Sales Management MM - 302

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What is Sales?
Two party : Buyer & Seller. Transfer of Goods & Services. Transfer of Ownership. Profit to the Seller. Benefits to the Buyer. Monitory Value. Satisfying the need of the Buyer.
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Why Sales Management?
Which department generates maximum of total revenue? Which department establishes the link b.w the firm and the bread and butter of the firm (Customers)? Organizations large or small are into selling something or the other for their survival and growth
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Continued---Continued---It may be a product Service Idea Concept Destination person

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Evolution of Sales Management
The history of salesmanship is as old as human civilization ± Paul Herman Sales people were not held in high esteem by the society Scene before Industrial revolution begins Scene after Industrial revolution started The techniques of modern sales management and selling techniques were refined by John Henry Patterson ± Father of Modern Sales Management 5

Continued---Continued---He was the pathfinder who showed the strategy and skill required to transform a sales force into an effective work force for generating sales and profits. A salesperson is no longer an order taker or information provider It costs 5 times to register a new customer than to sell a product or service to an existing customer. The domain of sales management has become multi disciplinary 6

What is sales management
American Marketing Association Sales management means 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 In above definition there is a confusion b.w sales management and management of sales force
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Nature and Scope of Sales Management
The nature or characteristics of sales management can be explained by a) Its integration with marketing management b) Relationship selling c) Varying sales responsibilities

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Integration with Marketing Management
Sales planning should be integrated with marketing planning. A company¶s marketing plan typically consist of two basic groups a) Field selling teams Contacting existing and prospective customers b) Head quarter marketing team Performs support and service functions or activities to assist or help field salespeople in their jobs in following manner 9

Continued---Continued---Promotion Consists of advertising, sales promotion, publicity Marketing research Collecting and interpreting information on customers, competitors, products, markets and so on Marketing logistics Physical distribution of finished goods including 10 warehousing, inventory, transportation.

Continued---Continued---Customer service Pre sales and post sales service as well as delivery service to existing and prospective customers CoCo-ordination Between customers, company¶s salespeople and production or operations

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Relationship selling
Buyers and salespeople, who do business together have some type of business relationship Transactional relationship/selling Where after the product or service is sold, the customer is not contacted again and hence the relationship is not extended Value added relationship/selling In the case of value added exchange the focus is12on

Continued---Continued---the salesperson understanding the current and future needs of the customer correctly and meeting those needs better than the competitiors Collaborative/ Partnering relationship/selling It means important or major customers need continuous attention through partnering or collaborative relationships.
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Varying sales responsibilities
Selling includes a variety of sales jobs, which are different from one another. Sales position Delivery Delivery of a product to household consumers or to business customers Order taker Acts mainly as an inside order taker, who responds 14 to customer demands

Continued---Continued---Sales support people Expected to build goodwill and educate the decider, instead of the purchaser or user of the product Technical sales support / sales engineer High level of technical knowledge, professional consulting Demand creator or Order getter Actively seek orders, and use creative and problem 15 solving selling

Continued---Continued---Solution vendor A salesperson whose expertise is in solving of a business customer¶s problem, with the company¶s products and services.

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Sales Management Objectives
Sales Volume & Sales Growth. Share of each product in the total volume. Market Share. Profits. Selling Expenses. Key Accounts. New Accounts. Expansion of Channels. Proportion of Cash & Credit Sales.

After sales services. Training of dealers &(Customer in some cases).

Functions of sales manager
Sales manager has to make a win-win situation for wina) The owners and shareholders, through higher sales at increased profits b) The consumers, by giving them a perception of greater satisfaction by the usage of the product c) To the staff working along with him, to make them feel they have delivered the best d) To the trade, e.d distributors, traders and sellers, retailers by ensuring their profitability levels are maintained 19

Continued---Continued---In order to achieve all this, he has to perform various functions as follows a) Execution of CEO¶s vision Forecasting, Budgeting and Planning Sales operations b) Planning the selling policy and strategy c) Selecting and organising the sales team d) Selection of salesmen/ sales force
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Continued---Continued---e) Induction, training and placement of salesmen f) Devising compensation policy. Promotion avenues and long term career plans g) Controlling the field force h) Direction and coordination of sales force i) Link between top management and field j) Advertising and sales promotion k) Winning trust and confidence of trade and 21 customers

Theories of Selling
Is selling a Science ± Easily taught basic concepts Or an Art ± Learned through experience In a survey of 173 marketing executives, 46% perceived selling as an art, 8% as a science and 46% as and art evolving into a science

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Types of theories
Seller oriented theories AIDAS Right set of circumstances Buyer oriented theories Buying formula theory of selling Behavioral equation emphasizes the buyer
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AIDAS Theory of Selling
According to this theory, during the successful selling interview the prospect¶s mind passes through five successive mental states: Attention, Interest, Desire, Action, and Satisfaction Implicit in this theory is the notion that the prospect goes through these five stages consciously, so the sales presentation must lead the prospect through them in the right sequence if a sale is to result
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Securing Attention
Getting the attention of the prospect by making favorable comments about the prospect Proper dress, neatness, a genuine smile and a cheerful expression The objective of the first few minutes of the meeting is to put the prospect into a receptive state of mind. It is always a good strategy for a salesperson to make an appointment with the prospect 25

Gaining Interest
Leads the prospect¶s mind to second stage of gaining an interest Which aspects or factors of the product or service appeals or attracts the prospect Different methods are used:used:Carrying a sample of the product if it is not bulky Carrying visual aids like CD, the product leaflet, photographs
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Continued---Continued---Ask relevant questions to understand the buyer¶s needs or problems as well as to identify the strongest appeal or interest.

