sales & distrbution mngmnt notes- module 1 2 3

8/7/2019 Sales & Distrbution Mngmnt Notes- module 1 2 3

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SALES AND RETAIL MANAGEMENT

Sub Code: 08MBAMM312

PART A

SALES MANAGEMENT

MODULE 1 (8 Hours)

Introduction to sales management: Meaning, Evaluation, Importance, Personal Selling,

Emerging Trends in Sales Management, elementary study of sales organizations, qualitiesand responsibilities of sales manager. Types of sales organizations.

An Introduction to 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.

Nature and role of sales management

The determination of sales force objective and goals

Sales force organization, size, territory, and quota finalization

Sales forecasting and budgeting

Sales force selection, recruitment, and training

Motivating and leading the sales force

Designing compensation plan and control systems

Designing career growth plans and building relationship strategies with key

customers

Transaction selling & Relationship selling.

In relationship-oriented selling,

salespeople concentrate their efforts on developing trust in a few carefully selected

accounts over an extended period of time. The goal of this type of selling is to developmutually beneficial, long-term relationships. These relationships are based on trust,

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reliability, commitment, and cooperation on the part of both the buyer and seller. Intransaction-oriented sellingsalespeople focus on the immediate sale rather than on the

relationship with the customer. The goal is to maximize short-term sales.

Personal selling is a personal communication of information to persuade a prospective

customer to buy something-a good, service, or idea-that satisfies an individuals needs.

Personal selling strategies

1. Willingness to go to batfor the buyer within the supplier firm

2. Thoroughness and follow through

3. Knowledge of the sales persons product line

4. Market knowledge and keeping the buyer posted

5. Applying his product and services to buyers needs

6. Knowledge of the buyers product line

7. Preparation for sales calls

8. Regularity of Sales calls

9. Diplomacy in dealing with operating departments

10. Technical education

Types of personal selling

Industrial selling: It is the selling process followed to satisfy the industrial

customers and big organizations including the government establishments.

These are grouped into four categories on the basis of consumer sale.

Selling to resellers

Selling to business users

Institutional selling

Selling to governments

Retail selling: This is the front-door sales process that a customer encounters

when he visits a retail store.

A service selling is the selling process where the salespeople sell services to

customers.

Why does the domain of sales management viewed as multi disciplinary?

The domain of sales management has become multidisciplinary in which the sales

managers have to manage diverse workforce and more complex technology.

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Responsibilities of Sales managers have to perform duties like such as recruiting,

training, selecting, motivating, forecasting, controlling, and administering salespeople-

while facing the primary responsibility of generating revenue for their firms.

They have to manage and satisfy multiple stakeholders like customers, suppliers, sales

representatives and top management with an objective of increasing sales andprofitability. There are guiding principles and concepts in the field of sales and

marketing that are shaping the destiny of sales managers and the domain of knowledge in

sales management.

What are the top ten qualities of a sales person?

Following are the top ten qualities of the sales person

1. Willingness to go to batfor the buyer within the supplier firm

2. Thoroughness and follow through

3. Knowledge of the sales persons product line

4. Market knowledge and keeping the buyer posted5. Imagination of applying his product and services to buyers needs

6. Knowledge of the buyers product line7. Preparation for sales calls

8. Regularity of Sales calls

9. Diplomacy in dealing with operating departments

10. Technical education

What are the various concepts of marketing?

Following are the explanation for marketing concepts.1) Production concept

2) Product concept

3) Selling concept4) Marketing concept

5) Societal concept

_______________________________________________________________________

_

Selling Marketing

______________________________________________________________________1. Emphasis is on the product Emphasis on consumer needs and wants

2. Company manufactures the product first Company first determines customers needs

andand then decides to sell it wants and then decides out how to deliver a

product to satisfy these wants

3. Management is sales volume oriented Management is profit oriented4. Planning is short-run-oriented, in Planning is long-run-oriented, in terms

terms of todays products and markets of new products, tomorrows markets

and future growth

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5. Stresses needs of seller Stresses needs and wants of buyers

6. Views business as a good producing Views business as consumer satisfying

processProcess

7. Emphasis on staying with existing Emphasis on innovation on every sphere,

technology and reducing costs on providing better value to the customerby adopting a superior technology

8. Different departments work as All departments of the business operate

in a highly separate water tight integrated manner, the sole purposecompartments being generation of consumer satisfaction

9. Cost determines Price Consumer determine price, price determines

cost

10. Selling views customer as the last link Marketing views the customer as the verypurpose in business of the business

________________________________________________________________________

Selling Concept

Marketing Concept

The sales manager of today uses professional and scientific procedures to plan and

implement a sales management program.

1. He uses the fundamental principles of management applied to sales management

in the form of sales force recruitment, training, supervision, evaluation and

control.

