Ch-01 (Sales Management Strategy)

Block: Basics of Sales Management
Ch-1
Sales Management Strategy
Introduction
Sales management is defined as 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 sales force.
Definition Committee of the American Marketing Association.
Sales force is responsible for the sale of products of a company and to add
profit to the business operations and fulfill social obligations. Sales force
should be hardworking, result oriented, well educated and competent to
handle changing situations. Technical developments which are taking place
at a rapid speed have made the task of sales force more challenging.
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1-1
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Nature and Importance of Sales Management
Sales management helps to achieve the organizational objectives.
The main objectives of sales management is that products should be

sold at that price which realizes profits.
Buyers and sellers both have same types of business relationships.

This
relationship is based on exchange of goods, services and money.
Sales person develops a positive relationship with the customers. The

role of sales team is interdependent and success of one team member
depends on
the other.
The sales team continuously monitor the customer preference,

competitors
situation, government policy and other regulatory bodies.
Cont
.
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Relationship-based selling
Relationship-based selling works because people would rather buy
what they
need to buy anyway from those they have come to relationship.
Relationship-based selling means doing business in such a way that
company is worthy of the customer's trust.
Relationship selling is mainly personal not institutional, and buying is
heavily personal as well.
It is not selling centric. It's buyer-based.
The objective of relationship selling is to help the buyer do the right
thing for
the buyer.
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Managing the Sales Force

Successful sales force management means:
The right organisation and aggregation against product lines and
geographies.
The right strength and qualification.
The right compensation and incentive system.
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Ch-1
Steps in Designing and Managing a Sales Force

1.
Objective Setting
2.
Training for Sales Policies
3.
Designing Sales Force: Structure and Size
4.
Deciding Sales Force Compensation
5.
Recruiting and Selecting Sales Force
6.
Guiding and Motivating Sales Force
7.
Performance Rating of Sales Force
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Ch-1
Sales Managers Duties and Responsibilities

The sales manager is the most important person in a sales organisation. All
activities are based on his functions and responsibilities. The following are
some of the principal duties of a sales manager:
1.
Organising sales research, product research, etc.
2.
Getting the best output from the sales force under him.
3.
Setting and controlling the targets, territories, sales experiences,
distribution expenses, etc.

4.
Advising the company on various media, sales promotion schemes, etc.
5.
Monitoring the companys sales policies.

Cont
.
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In the table that follows, Al Reid gives the steps necessary for getting
success in selling:
Territory Sales Managers Job Responsibilities
To yourself
Increase basic selling skills.
Develop management
abilities.
Keep pace with changes,
trends and developments in
your territory.
Study the latest products,
promotion policies and
procedures.
Be alert to new sales and
merchandising ideas.
To your company
Be proud of your association
with your company.
Maintain the company
standing and standards with
all customers.
Inform the headquarters and
your supervisors, through
established channels, about
changes and developments in
your territory.
Be prompt in handling
records, reports,
correspondence, etc.
To your customers
Work closely with decisiontakers and influencers in each
account.
Point out the advantages of
an association with your
company.
Keep accounts current and
up-to-date on all company
advertising and promotional
activities.
Suggest ideas, methods,
techniques and tips that can
stimulate sales.
Cont
.
1-7
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Ch-1
Grow, so that you can

assume greater
responsibilities as
opportunities permit.
Cut selling costs by

economical routing, good use
of time, planning and greater
awareness of opportunity.
Maintain the appearance and

goodwill expected of a
territory sales manager.
Check demand and

movement of products in the
territory.
Analyse your weak and strong

points and then think about
them.
Report activities of the

competitors.
Strive to reach the best goals.
Ask for help, when you need
it.
Cooperate with other
departments of the company.
Inform the customers about

the trends in their areas.
Handle complaints effectively
and to the complete
satisfaction of the
complainants.
Suggest the best technique
for selling your products to
the customers.
Organise presentations to
inform and save time.
Make the customers aware of
the changes in the companys
policies or procedures.
Stimulate and maintain
enthusiasm for your
products. Build and maintain
goodwill.
Cont
.
1-8
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Ch-1
Problems of Sales Management

