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SALES AND DISTRIBUTION (MBA MK 03)

UNIT 1

LEC.1

INTRODUCTION TO SALES MANAGEMENT- SELLING AS A PART OF MARKETING

Sales management originally reffered exclusively to the direction of the sales force personnel.

Sales management meant management of all marketing activities , including advertising , sales

promotion , marketing research , physical distribution, pricing and product merchandising.

According to the committee of the American Marketing Association, the sales management

meant , 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. Sales Management is a respectable function today, and its professional

status is high as any other business function.

Sales management provide critical inputs for the key marketing decisions like budgeting ,

quotas and territory management.

From the company viewpoint , there are three general objectives of sales

management :

y Sales volume

y Contribution to profit

y Continuing growth

Top management delegates to marketing management, which then delegates to sales

management , sufficient authority to achieve the three general objectives.

Purpose of sales force in any organization

y To facilitate the development

y Coordination and balance

y Interdepartmental conflicts

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y SALES MANAGEMENT PROCESS

A motivated sales team always achieve profitable goal for their organization. In todays

globalized world the success of the organization depend on the success of its

employees. Whole management of sales can be improve by the process and different

steps of sales management, which is as follows:

A. Planning and Control:

It reduces hesitancy and false steps-Henry fayol

Planning is looking ahead on the basis of the present and the immediate

past. And Control operates on everything things, people, actions.

B. Reports:

i)daily report

ii)weekly report

iii)tour programme

C. Monthly Performance Review:

Each sales rep to report personally to the branch office once in a month.

D. Sales Training:

i) Presentation techniques

ii) Techniques to prompt and handle participation

iii) The methodology of role-playing, which can be valuable assistance in

developing sales skills.

iv) The use of training films.

E. Presentational techniques:

This section is designed to highlight key factors which can be used to make

your presentation more effective.

F. Ensuring that learning takes place:

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y ROLE OF SALES MANAGER

A successful sales manager must posses administrative , conceptual , technical , and

human relation skill which a salesman may not possess. Of course, selling experience is

an asset because a sales meneger manages the sales force that performs the selling job. But both these are two different aspects. A successful salesman may not always

make a successful sales manager.

A sales manager jobs has two dimensions ----- planning & operating

Planning function includes the following:

1. Design a sales programme.

2. Establish and manage a sales organisation.

3. Control the sales performance.

4. Set the sales goals, formulate the sales policies, and design the sales strategies.

5. Prepare a sales plan to implement the sales objective.

The operating functions include:

1. Manage the sales force.

2. Interact with other departments.

3. Interact with the trade and customers.

4. Interact with the marketing department and report to the marketing manager.

y Characteristics of Sales managers

1. A sales manager must visualize.

2. A sales manager must do the right selection.

3. He should do the proper time management.

4. He should be an effective leader.

LEC. 3

CONCEPT OF PERSONAL SELLING

Personal selling is a part of the total promotional activity of the firm, which along with product,

price, and place management, goes a long way in meeting the overall marketing objectives of

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the organization. The ultimate objective of the marketing function is to increase the sales of

want-satisfying products and services, thus leading to a healthy bottom line. Of the several

tools available to stimulate sales, one more important tool is personal selling.

WHAT IS PERSONAL SELLING

It is a method of communication----- a sales person communicates on an individual basis with a

prospect. Personal selling is person to person communication. It is also possible to get

immediate feedback in personal selling by observing the reaction of the prospect, and thus

communication can be modified on the spot. Advertising may be receive by those who are not

our target audience . Personal selling is focused directly on our target audience.

y Situations in personal selling:-

1. Establish product & ongoing relationship with the sales executive.

2. Established product & new relationship.

3. New product & ongoing relationship.

4. New product & new relationship.

SALES MANAGEMENT AND SALESMANSHIP

Sales management , is the direction of the personal selling effort . Mostly, this is accomplished

through salesmanship . A salespersons job has many activities , including salesmanship. A sales

manager has to understand these.

A sales person faces many problems, some of which are related to salesmanship. A

salesmanager must understand these and provide the right solutions.

