SALES MANAGEMENT

• Sales management originally referred exclusively to the direction of

sales force personnel.
• Later apart from management of personal selling, sales management
meant management of all marketing activities, including advertising,
sales promotion, marketing research, physical distribution, pricing and
product merchandising.
• 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.

TYPES OF SELLING

1. ORDER TAKERS

a. Inside Order Takers

b. Delivery salespeople
c. Outside order takers

2. ORDER CREATORS

a. Missionary salespeople

3. ORDER GETTERS

a. New Business salespeople

b. Consumer salespeople
c. Technical support salespeople
d. Merchandisers
 SALES STRATEGY

STEP 1: BUSINESS DEFINITION (CORPORATE MISSION OR GOAL)

STEP 2: SITUATION ANALYSIS/MARKETING AUDIT

STEP 3: STATEMENT OF OBJECTIVES

STEP 4: FORECAST SALES/DETERMINE MARKET & SALES

POTENTIAL

STEP 5: GENERATING & SELECTING STRATEGIES

STEP 6: PREPARING THE MARKETING PROGRAMME

STEP 7: ALLOCATING RESOURCES: BUDGETING

STEP 8: IMPLEMENTATION

STEP 9: CONTROL

THEORIES OF SELLING

1. AIDAS theory of selling

a. Securing attention
b. Gaining interest
c. Kindling desire
d. Inducing actions
e. Building satisfaction

2. “Right set of circumstances” theory of selling- “everything was right

for that sale” sums up the second theory. It is also called situation-
response theory, stating that particular circumstances prevailed in a
given selling situation caused the prospect to respond in a predictable
way.
3. “Buying Formula” theory of selling- the buyer’s needs or problems
receive major attention and the salesperson’s role is to help the buyer
find solutions.
4. “Behavioural Equation” theory- Drives----- Cues----Response----
Reinforcement

CONSUMER & ORGANIZATIONAL BUYERS

1. FEWER ORGANIZATIONAL BUYERS

2. CLOSE, LONG-TERM RELATIONSHIPS BETWEEN
ORGANIZATIONAL BUYERS & SELLERS
3. ORGANIZATIONAL BUYERS ARE MORE RATIONAL
4. ORGANIZATIONAL BUYING MAY BE TO SPECIFIC
REQUIREMENTS
5. RECIPROCAL BUYING MAY BE IMPORTANT IN
ORGANIZATIONAL BUYING
6. ORGANIZATIONAL SELLING/BUYING MAY BE MORE RISKY
7. ORGANIZATIONAL BUYING IS MORE COMPLEX
8. NEGOTIATION IS OFTEN IMPORTANT IN ORGANIZATIONAL
BUYING

CONSUMER BUYER BEHAVIOUR

1. CONSUMER ROLES
2. FACTORS AFFECTING BUYING BEHAVIOUR
3. CONSUMER DECISION MAKING PROCESS

PERSONAL SELLING OBJECTIVES

1. ANALYZING MARKET POTENTIAL

2. SALES POTENTIAL
3. SALES FORECASTING
4. MARKET IDENTIFICATION
5. MARKET MOTIVATION
6. MARKET POTENTIAL
SALES FORECASTING- a procedure for estimating how much of a given
product can be sold is a given marketing program is implemented. Methods

1. Jury of executive opinion

2. Delphi technique
3. Poll of Sales force opinion
4. Projection of past sales
5. Time series analysis
6. Exponential smoothing
7. Evaluation of past sales projection methods
8. Survey of customer’s buying plans
9. Regression analysis
10.Econometric model building and simulation

PERSONAL SELLING STRATEGY

CHOICE OF BASIC SELLING STYLE

1. Trade selling- trade salesperson develops and maintains long-term

relations with a stable group of customers. Main activities are taking
inventory, refilling shelves, suggesting reorders, setting up displays,
etc
2. Missionary selling- main objective is to increase the company’s sales
volume by assisting customers with their selling efforts. The
missionary salesperson’s job is to persuade indirect customers to buy
from the company’s direct customers.
3. Technical selling- deals primarily with the company’s established
accounts, and the main job objective is to increase their volume of
purchase by providing technical advice and assistance.
4. New business selling- main job is to find and obtain new customers,
that is, to convert prospects into customers.
 DETERMINING THE SIZE OF THE SALES FORCE

1. WORK LOAD METHOD- management first estimates the total work

load involved in covering the company’s entire market and then
divided by the work load that an individual salesperson should be able
to handle.
2. SALES POTENTIAL METHOD- this is based on the assumption that
performance of the se of activities contained in the job description
represents one sales personnel unit.
3. INCREMENTAL METHOD- net profits will increase when
additional sales personnel are added if the incremental sales revenue
exceed the incremental costs incurred.

