SALES MANAGEMENT AND

PERSONAL SELLING

Sales Mgmt-Definition
Planning, direction and control of personal
selling, including recruiting, selling,
equipping, assigning, routing, supervising,
paying and motivating as these tasks
apply to the personal sales force.
-American Marketing Association

Role and Skill of Modern SM

Playing a strategic role in the company
Working as a member of the corporate
team
Working as a Team leader
Managing multiple sales channels
Using latest technologies
Continually updating information and
understanding changes in market
environment

Sales Objectives, Strategies and

Tactics
Sales Objectives:
Statements of intents-when quantified to specific
and measurable targets with respect to time
periods become goals.
Derived from Companys marketing objectives and
goals which in turn are derived from Corporate
marketing objectives and goals

Relationship-Sales strategies and

Tactics

Decide
Objectives

Develop
Strategies

Evolve tactics/
Action plans

Relationship-Sales strategies and

Tactics
Strategies include ways of achieving the
objectives, and tactics/action plans are the
activities or the actions that should be
carried out in order to implement the
strategy

SALES FORECASTING

SALES FORECAST
Purpose- To plan and achieve the
forecasted sales in an effective manner.

Sales Forecasting
Used by
1. Manufacturing/production for setting up
production capacity and planning
production
2. Finance for raising cash for investment
operations and profit planning
3. Purchase function for planning their
purchases
4. HRM for manpower planning

Steps in Sales Forecasting

Defining objectives to be achieved
Dividing various groups into homogenous groups
Analyzing importance of various factors to be studied for
sales forecasting
Selecting the method
Collecting and analyzing related information
Drawing conclusions from analysis made
Implementing the decisions taken
Reviewing and revising sales forecasting techniques
from time to time
Reference- Sales and Distribution Mgmt- Dr S.L Gupta

Types of sales forecast

Firms refer to sales forecast by defining
three factors
1. Product level
2. Geographic area
3. Time period

Types of sales forecast

Product level
Total Sales
Industry Sales
Company Sales
Product line sales
Product variant sales
Product item sales

Time period
Long range/term
Medium range/term
Short range/term

Geographic Area
Nation
Region
Territory(Branch/dist)
Customer

Sales Forecasting Methods

Sales Forecasting Methods

Qualitative
Executive Opinion
Delphi Method
Sales Force Composite
Survey of Buyers intention
Test marketing

Quantitative
Moving Averages
Exponential Smoothing
Decomposition
Nave/Ratio Method
Regression analysis
Econometric Analysis

Sales Forecasting Methods

Qualitative Method
Executive OpinionGetting the views of Top company
Executives regarding future sales
Advantages-a) Forecasting done quickly
and easily b) very popular c) less
expensive
Disadvantages- a) unscientific b) subjective
c) difficult to break down into sub units

Sales Forecasting Methods

Delphi MethodA panel of experts from within and outside is selected,
each expert separately makes a forecast on some matter
anonymously, these forecasts are summarized till a
report is made. Process continues till some consensus is
reached.
Advantages-Objective and accurate, useful for technology,
new product and industry sales forecast, long term and
short term forecasting possible
Disadvantages- Difficulty getting a panel of experts, longer
time taken, difficult to break down into products and
territory level

 Sales force Composite MethodEach salesperson estimates the sale in his territory.
Used mostly by industrial or business marketing
companies.
Advantages- Accuracy and reliability as sales forecasting
is done by sales people who are closest to the market,
detailed break up as per customer, product, territory
possible
Disadvantages- either pessimistic or optimistic because of
lack of training, on interest by sales people to do
forecasting, underestimation of demand if sales quota is
linked to incentive schemes

 Survey of Buyers intention methodQuestionnaire administered to customers and decisions

on sales, marketing, production, R&D are based on the
responses generated.
Advantages- Useful for forecasting industrial products,
consumer durables and new products, gives customers
reasons for buying or not buying, relatively inexpensive
Disadvantages- sometimes buyers unwilling to reveal their
plan, buyers are sometimes over optimistic, expensive
and time consuming when customer database is very
large

 Test MarketingUsed for forecasting sales of new

products.Involves1)full blown test markets,
2)controlled test marketing, 3)simulated test
marketing
Advantages- forecasting of new/ modified
products possible
Disadvantages- Information being leaked to
competitors, if repurchase period is long then
waiting period may be extended

Quantitative Methods
Moving Average MethodCompany forecast is developed by calculating
the average company sales for previous years.
When a forecast is developed for the next
period, the sales in the oldest period is dropped
from the avg and replaced by sales in the
newest period.

Advantages- Relatively simple method, easy to

calculate, widely used for short term and
medium term forecasts
Disadvantages-unable to predict an
upturn/downturn in the market, cannot predict
long term sales forecast accurately, historical
data needed.

Sales forecast for next year

= Actual sales for past 3/6 years

Number of years (3/6)

 Exponential Smoothing Method

Forecaster can allow sales in certain
periods to influence the sales forecast
more than sales in other periods
Sales forecast =(L) Actual Sales this yr+ (1-L)This yrs sales forecast
for next yr

Forecaster decides the smoothing constant

based on:
a) Review of sales date
b) Knowledge and observation about conditions
in forecasted period and previous period
c) Intuition
Smoothing constant (L) is greater than zero,
less than 1

Advantages- Simple to operate, forecasters

knowledge or intuition used, useful when sales
data have a trend or seasonal pattern,
immediate response to upturn/ downturn in
sales, widely used

Disadvantages- Smoothing constant is

somewhat arbitrary, long term and new product
forecasting not possible

 Decomposition Method
The companys previous sales data is broken
down into 4 major components such as trend,
cycle, seasonal and erratic events. These
components are then recombined to produce the
sales data
Advantages- Conceptually sound
Disadvantages-Difficult and complex statistical
methods are needed to break down sales data
into various components, historical data needed.