4

Factory Product Selling and Profits

Promoting

Sales

Volume

Market Customer Coordinated Profits

Needs Marketing

Through

Customer

satisfaction

Starting

Point

Focus Means Ends


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2. He also uses the basic principles of designing sales organizations, the process of

fixing quota and allocating territories and forecasting demand for the future.

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The diagram to explain the type of selling

Types of Selling

The diagram to explain the emerging trends in sales management

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Selling

Function

Order

Takers

Order

Getters

Order

Creators

Outside Order

Takers

Inside Order

Taker

Merchandisers

Delivery Sales

People

Missionary Sales

People

New Business

Sales People

Organizational

Sales People

Consumer

Sales People

Technical

Support sales

People

Front Line

Sales People

Sales Support

Sales people


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Emerging Trends in Sales Management

Explain the diagram below about the evolution of personal selling

Evolution of Personal Selling

The sales management process in any organization involves three interrelated anddynamic set of decisions and processes. Sales management is the process of attaining

sales force goals in an effective and efficient manner through planning, staffing, training,

leading and controlling organizational resources.

Any organization with a substantial sales force needs to plan and manage the sales

management process and accomplish goals through resource utilization and people

management. The sales management process covers three interrelated steps of

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Relationship

Selling

Customer

Orientation

Global and

ethical

Issues

New Selling

Methods

Diversity

Emerging Trends in Sales

Management

Technology ( ERP, GIS, Tally,

etc.,

Persuasion

Consultative

Selling

Partnership

StrategiesBusiness

ManagementNegotiation


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formulation of strategic sales programs, implementation of the strategic sales program

and Evaluation and control of sales force performance. The following diagram explains

the steps and their meanings

Sales Management Process

Diagrams to explain various orientation in sales

Sales Orientation

Marketing Orientation

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Formulation of Strategic Sales Programme

The strategic Sales Program should consider the environmental issues affecting the

business. It should organize and plan the companys over all personal selling efforts and

inte rate these with the other elements of the firms marketin strate

Implementation of the Sales Programme

It involves selecting appropriate sales personnel, training them, leading them and

motivating them, design and implementation of policies and procedures that will direct

the efforts of the sales people towards achieving corporate objectives

Evaluation and Control of Sales Force Performance

It involves developing methods and practices for monitoring and evaluation of the individual

and group sales force performance. This invites taking corrective steps either in formulation or

in implementation programs to achieve the desired corporate goal.

Customer Needs

SalesCustomers

Emphasis on

Sellers Needs

Production

Production

Sales

Emphasis on

Customer Needs


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Sales Organization

It is the organization of individuals working together for marketing of products and

services manufactured by an enterprise or the products that have been procured by the

firm for the purpose of reselling.

A successful sales organization is one where functions of every department is carefully

planned and coordinated, efforts of the individuals supervised and resources areorganized towards the goal of delivering the products and services in the hands of the

customer for a profit. It is a point of orientation of individuals for cooperative efforts for

establishing relationships within the enterprises and with the customers outside the

organization.

A sales organization defines duties, roles, rights and responsibilities of people engaged in

selling activities, meant for effective execution of sales function, demanding a coherent

and unified effort of Individuals in the organization towards achieving a common goal ofsales. A sales organization is designed to execute functions more than just achieving sales

though the goal of the department is to achieve sales.

Factors influencing structure

product and service related factors

organization related factors

marketing mix related factors

external factors:

the speed of market change

- reduction in the number of vendors per buyer

- closer to customer relationships

changes in regulations and international practices

Organizational principles

span of control

unity of command

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hierarchy of authority

stability and continuity

coordination and integration

homogeneity

objectivity

specialization

Span of Control refers to the number of subordinates and sales staff under the

supervision of one sales manager.

Narrow span of control is an appropriate model when there are new recruits to be handledin the filed so that they can be guided in the sales function. New recruits gain ubstantially

from the experienced managers when it is one to one coaching in the field. It has its

disadvantages too like complicated communication flows, de-motivation due to directsupervision, resistance by innovative new recruits to the traditional methods of coaching

by the sales managers, increase isolation of management from grassroots level operation

and higher operation costs. The narrow span of control requires more layers ofsupervision, which adds on to the selling expenses and separates management from the

end consumer.

Wider span of control has fewer level of supervision where the managers play the role

of a cheerleader than supervisor. This puts pressure on the organizations to recruit

employees with adequate marketing experience and technical knowledge so that they can

handle the sales independently. Fewer levels of management also reduce the growth ofthe employees in the organization and posing a challenge to have an affective reward

system.