SALES RESPONSIBILITES & PERSONAL SELLING SKILLS

1. PROSPECTING- is the searching for and calling upon customers

who, have not purchased from the company. Sources of prospecting
maybe existing customers, trade directories, enquiries, press, cold
canvassing.
2. CUSTOMER RECORDS AND INFORMATION FEEDBACK- a
systematic approach to customer record keeping is to be
recommended to all repeat call salespeople.
3. SELF MANAGEMENT- organize his own call plan, dividing
territory, deciding the route, planning each day’s work, etc
4. HANDLING COMPLAINTS
5. PROVIDING SERVICE
6. IMPLEMENTING SALES & MARKETING STRATEGIES
7. PREPARATION- product knowledge, knowledge of competitor’s
products and their benefits, sales presentation planning, understanding
buyer behaviour, sales negotiations.
 THE SELLING APPROACH

STEP 1: THE OPENING- initial impressions, dressing, personal appearance,

bodily gestures, opening remarks

STEP 2: NEED & PROBLEM IDENTIFICATION- needs analysis

STEP 3: PRESENTATION & DEMONSTRATION- features, benefits, use

of reference customers, demonstration by involving customer, offering
guarantees, inducing trial orders.

STEP 4:DEALING WITH OBJECTIONS- listen & do not interrupt, agree &
counter, the straight denial, question the objection, forestall the objection,
turn the objection into a trial close, hidden objections.

STEP 5: NEGOTIATION- start high but be realistic, attempt to trade

concession for concession, buyer’s negotiating techniques.

STEP 6: CLOSING THE SALE- ask for the order, summarise & then ask
for the order, the concession close, the alternative close, the objection close,
action agreement.

STEP 7: FOLLOW-UP
 KEY ACCOUNT MANAGEMENT

“key account management is a strategy used by suppliers to target and serve

high potential customers with complex needs by providing them with special
treatment in the areas of marketing, administration and service.”

Advantages:

• Close working relationships with the customer

• Improved communication & co-ordination
• Better follow up on sales & service
• More in depth penetration of the direct marketing unit
• Higher sales
• Opportunity for advancement for career salespeople
• Lowe costs through joint agreement
• Co-operation on research & development

Disadvantages:

• Increased dependence
• Risk of pressure on profit margins
• Danger of customer applying ever-increasing demands
• Neglect of smaller accounts
• Mismanagement of career aspirations of key account managers

Building relationships with Key Accounts

• Personal Trust- ensure promises are kept, reply swiftly to queries,

problems, complaints, establish high frequency of contact, arrange
visits, engage in social activities with customer, give advance warning
of problems.
• Technical Support- research & development co-operation, before-and-
after sales service, provide training, dual selling
• Resource Support- provide credit facilities, create low interest loans,
engage in co-operative promotions to share costs, engage in counter-
trade
 • Service levels- reliable delivery, just-in-time delivery, computerized
reorder systems, fast accurate quotes, defect reduction
• Risk Reduction- free demonstrations, free/low-cost trials, product
guarantees, delivery guarantees, preventative maintenance contracts,
proactive follow-up, reference selling

SALES FORCE MANAGEMENT

“It involves a specialized form of personnel management including job

analysis, job specifications, job description, job evaluation, recruitment,
selection, training, supervision, performance evaluation, compensation and
motivating programs”

JOB ANALYSIS

Sales job analysis requires systematic collection and study of information on

particular sales jobs, such as that of territorial salesperson. Questions like:
To whom does this person report? Who reports to this person? What produce
does this person sell? To whom does this person sell? What information
should this person gather? What reports should this person make and to
whom? Are to be answered in analyzing sales job analysis.

a. Sales Job Description- it is an organized factual statement

covering (1) the reporting relationship of a particular job to
other jobs, (2) the job objectives, (3) duties and responsibilities,
(4) job performance criteria.
b. Sales Job Specifications- This must stipulate minimum
requirements with respect to education and product or technical
knowledge with respect to the job description.

RECRUITMENT

a. Sources within the company- company sales personnel, company

executives, internal transfers
b. Sources outside the company- direct unsolicited applications,
employment agencies, salespeople making calls on the company,
employees of customers, sales executives’ clubs, sales force of non
 competing companies, sales force of competing companies,
educational institutions, older persons.

