SDM
SDM
SDM
FORCE
SALES: Sales refers to the exchange of goods/ commodities against money or service. It is
the only revenue generating function in an organization. It has formed an important part in
business throughout history. Even prior to the introduction of money, people used to
exchange goods in order to fulfill the needs, which is known as the barter system.
Conditions of Sales
Direct Distribution
It can be defined as expanding or moving from one place to another without changing
direction or stopping. For example, Bata has no distribution channel; it sells its products
directly to the end consumers.
Indirect Distribution
It can be defined as means that are not directly caused by or resulting from something. For
example, LG sells its product from the factory to the dealers, and it reaches the consumers
through dealers.
The following image shows the end-products stored at a warehouse, ready for shipment to
the dealers/consumers.
What is Sales management?
Sales Management
Originally, sales management refers to the direction of sales force i.e. the people associated with the activities of
selling. With time, the term acquired a broader meaning. In addition to management of personal selling, sales
management meant management of all marketing related activities such as advertisement, sales promotion,
marketing research, physical distribution, pricing and product merchandising. However, it was pointed out these
activities are primarily carried out by the marketing department of a company and there was a need to clearly
define the purview of sales management.
Finally, American Marketing Academy agreed that sales management means the planning, direction
and control of personal selling, including recruitment, selection, equipping, assigning, routing, supervising, paying
and motivating as these tasks apply to personal task force.
The activities concerned with personal selling are sales management, while the activities of
managing those carrying out the activity of personal selling may be called as sales force management. The sales
managers organise the sales activity both within the organization and outside the organization. In the company,
the sales managers build both formal and informa1 organisations to ensure effective communication in the sales
department as well as other departments of the company. Outside the company, the sales managers build key
contacts with the customers and publics to ensure a smooth personal selling.
Skills of a Sales Executive
Sales management is an art where the sales executive or the salesperson helps the
organization or individual to achieve its objective or buy a product with their skills.
The following are some skills that a sales executive needs to possess −
Conceptual Skills
Conceptual skill includes the formulation of ideas. Managers understand abstract
relationships, improve ideas, and solve issues creatively. The sales executive should be well
versed with the concept of the product he/she is selling.
People Skills
People skills involve the ability to interact effectively with people in a friendly way,
especially in business. The term ‘people skills’ involves both psychological skills and social
skills, but they are less inclusive than life skills.
Every person has a different mindset, so a sales executive should know how to present the
product depending on the customer’s mindset.
Technical Skills
Technical skills are the abilities captured through learning and practice. They are often job
or task specific. In simple words, a specific skill set or proficiency is required to perform a
specific job or task. As a part of conceptual skills, a sales executive should also have a good
grasp on the technical skills of the product.
Decision Skills
Decision skills are the most important because to tackle the questions from consumers,
sales executive should always have the knowledge of competitors’ products and take a
wise decision.
Monitoring Performance
Sales executives should monitor the performance of the employees and report to higher
management to improve the performance and fill the loop holes.
Thus, conceptual skills deal with ideas, technical skills deal with things, people skills
concern individuals, technical skills are concerned with product-specific skills, and decision
skills relate to decision-making.
Sales Volume
It is the capacity or the number of items sold or services sold in the normal operations of a
company in a specified period. The foremost objective of sales management is to increase
sales volume to generate revenue.
Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue
generating department. It can be calculated as the percentage or ratio of gain in total
turnover.
Continuing Growth
One of the main objectives of Sales Management is to retain consumers to continue
growth of the organization. There should be regular expansion of sales and demand for an
item in the market with new advanced formulation.
These are the major objectives a sales executive has to focus on in sales management.
Set Objective
The very first step in sales management is setting goals and objectives. The senior
management of a firm needs to sit together and reach a mutual decision regarding what
the vision and resolution of the firm is.
This may sound quite easy but setting objective acts as a framework for designing a
company. If efficient decisions are made and objectives are set according to the company’s
potential and the market demand, the company progresses wonderfully. However, if the
objectives are poorly set, then the company might not prosper.
Develop Sales Strategy
After the objectives are set for the company to achieve, a strategy needs
to be designed. Sales strategy can be defined as how a company
markets or wants to sell its products or services. It can be a concept of
how the company meets the desired objectives and marketing goals; it
also clarifies what the sales executives do.
Strategy includes various components. following are a few of the
components −
Competitors’ performance
Develop Tactics
A strategy explains the purpose of the company whereas tactics explain the process to move
forward and implement the plan. Sales strategy is important as compared to the individual tactics.
But after the strategy is designed, we need to develop tactics to follow the strategy.
Sales tactics can be defined as the action taken by the company to impose its sales strategy to bring
it to life. There are different modes in which the company delivers the message to the consumers
such as websites, brochures, advertisements in social media, etc.
An investor or lender will invest in the company if they know about the objective and the strategy
of the company; else, it becomes difficult for the company and the lenders to make or justify a
decision of whether to invest in the company.
The company has to know that investment by lenders is very much required for the marketing
campaign. If the tactics are excellent but the strategies are not defined in a proper manner or
defined poorly, it does not help the company to grow.
Planning
Planning can be defined as the process of decision-making in a systematic manner
regarding the goals and the objectives of an organization. In short, it is a process an
individual or group will undertake in the future and the resources required for attaining
them.
Sales planning includes strategy, setting profit-based sales targets, quotas, sales
forecasting, demand management and the screening, writing and execution of a sales plan.
A sales plan is a strategic document that outlines the business targets, resources and sales
activities. It basically follows the lead of the marketing plan, the strategic plan and the
business plan with more precise detailing on how the goals and objectives can be achieved
through the actual sale of products and services.
Staffing
Staffing is the process of capturing, deploying, and retaining a workforce of optimal
quantity and quality to create a positive impact on the firm’s effectiveness.
Training
The training program in sales management provides frontline sales managers with proven
skills, knowledge and tools they need to drive margin line performance.
This in-depth program involves self-assessments and covers the following four crucial sales
management abilities −
Leading
Leading is done by the person who possesses the leadership quality, the ability to motivate
other people and get the work done. Leading is an effective sales management force that
invites the sales management executive to use practical tools and cuttingedge concepts to
create an effective sales management model.
This model is derived after a thorough research and consulting experience through cases,
group discussions, problem-solving exercises, computer-aided workshops, and
communicative case presentations.
The managers need to explore various perspectives on what does and does not work, and
why. A leader also monitors the work and explains the pro and cons as well as the ways to
complete a task effectively and efficiently.
Controlling
The task assigned to the sales personnel is monitored to find out whether the organization
is achieving its target or the goals as per the planning. Controlling is a process, which
defines the scope of and leads the actual performance against the planned goals of the
organization.
Controlling dwells in verifying whether everything happens in conformity with the plans
adopted, instructions issued and principles authorized. Controlling assures that there is
effective and efficient utilization of organizational resources so as to achieve the planned
goals and objectives.
Controlling judges the deviation of actual performance from the standard
performance, notices the causes of such deviations and helps in taking corrective actions.
The following figure depicts sales management with its functions and explains the role of
each function. All the roles are inter-related. An individual function cannot relate to work
without the help from other.
Resources
Resources are one of the important parts of sales management, as, without resources, the
planned process cannot be implemented. Resources include the following −
Human Resource
Human resources can be defined as that section of a business or organization that deals
with the hiring, administration, and training of staff. In sales management, we can say it is
the salesperson responsible for selling/marketing of products or services.
Financial Resource
Financial resource is the capital available to a business for investing in the form of cash,
liquid securities and credit lines. Before going into business, a businessman needs to secure
sufficient financial resources.
This is required in order to be able to function efficiently and sufficiently well to promote
success. It includes the finance that the company needs to perform the activities like
campaign, advertisement etc.
Materials
They are assets in the form of material possessions. Here, by assets, we mean anything of
material value or usefulness that is owned by an individual or a company. It includes the
source from where the raw material could be procured in low cost.
Technology
It is the application of science, especially to industrial or commercial goals and objectives. it
also includes the scientific technique and material used to achieve a commercial or
industrial objective as well as the machinery and the techniques that the organization uses
for the end product.
It will now be clear why resources are important in managing sales.
Performance
Performance is the completion of a given task measured against known preset standards of
accuracy, completeness, cost, and speed. In a contract, performance is assumed to be the
fulfillment of accountability in a manner that releases the performer from all liabilities
under the contract.
The last function is to review the performance. In this function, the leader reviews the past
performance and advises the Sales Personnel regarding the improvements required. It also
involves checking that all the functions are working in a proper way and there is no
deviation in achieving the goals.
Agency-based Sales
In agency-based sales, the organization hires an agent on contract basis. That sales agent
acquires the right to negotiate the sale of the organization’s goods or services in exchange
of a fixed commission or fee. The commission is calculated on the basis of the percentage
of the sales generated. Example: Insurance Policy, opening of bank accounts etc.
Door to Door
In door to door sales, the sales executive walks from the door of one
house to another to sell the product or service. For this type of sale, the
sales agent should be versatile and capable of quickly creating a
relationship with the customers.
The following are some major duties of sales personnel for door to door sales −
B2B
B2B selling is known as Business to Business selling. It refers to a
situation where one business makes a transaction with another.
B2B occurs where −
Factory produces goods and sells them to wholesalers.
Organization outsources its process to other companies to reduce the labor cost.
Company purchases raw materials from another company to make the final product.
Electronic Sales
Electronic sales or e-Commerce is known as trading of goods or services through the
internet. The figure given below depicts how e-Commerce works. We can conclude that the
e-commerce business has been increasing day by day due to easy access and simplicity.
E-commerce businesses may employ some or all of the following −
Online shopping web sites for retail sales direct to consumers.
Providing or participating in online marketplaces, which process third-party
business-to-consumer or consumer-to-consumer sales.
Business-to-business buying and selling.
Gathering and utilizing demographic data through web contacts or social media.
Marketing to prospective and established customers by e-mail or fax (for example,
with newsletters).
Engaging in prevailing market for launching new products and services.
Thus, e-commerce can be defined as the business conducted through the application of
computers, telephones, fax machines, barcode readers, credit cards, automated teller
machines (ATM) or other electronic appliances (whether or not using the internet) without
the exchange of paper-based documents.
Sales techniques are techniques for selling a product or service for marketing success. In
layman terms, it’s a combination of talking to the right people and finding out what they
actually want to buy; it depends on consumer choice and preference.
A salesperson using sales techniques doesn’t just sell the products. In fact, he looks at the
customer’s need or want and then offers the product after explaining its advantages and
disadvantages.
This helps the customer to differentiate among available products, making the decision
easy for the customer. This way of selling is more impressive than sampling delivering the
product.
It also helps to build a rapport between the customer and the salesperson who
understands how much the product is worth to the customer.
Conceptual Selling
Conceptual selling is a type of sales technique, which requires the salesperson to first
understand their customer’s issues, i.e., what they are trying to accomplish, fix or avoid.
Then the salesperson applies his expertise to find a solution for the customer.
By applying this approach, its helps to build trust with customers and the solution found
becomes difficult for the competitors to replicate. Conceptual selling is like introducing a
new technology, a revolutionary delivery method, a different way of serving customers and
finding a new way to resolve old problems.
Conceptual selling is classified into the following four categories −
Perceptual
Change
Emotional
Fundamental need
Perceptual
Perception is the way a person looks at something. It differs from person to person and it is
also possible for the perception of two people to be alike. This psychological proposal asks
the consumer to change the attitudes towards something or view it in a different way from
the existing point of view.
In other words, the seller requests the buyer to view things from a different perspective.
Change
Change is vital and a thing cannot be the same for a long period of time. The first step itself
relates to change. Most of the times, the first step is conceptual selling. The buyer should
be interested in listening to new ideas and seriously apply himself to something different.
Emotional
While the seller describes the product to the consumer, he wants an emotional relation
with the consumer. The seller should be passionate and eager; it plays a major role in
selling. This helps to increase credibility with the consumer and also helps to retain the
consumer for a long period of time.
Fundamental need
The fundamental need of a product satisfies a conceptual sale. The assumption is that the
product serves as a catalyst for the change that the seller petitions. In case the consumer
does not understand that this fundamental need, he will not buy the product.
Sales Negotiation
Sales negotiation refers to the mutual discussion between the buyer and the seller for a
transaction or agreement. The negotiation can be a formal event at a specific date and
time. It can also be an ongoing process at different points in sales process.
Why does a salesperson negotiate? The answer is because of a customer’s attitude towards
the product or service. A customer’s attitude can be categorized in four categories −
Objection
In this category, the customer shows an opposition to the product or service. The customer
is not satisfied with the product and opposes and raises a query against the product.
Indifference
The customer is not interested or shows less interest in the product; the reason could be
no perceived need for its benefits.
Skepticism
The customer has the perception of the product and its benefits but is in dilemma if the
product offered can really provide any benefit.
Acceptance
In this category, the customer agrees with the benefits as advised by the salesperson and
has no objections or negative feedback towards the product.
