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Sales Related MarketingPolicies
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IntroductionSales related marketing policies directl
in!uence the "obs o# sales e$ecuti%es&
These policies pro%ide the direction toorgani'e (manage and control the salese)ort &
These are generall compan go%ernedand #ormulated policies *hich areadministered b sales e$ecuti%es&
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Product Policies – What toSell ? The products a compan sells determines
its basic nature&
These ser%e are guidelines #or makingproduct decisions&
The are deri%ed #rom product ob"ecti%es
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Product PoliciesProduct Line Policy
+& Short line,speciali'ation or #ull line ,*ideselection policies&
.& /o%erned b *illingness to take risk&0arro*er the line greater the risk&
1. Changes in Product Oferings
-to determine the product tuning *ith market-to determine products *hich needs to be dropped oradded
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Product Policies2. Reappraising the product line and line simplication
-adding or remo%al o# pro1table and non pro1table product linesand customer accounts&
3. Reappraising the product line and line diversication
-relati%e to gro*th ob"ecti%es
4. deas !or ne" products
-Internal and e$ternal sources #or ne* ideas&
#. $ppraisal o! proposed ne" products.
-criteria is pro1tabilit( nature and si'e o# likel markets(competition( price polic( sales programs and legal implications&
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Product PoliciesProduct %esign Policy
+& 2re3uenc o# design change
.& 4$tent to *hich designs are to be protected #rom
coping&
. Product &uality and 'ervice Policy
+& 5igh 3ualit products re3uire less ser%ice and lo*3ualit products re3uires high ser%ice&
.& /uarantee polic – ser%es either protecti%e orpromotional purposes&
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Distribution Policies – Who toSell ?Policies on (ar)eting Channels
6hannels should be chosen in order to obtainthe optimum combination o# pro1t #actors&
Time dimensions must be considered inaddition to 7
+& Sales 8olume Potential
.& 6omparati%e distribution costs
9& 0et Pro1t Possibilities
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Distribution PoliciesPolicies on %istri*ution ntensity
2ollo*ing distribution strategies areimplemented b compan 7
+&Mass Distribution
.& Selecti%e Distribution
9& 4$clusi%e Agenc Distribution
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Pricing PoliciesPolicy on Pricing Relative to
Competition
+& Meeting the competition
.& Pricing abo%e the competition
9& Pricing under the competition
. Policy on Pricing Relative to Costs
+& 2ull cost pricing.& Promotion pricing
9& 6ontribution pricing
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Pricing PoliciesPolicy on +ni!ormity o! Prices to
%iferent ,uyers.
6ompan choose bet*een7
+& :ne-price polic ,same price
.& 8ariable price polic , price determined bindi%idual bargaining
5ere bargaining po*er o# buers %aries *ith thesi'e o# transaction&
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Pricing PoliciesPolicy on List Pricing
;ist pricing takes %ariet o# #orms most common being7
Printing the price on package
Sales personnel to suggest the resale price to buers&
Policy on %iscounts
+& Trade Discounts
.& <uantit Discounts
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Pricing Policies-eographical Pricing Policies+& 2ree on =oard ,2&:&= pricing – customer pas the
#reight
.& Deli%ered pricing – seller pas the #reight
9& 2reight absorption – compromise bet*een deli%eredand 2&:&= pricing&
. Policy on Price Leadership.
