13.

701 PRINCIPLE OF MANAGEMENT

AND DECISION MODELING
 MODULE III
Sales management: objectives and function - marketing: concepts, market
segmentation marketing mix-product life cycle. Forecasting of demand –
different - methods (simple problems).
Decision making-types of decisions-the decision making process - decision tree
– linear programming and its application in management, transportation and
assignment problems.
SALES MANAGEMENT
 SALES MANAGEMENT
• Defined by
• American marketing association — is planning, direction and control of personal selling
including recruiting, selecting, equipping assigning, routing, supervising, paying and
motivating as these task apply to personal sales force.
• Sales managers are responsible for organizing the sales effort, both within and outside
their companies.
• Within the company the sales manager builds formal and informal organizational
structures that ensure effective communication not only inside the sales department but
in its relations with other organizational units.
• Outside the company, sales manager serves as a key contact with customers and other
external publics and is responsible for building and maintaining an effective distribution
network. Sales managers have still other responsibilities.
 OBJECTIVES OF SALES MANAGEMENT
• From the company view point, there are three general objectives of sales
management
• Sales volume
• Contribution to profits (profitability)
• Continuing growth
• market share
• corporate-image
• Sales executives, of course do not carry the full burden in the effort to reach these
objectives, but they make major contributions.
• Top management has the final responsibility, because it is accountable for the
success a failure of entire enterprise.
 IMPORTANCE OR FUNCTIONS OF SALES
MANAGEMENT
• (I) to enable the top-management, to devote to more time in policy making for the growth
and expansion of business.
• (Ii) to divide and fix authority among the sub-ordinates so that they may shirk work.
• (Iii) to avoid repetition of duties and functions so that there may not be any confusion
among them.
• (Iv) to locate responsibility of each and every employee so that they can complete the
whole work in stipulated time; if not then the particular person must be responsible.
• (V) to establish the sales-routine in the business unit.
• (Vi) to stimulate sales-effort.
• (Vii) to enforce proper supervision of sales-force
 THE FOUR SALES CHANNELS

• Over-the-counter selling: personal selling conducted in retail and some wholesale

locations in which customers come to the seller’ place of business
• Field selling: sales presentations made at prospective customers’ homes or businesses
on a face-to-face basis
• Telemarketing: promotional presentation involving the use of the telephone on an
outbound basis by salespeople or on an inbound basis by customers who initiate calls to
obtain information and place orders
• Inside selling: performing the functions of field selling but avoiding travel-related
expenses by relying on phone, mail, and electronic commerce to provide sales and
product service for customers on a continuing basis
MARKET SEGMENTATION
 MARKET SEGMENTATION
• The market segmentation is mentioned as being one of the key elements of modern marketing
and is, the process of dividing the market into several groups and/or segment(s) based on
factors such as demographic, geographic, psychological and behavioral factors.
• By doing so the marketers will have a better understanding of their target audience and
thereby make their marketing more effective
• This is due to the fact that by using the analytical process that puts customers first, the
marketer will get more satisfied customers and thereby gain a great advantage over
competitors. Market segments can be characterized in different ways. One way is to
characterize the preferences of the target customers; homogeneous preferences, referring to
customers that roughly have the same preferences.
• Secondly there are diffused preferences which mean that the customers vary in their
preferences and finally clustered preferences which mean that the natural market segments
emerge from groups of consumers with shared preferences
• 1. Demographic segmentation
• The demographic segmentation divides customers into segments based on demographic
values such as age, gender, family size, family life cycle, income, occupation, education,
religion, race, generation, social class and nationality
• Age and life-cycle segmentation
• The consumer’s needs and wants change with age. Therefore some companies use age and
life-cycle segmentation, where age and the life-cycle determine the marketing approach.
• Gender segmentation
• Gender segmentation is used to differentiate the needs and wants between men and
women due to the fact that men and women have different attitudes toward a product. The
gender segmentation has long been applied in connection with clothing, hairstyling,
cosmetics and magazines.
 • Income segmentation
• Income segmentation divides the market into different income groups. It is used in
automobiles, clothing, cosmetics, financial services and travel. Many companies within the
mentioned categories seek to target the high-income customers.
• Generation segmentation
• Each generation is influenced by the times in which they grow up i.E. The music, the
movies, politics and other significant events characteristic of that period.
• Social class segmentation
• Social class segmentation divides the customers according to their preferences in cars,
clothing, home furnishings, leisure activities, reading habits and retailers
• 2. Geographic segmentation
• The geographic segmentation divides customers into segments based on geographical
areas such as nations, states, regions, counties, cities or neighborhoods. A company can
target one or more areas and must be aware of the fact that data according to geographic
segmentation may vary due to population shift
• 3. Psychographic segmentation
• The psychological variables derive from two principal types of customer; personality
profiles and lifestyle profiles (psychographics). Psychological profiles are often used as a
supplement to geographic and demographics when these does not provide a sufficient
view of the customer behaviour.
• 4. Behavioural segmentation
• Behavioural segmentation is based on the customers’ attitude toward, use of, or
response to a product.
MARKETING MIX
 MARKETING MIX
• Marketing involves a number of activities. To begin with, an organization may decide on its
target group of customers to be served.
• Once the target group is decided, the product is to be placed in the market by providing
the appropriate product, price, distribution and promotional efforts.
• These are to be combined or mixed in an appropriate proportion so as to achieve the
marketing goal. Such mix of product, price, distribution and promotional efforts is known
as ‘marketing mix’.
• According to philip kotler “marketing mix is the set of controllable variables that the firm
can use to influence the buyer’s response”. The controllable variables in this context refer
to the 4 ‘p’s [product, price, place (distribution) and promotion].
• Product : product refers to the goods and services offered by the organization
• Simple words, product can be described as a bundle of benefits which a marketer offers to
the consumer for a price
• Price: price is the amount charged for a product or service. It is the second most
important element in the marketing mix. Fixing the price of the product is a tricky job.
Many factors like demand for a product, cost involved, consumer’s ability to pay, prices
charged by competitors for similar products, government restrictions etc
• Place: goods are produced to be sold to the consumers. They must be made available to
the consumers at a place where they can conveniently make purchase