Thus, we can conclude that negotiation skills are required to change a customer’s
perception towards a product or service.
Negotiation Outcomes
The following are the four types of negotiation outcomes −
Questioning Strategy
Once the company has listed all the points and the required information, they need to
prepare a questionnaire. The questions should begin with broad issues and should allow
the buyer to express his/her point of view.
Reverse Question
When a buyer evaluates a product, whether to purchase or otherwise, it gives an
opportunity to the seller to pitch in and re-confirm the perception of the buyer. It helps
improve the relationship. The seller can better understand how to deal with the situation
and what can be offered to the buyer to satisfy his/her needs.
We can thus conclude that reverse selling has now become an important part in today’s
competitive market.
Take away
Take away selling techniques have become very famous in recent times. As the name
suggests, in this type, the buyer takes the product and moves on. In the traditional system,
the regular and take away counter used to be the same and people had to wait for long
even to take a small parcel.
In the following illustration, we can see a modern take away counter, where the buyer can
easily grab a parcel and move on. Such take away counters help the buyer to the get the
product in less time.
In a few places, we have a take away counter where the customer orders the product from
one side and the delivery is made on the other side of the road. This also saves a lot of time
for the buyer.
Sales Outsourcing
Sales outsourcing is a way by which one company outsources its process or part of the
process to the other company. The company outsources its work to increase the sales
volume without link to the sales team that carries on the sales campaigns.
The company that undertakes the process will be paid on a contract basis or the as per the
mutual understanding between both the parties. The other party is accountable and
answerable regarding all sales activities while representing the brand to the client. That
party is responsible for all the operations associated with direct sales activities.
The main purpose of sales outsourcing is to reduce the cost of production. For example, in
London, the labor cost is high as compared to India. So the company would like to
outsource the process to India and get the work done in less cost as compared to the home
country.
2. Order taker
In some cases, the sales persons may be the order takers and the delivery
of the product may be made by the dealers or through courier. In such cases,
the salesmen visit the customers, show their products, and persuade the
customer to purchase them. They book the orders and convey it to their
distribution department or their dealers. This practice is common in companies
selling consumer goods. The salesmen visit the shops and book orders and
convey them to the dealer who delivers them to the customers. This bifurcation
of delivery and order collection activity is done so that the sales person can
devote more time in understanding the customers and the market activity.
Also, the sales person might be working in a wide territory and the delivery
is done the distributor’s representative.
3. Missionary
In certain cases, the salesmen are not directed to book the orders or deliver
them. Their main task is just to build goodwill and create a favourable attitude
in the minds of the customers. They might also be directed to educate the
potential customer. In such cases, they act as missionary i.e. making market
calls with a broader mission and not merely booking orders. Medical
representative visiting doctors and informing about their products plays such
a role. They do not book orders but educate the doctors about their products
and the benefits they offer. This practice allows sales person to visit and
service customers in a large territory.
4. Technician
In certain cases where the product is technical in nature, the sales personnel
may have to act as a technical consultant and not merely focus on booking
orders. This activity is witnessed in the companies making plants and equipment
that involve high technical knowledge on the part of the seller as well as the
purchaser.
5. Demand creator
Often, the sales personnel have to stimulate the demand by product
demonstration or customer education. E.g. the demand of vacuum cleaners
was actually created by the salesmen by visiting the customers. Similarly,
the role-played by insurance agents by educating the customers helps them
in selling the insurance policies.
The nature of tasks performed by the sales personals vary from company to company
depending upon the objectives laid down for them. For example
the sales representatives of IBM are responsible for not only selling the
computer but also for its installation and upgradation. Similarly the sales
representatives of AT&T are responsible for developing, selling and protecting
accounts. In addition to the difference in company objective, other factors
such as state of economy, market orientation of a company etc. also determine
the nature of tasks performed by sales force. In general the sales personal
perform the following tasks :
1. Prospecting
The sales force has to be on the look out for new customers always. The
customers have the prospect of purchasing must be identified and persuaded
to purchase the products of the company. The new customers serve as a base
of growth of sales volumes and so they need to be-identified and converted
from a prospect to a customer.
2. Communicating
The sales force has to skillfully communicate the information about the
companies’ products and services. In fact communication is one of the single
most important function which is performed. The communication is both
within the organistion as well as out side the organization. Within the
organization, the sales representatives have to take instructions from marketing and
sales managers. They convey order collected form the customers to the
distribution department so that it can make the delivery. The sales representatives
also communicate with the accounts department of the company in order to
ensure that the timely collection of payments is made. In case a complaint is received
from the customers, the sales representatives have to communicate
the same to the technical personnel in production and quality control department.
Outside the department, the sales representatives have to meet the customers,
distributors, retailers and all those who affect the selling activity directly
or indirectly. They collect orders and payment. In addition to this, one of
the important tasks of sales representatives is to communicate market
intelligence i.e. the activities of the competitors so that the senior managers
can formulate strategies to face the competition. Thus, communication is
one of the single most task performed. The successful sales representatives
have to master the art of communication.
3. Selling
This is the core function of the sales representatives because all the activities must
ultimately culminate into sales. The sales representatives have to very
skillfully master this art of approaching the customers, presenting their
product, convincing them about the benefits of the products over the competing
products, answer the guarries and objections of the customers. The sales
representatives have to learn the art of negotiations and closing the deal. The
order thus collected must be conveyed to the company. The responsibility
of selling does not end here. The sales persons have to ensure product
delivery and customer education.
4. Servicing
The task of sales force does not end after taking the order. The customers
have to be visited again in order to resolve their difficulties or complaints.
In case the product is not performing well, the sales representatives have to get the
same repaired. It is also possible that the customer will have to
be educated about using the product. The sales people find it easier to sell
their products, to the existing customers. So, once a relationship is established
between the sales person and the customer, it has to be strengthened with
the help of services.
5. Information gathering
The sales personnel have to gather the information about the customers and
the market conditions and report the same to the company. The market
information helps the company in fighting competition. The information
about the customers helps the company in identifying customer needs and
designs the products, which the customers want. This helps the company is
getting an edge over the competitors.
6. Allocating
The sales representatives have the first hand information of the market
conditions. So, their opinion is significant in distributing or allocating the
products to the customers at the times when the product is in short supply.
Functions:
(i) Sales research and planning
SALES MANAGER
A sales manager is someone who is responsible for leading and guiding a team
of sales people in an organization. They set sales goals & quotas, build a sales
plan, analyze data, assign sales training and sales territories, mentor the
members of his/her sales team and are involved in the hiring and firing
process.
Roles and Responsibilities of a Sales Manager
A sales manager plays a key role in the success and failure of an organization. He is the
one who plays a pivotal role in achieving the sales targets and eventually generates
revenue for the organization.
A sales manager must be very clear about his role in the organization. He should know what
he is supposed to do at the workplace.
So, here are Top 10 Skills that are a Must-Have for every Sales Manager. Note them down and find opportunities to develop each
of these skills as preparation for your Sales Manager role in the near future!
1. Analytical Ability
Sales managers receive all kinds of information -- from verifiable facts to rumors. It
is important to be able to see the relevance of these bits of information, to draw
conclusions that fit the facts, and to analyze a problem to understand root causes.
Having analyzed the available information in a given situation, they must then
judicially weigh the evidence in order to decide on the best course of action. Most
decisions involve a balance of advantages and disadvantages, and so they should be
comfortable with tradeoffs.
4. Concise communications
Given how busy the average buyer is today, a critical sales skill is to make sure that
you communicate succinctly. The days of the silver-tongued, overly verbose
salesperson are coming to an end. Buyers value how information is presented more
than the information itself. Today, the preferred form of presentation is
conciseness. A good rule here is to never try to communicate more than three
important points in a single conversation with a buyer.
5. Service Orientation
Sales managers be Actively looking for ways to help out their clients in whatever
manner possible. Buyers don’t want to be closed; they want to be helped. That’s
why “Always Be Helping (ABH)” is the new “always be closing”. ABH is more of a
mindset than a skill. A lot of salespeople struggle with this, but you should try to
remember it every time you interact with a buyer.
7. Business Acumen
Business acumen is defined as the critical business thinking required to achieve your
sales objectives. The business environment demands that both sales reps and
managers have strong business skills. Sales managers need to be able to understand
complex business issues and help their sales reps view their business strategically.
Sales managers need to teach their sales people how to make wiser decisions, plan
better, and effectively allocate their resources based on customer needs and
potential for growth.
10. Leadership
Sales managers need to be strong leaders. The key to becoming a strong sales
leaders is for you to be able to create and share a vision with your sales team.
Strong sales leaders, have the skill and the will to help their team adopt the vision
and keep them focused on working towards achieving it. Sales leaders require the
ability to communicate, innovate, inspire and set the tone for the sales team.
He is known for personal direction and control of sales personnel and hence, spends major
portion of his time in the field supervision of the work of sales-force. Manpower
maintenance of the sales organisation is the basic task of this executive. He is to recruit,
select, train, supervise, stimulate, evaluate, equip, control and route the sales-force.
Field sales manager moves with salesmen on visits of importance. He assigns sales
territories and controls activities of salesmen through setting the standards of sales
achievements, analysing the sales reports, holding the sales meeting, supervising the
advertising and sales-promotion cooperation with dealers, directing sales contests,
supervising warehousing inventories, dealer relations and coordinating territorial and home
office activities.
Thus, a field sales manager provides the administrative sales manager with the latest
information relating to the view points of dealers and consumers on company, company
products, policies, and practices with facts on market trends, competitors, distributors and
individual salesman.
3. Administrative-cum-field sales manager:
In case of smaller organisations, we come across such sales manager who combines the
functions of administrative and executive sales officer. Generally speaking, administration
and field operations cannot go together. However, size and economy points force many
units to combine the distinct roles of administration and field operation.
As an administrator, he plans, organizes, directs and coordinates. As a field operator, he
guides and supervises and controls the activities within the sales organisation. Thus, thinking
and doing are done by the same person that goes against the very idea of specialisation for
an administrator is a ‘thinker’ and a line officer as ‘doer’.
4. Assistant sales manager:
Generally, the administrative sales manager is assisted by Assistant sales manager in the
administrative functions of planning, analysis, direction and coordination. He coordinates
the work of sales staff that is specialized in advertising, sales-promotion, research,
merchandising and dealer relations.
He may also handle sales office personnel, records and routine. He acts as the link between
the head-quarters and the field-sales-manager at distance. It is not a surprise if he
discharges the functions of field sales manager. Thus, he acts as both line and staff officer in
the sales organisation.
5. Product-line sales manager:
A company that markets variety of products has such product-line sales manager
responsible for one or group of products in the product- line. He is also known as product or
brand manager.
He is responsible not only for sales but also for production, research, product- development,
planning, advertising and profit for the product or the group of products in question. He is
to report to the Marketing manager who coordinates the work of several product sales
managers.
6. Marketing staff manager:
As the title suggests, the Marketing staff manager is not a line-officer. He is one of the staff
specialists who are delegated some of the responsibilities of administrative sales manager.
These are the specialists in the areas of marketing research, sales-promotion,
merchandising, advertising, sales planning, sales personnel, distributor/dealer relations,
sales costs, budget sales finances, traffic, sales office administration and service and the like.
These staff managers being non-line officers have no field tasks.
Field sales manager moves with salesmen on visits of importance. He assigns sales
territories and controls activities of salesmen through setting the standards of sales
achievements, analysing the sales reports, holding the sales meeting, supervising the
advertising and sales-promotion cooperation with dealers, directing sales contests,
supervising warehousing inventories, dealer relations and coordinating territorial and home
office activities.
Salesmanship
The term salesmanship has been defined in various ways. Some of the definitions of salesmanship are :
a. Salesmanship is the art of persuading persons to buy goods or services, which will give them lasting
satisfaction.
b. Salesmanship is the art of helping prospects and customers achieve their goals in life.
c. Selling is a buying process wherein the salesman ascertains the customers’ needs and indicates convincingly
how the needs can be satisfied through the purchase of goods and services.
d. Salesmanship is the art of solving the customers’ problems through the benefits offered by the products or
services being sold by the salesman.
Personal Selling
Meaning of Personal Selling:
Personal-selling or salesmanship are synonymous terms; with the only difference that the
former term is of recent origin, while the latter term has been traditionally in usage, in the
commercial world.
(2) “It is the part of a salesman’s’ business to create demand by demonstrating that the need
does exist, although before his visit there was no consciousness of that need.”
(ii) It is an art of persuading the prospect, to appreciate the need for the product canvassed
by the salesman, in a democratic, cordial and social manner. This, then, requires outstanding
qualities in a salesman; specially the proficiency in selling skills and techniques.
(iii) In personal selling, the emphasis is on the development of permanent and lasting
relations with prospects If a prospect is won; a sales transaction might materialize with him
subsequently in future. Obtaining an immediate sale may be the natural ambition of a
salesman; it should never be his target.
