SALES AND

DISTRIBUTION
MANAGEMENT

Dr. Rahul Pratap Singh

Kaurav

Session I
SALES MANAGEMENT:
ITS NATURE, REWARDS, AND
RESPONSIBILITIES

WHAT IS SALES MANAGEMENT?

Sales management is the attainment of sales force
goals in an effective and efficient manner through:
Planning
Staffing
Training
Leading
Controlling organizational resources
3

FIGURE: THE SALES MANAGEMENT PROCESS

Sales Management Functions

PLANNING
The conscious, systemic 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.

STAFFING
Activities undertaken to attract, develop, and
maintain effective sales personnel within an
organization.

SALES TRAINING
The effort put forth by an employer to provide the
salesperson job-related culture, skills, knowledge,
and attitudes that result in improved performance
in the selling environment.

LEADING
The ability to influence other people toward
the attainment of objectives.

CONTROLLING
Monitoring sales personnels activities,
determining whether the organization is on target
toward its goals, and making corrections as
necessary.

SALES PERFORMANCE

Sales Management is the attainment of

sales goals in an ethical, efficient, and
effective manner.

10

Roles of Sales Manager: Duties and Responsibilities

The sales manager is the most important person in a sales organisation. All
activities are based on his functions and responsibilities. The following are
some of the principal duties of a sales manager:
1. Organising sales research, product research, etc.
2. Getting the best output from the sales force under him.
3.

Setting and controlling the targets, territories, sales experiences,

distribution expenses, etc.

4. Advising the company on various media, sales promotion schemes, etc.
5. Monitoring the companys sales policies.

11

In the table, Al Reid gives the steps necessary for getting success in
selling:
Territory Sales Managers Job Responsibilities

To yourself
Increase basic selling skills.
Develop management
abilities.
Keep pace with changes,
trends and developments in
your territory.
Study the latest products,
promotion policies and
procedures.
Be alert to new sales and
merchandising ideas.

To your company
Be proud of your association
with your company.
Maintain the company
standing and standards with
all customers.

To your customers
Work closely with decisiontakers and influencers in each
account.
Point out the advantages of
an association with your
company.

Inform the headquarters and

your supervisors, through
established channels, about
changes and developments in
your territory.

Keep accounts current and

up-to-date on all company
advertising and promotional
activities.

Be prompt in handling
records, reports,
correspondence, etc.

Suggest ideas, methods,

techniques and tips that can
stimulate sales.
Cont.

Grow, so that you can assume

greater responsibilities as
opportunities permit.
Maintain the appearance and
goodwill expected of a territory
sales manager.
Analyse your weak and strong
points and then think about
them.

Cut selling costs by

economical routing, good use
of time, planning and greater
awareness of opportunity.
Check demand and movement
of products in the territory.
Report activities of the
competitors.

Inform the customers about the

trends in their areas.
Handle complaints effectively
and to the complete
satisfaction of the
complainants.
Suggest the best technique for
selling your products to the
customers.

Strive to reach the best goals.

Ask for help, when you need it.
Cooperate with other
departments of the company.

Organise presentations to
inform and save time.
Make the customers aware of
the changes in the companys
policies or procedures.
Stimulate and maintain
enthusiasm for your products.
Build and maintain goodwill.

Cont.

Functions of Personal Selling

Personal selling is an oral presentation in face to face conversation with one
or more prospective customers for the purpose of making sales. The main
functions of personal selling are as follows:
1. Provide service to customers (Introduce the product, explain the right
use, Convince them etc.)
2. To sell the product
3. Maintain the sales record
4. Executive Function
5. Develop goodwill
6. Achieve sales target

14

Changing Face of Personal Selling

Modern sales approach is based on the following
parameters
1. Value Sharing.
2. Relation Building.
3. Role Playing.
4. Changing Approach.

