MS-62 SOLVED ASSIGNMENT 2015

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Course Code : MS-62

Course Title : Sales Management
Assignment Code : MS-62/TMA/SEM-I/2015
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment on or before 30th April, 2015 to the
coordinator of your study center.

Q1. What is Sales Management? Discuss the considerations in the

formulation of Sales Strategy for the following products:

(a) Any Industrial Product of your choice

(b) For a newly introduced consumer durable (ceiling fan brand) in

a highly competitive market.
Ans:

Sales management is a business discipline which is focused on the practical application of

sales techniques and the management of a firm's sales operations. It is an important
business function as net sales through the sale of products and services and resulting profit
drive most commercial business. These are also typically the goals and performance
indicators of sales management.

Sales management refers to the administration of the personal selling component of an

organization's marketing program. It includes the planning, implementation, and control of
sales programs, as well as recruiting, training, motivating, and evaluating members of the
sales force. The fundamental role of the sales manager is to develop and administer a
selling program that effectively contributes to the achievement of the goals of the overall
organization. The term "sales manager" may be properly applied to several members of an
organization, including: marketing executives, managers of field sales forces, district and
division managers, and product line sales administrators. This text emphasizes the role of
managers that oversee a field sales force.

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The attainment of sales force goals in an effective and efficient manner through planning,
staffing, training, directing, and evaluating organizational resources.”

Note that these functions are mentioned repeatedly in these summaries of sales
management:

 Sales planning
 Recruiting / staffing
 Training
 Controlling / directing
 Evaluating
 Effectiveness / efficiency
 Compensation

A) Any Industrial Product of your choice of Formulation of Sales Strategy

for Lux

Setting Lux Product objectives - The key component of any strategy statement is
to set the long-term objectives of the organization. It is known that strategy is
generally a medium for realization of organizational objectives. Objectives stress the
state of being there whereas Strategy stresses upon the process of reaching there.
Strategy includes both the fixation of objectives as well the medium to be used to
realize those objectives. Thus, strategy is a wider term which believes in the manner
of deployment of resources so as to achieve the objectives.

While fixing the organizational objectives, it is essential that the factors which
influence the selection of objectives must be analyzed before the selection of
objectives. Once the objectives and the factors influencing strategic decisions have
been determined, it is easy to take strategic decisions.

Evaluating the Uniliver Environment - The next step is to evaluate the general
economic and industrial environment in which the organization operates. This
includes a review of the Uniliver competitive position. It is essential to conduct a
qualitative and quantitative review of an organizations existing product line. The
purpose of such a review is to make sure that the factors important for competitive
success in the market can be discovered so that the management can identify their
own strengths and weaknesses as well as their competitors’ strengths and
weaknesses.

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After identifying its strengths and weaknesses, a Uniliver must keep a track of
competitors’ moves and actions so as to discover probable opportunities of threats
to its market or supply sources.

Setting Quantitative Targets - In this step, a Uniliver must practically fix the
quantitative target values for some of the organizational objectives. The idea behind
this is to compare with long term customers, so as to evaluate the contribution that
might be made by various product zones or operating departments.

Aiming in context with the divisional plans - In this step, the contributions made
by each department or division or product category within the organization is
identified and accordingly strategic planning is done for each sub-unit. This requires
a careful analysis of macroeconomic trends.

Performance Analysis - Performance analysis includes discovering and analyzing

the gap between the planned or desired performance. A critical evaluation of the
organizations past performance, present condition and the desired future
conditions must be done by the organization. This critical evaluation identifies the
degree of gap that persists between the actual reality and the long-term aspirations
of the organization. An attempt is made by the organization to estimate its probable
future condition if the current trends persist.