(iv) A salesman sells product, by first selling his own idea or viewpoint to the prospect.
Personal selling, therefore, is the art of convincing the prospect and influencing his mind, in
a favourbale way.
(v) Personal selling requires a flexible approach; on the part of the salesman i.e. the salesman
should modify his approach in persuading the prospect, in view of the psychology, needs and
resources of the prospect.
(vi) The ultimate goal of personal selling is mutual satisfaction of the interests of both – the
salesman and the prospect.
Some of the reasons for the need of personal selling are as follows:
(i) Requirements of Product Demonstration:
There are certain products which require a demonstration, for purposes of explaining their
use, manner of their handling and the precautions required in using them. This requirement
for product demonstration necessitates personal selling; as no advertising media cannot
undertake this work.
Salesmen are needed to approach such illiterate prospects, who would explain the usefulness
of the products to them, in a convincing style.
(iii) Traditional Necessity of Personal Selling:
There are cases of products, where advertising is not usually done; partly due to the technical
or specialized nature of products and partly due to traditions. In cases of such products,
therefore, personal selling is necessitated to meet the requirements of tradition prevalent in
particular trades.
Some of the manufacturers appoint salesmen precisely for this purpose, besides expecting
them to create more sales. This factor, therefore, becomes a modern factor necessitating
salesmanship; and accounting for its survival under the modern marketing conditions.
A manufacturer, through salesmanship can plan to remove such misconceptions from the
minds of prospects (caused by competitive advertising), by making them available true facts
and merits of his products through his own salesmen.
1.Prospecting
2.Pre-approaching
4.Demonstration
5. Handling Objection
1. Prospecting: A prospect means a probable buyer. Prospecting means searching for persons , to whom
sales can be affected.Prospect is a person ,who has wants to be satisfied and has ability and
willingness to buy . Therefore this is a first step in identifying and locating of prospects,either from
company’s past records or customers or advertisements. A list of Prospects is prepared and this helps
in planning the whole selling efforts so as to avoid waste calls.
2. Pre-Approaching: It involves developing an understanding about the prospective buyers or
qualified buyers as to their needs, problems, buying motives, preferences, personal
character etc. This pre-approach is effective for making a ground for approach.
3. Approaching & attention: This is a sales interview.This is a seed,with which sales tree grows
up.This stage is important and vital. The first impression of the salesman may bring a long-
benefit-repeated-sales.This step is based on AIDAS formula.The salesman adopts all other
selling points relating to the products.
4. Demonstration: The need-satisfying characteristics of the product are to be presented or
demonstrated.The prospect may be made to understand the benefits of the product.He
may also be informed of the special features,merits,benefits etc. of the products.The
salesman can also show the survey reports,relevant data,free gifts,referring to specific
problems in other products,telling examples etc. The prospects must be convinced and an
interest in processing the product must be aroused .
5. Handling Objectives: When one shows interest in buying the products ,generally,every
salesman faces objections from the prospective buyers. There is no wonder, when a buyer
purchases products at a price,buyers ask questions and explanations.The salesman must
face the buyer by giving satisfactory answers,sincerely and without any hurry.
6. Closing the sales: It aims at taking an order for the products from the prospective buyer.The salesman
also asks questions as to the product –choice of colour, periodicity of delivery, quantity, terms etc. At the
climax stage, the prospects place orders with the salesman.
7. Follow-up: Satisfaction of the buyer is important as a source of publicity.This stage is
important,to have information from buyers regarding the product-use-problems,if any.The
salesman keeps contact to know the problems,if any. After sale service should be followed
strictly i.e., punctuality,personal attention etc.
It is a two-way communication. So the selling agent can get instant feedback from the
prospective buyer. If it is not according to plan he can even adjust his approach accordingly.
Since it is an interactive form of selling, it helps build trust with the customer. When you
are selling high-value products like cars, it is important that the customer trusts not only the
product but the seller also. This is possible in personal selling.
It also is a more persuasive form of marketing. Since the customer is face to face with the
salesperson it is not easy to dismiss them. The customer at least makes an effort to listen.
Finally, direct selling helps reach the audience that we cannot reach in any other form.
There are sometimes customers that cannot be reached by any other method.
Personal selling is an important tool in the marketing of goods and services. Its
importance to the businessmen, customers and society is discussed below.
Importance to Businessmen:
It is helpful to businessmen as follows:
1. Effective Promotional Tool:Personal selling is an effective promotional tool in
the hands of businessman for increasing sales. Salesman provides information about
the various features and advantages of his product as well as about market
developments.
2. Flexible Tool: Personal selling is the most flexible tool of promotion. Sales
presentation is adjusted according to the requirements of the customer.
3. Minimises Wastage of Efforts: Personal selling involves minimum wastage of
efforts as compared to other tools of promotion.
4. Customer Attention:The level of customer attention and interest can easily be
assessed under personal selling. Thereafter, the presentation can be modified
appropriately.
5. Lasting Relationship:Personal selling aims at developing good and long lasting
relationship between salesperson and the customer to increase sales in line with
WIN-WIN philosophy.
6. Personal Rapport: Competitive strength of a business organisation increases
with the development of personal rapport between its salespersons and prospective
customers.
7. Role in Introduction Stage: By describing the merits of a product and
persuading the customer to purchase it, salesperson helps in introducing a new
product in the market.
8. Link with Customers:By playing persuasive, servile and informative role,
salesperson help in linking business firm to its customers.
Importance to Customers:
It is important to customers as follow:
1. Helps in Identifying Needs: It helps in identifying the needs & wants of the
customers so that they can be satisfied by getting best products.
2. Latest Market Information: Under personal selling, customers are provided
with information regarding availability or shortage of product, introduction of new
product etc.
3. Expert Advice:Expert advice and guidance can be provided to the customers
while purchasing various goods and services.
4. Induces Customers:Personal selling induces customers to buy new product in
order to satisfy their needs in a better way.
Importance to Society:
It is also important to society as follow:
1. Converts Latest Demand:Personal selling helps in converting latest demand
into effective demand. This results in more production, and hence leads to increase in
GDP.
2. Employment Opportunities: It provides opportunity to unemployed people to
work as salespersons for earning income.
3. Career Opportunities:Personal selling ensures attractive career, job
satisfaction, respect, variety, security etc.
4. Mobility of Sales People:Travel and tourism in the country get promoted by
the mobility of the people from one place to another.
5. Product Standardisation:Personal selling ensures uniformity in consumption
by selling standardized products.
Sales Organization
Introduction and Meaning:
Whenever two or more persons join together to do activities for achieving some common objectives ,a necessity
to distribute the work among them is felt and coordination among different activities is to be made.The
organization originates from this very necessity. Organization is the process of identifying and grouping the work
to be performed, defining and delegating responsibility and establishing relationship for the purpose of enabling
people to work together most efficiently in attaining objectives.
Sales Organization is a structured framework, specifying the formal authority and responsibility among persons
working in the organization. It consists of group of individuals working in the organization. It consists of group of
individuals working to achieve selling objectives to increase sales, maximizing profits ,expanding market share
etc.it establishes coordination among various selling activities necessary for the achievement of selling
objectives. Sales organization is not a separate unit.It is affected by other functional areas such as
production,finance,personnel etc. Sales organization organizes group of persons in the form of a suitable
structure ,depending upon the requirements of the enterprise. Various forms of sales organization structure can
be line organization,line and staff organization , functional sales organization, committee form of sales
organization.
Sales organisation consists of human beings or persons working together for the effective
marketing of products manufactured by the firm or the products purchased for resale. Sales
organisation co-ordinates the efforts of members of a group to bring about a desirable result.
It provides an efficient, economic and flexible administrative set up to ensure timely
movement of products from the warehouse to the ultimate consumer. Thus it provides
satisfactory job to buyers and sellers.
A sales organisation has a number of departments. It has a planned and well co-ordinated
structure. It performs the functions of planning, organizing and controlling marketing and
distribution of products. Sales organisation is a foundation for effective sales planning and
sales policies. Systematic execution of plans and policies and programmes of a sales
organisation control all the sales activities. As such it ensures maximum efficiency and
profitability without losing consumer service and satisfaction.
Definition:
According to H.R. Toosdal, “A sales organization consists of human beings working together for the marketing
of products manufactured by the firm or marketing of commodities which have been purchased for resale.”
According to Still and Cundiff, “ A sales organization is a group of individual striving jointly to reach certain goals
and bearing formal as well as informal relations to each other.”
Functional Type
Functional type of organization is divided and classified on the basis of
the functions performed. The following illustration shows a functional
type organization.
This depicts the functional type organization. We will now discuss the
advantages and disadvantages of this type.
Advantages of functional type
The following are the advantages of a functional type of organization −
Specialization − In the figure, we can see the division has been made according to the functions. By this,
we can expect each function is specialized in its activity.
Flexibility − The number of departments can be added or removed as per the requirements.
Decision making − Decisions can be made quickly as the person would be an expert in his department and
will be aware of the impact of his decision.
Co-ordination − The co-ordination between functions can be done easily
Product Type
This type of division is made according to the products. The organization
divides the departments based on the products.
The following illustration shows the layout of the product type.
Advantages of Product Type
Due Attention − Due to the division according to the product, each product gets required attention.
Specialization − The salesperson is specialized in specific products; hence he/she has an advantage in
handling the department.
Responsibility − The responsibility can be easily assigned to a salesperson because all the salespersons
are specialized in their product/ department and are well acquainted with the product, which helps them to
handle customers smoothly.
When there is a large number of consumers who are looking out for special services.
The costumer is ready to pay for the services offered. Here, the target is mostly premier customers.
Area Type
In this type of organization, departments are divided accord ing to the
attributes of areas. They can also be divided geographically. The
following illustration shows the layout of the area type organization.
Advantages of Area Type
Products − Customers can be served with the latest products and customized products.
Transport cost − Transport cost can be reduced because the division has been made according to areas.
Customer service − Company can provide better customer services as the division is made according to
area. Thus, the company can understand the customer psychology and perception better.
Sales performance − The sales performance can be compared according to zones and steps can be taken
to improve.
Where the sales volumes are high and generate more revenues.
A number of factors determines how sales organizations are structured; these include the customers, marketing
channels, company size, products, practices of competitors and the personality and abilities of sales personnel.
1) Customers
Customers naturally influence the structure of sales organization. The customers are the core reason why
production is ongoing and why the sales department is being set up. Therefore an organization ought to
understand their customer base and experiences before they settle on any particular design for their sales
department. Doing this will significantly influence how well the set team will help the organization meet
customers’ needs and expectations.
2) Marketing channels
Marketing channels at the time of setting a sales team also determine how the department will be structured. The
marketing channels refer to the methods used to avail products and services to consumers. This just like with the
customers is very important. The organization, therefore, ought to pay attention to their channels of distribution
as well as how the team will work with these channels to deliver the products and services at the right places and
the right time for the consumer to buy.
3) Organizational size
Smaller companies do not usually require a vast sales organization because most of the tasks are centralized.
Larger companies, on the other hand, need a more powerful sales framework for their sales team. A company
with a larger customer base expects more sales personnel to handle the needs of all their customers. Highly
specialized business operations in the same regard also require a more formal structure like the line and staff
sales organization.
4) Product
Product and product line is another determining factor that will influence the new design a sales organization will
take. For example, a business that deals with a more diversified product or a wide range of products requires a
more intense sale force compared to one that deals in only one particular product.
Ideally, the nature of products dealt in significantly influence the structure of the sales organization. The design,
as well as selection of the sales team, will vary based on the level of awareness of the products, complexity of
the products, and the customization needs. Depending on these elements, an organization ought to determine
what the team will constitute, the level of expertise required and what structure will ensure that product
awareness, market penetration and customization needs are handled efficiently.
5) Practices of competitors
Another factor influencing sales organization structure is comprised of the practices of competitors. Most
organizations form their structures based on the market competition. And therefore in this regard,
an individual organization has to map its competitors’ practices like marketing techniques, channels, etc. to
create its structure that will help beat competition.
These capabilities include skills, experience, and knowledge of the sale personnel. For example, a company with
a complex nature of products that require thorough customer education as well as extensive customization need
a sale force design of well educated, highly dedicated and specialized members. This will be so from the top
management to the lowermost position.
Conclusion
An efficient organizational planner ought to understand that structures are often derived from the needs of the
company. Therefore as you prepare to create a sales organization, understand the needs of the business, the
various designs including their benefits and limitations and then choose the most appropriate one for the
company in question.
So long as the firm is a small one, there is no need for sales organisation, as the proprietor
himself can sell all the output or in certain cases, he is assisted by one or two salesmen,
under his direct control. But when the firm or the business itself expands, because of
extension of markets, production in large-scale, competitive market etc., the need for a sales
organisation is felt.
The need arises because of the following factors:
1. Production in anticipation of demand, which must be sold.
“A business organisation is like a home. It has characteristic atmosphere. In some homes the
head of the household and all its members are vitally concerned about religion, politics or
some other interest—the occupations of the individual members being only of minor interest.