15

Benefits of personal selling

1. Availability of expertise
2. Early access to relevant market information
3. Availability to be flexible regarding processes, timing
4. Faster, shorter contracts
5. Economies of information sharing
6. Lower cost of selling
7. Knowledge of other uses or applications
16

Steps in Personal Selling

Successful personal selling calls for an integrated
approach devised from the experience of the sales
personnel. The approach comprises the steps as shown in
the figure here. Each of these steps are further described
Steps in Personal Selling
in brief.

17

Prospecting
Prospecting is the process of identifying prospective buyers of the
product. A prospect is qualified if he has the authority, need, ability
and eligibility to buy. There are different ways to identify prospects.
Some of the most frequently used methods are described below:
Acquaintance References
Cold Calling
Centre of Influence Method
Personal Observation Method
Direct Mail or Telephone Method
Companys Records
Newspapers
Retailers

18

Pre-approach
It emphasises that the salesman should know, after identifying the
prospect in the prospecting stage, the prospects likes and dislikes,
his needs, preferences, habits, nature, behaviour, economic and
social status etc.
Significance of Pre-Approach
1. Salesman concentrates only on the prospects and not the
suspects.
2. S/He is able to give a sales presentation more efficiently, effectively
and with confidence.
3. It does not waste the prospects time and energy since the
salesman is already aware of the needs and preferences of the
19
prospect.

Approaching
In this stage the prospect and the salesman come in contact with
each other face to face.
The salesman has an opportunity to understand and interact with
the prospect in a better way.
Salesman should put forward his best efforts to make the best use
of this opportunity in getting the attention of the prospect and to
convince him to buy

the product.

Getting the attention of the prospect and persuading him to buy

are the two main objectives of a salesman.

Cont.

20

Key guidelines for successful approach

Prior Appointment
Timing
Command
Relaxed Atmosphere
Open Mindedness
Courtesies
Effective Presentation
Follow up

Cont.

21

Presentation
Quick presentation creates a good impression.
Attractively packaged, decorated and well-organised.
Should explain the product with its features and price
advantage to the customer in simple and easy terms.
Customer be shown the kind of quality that he is looking for.
Helps the salesman to prove the features of the product and
emphasise its genuineness.

Cont.

22

Demonstration
Demonstration is an exercise to prove the characteristics of the
product.
It highlights various attributes of the product such as utility,
performance, service and quality.
It is only during the demonstration that the customer gets an
opportunity to verify the facts about the product.
Demonstration is imperative and essential for a prospect to make
a buying decision.

Cont.

23

The Close
This is the last stage of any sales presentation.
The main aim of the close is to convince the prospect to sign the
order form or to place an order immediately rather than in the
future.
It is also important that through proper planning, prospecting,
presentation

and demonstration the salesman should try to

capture the attention of the prospect and not let the prospect
change his mind.

24

Relationship of Salesmanship with Sales Management

and personal Selling
Salesmanship & Personal Selling
1. The ability to quickly develop rapport with their prospective
customers.
2. A desire to truly help their customers.
3. The habit of asking questions to gather information before making a
pitch.
4. Sticking to a consistent, proven sales process.

Cont.

25

FORECASTING MARKET DEMAND

A marketing decision support system (MDSS) is an

ongoing, future-oriented structure designed to generate,
process, store, and later retrieve information to aid
decision making in an organizations marketing
program.
It involves problem-solving technology composed of
people, knowledge, software, and hardware wired
into the sales management process.
26

USES OF SALES FORECASTS

A sales forecast is the estimated ` or unit sales for
a specific future time period based on
- proposed marketing plan
- assumed market environment.

27

A sales forecast is important for at least five reasons:

1. A sales forecast becomes a basis for setting and maintaining a
production schedule manufacturing.
2. It determines the quantity and timing of needs for labor, equipment,
tools, parts, and raw materials purchasing, personnel.
3. It influences the amount of borrowed capital needed to finance the
production and the necessary cash flow to operate the business
controller.
4. It provides a basis for sales quota assignments to various segments of
the sales force sales management.
5. It is the overall base that determines the companys business and
marketing plans, which are further broken down into specific goals
marketing officer.

