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a) Age-old technology.
b) Lack of skilled workforce.
2. After Industrial Revolution by virtue of improved technology manufacturers were able to produce large quantities of
goods. The earlier situation changed i.e. supply was greater than demand.
3. These necessitated the need for selling & market expansion as the local & nearby markets were not able to absorb the
excess quantity of goods. For market expansion you need to have your own set up which includes land, building,
machinery, workers & capital to raise the same.
4. This led to corporate form of business wherein separate functional departments were established.
Sales Management: -
Definition: -
“Sales Management is the planning, direction, & control of personal selling, including recruiting, selecting, equipping,
assigning, routing, supervising, paying & motivating, as these tasks apply to the personal sales force.”
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3. Continuing growth
Major functions of Sales Management: -
a) Selection of sales force
b) Training of sales force
c) Motivating the sales force [[
Personal selling
Personal Selling: -
Personal selling is a method of communication, wherein a salesperson communicates on an individual basis with a
prospect.
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Salesmanship: -
It is an art of successfully persuading prospects or customers to buy products or services form which they can derive
suitable benefits which in turn will increase their total satisfaction.
Being one of the elements of Promotion Mix the exact role of Personal Selling is determined by Marketing Management
in consultation with Sales Management.
Marketing planners sets personal selling objectives, determines sales related marketing policies, formulates personal
selling strategies & finalises the sales budget.
1) Qualitative objectives
2) Quantitative objectives
Qualitative Objectives: -
Qualitative objectives are generally carried over from one period’s promotional program to the next. On the basis of
company objectives following qualitative objectives may be assigned;
1) To do the entire selling job if there are no other elements of promotion mix.
2) To service existing customers i.e. maintain contacts with present customers, take orders & so on.
3) To search out & obtain new customers.
4) To secure & maintain customers’ co-operation in stocking & promoting the product lines.
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5) To keep customers informed on changes in the product line & other aspects of marketing strategies.
6) To assist customers in selling the product line
7) To provide technical advice & assistance to customers in case the product is complex in nature & tailor made. E.g.
Personal Computers.
8) To assist with the training of middlemen’s sales personnel.
9) To collect & report market information related to the company’s interests.
Quantitative objectives: -
Quantitative objectives are short term & adjusted from one promotional period to another. Quantitative objectives are either
related or derived from sales volume objective. They are as following;
• Sales potential: - it is an estimation of maximum sales opportunities present in a particular market segment open to a
specified company during stated future period.
• Sales forecast: - It is an estimation of sales in terms of Rupees or Units in a future period under a particular
marketing programme & an assumed set of economic & other factors outside the unit for which the forecast is made.
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Analysing market potential: - following are the steps involved in this process;
2) Market motivation: - It includes finding out the motivating factors which led to the buying decisions of existing
customers & potential customers. In simple words it includes finding out answers to following questions
Answers to these questions helps in estimating market potential & assists the sales executive in increasing the
effectiveness of promotional programmes.
3) Analysis of market potential: - The third logical step is to analyse the market potential. Generally market potential
cannot be analysed directly, so analysis makes use of market factors (market features or characteristics related to the
product’s demand. E.g. no of males reaching an age where they start shaving.)
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Recruiting & Selecting sales personnel
What is Recruitment?
Recruitment is finding potential job applicants, telling them about the company & getting them to apply. Through this
process the employer tries to find out applicants who are having potential to be a good employee, as the entire Sales
Organisation depends on a successful recruiting approach.
Process of Recruitment: -
Interviewing
Selection
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1) Preparation of Job description & specification: - at this stage following factors should be kept in mind;
Personal specifications: -
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• Recruiting Budget: -
• Legal Considerations.
3) Inviting applications & short listing.
4) Interviewing.
5) Selection: - The selection process includes following steps;
• Initial screening interviews: - it varies from company to company depending on the size of the
company, the number of sales persons required etc.
Purpose: - to eliminate undesirable recruits. It may start with application form which consists of
details like qualifications, experience, personal interview or test.
• Group discussions
• Final interview
• Reference check.
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Building sales training programmes: -
Building sales training programmes requires decision making related to training aims, content, training methods and
execution of training programmes & evaluation procedures.