In other homes where the personality of the head of the household dominates the activities
and spirit of the members the opposite occurs. Like any group a business organisation has its
own culture, traditions, and to some extent its own language and climate.” —Hepner
“A sale organisation is like a power-station sending out energy which is devoted to the
advertising and selling of particular lines and there is a tremendous waste of energy between
the power station and the points where it reaches the consumers. Therefore, there arises the
necessity of organizing the sales department.” —Boiling
“Sales are the life blood of business,” Sales organisation is part and parcel of a business firm.
All the departments are carefully plaited in a good sales organisation.
2. Increasing sales means progress of the firm. If the sales fall down, it is fatal, because sales
are the life blood of the business, as the blood is to a human body.
3. Consumers are the kings. Manufacturers produce goods for consumers. They must be
satisfied in the market which is full of competitors with products for similar use. So suitable
products are necessary, and for this an organisation is necessary.
4. To move the products from the factory to the consumers, the sales organisation is
necessary— demand creation.
5. To handle the orders promptly i.e., from the stages of enquiry to order at full satisfaction
to consumers.
6. Collection of dues is also important. Several drops make an ocean; at the same time
milking cows should not be neglected.
7. To keep good public relations by redressing the complaints if any, and to create a good
image of the firm.
3. Accurate market or sales forecasting and planning the sales campaign, based on relevant
data.
5. Packaging for the consumer wants a container which will satisfy his desire for attractive
appearance, keeping qualities, utility, and correct price and many other factors.
4. Number of products
Sales Management:
Sales management is concerned with mainly with the management of selling function. The
sales function in a business is a basic function. The sales management represents one of the
most important functional areas of business management, and all the principles of general
management such as planning, organizing, directing, motivating, and controlling are applied
to sales management too for securing better business performance, viz., reasonable profits
through sales. Modem business is consumer centred.
The American Marketing Association has defined sales management as “the planning,
direction, and control of the personal selling activities of a business unit, including
recruiting, selecting, training, equipping, assigning, rating, supervising, paying and
motivating as these tasks apply to the personal sales force.”
5. Marketing research
5. Motivation
6. Compensation
7. Controlling the sales force
SMBO APPROACH
It is another approach to formulate and accomplish sales-objectives is the
sales management by objectives (SMBO) technique. It is formulated
combined by sales manager and sales-force (representatives). It aims to
focus on (i) results, within a specified set of objectives and (ii)
participative style of management.
Process of SMBO
The operationalization of SMBO is a process, comprising of the
following steps:
(i) Setting goals jointly with the salesman: In this process the goals
for sales-man and sales managers are settled simultaneously in the
organisation so that they can built a close coordination between them and
lastly they achieve the main objective of the organisation.
(ii) Planning strategy to reach the objectives: His the participative
style of sales. Management proves to be a boon to the top-management, in
the sense of the close familiarity
of the salesman, with their markets. The outcome of the joint exercise would
be the development of a strategy that directs the salesman to his objectives,
following a plan, in the
correct sequence, with the correct timing, and must be efficient, in the use
of resources of time and money.
Importance of SMBO
RECRUITMENT PROCESS
To ensure the new recruits have the aptitude necessary to be successful in a
particular type of sales job, certain procedures should be followed in the
recruitment process. The steps in this process are:
(a) Conducting a job analysis
Before a company can search for a particular type of salesperson, it must
know something about the sales job to be filled. To aid in the process, a job
analysis should be conducted to identify the duties, requirements,
responsibilities, and conditions involved in the job. A
proper job analysis involves following steps:
1. Analyze the environment in which the salesperson is to work.
For example:
(a) what is the nature of the competition faced by the salesperson in this
job?
(b) what is the nature of the customers to be contacted, and what kinds of
problems do they have? (c) what degree of knowledge, skill, and potential is
needed for this particular position?
2. Determine the duties and responsibilities that are expected from the
sales-person. In so doing, information should be obtained from (a)
salespeople; (b) customers; (c) the sales
manager; and (d) other marketing executives, including the advertising
manager, marketing services manager, distribution manager, marketing
research director, and
credit manager.
3. Spend time making calls with several salespeople, observing and
recording the various tasks of the job as they are actually performed. This
should be done for a variety of
different types of customers and over a representative period of time.
SOURCES OF RECRUITMENT
There are many places a sales manager can go to find recruits. Sales
managers should analyze each potential source to determine which ones will
produce the best recruits for the sales position to be filled. Once good
sources are identified, sales managers should maintain a continuing
relationship with them, even during periods when no hiring is being done.
Good sources are hard to find, and goodwill must be established between
the firm and the source to ensure good recruits in the future.
Some firms will use only one source; others will use several. The most
frequently used sources are persons within the company, competitors, non-
competing companies, educational institutions, advertisements, and
employment agencies.
(a) Persons within the company
Companies often recruit salespeople from other departments, such as
production or engineering, and from the non-selling section of the sales
department. The people are already familiar with company policies as well as
the technical aspects of the product itself. The chance of finding good
salespeople within the company should be excellent because
sales managers know the people and are aware of their sales potential. In
fact, most firms turn to non-sale personnel within the company as their first
source of new sales recruits.
Hiring people from within the company can lift morale because a transfer
to sales is often viewed as a promotion. But transferring outstanding
workers from the plant or office into the sales department does not
guarantee success. In some cases hostility can arise among plant and office
supervisors, who feel their personnel are being taken by the sales
department.
Recommendations from the present sales force and sales executive usually
yield better prospects than those of other employees because the people in
sales understand the needed qualifications.
(b) Competitors
Salespeople recruited from a competitor are trained, have experience of
selling similar products to similar markets, and should be ready to sell
almost immediately. But usually a premium must be paid in order to attract
them from their present jobs.
Some sales managers are reluctant to hire competitors' salespeople because
the practice is sometimes viewed as unethical. But is it? Is it really any
different than attempting to take a competitor's customers or market share?
No. But it is unethical if the salesperson uses valuable confidential
information in competing against the former employer.
Recruiting competitors' salespeople may bring other problems.
Although these people are highly trained and know the market and the
product very well. It is often hard for them to unlearn old practices. They
may not be compatible with the new organization and management. Also,
recruits from a competitors usually are expected to switch their customers
to the new business; if they are unable to do so, their new employer may be
disappointed.
The potential for these problems to arise may be evaluated with one
question: why is this person leaving the present employer? A satisfactory
answer to this question frequently clears up many doubts and usually leads
to a valuable employee. The difficulty arises, however, in
determining the real answer. Often, it is almost impossible to assess
accurately why someone is looking for another job. Good sales managers
must be able to evaluate effectively the information they get.
(c) Non-competing companies
Non-competing firms can provide a good source of trained and experienced
salespeople, especially if they are selling similar products or selling to the
same market. Even though some recruits may be unfamiliar with the
recruiting firm's product line, they do have selling experience and require
less training.
Companies that are either vendors or customers of the recruiting firm can
also be an excellent source of candidates. Recruits from these sources
already have some knowledge of the company from having sold to or
purchased from it; their familiarity reduces the time it will take to make
them productive employees. Another advantage of recruits from the sources
is that they are already familiar with the industry.
(d) Educational institutions
High schools, adult evening classes, business colleges, vocational schools,
junior colleges, and universities are all excellent sources of sales recruits.
Large firms usually are successful in recruiting from universities, but small
firms tend to be more successful in recruiting
from small educational institutions or from other sources.
While most college graduates lack specific sales experience, they have the
education and perspective that most employers seek in potential sales
managers. College graduates tend to adapt more easily than experienced
personnel. They have not yet developed any loyalties to a
firm or an industry.
A major problem in recruiting from college campuses used to be the
unfavourable image of sales. Selling typically was associated with job
insecurity, low status, and lack of creativity, but this situation has been
changing in recent years. Colleges graduates are beginning to realize that
selling provides challenge and a sense of accomplishment, that it is
complex and exciting, that it allows them to be creative, that it rewards
them well and in direct proportion to their level of achievement, and that it
provides opportunity for rapid advancement. In short, many students today
know that a sales career is a good use of a college education.
Small firms are less likely to recruit on college campuses because many
graduates prefer large, well-known corporations with training programs and
company benefits. College students tend to avoid small companies because
these companies usually employ few college
graduates, and students are afraid that people without college degrees will
not understand or appreciate their needs and expectations.
(e) AdvertisementsClassified advertisements in newspapers and trade
journals are another source of recruits. National newspapers and various
trade journals are used in recruiting for high-caliber sales and sales
management positions. However, most firms that use advertising,
especially in local newspapers, are recruiting for low-level sales positions.
Many businesses use advertising only as a last resort. While advertisements
reach a large audience, the caliber of the average applicant is often second-
rate. This places a burden on those doing the initial screening. The quality
of applicants recruited by advertisements can be increased by carefully
selecting the type of media and describing the job qualifications specifically
in the ad. To be effective, a recruiting ad must attract attention and have
credibility. The following elements should be included to ensure an ad's
effectiveness: company name; product; territory; hiring qualifications;
compensation plan, expense plan, and fringe benefits; and the way to
contact the employer.
(f) Employment agencies
Employment agencies are among the best and the worst sources. Most of the
time it depends on the relationship between the agency and the sales
manager. The agency should be carefully selected, and a good working
relationship must be developed. Sales managers should make sure that the
agency clearly understands both the job description and the job
qualifications for the position to be filled.
In recent years agencies have steadily improved and expanded their
services. They can provide a highly useful service to sales managers by
screening candidates so that recruiters may spend more time with those
prospects who are most highly qualified for the job.
SELECTION PROCESS
The recruiting process furnishes the sales manager with a pool of applicants
from which to choose. The selection process involves choosing the
candidates who best meet the qualifications and have the greatest aptitude
for the job. There are numerous tools, techniques, and procedures that can
be used in the selection process. Companies
typically use initial screening interviews, application forms, in-depth
interviews, reference checks, physical examinations, and tests as selection
tools.
None of these should be used alone. Each is designed to collect different
information. While successful selection of sales applicants does not
necessitate the use of all the tools and techniques, the more that are used,
the higher the probability of selecting successful sales personnel.
Selection tools and techniques are only aids to sound executive judgement.
They can eliminate the obviously unqualified candidates and generally spot
the more competent individuals. However, in regard to the majority or
recruits who normally fall between these extremes, the current tools can
only suggest which ones will be successful in sales. As a result executive
judgement is heavily relied on in selecting salespeople.
SALES TRAINING
INTRODUCTION
For effective operation of selling activities, sale force in terms of manpower
and womanpower is necessary for a business concern. For attaining
predetermined objectives; it is imperative that entire manpower should be in
place. Manpower i.e. in this case salesforce is one of the most precious
resources of a business unit. It takes a lot of years to build-up and to
develop itself for efficient and effective working. As we know that the effective
sales organisation is the antipathy of any competitor. However, it must be
emphasised that the Sales-Force can be effective only when the other
ingredients of the Marketing-Mix: product,
price, place and promotion are equally sound and intact. To expect
salespeople to become more productive; it is hardly fair. Each ingredient of
this Mix has to be emphasised equally so that its productivity may be
improved. Thus, the Sales-Force is the infantry that has to visit
customers, and/or channels of distribution to impart information and
knowledge; actually obtain orders from specific customers, and ensure that
existing customers are happy and satisfied with the company and its service
provided to them apart from, of course, looking for new prospects.
4.2 SALES FORCE TRAINING
Training is very much important for salesforce to ensure that the contents
related to the product are described to the potential customer and exiting
customers efficiently and effectively. Generally, training means to train the
employees i.e. to improve their productivity to face the challenges created by
competition. The art of selling lies in presenting the
benefits and multi-uses of the product so that the buyer gets the feeling of
satisfaction to his needs.
Not only, it is expected from a successful salesman that he must be well
informed/intelligent in terms of knowledge but also he must be skilled in the
presentation of information/knowledge of himself. A salesforce training
programme, thus, aims at providing the required knowledge about the
products and the effective ways presentation to the
customers in the market. The nature and scale of both these skills should
be specified, in advance, so that the programme so conceived is directed
towards predetermined and definite goals.
The Training-Programme may be for the-newly recruited salesmen as well as
those already in employment with the company to refresh their knowledge.
So, the first task for the Sales Manager/Training Manager is to set objectives
for such type of training programmes. For this purpose, the first step is to
identify the gap between the standard of skills required
and Salesman’s current standard in the organisation/company.
The level, they are supposed to achieve can be known easily by reference to
job specifications. Current-levels of skills, in the case of existing Salesmen,
can be determined through observations of their actual working i.e., their
knowledge about Product, Competition, selling skills etc. Though, a good
Training-Programme should clearly state what
the Trainees are expected to do, after their Training and the period within
which they should be able to do it. For guidance, the Training Manager, may
include Knowledge-Areas, viz. the Company, its Products, Practices and
Procedures; as well as the Product/Services and their Competition.
