Sales Management Planning

Sales Management- Execution aspect

Prepared ByMathew Lawrence

Special Focus on: • Sales Information System• Sales Planning Management• Sales Forecasting Management• Sales Budgeting

Which are our lowest/highest margin customers ?

Which are our lowest/highest margin customers ?

What impact will new products/services have on revenue and margins?

What impact will new products/services have on revenue and margins?

Who are my customers and what products are they buying?

Who are my customers and what products are they buying?

Which customers are most likely to go to the competition ?

Which customers are most likely to go to the competition ?

What is the most effective distribution channel?

What is the most effective distribution channel?

What product prom--otions have the biggest

impact on revenue?

What product prom--otions have the biggest

impact on revenue?

Sales Information System- Introduction

• Sales management is about finding ways of satisfying customer wants and needs.

• These wants and needs are satisfied with proper information- internal as well as external.

• Early systems were paper-based systems but, with the emergence of computers with large storage capacities and microcomputers with similar features, marketing information systems have become more "electronic" in nature. MIS (marketing information systems)

• One can define a marketing information system “As one which scans and collects data from the environment, makes use of data from transactions and operations within the firm and then filters, organizes and selects data before presenting them as information to management.”

Need for Sales Information System

• Sales information system forms the base for- Planning, forecasting, budgeting, marketing research and other sales activities.

• Decision making: Unfortunately, in many firms, it is often difficult to obtain information of the right kind.

• Anticipation of customer demand: Every marketer needs up-to-date knowledge about consumer needs and wants.

• Significance of Analysing Competition: Marketers cannot survive without having information regarding nature, character and size of competitors.

• Marketing Planning: Marketing plans and programs are based upon information supplied by economic forecasts and market research

Data Warehouse/Data Warehousing

• Data warehouse: A single, complete and consistent store of data obtained from a variety of different sources made available to end users in a what they can understand and use in a business context.

• Data warehousing: A process of transforming data into information and making it available to users in a timely enough manner to make a difference

Data Mining

• Data mining (sometimes called data or knowledge discovery) is the process of analyzing data from different perspectives and summarizing it into useful information - information that can be used to increase revenue, cuts costs, or both.

• Data mining, the extraction of hidden predictive information from large databases, is a powerful new technology with great potential to help companies focus on the most important information in their data warehouses.

• Data mining tools predict future trends and behaviors, allowing businesses to make proactive, knowledge-driven decisions.

• Data mining tools can answer business questions that traditionally were too time consuming to resolve.

Data Warehouse & Data Mining- Flow Chart

Sales Planning Management

• Sales strategy is the game plan sales managers have for achieving the enterprise level sales targets.

• Every sales manager, based on his experience and understanding has some assumptions, goals and plans for achieving what he needs to achieve.

• For achieving the long-term targets sales strategy or game plan needs to be effectively executed on a day to day basis.

• For any strategy to be executed, it first needs to be translated into actionable terms. As it is, in most of the companies, the whole sales strategy is not translated into operational terms.

• In organizations, sales management system (SMS) is the single largest factor that decides what sales managers will execute and how they execute.

Continue….

• Some of the factors considered in Sales Planning are.........

1) What kind of sales target we need to have.

2) Which segment of customers do we serve and focus.

3) What kind of service quality we offer.

4) How do we differentiate our product.

5) What kind of sales culture we build.

6) Which of sales processes we focus on.

7) Competitors

8) Pricing

9) Key U.S. P

Sales & Profit

Time

Ru

pees

0+

-

Introduction

Growth Maturity

Decline

Industry Sales

Product Life Cycle- Graph

Industry Profits

Sales Forecasting Management

• The Sales Forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.

• It helps in the prediction of the future sales of a particular product over a specific period of time based.

• The three parameters that covers in the sales forecasting are-1) What customers say about their intentions to continue buying

products in the industry?2) What customers are actually doing in the market?3) What customers have done in the past in the market?

• Ideal Sales Forecasting Calculation: Last year's annual sales + (last year's annual sales X rate of inflation) = next year's sales forecast

Continued…..

• There are two major types of sales forecasting which can be broadly described as Macro and Micro:

Macro level forecasting: It is concerned with forecasting markets in total. This is about determining the existing level of market demand and considering what will happen to market demand in the future.

Micro level forecasting: It is concerned with detailed unit sales forecasts. This is about determining a product’s market share in a particular industry and considering what will happen to that market share in the future.

Continued…..

• The selection of which type of forecasting is use depends on the several factors which can be described as:

1) The degree of accuracy required – if the decisions that are to be made on the basis of the sales forecast have high risks attached to them, then it stands to reason that the forecast should be prepared as accurately as possible. However, this involves more cost.

2) The availability of data and information - in some markets there is a wealth of available sales information (e.g. clothing retail, food retailing, holidays); in others it is hard to find reliable, up-to-date information.

3) The time horizon that the sales forecast is intended to cover. For example, are we forecasting next weeks’ sales, or are we trying to forecast what will happen to the overall size of the market in the next five years.

4) The position of the products in its life cycle. For example, for products at the “introductory” stage of the product life cycle, less sales data and information may be available than for products at the “maturity” stage when time series can be a useful forecasting method.

Forecasting Approach

District

Territory

Sales Person

Sales Quota

Sales Quota

Sales Person

Territory

District

Region

SBU

Top- down/ Beak down

Bottom- up Build Up

Sales Budgeting

• A budget is a plan expressed usually in monetary terms. It is portion of allocating a portion of an organization's resources for its various activities for a specified period of time.

• It includes estimates of sales volume and selling expenses.

• Sales volume budget is derived from the company sales forecast, - generally slightly lower than the company sales forecast to avoid excessive risk.

• It helps in planning and coordination of the organization’s activities. Sales budgets are developed for the smooth functioning of the sales function (Purpose)

• Sales budget gives a detailed break-down of estimates of sales revenue and selling expenditure.

Continued…..

• In practice, sales managers prepare three types of budgets –

1) Sales budgets: A sales budget gives a plan showing the expected sales for a specified period in the future.

2) Selling expense budget: Selling expense budgets details the schedule of expenses that may be incurred by the sales department to achieve planned sales.

3) Administrative budget: Administrative budget specifies the budgetary allocations for general administrative expenses that would be incurred by the sales department

Different methods of Budgeting

• The different methods for budgeting include the-

1) Affordability method: procedure used to set budgets, based on what the organization thinks it can afford to spend. At times organization may spend less than necessary to achieve a sales target or fail to provide the necessary support to a new or declining brand.

2) Percentage-of-sales method: procedure used to set

organizations budgets, based on a predetermined

percentage of past sales or a forecast of future sales.

Management usually determines the budget's percentage

figure, which is based on the industry average or the

company's historical or previous year's advertising spending.

Different methods of Budgeting (continued)

3) Competitive parity method: budget allocation for based on the

expenditures of competitors. The practice is sometimes

called defensive budgeting or defensive spending, because it is based

on the idea that one should defend against competition by spending

as much (or as little) as one's competitor.

4) Objective-and-task method: a budgeting method in which the amount to be spent on sales promotion, advertising, personal selling, etc is determined by the desired result of the activity and the nature of the tasks necessary to achieve it.

5) Return-oriented method: a budgeting method where organization compensate the allocation of fund according to their activities or we can say on the basis of the return.