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Kindling Desire
The objective in this stage is to arouse a strong feeling in the prospect of wanting to have the product or service Salesperson continues with presentation that how his product/service can solve the buyer¶s problem In this process, the buyer may raise some objections, which need to be answered properly If there is an external interruptions
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Inducing Actions
Buying action or closing the sale Some salespeople use trial close to test whether the prospect is ready to buy. If no the salesperson continues with the presentation to fully convince the prospect about his proposal

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Building Satisfaction
After the customer has given the order, the salesperson should reassure the customer that the decision was correct Thanking the customer for the order, and attending to such matters as making certain that the order is filled as written, and following up on promises made

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Right Set of Circumstances Theory
µEverything was right for that sale¶ sums up the second theory. This theory, sometimes called the µsituation response theory¶ holds that the particular circumstances prevailing in a given selling situation cause the prospect to respond in a predictable way The more skilled the salesperson is in handling the set of circumstances, the more predictable is the response
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Buying Formula Theory of Selling
Salespeople must understand that household and individual as well as business or industrial) buyers pass through certain stages or steps in buying a product. In consumer markets, individual and household consumers make buying decision based on five mental stages of buying process as follows

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Problem (or need) Recognition
The consumer buying process starts when the prospective consumer recognizes a problem or need. Salesperson must identify the buyer¶s needs to know what information about the product benefits should be given so as to satisfy the buyer¶s needs.

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Information Search (Collection)
An aroused consumer will search for more information. For low involvement products it may be mild for high involvement products the person may want an active information search

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Evaluation of alternatives
Following factors in the evaluation process used by consumers mostly on a rational basis: The consumer is trying to satisfy a need, or solve a problem The consumer is looking for certain advantages or benefits from the product or service that satisfies the need or solves his problem The consumer knows that each alternative product or brand a set of characteristics that try to satisfy his need 35

Continued---Continued---The importance and relevance of attributes vary from product or product

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Purchase Decision
The consumer forms preferences among the brands and also an intention to buy the most preferred brand, in the evaluation stage. Intentions can be changed by three factors Attitude of others Unanticipated situational factors Perceived risk
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Post purchase behavior
After buying the product or service, the customer experiences some level of satisfaction or dissatisfaction The salesperson¶s job does not end when the product is purchased It is a known fact that the buyer¶s satisfaction is high, if the product perceived performance is more than the buyer¶s expectations.
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Buying Decision Process of Business Buyers
In business or industrial markets, the decision making process includes three additional stages as compared to the five stages of consumer buying process Determination of characteristics and quantity of needed product or service Development of specifications of product or service, needed and Obtaining and analyzing supplier proposals 39

Behavioral Equation Theory

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PERSONAL SELLING & SALESMANSHIP
Contents: Meaning & Concept Buyer-Seller dyads Essentials of Personal Selling Method of Personal Selling Types of Sales Persons Phases of Selling Process

Personal Selling
Personal Selling is also known as Direct Selling. Most important tool of Sales Promotion. Directly persuade the prospect for buying the Product & Services. It is Oral presentation of Goods & Services. It is two way communication b/n Seller & the Buyer. Identifying the ability of Sales Person.

Some Important Aspects
It enhances customer's confidence in the seller It promotes long-term business relations through longpersonal intimacy It provides a human touch to business transactions It helps facilitate the seller to understand each customer¶s needs and preferences more clearly It helps satisfy a customer by modifying the product as per the customer¶s choice and preference 43

Continued---Continued---Personal selling followed by personal service helps build long-term relations between the business and longthe customer It helps keep up with the competition in the market, based on product customization as per customer¶s preferences It is powerful an effective tool for convincing the customer about the product
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Buyer Seller Dyads
Dyads describe a situation in which two People interact The Sales Person & the prospect interacting with each other constitutes one example of Buyer Seller dyads. In both Advertising & Personal Selling , the Seller seeks to Motivate the Prospective Buyers to behave favorably towards the Seller.

Essentials of Personal Selling
Product Knowledge Company Knowledge Competitor Knowledge Market Knowledge Knowledge of Selling Process Communication Skills & Selling Skills

Method of Personal Selling
Across the table Selling. Counter Selling Selling at the Door Step Auction Selling Tender Selling

Types of Sales Person
Salesmanship: It is the art of successfully persuading prospects or customers to buy product or services from which they can derive suitable benefits, thereby increasing their total satisfactions. Salesperson:  Order Takers Inside Order Takers Delivery Salespeople Outside Order Takers 

Order Creators: Missionary salespeople Order getters

Process or Steps in Effective Selling
Prospecting & Qualifying

Preapproach

Approach

Presentation & Demonstration Overcoming Objections

Closing

Follow up & Maintenance

Steps in Personal Selling
Successful personal selling calls for an integrated approach devised from the experience of the sales personnel. Following are the steps involved in personal selling

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Prospecting
Prospecting is the process to identifying prospective buyers of the product. The prospects are those who have a need or will to buy and the power to pay. Prospects may be individuals or institutions There are different ways to identify prospects

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Continued---Continued---Acquaintance References Satisfied customer can be a good source of information

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Continued---Continued---Cold Calling This method of prospecting identifies the customer segment to whom the sales personnel might call upon without any reference but with an anticipation of converting the call into a sale. Also called random prospecting

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Continued---Continued---Centre of Influence Method Using this approach, the salesmen obtain the references for prospects from the eminent people of society

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Continued---Continued---Personal Observation Method A salesman has ample opportunity to identify prospects on several occasions such as interacting with friends and acquaintances, attending seminars, social gatherings, functions, travelling etc.