Centralization & Decentalization.: To what extent control and authority over the salesforce should rest on the hands of the top management versus field sales manager decides

the level of centralization in the organization. In a highly centralized organization,selection, recruitment, training, supervisions, fixation of quota and territory allocations

and compensation plans are decided at the corporate level where as in a decentralized

organization these responsibilities are of the field sales manager. Consistency in the

marketing plan, uniformity in the product and service offer, coordination and integrationof sales people across the organization are the essential elements of a centralized

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organization. Centralized recruitment, training and motivation plans help organizations to

save costs for the organization.

The simplest method of designing an organization is on the basis of geographic territory

where every salesman is assigned a specific area for making the sales. The areas are

combined together for assigning a supervisor and then number of areas is combined for asales manager. This is a very distinct form of design and least complicated design.

Many modern organizations are switching to independent sales agents in the form of

distributors and suppliers that represent several suppliers simultaneously. They are

independent private businesses with a contractual agreement with the selling organization

for sale for a contractual payment called commission. These organizations maintain theirown sales force and manage the intermediary network.

System selling involves constitution of cross-functional teams and prospecting through a

cross functional team. A cross-functional team typically involves people from sales,service and product design departments. Organizations selling software, business-to-

business solutions, and high technology based complex products use system sellingapproach.

There are various factors that are influential in the design of a sales organization. The

market strategy and goal set by the organization, the market coverage strategy, theproduct mix, the type of selling method used for example from Individual to team selling,

the extent of technology applied in the organizational sales function are some of the

factors influencing the design of the sales organization.

Many organizations, large in size and complex in product offering prefer a complex

design which is a combination of different types as explained above at different levels ofthe organization. The combination can be on the basis of the product, function,

geographic or customer depending on the market coverage and scope of business.

Organizations having diversified product ranges and serving extensive markets use thecombined type of sales department. Such a set up is essential for them to get

specialization at every stage of marketing activities. These kind of organizational designs

are relevant for multinational firms operating in different countries.

The typical hierarchy system and span of control applies to applies manufacturing

organizations. Information technology sector is a different ball game in which theworkers are highly educated and they are called as knowledge workers. Take the

examples of companies like Infosys, Satyam and Wipro to explain the concept.

3. The application of technology in tracking customers, order-processing managementcan be explained by the concept of Enterprise Resource Planning (ERP) and Customer

Relationship Management (CRM). You can explain about this technology by visiting to

the site crmguru.com and bringing issues related to the above.

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5. The top three technological changes include the application of ERP packages at the

back end; the CRM packages in the front end and web enabled systems and procedures

for the customer data management.

Hindustan Lever Limited

Combined sales organization will be a good idea as it can help in covering a large set of

product mix and geographical markets.

Organizational design

- formal and coordinated task

- assigning territories- establishing flows of communication and responsibilities

of sales groups and individuals to customers effectively

Line organization

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President / Owner

VP (Sales)

Five sales people


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MODULE 2 (5 Hours)

Selling skills & Selling strategies: Selling and Business Styles, selling skills, situations,

selling process, sales presentation, Handling customer objections, Follow-up-action

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Selling situations

Maintenance selling

Developmental selling

Selling Skills and Selling Strategies

Various selling skills that include communication skill, presentation skill, listening skill,negotiation and bargaining skill.

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Body language plays a greater role in communicating with customers about how much

confident and knowledgeable sales man s about company, products and competitorsproducts. It reflects the professionalism and dynamism with the sales person and his ways

of handling customers approach towards a sale. There are various ways to improve the

body language that include management of personal appearance, postures and gestures,

facial expressions, eye contacts and space distancing that can be done by the sales person.

Managing body language:

Personal Appearance

Posture

Gestures

Facial Expressions

Eye Contact

Space Distancing

Different levels of listening skills include the level of feedback, paraphrasing,

clarifications, empathetic listening and active listening. The most important stage in the

listening process is the empathetic listening in which the sales person sidelines with the

customer and wins customers agreement for the active listening stage.

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The three components of conflict include

o interest level conflict,

o emotion level conflict

o Value level conflict.

The sales manager should identify potential opposition or incompatibility, and then look

for cognition and personalization, which leads to conflict reducing behaviour and desired

outcome. Various accepted and standard methods of conflict resolution includecompeting, collaborating. Avoiding, accommodating and compromising. The sales

manager should follow the above-mentioned methods and strategies for conflict

resolution.

The conflict resolution process:

lumping

avoidance

coercion

meditation

conciliation

arbitration

adjudication

negotiation

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The various situations and timings on which negotiation is appropriate include

When many variable factors bear not only on price but also on quality and

service When business risks involved can not be accurately predicted

When a long period of time is required to produce the items purchased.

