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The term dyad is used for interactions between people. Thus buyer seller
interactions can also be said as buyer seller dyads. The seller can either be a
personal salesman, or an advertisement, or any such combination of a pull or
push strategy. However, this interaction between buyer and seller is known as
buyer seller dyad.
The objective of a marketers is to optimally utilize buyer seller dyads or in
other words to have interactions in such a manner that the customer buys our
products. That is why so much market research is put into developing an ad
copy or into training a sales executive. Because they are the main interaction
point.
Example Research has shown that in the Insurance industry, people are
more ready to buy insurance from a representative they know personally
rather than from a company representative. Thus insurance companies took a
stand of making sales agents rather than hiring them because these agents
through their contacts are able to sell insurance much better.
Marketing implications of buyer seller dyads
Sales people are stereotyped even before their pitch. Thus they need to
be trained in such a manner that they overcome the resistance so as to have a
positive interaction.
Selling is a two way process involving both the consumer and the marketer, a
buyer and a seller. Hence the study of buyer seller dyads is extremely
important.
SALES PLANNING
A sales plan is a strategy that sets out sales targets and tactics for your business, and
identifies the steps you will take to meet your targets.
A sales plan will help you:
done in the second stage of planning and can be carried out only when the
company has a strategic marketing plan in place.
The first thing that an organization does is make a strategic marketing plan.
Once the strategic marketing plan is made, the organization knows the
segment that has to be targeted, and also, the consumer buying behaviour for
that segment. Accordingly sales planning is done.
Let us go through the sales planning process with the example of Air
conditioners
1) Setting objectives Your sales planning is going to start only when you
have defined the objectives for the sales team. For example The objective of
an air conditioning company might be to increase the market share of the
company. For this, it will have to penetrate a new geographic market. Thus the
objective of sales planning is to penetrate a new market to increase market
share.
2) Determine the actions necessary Once you know the objectives of
your sales plan, you have to forecast what actions you need to take and the
operations which are needed in effect before you implement the sales plan.
This is a crucial step in the sales planning process because if you do not
forecast the correct operations strategy, then in future you will face
operational difficulties which will hamper you in meeting your sales objectives.
For example The air conditioning company needs to penetrate a new
geographic territory to increase market share. Thus it needs Sales as well as
service operation backup in this territory. The marketing department should
also know the new territory so that they can come up with aggressive
marketing tactics to target that territory.
3) Organize your actions Coming back to the first point haphazard
actions will never bring results. Once you know the operations that are
necessary, you need to organize your sales planning. For example The first
priority of the air conditioning company in new territory will be to have a
service setup. Than to have a sales setup and the necessary channel in place.
Once that happens, they will have to bombard the new territory with
world and it comes with its own share of challenges. Thus your sales planning
will go a long way in implementing your organizations visions as well as in
implementing the strategic marketing plan.
Sales Forecasting
Sales forecasting is the process of a company predicting what its future sales will be.
This forecast is done for a particular period of a time in the near future, usually the
next fiscal year. Accurate sales forecasting enables a company to make informed
business decisions. Sales forecasting is easier for established companies that have
been operating for a few years than for newer companies. Established companies
have years of sales records and can base their forecasts on that past sales data.
Newly founded companies have to base their forecasts on less verified information,
such as market research andcompetition analysis to forecast their future business.
Products like, wearing apparel, luxurious goods, furniture, vehicles; the size
of population by its composition-customers by age, sex, type, economic
condition etc., have an important role. And trend of fashions, religious
habits, social group influences etc., also carry weights.
3. Industrial Behaviours:
Markets are full of similar products manufactured by different firms, which
compete among themselves to increase the sales. As such, the pricing
policy, design, advanced technological improvements, promotional
activities etc., of similar industries must be carefully observed. A new firm
may come up with products to the markets and naturally affect the market
share of the existing firms. Unstable conditionsindustrial unrest,
government control through rules and regulations, improper availability of
raw materials etc., directly affect the production, sales and profits.
4. Changes within Firm:
Future sales are greatly affected by the changes in pricing, advertising
policy, quality of products etc. A careful study in relation to the changes on
the sales volume may be studied carefully. Sales can be increased by price
cut, enhancing advertising policies, increased sales promotions,
concessions to customers etc.
5. Period:
The required information must be collected on the basis of periodshort
run, medium run or long run forecasts.
depression or boom, inventions etc. This type is good for adding new
products and dropping old ones.
It is possible that the growth may not remain uniform. It may decline or be
stationary. The economic condition of a country may not be favourable to
the business activities-policies of the government, imposition of controls
etc. It may affect the sales.