SELECTION
A selection system is a set of successive “screens”, at any of which an
applicant may be dropped from further consideration.

1. Preinterview screening & preliminary interview- eliminating

obviously unqualified applicants, thus saving the time of interviewers
& applicants
2. Formal Application form- is filled out after a preliminary interview
indicated that a job candidate has promise as a company salesperson
3. The interview- patterned, nondirective, interaction, rating scale
interviews.
4. References- present or former employers, former customer, reputable
citizens, mutual acquaintances.
5. Credit checks- checks are made on all aspects of the applicant’s
behaviour, non financial as well as financial.
6. Psychological tests- tests of ability, tests of habitual characteristics,
interest tests, achievement tests
7. Physical examination

SALES TRAINING

1. DEFINING TRAINING AIMS- identifying initial training needs

based on job specification, trainee’s background & experience and
sales related marketing policies and identifying continuing training
needs.
2. DECIDING TRAINING CONTENT- product data, sales techniques,
markets, company information.
3. SELECTING TRAINING METHODS- the lecture, personal
conference, demonstrations, role playing, case discussion, impromptu
discussion, gaming, on-the-job training, programmed learning,
correspondence course.
4. ORGANIZATION FOR SALES TRAINING- Who will be the
trainees?, Who will do the training?(initial sales training, continuing
sales training, sales training staff, training the sales trainers, outside
experts), When will the training take place? Where will the training
 site be? Instructions materials and training aids (manuals, printed
materials, training aids, advance assignments).
5. EVALUATING SALES TRAINING PROGRAMS

MOTIVATION

Motivation is goal-directed behaviour, underlying which are certain needs or

desires. Sales team needs to be motivated through:

• Inherent nature of the sales job

• Salesperson’s boundary position & role conflicts
• Tendency toward apathy
• Maintaining a feeling of group identity
• Needs gratification
• Leadership style
• Communication patterns

COMPENSATION OF SALES PERSONNEL

Devising a sales compensation plan

1. Define the sales job

2. Consider the company’s general compensation structure
3. Consider compensation patterns in community & industry
4. Determine compensation level
5. Provide for the various compensation elements
6. Special company needs & problems
7. Consult the present sales force
8. Reduce tentative plan to writing and pretest it
9. Revise the plan
10.Implement the plan and provide for follow up

Types of compensation plans

• Straight salary plan

• Straight Commission plan
 • Combination salary and incentive plan
• Bonuses
• Fringe benefits

CONTROLLING SALES PERSONNEL: EVALUATING &

SUPERVISING

QUANTITATIVE PERFORMANCE STANDARDS

• QUOTAS- a quota is a quantitative objective expressed in absolute

terms and assigned to a specific marketing unit. They can be for sales
volume, gross margin, net profit, expenses, performance of non
selling activities, etc.
• SELLING EXPENSE RATIO- comparison of selling expense to sales
volume so as to draw a sound picture of the productivity of the sales
person.
• TERRITORIAL NET PROFIT OR GROSS MARGIN RATIO- target
ratios of net profit or gross margin to sales for each territory focus
sales personnel’s attention on the needs for selling a balanced line and
for considering relative profitability.
• TERRITORIAL MARKET SHARE- controls market share on a
territory-by-territory basis
• SALES COVERAGE EFFECTIVENESS INDEX- controls the
thoroughness with which a salesperson works the assigned territory.
• CALL FREQUENCY RATIO- calculated by dividing the number of
sales calls on a particular class of customers by the number of
customers in that class. By establishing different call frequency ratios
for different classes of customers, management directs selling efforts
to those accounts most likely to produce profitable orders.
• CALLS PER DAY- in consumer product fields, where sales personnel
contact large number of customers, it is desirable to set a standard for
the number of calls per day.
• ORDER CALL RATIO- measures the effectiveness of sales personnel
in securing orders. Calculated by dividing the number of orders
secures by the number of calls.
• AVERAGE COST PER CALL- to make profitable calls, average cost
per call is calculated.
 • AVERAGE ORDER SIZE- it controls the frequency of calls on
different accounts depending on their order size.
• NON SELLING ACTIVITIES- activities like obtaining dealer
displays, cooperative advertising contracts, training distributors’
personnel, goodwill calls on distributors’ customers.