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Continued---Continued---Direct Mail or Telephone Method A salesman can contact prospective buyers on the telephone and inform them about the product range, plus the benefits and price of the products available.

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Continued---Continued---Company¶s Records The salesman can refer to the company¶s records and get in touch with several old and new contacts.

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Continued---Continued---News Papers There are several people who advertise their requirements through newspapers

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Preapproach
PrePre-approach is the second step in the selling process it emphasis that the salesman should have prospects personal information, after identifying the prospect in the prospecting stage. Based on all this information, the salesman has the necessary tools to plan his visit/interview with the prospect and can give an effective sales presentation
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Significance
Concentrates only on the prospects Gain all the possible information about the prospect It does not waste the prospect¶s time and energy

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Approaching
In this stage the prospect and the salesman come in contact with each other face to face Here the salesman has an opportunity to understand and interact with the prospect in a better way Since salesmen are of two types, viz, the traveling salesmen and the counter salesmen, the approach adopted by each of these salesmen is obviously different
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Approach adopted by traveling salesmen
Difficult to approach prospect since the prospects are generally a busy lot Prospects may not be interested in buying the product The salesman must keep on trying to obtain an interview with the prospect If the prospect happens to be a high ranking executive or a senior officer
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Different ways to gain access the prospect
May directly approach the prospect Salesman can seek an appointment with a prospect could be by sending an advance mailer explaining his product and its benefits vis-à-vis other products visavailable in the market Can secure an appointment with a prospect than through a reference given by the friend, relative or business associate of the prospect Another effective way is to give away gifts to the prospects before asking for an appointment 64

Continued---Continued---Sale letters have proved to be another kind of door opener. Such letters provide ample detail about the product, benefits and scheme available with the product

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Approach adopted by counter salesmen

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Methods of Approaching
1.Cashing in on brand name or the company¶s reputation 2. Customer benefit approach 3. Innovative product opens the door to the salesman 4. The premium approach 5. The shock approach 6. The survey approach 7. Interactive approach

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Presentation and Demonstration
A good presentation is as important as a good product A good presentation can be in the form of attractive packaging and display, conspicuous placement of the product in the display window, etc.

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Requirements of good presentation
Conspicuous location Attractively package, decorated and well organized articles create a good impression in the mind of the prospect The salesman should explain the product with its features and price advantage to the customer in simple and easy terms It is very important that the customer be shown the kind of quality that he is looking for 69

Continued---Continued---Demonstrating a product helps create a positive impression in the mind of the customer and increases his interest

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Overcoming Objections

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The close
This is the last stage of any sales presentation The main aim of the close is to convince the prospect to sign the order form or to place an order immediately rather than in the future The salesman should be alert and use his good judgment to spot an opportunity when he is in a position to close the sale

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Follow up and Maintenance

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SALES FORECASTING
Contents 

Concept of Sales Forecasting  Steps in Sales Forecasting  Method of Sales Forecasting  Market Potential  Sales Potential  Market Identification  Market Motivation

Sales Forecasting
According to Cundiff and Still An estimate of sales during a specified future period which is tied to a proposed marketing plan and which assumes a particular set of uncontrollable and competitive forces Sales forecast are used by other functions i.e., Manufacturing or Production Finance Purchase 75 Human Resource Management

Steps in Sales Forecasting 
      

Defining the Objective to be Achieved. Dividing Various Product in to homogeneous Group. Analyzing the importance of various factors to be studied for Sales Forecasting. Selecting The Method. Collecting & Analyzing the Related Information. Drawing Conclusion from the Analysis made. Implementing the decision Reviewing & Revising the Sales forecasting from time to time.

Method of Sales Forecasting 

Survey Method  Expert Opinion Method.  Market Studies Method  Sales force Opinion Method  Statistical Methods Trend Method Graphical Method

Market Potential: ³A Market Potential is an estimate of the maximum possible Sales Opportunities present in a particular market Segment and open to all seller of a good or service during a stated future period´. Sales Potential: ³A Sales potential is an estimate of the maximum possible Sales opportunities present in a particular market segment open to a specified Company selling a goods or services during a stated future period´.

Market Identification:  Market identification Requires finding out:Who buys the Product? Who uses it? Who are the Prospective Buyers & Users? Market Motivation: Why do people buy? Why don¶t people buy? How best to present the product in sales talk ?

DETERMINATION OF THE SIZE OF SALES FORCE
Contents: Meaning Sales Force Size Sales Force Objectives Sales Force Structure

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Sales Force Size 

I. II. III.

IV.