The methods of forecasting discussed above have respective merits and
demerits. No single method may be suitable. Therefore, a combination
method is suitable and may give a good result. The forecaster must be
cautious while drawing decisions on sales forecast. Periodical review and
revision of sales forecast may be done, in the light of performance. A
method which is quick, less costly and more accurate may be adopted.
SALES BUDGET
MEANING AND IMPORTANCE OF SALES BUDGETING
A sales budget is a financial plan depicting how resources should best be allocated to
achieve the forecasted sales. The purpose of sales budgeting is to plan for and control the
expenditure of resources (money, material, people and facilities) necessary to achieve the
desired sales objectives. Sales forecast and sales budget are therefore 1 intimately related
as much as that if the sales budget is inadequate, the sales forecast 'I will not be achieved,
or if the sales forecast is increased the sales budget must be increased accordingly. Sales
budget by relating sales obtained and resources deployed also acts as a means for
evaluating sales planning and sales effort. It aims at attaining maximum profits by directing
the emphasis on most profitable segments, customers and products.
4.3 PURPOSE OF THE SALES BUDGET
1) A Planning Tool: In order to achieve goals and objective of the sales department, sales
manager must outline essential tasks to be performed and compute the estimated costs
required for their performance. Sales budgeting therefore, help in profit planning and
provide a guide for action towards achieving the organizational objectives.
2) An Instrument of Coordination: As we all know selling is only one of the important
functions of marketing. To be effective it needs support from other elements of the
marketing mix. The process of developing realistic sales budget draws upon backward and
forward linkages of selling with marketing and in turn brings about necessary integration
within the various selling and marketing functions, and co- ordination between sales,
finance, production and purchase function.
3) A Tool or Control: The sales budget on adoption becomes the mark against which
actual results are compared.
Rules of Thumb: Such as a given percentage of sales. Mass selling goods and companies
dominated by finance function are major users of this method.
- Competitive parity: Large sized companies whose products face tough competitions and need
effective marketing to maintain profits make use of this method. The use of this method
presumes knowledge of the competitors activities and resource allocation.
- Objective and Task Method: systematic method help in determination of the sales budget by
identifying the objective of sales function, and then ascertaining the selling and related tasks
required to achieve each objective. Later, the cost of each task/activity is calculated to arrive :It
the total budget. The finalisation of the budget may require adjustment both in the objectives as
well as in the way the task. may be performed
- Zero based budgeting: It is relatively a new approach to budgeting. It involves a process in
which the sales budget for each year is initiated from Zero base thus justifying all expenditure
and discarding the continuation of conventions and rules of thumb. The method suffers from
practical limitations which relate to a very elaborate and time consuming process required by it
In practice, companies make use of a combination of the above methods and depending upon the
experience gained sales .budgeting approach stands refined. The status of the sales and marketing
function within the organisation determines the extent of sophistication used in the approach to sales
budgeting.
4. Direction & Numbers: Sales meetings serve as our compass. They influence direction and
indicate when course correction is required. Numbers are a direct reflection of results. Numbers
are the only true, impartial measurement of success. Numbers are a true ally and friend to
producers. They never lie, they are brutally honest. Numbers give us hope, determination,
incentive and recognition for our successes. They also give us a kick in the rear when we need
it. Sales meetings are all about the numbers, and we need to fall in love with numbers.
5. Motivation: We are all motivated by different factors. For some its the pursuit of excellence,
for others its money, and still others are motivated by competition. We all have personal forms of
internal motivation, but peer pressure and competition are a powerful form of external motivation
that gives us that extra spark to jump start our engines. External motivation stirs our competitive
spirit. Sales meetings touch on many forms of motivation both positive and negative. Sales
meetings create needed competition and pressure.
6. Skill set development and reinforcement: Selling isnt winning. Winning is winning. We win
business from the competition by being better. Sales meetings test and hone our abilities, and
force us to learn and apply new skills and processes that are good for us, and make us better
than our competition.
7. Talent development & perpetuation: Agencies that have expired or been consumed by
larger shops all share one thing in common; they failed to groom new talent to grow and
perpetuate the agency. Experienced producers can have a huge impact on the careers of new
producers by shortening their learning curve. The opportunity for a new producer to participate in
meetings where experienced producers discuss numbers, business plans, account strategies
and selling skills is invaluable. Who will provide for your retirement? The new talent you groom to
take your place. Sales meetings serve as an opportunity for seasoned agents to help grow new
talent.
8. NOBs: All highly performing companies embrace Non Optional Behaviors. Every fortune 500
company, subscribes to NOB s that drive sales cultures based on excellence and exceptional
results. Sales meetings are one specific change we can make to produces immediate results.
The Agencies and Producers I work with experience exceptional results. Why, one reason is they
all run excellent sales meetings. Producers and managers who participate in sales meetings gain
significant personal and financial benefits. Increased opportunities and improved performance
are the product of these sales meetings. They result in significant revenue that benefits
everyone in the organization and secures the future of the agency. All believe that Sales
meetings are Non Optional Behaviors.