The Skill-Areas include:
(i) Sales-techniques,
(ii) Work-Organisation, and
(iii) Reporting-System.
Depending on the nature of a Company, there may be certain
other exclusive, supplementary areas, where Training may also be needed.
After setting the objectives, the Manager has to think about the following
points:
(i) What should be taught?
(ii) Where should it be taught?
(iii) Should who teach it?
(iv) How should it be taught? and
(v) What time should it be taught at?
In the reply of the first question, i.e., what (i.e., contents of the course), have
been explained already. Regarding the second question of place, normally
there are three alternatives: the company’s, factory and Office, the fields and
courses run by outside organisations, e.g., NICEM, etc. Usually, the best
location for training in basics: policies procedures and processes, knowledge
is the place where this type of work is being actually carried out, e.g.
Company’s Head Office. Moreover, the basics of theoretical-training maybe
discussed the staff training room is the best location. To impart the basic
knowledge, the trainees should be assigned to a senior sales executive. It
will be here that the trainee will be able to appreciate the application of the
required kills. And, training may be integrated with demonstrations and
real-life experience in in-plant training.
In the response to the question ‘By Whom’, it simply means that the training
should be imparted by different senior sales-executives, who are specialists
in their own areas. Of course, the overall respol1sibility is that of the sales
manager/training manager. By delegating the authority, the sales manager
does not wash-off his hands; he just shares his
burden, but retains overall control. Some big companies have their own
training department and human resource development departments. It pre-
supposes enough number of trainees, to justify specialised staff.
Sometimes, companies also have consultants. But this approach has the
disadvantage of total lack of their knowledge of company’s objectives and
needs. External courses are also mostly general in nature. However, a
judicial mix of all the three alternatives, so as to serve best the company’s
needs is advised. The reply of fourth question depends upon, who is
teaching? Every individual has his own and unique way of
teaching/explaining. However, some basic guidelines may be laid down to
serve as instructions of the training-personnel. Similarly, the last question is
at ‘What Time?’ It is difficult to precisely lay down the specific duration of
training. Usually, it may be between 6-8 weeks in medium to large
companies. In between
sessions, there should be adequate breaks. If required, the programme can
go well into the evenings. However, every instructor should avoid too much
of lectures and rather should concentrate on participative-activity, so that
interest in the course is maintained. Another teaching-approach, suitable to
all companies of any size is meet the man behind you. Here,
each head of the department talks with the trainees. In doing so, he makes
direct contact and he befriends them. He tries to self his department to the
trainees. During this type of a lecture, the following points are may be
covered:
(i) His job-what he does?
(ii) Goals-what his department does presently?
(iii) Innovations- what is scheduled for
future?
(iv) Needs-what is needed for his more effective working?
(v) Help how salesmen can help in effective working? To sum-up, the
initial training-programme ends with the achievement of basic-
objectives laid down for it. By this time the trainee is expected to
have acquired basic grounding in
(i) product-knowledge, (ii) the company and (iii) the desired
level of skills in sales-techniques, and maybe considered to be fit to be
exposed to actual field conditions, i.e., then starts the on-the-job training. It
is here, that he applies the principles enunciated during his training. It is
absolutely necessary that the supervisor looks after each new entrant; and
ensures their proper seasoning. Sometimes, a new entrant is assigned to an
experienced senior salesman, for a couple of weeks, so that he gets practical
training; before-assuming charge of his independent territory. It is
sometimes said, if the trainee has not learnt, the trainer has not taught. In
fact, it is true; because, as we know that after a series of tests, analysis etc.;
a person of below average qualities cannot get selected for the job. So,
unless the training-methods are devised and planned well in advance, it
would result in a huge waste of valuable resources of the company. A good
training schedule may be prepared on the basis of ACMEE principle, where’
A’ = Aim of the
Training; ‘C’ = Content of the Training; ‘M’ = Method of the Training; ‘E’ =
Execution of the training-programme, and ‘E’ = Evaluation. A Training-
Programme should be executed scientifically, and a post-evaluation
should be made after each kind of Training.
(F) CONCLUSION
The sales budget is a statement of projected sales revenues and selling
expenses. The projected sales revenues are, in effect, the sales volume
objectives derived from the various sales forecasts. The projected selling
expenses are determined by the different organisational units within the sales
department and are based on assigned sales and profit objectives. The sales
budget is best prepared in an atmosphere where the bottom-up planning style
predominates, with each echelon preparing a tentative budget of revenue and
expense. In reality, the sales budget is a composite of quotas-for sales,
profits, and expenses - and is a valuable tool for control.
SALES QUOTA
A sales quota is a quantitative goal assigned to a sales unit for a specific
period of time. A sales unit may be a sales person, territory, branch office,
region or distributor. Sales quotas are used to plan, control and evaluate
selling activities of a firm. As standards for appraising selling effectiveness,
quotas specify desired performance levels for sales volume, expenses, gross
margin, net profit, selling and non-selling activities, for some combination
of these items. Sales quotas provide a source of motivation, a basis for
incentive, compensation, standards for performance evaluation of sales person
and uncover the strengths and weaknesses in the selling structure of the firm.
Quotas are devices for directing and controlling sales operations. Their
effectiveness depends upon the kind, amount, and accuracy of marketing
information used in setting them, and upon management’s skills in administering
the quota system. In effective systems, management bases quota on information
derived from sales forecasts, studies of market and sales potentials, and cost
estimates. Accurate data are important to the effectiveness of a quota system,
but, they are not sufficient; judgement and administrative skills are required
of those with quota setting responsibilities. Soundly administered quotas
based on thorough market knowledge are effective devices for directing and
controlling sales operations.
Objectives
Sales quota is imposed in an organization to fulfil various objectives required to increase
the sales of product and maximize profit.
Sales objectives help an organization in the following ways −
They provide a standard to measure the performance.
They help to control sales expenses for customer acquisition.
They help define a target; this further facilitates motivation and enhanced
performance.
These help to identify and monitor the performance of salespersons.
These are some of the primary objectives of sales quota for an organization. Further, sales
quota can be divided in different types according to the requirement.
TYPES OF QUOTAS
Differences in forecasting and budgeting procedures, management philosophy,
selling problems, and executive judgment, as well as variations in quota setting
procedures, cause each firm to have somewhat unique’ quota. Ignoring
small differences, however quotas fall into four categories :
(i) Sales volume quota : The most commonly used quotas are those
based on sales volume. This type of quotas are set for an individual
sales person, geographical areas, product lines or distributive outlet
or for only one or more of these in combination. Sales volume quotas
are also set to balance the sales of slow moving products and fast
moving products or between various categories of customers per
sales unit. The sales volume quota may be set in terms of units of
product sales, or rupee sales .or both on overall as well as product
wise basis. Some companies combine these two and set quota on the
point basis. Points are awarded on the attainment of a certain specific
level of sales in units and rupee terms for each product/customer. For
example : A company might consider Rs.1000 equal to 1 point, Rs.2000
equal to 2 points and so on. At the same time company may award 3 points for unit
sales of product A and 5 points-for unit sales product
B. Companies use this type of approach generally because of problems
faced in implementing either rupee sales volume or unit sales volume
quota. Unit sales volume quotas are found useful in market situations
where the prices of the products fluctuate considerably or when the
unit price of the product is rather high. Rupee sales volume quotas
are found suitable in the case of sales force, selling multiple products
to one or different types of customers.
(ii) Financial or budget quotas : Financial or budget quotas, are determined
to attain desired net profit as well as to control the sales expenses
incurred. In other words, it is set for various units in the sales organisation
to control expenses, gross margin, or net profit. The intention in
setting financial quota is .to make it clear to sales personnel that this
jobs consist something more than obtaining sales volume. It makes
personnel more conscious that the company is in business to make
a profit. Expense quotas emphasize keeping expenses in alignment
with sales volume, thus indirectly controlling gross margin and net
profit contribution. Gross margin or net profit quotas emphasize
margin and profit contributions, thus indirectly controlling sales
expenses.
Expense quotas : In order to make the sales force conscious of the
need to keep selling costs within reasonable limits, some companies
set quota for expenses linked to different levels of sales attained by
their sales force. And to ensure its conformity they even link compensation incentives
to keeping expenses within prescribed limits.
Since sales are the result of the selling tasks performed which vary
across sales territories, it is not easy to determine expense quotas
as percentage of sales in a uniform manner. Also very strict conformity
to expense. quota norms result in demotivation of sales force. As such
expense quota is generally used as a supplement to other types of
quotas.
Net profit quotas : Net profit quotas are particularly useful in multi
product companies where different products contribute varying level
of profits. Its emphasis is on the sales force to make right use of their
time. It is important for the management to ensure that its sales force
do not spend more time on less profitable products, because the
salespersons are costing the company the opportunity of earning
higher profits from their high margin products. In other words, it
should ensure that its salespersons spend their maximum time on
more profitable customers. The objective can be achieved by setting
a quota on net profit for its sales force, and thus, encouraging them
to sell more of high margin products and less the low margin products.
(iii) Activity quotas : Good performance in competitive markets requires
the sales force to perform the sales .as well as market development
related activities. The latter activities have long term implications on
the goodwill of the firm.
To ensure that such important activities get performed, some companies
set quotas for the sales force in terms of various selling activities to be performed by
them within a given period. Finally the company
must set a target level of performance for, the sales persons. Some
of the common type of activity quotas prevalent in Indian firms are
as under :
Number of prospects called on
Number of new accounts opened
Number of calls made for realising company’s account
Number of dealers called on
Number of service calls made
Number of demonstrations made
The chief merit of activity quota lies in its ability to direct the sales
force to perform the urgent selling activities and-important nonselling
but market development related activities in a balanced and
regular manner.
(iv) Combination Quotas : Depending upon the nature of product and
market, selling tasks required to be performed as well as selling
challenges facing the company, some companies find it useful to
set quotas in combination of the two or three types discussed above.
Rupee sales volume and net profit quotas or unit sales volume and
activity quota in a combined manner are found in common use in
a large number of consumer and industrial products companies in
India.
CONCLUSION
Quotas are quantitative objectives assigned to sales personnel and other units
of the selling organisation. They are intended both to stimulate performance
and to evaluate it, through communicating management’s expectations and
serving as performance measures. In successful quota systems, special pains
are taken to tie in quota setting procedures with sales potentials and planning
data from the sales forecast and sales budget. Sound judgement is required
for adjusting tentative quotas both for contemplated policy changes and for
factors unique to each territorial environment. Continuous managerial review
and appraisal and balanced flexibility in making changes in quotas and
improvements in quota setting procedures characterise successful quota
system. When based .on relevant and accurate market information, and when
intelligently administered, quotas are effective devices for directing and
controlling sales operations.
SALES TERRITORIES
The task of assigning the sales territories to the sales representatives has
a significant effect on the functional efficiency of the sales department. The
sales representatives do not work within the boundaries of the organisation.
For them, working at the market place is the prime responsibility. In case
the territories are not assigned by clear planning, there is likely to no control
over the activities of the sales representatives. Also, in case the territories
are too large or too small, the performance is bound to be affected. In case
the nature of the territories is not homogenous, the comparison of the
performance of the sales representatives becomes difficult. With this background
of the difficulties that can arise in case of unplanned territory allocation,
it is of prime importance that the managers plan the territories of the
companies very carefully.
Sales territory : the concept
The territory can be defined in terms of the size of the area in which the
sales representatives operate as well in terms of the number of customers.
Operationally, it is better to define the sales territory as a
grouping of customers, and prospects assigned to an individual sales person. This
definition lays more stress on the customers and prospects in an area instead
of the size of the territory. A company might prefer to keep more sales
representatives in a densely populated metropolitan city and keep a few sales
representatives in an area with a lesser density of the customers and prospects.
E.g. Daewoo Motors selling Matiz and Cielo cars would prefer to keep more sales
representatives in Delhi and might keep only a few sales representatives
in the entire state of Haryana or Himachal Pradesh, although in terms of the
size the states are much bigger. It is the number of the customers as well
as the prospects who are likely to decide the sales volume that can be
achieved by a company and not the geographical area. The prospects represent
the sales potential that can be useful for the company in future. As the
companies start their marketing operations, they usually start with appointing
the sales representatives in the potential areas and increase the number of
sales representatives in the underrepresented area. This might call in for
increasing the number of sales representatives in the territories. In cases
when a single account is very large and is responsible for a significant part
of the sales of a company, them a single representative might not be assigned
this important client but it might be handled by a group of executives from the head
office. Such a client (often called as account) is known as house
account.
satisfied from the compensation. It is the personal relationship that the sales
representatives develop in the market that helps them in getting the sales.
Consequently, if a sales representative leaves an organization, the new person
has to develop the relations to get the same level of sales. So, the managers
have to devise ways and means that keep the managers going to achieve their
targeted sales.
