unit iii sdm
TRANSCRIPT
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An organization in general can be
defined as the rational coordination
of the activities of a number of
people for the achievement of some
common explicit purpose or goal,
through division of labour and
function, and through hierarchy of
authority and responsibility.
What is an organization?
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A sales organization is a team of individuals
working together to achieve the set salesobjectives. A sales organization operates within
a organizational / corporate framework.
A sales organization ought to have a well
defined structure to operate efficiently and
effectively.
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A well designed organizational structure
does the following:
Defines jobs - roles, responsibilities and duties of the
personnel
Clarifies authority and power at each level. Promotes specialization
Avoids duplication of work
Facilitates coordination and communication
Facilitates adaptation by being flexible to the
changing environmental needs.
Facilitates growth
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The factors considered while designing a salesorganization structure are - Nature of the product and services
Organizational related factors: Size, volume,product range, geographical expanse of businessetc influence the sales structure.
Marketing mix related factors: The type ofdistribution channel, pricing policy, marketingcommunication influence the sales structure.
External factors: Nature of competition
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Major principles based on which the salesorganization is designed:
Span of control: It refers to the number ofsubordinates a manager can effectively manage.
A narrow span of control
A wider span has fewer levels of supervision.
Centralization and Decentralization:
Centralization of authority refers to the relativeconcentration of authority for decision makingespecially at top level.
Features - Consistency in the marketing plan, uniformityin product and service delivery, uniformity incompensation packages of the sales force, integration ofthe sales force.
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A decentralized structure helps in making the
organization more responsive to the market andregional demands.
In many organizations combination of centralizedand decentralized organizational structures are
used. E.g. - Titan Watches and Modi Xerox.
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Organizations adopt different kinds ofstructures To assure that all necessary activities are
performed
To define authority
To achieve coordination and control
To permit the development of specialists
To economize on execution time
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GeneralManager
Sales Manager
AssistantSales
Manager Div. 1
Salespeople
AssistantSales
Manager Div. 2
Salespeople
AssistantSales
Manager Div. 3
Salespeople
AssistantSales
Manager Office
Office Staff
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BASIC TYPES OF SALES ORGANISATIONS
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President
VP (Marketing)Advertising Manager Manager (Marketing Research)General Sales Manager
Director (Sales and Training)
Director of Dealer and
Distribution Relations
Sales Promotion Manager
Assistant to General
Sales Manager
Assistant GeneralSales Manager
District Sales Managers
Branch Sales Managers
Sales Personnel
Sales Personnel Director
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BASIC TYPES OF SALES ORGANISATIONS
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Director
of
Sales
Administration
Installation
and
Service
Manager
Manager of
Dealer and
Distribution
Networks
Manager
of
Sales
Personnel
Manager
of
Sales
Promotion
Manager ofSales
Supervision
Manager
of
Sales
Training
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Salesperson Salesperson Salesperson Salesperson Salesperson Salesperson
BASIC TYPES OF SALES ORGANISATIONS
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GeneralSales
Manager
Sales
Personnel
Director
Western
DivisionSales
Manager
Director of
Sales
Analysis
Director
ofSales
Promotion
Central
DivisionSales
Manager
Director of
Sales and
Training
Eastern
DivisionSales
Manager
Branch
SalesManagers
Branch
SalesManagers
Branch
SalesManagers
Sales
Personnel
Sales
Personnel
Sales
Personnel
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BASIC TYPES OF SALES ORGANISATIONS
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General
Sales
Manager
Sales
Manager
Product 1
Director of
Sales
Analysis
Director
of
Sales
Promotion
Director of
Sales and
Training
Sales
Personnel
Director
Sales
Manager
Product 2
Sales
Personnel
Product 1
Sales
Manager
Product 1
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BASIC TYPES OF SALES ORGANISATIONS
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General
Sales
Manager
DirectorProduct
R and D
Manager,
Mining
Industry
Sales
Director of
Sales
Promotion and
Advertising
Director
of
Sales
Training
Manager,
Construction
Industry
Sales
Director ofSales
Planning
Manager,
Lumber
Industry
SalesBranch
Sales
Managers
Branch
Sales
Managers
Branch
Sales
Managers
Sales
Personnel
Sales
Personnel
Sales
Personnel
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BASIC TYPES OF SALES ORGANISATIONS
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General
Sales
Manager
SalesPersonnel
Director
AdvertisingManager
Director ofCustomer
Relations
SalesPromotion
Manager
Director ofSales
Planning
Sales ManagerInstitutional Sales
Sales Personnel
Sales Manager
Wholesale Sales
Sales Personnel
ExportSales Manager
Sales Personnel
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Sales ManagerChain Store Sales
Sales Personnel
BASIC TYPES OF SALES ORGANISATIONS
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Sales territory is a geographical grouping of existing and potential
customers allocated to
an individual
a group of salespersons.