Price changes b Market ;eader and 2ollo*ers. Decision depends upon marketer>s relati%e market
position and the image o# leadership that it desires tobuild and maintain
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Pricing PoliciesProduct Line Pricing Policy Di)erent items in product lines compete *ith each other&
Price space bet*een the indi%idual members o# the line
=ottom o# line as tra@c builders> and top o# line as
prestige builders>
Competitive ,idding Policy Industrial and go%ernment buers solicit competiti%e
bids #rom potential suppliers and a*ard the business tothe bidder o)ering the best proposal
Decision depending upon %arious #actors such as price(deli%er dates( reputation #or 3ualit etc&
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6hapter
2:RMB;ATI0/P4RS:0A;-S4;;I0/ STRAT4/C
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A/40DA 6ompetiti%e Settings
--Pure( Monopolistic( :ligopolistic( 0o Direct 6ompetition
Personal Selling :b"ecti%es
-- <ualitati%e <uantitati%e
Determining the kind o# sales personnel--Product Market Analsis( Salesperson>s role in securingorders( choice o# basic selling stle
Determining the si'e o# the sales #orce--Workload( Sales Potential( Incremental
Indi%iduali'ing selling strategies
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6ompetiti%e StrategiesPure
;arge number o# buers and sellers 0o one po*er#ul enough to control or in!uence market
prices
0o buer or seller is so big *hich can impact theproduct>s total demand and suppl All products are identical( no di)erentiation All buers are a*are o# all sellers> prices
0ot a real *orld situation and hence no companconcerns itsel# *ith a particular personal sellingstrateg #or Pure 6ompetition
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Monopolistic
Man competing producers sell products that are
di)erentiated #rom one another ,ie& the products aresubstitutes( but are not e$actl alike
4as #or additional competitors to enter the market
Ad%ertising di)erentiates the brand in the minds o# 1nalbuers and stimulates selecti%e demand
Ee element in marketing strateg is the abilit to
di)erentiate the product , b both Ad%ertising and PersonalSelling
Personal 'ellings role is that o! servicing thedistri*ution net"or) and stimulating promotional
eforts *y the middlemen
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Oligopolistic
0umber o# competitors are small enough that the areindi%iduall identi1ed and kno*n to each other
Di@cult #or ne* competitor to enter the market
Success#ul organi'ations keep on gro*ing and less success#uldisappears
:ligopol produces most aggressi%e competition
Strategies o# one plaer has deep impact on the strategies o#other plaers
Personal 'elling 'trategy plays important role in*uilding and maintaining dealer cooperation/ in servicingdistri*ution net"or) and in gathering in!ormation oncompetitors activities
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0o %irect Competition
=oth monopol or oligopol ha%e indirectcompetition
The %ie sellers in other industries #or the sameprospects> interest and buing decisions
4%en in case o# no direct competition( personalselling and ad%ertising plas an important role
,oth reuire the efective implementation
o! personal selling strategy in terms o! *oth)ind and num*er o! sales personnel even incase o! indirect competition
6hoosing pricing strateg calls #or e)ecti%e
implementation o# personal selling strateg
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Personal Selling :b"ecti%es&ualitative
8ar *ith competiti%e setting
;ong Term
6arried #rom one operating period to another
When 3ualitati%e ob"ecti%es change( there are
changes in nature o# sales "obs and si'e o# thesales #orce
&uantitative
8ar *ith competiti%e setting Short Term
Ad"usted #rom operating period to operatingperiod
Since short term( the impact more upon the si'e
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Determining the kind o# Sales Personnel
ach company deals "ith uniue set o! mar)eting!actors
Strengths Weakness o# productsMoti%ations and buing practices o# its customers and
prospects
Pricing Strateg
6ompetiti%e Setting
Di)erent selling "obs re3uire di)erent le%els o# selling and nonselling acti%ities( training( technical and other kno*ledge
e must understand "hat is e5pected o! salesperson Fob :b"ecti%es
Duties and Responsibilities
Per#ormance measures
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Product Market AnalsisProduct 'pecialists
When product is highl technical
Re3uiring salespersons to ad%ise on uses and applications
(ar)et 'pecialists
Product is non technicalWhen di)erent kinds o# customers ha%e uni3ue buing
problems and re3uire special sales approaches or needspecial ser%ice
Com*ination o! *oth
On the *asis o! Product6(ar)et grid/ you can chose"hether the sales personnel should *e product ormar)et specialist
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Tpes and Amount o# Speciali'ationin Selling :rgani'ations
Dominant
Interdependence
Dominant Expertise
Between Customers Between Products
Product Technologies Product Specialists Full-Line Salespersons(supported by ProductManagers)
Customers’ Applications Customer Specialists Full-Line Salespersons(specialied by !ind o"customer)
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Analsis o# Salesperson>s role in securing orders
Salespersons ma be acti%e or passi%e insecuring orders
The role in!uences the decision o# kind o# sta)
re3uired
Salespersons ma seek order aggressi%el