Sales Representative are one of the Company¶s most productive & Expensive Assets. Increasing in their number will increase both Sales & Cost .This method consist of the following five steps: Customer are grouped in to size classes according to annual sales volume. Desirable call frequencies are established for each Class. The Number of accounts in each size class is multiplied by the corresponding call frequency to arrive at the total workload, in sales call for one year. The average no. of call for a sales representative can make per year is determined.
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V. The number of sakes person are needed is determined by dividing the total annual calls required by the average annual calls made by a sales representative . Example: Suppose the company estimate that there are 1,000 A accounts & 2,000 B accounts in any particular territories. A accounts required 36 Call in a year & b accounts require 12 calls a year. The Company need a Sales Force that can make 60,000 Sales call in a year. Suppose the average Rep. Can make 1,000 calls in a year. The company would need 60 full time sales Representative.
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Sales Force Objectives
Prospecting

Information Gathering Sales Force Objectives Allocating Selling

Targeting

Servicing

Sales Force Structure
Product Based Structuring Customer Based Structuring Territory Based Structuring

Sales Force Structure

SALES ORGANISATION
Contents: Meaning & Function of Sales Org. Types of Sales Organization Developing a Sales Organization Field Sales Organization

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Organization
the systematic coordination of the function essential to achieving organizational objectives. The objective of the sales organization is the performance of various activity necessary to promote sales. 
Organization means

Objectives of the Sales Organization 
Define

the line of Authority Assure that all necessary activity are assigned & Performed. Established lines of Communication To achieve coordination & Balance To economize of executive time.
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Setting up a Sales Organization
Defining the Objectives Determination of Activities Grouping activities in to position Assignment of Personnel to Position Provisions for coordination & Control

Recruitment
Recruitment is the process of locating and attracting job applicants Recruitment and selecting a new sales force is an important aspect of the sales manager¶s job

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Preparing the job description an specification
Title of the job Duties and responsibilities Technical requirements Territory to be covered

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Recruitment Sources
There are five main sources of recruitment Advertisements Advertisements are both a source of recruits and a method of reaching them Newspapers, magazines and trade journals are the most widely used media

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From Inside ± The organization's Staff
The advantage of this source is that the candidate is familiar with the working of the company and its product

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Recruitment Agencies
Recruitment agencies provide bio-datas of potential biocandidates for a fee

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Educational Institutions
This source includes management institutes, universities and technical institutes. This source is used for placement at the entry level

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Competitors and Other Industries
The advantage of this source is that the salesperson knows the market and its customers

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Friends and Relatives
If they meet the necessary qualifications required for the job

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Previous Staff
If they are willing to return

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Selection Procedure
Selection, involves picking and hiring a few people from the total number of candidates applying for the sales job Selection is done by comparing the requirements of a job with the applicant¶s qualifications

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Steps Involved in Selection Process
(a)Hiring profile The aim of the recruitment process is to attract a number of qualified candidates. The manager should develop a hiring profile system

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Example
Job Description 
     

Job Title Basic Job Objectives Secondary Objectives Responsible to Duties Performance Evaluation Remuneration and fringe benefits
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Continued---Continued---Quantitative Methods
1. 2. 3. 4. 5.

Age Education Experience Special qualifications Abailability

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(b) Application Scrutiny
Review the completed forms he has received The main purpose of scrutinizing applications is to identify those candidates who fit the job specifications and can be called later for an interview and testing sessions

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Example
1. 2. 3. 4.

5.

6.

Job applied for May I have your name Your address where you can be contacted Telephone where you can be contacted What kind of a job you are looking Must be sales What do you expect to earn Must be in line what is being offered What are you earning now Compared with 5, is he being realistic

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Continued---Continued---7. What are you doing now Whom for How long for 8. And before that? Whom for? How long for? 9. When can you be available 10. Are you married Children
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Continued---Continued---Quantitative factor Age Education Experience Availability

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(c) Interview
The interview is the most used but least scientific of the various tools of selecting employees The personal interview is used to help determine if a person is right for the job

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Procedure
The following steps are generally involved Reviewing background information Preparing a question plan Conducting the interview Concluding the interview

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Example
Rating A- Excellent, B- Good, C- Fair, D- Poor ABCDTraits Brief Notings Background Conversational ability Personality Qualifications Experience Overall suitability Recommended for the position: Yes/No Rating

Signature of the Interviewer
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(d) Psychological testing
Psychological test is designed to measure such skills and abilities in a salesperson as are found to essential for successful job performance Knowledge tests Ability tests Aptitude tests

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(e) Reference check
Reference checks allow an organization to secure information not available from other sources References are usually checked while the application form is being processed and before the final interview takes place

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(f) Physical examination
Physical examination reveals whether or not a candidate possesses the required stamina, strength and tolerance needed under hard working conditions.

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(g) Job Offer
When all other steps have been completed in the selection process, the company must decide whether or not to hire such an applicant

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Sales training programme
The purpose of sales training is to achieve improved job performance In the absence of training job performance improves with experience

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Aim of Training
Represent the company better in the market Higher turnover Make salesperson aware of new product

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Identifying Initial Training Needs
Job Specifications The qualifications needed to perform jobs are detailed in job specifications Trainee¶s background and experience Sales related marketing policies

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Training on Market Place
Market place includes the wide client base upon which the selling process is focused. During the training, sales staff should be informed about the location of the market where the company¶s products are already sold.