Choice of Strategy - This is the ultimate step in Strategy Formulation. The best
course of action is actually chosen after considering organizational goals,
organizational strengths, potential and limitations as well as the external
opportunities.

b) For a newly introduced consumer durable (ceiling fan brand) in a

highly competitive market.
Sales Strategy is for newly launched ceiling Fan

a) Increase the width of the product line and launch new categories / products
b) Move towards a direct distribution system. Benchmark the market leaders
network reach and expand the retail network aggressively
c) Price the products competitively with a higher deliverable value.
d) Create a unique positioning by capitalising on a core category benefit,
hitherto not appropriated by any other competitor.

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 e) Use the power of the large organisational infrastructure, good brand equity
and resources to take on major players head on and invest to grow the
business.

Ceiling Fans was earlier focusing only on the premium segment of ceiling fans and
was a niche player in the market. To have a dominating position in the fans market
based on the strengths that company had in terms of brand, infrastructure, and
management capabilities and understanding of the fans market, the company
decided to target most of the segments in the fan market by following a micro-
segmentation strategy. The Company believed that the Right Product at the Right
Price Point for the Right Target Consumer was the Right approach to creating the
Right Competitive Advantage.

Q2. (a) Discuss the concept of personal selling with suitable examples.

Ans:
Personal Selling

Personal selling is promotional presentation by the firm’s sales force conducted on a

person-to-person basis with the buyer for the purpose of making sales and building
customer relationships. Personal selling is the oldest form of promotion. This direct
form of promotion may be conducted face-to-face, over the telephone, through
videoconferencing, or through interactive computer links between the buyer and
the seller. This direct contact with the customer gives the salesperson the
opportunity to be flexible and modify the sales message to coincide with the
customer’s needs. The salesperson can get immediate feedback from the customer.
This form of promotion has a high cost per contact with the customer. The average
sales call costs about $300. It is difficult to ensure consistency of message when it is
delivered by many different company representatives. The credibility of salespeople
often depends on the quality of their company’s image, which has been created by
other promotion strategies. About 14 million people in the U.S. are employed in
personal selling.

Today, most salespeople are well-educated, well-trained professionals who work to

build and maintain long-term customer relationships by listening to their
customers, assessing customer needs, and organizing the company’s efforts to solve
customer problems. The term salesperson covers a wide range of positions. At one
extreme, a salesperson might be largely an order taker, such as a department store
salesperson standing behind a counter. At the other extreme are order getters,
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whose positions demand the creative selling of products ranging from appliances,
industrial equipment, and airplanes to insurance, advertising, and information
technology services.

For example, you will see that these shirts are made of pure silk and the button
holes as well as the buttons are such that they will not tear easily. The material is
‘sanforized’ and guaranteed that the shrinkage of these shirts is less than one per
cent. The collars are also trubenised…”

In this way the salesman agrees with the customer and continues with his sales talk.
In case the customer actually goes round, he will bear in mind the various points
that the salesman had shown in connection with his goods and would very likely
return to make the purchase from him.

Q2. (b)Critically evaluate the various theories of personal selling with

suitable illustrations.

Ans:

Selling is a key element of a company's promotional mix. It is one-on-one interaction

between a salesperson and a prospect. In the early 21st century relationship-oriented
consultative style approach to personal selling, salespeople get to know prospects, find out
their needs and make honest recommendations about product or service solutions. A
number of theories help sellers better understand the role they play in selling to customers.

Maslow's Hierarchy

One of the foundational need theories in psychology is Maslow's Hierarchy of Needs.

Abraham Maslow introduced his five levels of human need in a 1943 paper. He indicated
that people have five basic needs, which they address in order of priority. Physiological
needs are first, followed by safety and security, social belonging, self-esteem and self-
actualization. This theory has huge value in selling in that salespeople get to know
prospects and ask questions to discover their needs in a buying situation. Realizing where
people are coming from on the Maslow pyramid is a part of a seller's emotional
intelligence. Illustration: For instance, car buyers may be most concerned with basic
survival or security and want an economic, dependable vehicle. Others buy cars for social
or esteem reasons.