Salesmanship is defined by Shapiro as the art of persuation which motivation the customers to

buy products which provide them suitable benefits. Salesmanship is initiated by the seller and

provides information to the prospective buyers about the products and their benefits so as to

persuade and motivate them to opt for them.

LEC. 4

PROCESS OF PERSONAL SELLING

There are six stages in Selling process , which are as follows:

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P rospecting & Qualifying

P re- approach & Approach

Sales P resentation & Demo

Handling Objections

Closing

Follow Up & Maintenance

LEC. 5

QUALITIES OF A SUCCESSFUL SALESMAN

There are different qualities of a successman salesman :

1. Personality

2. Mental qualities

3. Sociability

4. Vocational skills

5. Communication ability

6. Patience

7. Determination

8. Dependability

LEC. 6

GOALS IN SALES MANAGEMENT: GOAL SETTING PROCESS IN SALES MANAGEMENT

There are three main goals in sales management. They are:

(i) Adequate sales volume to be achieved

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(ii) Maximum contribution to profits

(iii) Continuing growth

To fulfill these goals and objectives the top management delegates power to

marketing management which further pass it to sales management which finallyset the future operations.

GOAL SETTING PROCESS:

The duty of a sales manager is to look after and managing the companys personal

selling for achieving this goal he has to adopt sales management goal setting

process which is as follows:

1. Analysis :

(a)to analyse the sales records

(b)reports of sales people

(c) knowing market trends

(d) other environmental factors

2. Planning :

(a) formulating goals for the companys sales efforts

(b)developing sales strategies and policies for achieving those goals

3. Organization :

(a)formation of sales force

(b)delegation of authority for achieving companys goal

4. Direction :

(a)to supervise and implement the plans properly and in the direct direction

(b)for this proper communication motivation and right leadership is required

5. Control :

(a)to find out the difference between actual and targeted results

(b)to find out the cause of deviation , if any

(c) ultimately taking corrective action to solve them

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LEC. 7

ANALYZING MARKET DEMAND AND SALES POTENTIAL

According to Philip Kotler, Market demand for a product is the total volume that would be

bought by a defined customer group in a defined geographical area in a defined time periodin a defined marketing environment under a defined marketing program.

MARKET DEMAND : In it the firm need to assess :

(i) Current market demand (ii) future market demand

(a) Current market demand : it consist of two types of assessment which are:

1. Total market demand : this can be calculated by sales forecasting.

2. Area market demand :

(i)It refers to the demand within a particular area which can be either a district,state or country.

(ii)It has two methods

(a) Market build up method: It identifies :

(i)the quantity of potential buyers in each market and

(ii)to estimate the quantity of their potential buying

(b)Market factor index method : It identifies :

(i)those market factors which have coordination with market potential and

(ii)then these factors unite them with a weighted index

(b) Future market demand includes the following:

(i)forecasting total demand and

(ii)forecasting area demand which depends upon the forecasting total demand.

SALES POTENTIAL:

According to Still and Cundiff, A sales potential is an estimate of the maximum possible sales

opportunities present in a particular market segment open to a company selling a good or

service during a stated future period.

A sales potential represents sales opportunities available to a particular manufacturer while

a market potential indicates sales opportunities available to an entire industry.

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The sales potential is larger than the sales forecast as:

(i) Some firms lack sufficient production capacity to achieve the full sales potential.

(ii) Other firms lack distributive networks to reach every potential customer .

(iii) Others do not consider their total sales potential due to lack of their financial

resources

(iv) Still others are more profit oriented rather sales oriented.

Thus the estimate for sales potential shows how much a firm can sell if it had all

necessary requirements and ready to use them.

Lec. 8

Techniques of Sales Forecasting

The following methods and techniques are used for forecasting sales of a company:

1. Jury method/executive opinion method

Most common and prevalent method. The base of this method is judgement hence

also called executive opinion method. In this method all the participants give their

judgement and opinions. The final forecast is determined by averaging these

opinions.

2. The Delphi method

It is also a kind of expert opinion which is used for broad based future estimates. It

this method a sequence of questionnaires are put on a panel of experts in this field. All

members provide their individual information to others in the panel. Then panel is

asked to check the questions which are important to the forecast. Their answers and

reactions are analysed and if there is any sharp differences in opinions, it is again

discussed and final forecast is formulated.