28

FIGURE: PLANNING/FORECASTING/BUDGETING SEQUENCE

M a r k e t i n g P la n

S a le s F o r e c a s ts

S a le s F o r c e B u d g e t

29

THE FORECASTING PROCESS

The forecasting process refers to a series of
procedures used to forecast.

30

FIGURE: THE FORECASTING PROCESS

F o r e ca s t
O b j ect i v e

D e t er m i n e D e p en d e n t a n d
I n d e p en d e n t V a r i a b l es

D e v el o p F o r eca s t
P r o ced u r e

S el ect F o r eca s t
A n a l y s i s M et h o d

E v a l u a t e R es u l t s
v er s u s F o r eca s t

M a k e a n d F in a liz e
F o r eca s t

T o t a l F o r eca s t
P r o ced u r e
P r es en t A s s u m p t i o n s
a b o u t D a ta

G a th er a n d A n a ly z e
D a ta

31

FIGURE 5.3 BASIC STEPS IN BREAKDOWN METHOD OF FORECASTING

SALES

G e n e r a l E n v ir o n m e n t F o r e c a s t
I n d u s tr y S a le s F o r e c a s t
C o m p a n y S a le s P o t e n tia l
C o m p a n y S a le s F o r e c a s t
P r o d u c t L in e s
I n d iv i d u a l P r o d u c t s

fo r
Customers-Territories-RegionsDevisions-India-World

32

Industry sales forecast, or market potential,

is the estimated sales for all sellers.
Company sales potential is the maximum
estimated or potential sales the company
may reach in a defined time period under
given conditions.
The companys share of the estimated sales
for an entire industry is referred to as
market share.
33

SALES FORECASTING METHODS

Two categories of sales forecasting methods exist:

Survey methods are qualitative and include

executive opinion, sales force composite, and
customers intention surveys.
Mathematical methods are test markets,
market factors, trend analysis, and
correlation analysis.

34

FIGURE: THE MORE POPULAR OF MANY FORECASTING METHODS

S u r v e y M e th o d s

E x e c u t iv e
O p in io n

U s e r s
E x p e c ta tio n

S a le s F o rc e
C o m p o s it e

M a th e m a tic a l M e th o d s

T est M ark et

B u ild - t o O rd er

N a iv e

M o v in g
A v erag e

R e g r e s s io n
T re n d

E x p o n e n tia l
S m o o t h in g

35

SURVEY FORECASTING METHODS

Four basic survey methods are

Executive Opinion
Sales Force Composite
Users Expectations
Build-to-Order

36

Executive Opinion
Executive forecasting is done in
two ways:
1. By one seasoned individual (usually
in a small company).
2. By a group of individuals, sometimes
called a jury of executive opinion.
37

Delphi Method
Administering a series of
questionnaires to panels of
experts.
Sales Force Composite
Obtaining the opinions of sales
personnel concerning future
sales.
38

Users Expectations
Consumer and industrial
companies often poll their
actual or potential customers.
Build-to-Order
Companies build final products only after
firm orders are placed.
39

MATHEMATICAL FORECASTING
METHODS
Test markets are a popular method of
measuring consumer acceptance of new
products.

40

Time Series Projections

Time series methods use chronologically
ordered raw data.

Nave Method
This Years
Sales
Next Years Sales = This Years Sales X Last Years
Sales
41

Moving Average
Moving averages are used to
allow for marketplace factors
changing at different rates and at
different times.
Regression Analysis
Regression analysis is a statistical
method used to incorporate
independent factors that are thought
to influence sales into the forecasting

42

L i n e a r R e la t i o n s h i p

C u r v i li n e a r R e l a t i o n s h i p

S a le s

S a le s

FIGURE: REGRESSION ANALYSIS

P o p u la t i o n
(A )

P o p u la t i o n
(B )

43

FIGURE: QUESTIONS TO ANSWER TO IMPROVE CHANCES OF HITTING THE

FORECASTING BULLS-EYE

H a v e Y o u D e v e lo p e d
a G ood
S a le s F o re c a s tin g
P ro c e s s?

