Unit I SDM

7/27/2019 Unit I SDM

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Sales Management


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Sales Management

Sales management is a business discipline

which is focused on the practical application of

sales techniques and the management of a

firm's sales operations. It is an importantbusiness function as net sales through the sale

ofproducts and services and resulting profit

drive most commercial business. These are

also typically the goals and performanceindicators of sales management.
http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Sales_operationshttp://en.wikipedia.org/wiki/Sales_(accounting)http://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Profithttp://en.wikipedia.org/wiki/Performance_indicatorhttp://en.wikipedia.org/wiki/Performance_indicatorhttp://en.wikipedia.org/wiki/Performance_indicatorhttp://en.wikipedia.org/wiki/Performance_indicatorhttp://en.wikipedia.org/wiki/Profithttp://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Sales_(accounting)http://en.wikipedia.org/wiki/Sales_operationshttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Business


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American Marketing

Association Definition: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

salesforce.


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Sales Management is the management

of the personal selling component of an

organizations marketing program.


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Objectives of Sales

Management Sales Volume

Contribution to Profits

Continuing Growth


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Sales Planning

Sales planning involves strategy, setting

profit-based sales targets, quotas, sales

forecasting, demand management andthe writing and execution of a sales plan.

A sales plan is a strategic document

that outlines the business targets,

resources and sales activities.
http://en.wikipedia.org/wiki/Profit-based_sales_targetshttp://en.wikipedia.org/wiki/Forecasthttp://en.wikipedia.org/wiki/Demand_managementhttp://en.wikipedia.org/wiki/Demand_managementhttp://en.wikipedia.org/wiki/Forecasthttp://en.wikipedia.org/wiki/Profit-based_sales_targetshttp://en.wikipedia.org/wiki/Profit-based_sales_targetshttp://en.wikipedia.org/wiki/Profit-based_sales_targets


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Activities of Salespeople

Generate Sales:

Precall Planning

Prospecting

Make Sales Presentations

Overcome Objections

Close by asking for ordersArrange for Delivery

Entertain


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Generate Sales:

Arrange for credit financing

Collect payments

Participate in trade shows


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Provide service to customers:

Provide management /technical

consulting Oversee installations and repairs

Check inventory levels

Stock shelves


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Provide service to customers:

Provide merchandising assistance: Co-

op advertising, point-of-purchasedisplays, brochures

Oversee product and equipment testing

Train wholesalers and retailerssalespeople


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Territory Management:

Gather and analyze information on

customers, competitors general marketdevelopments

Disseminate information to appropriate

personnel within salespersons company

Develop sales strategies and plans,

forecasts and budgets.


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Professional Development:

Participate in:

Sales Meetings

Professional Associations

Training Programs


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Company Service:

Train new salespeople

Perform civic duties


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Salespersons average time

allocationWaiting/Travel time-18% (8.5 hours)

Administrative Tasks-15% (7.2 hours)

Selling over the phone- 11%(5.3 hours) Selling face-to-face- 31% (14.3 hours)

Service Calls- 25% (11.6 hours)


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The three recruitment tasks used in salesmanagement are Job analysis; Job descriptionand Job qualifications.

Job analysis is performed to specify the certaintasks that a salesperson would be responsiblefor on a daily basis. It should identify whatactivities are deemed as being vital to thesuccess of the company. The person that is

responsible for completing a job analysis shouldhave an in-depth comprehension of the dailyactivities of the salespeople.


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This job analysis is then written in an

explicit manner as a job description. The

general information consists of: Title of job 2. Organizational relationship

3. Types of products and services sold 4.

Types of customers called on 5. Duties

and responsibilities related to the job 6.Job demands 7. Hiring specifications


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An effective job description will identify compensationplans, size of workload, and the salespeoples duties. It isalso primarily responsible for hiring tools such asapplication forms and psychological tests.

The most difficult part of this process would be thedetermination of job qualifications. A reason for thisdifficulty is because hiring affects a companyscompetitive advantage in the market as well as theamount of revenue. Additionally, there should be a set ofhiring attributes that is associated with each sales job thatis within a company. If an individual does not excel intheir assigned territory, it could be due to external factorsrelating to that persons environment.