When production is interrupted frequently because of numerous changeorders

The bargaining strategy should be built up with various issues in mind that include thesubstantive issues, relationship issues and avoidance of I message. The sales manager

should focus on interests and not on the positions and should look for the timing,

perception and likely marginal gains through successful negotiations as the evaluatingparameters for establishing a bargaining strategy.

Negotiation Skills

Situation and timing for negotiations

Formulation for a bargaining strategy The theory and strategy of principle

negotiations

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- separate the people from the problem

- focus on interests, not on positions

- invent options for mutual gains- insist on objective criteria

-

Few bargaining tactics:a. Big Pot

The sales manager should leave himself a lot of room to negotiate. He should make a

high demand at the beginning so that even after making concessions he still will end upwith large pay off than if he had started with a very low demand.

b. Budget Bogey

The customer says that he has a fixed budget beyond which he cannot go. The seller who

accepts these fixed budget constraints ends up with a low price. So the sales personshould not accept this concept without cross checking the sources of funds. Most budgets

are flexible and have scope to adjust the market variations. If the sales person rejects the

price as nonnegotiable, budgetary provisions can be made in companies from other

sources. c. The well is dry

In this tactic, the sales manager takes a stand and tells the opponent that he has no moreconcessions to make.

d. Limited authority

The sales manager shouldnegotiate in good faith with the opponent, and when he is to

ready to sign the deal, the sales manager can say, I have to check with my boss. This isbasically done to take another chance for negotiation..

Paradigm pioneers are people who have the courage to escape a paradigm paralysis by

breaking existing rules when success is not guaranteed. They have the realization that

there is no shortcut in the jungle of life and there is no easy road in the unchartedterritories. They have to cut paths and making it easier for others to follow. They have a

high level of intuition to carry out new ideas and courage to leap frog the conventional

wisdom and create new set patterns. The steps involved in problem solving includedefinition of the problem, generating alternative solutions, deciding on the solution,

implementing the solution and evaluating the solution.

The seven habits can be studied from the book of Steven Covey, which are necessary forthe sales people to follow. They take people from dependence to independence, to a

proactive and personal vision, to begin with an end in mind, to develop paradigms of

interdependence, to think win- win, to seek to understand and the be understood, tofollow the principles of creative cooperation and balanced self renewal.

BATNA is the standard of comparison that can protect a sales person from acceptingunfavourable terms and rejecting favourable terms. It is a standard against which the

proposed agreement should be measured. The sales manager should find out his BATNA

by analyzing the size of his business, the relative gains if he misses the BATNA and the

strengths of competitors in the process.

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Communication plays a great role in reducing the noise level in the sales presentation.

Sales manager should be very clear about the message intent, structure and order, whichwill help in reducing the noise level and increasing the effectiveness of the presentation.

The Selling Process

1.

Selling process is the process under which the sales man identifies and locates the

prospect, separates the suspects from prospects, approaches them and makes a sales

presentation, handles their objections and closes a sale. Subsequently he should follow

the customer to reinforce the buying behaviour. The sales person should be very careful

by taking in to account the customers likelihood of reaction to the sales personspresentation, how he is going to remove the ambiguity of the customers.

Pre approach to selling

Approach to the customer

Sales presentation- approach to sales presentation

- attracting customer attention

- creating interest

- arousing desire and building conviction

Methods of sales presentation

- canned presentation

- organized presentation

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- tailored presentation

The sales person can start with his highest expectations and avoid conceding first. He

should be sure that the customer understands the value of concession. He should makeconcession in small amounts. He should admit the mistakes and make corrections

willingly. He should be prepared to withdraw a concession and avoid split the difference

strategy and should not advertise the willingness to concede.He can handle customer objections by various methods like superior feature method,

yes but method, reverse English method, Indirect Denial Method, Pass Out Method,

Comparison method and Direct Denial method.

Prospecting is the process of identifying potential buyers who have a need for the

products and services offered by the company have the ability to pay for it and the

adequate authority to buy it.

a. Wine (Cold canvassing, prospect Pool)b. Cigarette (Prospect Pool, centres of Influence)

c. Industrial lube (Endless Customer Referral)d. Washing Machine (Centres of Influence, telemarketing and Network)

Methods of prospecting

Cold canvassing

Endless chain customer referral

Prospect pool Leads , Referrals, Orphans & Customers

Centers of influence Non competing sales force

Observation

Friends and acquaintances

Lists and directories

Direct mail

Telemarketing

Trade shows and demonstrations

Product features are the physical elements by which the product is identified and

customer confronts them at the buying point. The consumer benefits are what thecustomer derives out of these features. Benefits are the net utility that customer will get

out of each features.

Various Methods for handling customer objections include the superior feature method,

yes but method, reverse English method, Indirect denial method, pass out method,

comparison method, direct denial method, another angle method, narrative method,testimonial method ad question or why method.

