Sales Related Marketing Policies

Agenda
 Product Policies - What To Sell ?

 Distribution Policies – Who to Sell ?

 Pricing Policies – What price to Sell ?

Introduction
 Sales related marketing policies directly influence the jobs of
sales executives.
 These policies provide the direction to organize ,manage and
control the sales effort .
 These are generally company governed and formulated
policies which are administered by sales executives.
Product Policies – What to Sell ?
 The products a company sells determines its basic nature.
 These serve are guidelines for making product decisions.
 They are derived from product objectives
Product Policies
 Product Line Policy
1. Short line(specialization) or full line (wide selection)
policies.
2. Governed by willingness to take risk. Narrower the line
greater the risk.

1. Changes in Product Offerings

-to determine the product tuning with market
-to determine products which needs to be dropped or added
 Product Policies
2. Reappraising the product line and line simplification
-adding or removal of profitable and non profitable product lines and customer
accounts.

3. Reappraising the product line and line diversification

-relative to growth objectives

4. Ideas for new products

-Internal and external sources for new ideas.

5. Appraisal of proposed new products.

-criteria is profitability, nature and size of likely markets, competition, price policy,
sales programs and legal implications.
Product Policies
 Product Design Policy

1. Frequency of design change

2. Extent to which designs are to be protected from copying.

 Product Quality and Service Policy

1. High quality products require less service and low quality

products requires high service.
2. Guarantee policy – serves either protective or promotional
purposes.
Distribution Policies – Who to Sell ?
 Policies on Marketing Channels
Channels should be chosen in order to obtain the optimum
combination of profit factors. Time dimensions must be
considered in addition to :
1. Sales Volume Potential
2. Comparative distribution costs
3. Net Profit Possibilities
Distribution Policies
 Policies on Distribution Intensity
Following distribution strategies are implemented by company
:
1. Mass Distribution
2. Selective Distribution
3. Exclusive Agency Distribution
Pricing Policies
 Policy on Pricing Relative to Competition
1. Meeting the competition
2. Pricing above the competition
3. Pricing under the competition

 Policy on Pricing Relative to Costs

1. Full cost pricing
2. Promotion pricing
3. Contribution pricing
Pricing Policies
 Policy on Uniformity of Prices to Different Buyers.

Company choose between:

1. One-price policy (same price)

2. Variable price policy ( price determined by individual
bargaining)

Here bargaining power of buyers varies with the size of transaction.

Pricing Policies
 Policy on List Pricing

 List pricing takes variety of forms most common being :

 Printing the price on package
 Sales personnel to suggest the resale price to buyers.

 Policy on Discounts

1. Trade Discounts
2. Quantity Discounts
Pricing Policies
 Geographical Pricing Policies
1. Free on Board (F.O.B) pricing – customer pays the freight
2. Delivered pricing – seller pays the freight
3. Freight absorption – compromise between delivered and F.O.B
pricing.

 Policy on Price Leadership

 Price changes by Market Leader and Followers
 Decision depends upon marketer’s relative market position and the
image of leadership that it desires to build and maintain
Pricing Policies
 Product Line Pricing Policy
 Different items in product lines compete with each other.
 Price space between the individual members of the line
 Bottom of line as ‘traffic builders’ and top of line as ‘prestige builders’

 Competitive Bidding Policy

 Industrial and government buyers solicit competitive bids from potential
suppliers and award the business to the bidder offering the best proposal
 Decision depending upon various factors such as price, delivery dates,
reputation for quality etc.
Chapter 5

FORMULATING
PERSONAL-SELLING STRATEGY
AGENDA
 Competitive Settings
--Pure, Monopolistic, Oligopolistic, No Direct Competition

 Personal Selling Objectives

-- Qualitative & Quantitative

 Determining the kind of sales personnel

--Product Market Analysis, Salesperson’s role in securing orders, choice of
basic selling style

 Determining the size of the sales force

--Workload, Sales Potential, Incremental

 Individualizing selling strategies

Competitive Strategies
Pure

 Large number of buyers and sellers

 No one powerful enough to control or influence market prices
 No buyer or seller is so big which can impact the product’s total demand
and supply
 All products are identical, no differentiation
 All buyers are aware of all sellers’ prices

Not a real world situation and hence no company concerns itself with a
particular personal selling strategy for Pure Competition
 Monopolistic

 Many competing producers sell products that are differentiated from one
another (ie. the products are substitutes, but are not exactly alike)

 Easy for additional competitors to enter the market

 Advertising differentiates the brand in the minds of final buyers and

stimulates selective demand

Key element in marketing strategy is the ability to differentiate the

product ( by both Advertising and Personal Selling)

Personal Selling’s role is that of servicing the distribution

network and stimulating promotional efforts by the
middlemen
Oligopolistic
 Number of competitors are small enough that they are individually
identified and known to each other

