Professional Documents
Culture Documents
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Unit 1 1 1 1 1
Contents Selling as a Part of Marketing Sales Management process Role of Sales Manager Sales Management and Salesmanship Process of Personal Selling, Concept of Personal Selling, The Ones of Personal Selling Qualities of a Successful Salesman. Goal Setting Process in Sales Management, Analyzing Market Demand and Sales Potential, Techniques of Sales Forecasting, Preparation of Sales Budget Formulating Selling Strategies Designing Sales Territories and Sales Quota
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Selling Concept
Customer will not buy product unless they are persuaded
Marketing Concept
This concept proposes that the reason for success lies in company's ability to create , deliver and communicate a better value proposition through its marketing offer.
Implementation
It involves selecting appropriate sales personnel, training them, leading them and motivating them, designing and implementing of policies and procedures that will direct the efforts of the sales people towards achieving corporate objectives
Evaluation
It involves developing methods and practices for monitoring and evaluating the individual sales force performance.
Refer Sales and Distribution Management- Oxford pub Tapan K.Panda ,page no 26-page no.31
Salesmanship
It is a seller initiated effort that provides prospective buyer with information and motivates or persuades them to make favorable buying decision concerning the seller s products or services. Salesmanship is an attempt to induce people to buy goods---- W.G. Carter It is the ability to persuade people to buy goods or services at a profit to the seller and benefit to the buyer.----- National Association of Marketing Teachers of America
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Functions of Salesmanship
To introduce products to customers To help the customers to make buying decisions. To see how the customer s needs are transformed into wants and demand. To negotiate and conduct effective selling at least cost. To gather information about markets and competitor s products and transmit it to the company.
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Stimulus (Sales Presentation) Buyer s decision making process Response (buy or no buy)
If a sales person makes a presentation, the prospect may or may not buy The above buyer behaviour model does not tell us the reasons of buying or not buying To understand the psychological aspects of selling or buying, salespeople should study consumer or buyer behaviour, including buying process and situations
The sequence of above steps may change to meet the sales situation in hand. Some of the above steps may not be applicable for selling to the trade We now discuss application of above steps to industrial selling
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Prospecting
It is identifying or finding prospects i.e. prospective or potential customers. Methods of prospecting or sales lead generation are: (1) referrals from existing customers, (2) company sources (website, ads., tradeshow, teleprospecting), (3) external sources (suppliers, intermediaries, trade associations), (4) salespersons networking, (5) industrial directories, (6) cold canvassing
Qualifying
Companies qualify sales leads by contacting them by mail or phone to find their interests (or needs) and financial capacity. Leads are categorized as: Hot, Warm, and Cool
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Pre-approach
Information gathering about the prospect. Sources of information: the Internet, industrial directories, government publications, intermediaries, etc. Precall planning Setting call objectives Tentative planning of sales strategy: which products, features and benefits may meet the customer needs
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Approach
Make an appointment to meet the prospect Make favourable first impression Select an approach technique: Introductory Customer benefit Product Question Praise The approach takes a few minutes of a call, but it can make or break a sale
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Using Demonstration
Sales presentation can be improved by demonstration Demonstration is one of the important selling tools EGs: Test drive of cars; demonstration of industrial products in use Benefits of using demonstration for selling are: Buyers objections are cleared Improves the buyer s purchasing interest Helps to find specific benefits of the prospect The prospect can experience the benefit
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Negotiation
Salespeople, particularly in business to business selling, need negotiating skills When to negotiate? (a) When the buyer puts certain conditions for buying to the seller, (b) When agreement between the buyer and the seller is needed on several factors, (c) When the product is customized, (d) When the final price is to be decided How to prepare for negotiation? (a) planning, (b) building relationship, (c) purpose Styles of negotiation (a) I win, you lose, (b) Both of us win (or win-win style), (c) You win, I lose, and (d) Both of us lose
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Goal Setting
Companies set different objectives for their sales force, depending upon their overall corporate objectives and the nature of commercial activities. From company s point of view there are three general objectives of goal setting
Maintaining continual growth Achieving sufficient sales volume Providing sufficient contribution to profits.