Contributing to morale of sales force
As explained in the previous point, correctly designed territories facilitate
evaluation of the sales representatives When the sales representatives feel
that they are getting their due reward for their efforts, they feel motivated
to achieve higher levels of sales performance. Their commitment to the
company increases and their morale i.e. their drive increases.
Coordination
The territories help in achieving the coordination between personal selling
and advertisement. If left alone, both of them cannot be an effective means
to achieve higher sales. It is their combined effort, which can achieve the
sales objectives. By the allocation of territories, the specific requirement
of each area can be studied and the advertisement and the sales promotion
scheme can be designed accordingly. These customized approaches helps in
servicing the customer in-a better way and thus gain more sales. E.g. A
company can divide the Indian states as territories and study the requirements
of the customers of each state. Each state will have its different language
and may require different sales promotion campaigns. Correctly formed
territories will reduce the wasteful expenditures into unproductive sales
promotion schemes and adopt a more effective and targeted approach.
STEPS FOR TERRITORY DESIGN
The steps for designing the sales territory very with the nature of business
operation. For example the principals followed while designing the sales
territories would be very different in case of FMGC companies like Hindustan
Levers, P&G etc. in comparison to consumers durable companies like Maruti,
BPL etc. Still some generalisation can be drawn regarding the steps for
setting of the sales territory :
(i) Selecting a basic geographical control unit.
(ii) Estimating the sales potential in control units.
(iii) Designing tentative territories from control units
(iv) Adjusting for coverage difficulty and redesigning the territory.
Selecting a basic geographical control unit.
The stating point in the planning of the sales territories is the basic geographical
unit. The commonly used geographical control unit in India is the district
or the state. In case of metropolitan cities, the territories are allocated as
per residential/business localities. Some of the other bases of selecting a
control unit are Zip code numbers (practiced in U.S.A.), cities, trading areas
etc. While selecting a control unit, it is preferable to keep them small and
allocate them on the basis of geographical proximity in order to facilitate
the sales operation subsequently. Such an allocation of territories also facilitates
readjustment of territories at a later stage. The various basis of geographical
control units are further-described herein :
Countries
The firms operating in multinational markets divide their markets on the
basis of the countries. The countries can be assumed to be homogenous
markets, although large countries need to be further subdivided into smaller
territories. However, the companies in the initial stages of multinational
marketing find it most convenient to divide their market on the basis of
countries or even groups of countries such as Middle East, Far East, Europe,
South Asia etc.
States
For the firms operating in India, state is considered to be a very convenient
geographical control unit. The companies might even use groups of states
and call it and region. The region shall be further divided into the states and
then the states further divided if necessary to districts under the area sales
managers with sales representatives operating in the smaller towns. E.g.
Cipla Ltd. A major pharmaceutical company has 22 regions in the country,
each comprising of one or more states. Similarly, most companies divide
all India sales operations into five regions. namely North, South, East, West
and Central India. Each region consists of a group of states.
Districts
With the increased competition, the companies have to formulate territories
much smaller than the states because they have to increase their reach. For
this purpose, the district serves as a logical basis for division into territory.
However, most companies divide the districts according to their convenience and may
not adhere to the administrative districts as formed by the government.
E.g. Shahbad, although comes under district Kurukshetra, most companies
count it as a part of the territory of Ambala district because the stockists
of Ambala visit Shahbad while those of Kurukshetra do not. So, the sales in
Shahbad are not counted into the performance of Kurukshetra district and
are counted as the sales performance of Ambala district. Analogous to
districts, American companies use Zip code as a basis for making the territories.
Zip code contains area that can be counted as one homogenous market.
Metropolitan cities
Metropolitan cities comprise of a large population in a relatively smaller
area. The population in Delhi is, almost equal to that of the state of Haryana
although in terms of area it is very small. So, in case of metropolitan cities,
the localities are divided depending on the basis of the number of customers
and prospects living in an area. Usually, the people living in a locality can
be taken as a fairly homogenous in terms of their income levels, education
and consequently consumer behaviour. So, they can be taken as one territory.
E.g. people of Greater Kailash and Nehru Place localities in Delhi can be
taken as one territory while those living, in Janakpuri and Vikaspuri can be
taken as another territory. Similarly, people living across river Yamuna can
be taken as another territory. The economic level, education, occupation etc.
in these localities is likely to be homogenous. White the first is a posh
locality, the second one may be taken as middle income class 1ocality and
the third as a lower income locality. The companies can allocate the resources
to these territories and achieve their sales targets. Territory allocation on the basis of
product
In certain cases, companies are resorting to allocating territories on the
basis of products. E.g. Cipla Ltd. Has representatives promoting specialised
products such as anti asthmatic and cardiac range of products in addition to
the representatives selling the regular antibiotics and anti inflammatory
.products. The representatives promoting specialised products are assigned
special territories, exclusive of the regular territories. There might be
representative selling cardiac products only in Punjab and Chandigarh while
the other may visit the doctors only in Haryana and Delhi. With the everincreasing
product lines of companies, this basis bf territory allocation is
also becoming quite popular.
Estimating the sales potential in each control unit
Once the basis of a control unit is established, the sales potential of each
control unit is estimated. The sales potential is estimated not only in the
present terms but also the future terms by estimating the number of prospects
in a sales territory. For this, the customer profile must be defined and an
estimate of the number of customers is made. Caution must be exercised
to estimate of the number of target customers and not vaguely defined
individuals. E.g. a company (say Revelon) marketing cosmetics has to estimate
not the number of women in a territory but the women who have the capacity
to purchase their premium range of cosmetics. So, they would be. interested
to estimate the population of the number of women in the upper middle class
society whom they would target in their marketing strategies. Thus, the
territories must not be looked upon merely in terms of the geographical area
and population, but in terms of the potential customers who can actually be useful to
the marketers. Such an estimate may be possible, in those situations,
an indirect estimate about the size of markets must be made by measuring
the variables that have a direct correlation with the market size. E.g. the
campany selling paints may not be able to estimate the number of people
who will get their houses painted in the next year, but the estimate of
population may be an indicator of the likely sales. In a populated area, the
sales are likely to be more as compared to a sparsely populated area.
Having conducted the exercise stated above, the companies estimate the
marketing potential. The next step is to estimate the sales potential by
analyzing the historical market shares within each control unit. The changes
required (if any) in the strategies and marketing practices are studied before
arriving at any conclusion. Having estimated the sales potential of the control
units, the territorial planner identifies those territories that have substantial
sales potential to justify sales-coverage. In case the company plans to have
mass coverage as its strategy, then all the territories are covered irrespective
of the sales potential. However if the company plans far a selective coverage
of markets, then the territories have to be selected an the basis of the sales
potential. This is the practice preferred during the initial launch stages of
the products as in case the companies are marketing industrial products.
Designing tentative territories from control units
The control units are combined to be converted into the tentative territories.
The territories are always subject to change, so they have been termed as
tentative. As a first exercise, contiguous control units are designated as
territories, each containing approximately same sales potential. The number of sales
persons required are estimated by dividing the sates potential and
the average sales that can be realised by an individual sales person. Historic
data and competitor information serve as useful basis in making such decisions.
For example, .assume that the management estimates that an average sales
person can realise a sale of Rs. 25,000 and the sales potential of Haryana
is Rs. 2,50,000. The management will have to divide Haryana into ten territories
and appoint ten sales representatives in order to achieve the sales targets.
In practice, while every effort is made to keep the, territories homogenous
in size, such figures present lot of practical difficulties. So, the sales potential
of a territory is often expressed as the percentage of sales potentials of the
total market.
Designing the shape of territories
The shape of the territories affects the selling expenses as well as the
efficiency of the sales person. If the territory shape permits a sales person
to spend minimum time on the road and more time in meeting the customers
it results in more productive time and hence better achievement of target.
This also contributes to increasing the morale of the sales persons. Three
types of shapes are most commonly used; the wedge, the circle and the
clover leaf territories. There shapes are as shown in the figure.
The wedge shape territory is appropriate when it contains both rural as well
as the urban areas. The urban areas are situated in the middle of the wedge
and the sides of the wedge protrude in the direction in which the rural
markets are spread. Wedges can be in m-any sizes. The travel time along the
adjoining wedges can be equalised by balancing urban and non-urban calls.
The circle shaped territory is appropriate when the customers (accounts) are
evenly distributed throughout the area. The sales person assigned to circular
shaped territory is based at some point near the centre, making for greater
uniformity in frequency of calls on customers and prospects. This also
makes the sales persons nearer to more of the customers than is possible
in a wedge shaped territory.
The cloverleaf is desirable when accounts are located randomly throughout
the territory. Careful planning of call schedule results in each clover leaf
being completed in a week or a fortnight in order to facilitate the completion
of one touring cycle of the sales representative. The sales representative can
report to his head quarter after the completion of one tour cycle. Usually
home base of the sales persons assigned to the territory is near the centre.
Cloverleaf territories are more common among consumer market and among
companies cultivating the markets extensively rather than intensively.
Adjusting and redesigning the territory
The final step is to adjust the tentative-territories by adjusting them for
coverage difficulty. The tentative territories should be so designed that each
territory contains approximately the same sales potential. However, it must
be accepted that even the territories with nearly equal sales potentials require
different selling efforts. They also differ in the selling expenses also. The
unrealistic assumptions are removed so that no differences in the characteristics
of geographical control units exist. Significant differences in physical and
other characteristics make the sales coverage more difficult for some control
units than for others. For example, certain large cities like Delhi have greater sales
potentials for
most products than some states such as Haryana or Punjab. However, the
time required to contact customers and prospects in cities is much less, and
the same is true in case of selling expenses. The optimum territorial arrangement
is reached when incremental sales per dollar of selling expenditures are
equated among all territories. In working toward this ideal, both sales potential
and coverage difficulty are taken into account. As the planner adjusts for
differences in coverage difficulty, control units are taken away from some
tentative territories and added to others. The final territorial arrangement is
one in which different territories contain different sales potentials.
Differences in coverage difficulty represent differences in workloads. The
planner ascertains how large the maximum workload the largest work load
for any salesperson should be. All workloads need not be the same size, since
sales personnel vary in ability as well as in drive, and some can safely be
assigned larger workloads. However, since there is an upper limit to the
desirable workload, and this also limits a territory’s maximum geographical
extent. When final adjustments for coverage difficulty are mad : sales territories
have varying amounts of sales potential and different-sized work loads, but
none exceeds the maximum desirable work load. The work load method is
one of the approaches to determine the sales force size. Here, the same
concept, with minor modifications is used for redistricting.
Redistricting to adjust for coverage difficulty (that is, differences in work
loads) is a seven-step procedure :
1. Determination of number, location and size of customers and
prospects in each tentative territory. Customers are identified and located through
sales records; prospects through trade directories,
subscription lists to trade publications, classified directories, and
credit reporting agencies. Size is measured in terms of sales potential.
2. Estimation of the average time required for each sales call. This
varies from account to account and from prospect to prospect, so
customers and prospects are classified into groups, estimating an
average time per call for each group. Time and duty analyses of sales
personnel are used to check these estimates.
3. Determination of the time required for traveling from one customer
to the next. This varies among regions, depending on the density of
customers and prospects and the condition of roads and transportation
facilities. Particular attention is paid to physical characteristics. Large
rivers, lakes, mountains, and other barriers to travel make natural and
necessary territorial boundaries. The number of places where a large
mountain range can be crossed by automobile are limited and often
considerable time is consumed in the crossing. The same is true of
large rivers, lakes, bays, and so forth. Transportation facilities are as
important as physical characteristics. If public transportation facilities
such as commercial airlines are used, territories are planned with an
eye on locations of air terminals. The planner interrelates and balances
differences in sales potential, physical geographical characteristics,
and transportation facilities and routes. After sketching in on a map
the tentative territorial division according to roughly equal sales potentials, the planner
makes adjustments after superimposing maps
showing topographic and transportation features.
4. Deciding call frequencies. Within certain control units, some or all
customer and prospect classes require call frequencies that differ
from those in other control units. Differences in the strength of
competition require variations in call frequency rates. Similarly, call
frequency rates are influenced by the market acceptance of the product
line within control units. Cost studies on minimum profitable order
sizes also provide input to the decision on call frequencies.
5. Calculating the number of calls possible within a given time period.
To determine the number of calls per day in a certain control unit,
the average amount of time required for each call is added to the
average time between- calls and divided into the number of working
hours in the day. Adjustments are made when call lengths vary for
different classes of customers and prospects.
6. Adjusting the number of calls possible during a given period by
the desired call frequencies for the different classes of customers
and prospects. Such an exercise results in estimation for the total
workload represented by the control units in each tentative territory.
Further adjustments are made to assure that the workload in any
territory is not larger than the allowable maximum and that selling
expenses are within budget limits. The planner shifts control units
among different tentative territories, adding units to some by taking
them away from adjacent territories. Each’ shift brings the territorial arrangement
closer to the optimum-that is, closer to one in which
incremental sales per dollar of selling expenditures are equated among
all territories.