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There are various approaches to selling that include benefit based approach by use of

consumer benefits, the referral approach by focussing on a third partys

recommendations, introductory approach by focussing on the selling company andfocussed product approach by stressing the physical aspect of the product. The strongest

is the consumer befit approach which is sued at the introductory stage of a product life

cycle and the growth stage one uses the referral from the existing customers, Thematurity and declining stage stress the physical product benefits and over all benefit

based approach.

The sales person can encourage prospect to continue to talk to him by using empathetic

listening skills as explained in the previous chapter and by motivating the customer to

speak what he anted to speak but could not speak. What he ill get out of the product use,

providing a comparative judgement to the competitors products and also referring aboutwho else nearby has done the buying of the product. He can bring back the customer to a

conversation by motivating him to speak and share his thoughts about great product ideas

in the category.

The sales person can use various methods like testimonial method and question why

method to find out the real customer problems

The sales person should go and do a follow up at the end of the sale. It helps him to

identify the competitive moves, in generating additional leads from the satisfied

customers and also to help the company in the idea of cross selling and up selling. Yes, ithelps in reselling the product. And also building up the customer interest and generating

repeat sales for the salesman.

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Methods of handling customer objections

Superior feature method

YesBut method

Reverse English method

Indirect denial method

Pass out method Comparison method

Direct denial method

Another angle method

Narrative method

Testimonial method

Question or WHY method

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MODULE 3 (7 Hours)

Management of Sales Territory & Sales Quota: Sales territory, meaning, size,

designing, sales quota, procedure for sales quota. Types of sales quota, Methods of

setting sales Quota.Recruitment and selection of sales force, Training of sales force.

Management of Sales Territory

A sales Territory is a group of present and potential customers assigned to an individual

or group sales man (men), branch, dealer, distributor or a marketing organization at a

given period of time.

A good sales territory should have enough customers who have the ability and

willingness to buy the category and interest to buy the brand sold by the firms sales man.

Territories are defined by geographical boundary in many organizations. Though the

geographic market may have a heterogeneous mix of customers and potential customers

but a decision on the basis of geographic coverage has distinctive advantages. A goodterritorial design always helps in matching the selling efforts with sales opportunities in

that market. Sales managers assign their sales force the responsibility for serving

particular groups of present and potential customers and serve as contact points withinthese markets. This helps in providing a direction to the process of sales planning and

control.

The design of a sales territory provides various advantages to the firm.

it ensures better market coverage

effective utilization of the sales force

efficient distribution of workload among sales people it is convenient to evaluate the performance of sales people to control over the direct and indirect costs of the sales function

optimum utilization of sales time by sales people

. It also enhances employee morale and helps the managers in better sales control andprogram evaluations. Compared to a vast market which is an aggregate whole of

consumers, a territorial design helps in building accountability for each salesman in the

form of identification of prospects, maintenance of the call norms and realization ofdifferent level of sales at different points of time. By restricting sales force to specific

geographic areas the sales manager makes them to generate more sales from the same

market and serve the customer better.

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They do not get a chance to poach in each others territory. They also work to build

customers and increase the profit level out of each customer by inculcating higher sales

through up-selling and cross selling to the same set of customers. This helps them tounderstand the customers current and latent need requirements in depth and serve them

better by fostering a level of loyalty to the organization products and services. The sales

people understand the business decision processes of each customer in their territory,their consumption rates and people who are involved in decision making. new products

and likely support for the modified marketing program in support of the new product

launch.

There are various factors that the sales manager should take in to account while designing

the territory. They include the

market stage,

the sales force turnover in the company,

the level of relocations of the customers,

the geographic location of customers,

the distribution of category of customers, the stage in the product life cycle and

the percentage of change in the product line in the near future.

The geographic control units are the independent customer concentrations, which can be

combined to form sales territories. These control units must be small enough to allowflexibility in setting up geographic boundaries and they should not be so small that it

needs a high level of data manipulation. The units so selected should be homogenous and

of reasonable size to achieve economy. These basic units can be country, state, district,division, block with clear boundaries. Firms having international or global operations

treat a country as a territory. Further a country can be subdivided on the basis of states as

geographical control units. States can be account the differences in areas, population,transportation, resources, purchasing power and level of development.

Once tentative initial boundaries are established for each sales territory, the next task is todetermine how much work is required to cover each territory. Territories should be

formed on the basis of equal sales potential and workload.

The modern day sales organizations use information technology and computer programs

for deciding sales territories, work load and call norms for each salesman. Sales managers

can save a great deal of time by building territories with computer programs and by

taking the help of available databases of market information for making them morerealistic and achievable. The computer programs are basically used for territory mapping,

simulation and optimization of routine and call norm behaviour. Mapping programs areused to display territories as a aggregate of various priori data sets. The sales manager

feeds the basic data on market potential, number of present accounts, home locations of

sales people and geographic boundary of control units. Then the sales managers draw

tentative territory boundaries. The display gives the size and locale of the territory, therelevant data on current sales, potential sales, and geographic size for coverage.