1.
Designing and Managing Sales Force

Actual supervision of, and guidance to, individual salesmen is also a
sine
1.
qua non of a sound sales manager.
Sales Force Authority

sales
force
requires
delegation
of
authority
with
respect
to
the following:
Changing or fixing prices
Credit facilities to old and existing customers
Assurance regarding quality and after-sale service
Payment terms and settlement of claims.
1-9
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Cont
.
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Ch-1
1.
Target-setting
Sales targets are fixed on the basis of past experience, time period and
brand positioning in the market. The targets should be fixed in such a
manner that they are achievable.

1.
Sales Forecasting
Sales forecasts must change as conditions change. Accuracy depends
on meticulous planning and dynamic strategies.
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Ch-1
Sales Management Formulation of Sales Strategy

The following are key decision areas in sales management which are
particularly relevant to strategy formulation:
Determining the size of the sales force
1-11
Decision regarding type and quality of sales force required
Designing the sales organisation
Territory designing
Recruitment and training procedures
Task allocation
Compensation of sales force
Performance appraisal and control system
Feedback mechanism to be adopted
Managing channel relationships
Coordination with marketing departments.
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Ch-1
Different Sales Strategies

Relationship Strategy
In this strategy, a major key to success in selling is the ability to
establish
working relationships with customers in which mutual support,
trust and
goals are nurtured over time.
and
The sales force that builds effective relationships with the customer
provides valuable service are usually high performers and top
achievers.
Cont
.
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A Selling Partner
A Selling Partner
P
Prepares strategically for a long-term, high-quality relationship that
P
Prepares strategically for a long-term, high-quality relationship that
solves customers problems.
solves customers problems.
A Asks questions to get on the customers agenda.
A Asks questions to get on the customers agenda.
R Restates customer needs with confirmation questions.
R Restates customer needs with confirmation questions.
T
Teams with support people to provide the customer with solutions.
T
Teams with support people to provide the customer with solutions.
N Negotiates double-win solutions with joint decision making.
N Negotiates double-win solutions with joint decision making.
E
Exceeds customer expectations whenever possible.
E
Exceeds customer expectations whenever possible.
R Re-examines the ongoing quality of the relationship frequently.
R Re-examines the ongoing quality of the relationship frequently.
In this model, a customer is treated as a partner. Therefore, maintaining a

good relationship with the customer is important.
Cont
.
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The Double-Win Strategy
In this strategy, both the customer and the salesperson come out of the
sale
with a sense of satisfaction. The salesperson not only obtains the
order but
future
sets the stage for a long-term relationship, repeat business and
referrals.
They both come out of the sale feeling satisfied, knowing that neither
has
taken advantage of the other and that both have profited,
personally and professionally, from the transaction.
However, some salespeople have still not accepted the merits of the
win-win
approach. They have adopted a win-lose approach which
means that the salesperson wins at the buyers expense.

Cont
.
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Win Lose approach vs. Win Win attitude

The starting point to the development of a double-win philosophy is to
compare the behaviour of persons who have adopted the win-lose
approach with that of persons who have adopted the win-win approach
(Figure).
Double-Win Strategy
Win - Lose People
Win - Win People
See a problem
Help others solve their problem
Fix the blame
Fix what caused the problem
Let life happen to them
Make life a joyous happening for others

and themselves
Live in the past
Learn from the past, live in the present

and set goals for the future
Make promises they never keep
Make commitments to themselves and

to others and keep both of them
Cont
.
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Ch-1
Instant Service
It is in this context of providing almost instant service to the
customer that the concept of supply chain management has caught the
imagination of managements the world over.
No matter how efficiently and effectively goods/services are produced,
if they cannot be delivered to the customer in the quickest possible time,
all efforts made earlier are in vain, particularly in the context of very short
product life cycle counted in months rather than years.
As depicted in Figure below, a combination of effective process plus
supply chain management is what is required to cope with the challenges
of the international market-place.
One cannot survive in a highly competitive market without conforming
to the so called Q-C-D triangle Highest Quality, Lowest Cost and Least
Delivery
times.
Cont
.
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Ch-1
Simplified Model for Ensuring Customer Delight