 Nave/Ratio methodTime series method of forecasting, based

on the assumption that what happened in
the past will continue happening in the
future
Sales forecast = Actual sales x Actual Sales of this yr
for next yr
of this yr
Actual Sales of last yr

Advantages- Simple to calculate, requires

less data, accuracy good for short term forecast

Disadvantages- Cannot be used for long

term periods and new products, accuracy of past
sales would be less if past sales fluctuate
considerably

 Regression Analysis
Statistical forecasting method used to predict
sales, called as dependant variable Y. The
company then identifies causal relationship
between company sales and independent
variables which influence sales.
Depending on the number of independent
variables, either linear regression or multiple
regression analysis is done

Advantages-High forecasting accuracy if relation

between variables is stable, objective method, can
predict turning points in the companys sales.

Disadvantages-Technically complex, can be expensive

and time consuming, use of computer and s/w package
essential.

 Econometric Analysis
In this method, many regression equations are built to
forecast industry sales, general economic conditions or
future events
To find out which factors or variables influence sales and
the relationships between sales and these factors as well
as interrelationships between the factors, a number of
regression equations representing these relationships is
developed, a forecast is then prepared solving these
equations

Advantage- Accurate forecast of economic

conditions and industry sales are possible

Disadvantage- A large volume of data is

required representing the various factors

Sales Budget-Planning and Control

Purposes of a sales budget-

Planning
Planning
Sales goals, strategy &
action plan

Cost of executing strategy

and action plan

Sales volumes, selling expenses

& key activities to be
performed by salespeople

 Co-ordination
At the corporate level, the budget process
is used for coordinating the activities of
various functional areas.

 Control
Process of enhancing under/poor
performance with respect to budgeted
sales volume/expenses and taking
corrective action. Possible due to
establishment of sales budget.

ORGANISING AND STAFFING THE SALES

FORCE

Sales Organization
A Sales Organization should be evolved in
such a way so that it assists the sales
managers and sales people to carry out
their tasks effectively

a)
b)
c)
d)
e)
f)

Basic concepts included in Sales

Organization are
Degree of centralization
Degree of Specialization
Line and staff positions
Marketing orientation
Effective coordination
Span of control

Basic types of Sales Organizational

Structures

Types of Sales
Org Structures

Line sales org

Line and Staff

Sales Org

Functional Sales
Org

Horizontal Org

Types of Sales Org Structures

Line Sales Organization
Simplest structure, all top and middle managers have line
authority, authority to direct, control subordinates and achievement of sales
targets.

ADVANTAGES
Clear Authority
Responsibility
Quick decision making
Low cost

DISADVANTAGES
Dependency on head of sales
No support from subordinates
with specialized knowledge
and skills
Inadequate time for sales and
planning

Types of Sales Org Structures

Line and Sales Org
A group of specialists called staff advise and assist sales managers in
various specialized activities like MR, advertising, logistics, integrated
marketing communication etc.
Used in medium and large scale companies when customer base is large,
national/regional market coverage, large sales force and many
products/services are sold.
ADVANTAGES

Better marketing decisions due to

specialists support
Better sales performance due to sales focus
Top managers can concentrate on planning,
coordination etc

DISADVANTAGES

Higher cost and coordination work

Slower decision making
Potential of conflict if authority of line
and staff managers not clear.

Types of Sales Org Structures

Functional Sales Organization
Principle of specialization is fully used. Each staff specialized manager has
line authority of his function over salespeople.
Used in large sized companies with many products/services

ADVANTAGES

DISADVANTAGES

High degree of division of labour

Administrative simplicity

Effectiveness reduced as
company's products and
segments increase
Tough task for marketing head to
co-ordinate different functional
heads
Confusion of salesmen because of
multiple bosses

Horizontal Sales Organization

Removes hierarchical levels and departmental boundaries
Support functions are looked after by small team of senior executives
Remaining employees part of cross functional teams performing core
processes like product design, sales etc, work with customer teams to solve
customers problems

ADVANTAGES
Reduction in supervision,
unnecessary tasks and costs
Substantial improvement in
efficiency
Enthusiastic customer
responses.

DISADVANTAGES

Specialization within Sales Org6

Geography

Product
Staff
specialists

Market

Specialised
salesforce

Functional

Combination

SM-Functions and Responsibilities

Job Objective:
To secure maximum revenue sales
through the effective development and
execution of sales programs and sales
policies for all products sold by the
division.

Duties and responsibilities

1. Sales programme
2. Organization
3. Sales force management
4. Internal and external relations
5. Communications
6. Control

Characteristics of a successful
salesman
1. Ability to define the positions exact functions
and duties in relation to the goals the company
should expect to attain.
2. Ability to select and train suitable subordinates,
willingness to delegate authority with minimum
supervision
3. Ability to utilize time effectively
4. Ability to allocate sufficient time for thinking
and planning
5. Ability to exercise skilled leadership

Developing the Sales Force

Recruiting sales force

Finding /identifying sources of sales recruits

External
Internal

Employee referral
Current employees
Promotions and transfers

Ads
Internet
Educational institutes
Employment agencies
Competitors, non
competitors
Job fairs