a branch
a dealer
a distributor
A marketing organization
Essentially designing territory means to divide the market into
convenient clusters.
Sales territory must be designed to meet certain criteria such as
easy administration, accessibility, optimization of travel time.
Designing of sales territories can be done by Equal Workload
Method or Equal Potential Method.
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Designing of sales territory has various advantages:
Better market coverage
Effective utilization of work force Better work load distribution
Easy performance evaluation
Control over costs of sales function
Improves the performance of salespersons
Increases individual attention to key customers
Advantages of segmentation can be gained. As
characteristics of different territory can be different. More effective planning, implementation and
control.
Helps in assigning responsibilities to salespersons.22
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Wedge shaped e.g. FMCGs like P&G Ltd.,Marico Industries, HLL, etc.
Circle shaped sales person is located at thecentre and then he needs to travel equally toall areas. E.g. Maruti Udhyog, HyundaiMotors.
Cloverleaf design clients /accounts are
distributed randomly throughout theterritory. E.g. Airtel
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- Philip Kotler
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Sales quota is the target or goals assigned to sales
units: sales person, dealer, distributor, territory, to beachieved in a specific period of time.
Sales quotas (quantified objectives) may be expressed
either in monetary terms or in volume terms.
These quantified objectives should be realistic.
The basis for fixing the sales quota should not only
be potential of the territory and the past data but also
factors such as territorys importance to the company,the market share expected from it and the profitability
of sales in that territory.
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Participative approach should be followed
while fixing the sales quota. The objective of fixing Sales quotas are :
Motivating the sales force
To bring in the right focus (products to begiven importance)
These form an important basis for feedback,
evaluation of and reward for the performanceof a sales unit.
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Cont.
Importance of Sales QuotasSales quotas serve several purposes. The important
objectives are shown in the diagram below:
Sales
Quotas
Quotas provide
performance
targets
Quotas provide standards
Quotas provide control
Quotas are motivational
Sales
Objectives
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Cont.
Types of Sales QuotasA sales organisation can set many types of quotas. The most common
quotas are shown in the following diagram:
Types of Sales Quotas
Sales VolumeQuotas
Sales BudgetQuotas
ActivityQuotas
QuotaCombinations
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1. Sales volume quota: These are basically ofthree kindsMonetary sales volume quota
Unit sales volume quota ( resorted to becauserupee value may varyprice may vary)
Point sales volume quota ( followed in multiproduct situations. Relative weightage. A unitof a product may get higher points than another
product)
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2. Sales Budget quota: These quotas are set with theobjective of controlling expenses, increasinggross margin / profit. Profit quotas are set. By thisthe salesmen are encouraged to sell more
profitable products. Expenses are often controlledby setting an expense budget as a percentage ofthe territory sales.
2. Sales activity Quota: Activity quotas are fixed forsalesmen in addition to sales quotas.
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As an example the activity quota may be set
for number of
Sales call to be made
Number of dealer contacts Number of product demonstrations to be made
Number of new accounts to be created
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Sales quotas can be fixed based on
1. Sales forecast & market potential
2. Based on sales forecast alone3. Average of Past sale
4. Executive judgment
5. Sales force compensation
6. By Sales people themselves
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Territory Managementrevenues, expenses, marketshare, dealer and trade relations.