7. Checking out the adjusted territories with sales personnel who work
or who have worked in each are, and make further adjustments as
required. Personnel familiar with customer service requirements,
competitive conditions, and topography, roads and travel conditions
may point out weaknesses not obvious to the planner. These cause
further shifting of control units from one territory to another, each
shift bringing the final territorial arrangement a little closer to the
optimum.
Assigning sales persons to the territories
Upon obtaining the best possible arrangement of the territories, the sales
persons are assigned to the territories. The above planning had assumed that
all the sales persons are similar in their performance, however the actual
allocation of persons poses lots of problems. People vary in ability, initiative,
effectiveness and physical condition. Moreover, sales persons performance
can vary in the territory. E.g. a South Indian is likely to be less effective in
Himachal Pradesh and vice versa. So, management has to consider lots of
factors while assigning the persons to the territories. Some companies find
that assigning hometown to the people to work gives better results while
some. companies think otherwise. There can be no prescriptive basis to serve
as a basis for assigning persons to the territories. The task of assigning persons must
fit into individual’s ability and should result into highest
contribution of the individual towards corporate profit. It might be noted that
even the periodic transfer of persons of one territory to another might be
done where it is felt that such an exercise will increase the effectiveness
of the person.
Routing and scheduling persons
The routing and scheduling plans aim to maintain the lines of communication
so as to optimise sales coverage and minimise wastage of time. The only
productive time that the sales persons spend is when they are in contact with
the customers. The time spent in travelling and reporting activities yields
less returns to the company. 5d, the routes and schedules of the sales persons
should be so designed that the non-productive time is maximised and the
productive time is maximised. The management can consider the options of
modes of transport in case this results in increasing the productive time. E.g.
the sales person may be provided with a car which will result in increase in
the productive time and an increase in the sales expenses also. Depending
the financial viability, such a decision should be taken. Similarly, companies
might allow sales persons to travel by air so as to reduce the travelling time.
The planned selection of routes will also result in reduction of non-productive
time. The schedules must be according to the convenience of the customer,
but care must be taken that the cost involved does not increase unnecessarily.
The practical problems must be accommodated while designing tour plans
and schedules and adequate flexibility must be allowed in the plans to allow
the uncontrollable situations.
Reasons for Establishing Territories
The main motive of establishing sales territories is to simplify the planning and controlling
of the selling function.
Following are some reasons for establishing sales territories −
Individual to District
District to Regional
Regional to Entire Sales Force
By this comparison, we can evaluate and determine where the sales force is contributing
for high volume of sales.
MEANING OF MOTIVATION
High productivity in sales personnel come about neither naturally nor
accidentally. Some sales personnel are self-starters, requiring little external,
incentive to perform effectively, but they are the exceptions. The majority
of sales personnel require motivational help from management in order to
reach and maintain satisfactory job performance levels.
Motivation is goal-directed behaviour, underlying which are certain needs or
desires. The term “needs” suggests ‘lack of something’ or a state of felt
deprivation of some basic satisfaction, while the term “desires” suggests
positive ardor and strength of feeling. The complex of needs and desires
stemming from within individuals leads them to act in ways that will satisfy
these needs and desires.
Specifically, as applied to sales personnel, motivation is the amount of effort
the salesperson desires to expend on each of the activities or tasks associated
with the sales job, such as calling on potential new accounts, planning sales
presentations, and filling sales reports. Expending effort on each activity
making up the sales job leads to some level of achievement on one or more
dimensions of job performance-total sales volume, profitability of sales,
sales to new accounts, quota attainment and the like.
Motivational “Help” From Management
Most sales personnel require additional motivational “help” from management
in order to reach and maintain acceptable levels of job performance. They
require additional motivation both as individuals and as group members. As
individuals they are targets for personalized motivational efforts by their
superiors. As members of the sales, force, they are targets for sales management
efforts aimed toward welding them into an effective selling team. Four
aspects of the salesperson’s job affect the quality of its performance. The
following discussion focuses on these aspects. Each aspect is an important
reason why most sales personnel require additional motivation to perform
their jobs satisfactorily.
(a) Inherent Nature of the Sales Job : Although sales jobs vary from
company to company, sales jobs are alike in certain respects. To a
greater or lesser extent, each sales job involves a succession of ups
and downs, a series of experiences resulting in alternating feelings
of exhilaration and depression. In the course of a day’s work, salespersons
interact with many pleasant and courteous people; but they also meet
some who are unpleasant and rude, with whom it is difficult to deal.
They are frequently frustrated, particularly when aggressive competing
sales personnel are vying for the same business, and they meet numerous turndowns.
Furthermore, sales personnel spend not only working time
but considerable after-hours time away from home, causing them to
miss many of the most attractive parts of family life. These conditions
can cause an individual salesperson to become discouraged, to achieve
low performance levels, or even to seek a nonselling position. The
inherent nature of the sales job, then, often is the reason that additional
motivation is required to assure acceptable job performance.
(b) Salesperson’s Boundary Position and Role Conflicts : The
salesperson occupies a “boundary position” in the company and must
try to satisfy the expectations of people both within the company (in
the sales department and elsewhere) and in customer organizations.
There is linkage with four distinct groups : (1) the sales management
group, (2) the balance of the company organization who must be
depended upon for order fulfillment, (3) the customers, and (4) other
company sales personnel. Each group imposes certain behavioral
expectations on the salesperson and, in playing these different roles,
the salesperson faces role conflicts, such as :
1. Conflict of identification : This arises out of multi group membership.
As the salesperson works with the customer, it is reasonable to expect
identification with the customer rather than the company. However,
on returning to the company, the salesperson must drop identification
with the customer and identify with company.
2. Advocacy conflict : This arises when the salesperson has identified
with the customer, and seeks to aid the customer by advocating the customer’s
position to other groups in the company organization.
Although this may be important-and may be encouraged by the sales
n1anagement group it places the advocator in a difficult position.
(c) Tendency Toward Apathy : Many sales personnel have a natural tendency
to become apathetic, to get into a rut. Those who, year after year, cover
the same territory and virtually the same customers, tend to lose interest
and enthusiasm. Gradually their sales calls degenerate into routine
order taking. Because they feel they know the customers so well. They
come to believe that good salesmanship is not longer necessary. Many
salespeople require additional motivation to maintain continuing
enthusiasm for their work or to generate renewed interest in it.
(d) Maintaining a Feeling of Group Identity : The salesperson, working
alone for the most part, finds it difficult to develop and maintain a
feeling of group identity with other company salespeople. Team spirit,
if present at all, tends to be weak. Thus, the contagious enthusiasm
conducive to improving the entire group’s performance-does not develop.
If management, through providing added motivation, succeeds in developing
and maintaining team spirit, individual sales personnel will strive hard to
meet group performance standards : Few people who do not consider themselves
members of the sales team appear as poor performers in the eyes of their
colleagues in the sales force.
Providing the kind of working atmosphere in which all members of the sales
force feel they are participating in a cooperative endeavour is not easy nevertheless,
effective sales management works continuously to achieve and
maintain it.
DESIGNING A SALES-COMPENSATION PLAN
Third, the plan is fair-it does not penalize sales personnel because of factors
beyond their control within the limits of seniority and other special
circumstances, sales
personnel receive equal pay for equal performance.
Seventh, the plan helps in attaining the objectives of the sales organization.
IMPORTANCE OF MOTIVATION
The nature of the sales job, the individuality of salespeople, the
diversity of company goals, and the continuing changes in the
marketplace make motivating sales persons a particularly difficult and
important task.
Unique nature of the sales job- Salespeople experience a
wonderful sense of exhilaration when they make a sale. But they must
also frequently deal with the frustration and rejection of not making the
sale. Even very good sales person does not make every sale. Also, while
many customers are gracious, courteous, and thoughtful in their
dealings with salespeople, some are rude, demanding, and even
threatening.
Salespeople spend a large amount of time by themselves calling on
customers and travelling between accounts. This means that most of the
time they are away from any kind of support from their peers or leaders,
and they often feel isolated and detached from their companies.
Consequently, they usually require more motivation than is needed for
other jobs to reach the performance level management desires.
Individuality of salespeople- Sales people have their own personal
goals, problems, strengths, and weaknesses. Each sales person may
respond differently to a given motivating force. Ideally, the company
should develop a separate motivational package for each sales person;
but a totally tailor-made approach poses major practical problems. In
reality, management must develop a motivational mix that appeals to a
whole group but also has the flexibility to appeal to the varying individual
needs.
A related point is that the sales people themselves may not know
why they react as they do to a given motivator, or they may be unwilling
to admit what these reasons are. For example, a salesperson may engage
in a certain selling task because it satisfies his ego, rather than admit
this, however, he will say that he is motivated by a desire to serve his
customers.
Diversity in company goals- A company usually has many diverse
sales goals, and these goals may even conflict with each other. One goal
may be to correct an imbalanced inventory and another may be to have
the sales force to missionary selling to strengthen long-term customer
relations. These two goals conflict somewhat and require different
motivating forces. With diverse goals such as these, developing an
effective combination of motivators is difficult.
Changes in market environment- Changes in the market
environment can make it difficult for management to develop the right
mix of sales force motivational methods. What motivates sales people
today may not work next month because of changes in market
conditions. Conversely, sales executives can face motivational problems
when market conditions remain stable for an extended period of time. In
this situation, the same motivators may lose their effectiveness.
5.8 MOTIVATION THEORIES
Researchers in the behavioural sciences have shown that all
human activity is directed toward satisfying certain needs and reaching
certain goals. How sales-people behave on the job is directly related to
their individual needs and goals. Thus, some individuals will behave
differently and will be more successful because of different motivational
patterns. Many people feel that individual motivation is dependent upon
whether or not salespersons find something in the job that is personally
motivating for them. Therefore, the job of the sales manager must be
redefined, with greater emphasis placed upon understanding and
accepting the idea of how motivation works. The sales manager is
responsible not only for motivating the sales force per se but also for
counseling each salesperson individually to find the source of that
person’s self-motivation.
Maslow’s Need Theory
Maslow’s well-known theory contends that people are motivated by
a “hierarchy” of psychological growth needs. Relative gratification of the
needs at one level activates the next-higher order of needs. The
hierarchy-of-needs theory implies that salespeople come to their jobs
already motivated and that they only need the opportunity to respond to
the challenges of higher-order needs. The following Exhibit presents the
order of priority of the needs individuals seek to fulfill and the needs
sales managers must consider.
EXHIBIT: HIERARCHY OF HUMAN NEEDS AND THEIR IMPLICATIONS
FOR SALES MANAGERS
Maslow’s Hierarchy Salesperson’s Needs Sales Manager’s Task
Self-actualization needs
Self-development
Creativity
Self-fulfillment
Provide greater freedom,
self-development workshop
95
Esteem needs
Recognition Status Provide greater job
responsibilities, promotion
opportunities, public
recognition for
achievements
Social needs
Social interaction
Friendship
Acceptance among peers
and superiors
Maintain close
relationships with sales
force
Sales meetings
Newsletters, memoranda,
etc.
Safety needs
Freedom from worry about
security of jobs, incomes,
medical expenses, etc.
Provide a balanced package
of fringe benefits
Physiological needs Food, shelter, overall
health, etc.
Be aware of general health
and living conditions of
sales force
Sales managers applying need theory should keep in mind its two
major premises:
• The greater the deprivation of a given need, the greater its
importance and strength.
• Gratification of needs at one level in the hierarchy activates
needs at the next-higher level.
Sales managers must keep track of the level of needs most
important to each salesperson, from the beginning trainee to the senior
sales representative. Before salespeople become stagnated at one level,
they must be given opportunities to activate and satisfy higher-level
needs if they are to be successfully motivated toward superior
performances. Since various salespeople are at different need levels at
any one time, sales managers have to retain their sensitivity to the
evolving needs of individual sales person through close personal contact
with each member of the sales force.
people who feel overpaid tend to increase their efforts. People may also
reduce their inequity tensions by distorting their perceptions of their
rewards and contributions versus those of others. Finally, individuals
may leave a perceived inequitable situation by quitting the job or
changing the comparison group.
According to inequity theory, it is important that sales managers
learn how individual sales representatives feel about the equity of their
contributions and rewards compared with those of others. If inequity is
perceived by some of the salespeople, the sales manager needs to correct
the situation if inequity really does exist or help the salespeople reduce
tensions by altering their perceptions of the comparison group’s relative
contributions and rewards.
Role clarity: Donnelly and Ivancevich contend that one of the
most important needs of salespeople is role clarity, or a concept of exactly
what their job entails. Because salespeople often lack sufficient job
knowledge, must deal across departmental boundaries, and are
challenged by complex problems requiring innovative solutions, precisely
defined goals and clear role expectations can be motivational. Empirical
research with salespeople correlates increased role clarity with greater
job interest, more opportunity for job innovation, less work tension, more
job satisfaction, and a lower propensity to leave. Salespeople usually
want and need more information about what is expected of them and how
they will be evaluated.