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Cont .
Market potential is the maximum market (or industry) demand, resulting from a very high level of industry marketing expenditure, where further increases in expenditure would have little effect on increase in demand Company demand is the company s estimated share of market demand for a product or service at alternative levels of the company marketing efforts (or expenditures) in a specific time period
Fig. Market Demand Functions
Market demand
Cont
Company sales potential is the maximum estimated company sales of a product or service, based on maximum share (or percentage) of market potential expected by the company Company sales forecast is the estimated company sales of a product or service, based on a chosen (or proposed) marketing expenditure plan, for a specific time period, in a assumed marketing environment Sales budget is the estimate of expected sales volume in units or revenues from the company s products and services, and the selling expenses. It is set slightly lower than the company sales forecast, to avoid excessive risks
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Forecasting
Market (or industry) forecast (or market size) is the expected market (or industry) demand at one level of industry marketing expenditure
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Forecasting Approaches
Two basic approaches: Top-down or Break-down approach Bottom-up or Build-up approach Some companies use both approaches to increase their confidence in the forecast
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Delphi method
Process includes a coordinator getting forecasts separately from experts, summarizing the forecasts, giving the summary report to experts, who are asked to make another prediction; the process is repeated till some consensus is reached Experts are company managers, consultants, intermediaries, and trade associations
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Decomposition Method
Process includes breaking down the company s previous periods sales data into components like trend, cycle, seasonal, and erratic events. These components are recombined to produce sales forecast Advantages: Conceptually sound, fair to good accuracy, low cost, less time Disadvantages: complex statistical method, historical data needed, used for short-term forecasting only
Advantages: simple to calculate, low cost, less time, accuracy good for shortterm forecasting Disadvantages: less accurate if past sales fluctuate
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Distribution strategy *source: Sales and distribution Management TMH-Hawaldar Direct marketing strategy 47
Relationship strategy
Whether a selling firm should use transactional, valueadded, or collaborative relationship depends on both the seller and the customer Each selling firm to decide which segments and individual customers respond profitably to collaborative relationship
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Channel Strategy
There are many sales / marketing channels. For example: company salesforce, distributors, franchisees, agents, the internet, brokers, discount stores Selection of a suitable channel depends on both the buyer and the seller, products / services, and markets
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Sales Territories
A sales territory consists of existing and potential customers, assigned to a salesperson Most companies allot salespeople to geographic territories, consisting of current & prospective customers
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Make tentative territories Develop final territories Objective is to equalise sales potential of territories
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Routing
Routing is a travel plan used by a salesperson for making customer calls in a territory Benefits of or Reasons for routing: Reduction in travel time and cost Improvement in territory coverage Importance of routing depends on the application: Nature of the product Important for FMCG Type of jobs of salespeople Important for drivercum-salesperson job, but creative selling job needs a flexible route plan
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Base (B)
C1
B B
C5 C4 C3 C2
Circular
Clover Leaf 57
Scheduling
Scheduling is planning a salesperson s visit time to customers. It deals with time allocation issue How to allocate salesperson s time? Sales manager communicates to salesperson major activities and time allocation for each activity Salesperson records actual time spent on various activities for 2 weeks Sales manager and salesperson discuss and decide how to increase time spent on major activities Companies specify call norms for current customers, based on sales and profit potentials, and also for prospective customers
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Sales Quotas
What are Sales Quotas? Sales quotas are sales goals or targets set by a company for its marketing / sales units for a time period Marketing / sales units are regions, branches, territories, salespeople, and intermediaries Generally, company sales budget is broken down to sales quotas for various marketing units Objectives of Sales Quotas To use quotas as performance standards or performance goals To control performance To motivate people by linking quotas to compensation plans To identify strengths and weaknesses of the company