After sales service
Unique selling
propositioning/brand
equity
Customer
Delight
SUPPLY CHAIN
management
Exceeding customer
expectations
On time delivery
Competitive price
Reliability of product
or service
PROCESS
management
Novelty/uniqueness
of product/service
leading to customer
loyalty and lasting
relationship
1-17
Cont
.
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Hard Sell Versus Soft Sell Strategy

Strategies for Identifying Customers
Hard Sell
Hard Sell
Concern for self
Concern for self
Canned presentation
Canned presentation
Talking
Talking
Pushing product
Pushing product
Presenting features
Presenting features
Advocating without acknowledging
Advocating without acknowledging
Soft Sell
Soft Sell
Concern for customer
Concern for customer
Questions for discussion
Questions for discussion
Listening
Listening
Providing buying opportunities
Providing buying opportunities
Presenting benefits
Presenting benefits
Acknowledging needs
Acknowledging needs
Cont
.
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Ch-1
Product-centered Selling and Client-centered Selling

Product-centred Selling
Client-centred Selling
1.
Seller puts in efforts for research and

development of product.
1.
Seller puts in efforts on research and

development of relationship with clients.
2.
Product centred selling emphasises

knowledge of product.
2.
Client centred selling emphasises

knowledge of client.
3.
Selling strategies and tactics tend to be

most influenced by past performances
of products and competition and present
situations.
3.
Strategies and tactics tend to be

directed more to considerations of
future growth and developments in the
clients world.
4.
Representative seeks to be accepted as

a reliable, credible source of information
and service.
4.
Representative strives to raise clients

expectations of personal excellence.
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Selling Process
The selling process is defined as a process by which a salesperson
identifies
and locates the prospects, separates the prospects from the
suspects
approaches them and makes a sales presentation, handles
their objections.
He also follows up the existing customers to identify
further sales leads and measures the success and customer satisfaction
level of the current products and service offerings.
Selling concept refers to the exchange of goods or services for an
amount of money or its equivalent in kind. Selling helps an organization
achieve its organizational goals. Thus, managing sales in an organization
is a critical activity. A sales manager needs to ensure that the salesman are
motivated to give their best performance.
The sales team continuously look out the changes taking place in the
external environment regarding competitors, customers, government policy
and other regulatory agencies, advances in technology, and industry
trends. This provides the sales personnel a vital information regarding
trends in
product sales, product development, and budgets.
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Cont
.
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Ch-1
The economic slowdown is receding and budgets of companies are

increasingly receptive to alternative direct marketing tools to sell their
products.
Telemarketing (TM), that is marketing products and services on the
telephone, a direct marketing tool, which has touched a high in the last
three
years.
Apart from professional TM service outfits, many companies, including
MNCs, have set up their in-house TM cells.
A TM outfit works through a well networked team of trained

telemarketers
who make calls to potential clients and customers and
establish direct contact with them. The key lies in convincing the customer
about the value of
the product or service and fixing up an
appointment.
Direct customer marketing system allows customers complete

flexibility to
purchase our products. Orders can be placed via the
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2010, S L
Cont
Internet, over the
phone, by mail, through our catalogue
orthrough
Gupta
.
the
company
personnel.
Excel Books
Sales and Distribution Management Text & Cases (2nd Edition)
S L Gupta
Ch-1
Mail Order Sales