The need onl take orders coming their *a
Salespersons ma act as ad%isors to
middlemen or the customer
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(issionary 'elling
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(issionary 'elling
Increase sales %olume b assisting customers *ith theirselling e)orts
Persuade indirect customers to b #rom the compan>sdirect customers
The also pla a role in in!uencing people *ho do notpurchase the product but *ho in!uence its purchase
7echnical 'elling
Deals primaril *ith compan>s established accounts
Increase their %olume o# purchase b pro%iding technicalad%ice and assistance
Per#orms ad%isor #unctions similar to the missionarsalesperson
In addition( sells direct to industrial users and other buers
In this stle( abilit to identi#( anal'e and sol%ecustomers> problem is important
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0e"6*usiness 'elling
2ind and obtain ne* customers
6on%ert prospects into customers
Bsuall salespersons are creati%e and ingenious andposses high degree o# resource#ulness
Sometimes salesperson doing trade selling engagesthemsel%es in ne*-business selling also
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Determining the si'e o# the sales #orce
or)load (ethod
+& 6lassi# customers( both present and prospecti%e into sales%olume potential categories
.& Decide on the length o# time per sales call and desired call
#re3uencies on each class
9& 6alculate the total *ork load in%ol%ed in co%ering the entiremarket
G& Determining the total *ork time a%ailable per salesperson
& Di%ide the total *ork time a%ailable per salesperson b task
H& 6alculate the total number o# salespeople needed
'ales Potential (ethod
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'ales Potential (ethod
6oncept o# Sales Personnel Bnit
A salesperson ma represent more or less than onesales personnel unit depending upon hisher skillsand e$pertise
Sales "ob descriptions are constructed onmanagement assumption that the describe *hatthe a%erage salesperson *ith a%erage per#ormance*ill accomplish
With abo%e in#ormation( *e can deri%e amount o#sales %olume each salesperson should produce
Di%iding the abo%e amount into #orecasted sales
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Sales Potential Method
0 8 '9P :1 ; 7<
here 0 J 0umber o# sales personnel unit
S J 2orecasted sales %olume
P J 4stimated sales producti%it o# onesales personnel unit
T J allo*ance #or rate o# sales #orceturno%er
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ncremental (odel
6ompan de%elops a sales response #unction ,a
3uantitati%e #unction that>s describes the relationshipbet*een the amount o# personal selling e)ort and theresulting sales %olume
=ased on the proposition7 0et pro1ts *ill increase*hen additional sales personnel are added i# theincremental sales re%enue e$ceed the incrementalcosts incurred
In#ormation re3uired7 Incremental costs andIncremental re%enue
6alculate the net pro1t contribution resulting #rom the
addition o# each salesperson
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Incremental Model
Although conceptuall correct( it is di@cult toappl
0ot suited *here personal selling is not the
primar means o# making sales ,*heread%ertising and other promotions pla animportant role
2ails to account #or possible competiti%e reactions
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Indi%iduali'ing Selling Strategies to customers 4ach salesperson must indi%iduali'e his or her dealings
*ith the customer
Regardless o# the basic selling stle or the role o# ordergetter or order taker( the salespersons> success dependsupon the outcome o# interaction *ith the customers
=eha%ior and sales pitch o# the salesperson %aries #romcustomer to customer
Selling skills is a #unction o# bothpreplanning o# each sales callper#ormance on the call itsel#
Indi%idual salesperson>s per#ormance ultimatel determinethe success or #ailure o# compan>s o%erall personal-selling strateg( sales management has a %er importantrole in helping them de%elop and impro%e selling skills
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The 4)ecti%e Sales 4$ecuti%e
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Agenda• ature o" Sales Management Positions
• Position *uide + Sales Manager
• Position *uide + #istrict Sales Manager
• Functions o" Sales ,ecuti$e
• .ualities o" ,""ecti$e Sales ,ecuti$e
• &elations %ith Top Management
•
&elations %ith Managers o" /ther Mar!eting Acti$ities
• Compensation Pattern
• Conclusion
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4)ecti%e Sales 4$ecuti%e
The 'ob o" the sales eecuti$e is more action oriented and
less planning oriented
Main concern o" sales management is the 0present1 + the
0here and no%1
Their decisions not only a""ect the sales department2 but
may ha$e signi"icant implications else%here in the
organiation
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0ature o# Sales ManagementPositions
• &e3uirements o" the sales eecuti$e’s 'ob position $ary "rom
company to company and "rom position to position in a company
• 4t is possible to generalie about acti$ities and responsibilities o"
sales managers2 district sales managers2 product managers and
other sales or mar!eting eecuti$es
• Some companies ha$e "ormulated concise statements o" duties
associated %ith $arious positions2 !no%n as 'ob or position
descriptions
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Position /uide – Sales Manager• &eports to the $ice president o" mar!eting