3. Sales force composite method

The sales forecasting is done by sales force and is also a judgement based method.

In it each salesman predict the forecast for his territory. All such forecasts are

then consolidated at regional level and the sum of all these forecasts develops into

the firms forecast . It is thus called a grass root method as the judgement of the

are nearest to the market place forms the basis of the forecast.

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4. User Expectation method/survey of consumers opinion method

The sales forecasting is done after surveying the buyers intentions. A list is

demand forecast is consolidated.

Thus, the survey of buyer will provide-

(i)

The total likely consumption of the product.(ii) The consumers buying plan.

(iii) The market share for the enterprise.

5. Market share method

The company first chalk out the industry forecast and then applies the market share

factor of the company forecast. The market share factor is prepared from companys

past trends, present position, plans for future and brand preference etc. It requires

great expertise to correctly assess through marketing intelligence, its competitorsplans, policies and activities.

6. Analytical and statistical methods/Trend analysis

Under this method of sales forecasting , the past data of sales of the enterprise are

analysed and the trend is established. Forecasting for the future are made on the basis

of this trend.

7. Market survey method

This method is most suitable for the sales forecasting of the new product. Under this

method , some certain segments are selected and the product is introduced in thesesegments only. The result of sales in these segments are collected and analysed and on

the basis of these results, the sales forecasts are made for the whole market.

Sales Budget:

Sales budget is an important part of sales forecasting. A sales budget is a forecasting of

a new product or of an enterprise for a certain period of time. Sales budget is prepared

after preparing sales forecast. Sales budget is considered to be a most impotent budget

of an enterprise budget because all other budgets, such as production budget, Raw

Materials budget, labour budget, plant budget, overheads budget etc. A sales budget is

prepared by sales manager or marketing manager with the help of marketing research

manager, regional sales manager, branch manager and salesman.

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Factors to be considered while preparing a sales budget:

There are many factors which must be considered while preparing a sales budget. It can

be divided into following two parts-

1. Internal factors:

Important internal factors which affecting the sales budget are as under-

(i) Volume of sales of the enterprise

(ii) Trend of the sales of the enterprise

(iii) Long term trend of the sales of the enterprise

(iv) Profitability of different products of the enterprise

(v) Production capacity of the enterprise

(vi) Expansion programme of the plant of the enterprise

(vii) Plan of new products

(viii) Product diversification

(ix) Plan or product development

(x) Seasonal fluctuations

(xi) Selling and distribution channels

(xii) Possibilities of marketing research

(xiii) Price policy

(xiv) Advertisement and sales promotion policy

(xv) Ability and efficiency of salesman,etc.

2. External Factors:

External Factors affecting the preparation of a sales budget, These are as under:

(i) General economic condition of the country

(ii) General atmosphere of the industrial development of the country

(iii) Condition of a particular industry

(iv) Changes in population

(v) National production and per capita national income

(vi) Distribution of wealth in country

(vii) Situation of competition in the market

(viii) Changes in the needs , habits and tastes of consumers

(ix) Industrial and taxation policy of the government

(x) Purchasing power of general public

(xi) Trade conditions in the country etc.

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LEC. 9

Formulating selling strategies

Objectives are achieved through strategies. Policies provide the guidelines.

Selling strategies have two types of dimensionswhat type of salesforce isneeded and how many of sales people are needed. The different strategies of

sales are as follows:

Types of sales persons:

It is a key question in selling strategy. The consideration are the expectations of

the organization from the salesforce and the measurement of performance. Each

organization has its individual requirements. Each organization has its own

strengths and weaknesses in terms of product it sells.

Product market analysis:

Selling task varies from customer to customer, and market to market. To take

an extreme example, a salesman may sell a single product to several different

types of customers. Another extreme is to sell a diversity of products to a

single types of customer . sales persons can be product specialists or market

specialists or product market specialists.

Role in securing orders:

A sales persons role in securing orders also affect the type of sales persons

required. In different selling environments, the order securing process operates

differently, e.g., some have to solicit orders aggressively such as computer

salesman whereas some just accept orders which come their way such as a

salesman of government textbooks prescribed for primary and secondary

schools.