 Difficult for new competitor to enter the market

 Successful organizations keep on growing and less successful disappears

 Oligopoly produces most aggressive competition

 Strategies of one player has deep impact on the strategies of other players

Personal Selling Strategy plays important role in building and

maintaining dealer cooperation, in servicing distribution
network and in gathering information on competitor’s activities
 No Direct Competition

 Both monopoly or oligopoly have indirect competition

 They vie sellers in other industries for the same prospects’ interest and
buying decisions
 Even in case of no direct competition, personal selling and advertising
plays an important role

Both require the effective implementation of personal

selling strategy in terms of both kind and number of sales
personnel even in case of indirect competition
Choosing pricing strategy calls for effective implementation of
personal selling strategy
Personal Selling Objectives
Qualitative
 Vary with competitive setting
 Long Term
 Carried from one operating period to another
 When qualitative objectives change, there are changes in nature of
sales jobs and size of the sales force

Quantitative
 Vary with competitive setting
 Short Term
 Adjusted from operating period to operating period
 Since short term, they impact more upon the size of the sales force
than upon the nature of the sales job
Determining the kind of Sales Personnel
Each company deals with unique set of marketing factors:
 Strengths & Weakness of products
 Motivations and buying practices of its customers and prospects
 Pricing Strategy
 Competitive Setting

Different selling jobs require different levels of selling and non selling
activities, training, technical and other knowledge

We must understand what is expected of salesperson:

 Job Objectives
 Duties and Responsibilities
 Performance measures
Product Market Analysis
 Product Specialists

 When product is highly technical

 Requiring salespersons to advise on uses and applications

 Market Specialists
 Product is non technical
 When different kinds of customers have unique buying problems and
require special sales approaches or need special service

 Combination of both

 On the basis of Product-Market grid, you can chose whether the

sales personnel should be product or market specialist
 Types and Amount of Specialization in Selling
Organizations

Dominant Between Customers Between Products

Interdependence 
Dominant Expertise

Product Technologies Product Specialists Full-Line Salespersons

(supported by Product
Managers)
Customers’ Applications Customer Specialists Full-Line Salespersons
(specialized by kind of
customer)
Analysis of Salesperson’s role in securing orders

 Salespersons may be active or passive in securing orders

 The role influences the decision of kind of staff required

 Salespersons may seek order aggressively

 They need only take orders coming their way

 Salespersons may act as advisors to middlemen or the customer

Choice of Basic Selling Style
 Trade Selling

 Develops and maintains long term relationships with a stable

group of customers
 Low key selling with little or no pressure
 Routine job
 Advertising and other promotions more important than
personal selling
 Help customer build up their volume through promotional
assistance
 Missionary Selling

 Increase sales volume by assisting customers with their selling efforts

 Persuade indirect customers to by from the company’s direct customers
 They also play a role in influencing people who do not purchase the
product but who influence its purchase

 Technical Selling

 Deals primarily with company’s established accounts

 Increase their volume of purchase by providing technical advice and
assistance
 Performs advisory functions similar to the missionary salesperson
 In addition, sells direct to industrial users and other buyers
 In this style, ability to identify, analyze and solve customers’ problem is
important
 New-business Selling

 Find and obtain new customers

 Convert prospects into customers

 Usually salespersons are creative and ingenious and posses high degree of
resourcefulness

 Sometimes salesperson doing trade selling engages themselves in new-

business selling also
Determining the size of the sales force
 Workload Method

1. Classify customers, both present and prospective into sales volume

potential categories

2. Decide on the length of time per sales call and desired call frequencies on
each class

3. Calculate the total work load involved in covering the entire market

4. Determining the total work time available per salesperson

5. Divide the total work time available per salesperson by task

6. Calculate the total number of salespeople needed

 Sales Potential Method

 Concept of Sales Personnel Unit

 A salesperson may represent more or less than one sales personnel unit
depending upon his/her skills and expertise

 Sales job descriptions are constructed on management assumption that

they describe what the average salesperson with average performance will
accomplish

 With above information, we can derive amount of sales volume each

salesperson should produce

 Dividing the above amount into forecasted sales volume and allowing for
sales force turnover results in an estimated number of salespeople needed
Sales Potential Method

N = S/P (1 + T)

Where N = Number of sales personnel unit

S = Forecasted sales volume
P = Estimated sales productivity of one sales personnel
unit
T = allowance for rate of sales force turnover
 Incremental Model

 Company develops a sales response function (a quantitative function that’s

describes the relationship between the amount of personal selling effort and
the resulting sales volume

 Based on the proposition: Net profits will increase when additional sales
personnel are added if the incremental sales revenue exceed the incremental
costs incurred

 Information required: Incremental costs and Incremental revenue

 Calculate the net profit contribution resulting from the addition of each
salesperson
Incremental Model

 Although conceptually correct, it is difficult to apply

 Not suited where personal selling is not the primary means of making
sales (where advertising and other promotions play an important
role)

 Fails to account for possible competitive reactions

Individualizing Selling Strategies to customers
 Each salesperson must individualize his or her dealings with the customer
 Regardless of the basic selling style or the role of order getter or order
taker, the salespersons’ success depends upon the outcome of interaction
with the customers
 Behavior and sales pitch of the salesperson varies from customer to
customer
 Selling skills is a function of both
 preplanning of each sales call
 performance on the call itself