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Training on competitors
The sales force should have sufficient knowledge about he competition. Checklist Competitor's Name Product Name What is the current % market share Trend Promotion strategies
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Training in Handling the competition
Create new needs Present the product differently Wait for the right opportunity Be prepared

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Training on Communication
It is an interaction between one or more persons It is important to check that the message that the salesperson conveys is the same as the one his client receives

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Training Methods
Lectures Trainees mainly watch and listen Personal conferences Trainer and trainee jointly analyze the problems Demonstration Appropriate for conveying such topics as new products and selling techniques
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Continued---Continued---Role playing This method involves trainees acting out parts in artificial problem solutions. Gaming Also known as simulation, somewhat resembles role playing On the Job Training (Coach and Pupil Method) This method combines showing, telling, practicing and evaluating
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Compensation Plan
Compensation plans for the sales force are designed to achieve several objectives To assist the company in meeting its sales projections To bring the earnings of the sales force to desired levels Reward individual salesperson in direct proportion to their efforts and performace
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Attitudes towards a Compensation Plan
Salespeople look for company¶s attitude 1. Adequate income for adequate performance No conflict 2. Superior income for superior performance None here either 3. A base of fixed income for security purposes Many companies agree
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Continued---Continued---4. At least primary fringe benefits No argument here, but not all companies can afford full range 5. A yardstick to measure performance Equally important for the company to measure performance 6. simplicity- easy to understand simplicityThe company agrees ± the simpler the plan, the easier and cheaper to administer it
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Designing Compensation Plan
Designing a new compensation plan consists of a number of steps as follows

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Examine job descriptions
The first step is to examine the existing job descriptions prepared in the staffing process for all sales positions Each position needs a separate job description, with detailed job responsibilities and key performance standards, to decide how much the company should pay

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Set up specific objectives
An effective compensation plan should have specific objectives for the sales people and these objectives should be derived from the company's sales and marketing objectives

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Decide levels of pay or compensation
A level of pay means the average pay or money earned by the salespeople per year (or per month). The level of compensation or pay should be competitive to attract and retain good quality salespeople Firms divide the levels of pay based on the following factors The levels of pay for similar sales positions in the industry 127

Continued---Continued---The levels of pay for comparable jobs in the company Education, experience and skills required to do the sales job

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Developing the compensation mix
One of the key tasks in designing an effective sales compensation plan is to develop the compensation mix or the method by which the salespeople will be paid Widely used elements of compensation mix are: Salaries, Commissions, Bonuses, Indirect monetary benefits Types of compensation mix
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Continued---Continued---1. Straight Salary A salary is a direct monetary reward paid for carrying out certain duties over a period of time. It is related to a unit, and not to a unit of work. Suits for sales trainees, missionary dales activities etc.

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Continued---Continued---2. Straight Commission Plan Present strong financial incentives in order to ensure superior performance A commission is a payment for the performance of a unit of work Following factors should be decided Commission base Commission rate Commission srart
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Continued---Continued---Commission payout Suits for certain industries like real estate and insurance, direct sales industry, wholesalers etc.

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Continued---Continued---3. Combination plan 68% of all companies use a combination plan to pay their salespeople

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Decide indirect payment plan
Indirect payment plan, which is also called fringe benefits, perquisites, or perks, range from 25 to 40% of the total sales compensation package Fringe benefits help satisfy safety needs and security needs, although some contribute to fulfillment of higher order needs

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Pretest, administer, and evaluate the compensation plan
Pretesting Before a new compensation plan is adopted, the company should evaluate it. Before implement for the entire company, new plan should be checked for one or more branch sales offices for adequate duration

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Continued---Continued---Administering The new compensation plan should be announced well in advance of the date of implementation Each salesperson should even be asked to calculate the salary, and incentives at the various sales levels

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Continued---Continued---Evaluating After the new plan is established, it should be evaluated on quarterly, half-yearly or yearly basis. half-

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Motivating Sales Personnel
Motivation is originally derived from the Latin word ³movere´, which means to move´. The desire to spend effort to fulfill a need is motivation Most commonly used definition of motivation includes three dimensions: Intensity, Persistence, and direction

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Continued---Continued---Intensity refers to the amount of physical and mental effort the salesperson spends on a given task Persistence describes how long the salesperson continues to put forth effort Direction suggests the salesperson¶s choice of direction of effort among various tasks

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Importance of Motivation
It has been observed that about 10-15 percent of 10salespeople are self motivated, while the majority of salespeople are not adequately motivated The company management recognizes the importance of sales management and sales force, because the financial performance of the company depends upon the achievement of sales volume objective
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Continued---Continued---Sales managers find the task of motivating salespeople difficult and important due to the following factors: Changes in marketing environment Marketing environmental factors, such as demographic, economic, technological, politicalpoliticallegal, and social-cultural, change continuously socialIt is difficult to develop an effective mix of sales force motivational methods in the changing marketing environment 141

Continued---Continued---Conflicting company objectives Salespeople are required to achieve the company objectives and goals, such as sales volume, profits, and customer satisfaction. Sometimes these objectives conflict

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Continued---Continued---Unique nature of the sales job Salespeople usually work alone and their working hours are irregular. Salespeople often face hostile and competing salesperson

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Continued---Continued---Separate motivational package Salespeople have individual characteristics that influence their motivations. Ideally, the firm should develop a separate motivational package for each salesperson, but it is next to impossible