Basic selling styles:

The four basic selling styles: trade selling , technical selling, missionary selling

and new-business selling.

Trade selling tries to establish long-term relationship with the customers. This is

a routine job. In wholesale trade, this style is used extensively.

Technical selling aims at improving sales volume of established products by

offering sound technical advice and other assistance.

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Missionary selling assists the customers in their selling efforts. The idea is to

increase the sales volume. If orders flow in, they are just incidental. A medical

representative is a typical missionary.

New-business selling tries to identify new customers and secure orders from

them. He converts the prospects into customers. Selling for him is a creative job.

He should have good selling skills.

Size of the sales force

The second dimensions of selling strategy is the size of the salesforce. An

organization first decides what type of sales people it requires and then how

many of them are necessary so as to meet the sales and profit objectives. Too

few sales people mean loss of opportunities and too many of them, unnecessary

expenditure. The exact number of sales people a company must have is difficult

to pin point.

Customer, Tailored Selling Strategies

Strategy of selling ultimately is tested against interactions of the salespeople

with the customers; which lead to the realization of the selling objectives. The type of sales

persons required and their number are the first two key decisions taken by a company.

Later the focus is on developing an individual selling style, which is mutually beneficial. All

said and done, a salesman achieves success by his interactions with the customers. His

behaviour may vary from customer to customer. The extent of this variation is a matter

of selling skills. This calls for pre-planning and the actual performance during the call.

LEC. 10

Designing sales territories and sales Quota

Sales territory

A geographical grouping of customers and prospects is called a sales territory .

operationally it is a group of customers assigned to a sales person. In it customers are

important rather than the areas in which a salesman work.

Designing sales territories

It means dividing the market into similar customers making homogeneous market area.

Market data is more useful when collected and applied at the territory level. To

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implement planning and control the market area should be broken up into a number of

well designated sales territories.

Definition

According to Still & Cundiff, A sales territory is a grouping of customers and prospects

assigned to an individual sales person.

Criteria for Territory design

Sales territory design should be-

(i) For easy administration and right approach

(ii) Feasible having equal work load and equal potential.

(iii) Divided into marketing regions and district etc, to cover total marketing area.

SALES QUOTAS

Quotas are quantitative objectives which are assigned to individual sales personnel or a

sales unit (a district or region or territory) for a particular period of time by the sales

department. These appraise the selling effectiveness of the company.

sales quota is a goal in terms quantity given to a sales representative, or a group of sales

representatives over a period of time. Sales quota may be assigned to a region , territory,

branch office. It may be assigned to a distributor too. Sales quotas are the tools of planning

and control.

Sales quotas are based on sales forecasts and sales potentials of different markets. The

more accurate the data used in formulating the sales quotas, the more effectives quotas

become. Sales efforts is controlled by using quotas. It helps in appraisal. It helps in

controlling expenses. Quotas provide a quantitative performance standards. Quotas are used

as performance criteria in sales contests.

Sales forecast is the first step in setting up quotas. It leads to the sales budget. In the budget,

there is a provision for setting quotas as performance standards.

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UNIT 2

Lec. 11

Sales force Management

The success of any sales organization depends upon the ability, skill and willingness of the

sales force in achieving the desired sales objectives. The willingness to do the work will

enhance his performance level. The willingness depends upon the motivation he gets. Thus,

motivation provides willingness which is quite different from his ability or capacity in doing

his job. Therefore, there are two factors in determining the performance of the salesforce

which are his-

1. Ability and skill

2. Motivation

y Ability and skill can be developed through education and training

y Willingness and interest to perfect well can be achieved through proper

motivation. Thus, motivation can enhance greater selling efficiency in the form of

higher sales volumes.

y A motive is an emotion within an individual which incites and encourage him to

perform well.

y Motivation can be aroused by some external stimuli or incentive.

Lec. 12

Organizing the sales force:

The following Common approaches are used in organizing the sales force:

1. Customer based organisation

2. Product based organization

3. Territory based organization

4. National account based organization

5. Inside/outside sales based organization

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Lec. 13

Sales force structure:

(i) It requires when the company sells different variety of products to different types of

customers over a large geographical area.(ii) It combines many types of sales force structures.