Over my 30-year career in insurance I have participated in, and run thousands of sales
meetings. Good, bad and ugly sales meetings. What Ive learned is that sales leaders must
prepare for, and practice running productive sales meetings. Effective sales meetings governed
by rules of conduct that apply to everyone. There must be a results driven agenda that creates
opportunity and a desire to attend.
Here is what I consider the optimal structure, agenda and rules for running the very best sales
meetings in the business.
Meanings
Sales contests are taken as one of the measures of sales promotion. A sales contest is a special
selling campaign offering salesman incentives in the form of prizes or awards above and beyond
those provided by the compensation plan. Sales contests are most popular with firms specializing
in consumer products like food and drugs etc. The main object of sales contests is to provide
sales personnel with extra incentives to increase sales volume and also bring more profits to the
company. Sales contests aim at fulfilling the needs of individuals for achievement and
recognition. If they are well-organized, they can be used to counter off-season decline in sales
and bring in new customers. They also generate team spirit among the salesmen and foster a
sense of co-operation. These sales contests bring out the talented and more intelligent salesmen
to the forefront.
Objectives of the Sales Contests
Sales contests motivate salesman to increase sales volume along with higher profits. The main
objectives of sales contests are as follows:
1. To risen the sales.
2. To make new customers attracted.
3. To arrest seasonal sales slumps.
4. To push new products, high margin goods and slow moving goods.
5. To get repeated orders from present and former customers.
6. To improve sales personnel performance.
7. To bring a spirit of competition among the salesman.
8. To improve customers services.
9. To achieve the sales targets.
10. To increase incentives to sales force.
11. To make the products of the company popular.
12. To bring talented and intelligent salesman to the forefront.
13. To generate team spirit among the salesmen and foster a sense of cooperation.
Precautions for Planning Sales contests
Sales contests, if all they are to be a success, must be properly planned by the sales manager. In
this connection the following precautions should be kept in mind before finalizing any scheme of
sales contests:
1. The purpose or result aimed at should be very clearly defined and published.
2. Conditions, rules and regulations etc should be quite simple and easily understandable by all.
3. The time and date of the sales contest should be chosen with great care.
4. The sales contests should be such in which everybody can participate and have equal
chances of winning the prizes etc.
5. Interest of the participants should be maintained throughout the contests.
6. Both the employer and the sales force must be benefited by the sales contests.
7. The sales contest must motivate the sales force to expand increased efforts.
8. Extra prizes should be given for the first order, the biggest order, the greatest number of
orders and so on.
9. Prizes that may have a permanent value, such as watches, cycles, scooters, books etc should
be given so that they my keep a salesman enthusiastic after the contest.
10 The members of the contest committee should be impartial and acceptable sales personnel.
Advantages of Sales contests
The main advantages of sales contests are as follows:
1. The sales contests increase the sales volume along with increase in profits of the company.
2. Sales contest stimulate salesmans efforts more vigorously to attain the sales targets.
3. The possibility of winning the prizes attracts young, talented and efficient salesmen to offer
their services more effectively.
4. During slump period, sales contest are the best means of not only arresting the decline in
sales but also raising the volume of sales.
5. Sales contest generate team spirit among the salesmen and foster a sense of cooperation.
6. The sales contests are helpful in bringing out the talented and more intelligent salesmen to the
forefront for promotion purposes.
7. Sales contests raise the morale of the sales force and develop the spirit of competition.
8. Sales contests increase the goodwill and the reputation of the company.
9. New customers are attracted on account f sales contests.
10. Consumers are also benefited by sales contests.
Disadvantages, Limitations or Objectives of Sales contests
The disadvantages, limitations or objectives of sales contests are as follows:
1. Sales contests do not really increase and sales over the long run, but they merely provide a
short-term sales expansion.
2. High caliber and more experience sales personnel look upon the sales contests as juvenile
and silly.
3. Sales contests cause sales personnel to launch their sales efforts during the competition and
thus sales slump occurs bothbefore and after the sales contests.
4. The disappointment suffered by sales contest losers causes a general decline in sales force
morale and enthusiasm.
5. Sales contests distract salesmen from the main job of selling and encourage them only to
concentrate on winning prizes by fair or foul means.
6. Sales contests lead to unanticipated and undesirable results, such as, increased returns and
adjustments, higher credit losses and overshocking by dealers.
7. Sales contests are temporary devices for motivating sales force, and if used too frequently
have a narcotic effect. No greater results in the aggregate are obtained with such contests.
8. When the product is in short supply, it is ridiculous to encourage sales contests.
9. It is argued that the sales force is regularly paid for their services under the basic
comprehension plan. Hence there is no necessity of organizing sales contests.