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Geographic Information Systems (GIS) is the most popular database used for the

purpose..

The features of a computer program for mapping should include the detailed mapping

programming, more levels of iterations, scope for updation and adaptability to the system

and country, ability to draw topographical features and synthesize the territorialinformation.

Essentially this is necessary to finalize the shape of the territories, analyse the workloadof each sales man for uniform distribution and level of customer density in each segment

and territory.

.

Sales territory design

a. The type of design

b. The characteristics of the territoryc. The factors taken in to consideration while designing the sales territory

d. The periodic measures taken by sales manager to control the territoryGeographical control unit is designed, how workload analysis is done and how the

territorial shapes are built in a pharma concern.

Companies use Geographic Information System for territorial planning. Some of thepopular companies include Marico, Procter and Gamble and Lupin Pharmaceuticals.

Management of Sales Quota

A sales quota is the sales goal set for a product line, company division, or sales

representative. It is primarily a managerial device for defining and stimulating sales

effort.... Kotler.

a quota is an expected performance objective

a quota is a sales assignments or goal to be achieved in a specific period of time

it is routinely assigned to the sales units (e.g. departments, divisions, and

individuals)

sales units proceed to reach quotas in their respective domains

The sales managers use the sales quota for motivating sales people. People with a mind toachieve higher things like the concept of sales quota due to its objectivity in measurement

and subsequent linking with the reward system. They also get a feed back on their

performance through the achievement of quota in the organization. In a multi productsituation, the sales people are directed to put their efforts in specific product categories

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that make them to know where to concentrate for achieving the organizational goal.

Quotas always lead organizations for management by exception.

When you have an improper quota, it leads to inequitable distribution of work. Quota set

above the achievable limit often creates de-motivation and results in high turnover in the

organization. A rigid quota does not take in to account the changes in market conditionsand competition due to emergence of new competitors, changes in legislation, new

innovation, or short-term sales strategy followed by the competitors to increase market

share. The method and approach to quota setting should not change very often. Frequentchanges to quota setting methods and approach also can create confusion and loss of

goodwill for the sales manager.

Following are the method of fixing quota; quotas based on

sales forecasts and potentials,

quotas based on forecasts, quotas based on past sales and experience,

Quotas based on executive judgment,

quotas based on sales people judgment,

quotas based on compensation.

Quotas based over executive judgment needs moderation because they are based on the

executives past experience, which may not be valid at a future point of time. They try to

analyze facts and figures for the different markets and the decide quota for the territory,salesman and intermediaries.

Sales managers face various problems while fixing quota for the organization.. There is ahigh level of individual difference in every organization. The ability of individuals inperforming certain duties varies, as it is dependent on personal effectiveness, personality

type and skill of the individual. While setting sales quota differences in ability, quality,

experience and position among the salesman are not considered suitably in manyorganizations for which the basic objective of setting quota and its contribution towards

the organizational effectiveness through scientific endeavour of quota management is

difficult to attain.

In selling by objective method, the sales managers chart out the selling strategy for their

respective units from the original corporate sales plan. The sales units are decided

depending on the hierarchy of the sales manager. It can be a state sales unit or a district,zone or area unit. This is more scientific in nature as it uses the past data, the growth

rates and tries to build up based over each territorial unit to arrive at a national figure.

In order to make the quota acceptable to the sales staff and to obtain optimum result, a

quota should be Specific, Measurable, Attainable, Realistic and Time specific. There

should be an equal level playing field while setting quota and the allotment should beuniform between the salesman by taking in to account the conditions prevailing in the

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territory, the level of competition, the experience and ability of the salesman in achieving

the sales goal.

Quota setting is often used as a tool for motivating sales people. The sales people are

taken in to the teams while fixing quota. A democratic method of fixing quota helps the

sales person realize the changes and the reasons there of. The enhancement of quota overthe years backed up by a compensation and incentive plan also helps the sales people to

stay committed to the organization. A quota fixed scientifically brings clarity in the mind

of the sales people and helps them in understanding their goal and role in theorganization. One can take examples of fast moving consumer goods companies,

business-to-business marketing companies as example for explaining different kinds of

quota used by each one of them.