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Diversity of Personal-Selling

SituationsGroup A (Service Selling)

Inside Order Taker

Delivery Salesperson Merchandising Salesperson

Missionary

Technical Salesperson


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SituationsGroup B (Developmental Selling)

Creative Salesperson of Tangibles

Creative Salesperson of Intangibles


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SituationsGroup C (Basically Developmental

Selling, but requiring unusual creativity)

Political, Indirect, or Back-DoorSalesperson

Salesperson Engaged in Multiple Sales


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Sales Management

ResponsibilitiesCommunication, Co-ordination,

Integration

Strategic Planning Organizing the salesforce

Recruiting, selection, assimilation

Training and Development

Motivation and Supervision

Performance Appraisal


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Theories of Selling

AIDAS Theory of Selling

Right Set of Circumstances Theory of

Selling Buying Formula Theory of Selling

Behavioral Equation Theory


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Personal selling process

Prospecting and Qualifying

Preapproach (Precall Planning)

Approach Presentation and Demonstration

Overcoming objections

Trial Close/Closing the sale Follow-up and Service


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Prospecting and Qualifying

Two steps in successful prospecting:

First step is generating leads-identifying

potential customers. Second Step is qualifying leads

according to who is most likely to buy.


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Identifying Leads

Referrals from customers

Referrals from internal company sources

Referrals from external referral agencies Published Directories

Networking by the salesperson

Cold canvassing


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Qualifying Leads

The customer has a need for the

products which are being sold.

The customer can afford to buy theproducts.

The customer is receptive to being called

upon by the salesperson.


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Preapproach-Planning the sale

Customer Research

Planning the Sales Presentation


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The Approach


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Need Assessment

Situational questions

Problem Discovery questions

Problem impact questions Solution value question

Confirmatory questions


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The Presentation

It is primarily a discussion of those

product and/or service features,

advantages and benefits which thecustomers have indicated are important

to them.


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Product Demonstrations

A good sales presentation is built around

a forceful product demonstration.


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Developing Effective

Presentations Keep the presentation simple

Talk the prospects language

Stress the application of the product orservice to the prospects situation.

Above all, seek credibility at every turn


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Meeting objections

Listen to the buyer

Clarify the objection

Respect the buyers concernRespond to the objection


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Gaining commitment

The salesperson must ask the buyer to

commit to some action which moves you

further toward the sale. The key to obtaining commitment is first

to plan realistic objectives for each sales

call and second to ask for a commitment.


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Common Sales Closes

The assumptive close

Special-offer close

Summary close


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Follow-Up

Good follow-up is the key to building a

loyal clientele. Satisfied customers

voluntarily provide more business.


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Salesmanship

It is the art of successfully persuading

prospects or customers to buy products

or services from which they can derivesuitable benefits, thereby increasing their

total satisfaction.


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Personal Selling Objectives

To do the entire selling job.

To service existing accounts.

To search out and obtain new customers.

To secure and maintain customers cooperation

in stocking and promoting the product line.

To keep customers informed on changes in the

product line and other aspects of marketing

strategy.


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To assist customers in selling the product line.

To provide technical advice and assistance to

customers.

To assist with the training of middlemens sales

personnel.

To provide advice and assistance to middlemen

on management problems.

To collect and report market information of

interest and use to company management.


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To capture and retain a certain market share.

To obtain sales volume in ways that contribute

to profitability.

To obtain some number of new accounts of

given types.

To keep personal-selling expenses within set

limits.

To secure targeted percentages of certain

accounts business.


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Setting Personal Selling

ObjectivesMarket Potential

A market potential is an estimate of themaximum possible sales opportunities

present in a particular market segment

and open to all sellers of a good or

service during a stated future period.


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ObjectivesSales Potential

A sales potential is an estimate of themaximum possible sales opportunities

present in a particular market segment

and open to a specified company selling

a good or service during a stated futureperiod.


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ObjectivesSales Forecast

A sales forecast is an estimate of sales,in rupees or physical units, in a future

period under a particular marketing

program and an assumed set of

economic and other factors outside theunit for which forecast is made.


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Types of Sales Forecast

Product Level

Total sales

Industry sales Company Sales

Product Line Sales

Product Form Sales Product Item Sales


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Time Period

Long range (Term)

Medium range (Term) Short range (Term)


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Geographic Area

World

Nation (India) Region (North/South)

Territory (Branch/District)

Customer segment


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Analyzing Market Potential

Market Identification

Market Motivation

Analysis of market potential usingmarket factor.

(A market factor is a market feature or

characteristic related to the Products

demand.)


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Market Index

A market index is a numerical

expression indicating the degree to

which one or more market factors

associated with a given products

demand is present in a given market

segment-usually a given geographical

market segment.


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Sales Forecasting Methods

(Qualitative Methods)

Jury of Executive Opinion

(The Delphi Technique)

Poll of Sales Force Opinion Survey of Customers Buying Plans

Test Marketing ((Full-blown, controlled,

simulated)


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Advantages

Forecasting can be done quickly and

easily. Less expensive than other methods.

