Module I: Introduction to Sales Management

The only business function that generates revenue

SELLING

Sale is an activity involved in the selling of products or services in return for money or other compensation.

Selling is trying to make sales by persuading someone to buy one’s product or services.

Selling is the profession of making sales.

Selling is an exchange transaction. Exchange of Product or service for money

Money is the revenue or the earnings of an enterprise often called ‘turnover’ or ‘top line’

Sales therefore is the only revenue generating function in an enterprise.

Sales Management vis-à-vis Marketing Mix

Sales Management

Definition-

Sales Management-• “Sales Management is the attainment of sales force goals

in an effective and efficient manner through planning, staffing, training, leading, and controlling organizational resources” by (Futrell1998)

• Managing a sales force involves recruiting, hiring, training, supervising, compensating salespeople, motivating them to become problem solvers, and providing the proper planning and backup support so that they can perform their jobs properly.

Cont…

The Definitions Committee of the American marketing association defined sales management as

“ the planning , direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force”.

However, we shall also include indirect sales through channels within the ambit of sales management.

 

Sales Management

Cont..

• Three underlying objective of the sales Management:

• A) Sales volume • B) Profit & • C) Growth

Sales – cost of sales = gross margin.

Gross margin – expenses = net profit.

Cont…

A sales manager always aims at increasing the : SALES GENERATING PROFIT CREATING REVENUE MARKET SHARE CONTROLLING INTERNAL COSTS.

Cont…

• A sales manager is able to obtain their goals by :

Knowledge of the sales environment Planning for the sales Recruiting the sales force Training the sales force Motivating the sales force Supervising the sales force

Sales Management

Cont..

• PLANNING: Planning is the conscious , systematic process of making decisions about goals and activities that an individual, group, work unit or organization will pursue in the future and the use of resources needed to attain them.

Recruiting

• Recruitment – set of activities and processes used to legally obtain a sufficient number of individuals that takes the people’s and the sales force’s best interest into consideration.

Cont..

Training:• Sales Training – effort put forth by an employer

to provide the salespersons job related culture,skill,knowledge and attitude that result in improved performance in the selling environment.

Another Objectives of sales Management could beTo retain and capture market share

To determine sales volume in ways that contribute to PROFIT

To keep personal expenses within specified limits

To do entire selling jobs

To maintain customer co-operation

To provide technical advice wherever necessary

To assist in training of sales personnel

Sales as a function of Marketing Mgt.• Sales &Advertising: both stimulate demand.

They need to be blended. Salespersons can improve advertising effectiveness. Advertising needs to support sales where and when they need it most.

• Sales & Marketing information: data is needed for analysis of sales problems, for determining sales potential. Raw data is collected by sales people.

Cont..• Sales and service: contributes to strategy

success.• Sales and distribution: minimizes stock out

situation; improves inventory control; helps sales to focus on demand generation.

• Sales & Production: • Sales and R&D• Sales &Finance

Theories of selling

• 1) Buyer seller Dyads• 2) AIDAS Theory• 3) Right set of circumstances Theory• 4) Buying Formula Theory• 5) Behavioral Equation Theory

Buyer seller dyad

• Dyad is a situation in which two people interact. The salesperson and the Prospect interacting with each other constitute an example of what we call Buyer Seller dyad.

AIDAS…

• A – Securing attention: the first intention is to put the prospect into a receiving state of mind.

• I – Gaining Interest: the second intention is to intensify the prospect’s attention so that it evolves into strong interest.

• D- Kindling desire: The third goal is to kindle the prospect’s desire to the ready –to-buy point.

• A- Inducing Actions: if the presentation has been the perfect, the prospect is ready to act i.e. to buy

• S- Building satisfaction

Cont..

• Building satisfaction: after the customer has given the order, the salesperson should reassure the customer that the decision was correct.

• RIGHT SET OF CIRCUMSTANCES THEORY• It is also known as situation response theory.

The assumption is “ everything was right for the sale” . It assumes that the particular circumstances prevailing in a given selling situation causes the prospect to respond in a predictable way.

Cont..

• If the salesperson succeed in securing the attention and gaining the interest of the prospect and if the salesperson presents the proper stimuli or appeals , the desired response will result. This is a seller oriented theory.

Buying formula theory of selling • Emphasizes on buyers Theory. The theory tries

to answer the question “What thinking process goes on in the prospect’s mind that causes the decision to buy or not to buy?” Name was given by Late E.K.Strong Jr. & following step-by-step process is adapted:

• The mental process involved in purchase process: Need----- solution -----Purchase

• As the outcome of purchase affects the chance of a continuous relationship between buyer & seller, it is necessary to add the 4th element i.e

Cont..

Whenever a need is felt ,the individual is conscious of a deficiency of satisfaction. In the world of selling and buying , the solution will always be a product or services

• Product - solution---Purchase-satisfaction.• In purchasing, then element “solution” involves

2 parts- a. Product or service b. Trade Name i.e. name of the manufacturer/Company)

• Hence forth when a definite buying habit has been established , the buying formula is :

•

Cont..

• Need---- Product/service or trade name---purchase--satisfaction/dissatisfaction.

• To ensure purchase product or service & trade name must be considered adequate & the buyer must experience a pleasant feeling of anticipated satisfaction The new formula is:

• Need-product AND Trade name--Purchase service ( adequacy & pleasant feeling)—Satisfaction.

BEHAVIOURAL EQUATION THEORY:• BEHAVIOURAL EQUATION THEORY: • IV.BEHAVIOURAL EQUATION THEORY

J.A.Howard explains buying Behavior in terms of purchasing Decision process viewed as phases of learning process. Four essential elements of learning process included are 1.Drives -strong internal stimuli that impels buyer’s response. These are of 2 kinds

• *Innate Drives-psychological needs eg. hunger, pain

• *Learned Drives-striving for social status & approval, acquired when innate drives satisfied

Cont..

• 2. Cues - are weak stimuli that determine when the buyer will respond

• *Triggering cues- activate the decision process for any purchase

• *Non triggering cues- influence the decision process but don’t activate it

• a. Product cues-external stimuli received from the product directly. e.g. package, price

• b. Informational cues- external stimuli providing information, can come from advertising etc.

Cont..

• 3. Response -What the buyer does• 4. Reinforcement - is any event that

strengthens the buyer’s tendency to make a particular response

Howard incorporates these four element into an equation i.e

Cont..

• - B=P*D*K*V Where, B=Response P= predisposition or the inward response, D=Present drive level(amt. of motivation) K=Incentive potential(value of the product or potential satisfaction) V=Intensity of all the cues.

• Henceforth , each time there is a response i.e purchase in which K ( satisfaction) is sufficient , it is expected

• that buyer will buy the product.

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