(iii) Sales people are trained for territorial or product or market structure knowledge.

(iv) Then, these sales people have to report to one or more line and staff managers.

The sales force is very important in marketing mix. Hence, companies need to carefully

consider when and how to use sales representatives. For this, companies are substituting

inside mail and phone based selling units to reduce field sales expenses and they are trying to

increase the productivity of the remaining sales force through better selection, training,motivation and compensation. Sales personnel serve as the companys personal link to the

customer.

Lec. 14

Size of sales force:

(i) It is the most important asset and major component of companys promotion mix.

(ii) It decides the companys fate as revenues are provided through sales.

(iii) Its effectiveness determines overall marketing objectives of the firm.

(iv) Sales force is required for various kinds of services.

Sales force size:

(i) A company after formulating its sales force strategy and structure start

considering its sales force size.

(ii) It is usually fixed at the optimum level.

(iii) It includes expected level of sales together with the number of sales persons

required for such sales.

(iv) Increasing the number of their sales representatives will increase both sales and

costs.

(v) Thus, the sales force size can be established on the number of customers they

want to tackle.

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Note: It is called work load approach by Philip Kotler which is as follows :

(i) The buyers are categorized according to their yearly sales volume.

(ii) Then, the call frequencies per year is established for each category.

(iii) The number of accounts for each category is multiplied by the call frequencies to

find out the complete work load in sales call per year.

(iv) Through it, the number of calls a sales person can utilize per year is find out.

(v) By dividing the total year calls needed with the average year calls done by the

sales person can determine the number of sales persons required by the company.

(vi) The size of sales force depends upon its structure and productivity and some other

factors.

(vii) The size is also changeable according to the companys market conditions.

(viii) The company determines the sales force size upon its affordability and its

requirements for the job.

Lec. 15

Recruitment of the sales force:

The main responsibility of any companys sales executives is to recruit and select the

executive should implement personal selling strategy in considering both the kind and

quantity of sales personnel.

Individual are recruited by their varying abilities, skills, education, training,

experience. The scope of recruitment depends upon

(i) Number of recruits required.

(ii) Size of sales company.

(iii) Rate of turn over and

(iv) Forecasted sales volume and distribution channels.

Importance of recruitment:

(i) It is essential to carry out the selling activities of the company to recruit the

right type of sales person having all the desired qualities.

(ii) For this, a sound recruitment policy is required for the success of any organization.

(iii) The management should choose the right man for the right job or else they will

become burden on them.

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(i) Either through simple system by applying an informal personal interview

(ii) Or through complex system by using diverse mechanism to gather information

about applicants for sales jobs.

A complex selection system is a set of successive screening such as

y Applications

y Preliminary interview

y Qualifications

y References

y Testing

y Physical conditions

y Employment offer

Lec. 17

Leading and motivating the sales force

Motivation is behaviour towards reaching the desired goal. The need within individual leads a

person to act so as to achieve it. Thus, motivation for sales personnel is amount of effort

required for his sales job i.e.,

(i) Calling on potential customers

(ii) Planning sales deals and

(iii) Preparing reports etc.

Need for motivation

There is a need for motivation for sales personnel in order-

1. To improve efficiency

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2. To remove tension

3. Keep them satisfied

4. Provide human treatment

5. Motivation tools

Motivation and leadership

(i) Effective sales executives act as leaders of sales personnel and get voluntary

cooperation from them to reach the sales departments goal.

(ii) They very well know the motives, desires and ambitions of the sales persons and

use this knowledge to guide them in their activities.

(iii) The leadership requires to keep good relationship with the sales personnel which

requires skills, experience, maturity and common sense.

(iv)

They should treat them fairly in assigning jobs, promotions and remunerations etc.

Lec. 18

Training and compensating the sales force

The increasing demand of demand of present world of marketing requires competent and

well trained salesman as a companys success and progress depend greatly on the efficiency

of its sales force. now-a-days only proper trained sales person can improve the maximum

potentiality of any organization hence, well trained sales force can be a valuable asset for it toface the modern marketing.

According to C. L. Hudson, Training is a process of learning that is specifically directed to

the acquiring and developing of specific attitudes and skills for the successful carrying out

of specific objectives and tasks.