Types of sales quota

sale volume quota

sales budget quota sale activity quota

combination quota

The sales person should participate in fixing quota. Quota, which is set forth by the topmanagement if often, found to demotivate the sales people. If they are a party to quota

fixing, it is easier to take their commitment and help them in realizing the requirement of

their efforts in achieving the desired goals. However a sales manager should take

precautions while fixing quota. The purpose is to create a win- win situation for both theorganization and the employee. If the goal setting cannot be completed in one meeting,

the sales manager can set few more meetings for problem solving and creative objectives.The meetings have to be formal, structured and run with scheduled discussion. He shouldlook in to organizational goals and the objectives set forth by the top management while

taking suggestions from the sales people.

Problems in setting sales quota

1. There is a high level of individual difference in every organization

2. A perfect quota is a combination of selling and non- selling activities

3. Often sales people do not give proper attention to the non-selling activities (e.g.

searching for prospects, handling customer objections, and creating market forprobable entry of new products

Recruitment and Selection of the Sales Force

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Challenges in sales force selection

personality types matching to job profiles

one of the measures that the organization looks in an employee is: the ability to

perform by an employee = ability x motivation

level of motivation

Planning, recruiting, and selecting sales person is important for the company for various

reasons. the enterprise to take up additional responsibilities.

Job analysis is the gathering and organization of information concerning the tasks, duties

and responsibilities of specific jobs. There are various techniques available for

conducting job analysis and we explain here two important techniques namely;

Task Inventory Analysis and

Critical Incident Technique.

Task Inventory analysis is the collection of various methods, which are practiced, in USA

military organizations. The technique is used to determine the knowledge, skills andabilities (KSAs) needed to perform the job. The analysis involves three steps viz.

Interview, survey and generation of a task by KSA Matrix.

Critical Incident Method is used to develop behavioural description of the job. The

supervisors and workers generate behavioural incidents of job performance. In this

technique the job analyst develops dimensions, generates incidents, retranslates them to

work situations and assigns effectiveness values

The sales manager should take effective steps to forecast the demand and fill up the gap,which may emerge out of the likely turnover of the sales people.

The process of hiring involves a four-stage approach.

The first stage explains the human resource planning process where the key decisions like

examining the sales person turnover in the organization, conducting the strategic position

analysis, establishing the hiring objectives and deciding on the number of sales people for

a particular period of time.

The second stage is called the recruitment stage where the decisions on identifying the

best source of candidates, and generating a pool of candidates to select from.

The last stage is the stage of selection where various techniques are used to identify the

right candidate for the organization.

The steps followed for the selection of manpower for the organizations followed by sales

managers include the identification of source of recruitment and methods ofcommunication, designing an effective application form and preparing short list,

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conducting the interview, conducting psychological tests and medical check ups and then

offering the appointment to the sales people.

The sources of recruitment are classified as

External sources and

Internal sources of recruitment.

The internal sources include the employees in the pay roll. The external sources includenew entrants to the labour force, the unemployed, retired, and experienced people. The

advantages of the internal sources include.

There are various psychological test tools available for a sales manager to selectmanpower. These test tools are used for testing the intelligence, personality and aptitude

and skills of the sales people. Intelligence tests are useful in determining whether the

applicant has adequate mental ability to perform the job better. These are the most useful

among all the tests conducted for selection of sales personnel in organizations. Itmeasures the over all intellectual capacity of a sales person which includes the test of

memory, word fluency and inductive learning. Aptitude tests are conducted to detect ifthere is any problem in the persons sensory processes and intellectual capabilities. The

sales managers focus on a particular talent like learning skills and the level of reasoning.

It measures whether a person has the interest in or ability to perform certain tasks and

activities. Personality tests aim at measuring non intellectual characteristics of the salespeople that includes motivation interests, ability to adapt and adjust, desire for level of

inter personal relationships. The tests are conducted on numerous identified traits.

Edwards Personal Preference Schedule measures seventeen traits such as sociability,level of aggression, and nature of dependency on others in executing his own task.

Socialization is defined as the process of orienting a new sales person to the salesorganization or the territory or division in which he or she will be working. The hiring

process will not be complete with hiring or promoting an applicant to the new

designation. Sales Organizations should pay attention to involve the new employees in aprocess of socialization for optimizing the value of the sales force. Socialization is the

process by which new employees are introduced to their work environment, territory and

to the job. The process of socialization is broadly divided in to three stages namely,

anticipatory, encounter and settling in.The anticipatory stage is the first stage where new employees have different kinds of

expectations about the organization and job based over the information available with

them through news paper reports, peer information, word of mouth information, publicrelations and other available sources.

Training the Sales Force

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Training is a process of providing sales force with specific skills for performing their taskbetter and helping them to correct deficiencies in their sales performance. When a new

product is introduced in the market; market situation undergoes change due to entry of

new competitor(s) or new technology; the product moves across the life cycle or the salespeople are required to perform the job in the new way, these kinds of situations need

training for the sales force.