• The primary ob'ecti$e is to secure maimum $olume o" dollar sales through
the e""ecti$e de$elopment and eecution o" sales programs and sales
policies "or all products sold by di$ision
• #uties and responsibilities5
– Sales Program
– /rganiation
– Sales Force Management
– 4nternal and ,ternal &elations
– Communications
– Control
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Per"ormance is satis"actory %hen2
#epartment’s dollar or unit sales are e3ual to or eceed the
3uantities budgeted
Pro"it contribution o" the sales department is in line %ith
plan
#etails o" sales plan are in %riting and are acceptable to
mar!eting management
Turno$er o" sales personnel is maintained at a le$el regardedas satis"actory by mar!eting management
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Position /uide – District Sales Manager
• &eports to the sales manager
• The primary ob'ecti$e is to secure maimum dollar sales o" the
company’s products in the sales district in accordance %ith
established sales policies and sales programs2 %ithin the limits
o" sales budget
• #uties and &esponsibilities5
–
Super$ision o" Sales Personnel – Control
– Administration
– Communications
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• Per"ormance is satis"actory %hen2
– #istrict’s dollar and unit sales are e3ual to or eceed the
3uantities budgeted
– #istrict’s total epenses are no higher than the amounts
budgeted
– Pro"it contribution o" the district o""ice and %arehouse and
stoc! "acilities is in line %ith plan
–
Turno$er rate o" district sales personnel is maintained at a
le$el regarded as satis"actory by the (general) sales manager
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2unctions o# sales 4$ecuti%e• 6asically has t%o sets o" "unctions
- /perating
- Sales Force Management
- andling relationships %ith personnel in other company
departments and %ith trade
- Communicating and coordinating %ith other mar!eting
eecuti$es
- &eporting to some superior eecuti$e
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- Planning
- Setting personal-selling goals
- #e$eloping sales program designed to achie$e these
goals
- Formulating sales strategies and personal-selling
strategies
- Putting together plans "or their implementation
These "unctions $aries %ith
. The type o" products
. The sie o" the company
. The type o" super$isory organiation
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<ualities o# 4)ecti%e Sales 4$ecuti%e
e should ha$e
• Ability to de"ine the position’s eact "unctions and duties in
relation to the goals the company should epect to attain
• Ability to select and train capable subordinates and %illingness to
delegate su""icient authority to enable them to carry out assigned
tas!s %ith minimum super$ision
• Ability to utilie time e""iciently
• Ability to allocate su""icient time "or thin!ing and planning
• Ability to eercise s!illed leadership
Relations *ith Top
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Relations *ith TopManagement
,""ecti$e sales eecuti$es need to !eep the top management
abreast o" their progress as their personal goals are
intert%ined %ith company’s goals
They should not be dispensable to the company and should
be able to delegate tas!s e""ecti$ely
They update the top management o" all the latest acti$ities
through periodic reports and presentations
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Relations *ith Product management
Product planning and "ormulation o" product policies
re3uires numerous decisions
Sales eecuti$es pro$ide input "or these decisions
Their contact %ith the mar!et through subordinates and
sales personnel pro$ide them %ith "eedbac! about product
per"ormance and acceptance generally not a$ailable "rom
other sources
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Relations *ith PromotionManagement
Sales eecuti$es play a $ery important role in promotional
acti$ities as they are the one %ho actually implement them
They must be in$ol$ed in "ormulating policies as they are
$ery close to the customers
The sales "orce must be !ept updated about all the latest
promotional acti$ities
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Relations *ith Pricing Management
Sales eecuti$es ha$e much clearer ideas o" the prices the
buyers are %illing to pay2 because o" the close and
continuing contacts %ith the mar!et
Pricing policies need to be "ormulated by a committee
comprising o" members "rom di""erent departments
/nce the policy is established2 its implementation is the
responsibility o" the sales eecuti$e
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Relations *ith DistributionManagement
#istribution policies are ma'or determinants o" the breadth
and compleity o" sales department’s organiation and
"unctions
4t has an impact on the sales organiation and its acti$ities
Sales eecuti$es play !ey roles in pro$iding in"ormation
needed "or their "ormulation
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6ompensation Pattern 2or Sales4$ecuti%es
• Compensation pattern di""ers on the basis o" position o" the
sales eecuti$e in the hierarchy and the sie o" the company
• Sales eecuti$e recei$e some o" their pay as bonuses2
commissions and other 0incenti$e1 payments
• These payments are based upon relati$e pro"it per"ormances
at higher eecuti$e le$els and upon sales $olume achie$ed
relati$e to sales potentials at lo%er eecuti$e le$el
• More than hal" o" the sales eecuti$es ha$e stoc! options
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Thank Cou K