Clearly written job descriptions and management-by-objectives
(MBO) conferences that set precise goals (mutually agreed upon by the
salesperson and sales manager) can have important motivational effects and
stimulate job satisfaction. Clarifying the role expectations for
salespeople by individualizing achievement plants and providing a
continuous flow of helpful information will consume significant amounts
of sales management time. But this seems to be one of the least
complicated, least expensive, and surest ways of obtaining higher sales
force productivity.
MOTIVATIONAL TOOLS
The simple motivational tools of early years such as only financial
benefits prove to be a poor method of motivation beyond physiological
and safety needs satisfaction on account of the unique aspects of a
salesperson’s job. The non-financial incentives, become an important
component of motivation. Some of the factors that make a special mark
on salesforce motivation are discussed below.
1. Meeting between manager and salesforce- These are highly
regarded by sales managers in the motivation of their sales
teams. This provides opportunity to managers to meet their
salesforce in the field, at head office and at the sales
meetings/conventions. This provides a number of
opportunities for improving motivation. These meetings allow
the sales manager to understand the personality, needs and
problems of each salesperson.
2. Clarity of job- Clarity of job and what is expected from the
salesperson is a great motivator. The objectives when duly
quantified and well defined, properly connected and linked with the reward
and recognition serve as source of
motivation to the salesperson.
3. Sales targets or quotas- If a sales target or quota is to be
effective in motivating a salesperson, it must be regarded as
fair and attainable and yet offer a challenge to him. Because
the salesperson should regard the quota as fair, it is usually
sensible to allow him to participate in the setting of the
quota.
4. Sales contest- The sales contest is an important tool to
motivate salesperson. The purpose of the sales contest varies
widely. It may encourage a higher level of sales in general, to
increase the sales of a slow-moving product or to reward the
generation of new customers. It provides an incentive to
show better performance and secure more satisfactory
results.
5. Sales conventions and conferences- These are the devices
of group motivation. They provide opportunities for
salesperson to participate, gain social satisfaction and
express their views on matters directly affecting their work.
They promote team work, dissolve social barriers, inspire and
raise salesperson’s morale. Most of the companies in India
are now-a-days adopting this method to motivate their
salesforce.
6. Positive affect- The positive affect method is also an
important techniques for motivating the salesforce to their
best. The proper application of praise, positive feedback, and human
warmth and understanding can impel others to
perform up to their capabilities. This must be done in a
genuine way and not be perceived as overtly-self serving.
7. Leadership style of the manager- Leadership style of the
manager plays an important role in motivating the
salesperson. Inspirational leadership, which refers to
influence through referent power. Identification or
charismatic charm is an important tool in the motivational
strategy of the management.
8. Freedom to work- In order to perform the onerous duties
and responsibilities, the salesperson must be given a
reasonable amount of freedom and discretion in performing
their job. Discretion and freedom may be accomplished by
allowing salesperson to develop their own call patterns, more
control over the types of promotional packages that are
offered to their customers etc. Freedom or autonomy satisfies
the psychological needs and is like power pay (which is a
reward), making the job of salesperson more important in the
organization.
9. Reward and recognition- Although sales quotas, sales
contests, conventions and conferences have positive carry
over effects, these are short lived techniques of motivating
salesmen. On the other hand reward and recognition on
salesperson accomplishments are more enduring and
relatively economic methods of motivation. Some of the ways
to extend recognition and honour to salesperson include conferment upon
the title of “salesman of the month/year”.
Congratulation telegrams from members of top management,
sales trophies, offering membership of social clubs, mention
in company newsletter, certificate etc.
10. Persuasion- One of the more common and recommended
forms of inducing high levels of motivation is through
persuasion. In this situation, managers use rational
arguments to convince salesperson that it is in their own
best interests to act in preferred way. Persuasion has the
advantage of getting people to conclude that their actions
were performed out of their own free will. This leads to higher
levels of self direction than reward or coercive modes of
influence where one perceives he or she acts more as a
function or external compulsion than internal volition.
beyond the sales person’s control. For instance, pricing policy affects both
net profit and gross margin and delivery costs, not only vary in different
territories but are beyond the sales person’s controls. Neither ratio should
be used without recognition of its shortcomings.
(d) Territorial Market Share : This performance standard takes into
account market share, on territory to territory basis. Management sets target
market share percentages for, each territory. Management later compares
company sales to industry sales in each territory and measures the effectiveness
of sales personnel in obtaining market share. Closer control over the individual
sales person’s sales efforts is obtained by setting target market share percentages
for each product and each class of customer or even for individual customers.
(h) Order Call Ratio : This ratio measures the effectiveness of sales
personnel in securing orders. It is calculated by dividing the number of
orders secured by the number of calls made. Order call ratio standards are
set for each class of account. When a sales person’s order call ratio for a
particular class of account varies from the standard, the sales person needs
help in working with the class of account.
(j) Average Order Size : The usual practice is to set different standards
for different sizes and classes of customers. Using average order size standards
alongwith average cost per call standards, management controls the sales
person’s allocation of effort among different accounts and increases order
size obtained. Accomplishing this objective may require sales personnel to
reduce the frequency of calls on some accounts.
The causes for divergences have to be identified so that the corrective action
may be taken. A detailed analysis is, therefore, necessary to reveal the true
position. There may be two types of reasons for deviations : Controllable
and Noncontrollable. If the reason is controllable, it may be cured otherwise
the management will have to revise the standards of actions.
3. Corrective Actions : Once sales manager is able to identify correct
reason of over and under achievements, he has to take corrective actions.
There are two options : modify the standards or alter the results. If, events
are such that rendered the plan or sales budget inadequate or in other words,
factors responsible for deviations are noncontrollable, the sales management
must revise the sales plan or sales budget taking into account the changed
market conditions. If, on the other hand, the factors responsible for changes
are controllable, alteration of results should be done by having stricter
control over sales activities.
Thus, Sales control efforts entail the evaluation of the actual performance
vis-a-vis the standards so that the necessary corrective actions can be taken
immediately to improve the performance level.
Data for Sales Analysis : Sales analysis is nothing but to collect, classify,
compare and study the company sales data. Collection of data is not a part
of analytical effort but it vitally affects the quality of sales analysis.
Sales analysis is generally based on data already available. It is called Secondary
Data. Secondary data may be gathered either from internal sources such as
invoice or shipping records, or from external sources such as marketing
research agencies, government agencies, trade associations and trade journals.
Secondary data are often readily available but should be used with caution.
The management has to rearrange them according to its needs. Necessary
adjustments are required if they are outdated or they are classified in a
different manner. Their source and limitations should also be studied before
they are used for analysis.
(c) Sales Analysis by Product Line : Before asking for any explanation
from Gupta for his poor sales performance, the Sales Manager should see
his sales performance based on product line :
It is clear from the above table that Gupta did an excellent job of reaching (d) Sales
Analysis by Customer : Customer-wise break-up of manual
typewriters sales attained by Gupta showed that one important account i.e.
Government department was responsible for Gupta’s poor performance on
that product line. Government Department was Gupta’s biggest customer and
has been targeted for 80 percent of his entire sales quota for manual typewriters.
With an entry of another office automation company, the customer had
switched over to the same. Gupta did not feel the gravity of situation, as the
sales to Government department was taken for granted by him. If he had
product quotas with the exception of manual typewriter, where he achieved
only 30 per cent of quota. With total sales of manual typewriter running
slight ahead of the last year in all other territories and no unusual situation
in Gupta’s territory, the sales manager should look into Gupta’s customer
wise details for detecting the causes of the shortfall.
foreseen the alarming situation in time, he could have asked for assistance
by the sales manager. Analysis of Gupta’s sales by customer also validates
the existence of 80-20 principle referred above.
Accounts Quota Actual Performance as %of quota
Banks 2 2 100
Financial Institutions 1 1 100
Educational Institutions 1 1 100
Govt. Department 24 0 0
Industrial Undertaking 1 1 100
Private Parties 1 1 100
Total 30 6 20
The above illustration clearly brings out the importance of conducting detailed
sales analysis. It also leads the sales manager to diagnose the factors responsible
for variance between targeted and actual performance. Sales analysis thus
makes a good beginning in the sales control function of the Sales Manager.
Limitations of Sales Analysis
The following are certain limitations of the Sales Analysis :
1. A serious drawback of Sales Analysis is the fact that sales are in no
way indicative of segment’s or of the entire sales functions profitability.
Profitability is the result of the inter-play between revenue and costs. Sales
analysis analyses only the sales aspect and cost analysis does not come under
its scope.
2. Another danger of sales analysis is that as more and more sales data
become available, decision makers can become wired in detail. As this
analysis-paralysis sets in, the sales manager loses sight of the fact that
analysis is a tool and not an end in itself. It should not be used as a substitute
for but as an aid in decision making.
Thus, the tool of sales analysis should be used very cautiously and in the
interest of the firm.
Sales Promotion
Meaning and Definition
Sales promotion is defined as activities which include advertising and publicity aimed at stimulating
consumer purchasing and effective selling by dealers. Sales promotion includes free samples, a
premium on sale and dealer incentive, contests, fairs and exhibitions, public relations activities, etc.
Sales promotions are those activities, other than advertising and personal selling that stimulate
market demand for a product. The basic purpose is to stimulate on the spot buying by potential
customers through short-term incentives. These incentives are essentially temporary and non-
recurring nature.
According to American Marketing Association, “Those marketing activities, other than personal
selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such
as displays, show and exhibitions, demonstration and various non-recurrent selling efforts not in an
ordinary routine.”
According to W.J. Stanton, “Sales promotion defined as demand stimulating devices to supplement
Sales promotion is an important component of a promotion campaigning programme. It can be specific tool of the marketing
strategy of an enterprise. Because of increasing level of competition and costs of advertisement, producers largely use this
technique as a promotional tool.
Sale promotion techniques are not only useful to the producers and distributors, but also are useful to consumers. The
importance of sales promotion may be grouped as follows:
A) IMPORTANCE TO CONSUMER
Sales promotional tools like prices-off deals, premium offers, discounts, etc. reduce the price of the product when
purchased on notified occasions.
Free samples offered under the sales promotion programme give the potential consumers an opportunity to
use the goods and satisfy with the quality of product. This experience may give them confidence to take a better decision
towards the purchases of products.
Stimulated by the various promotional incentives like free goods, premium and coupons, etc. the buyer are
attracted towards larger purchases than their usual needs to avail the opportunity.
The consumer also get plenty of opportunities in using the new , cheaper & durable items, to their satisfaction,
which may help them to maintain a higher standard of living.
6. Minimize exploitation :-
The consumer promotion programme gives sufficient knowledge about product and substitutes available for a
product, its quality and price. As a result, a seller cannot be able to create a monopoly in his product an exploit the consumers.
This may be the reason that for product like soaps. Detergent, toothpastes, etc. the exploitation is not at all possible.
1. Increases in sales :-
sales promotion programme attracts the consumers & stimulates them for larger purchases leading to
increased sales.
The offer of off-season discounts, price cut etc. on seasonal products like fridge, coolers, fans, etc.
are able to maintain regular are continuous sales of such items.
The sales promotion makes the advertisement more effective to push the sales. It is
effective technique to minimize the dissatisfaction of customers that have been create by retail selling.
The various promotional incentives offered to the dealers help to achieve co-operations from
them to sell the product on priority basis and to maintain maximum stock with them.
The sales promotion programme facilitates the producer to capture new markets for his products
easily. The markets of plantation products have been successfully in capturing the markets by the distribution of free samples.
7. Increase in goodwill :-
The repeated uses of sales promotion tools facilitate the consumers to get a special identification of
the product as well as of the producer. The satisfaction that have been arrived to the consumers by continuous uses of the
products will gradually increase the goodwill of the firm.
8. Direct control :-
Since the advertising media is controlled by advertising agencies, the advertising costs are on higher side.
This has adverse effect on the sales and profits. But in the sales promotion programme, the producer has full control over the
promotional tools & therefore, can achieve maximum results at minimum costs.
Larger sales, reduce production costs, increase in profits, special identity and goodwill of
the producer, etc. achieved through sales promotion measures can help to face the competition more effectively.
The sales promotion programme invites suggestions from the consumers from time to time to
know about their change in need & performance. According, necessary improvements or modifications are made in the product
to satisfy the consumer need.
C) IMPORTANCE TO DEALERS/ MIDDLE MEN
The dealers get advantages of sales promotional techniques for increasing their sales. Sales promotion is a coordinating
activity between sales, advertising, research & public relations efforts & they reduce the resistance at the point of sales.
The importance of sales promotion programme for the society & the nation can be summarized as below :-
Increase in standard of living the people.
Increase in employment opportunities.
Development and expansion of transport, communication, baning, insurance and warehousing facilities.
Increase in Gross National Product and percapita income.
Creation of healthy competition in national and international trade, etc.