Buyer Resolution Theory

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The buyer resolution theory, also known as the 5 W's, provides a simple framework of
questions salespeople must address to get a prospect to buy. Illustarion :- The questions
are "Why should I buy?", "What should I buy?", "Who should I buy from?", "What's a fair
price?", and "When is a good time to buy?" These questions also relate to the five common
categories of buyer concern. In essence, if a salesperson can effectively answer all of these
questions in an optimal way for a prospect, he should be able to close a sale.

Consumer Decision-Making Process

The consumer decision-making process is the common steps buyers go through en route to
a purchase. The process begins with need recognition, which is the through that triggers a
buyer to consider a purchase. He then moves to information search and development of a
consideration set. After evaluating options on critical criteria, he purchases what he
believes is the best value solution. Example: After experience the product or services, he
assesses the value relative to expectations. Understanding this systematic approach buyer’s
use, sellers can help from the beginning by suggesting needs or desires buyers may not
even recognize yet. During the information search, a seller needs to present his solution as
a good value. During and after purchase, customer service for an ongoing relationship
becomes key.

Dominant Buying Motives

Two comparisons of buying motives offer insight into where a particular prospect is
coming from in a buying scenario. Emotional versus rational buying motives is a
comparison of purchases driven by emotion and sentiment or rational thought processes.
Patronage versus product motivation is an assessment of a buyer's interest in a product or
in buying from a given firm. Knowing whether a buyer is more emotionally or rationally
involved helps salespeople organization their persuasive efforts. Example:-In general,
though, emotional appeals tend to carry more weight even with rational buyers. While
sellers want to sell quality products, they also want to develop relationships with buyers to
encourage long-term relationships and patronage motivations.

Q3. a) Why and how “Selling Skills” are important for a salesman in
pursuit of discharging his responsibilities.

Ans:

“Selling Skills” are important for a salesman in pursuit of discharging his

responsibilities.
1. Active Listening
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Listening to prospects is the most basic selling skill a sales person has, and it is also
one of the most important. A sales person needs to be able to listen actively and
identify opportunities based on the information a prospect relates – or chooses not
to share. Additionally, it is only by actively listening to prospects that top sales
people are able to ask the right questions to move a prospect closer to a sale.

2. Relating to Prospects

A top sales person could have the best understanding of a product or service of all of
the people on a given sales team, but if he or she can’t relate to a prospect, the
prospect won’t be engaged in the sales cycle. A buyer needs to know that their
business will benefit from a deal, and a top sales person has the selling skills to
create rapport with that buyer by engaging both rationally and emotionally.

3. Managing the Sales Pipeline

There are several versions of the sales pipeline, but all have at least one stage in
common: Prospecting. Prospecting is one of the most critical areas for sales people
to manage. Yet a surprising number of sales people either never prospect,
attempting instead to coast on hot leads and existing clients, or prospect too much,
never reaching the next stages in the sales cycle. A top sales person with strong
selling skills avoids these extremes, maintaining a healthy stream of prospects into
the sales pipeline while still closing deals at the other end.

4. Identifying Decision Makers

Too many sales people without developed selling skills spend time trying to close a
deal with a prospect who in actuality is not empowered to make a buying decision. A
top sales person with strong selling skills will be able to identify whether or not he
or she is dealing with the appropriate individuals, and will not be afraid to ask a
prospect to put him or her in contact with the person or group responsible for a
buying decision. Moreover, a top sales person will be able to do so in such a way that
the prospect does not feel shut out and leave the sales cycle.

5. Overcoming Objections

A sales person might have all of the above four selling skills, but without the ability
to overcome objections, it is impossible to become a top sales person. Objections run
the gamut from soft objections like “We might not be able to afford it this quarter” to

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hard objections such as “We don’t see a use for this product.” A sales person needs
to not only have the knowledge of what he or she is selling and the prospect’s
business, but the selling skills to convince a prospect with objections that his or her
offering is the best solution.