QUALITATIVE PERFORMANCE CRITERIA

• Effectiveness in handling customer relations problems

• Product knowledge
• Punctuality
• Dress & appearance
• Cooperation
• Reliability
• Adaptability
• Sales skills
• Self organization
•

SALES FORCE REPORTS FOR EVALUATING ACTUAL

PERFORMANCE

• Progress or call report

• Expense report
• Sales work plan
• New business or potential new business report
• Report of complaint and/or adjustment

SALES BUDGET

It details who is going to sell how much of what during the operating period,
and to which customers or classes of trade. Sales budget is then a projection
of what a given sales program means in terms of sales volume, selling
expenses and net profits.
Kinds

• Selling expense budget- includes those costs directly attributable to

the selling process e.g sales personnel salaries and commission, sales
expenses and training.
• Advertising budget- directly attributable to various kinds of
advertising.
• Administrative budget- incurred in running the sales office

QUOTAS

Quotas are quantitative objectives assigned to sales organizational units-

individual sales personnel as standards for appraising selling effectiveness,
quotas specify desired performance levels for sales volume; such budgeted
items as expenses, gross margin, net profit and return on investment; selling
and non selling related activities.

OBJECTIVES IN USING QUOTAS

• To provide quantitative performance standards

• To obtain tighter sales and expense control
• To motivate desired performance
• To use in connection with sales contests

TYPES OF QUOTAS

I. SALES VOLUME QUOTAS- managements’ expectations as to

“how much for what period”. Sales volume quotas are set for
geographical areas, product lines, or marketing channels. Like
dollar sales quotas, unit sales volume quotas, point sales volume
quotas

Procedure for setting sales volume quotas

 • Derived from territorial sales potentials
• Derived from total market estimates
• Based on past sales experience alone
• Based on executive judgment alone
• Related only to compensation plan
• Letting sales personnel set their own sales volume quotas

II. BUDGET QUOTAS- to control expenses, gross margin or net

profit
III. ACTIVITY QUOTAS- desire to control how sales personnel
allocate their time and efforts among different activities. E.g total
sales calls, calls on particular classes of customers, calls on
prospects, number of new accounts, missionary calls, product
demonstrations, placement or erection of displays, making of
collection, etc.

SALES TERRIORIES

Sales personnel are assigned the responsibility for serving particular

groupings of customers and prospects and provide contact points with the
markets. Territorial assignments lend direction to the planning and control of
sales operations.

Reasons for establishing or revising sales territories

• Providing proper market coverage

• Controlling selling expenses
• Assisting in evaluating sales personnel
• Contributing to sales force morale
• Aiding in coordination of personal selling & advertising

Procedures for setting up or revising sales territories

Step 1: Selecting a basic geographical control unit

Step 2: Determining sales potential present in each control unit

Step 3: Combining control units into tentative territories

Step 4: Adjusting for differences in coverage difficulty and redistricting

tentative territories

a. Determine number, location and size of customers and

prospects in each tentative territory.
b. Estimate time required for each sales call
c. Determine length between calls, that is the amount of time
required o travel from one customer to the next.
d. Decide call frequencies
e. Calculate the number of calls possible within a given period.
f. Adjust the number of calls possible during a given period by the
desired call frequencies for he different classes of customers
and prospects.
g. Finally, check out the adjusted territories with sales personnel
who work or who have worked in each area, and make further
adjustments as required.

SALES CONTROL AND COST ANALYSIS

SALES AUDIT

A sales audit is a systematic and comprehensive appraisal of the total selling

operation. It appraises integration of the individual inputs to the personal
selling effort and identifies and evaluates assumptions underlying the sales
operation. More specifically, a sales audit is a systematic, critical and
unbiased review and appraisal of the basic objectives and policies of the
selling function and of the organization, methods, procedures, and personal
employed to implement those policies and achieve those objectives.

A sales audit uncovers opportunities for improving the effectiveness of the

sales organization. An audit identifies strengths and weaknesses- strengths
have potential for exploitation, weaknesses have potential for improvements.
SALES ANALYSIS

Sales analysis is a detailed study of sales volume performance to detect

strengths and weaknesses. Through this, management seeks insights on
strong and weak territories, high volume and low volume products, and the
types of customers providing satisfactory and unsatisfactory sales volume.

SALES COST ANALYSIS

The first step in sales cost analysis is sales analysis by territories, sales
personnel, products, class of account, size of order, marketing channels, etc.
the next step is to break down and assign selling expenses by sales
territories.

The questions which it seeks to answer are Which sales territories are
profitable and which are not? What are the profit contributions on individual
sales personnel? What is the profitability of the different products? What is
the minimum size of a profitable account? etc, etc.