There are various challenges to training program which include the ability of the training

program in solving a problem, the level of realism involved in the goals for the training

program, the level, feasibility of the investment in the training and the effectiveness of

the training program.

The training need assessment is done in the sales organization for collecting data, which

will help in designing sales training programs. The input information for design ofrelevant training programs is obtained in this stage. Need assessment stage is conducted

at three level of analysis viz: organizational level, task level and at individual level. The

over all purpose of this phase is to determine whether there is a need for training andwhat kind of information is needed to design a training program.

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Training needs

Identification of specific problems

Anticipating impending and future problems

Management requests Interviewing and observing the personnel on the job

Performance appraisal

Questionnaire survey

Checklist

Attitude survey

Interpersonal skill test

Types of training

Cross-functional training

Team training

Creativity training

Literacy training

The various training approaches include the classification by location, presentation andtype. By location we can classify them as on the job and off the job training programs. By

location we can classify them as use of slides, videotapes, computers, simulations, virtual

realty. By types of training we can classify them as skills based, content based andbehavioural training program.

Sales training can be carried on either on the job or off the job. A typical sales person is

trained on the job training(OJT) after the initial break in. In this method the sales personworks in the actual work setting under the supervision of a sales supervisor or senior

sales staff or a sales trainer.

One of the popular methods of on the job sales training is called job rotation, which

allows the sales people to garner experience at different territories of the market. This

helps the sales people to get a broader understanding of the organization and the market

demand. The apprenticeship is associated with technical selling or high technologyproduct selling. This involves learning about sales under the supervision of an

experienced technical sales person. On the job training helps the sales person to learn the

duties and functions of a salesman through tasks generated by the job itself.

Off the job training programs include the programs in which the trainee is taken from the

routine work schedule and trained either at the training centre or at another institute.

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Simulations are devices or solutions that replicate the sales job demands at an off the job

site. This technique is used when the information is complex, the equipment is expensive

and the cost of a wrong decision is high. One of the popular training simulation productsis the MarkStrat 3 developed by Stanford Business School and popularly used in all

training programs in sales and marketing. This particular simulation model replicates a

highly competitive market and allows the sales trainees to take different competitorsposition and then take various sales and marketing decisions.

Cross-functional training is a method of job enrichment in which employees are trainedto perform activities and duties in functional areas other than their assigned job

responsibilities. There are various ways in which cross-functional training can be done in

sales organizations. Job rotation is one of the method in which people in one territory

manning the sales are rotated through other territories or the sales people are givenresponsibilities other than what they are doing. In many organizations like Cadila

Pharmaceuticals, sales people are rotated through corporate responsibilities in between

the field responsibilities so that they understand the versatility and nature of the sales job

from different perspectives.

Training methods

Didactic method

- structure the lecture- reinforce the Message

- aid concentration

- material used for the lecture- make it memorable for the participants

- deliver with dynamism

- use questions Visual support

Participative Conferences

Seminars

Discussions

Role play

Case study

Fishbowl

Workshops

Sensitivity training

Transaction analysis

In-tray exercises

Transcendental meditation

Brain storming methods help in cross fertilization of idea, beliefs, attitudes, knowledge

and experience between people who have matured in different environments. By invitingthem to participate in a brain storming session, a climate is created in which they feel that

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they are being treated as responsible adults and their knowledge and experience is taken

in to account while delivering the training program.

The didactic methods include one to one instruction method, lecture method. One to one

instructions are also called as direct teaching approach, which is delivered to the sales

apprenticeship. This is an authoritarian one-way method of training which is applicable toskill based training programs. The trainee is a passive learner and directive instruction

creates dependency on the trainer for learning. One to one instruction is being modified

by bringing two-way communication, adequate reinforcement of learning and a practicaldemonstration of the learning under skilled supervision

The participative methods include sales conferences, seminar, discussion, team training,

case study method, role play method, simulation, brain storming, fishbowl, groupexercise, workshops, sensitivity training, transactional analysis, training within the

industry, television, film and slides presentations, field trips, in tray exercise, and

transcendental meditation.

There are five key decisions that a sales manager has to take while deciding on the

training program. They include1. Deciding on the training objective

2. Deciding on the content of the training program

3. Deciding on the method of training

4. Deciding on the arrangements made for execution of the training program5. Deciding on the procedures to evaluate the training program

The advent of modern technology like ERP, web based support programs are helping forfaster and smoother data collection and sales people are kept abreast with company

information and production schedules so that they can exactly know how the order to

supply cycles are managed. Methods like simulation, virtual learning will help the firmsin making decisions faster than before.

The advertising sales people can be trained on creative skills so that they can present newcreative ideas on board to the client and can develop message and copy strategy to

capture the essence of the brand in meetings with clients.

sales & distrbution mngmnt notes- module 1 2 3

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