With deep experience in recruiting sales professionals for all industries, sales
recruiting agencies can also help you form a better sales hiring process, assisting
you with all aspects of recruiting, hiring, and retaining top sales people with these
critical selling skills. Given that most top sales people never actively seek a new
position, sales recruiters are the best recruiting options for organizations seeking
top candidates. If your organization is having trouble recruiting candidates with
these essential selling skills, contact a sales recruiting agency and ask how your
sales hiring could be improved.

Q3. (b) What are the basic objectives of good sales force monitoring
system? List and briefly discuss the criteria used to monitor the sales
force team of an FMCG product company.

Ans:

The basic objectives of good sales force monitoring system

a) Setting targets and objectives based on inputs (usually via a command center)
b) Assigning factors responsible for achieving objectives
c) Control processes for ensuring objectives are being achieved within
d) a given time frame
e) a given constrained context (customers and/or markets)
f) System management to handle uncertain environments

The process usually starts from specific sales targets. The command center analyzes the
inputs and outputs established from a modeled control process and the sales force. The
control process enables the sales force to establish performance standards, measuring
actual performance, comparing measured performance against established standards and
taking corrective action. The sales managers adjust their actions based on the overall
process.

a) Time management— Accurately measures the tasks and the fraction of time needed
for each task.
b) Call management— Plan for customer interaction accounts for the fraction of
command center reps that comply with the process and have successful calls.

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 c) Opportunity management— If the process is followed correctly then a sales
opportunity exists. The fraction of command center reps that use the tools, comply
with the objective are all measured.
d) Account management— For multiple opportunities with a customer the account is
measured by the tools, process, and objectives.
e) Territory management— For monitoring the account, the territory is measured by
the number of account reps and prospective versus active customers.
f) Sales force management— Process includes training, IT systems, control, coaching,
and is shared across several people and departments.

The criteria used to monitor the sales force team of an FMCG product
company
The Fast Moving Consumer Goods (FMCG) industry is one of the faster growing
segments of the market. Supermarket shelves are filled with products which must
be tracked in bulk, sales statistics monitored and business tactics changed in very
short periods.

In order to maintain position within such a competitive and rapidly expanding

market the FMCG industry increasingly turns to Information Technology to give
them the competitive edge.

FMCG Even in harsh economic conditions the FMCG market continues to grow over
8% in 2009.

With such rapid growth it becomes essential to be able to identify which of the
numerous product lines is selling well, in which markets, and even in which
positions on the supermarket shelves.

The range of conditions which can affect the success or failure of a product line in
the market place is large, and accurate decision making requires the collection and
analysis of large amounts of real-world data.

For the sales & marketing directors of any FMCG their careers may depend on
knowing the answers to questions like the following.

 How to train up our salespeople and improve their sales revenue?

 How to analyze the competitor information in a short time?
 How to do the sales forecast and planning in an efficient manner?
 How to track sales & marketing data in real time and generate flexible sales
reports as different stakeholders require?

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Illustration

Bamboo has significant experience with business application development in the

FMCG industry, and a specialty in sales and marketing information management.
Sales training management, store/sales data management, dealer/competitor
information management, sales forecast and planning, and sales expense
management are all solution areas.

Efficient Management of Information leads to increased competitiveness and higher

margins.

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FMCG MANAGER IMPROVED SALES VOLUMES

A fortune 100 FMCG supplier needed to be able to more accurately forecast demand,
and have more visibility on the performance of product lines within the retail
channel. Additionally, information regarding effects of placement, seasonality and
market segments where necessary in order to better prepare the sales force to
target the correct products for the correct markets.

Fortune 100 FMCG Company Wanted

In the FMCG industry the primary strategy must be to win at the first opportunity.
There are few second chances for an under-performing product line. To realize this
strategy, the client must understand themselves and their competitor’s in store
performance. The aim is to make data-based decisions. Since there was no available
third-party to offer this service on the market, they decided to build a Sales
Fundamental Tracking system - a powerful tool to guide business planning for both
our client and their key customers. The system was to track the client's and key
competitors’ in-store sales fundamental performance at key retailers, including
distribution, shelving, pricing and merchandising.