Mail order houses are retail trading organisations engaged in the mail
order
business.
This is also known as carrying on business through post or mail. In this

method, customers do not visit the sellers business premises, nor do
they
make a personal examination of the goods before they are
purchased. In this
system, orders are received from customers by post
and the goods are
dispatched usually by VPP (Value Payable Parcel) or
registered post.
Cont
.
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In case of the mail order business, the selling function is performed without
the intervention of the personal salesman.
The goods should be known for their utility so that there is no need of
convincing prospective buyers about their usefulness.
They must fetch a sufficient price to have a wide profit margin.
They must command wide demand.
They must not be easily perishable.
They should be available in large quantities throughout the year.
Cont
.
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Ch-1
Sales through Large Scale Fixed Shop Retailers

Concentration of population in urban areas, increasing flow of
manufactured goods and improved methods of organising business have
led to the expansion of retail business. This expansion was effected in
different ways, giving rise to different types of retail establishments, which
operate on a large scale. More prominent among them are the following:
1-24
Departmental stores
Chain stores
Mail order houses
Hire purchase shops
Super markets
Fixed price shops
Cooperative stores
Cont
.
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Sales through Wholesalers and Retailers

Wholesalers perform a number of functions in the marketing of goods as
listed below
1-25
Assembling and buying
Storing or warehousing
Transporting
Financing
Risk-bearing
Grading, packing and packaging
Providing market information.
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Cont
.
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In the process of acting as a link between the wholesaler and the consumer,
a retailer performs many functions. The more important of them are given
below:
1-26
Buying and assembling
Warehousing or storing
Selling
Grading and packing
Financing
Supply of market information
Advertising.
Cont
.
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Ch-1
Direct Selling
Direct selling identifies the unfulfilled needs of ordinary customers.
Direct marketing companies have an advantage over conventional
marketers
starts
in that the relationship between the company and the customer
building even before a sale is made.
Lessons From Direct Selling
time
THE STRATEGY: Eureka Forbes structures its demos according to the

at the customers disposal.
The Lesson: Keep the process flexible enough to accommodate
individual
1-27
needs.
Cont
.
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How to Add Value Through Direct Selling

Create direct
selling
process
Identify the
customer
Make
appointment
with customer
Choose suitable
time for demo
and pitch
Ensure product
Performance
at demo
Close deal
quickly
Follow up sale
with prompt
service
Is the
process clearly
structured?
Yes
Ensure
increase in
customer value
Is salesman
empowered to be
flexible?
Yes
Yes
No
Cont
.
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THE STRATEGY: Modi Telstra uses a clearly structured sales call
process to
customers
time.
THE STRATEGY: Oriflame uses multilevel marketing to enlist direct
sales
market its cell phone services.
THE LESSON: Simplify the process of negotiation to save the
agents from its customer base.
THE LESSON: Use your customer to sell your product to other
customers.
THE STRATEGY: INDAL empowers its sales force to take pricing
decisions
on the spot when closing sales.
THE LESSON: Ensure that your direct seller can conclude a deal
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Ch-1
National Sales Manager

In carrying out these responsibilities, sales mangers do the following
things:
1.
Prepare sales plans and budgets
2.
Set sales force goals and objectives
3.
Estimate demand and forecast sales
4.
Determine the size and structure of the sales force organization
5.
Recruit, select and train sales people
6. Design sales territories, set sales quotas and define performance

standards
7.
Compensate, motivate and lead the sales force
8.
Conduct sales volume, cost and profit analysis
9.
Evaluate sales force performance
Cont.
10. Monitor the ethical and social conduct of the sales force.
1-30
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Sales Manager
Regional Manager Regional Manager Regional Manager Regional Manager Regional Manager
(North)
(South)
(East)
(West)
(Staff)
BM BM BM BM
BM BM BM BM
BM BM BM BM
BM BM BM BM
BM BM BM BM
Field Staff
Field Staff
Field Staff
Field Staff
Field Staff
Cont.
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Ch-1
Stand Points of Sales Representative