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Selecting An Effective Mix
Motivational tools are usually divided into two broad categories 1) Financial rewards/Compensation Includes A) Financial Compensation Plan Current spend able income - Salary, commission, bonus payments Deferred Income Various insurance plans and fringe benefits
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Continued---Continued---B) Sales contests Sales contests are short term incentive programmes that can be an effective motivational tool A sales contest should have a specific purpose The design of the sales contest should consider the following points Each salesperson has an equal opportunity to win Sales person do not use undesirable methods
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Continued---Continued---2) Non Financial Rewards/ Compensation These rewards include the following a) Promotion Change in titles or promotions are ranked high among younger and better educated salesperson Salesperson ± Senior Salesperson ± Key Account Executive
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Continued---Continued---b) Sense of accomplishment An awareness that something has been achieved successfully It is an intrinsic motivation and a firm can only facilitate c) Personal growth opportunities Many salespeople rank opportunities for personal growth high in the list of sales force rewards
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Continued---Continued---d) Recognition Most sales managers realize that they must pay more attention to the individual salesperson¶s higher order needs, such as recognition, appreciation, and admiration. Formal and Informal recognition

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Continued---Continued---e) Job Security It is valued highly by older salespeople who are nearing retirement age, but is least valued reward among younger salespeople. f) Sales meetings and Conventions Companies use sales meetings and conventions as an additional motivating tool to stimulate sales force effort 150

Continued---Continued---g) Sales Training Programmes A good sales training programme increases the performance of salespeople and in turn improves their sense of self esteem h) Supervision Through supervision salesperson understand the personal needs and aspirations of each salesperson
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Sales Meetings and Contests
Sales meetings are important both for communication and motivational purposes. When sales personal are on the road without the day to day opportunity for employer communication and supervision, periodic group meetings are valuable They also provide occasions for motivating individual sales personnel through group pressures
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Planning Sales Meetings
Planning a sales meeting requires five major decisions ± A-C-M-E-E Approach 1) Defining the specific training aims In planning any sales meeting it is important to have clearly defined objectives. A new product may be about ready for introduction or research may have uncovered new insights on customer attitudes and behavior
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Continued---Continued---In setting a meeting¶s specific aims, the effective executive answers three important questions Are these aims clear and attainable? Are they realistic in terms of time, audience, and other conditions? Will the probable results justify the estimated costs

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Continued---Continued---2) Content Determining a meeting¶s content is a matter of planning its agenda An agenda, by definition, is a list or an outline of things to be considered or done during a meeting

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Continued---Continued---3) Method The methods(M) used in conducting a sales meeting, of course, depend upon the aim and content as well as upon the time available and meeting place

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Continued---Continued---4) Execution Execution decisions, outwardly trivial, contribute significantly to a meeting¶s success or failure Among these seemingly trivial decisions is room management Herringbone, Workshop, Inverted U-Shape USeminar or the ³British Square´
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Continued---Continued---5) Evaluation It is important , especially if management desires to improve meeting effectiveness The basis for evaluation should be whether the meeting accomplished its aims To determine this, participant feedback is necessary
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National Sales Meetings
The cost of bringing the entire sales force to a central site are substantial, but national sales meetings are sometimes appropriate

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Regional Sales Meetings
The trend is away from national and toward regional sales meetings Reduce total travel costs and lowering lost selling time Headquarter executives brought into direct contact with field personnel, learn about current problems at firsthand. May have a program designed to emphasize unique problems of that region Increase participation time per person attending160

Local sales meetings
Local sales meetings are conducted weekly or biweekly by district sales managers and last from fifteen minutes to several hours

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Remote ± Control and Travelling Sales Meetings
Certain forms of sales meetings retain the national sales meeting¶s advantages while reducing its cost and time expenditure disadvantages. Among these forms are meetings conducted by Closed ± Circuit Television The program is live at one meeting site and is telecast to others, thus retaining much of the inspirational value of the live show without incurring costs and inordinate losses of selling time
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Continued---Continued---Sales meetings by telephone Telephone conference calls are used for small group meetings and discussions Users say the group should be no larger than twenty

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Continued---Continued---Sales meetings at home Seeking to reduce the time and costs of sales meetings, some companies mail recordings or printed materials to sales personnel at their homes.

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Sales Contests
A sales contest is a special selling campaign offering incentives in the form of prizes or awards beyond those in the compensation plan The underlying purpose of all sales contests is to provide extra incentives to increase sales volume, to bring in more profitable sales volume, or to do both Sales contests develop team spirit, boost morale and make personal selling efforts more productive
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Specific Objectives
Sales contests are aimed to accomplish specific objectives, generally one per contest, within limited periods of time. Most sales contests aim to motivate sales personnel: 1) To obtain new customers 2) To secure larger orders per sales call 3) To push slow moving items, high margin goods, or new products 166

Continued---Continued---4) To overcome a seasonal sales slump 5) To sell a more profitable mix of products 6) To get reorders 7) To obtain more product displays by dealers

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Contest Formats
Contest formats are classified as direct or novelty A direct format has a contest theme describing the specific objective A novelty format uses a theme which focuses upon a current event, sport, or the like

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Contest Prizes
There are four kinds of contest prizes Cash Merchandise Travel Special honors or privileges

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Contest Duration
Contest duration is important in maintaining the interest of sales personnel Contests run for periods as short as a week and as long as a year, but most run from one to four months There are no set guides Contest duration should be decided after considering the length of time interest and enthusiasm can be maintained 170

Designing Territories
A sales territory consists of existing and potential customers assigned to a salesperson. The territory may or may not have geographic boundaries. However, generally a salesperson is assigned to a geographic area. The basic concept of a sale territory is that a territory or a market is made up of present and potential customers
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Reasons for Setting up Sales Territories
The reasons for setting up and subsequently reviewing sales territories are as follows 1) Increase market or customer coverage A well designed sales territory allows salespeople to spend sufficient time with present and potential customers, which improves the market coverage

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Continued---Continued---2) Control selling expenses By setting up well designed sales territories salespeople spend less time on the road, fewer nights away from home, resulting in less cost of traveling and less expenses on lodging and food.