In order to operationalise these general aims it needs to be converted into specific aims, which derives from training needs.
Identification of Initial Training Needs: -
While determining the initial training needs following factors needs to be analyzed;
a) Job specifications.: - It helps in identifying the areas where new personnel requires training like;
• Time Management
• Approaches to selling etc.
b) Trainee’s background & experience: - The gap between qualifications in the job specifications & the trainee’s
qualifications decide the nature & amount of training required..
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Identification of Continuing Training Needs: -
Determining the specific aims for continuing sales training programme necessitates, identification of specific training needs
of experienced sales personnel which arises due to
1) Product knowledge.
2) Sales Techniques.
3) Market
4) Company information.
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Sales Training Methods: -
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Motivating Sales Personnel:-
What is Motivation?
• Motivation is nothing but a driving force, which induces a person to put in efforts for achieving the set
targets.
Importance of Motivation: -
• Financial performance depends upon the achievement of sales volume objective.
• Very few sales persons are confident, ambitious & self motivated.
• Majority of the sales persons are not adequately motivated, hence they require encouragement & incentives
from the management to achieve the set targets.
Motivational Mix: - Elements of motivational mix are as following;
• Financial rewards/ Compensation.
a) Salary.
b) Commission.
c) Bonus.
d) Fringe benefits/ perquisites.
e) Combinations.
f) Sales Contests.
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a) Promotion.
b) Sense of accomplishment.
c) Personal Growth Opportunities.
d) Recognition.
e) Job security etc.
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Designing & administering Compensation Plan:-
• Financial Compensation: -
a) Promotion.
b) Sense of accomplishment.
c) Personal Growth Opportunities.
d) Recognition.
e) Job security etc.
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Developing & Managing Sales Evaluation Programme: -
Objectives of Sales force Evaluation & Control –
• It helps in improving sales person’s performance by identifying the causes of unsatisfactory performance.
• It helps in decision making in regard to increments, incentives & attrition etc.
• It helps in identifying the salespeople who deserve promotion by virtue of their performance.
• It helps in determining the training needs of individual salespersons & the entire sales force.
1) Set policies on performance evaluation & control: - In this stage the Management establishes the basic
policies regarding –
a) Frequency of evaluation: - E.g. yearly, half yearly, quarterly, monthly & weekly etc.
b) Evaluating Authority: - Who will evaluate the performance?
c) Management by Objectives: -
d) Sources of information: - like reports, supervisory calls, customer letters & complaints/ feedback.
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2) Decide the bases of salespersons’ performance evaluation: -
6) Review performance evaluation with sales people: - The Sales Manager conducts a review session with
every salesperson on a predetermined day, date & time. In this session;
• Salesperson reviews his/ her own performance in accordance with the set standards.
• Sales Manager reviews the evaluation of each criterion. & summerises the total performance
evaluation.
• Immediately after the evaluation session is over the Sales Manager communicate to the salesperson
about the performance evaluation results & the objectives for the future period.
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Designing & Allocating Sales Efforts
• Sales Territory is a territory or a market which is made up of present & potential customers rather
than a geographical area.
• But generally a salesperson is assigned to a geographical area consisting of present & potential
customers.
• A well designed Sales territory allows sales persons – i) to spend sufficient time with present &
potential customers which improves market coverage, ii) to win over competitor’s customers
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• By having a well designed Sales Territories the sales persons spend less time in moving from one
place to another, fewer nights away from home, which in turn leads to reduction in the traveling cost,
lodging & boarding expenses
1) Select a Control Unit: - This is the first step in the designing of sales territory which is used for
territory analysis. Commonly used Control Units are States, Metros, Cities and Districts etc.
2) Find location & potential of customers: - The next step is to find location & sales potential of present
& prospective customers in each control unit.
3) Decide basic territories by using either Build up method or Break down method
• Build up Method: - This method helps in matching/ equalizing the work load of
salespeople with Sales Territory. Generally it is used by manufacturers of consumer
products & services who want intensive distribution.
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d) Make tentative territories.
e) Develop final territories.
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District X: - Number of Calls per Year = Column 2 * Column 3 * 12
• Breakdown Method: - This is another method by which Sales Territories can be designed.