M a rk e t D e c is io n S u p p o r t S y s te m

B re a k d o w n
U s e M u l t i p le
F o re c a s tin g
M e th o d s
B u i ld u p

F
O
R
E
C
A
S
T

14 0 %
13 0 %
12 0 %
110 %

90%
80%
70%
60%

44

TABLE: GUIDE TO SELECT BEST FORECASTING METHOD

FORCASTING
METHOD

TIME SPAN

MATHEMATICAL
SOPHISTICATION

COMPUTER
NEED

ACCURACY

Executive Opinion

Short to medium

Minimal

Not essential

Limited

Delphi Method

Medium to long

Minimal

Not essential

Limited; good in dynamic

conditions

Sales Force Composite

Short to medium

Minimal

Not essential

Accurate under dynamic conditions

Users Expectations

Short to medium

Minimal

Not essential

Limited

Test Markets

Medium

Needed

Needed

Accurate

Nave Method

Present to medium

Minimal

Not essential

Limited

Moving Average

Short to long

Minimal

Helpful

Accurate under stable conditions

Exponential Smoothing

Short to medium

Minimal

Helpful

Accurate under stable conditions

Least Squares

Short to long

Needed

Desirable

Varies widely

Regression Analysis

Short to Medium

Needed

Essential

Accurate if variable relationships

stable

45

THE SALES MANGAGERS BUDGET

BUDGET
PURPOSES
Planning

The sales force budget is the

amount of money available or
assigned for a definite period,
usually one year.

Coordination
Control

46

TABLE: SALES FORCE OPERATING COSTS

1. Base salaries
a. Management
b. Salespeople
2. Commissions
3. Other compensation
a. Social Security
b. Retirement plan
c. Stock options
d. Hospitalization

4.
5.
6.
7.
8.
9.
10.

Special incentives
Office expenses
Product samples
Selling aids
Transportation expenses
Entertainment
Travel

47

BUDGETS SHOULD BE FLEXIBLE

Sales, costs, prices, or the competitions
marketing efforts are some factors that may
be higher or lower than expected.

48

WHAT IS A SALES TERRITORY?

A sales territory is composed of

a group of customers or a
geographic area assigned to a
salesperson.

WHO IS RESPONSIBLE FOR

TERRITORIAL DEVELOPMENT?
Development of sales
territories is usually the
responsibility of the sales
manager overseeing the
larger sales units within the
organization.

WHY ESTABLISH SALES TERRITORIES?

To obtain thorough coverage of the market.

To establish a salespersons responsibility.

To evaluate performance.
To improve customer relations.
To reduce sales expense.
To allow better matching of salesperson to customer.
To benefit salespeople and the company.

Why sales territories may not be

developed?

Salespeople may be more motivated

if

they are not restricted.

The company may be too small.
Management may not want to take the time,
or have the know-how.
Personal friendship may be the basis for
attracting customers.

FACTORS TO CONSIDER WHEN DESIGNING SALES

TERRITORIES
Sales force objectives may be based on
factors such as
- contribution to profits,
- return on assets,
- sales/cost ratios,
- market share, or
-

FIGURE: FACTORS TO CONSIDER WHEN DESIGNING TERRITORIES

S el ect B a s i c
C o n tr o l U n it

A n a lyz e
W o r k lo a d

D et er m i n e B a s i c
T er r i t o r i es

E v a l u a t e, R e v i s e
i f N eed ed

C u s t o m er
C o n t a ct P l a n

A ssign to
T er r i t o r i es

SELECT BASIC CONTROL UNITS

States
Counties
Cities and zip-code areas
Metropolitan statistical areas
Trading areas
Major/ Key accounts
A combination of two or more factors

ANALYZE SALESPEOPLES WORKLOADS

Workload is the quantity of work expected
from sales personnel. Three of the main
influences on workload involve
- the nature of the job,
- intensity of market coverage, and
- type of products sold.

DETERMINE BASIC TERRITORIES

The breakdown approach uses
factors such as sales, population,
or number of customers.
Sales Force Size =

Forecasted Sales
Average Sales per Salesperson

TABLE: SIX STEPS TO CONSIDER WHEN

DETERMINING A FIRMS BASIC TERRITORIES

1. Forecast sales and

determine sales potentials.

