing level strategic decisions which typically provide guidelines within
which the sales manager and salespeople must operate.

The 3rd step “Designing the sales organization” deals with the importance of designing
an effective sales organization which is necessary to implement the strategies
successfully.

The 4th step “Developing the sales force” highlights the importance of right recruitment
and selection methods & the need for proper training of the sales force personnel

The 5th step “Directing the sales force” presents that hiring the best people for sales is
one thing & directing their efforts to meet the sales organization goals and objectives is
another. Sales manager spend a great deal of time in motivating, supervising and
leading members of the sales force.

The 6th step “Determining sales force effectiveness and performance” deals with
monitoring the progress of sales force to determine the effectiveness and performance.
Developing forecasts, assigning quotas & budgets provides necessary information for
the performance evaluation.

1.8 Summary

In this unit we understood the definition of sales management and the differences
between marketing and sales. We highlighted various marketing approaches starting
with the production concept, product concept, selling concept and finally the marketing
concept and their role in sales generation. A good selling process is essential in making
the sales easier by identifying the customer, communicating the benefits and
exchanging the goods/services for money. For the sales process to be effective the
sales force plays an important role in identifying the right approach to reach out to
customer and make the sale. Later in this chapter we have studied sales management
as a domain of the marketing mix in establishing the market place and the critical role of
personal selling played for the same. This unit also helped in understanding the role of
sales manager in planning, staffing, leading, training and controlling the sales force
personnel. Finally in this unit we understood the sales management model which helps
in managing the sales.

1.9 Glossary/ Keywords

1) Sales Promotion Activities, techniques and incentives that are

directed towards customer with an intention to
create a consumer demand.

2) AMA American Marketing Association is a

professional association for marketers.

3) FMCG Fast moving Consumer Goods are the

products which are used or replaced very fast
by the customers over a period of weeks,
months of within a year. Some examples would
be soft drinks, toiletries etc.

1.10 References

1. Tyagi,C.L., Arun kumar (2004), “Sales Management”, Atlantic Publisher, New

Delhi, India.

2. Charles Futrell. (1998), “Sales Management: Teamwork, Leadership, and

Technology (6th Ed.)”, The Dryden Press, Florida, USA.
 3. Richard R. Still, Edward W. Cundiff, Norman A. P. Govonil. (1998), “Sales
management: decisions, strategies, and cases (5th Ed.)” Prentice-Hall
International, New Jersey, USA.

4. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysis

and decision making”, The Dryden Press, New York, USA.

1.11 Suggested Readings

1. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “Sales

Management”, John Wiley & Sons, New Jersey, USA.

2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,

Prentice Hall, New Jersey, USA.