Generally it is used by manufacturers of industrial products who want either selective or
exclusive distribution.
The Sales Manager estimate the sales potential for the total market by using sales forecasting
methods.
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In order to forecast or estimate the sales potential the Sales Manager multiplies the total sales potential
of the company by Multiple Factor Buying Index of each control unit.
Multiple Factor Buying Index- It shows the major factors that influence the sales of a product or
service.
Estimation of sales potential for each control unit is explained with the help of following example.
E.g. – A company manufacturing & marketing premium bathing soaps all over India wants to find out
market potential for this kind of soaps in all major cities including Pune. The major factors that
influence sales of the said product are,
• Population
• Personal Income&
• Retail Sales.
The Sales Manager has given weights to these factors 40%, 30%, 30% respectively. In case of Pune, it has
7% of India’s population, 1% of India’s disposable income & 9 % of India’s retail sales. Then the Multiple
Factor Buying Index Pune would be;
Based on the premium bathing soap industry forecast of Rs. 55 Crores for the year 2006-2007, the sales
potential for Pune would be 0.058 % of Rs. 55 Crores, i.e. Rs. 3.19 Crores for the year 2006-2007.
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c) Estimate the sales volume expected from each salesperson: -
In this stage, the Sales Manager estimates the sales to be generated by individual salespersons in order to
Ensure profitable operation. While doing so, the Sales Manager has to consider factors like cost of goods
Sold & expected profit.
After the designing of sales territories, the Sales Manager allocates salespersons to each sales territory.
While doing so the Sales Manager should consider two criteria namely;
1) Relative ability of a Salesperson: - It is based on key factors like, product & market
information, past performance, ability in verbal & written communication & selling
skills.
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E.g. A Salesperson who is born & brought up in urban area will find it difficult to deal
with the customers from rural area. But on the other hand if a sales person who is born &
brought up rural area will find it very comfortable in dealing with the customers from
rural area as he is well versed with the local language & customs of the territory.
Routing: -
Advantages of routing: -
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• Improved territorial coverage.
• Better communication between Sales Manager & salespersons.
Routing Patterns: -
• Straight Line + Hopscotch: - In this type , the sales person starts from office or home base & makes
calls in one direction. This can be combined with Hopscotch pattern wherein a salesperson starts at
the farthest point from home or office base & makes sales calls on the customer way back to home or
office.
Base
C1
111
C4 C3 C2
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C- Customer
• Circular route pattern: - In Circular route pattern a sales person starts from his base & moves in a
circle, making sales calls ending at home base or office.
Base
• Clover Leaf: - In clover leaf pattern the first route covers a part of the territory, in next trip a
salesperson covers the adjoining circle & continues till the entire territory is covered.
North
South
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Sales Organization: -
What is Organization?
“It is the process of identifying & grouping work to be performed, defining & delegating responsibility,
authority & establishing relationships for the purpose of enabling people to work most effectively, together
in accomplishing objectives.”
A sound sales organization crystallizes the relationships between people in the organization, in
terms of authority responsibility and accountability. In other words Sales Organization clearly
defines the flow of instructions, indicate where responsibility lies & who is accountable to whom.
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• Provides insight into avenues of advancement
The personnel in the sales department look at the organizational structures as one of the indications
of the direction in which their future careers may grow. A good use of the organization chart may
be made by the management, in communicating to the subordinates, the possible avenues of
growth. In short the organization chart depicts the normal promotion route to the subordinates.
As operations and activities in the sales department increase in number and complexity, delegation of
authority becomes imperative. A sound organization design allows effective use of specialization so
that executive may spend less time in operations and more on planning.
In other words organization provides a framework within which sales managers & salespersons are able to
discharge their duties efficiently & effectively as it clearly defines which task should be carried out by
whom.
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Basic concepts of sales organization: -
1. Degree of centralization.
2. Degree of specialization.
3. Line & staff positions.
4. Span of control.
Types of Sales Organization
1) Line Sales Organization: -
V.P. Marketing
G.M. Manager
Sales
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+
1) Overburdened authorities: -
2) Lack of time for sales planning & analysis: -May lead to inefficiency: -
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