10. The competition atmosphere generated by sales contest weakens team spirit.
Controlling Process:
Sales force controlling process involves four steps:
1. Setting Sales Force Standards
2. Measuring Actual Sales Force Performance
3. Comparing Actual Performance with Standards
4. Correcting Deviations and Taking Follow-up Actions
Your sales are rising but your profits arent, even though youve been
controlling your overhead costs. Your accountant tells you its possible to
decrease your sales and increase profits. A bit of number crunching can
explain why. Both of these scenarios require an analysis of your sales
volumes to determine how youre generating revenue and expenses.
Sales Volume
Many business owners use the terms sales, revenues and income
interchangeably, but they each have separate meanings. In some
instances, sales refers to the number of units of a product or service you
sell, rather than the money you receive from selling them. Tracking your
sales by volume, or number of units sold, can help you identify what is
affecting your revenues, expenses and profits.
Types of Sales
One of the first steps in analyzing your sales volume is to differentiate
among the different types of sales you have. Start by counting the
number of units of each different product you sell, rather than your total
sales. Next, calculate how many units and how much of your sales
revenue comes from each different distribution channel you use. For
example, if you sell shoes, determine how many you sell in retail stores,
how many you sell online and how many you sell in print catalogs. If you
analyze your volumes by customer demographic, you might find that older
women are buying most of your product. Other factors to evaluate include
sales volumes by geographic territory, sales rep and price.
Break Even
Knowing your overhead and production expenses and costs of goods sold
helps you determine at what sales volume each product breaks even.
Knowing your break-even point can help you determine whether to launch
a new product, when to drop one and the effect of your sales beyond
break-even on your profits and taxes. This can help you better set pricing
strategies.
important qualitative measurements that should be considered, and they will be addressed in the
next article.
1. Revenue Production: The most common quantitative analysis done on sales people is at
the macro level; did they hit their revenue number for the year? The challenge is that some of the
sellers who drive revenue have huge salaries and some do not. In sports, the salary (expense)
does not necessarily correlate to how well the athlete performs. In business, the total expense
associated with the revenue production must make sense.
2. Margin: A week after Q4 ends, most management teams can see what the net effect of last
minute discounting when the reps buckle to pressure to close year end business. The exercise to
protect margins should be built into a coaching formula that includes opportunity review. Once
this is embedded, the mechanism should allow managers to know the profit that reps can obtain
in closing situations.
3. Product (and Service) Mix: Product mix will show if the sales person is selling the right
products to the correct customers. Lets say a sales person consistently sells low on a medical
device but the consumables for the device are sold at full price. It will take twice the volume in
consumables to make up for a discounted sale of the device. These numbers tell a story and will
point dramatically to drags to the bottom line.
After watching Moneyball, the movie that documented the notion that winning in baseball boils
down to how many players get on base during a game, you would think there is a scientific
formula that could provide the answers to controlling selling expenses. The good news is, for our
customers that mechanism is in place.
Once fully implemented, a well created sales process can provide managers with a lens to look
at these, and the related qualitative measurements, to determine if they should invest more time
in developing sales people. In this capacity, Cheaper to Keep Her means continuously
developing the skills with the seller to bring their performance up to speed in relation to the 3
areas mentioned above. Otherwise, it may be time to part ways with that employee, and begin
the arduous task of replacing them with new talent.
SALES TERRITORY
A sales territory is the customer group or geographical area for which an individual salesperson
or a sales team holds responsibility. Territories can be defined on the basis of geography, sales
potential, history, or a combination of factors. Companies strive to balance their territories
because this can reduce costs and increase sales.
[1]
Purpose[edit]
The purpose of a sales force coverage (or sales territory) metric is to create balanced sales
territories.[1] There are a number of ways to analyze territories.[2]"Most commonly, territories are
compared on the basis of their potential or size. This is an important exercise. If territories differ
sharply or slip out of balance, sales personnel may be given too much or too little work. This can
lead to under- or over-servicing of customers."[1]
"When sales personnel are stretched too thin, the result can be an under-servicing of customers.
This can cost a firm business because over-taxed salespeople engage in sub-optimal levels of
activity in a number of areas. They seek out too few leads, identify too few prospects, and spend
too little time with current customers. Those customers, in turn, may take their business to
alternate providers."[1]
"Over-servicing, by contrast, may raise costs and prices and therefore indirectly reduce sales.
Over-servicing in some territories may also lead to under-servicing in others." [1]
"Unbalanced territories also raise the problem of unfair distribution of sales potential among
members of a sales force. This may result in distorted compensation and cause talented
salespeople to leave a company, seeking superior balance and compensation."
[1]
Construction[edit]