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Continued---Continued---3) Better evaluation of sales force performance The sales manager can evaluate the performance of each salesperson in a better way, when the salesperson is assigned to a specific sales territory

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Continued---Continued---4) Improve customer relations When the salesperson spends adequate time with present and potential customers, to understand their problems and to find solutions , their relationship improve.

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Continued---Continued---5) Increase sales force effectiveness When the sales territory is properly designed, the salespersons workload is reasonable and the conflicts are minimum as specific customers are assigned to them

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Continued---Continued---6) Improve co-ordination coThe company sales performance improves substantially if the salesperson is involved in coordinating various elements of marketing communication.

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Continued---Continued---7) Benefits salespeople and the company Proper territory design and allocation of salespeople to territories will result in improved sales force performance, which in turn benefits the company

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Procedure for Designing Sales Territories
The ideal objective in territory design is to have equal opportunity and equal sales force workload for all sales territories

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Steps Involved in Designing the Sales Territories
1) Select a control unit The first step in territory design is to select a geographical territorial base, called control unit that will be used in the territory analysis In general the sales manager should select the smallest control unit Control units can be States, Metros, Cities, Towns
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Continued---Continued---2) Find location and potential of customers The next step is to find the location and sales potential of present and prospective customers in each control unit. Information of present customers Information on potential customers Classify the customers based on their sales and or profits potential
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Continued---Continued---3) Decide basic territories The third step in designing sales territories is to decide basic or fundamental territories This can be done by using either build up method or breakdown method

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Build ± up Method
The basic territories are set up by building up from the control units. The objective to be achieved is to equalize the workload of salespeople. The procedure is as follows 1) Decide call frequencies It means how many times a customer should be visited by the company¶s salesperson per year Various factors influence call frequency
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Continued---Continued---2) Calculate the total number of calls in each control unit This is done by multiplying call frequencies per month by number of customers and 12 months 3) Estimate workload capacity of a salesperson A salesperson¶s normal workload capacity is estimated by multiplying average number of calls a salesperson can make in a working day by number of working days in a year. 184

Continued---Continued---4) Make tentative territories In this step, the company should group adjoining control units (which share their borders) until yearly number of calls needed in those control units equals the total number of calls a salesperson can make.

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Breakdown method
This is another method of territory design that is used by companies who have decided to have intensive distribution strategy, mostly for selling consumer products The objective is to equalize the sales potential of territories

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Continued---Continued---The procedure is as follows 1) Estimate the company sales potential for total market Estimate the company sales potential or company sales forecast for its total market by using the sales forecasting methods

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Continued---Continued---2) Forecast sales potential of each control unit For estimate the sales potential of each control unit, the sales manager multiplies the total sales potential of the company by a multiple factor buying index of each control unit.

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Continued---Continued---3) Estimate the sales volume expected from each salesperson Here the sales manager must estimate how much each salesperson must sell, in order to ensure profitable operation For this, the sales manager studies the past sales as well as the cost and profitability analysis

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Continued---Continued---4) Make tentative sales territories The sales manager makes tentative territories by combining adjoining control units until the sales potential of each territory is equal to or greater than the expected sales volume from each salesperson

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Continued---Continued---5) Develop Final Territories The tentative territories need to be adjusted due to special considerations such as geographical locations of customers, or unequal sales potential of some territories

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Assigning Salespeople to Territories
Once the sales territories are designed, the sales manager is ready to assign or allocate individual salespeople to each territory. In any given sales force, salesperson differ in selling abilities and effectiveness. A sales person may succeed in one territory and fail in another territory, even though sales potential and workload are the same in the two territories
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Continued---Continued---While assigning salespeople to territories, the sales manager should consider two criteria: A) Relative ability of salespeople B) Salesperson¶s effectiveness in a territory

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Relative Ability of Salespeople
A sales manager should evaluate the relative abilities of a salesperson based on key factors It should be understood that the weightage of evaluation factors may vary from company to company and evaluation factors may also differ

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Continued---Continued---Evaluation Factors Product knowledge Market Knowledge Past Sales Performance Communication Selling Skills Total Weightage .15 .10 .40 .15 .20 1.00 Evaluation .9 .8 1 .8 .9 Salesperson Score = A *B .135 .080 .400 .120 .180 .915
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Salesperson¶s Effectiveness in a Territory
The sales manager should judge the effectiveness of a salesperson by comparing the salesperson¶s social, cultural, and physical characteristics with those of the territory

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Sales Quota
Sales quotas are sales goals (or quantitative objectives) set by a company for its marketing units for a certain period of time A marketing unit includes a region, a territory, a branch, a salesperson, a distributor, or a dealer Sales quotas can be set on sales volume, expense, profit margin, customer satisfaction, and combination
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Continued---Continued---Annual sales quotas for each marketing unit are broken down to quarterly and monthly quotas Sales quotas are developed from the annual marketing plan of the company After preparing the sales forecast, the company decides its sales budget, which includes the company¶s sales volume and selling expenses. The company sales budget is then broken down to sales quotas for regions and sales territories. 198

Continued---Continued---Each territory manager divides the territory¶s quota among the sales persons, distributors, and dealers, who are attached to the territory.