As a flexible analysis system, the client wanted.

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  The system to provide a user-friendly and efficient tool with good
performance to collect massive amounts of data.
 The system to provide flexible reports in multiple dimensions.
 Provide real-time monitoring of marketing intelligence

Q4. a)Define and discuss the purpose of Sales Quotas . Elaborate some of
the attributes of a good sales quota plan.

Ans:

Individual sales target figure assigned to each sales unit such a sales person,
dealer, distributor, region, or territory, as a required minimum for a specified
period (month, quarter, year). Sales quotas may be expressed either in dollar
figures (monetary terms) or in number of goods or services sold (volume
terms).

Sales Quota is the sales goal set for a product line, company division or sales
representative. It helps the managers to define and stimulate sales effort.Sales
quota is the minimum sales goal for a set time span.

Generally sales quotas are set slightly higher than the estimated sales so as to
stretch the sales force effort.

Sales quotas are developed through the study of annual territory marketing
plan. In this the plan for developing new accounts and expanding existing
accounts is given by the representatives.

Example: -

New business goal: - $1,000,000

Average sales size: - $50,000

Total sales needed to achieve the goal: 20

Elaboratation of some of the attributes of a good sales quota plan.

Having good sales quotas can mean the difference between a profit and a loss for
your business. How do you know if you've got good sales quotas? Since they're
largely subjective, and vary widely from one business to the next, it can be difficult
to know if you're using the right sales quotas. There are many factors to consider
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when examining sales goals, and many of them are based on internal company data,
making them different for every business. However, there are some characteristics
that all good sales quotas should share. These characteristics will ensure that the
goals you set encourage growth and reward success.

Keeping it real

Good sales quotas must be realistic. Some businesses try to encourage their
salespeople to work harder by setting exceptionally high sales quotas. Once your
salespeople realize that the quotas aren't achievable, they'll stop trying to reach
them. Ending each sales period with a sense of failure isn't much of a motivator.
Realistic quotas should be based on internal metrics, and should mirror the
projected growth of the company. Under- or over-shooting the quotas can be a
productivity killer. Too low, and you're not getting the most out of your salespeople.
Too high, and they'll lose their motivation. Finding the perfect balance can be tricky,
but it can be done. Using good internal data and performance reviews will help you
find the sweet spot for your sales quotas.

Sense of Achievement

If your sales force is frequently missing its sales quotas, they're either improperly
motivated, or the quotas are incorrectly set. For your sales team to succeed, you
need to give them the right tools. One of those tools is an achievable set of sales
quotas. Even if the quotas are realistic on paper, there are many other factors to
consider. Economic downturns, uncertainty, or seasonal changes can all have an
effect on sales quotas. Any factor that affects the achievability of quotas can also
affect the morale and motivation of your sales force. Sales quotas must be dynamic
and adaptable to keep up with changes in the sales climate.

Don't Lower the Bar

Achievable and easy are two entirely different things. It can be tempting to lower
sales quotas to help boost morale. If your quotas are realistic and achievable, then
lowering the bar shouldn't be necessary. If you want your sales force to grow and
improve, you need to give them challenges. These challenges will give them
something to work for, and a greater sense of accomplishment when they meet their
quotas. If you find that your entire sales force is consistently missing quotas, re-
examine the quotas along with the training and compensation your sales staff is
receiving. If your sales force is consistently meeting goals, don't be afraid to ratchet
up the difficulty a few notches.
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A Constantly Moving Target

Managing sales quotas is a difficult task. The factors that affect quotas are ever-
changing, meaning the quotas need to change as well. Trying to hit a moving target
is never easy, but there are some ways to improve your chances. Starting with good
data, make sure that you have realistic sales quotas. Don't base your quotas on
wishful thinking or data from comparable businesses. They must be based on your
data, from your business. Make sure that the quotas you pick are achievable.
Examine all the factors that affect the likelihood of achieving your sales quotas.
Move the quotas up or down, depending on whether the factors are negative or
positive. Set quotas that are challenging, but not impossible. You want your sales
force to be putting all of their skills and knowledge to work for you. If the quotas are
too low, they'll simply sleepwalk through the sales period. Don't be afraid to push
them to perform at their highest level. By using all of these characteristics, you can
be sure that you're using good sales quotas.