Need for trained salesman:

(i) The techniques and developments of sales keeps on changing with the time

hence to cope with it training is a necessity for every big concern.(ii) Thus, the salesman learning new techniques can greatly enhance the volume of

sales and profits for the organization and a better remuneration for themselves.

(iii) Training helps the salesman how to best influence their customers.

(iv) Training helps the sales force gaining essential knowledge about products,

customers and himself.

(v) A trained sales person can easily face adamant customers with confidence.

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(vi) The supervisory efforts and managerial control become lesser with trained

salesman.

(vii) Training build up his morale and self confidence to face any situation of the

modern marketing.

Compensating the sales force:

Compensation is essential to keep sales force morale high and to enable them to contribute

to its maximum for any enterprise. Though, the direct salary and allowance are more or

less similar for all companies yet they differ in indirect benefits such as incentives and

perquisites. Hence, the present general trend is towards increasing the indirect incentives

of the sales force.

A sales compensation plan has the four following basic elements :

(i) Fixed salary to provide stability of income

(ii) Commission or bonus or profit sharing as an incentive.

(iii) Paid vacations or pensions or life insurance etc.

(iv) Reimbursement of sickness or accident or expense allowance.

Lec. 19 & 20

Sales contests Evaluation and Analysis

Sales force management create sales contests to motivate the sales personnel in achieving

higher sales in a given period of time. Thus, it is a unique selling campaign to award beyond

the compensation plans. These also provide incentive techniques for different sales situations.

The sales contest is used for both customers and dealers. Both of them are motivated to use

the companys product and get certain awards like cash prizes or free ticket for some foreign

trips or attractive gifts.

Planning is essential for a successful sales contest according to the customer needs. Hence,

an experienced person can only organise a good sales contest as it is a special selling

technique which offers incentives in the form of prizes or awards which are not included in

compensation plan. Thus, it provide extra incentives to increase more profitable sales

volume.

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Sales contest objectives

Sales contests are meant to accomplish

(i) Specific objectives

(ii) To motivate sales personnel(iii) To create new prospects

(iv) To get big orders and sale more profitable products

(v) To increase sale of low margin goods and new products

(vi) To overcome seasonal sales decrease

(vii) To provide special deals to distributors and dealers

(viii) To create team spirit

(ix) To encourage employee morale

(x) To make personal selling efforts more productive

(xi) To offset compensations(xii) To support customers promotion

Evaluation of contest

Evaluation of such contests can be done in two ways i.e, before and after the sales

contest. Thus,

(i) Before evaluation :

The aim of management is to find out and correct the weaknesses of thecontest and

(ii) After evaluation :

Should seek ways and means to improve the future contests.

Both these pre and post evaluation rectify alternatives, effects, design, fairness and impact

upon the sales force morale.

1. Alternatives

(i) A sales contest will not be successful if serious defects exist in it.

(ii) Incompetent supervision or a bad compensation plan will not rectify

deficiencies caused temporarily or permanently in a sales contest.

(iii) The main purpose of sales contest is to provide extra incentives, to enhance

sales volume so that more profitable volumes can be accomplished.

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(iv) Thus, when a sales contest is considered, other methods of improving selling

efficiency should be taken into account for getting probable results.

2. Effects(i) A sales contest is considered successful if it increases sales volume, bringing

in more profitable volume or both in the short as well as long term effects.

(ii) Thus, successful contests enhance both contest period sales and long run sales

as they provide good selling methods to sales personnel.

3. Design

(i) The sales contest should be well designed to provide motivation in achieving

the desired goal .

(ii) The profit of sales volume should also cover the cost of sales contest.(iii) The contest format should tie directly with the specific objectives which

could be easily understood and move towards promotion.

4. Fairness

(i) The management should see that the contest format and rules provide

everyone a fair chance of winning.

(ii) When the contest takes place , every sales personnel should feel that he

has full chance of winning it.

5. Impact

(i) the impact of successful sales contest provide a permanent higher level of

sales force morale.

(ii) There are chances of personal rivalries and creating jealousy among the

sales force if the sales contest format is meant for individual awards.

(iii) Hence, the manager should organize teams and place the emphasis on

competition among them for recognition rather than individuals.

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