Individual salesperson’s performance ultimately determine the success or

failure of company’s overall personal-selling strategy, sales management
has a very important role in helping them develop and improve selling
skills
The Effective Sales Executive
Agenda
• Nature of Sales Management Positions

• Position Guide – Sales Manager

• Position Guide – District Sales Manager

• Functions of Sales Executive

• Qualities of Effective Sales Executive

• Relations with Top Management

• Relations with Managers of Other Marketing Activities

• Compensation Pattern

• Conclusion
Effective Sales Executive
 The job of the sales executive is more action oriented and

less planning oriented

 Main concern of sales management is the “present” – the

“here and now”

 Their decisions not only affect the sales department, but

may have significant implications elsewhere in the

organization
Nature of Sales Management Positions
• Requirements of the sales executive’s job position vary from

company to company and from position to position in a company

• It is possible to generalize about activities and responsibilities of

sales managers, district sales managers, product managers and

other sales or marketing executives

• Some companies have formulated concise statements of duties

associated with various positions, known as job or position

descriptions
Position Guide – Sales Manager
• Reports to the vice president of marketing

• The primary objective is to secure maximum volume of dollar sales through

the effective development and execution of sales programs and sales
policies for all products sold by division
• Duties and responsibilities:
– Sales Program

– Organization

– Sales Force Management

– Internal and External Relations

– Communications

– Control
 Performance is satisfactory when,

 Department’s dollar or unit sales are equal to or exceed the

quantities budgeted
 Profit contribution of the sales department is in line with plan

 Details of sales plan are in writing and are acceptable to

marketing management
 Turnover of sales personnel is maintained at a level regarded

as satisfactory by marketing management

Position Guide – District Sales Manager
• Reports to the sales manager

• The primary objective is to secure maximum dollar sales of the

company’s products in the sales district in accordance with
established sales policies and sales programs, within the limits
of sales budget
• Duties and Responsibilities:
– Supervision of Sales Personnel

– Control

– Administration

– Communications
• Performance is satisfactory when,

– District’s dollar and unit sales are equal to or exceed the

quantities budgeted
– District’s total expenses are no higher than the amounts

budgeted
– Profit contribution of the district office and warehouse and

stock facilities is in line with plan

– Turnover rate of district sales personnel is maintained at a

level regarded as satisfactory by the (general) sales manager

Functions of sales Executive
• Basically has two sets of functions

- Operating
- Sales Force Management
- Handling relationships with personnel in other
company departments and with trade
- Communicating and coordinating with other
marketing executives
- Reporting to some superior executive
 - Planning
- Setting personal-selling goals
- Developing sales program designed to achieve these
goals
- Formulating sales strategies and personal-selling
strategies
- Putting together plans for their implementation

These functions varies with

- The type of products
- The size of the company
- The type of supervisory organization
Qualities of Effective Sales Executive
He should have
• Ability to define the position’s exact functions and duties in relation
to the goals the company should expect to attain
• Ability to select and train capable subordinates and willingness to
delegate sufficient authority to enable them to carry out assigned
tasks with minimum supervision
• Ability to utilize time efficiently

• Ability to allocate sufficient time for thinking and planning

• Ability to exercise skilled leadership

Relations with Top Management
 Effective sales executives need to keep the top management

abreast of their progress as their personal goals are

intertwined with company’s goals

 They should not be dispensable to the company and should

be able to delegate tasks effectively

 They update the top management of all the latest activities

through periodic reports and presentations

Relations with Product management
 Product planning and formulation of product policies

requires numerous decisions

 Sales executives provide input for these decisions

 Their contact with the market through subordinates and

sales personnel provide them with feedback about product

performance and acceptance generally not available from
other sources
Relations with Promotion Management
 Sales executives play a very important role in promotional

activities as they are the one who actually implement them

 They must be involved in formulating policies as they are

very close to the customers

 The sales force must be kept updated about all the latest

promotional activities
Relations with Pricing Management
 Sales executives have much clearer ideas of the prices the

buyers are willing to pay, because of the close and

continuing contacts with the market

 Pricing policies need to be formulated by a committee

comprising of members from different departments

 Once the policy is established, its implementation is the

responsibility of the sales executive

Relations with Distribution Management
 Distribution policies are major determinants of the breadth

and complexity of sales department’s organization and

functions

 It has an impact on the sales organization and its activities

 Sales executives play key roles in providing information

needed for their formulation

Compensation Pattern For Sales
Executives
• Compensation pattern differs on the basis of position of the sales

executive in the hierarchy and the size of the company

• Sales executive receive some of their pay as bonuses,

commissions and other “incentive” payments

• These payments are based upon relative profit performances at

higher executive levels and upon sales volume achieved relative

to sales potentials at lower executive level

• More than half of the sales executives have stock options

Thank You !