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Objectives of Quotas
Includes

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Making available performance standards
A sales quota makes available to the sales manager a tool to measure the performance of the salesperson. A quota also provides a goal to the salesperson Hence, a quota is a performance standard, against which the actual performance is compared

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Controlling performance
By setting quotas for salesperson¶s activities, sales volume, and selling expenses, the sales manager is controlling the performance of salespeople. Similarly, to check wasteful expenditure on customer entertainment, lodging, and meals, expenses quotas are set as a percentage of sales

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Motivating People
Sales force compensation is often tied to the extent or degree of achievement of sales quotas Sales manager should not set sales quotas that are too high and non attainable.

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Identifying strengths and weakness
When actual sales performance is compared with respective quotas of different territories and salespersons, the sales manager can identify successful and unsuccessful performers

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Types of Quotas
Companies set many types of quotas The most common types of quotas are

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Sales volume quotas
Most companies have sales volume quotas for individual salespersons, distributors, retailers, geographical areas, or products, for a specific period of time. For effective control, it is proper to set sales volume quotas for the smallest marketing unit Companies set sales volume quotas in Rupees or Dollars sales volume, unit sales volume and or point sales volume
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Rupees/Dollars sales volume
When salespeople are required to sell many products, it is easier to manage if quotas are set in rupees or dollars

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Unit sales volume
Companies set sales volume quotas in units of products in three situations When salespeople are selling a few products When prices of the product fluctuate rapidly When the price of each product or service is very high

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Point sales volume
It is used in a situation when the company wants to improve its profitability, by asking salespeople to sell more those products that relatively contribute more to the profits

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Financial Quotas
Financial quotas are the goals set to control gross margin or profit contribution, and expenses of various marketing or sales units Can be of two types

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Gross margin or profit contribution quotas
Gross margin quota is decided by subtracting cost of goods sold from sales volume.

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Expense Quotas
The objective of setting expenses quotas is to control the costs of marketing or sales units, such as sales territories and salespeople. Often expense quotas are used along with sales volume quotas, so that selling expenses are kept in line with sales volume

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Activity Quotas
Many companies set activity quotas so as to direct salespeople to carry out important job related activities. These activities are useful for achieving performance targets of salespeople.

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Combination quotas
Companies set combination quotas or goals when they want to control sales force performance on both key selling and non selling activities

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Sales Budgeting and Control
A sales budget is a programme designed for a stipulated time frame that highlights the selling expenses and anticipated sales, quantitatively and in value terms. This helps in making an objective estimate of net profit on the selling operations.

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Significance of a Sales Budget
The importance of sales budget cannot be overemphasized. Its significance can be gauged from the factors given below

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Continued---Continued---It serves as a scale, or a yardstick It helps identify the areas in which the company needs to strengthen It serves as an indicator to control the expenses associated with the sales activity It helps the planners to frame policies for actual market situations
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Sales Budget
The sales manager should take into consideration the following factors while preparing the sales budget: Past sales figures and trends salesmen¶s estimates Plant capacity General trade prospects Orders on hand
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Continued---Continued---Proposed expansion or discontinuance of products Seasonal fluctuations Potential market Availability of material and supply Financial aspect Other factors

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Sales Control
Control is a function of every management to ensure that operations are being carried out as per the plan to achieve the objectives Sales control ensures the achievement of personal selling objectives

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Types of Sales Control
1) Annual plan control Prime responsibility ± Top level managers Purpose of control ± To examine whether the planned results are being achieved Approaches ± sales analysis, market shares analysis, marketing expenses to sales ratio

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Continued---Continued---2) Profitability control Prime responsibility ± sales controller Purpose of control ± To examine where the company is making or losing money Approaches ± customer attitude tracking profitability by product territory, market share, trade channel, order size, and sales audit
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Steps in Designing a Sales Control System
Objective setting Designing different control levels Designing a reporting system and a feedback system Deciding tools and techniques of control Variance analysis and reasons thereof

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International Sales Management
The multinationals and other companies with foreign production and marketing operations look to sales management to implement sales related marketing policies in each national market International sales managers have to guide and coordinate the efforts of the sales organization in countries where the company does business

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Challenges faced by International Sales Managers
Economic Factors A country¶s economic sources includes sources of domestic livelihood and the allocation of resources Cultural Factors The cultural traits of a country have a profound effect on people¶s lifestyle and behaviour patterns, and the same are reflected in the market place
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Continued---Continued---Political factors An international marketer needs to examine carefully the political environment of a country before making major commitments in that country Legal Factors International marketers must be aware of treaties and international conventions
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Qualities of the International Sales Force
Cultural Adaptability Physical Fitness Knowledge Decision Making Ability Language

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Formulating Sales Strategies at the International Level
Sales Job Description Recruitment and Selection Sales Training

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Continued---Continued----

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