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Types of Quotas
Organisations set many types of sales quotas: (1) sales volume, (2) financial, (3) activity, (4) combination Sales volume quotas For effective control, sales volume quota should be set for the smallest marketing units, such as salesperson, districts / branches, product items / brands Sales volume quotas can be stated in (a) rupees / dollars, (b) units, or (c) points Rupees / dollars sales volume quotas are appropriate when salespeople are required to sell many products
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Financial Quotas
Financial quotas control (a) gross margin or net profits, and (b) expenses of marketing units Gross-margin / Net-profit quotas Calculate gross margin by subtracting cost of goods sold (i.e. cost of manufacturing) from sales volume. Sales managers are not responsible for cost of manufacturing Net profit quotas are generally accepted by sales mangers as it is calculated by subtracting direct selling expenses from the gross margin Expense quotas In many companies, expense quotas are stated as a percentage of sales Expense quotas to be administered with flexibility, to make salespeople cost conscious, allowing reasonable expenses
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Activity Quotas These are set when salespeople perform both selling and non-selling activities Objective is to direct salespeople to carry out important activities For effective implementation, activity quotas are combined with sales volume and financial quotas E.G. Calling on high potential customers, payment collection from defaulting customers
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Combination Quotas
Used when companies want to control salesforce performance on key selling and non-selling activities Focus on a few types of quotas, to avoid confusing salespeople. An example:
Type of Quota Quota Actual Percent Weight Quota (Importance) 90 89 125 Total 3 2 1 6 Percent Quota x Weight 270 178 125 573
5,00,000 4,50,000 45 04 50 05
Total point score=573/6=95.5 for a salesperson Typically use points as a common measure to resolve the problem of different measures used by various types of quotas
3) 4)
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Objectives
1.A plan drawn up by sales managers to ensure that all prospective markets are visited by the sales team is known as a __________ plan Coverage (b) Beat (c) call (d) market 2.The schedule and sequence for visitng the outlets in any market is known as __________ plan . (a)Call (b) beat (C) outlet (d) visit 3.A _____________ made by sales managers is part of the demand management process. (a)promise (b) estimate (c) forecast (d) guess 4. A _____________ concept ensures that there is no wastage of effort and time in covering market. (a)Milk run (b) call plan (c) outlet coverage (d) scheduling 5. Breaking bulk storage and delivery to customers are the task performed by a ____________ (a)C&FA (b) Distributor (c) Transporter (d) Warehouse
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Objectives
6. Sales Management has an important position in the organization because it is (a)Closer to customer (b) The only income generating function 7. Organizations many times use relationship selling approach to (a)Large (b) medium (c) few number of customers 8.Out of three important skills for the success of a sales manager the two are (a)managing and technical skills. The third skill is Communication (b) Negotiation (c) Problem solving (d) People 9.The first stage in buying decision process , in both consumer and business markets is (a)Information search (b) Deciding the characterstics and quality of needed product Problem or need recognition (d) None of the above 10. A prospect who needs the product and has an ability to buy, is also referred to as a (a) Suspect (b) Sales lead (c) Probable prospect (d)potential customer 11. In defining a sales territory key word is (a) Sales (b) customers (c) geographic area (d)none of the above
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Objectives
12. Effective territories design and allocation of sales people to territories result in (a) improves sales force performance (b) improves company performance (c) growth of above 13 In designing sales territories , the sales manager should start the process by selecting a geographic control unit that is Small (b) large (c) medium size (d) any size 14. Basic territories can be determined by using (a) build up method (b) breakdown method (c) both the above method 15.In build up method company tries to (a) equalize the sales potential of territories (B) equalize the workload of sales people (c) equalize both sales potential of territories and workload
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References
Sales and Distribution Management: K. Havaldar, Cavale.: Tata Mcgrawhill Sales and Distribution Management: Tapan K panda, Sahdev : Oxford publication Sales Management : Cundiff .
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