The stand points of sales representatives and the managers are as follows:
1.
To protect drastic fluctuations in income so that regular monthly
expenses for
home mortgage, food and utilities can be paid/balanced
without hardship.
2.
Expenses in direct relations to the amount of effort
3.
Earnings to be equitable in terms of experience, ability, cost of living.
Cont.
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Organization uses two types of compensations:

1.
Financial
2.
Non-Financial
Financial includes compensation, salary, incentives and fringe benefits.

Non-financial
includes
motivation
and
its
implications
to
sales
management.
But monetary compensation is one of the most direct and least ambiguous
ways of communicating to sales people about their performance.
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Ch-1
Reasons for Providing Financial Compensation

The compensation plan is undoubtedly to reward the salesman for his
performance. The plan includes.
1.
The plan should provide a regular income at least at minimum level. In

addition to this regular income, it should provide adequate incentive to
induce minimum performance from the salesman.
2.
3.
The plan should be simple and easy to understand for the salesman.
It should be economical and should induce competition amongst
salesman.
4.
It should be fair to both the sales force and management.

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Ch-1
Methods of Remuneration
The sales force can be remunerated in the following ways:
1.
A straight salary
2.
A straight commission on sales
3.
Salary and commission on sales
4.
Salary and commission on sales above a certain amount
5.
Salary and different rate of commission on varying totals or for different
types
6.
of goods
Salary and share in the profits

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Expenses Accounts
The major sales expenses accounts are categorized as follows:
1.
Salary accounts
2.
Commission accounts
3.
Bonuses
4.
Meals and entertainment
5.
Air travel
6.
Automobiles rentals
7.
Lodging
8.
Travel accounts
9.
Tour expenses accounts (Advance accounts)
10. Communication and services expenses accounts.

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Ch-1
Fringe Benefits
Types of fringe benefits are:
1.
Company Car
2.
Supplemental life insurance and medical insurance
3.
Tax-return preparation
4.
Personal tax and financial planning
5.
Low or no interest loans
6.
Deferred compensation
7.
Supplemental retirement benefits
8.
Air travel and First class A.C. for Train Travel
9.
Relocation allowance
Cont.
10. Stationary facilities

1-37
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1.
Laundry benefits, while on the tour
2.
Special perquisites for outstanding performance by getting travel

prizes
recognition for outstanding performance
3.
Medical expenses
4.
Special business associations membership
5.
Exclusive developmental programs by IIM, Ahmedabad, by Shiv

Khera,
etc.
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Block: Basics of Sales Management

Sales Management Strategy

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Nature and Importance of Sales Management

Sales management helps to achieve the organizational objectives.

The main objectives of sales management is that products should be

Buyers and sellers both have same types of business relationships.

Sales person develops a positive relationship with the customers. The

The sales team continuously monitor the customer preference,

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Relationship-based selling works because people would rather buy

need to buy anyway from those they have come to relationship.

Relationship-based selling means doing business in such a way that

company is worthy of the customer's trust.

Relationship selling is mainly personal not institutional, and buying is

heavily personal as well.

It is not selling centric. It's buyer-based.

The objective of relationship selling is to help the buyer do the right

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Managing the Sales Force

The right organisation and aggregation against product lines and

The right strength and qualification.

The right compensation and incentive system.

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Steps in Designing and Managing a Sales Force

Training for Sales Policies

Designing Sales Force: Structure and Size

Deciding Sales Force Compensation

Recruiting and Selecting Sales Force

Guiding and Motivating Sales Force

Performance Rating of Sales Force

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Sales Managers Duties and Responsibilities

Organising sales research, product research, etc.

Setting and controlling the targets, territories, sales experiences,

distribution expenses, etc.

Advising the company on various media, sales promotion schemes, etc.

Monitoring the companys sales policies.

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Sales and Distribution Management

Text & Cases

Block: Basics of Sales Management

Sales Management Strategy

Grow, so that you can

Cut selling costs by

Maintain the appearance and