4. Tentatively establish
territories.

2. Determine the sales

volume needed for each
territory.

5. Determine the number of

accounts for each territory.

3. Determine the number of 6. Finalize the territories,

territories.
and draw the boundary
lines.

CUSTOMER CONTACT PLAN

The customer contact plan
involves scheduling sales calls and
routing a salespersons movement
around the territory.

Scheduling refers to establishing a fixed time when

the salesperson will be at a customers place of
business.
In theory, strict formal route designs enable the salesperson to:
1. Improve territorial coverage.
2. Minimize wasted time.
3. Establish communication between management and
the sales force in terms of the location and activities
of individual salespeople.

FIGURE: THREE BASIC ROUTING PATTERNS

S t r a ig h t - L i n e P a t t e r n

F i r s t C a ll
c

B ase
c

C lo v e rle a f P a tt e r n

W o rk B ac k

M a jo r- C ity P a tte r n

B ase
c

c
c

c
c

3
1

c
E ach L eaf O u t an d
B ack Sam e D ay

1 - D o w n to w n

THE SALES TERRITORY IS A BUSINESS

THE RIGHT SALESPERSON PAYS OFF
OPEN SALES TERRITORIES
Open sales territories are those left vacant until
new salespeople are assigned to them. Vacant
territories experience the following:
Lost sales due to the vacancy.
Lost sales due to the time needed for the
new salesperson to build sales productivity.

Sales leakage refers to the lost

sales due to both the vacancy and
the time required for the new
salesperson to produce at average.

WHAT IS A QUOTA?
A quota refers to an expected performance
objective.
Quotas are tactical in nature and thus derived
from the sales forces strategic objectives.

WHY ARE QUOTAS IMPORTANT?

Quotas provide performance targets.

Quotas provide standards.

Quotas provide control.
Quotas provide change of direction.
Quotas are motivational.

TYPES OF QUOTAS
Sales volume quotas.
Breakdown total sales volume.

Profit quotas.
Expense quotas.
Activity quotas.
Quota combinations.

Sales volume quotas includes

` or product unit objectives for
a specific period of time.

 Product lines.
Individual established and new products.
Geographic areas based on how the sales
organization is designed, which would
include:
Sales division.
Sales regions.
Sales districts.
Individual sales territories.

The two types of profit quotas:

Gross margin quota determined by
subtracting cost of goods sold from sales
volume.
Net profit quota determined by subtracting
cost of goods sold and salespeoples direct
selling expense from sales volume.

Expense quotas are aimed at

controlling costs of sales units. Often
expenses are related to sales volume or
to the compensation plan.

Activity quotas set objectives for jobrelated duties useful toward reaching
salespeoples performance targets.

Customer satisfaction refers to feelings

about any differences between what is
expected and actual experiences with
the purchase.

METHODS FOR SETTING SALES QUOTAS

Quotas based on forecasts and potentials.

Quotas based on forecasts only.

Quotas based on past experience.
Quotas based on executive judgments.
Quotas salespeople set.
Quotas related to compensation.

TABLE: LEVELS OF ORGANIZATIONAL SALES PLANNING

LEVEL

PURPOSE: WHAT IS
PLANNED

WHO (USUALLY) IS
INVOLVED

1. Marketing

Organizational goals (increase in

market share or penetration,
increase in customers, increase in
sales dollars and units sold)

Upper management and sales and

marketing executives

2. Regional plan

Priorities (which regions, markets,

and products to emphasize)

Regional and district sales

managers (which input from sales
reps)

3. District plan

Dollar allotment (for promotion,

advertising, new employees, sales
incentives, and so on)

District managers and sales

representatives

4. Territorial plan

Goals for number of new

Sales representatives
customers and for increased
business with old customers in each
region and territory

A GOOD OBJECTIVE AND QUOTA PLAN IS

SMART
Specific
Measurable
Attainable
Realistic