Account Managementneed to manage customers
on the basis. Companies use BCG matrix for this:
Starsneed more attention -> high future potential
Cash cowsmaintain current business deals & build a long
term relationship
Problem childcustomer who has high potential but does
not give adequate returns
Dogsneed to be divested as they have low sales potential
& declining sales
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Call Managementmanager need to managethe sales call by checking the sales person in:
Selling techniques
Repeating mistakes
Knowledge about the product
Planning about customer objections & adequate
responses
Self Management
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- Cundiff and Still
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Businesses are forced to look well ahead in order to
plan their investments, launch new products, decide
when to close or withdraw products and so on.
Key decisions that are derived from a sales forecastinclude:-
- Employment levels required
- Promotional mix
- Investment in production capacity
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Forecasting can be:
Short-termdeals with day-to-day operations like
Production processes, Logistics management,
Raw-material procurement,
Sales management,
Marketing management,
Advertising management, etc.
Long-term
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1. Used to establish quotas
2. Used to plan the personal selling efforts and other
types of promotional activities
3. Used to budget expenses
4. Used to plan and coordinate production, logistics,
inventories, personnel and so forth.
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Accuracy
Plausibilityno manipulation of figures under any
pressure
Durability
Flexibility
Availability of statistical indexes
Organizational participation
Demand patterns in the market for the product
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Qualitative User expectationsfor industrial products where no. of
customers is less
Sales force compositesales forecast is based on the
expectation and experience of the salesperson Jury of executive opiniontop management give their opinion
based on experience and intuition which is the combined.
Delphi techniqueexperts give their opinion . Experts from
government institutions, universities, industry are involved
Market test -
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Quantitative
Time series analysishelps in estimating future trends
based on the past performance of the organization Moving averageextension of time series average
of several periods is considered
Exponential smoothingfurther refinement of
Moving average greater weightage is attached tosales in recent period than earlier
Regression and correlation analysisis used to
identify the factor that influence sales
Multiple regression model - is used to identify the
more than one factor that influence sales
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A budget is a plan expressed usually in monetary
terms. It is a process of allocating a portion of anorganizations resources for its various activities for a
specified period of time.
It helps in planning and coordination of the
organizations activities. Sales budgets are developed
for the smooth functioning of the sales function.
Developing sales budgets serve two purposes
1. As a mechanism of control and
2. An instrument of planning.
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In practice, sales managers prepare three types of budgets
1. A sales budget gives a plan showing the expected salesfor a specified period in the future for a division rather
than a customer or territory .
2. Selling expense budgets details the schedule of expenses
that may be incurred by the sales department to achieve
planned sales.
1. Commission, Salaries, Travelling and entertainment, Training
3. Administrative budget specifies the budgetary allocations
for general administrative expenses that would be
incurred by the sales department.
1. Rent, electricity, office furniture, stationery, etc
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The different methods for budgeting include the-1. Affordability method
2. Percentage-of-sales method
3. Competitive parity method4. Objective-and-task method
5. Return-oriented method.
1. ROI
2. ROA3. ROTA
4. ROAMReturn on Assets Managed
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Control is defined as a process used by managersto direct, regulate, and restrain the actions of people
so that the established goals of an enterprise may be
achieved.
Goals of Control
Revenue control
Optimize number of sales
Maximize profitControl revenue
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Like any other control system, sales control
requires the establishment of standards, the
evaluation of actual performance and the
correction of deviation in performance. Sales control implies not only managerial action
with regard to actual sales, but it also embraces all
other marketing functions required for the even
flow of products or services form producers to
consumers.
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All promotional and auxiliary efforts in marketing
require as much control as the actual selling efforts
demand.
Nevertheless, control of promotional and auxiliary
efforts in marketing is more difficult and cannot be
exercised with that exactness which is possible in
case of actual selling efforts.
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Because of their intangible performances,
ancillary activities in marketing are placed under
some broad measures of control, and they are
measured and appraised by managerial judgment,skill or experience.
The basic tool for controlling these efforts is to be
found in the sales expense budget .
For controlling performances of salesmen, the sales
budget or in the absence of a sales budget, the sales
programme provides the standard for control.