Popular, among small and medium sized

companies.


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Disadvantages

Unscientific.

Subjective. Difficult to break-down forecast into

subunits (like regions, branches) of the

organisation.


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Delphi Method

Advantages

Objective forecast that is accurate.

Useful for technology, new product andindustry sales forecast.

Both long and short-term forecasting

possible.


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Delphi Method

Disadvantages

Difficulty getting a panel of experts.

Longer time for getting consensus. Break-down of forecast into products or

territories is not possible.


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Salesforce composite method

Advantages

Involvement of sales people.

Forecasting is done by salespeople whoare closest to the market and have better

insight into sales trends.

Detailed sales estimate broken down by

customer, product, sales representative

and territory are possible.


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Salesforce composite method

Disadvantages

Sales forecast often pessimistic oroptimistic as salespeople are not trainedin forecasting.

Salespeople deliberately under estimatedemand as sales quota are set based onsales forecast.

Many salespeople are not interested insales forecasting.


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Survey of Customers Buying

Plans

Purchase Probability scale

Not at all

Slight possibility Fair possibility

Good possibility

High possibility Certain Buying


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Plans

Advantages

Useful in forecasting sales for industrialproducts, consumer durables and newproducts.

Relatively inexpensive and fast, whenonly a few customers are involved(example business buyers survey).

It also gives customers reasons forbuying or not buying.


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Plans

Disadvantages

Sometimes buyers are unwilling to

reveal their plans. Buyers are sometimes over optimistic.

Expensive and time consuming in

consumer non-durable markets where

consumers are very large in number.


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Test Marketing-Full Blown

It consists of the company choosing a

few (two to six) representative cities, in

which full promotion campaign is

introduced.

Buyer surveys are carried out to get

information about consumer attitude,

usage and satisfaction towards the newproduct.


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Test Marketing-Controlled

The company hires a research firm that

delivers the new product to the panel of

stores, arranges promotions at the

stores and measures the sales of the

new product.


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Test marketing-Simulated

In this method, about 30-40 consumersare selected, based on their brandfamiliarity and preferences in a particular

product category. These consumers are given a small

amount of money and asked to buy anyitems in a store.

The researcher notes how manyconsumers buy the new product andcompeting products.


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Test Marketing

Advantages

Useful for forecasting the sales of new or

modified products. Useful in deciding whether a company

should go ahead for a National launch of

a new product, without spending huge

amount.


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Test Marketing

Disadvantages

The information on new products goes to

the competitor. Test results difficult to measure if

repurchase period is long.


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Sales Forecasting Methods

(Quantitative Methods)

Moving Averages

Exponential Smoothing

Regression Analysis Projection of Past Sales

(Time-Series Analysis, Exponential Smoothing,Evaluation of past sales projection methods.)

Decomposition Nave/Ratio method

Econometric Model Building and Simulation


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Moving Average Method

Sales Forecast for next year= Actual

sales for past 3 or 6 years divided by

Number of years (3 or 6 years.)


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Advantages

Relatively simple method.

Easy to calculate. Widely used for short-term and medium-

term sales forecasts.


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Disadvantages

Unable to predict a downturn or upturn in

the market. Historical data is needed.

Cannot predict long-term sales forecast

accurately.


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Method

Sales Forecast for next year= (L) (actual

sales this year) + (1-L) (this years sales

forecast).

Where, (L) is a smoothing constant, or

probability weighing factor.


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(L) - smoothing constant

Based on:

Review of sales data

Knowledge and observation about theconditions in the forecasted period and

conditions in previous period.

Intuition.


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Method

Advantages

Simple to operate.

Forecasters knowledge or intuition canbe used in forecasting.

Useful when sales data have a trend orseasonal pattern.

Used by many firms. Immediate response to a upturn or

downturn in sales.


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Method

Disadvantages

Smoothing constant somewhat arbitrary.

Long-term and new product forecastingare not possible.


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Decomposition Method

The companys previous periods sales

data is broken down into four major

components, such as trend, cycle,

seasonal and erratic events.


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Decomposition Method-

Advantages

Conceptually a sound method.


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Decomposition Method-

Disadvantages

Historical data is needed.

Difficult and complex statistical methods

are needed to break down sales datainto various components.


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Nave/Ratio Method

It is a time series method of forecasting,

which is based on the assumption that

what happened in the immediate past

will continue to happen in the immediate

future.


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Unit I SDM

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