Q4. (b) What is territory planning? Who and why the activity of territory
planning is undertaken in the company. Substantiate with suitable
examples of your choice

Ans:

One of the key elements of being a successful representative is planning and

organisation. A business plan is generally made for the forthcoming year, though it
will be subdivided and reviewed on a quarterly basis. The business plan is essential
in providing a framework of what is to be achieved and how. It ensures that time;
effort and resources are focused in the correct direction to get the optimal business
possible. When a company has more than one representative per territory the
business plan should be made as a team.

Situation Analysis

Situation analysis should be a review of the current situation (for the past few
months and over the previous year) on your territory involving information such as

Sales data, this can be looked at from many aspects, for example

 Broken down to brick level

 For the most recent months
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  For the previous year
 Cash sales
 Achievement versus target
 Market share e.g. your product sales versus competitor sales
 Index (you sales compared with the rest of the country/company)
 Activity rates (call rates, frequency and meetings)
 Competitor Sales
 Competitor activity
 New competition
 Own product changes, new clinical data
 Access to customers
 Target doctors
 Resource allocation on territory
 Meetings budget
 Added value resources e.g. in practice training assistance, stationery service,
equipment supply/loan
 Local issues
 Local hospital formulary endorsement
 Key opinion leader support
 Hospital support/threat
 Territory team strengths, weaknesses

The territory can be analysed using SWOT analysis (Strengths, Weaknesses,

Opportunities and Threats). This will include all aspects of the territory, e.g. sales
and activity, which can be definitively measured, but also strengths and weaknesses
of key client relationships, the competition, and possible new competition, local and
national issues. All factors, both positive and negative should be taken into account.

Key Issues

From the SWOT analysis, the key issues for the future success of the territory can be
picked out. These will be the factors that will have the greatest impact on the
territory and that are critical in leading to success and meeting your sales targets.

For example, a key issue may be that product X is not on the hospital formulary at
the district general hospital. Changing this situation would have a positive impact on
the sales of your product not only in the hospital but also in surrounding primary
care bricks.

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Another key issue may be the fact that your territory team has a meetings budget of
$50,000 for the year to be spent on product V. It is key to ensure this money is spent
wisely and that the greatest possible return on investment is made.

SMART Objectives

In depth objectives with specific action plans for key each issue can be produced.
The objectives should always be SMART

 Specific
 Measurable
 Attainable
 Realistic
 Time framed

Using the example of product V having a budget of $50,000 for the year for
meetings, SMART objectives for this might be:

 To spend $2,000 as a team per month on speaker meetings in the 2 main

hospitals on territory (hospitals A and B) targeting the Urology, Chest
medicine and critical care/ICU departments = $24,000
 Each rep in the territory team of 4 to do one lunch meeting per week
dedicated to product V and in a brick where the sales are currently lower
than their potential (i.e. high competitor sales) with a view to obtaining
switches/therapy substitutions of your product over the competition.
Average cost per meeting $70 x 4 reps x 48 weeks =$13,440
 Each rep to do 1 evening meeting per month dedicated to product V aiming at
difficult access GP’s from the target doctor list, cost per meeting should have
an average of $260 x 4 reps x 12 months = $12,480

Specific Action Plans

Each main objective above can now be broken down further into specific action
plans, with tasks assigned to individuals, exactly what needs to be done and by
when. E.g. booking venues, speakers, producing invitations, and setting agendas.

Constant Review

Each month or even weekly, the plans should be reviewed and achievement of the
specific action plans measured. If the plans are not being met, new plans to enable
catch up should be put into place. Attaining the specific action plan points will

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ensure the bigger picture objectives are met and hence the overall sales target hit
and bonus made!

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