• Promotion: if the product is manufactured keeping the consumer needs in mind, is

rightly priced and made available at outlets convenient to them but the consumer is not
made aware about its price, features, availability etc, its marketing effort may not be
successful.
PRODUCT LIFE CYCLE
 PRODUCT LIFE CYCLE
• A product has a life of its own and goes through cycles. Although different products have
different types of life cycles, the traditional product life cycle for most products is shown
in figure
• Introduction stage
• This stage involves introducing a new and previously unknown product to buyers. Sales are small,
the production process is new, and cost reductions through economies of size or the experience
curve have not been realized.
• The promotion plan is geared to acquainting buyers with the product. The pricing plan is focused
on first-time buyers and enticing them to try the product.
• Growth stage
• In this stage, sales grow rapidly. Buyers have become acquainted with the product and are willing
to buy it. So, new buyers enter the market and previous buyers come back as repeat buyers.
• Production may need to be ramped up quickly and may require a large infusion of capital and
expertise into the business. Cost reductions occur as the business moves down the experience
curve and economies of size are realized. Profit margins are often large.
• Competitors may enter the market but little rivalry exists because the market is growing rapidly.
Promotion and pricing strategies are revised to take advantage of the growing industry.
• Mature stage
• In this stage the market becomes saturated. Production has caught up with demand and demand
growth slows precipitously. There are few first-time buyers. Most buyers are repeat buyers.
• Competition becomes intense, leading to aggressive promotional and pricing programs to capture
market share from competitors or just to maintain market share. Although experience curves and
size economies are achieved, intense pricing programs often lead to smaller profit margins.
• Although companies try to differentiate their products, the products actually become more
standardized.
• Decline stage
• In this stage buyers move on to other products and sales drop. Intense rivalry exists among
competitors.
• Profits dry up because of narrow profit margins and declining sales. Some businesses leave the
industry. The remaining businesses try to revive interest in the product.
• If they are successful, sales may begin to grow. If not, sales will stabilize or continue to decline.
FORECASTING
 FORECASTING
• Forecasting is a process of estimating a future event by casting forward past data.
The past data are systematically combined in a predetermined way to obtain the
estimate of the future.
• Prediction is a process of estimating a future event based on subjective considerations
other than just past data; these subjective considerations need not be combined in a
predetermined way.
• Thus forecast is an estimate of future values of certain specified indicators relating to a
decisional/planning situation, in some situations forecast regarding single indicator is
sufficient, where as, in some other situations
• Forecast regarding several indicators is necessary. The number of indicators and the
degree of detail required in the forecast depends on the intended use of the forecast.
 SOME APPLICATIONS OF FORECASTING

• Sales forecasting
• Forecasting the need for raw materials and spare parts
• Forecasting economic trends
• Forecasting staffing needs
• Forecasting in education environment
• Forecasting in a rural setting
GENERAL STEPS IN THE FORECASTING PROCESS

• The general steps in the forecasting process are as follows:

• 1) identify the general need
• 2) select the period (time horizon) of forecast
• 3) select forecast model to be used:
• 4) data collection:
• 5) prepare forecast:
• 6) evaluate: