By: Kanchan Parashar

INTRODUCTION TO SALES MANAGEMENT

• Sales management is a business discipline which is focused on the practical application of sales techniques and the management of a firm's sales operations. It is an important business function as net sales through the sale of products and services and resulting profit drive most commercial business.

DEFINITION OF SALES MANAGEMENT

• Sales management is defined 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”

The American Marketing Association

NATURE & IMPORTANCE OF SALES MANAGEMENT

• Sales management helps to achieve the organizational objectives.

• The main objectives of sales management is that products should be sold at that price which realizes profits.

• Buyers and sellers both have same types of business relationships. This relationship is based on exchange of goods, services and money.

NATURE & IMPORTANCE OF SALES MANAGEMENT

• Sales person develops a positive relationship with the customers. The role of sales team is interdependent and success of one team member depends on the other.

• The sales team continuously monitor the customer preference, competitors, situation, government policy and other regulatory bodies.

OBJECTIVES OF SALES MANAGEMENT

• Sales Management entails numerous objectives which are executed by sales managers. There are mainly three such objectives

• Sales Volume• Contribution to profits• Continuous Growth

SALES VOLUME

• Achieving sales volume is the first objective of Sales. The word “volume” is critical because whenever a product sales start, the market is supposed to be a virgin market.

• Thus there needs to be optimum penetration so that the product reaches all corners of the region targeted. Ultimately, penetration levels can be decided on the basis of sales volume achieved.

CONTRIBUTION TO PROFITS

• Sales brings turnover for the company and this turnover results in profits. Naturally, sales has a major contribution to profit and it is categorized as a profit function in several organizations.

CONTINOUS GROWTH• A company cannot remain stagnant. There are

salaries to be paid, costs have been incurred and there are shareholders to be answered. So a company cannot survive without continuous growth.

• If there is no innovation at the product level or at the company level, then the company has to be blamed. But if the products are good, and still the penetration is not happening, then it is the fault of sales manager and sales executives.

MEANING OF SALES FORCE

• A "sales force" is a group within a company that conducts sales.

• Managing the Sales force involves two key personal selling decisions, which are;

Size of sales force: Depends upon the number of customer a company wants to reach.

Selling styles

COMPENSATING THE SALESFORCE• A good compensation plan should consider objectives

from the company’s and salespeople’s viewpoint.• Objectives of compensation plan from the company’s

viewpoint• To attract, retain, and motivate competent salespeople• To control salespeople’s activities• To be competitive, yet economical: It is difficult to

balance these two objectives• To be flexible to adapt to new products, changing

markets, and differing territory sales potentials

OBJECTIVES OF COMPENSATION PLAN FROM SALESPERSON’S VIEWPOINT

• To have both regular and incentive income• To have a simple plan, for easy understanding • To have a fair payment plan: Fair or just

payment to all salespeople is ensured by selecting measurable and controllable factors

COMPENSATING THE SALESFORCE

Factors influencing the design of a compensation plan

Financial Stability of the firm Size of the market Nature of the Product Types of Compensation PlanFinancial CompensationNon Financial Compensation

FINANCIAL COMPENSATION

• Straight Salary Plan• Straight Commission Plan• Bonus and Incentive• Salary plus Incentive Plan( Combination Plan)• Drawing account and Commission Plan

NON FINANCIAL COMPENSATION

• Promotions• Recognition Programmes• Fringe Benefits• Expense Accounts• Perks• Sales Contests

SALES FORCE MOTIVATION• Motivation is derived from Latin word

“movere”, which means “to move”.• Motivation is the effort the salesperson makes

to complete various activities of the sales job.• 10-15 percent salespeople are self-motivated.• Importance of motivating salespeople is

recognized, because financial performance of the company depends upon the achievement of sales volume objective

MOTIVATIONAL THEORIES• Motivational theories or behavioural concepts

that are relevant to motivation of salespeople are:

• Maslow’s hierarchy of needs• Hertzberg’s dual-factor• Vroom’s expectancy• Churchill, Ford, and Walker model of sales

force motivation, shown here under:

SELECTING A MIX OF MOTIVATIONAL TOOLS

• Sales manager should know each salesperson and understand his / her specific needs.

• For designing or selecting a mix of motivational tools, a compromise between differing needs of customers, salespeople, and the company management becomes necessary

• Motivational tools are divided into (1) financial, and (2) non-financial. These are shown in the next slide

MOTIVATIONAL TOOLS IN A MOTIVATIONAL MIX

FINANCIALSalaryCommissionBonus Fringe BenefitsCombinations

NON FINANCIALPromotionJob enrichmentJob SecuritySales MeetingPersonal growth

oppurtunities

MEANING OF PERSONAL SELLING• Personal selling is selling technique involved

between person to person and between the prospective buyer and seller.

• Personal selling consists of human contact and direct communication rather than impersonal mass communication.

• Personal selling involves developing customers relationship, discovering & communicating customer needs, matching the appropriate products with these needs.

MEANING OF PERSONAL SELLING

• Personal selling is the most significant promotional tool in terms of number of people employed.

• Personal selling is so important because the sales person is the catalyst that making reaction in the Marketing activities.

DEFINITIONS OF PERSONAL SELLING• According to American Marketing Association:-

“Personal Selling is the oral presentation in a conversation with one or more prospective purchases for the purpose of making sales , it is the ability to persuade the people to buy goods and services at a profit to the seller and benefit to the buyer.”

• According to Philip Kotler:- “As face to face interaction with one or more prospective purchasers for the purposes of making the sales.”

PRINCIPLES OF PERSONAL SELLING

• In present times, personal selling is becoming more and more customer oriented be cause no more do are have a buyer’s market. Three major principles of personal selling are :

• i) Professionalism• ii) Negotiations• iii) Relationship marketing

PROFESSIONALISM• The modern professional approach to

salesmanship is customer oriented. The act of selling is projected as aimed at solving the problems of the customers. Such an approach is satisfying the customers more there by making sales activity more and more effective.

• The sales managers realize the importance of training of the sales force and spend huge sums of money each year for the same.

• The aim at sharpening the skills of a salesman to make him more and more effective.

NEGOTIATIONS

• Negotiation skills are one of the most important skills of a salesman. The two parties need to reach agreement on price and other terms of sales.

• A good salesman wins the order without making concessions that will hurt his profitability. Also, he must not unduly extract the customer because such as approach will be detrimental in long run.

RELATIONSHIP MARKETING• The relationship approach is long term and

establishes a relationship between the buyer and the seller. Both understand each other and support each other.

• Sales managers have realized that it is far easier to get sales from an old customer as compared to getting the same from a new customer. So, it is important to retain the existing customers. Personal selling is the most effective method of building relationships.

OBJECTIVES OF PERSONAL SELLING

• Personal selling has two types of objectives-

Qualitative objectives

Quantitative objectives

QUALITATIVE OBJECTIVES• To do the entire selling job (as when there are no

other elements in the promotional mix).• To “serve” existing accounts {i.e., to maintain

contacts with present customers, take orders etc.).• To search out and obtain new customers.• To secure and maintain customer’s cooperation in

stocking and promoting the product line.• To keep customers informed of changes in the

product line and other aspects of marketing strategy.

QUALITATIVE OBJECTIVES• To assist customers in selling the product line (as

through “missionary selling”).• To provide technical advice and assistance to customers

(as with complicated products and where products are specially designed to fit buyers’ specifications).

• To assist with (or hand) the training of middlemen’s sales personnel.

• To provide advice and assistance to middlemen on various management problems.

• To collect and report market information of interest and use to company management.

QUANTITATIVE OBJECTIVES

• To obtain sales volume in ways that contribute to profit objectives.

• To keep personal-selling expenses within certain limits.

• To secure and retain a certain share of the market.

• To obtain some number of new accounts of given types.

PROCESS OF PERSONAL SELLING

Prospecting and qualifying

Pre Approach

Approach

Presentation & Demonstration

Closing the Sale

Follow up

THEORIES OF SELLING

• There are four theories of Selling:

AIDASRIGHT SET OF CIRCUMSTANCES BUYING FORMULA BEHAVIOURIAL EQUATION

AIDAS THEORY

• A- Securing Attention• I- Gaining Interest• D- Kindling Desire• A- Inducing Action• S- Building Satisfaction

RIGHT SET OF CIRCUMSTANCES THEORY

• It is also called the “situation-response” theory.• The major emphasis of the theory is that a

particular circumstance prevailing in a given selling situation will cause the prospect to respond in a predictable way. The set of circumstances can be both internal and external to the prospect.

• A sales person needs to be well skilled to handle the set of circumstances

BUYING FORMULA THEORY

• The name “buying formula” has been given by the late E.K. Strong. solution

• The theory is based on the fact that there is a need or a problem for which a solution must be found which would lead to purchase decision, as shown below:

Need Solution Purchase Satisfaction

BUYING FORMULA THEORY

• The buyer’s needs or problems receive major attention, and the salesperson’s role is to help the buyer to find solutions. This theory purports to answer the question: What thinking process goes on in the prospect's mind that causes the decision to buy or not to buy?

BEHAVIOURIAL EQUATIONTHEORY

Using a stimulus response model and incorporating findings from behavioral research, J.A. Howard explains buying behavior in terms of the purchasing decision process, viewed as phases of the learning process.

Four essential elements of the learning process included in the stimulus-response model are:

1. DRIVES: a) INNATE DRIVES b) LEARNED DRIVES

BEHAVIOURIAL EQUATIONTHEORY

. CUES: a) PRODUCT CUES b) INFORMATIONAL CUES

3. RESPONSE

4. REINFORCEMENT

BEHAVIOURIAL EQUATIONTHEORY

Howard incorporates these four elements into an equation

B =P * D * k * VWhere B= response or internal response tendencyP= predisposition or the inward response tendencyK= incentive potentialV= intensity of all the cues