Sales and Distribution Full

Sales Management Distribution
Sales Program Marketing Channel

Channel Intermediaries
Personal Characteristics & Sales Aptitude
Sample Questions
Recruitment & Selection
Sales Training
Sales Organization
Sales Process
Relationship Marketing
Compensating Salespeople
Territory Management
Sales Budgeting
Sales Analysis
Main Menu
SALES
PROGRAM
Formulating a Sales Program
Assess the External Environment

• Market conditions
• Competition
• Customer needs
Assess the Internal Environment
• Corporate culture
• Corporate strategy
• Promotional mix
Create a Strategic Sales Plan
Activities and Influences Involved in Formulating a
Sales Program
THE ENVIRONMENT MARKETING SALES
STRATEGY MANAGEMENT
ACTIVITIES
THE EXTERNAL
ENVIRONMENT
•Potential customers Account Management
•Competition Policies
•Legal Restrictions •Target Markets
•Technology •Products
•Natural Resources •Pricing Policies
Sales Force
•Social •Distribution
Organization
Channels
•Promotion
THE Sales Planning
Policies
ORGANIZATIONAL •Demand Forecasts
•Personal Selling
ENVIRONMENT •Quotas & Budgets
•Advertising
•Objectives
•Sales Promotion
•Human Resources Deployment
•Financial Resources •Territory Design
•Production •Routing
Capabilities
•R&D Capabilities
Implementing the Sales Program
The implementation process . . .

• Tailor the program to environmental variables
• Select a well-suited sales force
• Facilitate role perception and role acceptance
• Match aptitude with selling roles
• Develop sales force skills
• Create a motivational setting
Evaluating & Controlling the Sales Program
Sales Analysis – Monitor . . .

• Individual performance
• Geographical subdivisions
• Products and categories
Cost Analysis – Monitor . . .
• Individuals
• Customers
• Products
Sales Behavior Analysis
Activities and Influences Involved in
Evaluation and Control of the Sales Program
Sales Management Activities Outcomes Control
Account management
policies Evaluation and
Sales force organization control of sales
Performance force
Sales planning performance
Sales volume
Demand forecasts Quotas Percent of quota Sales analysis
and budgets
Selling expenses
Deployment Cost analysis
Profitability
Territory design Routing Customer Personal
service Reports evaluations
Supervision
Selection of sales personnel
ack
b
Sales training
e ed
Motivating the sales force F
Compensation systems
Incentive programs
Environmental Impact on Marketing and Sales
Planning
1. Environmental variables or changes determine the

ultimate success or failure
2. Changes in the environment create new marketing
opportunities
3. Environmental variables are affected and changed
by marketing activities
Components of the External Environment
Economic
GNP, disposable
income, Legal, Political
competition, THE FIRM and Ethical
etc. Anti-trust laws,
consumer protection
MARKETING laws, ethical values,
AND SALES etc.
PROGRAMS
Natural Technical
Resource availability, New product
environmental technologies,
impact, etc. changing
information,
Social and Cultural communication
Changing population technology, etc.
demographics, cultural
diversity,
etc.
The nature of Personal Selling
Transactional selling Relational selling
 Retain existing accounts

 Get new accounts
 Get the order  Become the preferred supplier
 Cut the price to get the sale  Price for profit
 Manage all accounts to  Manage each account for long-

maximize short-term sales term profit
 Sell to anyone  Concentrate on high profit

potential accounts
Executive Ladder in Personal Selling
President
Vice President of Sales
National Sales Manager

Staff assistants
available for advice
Regional / Divisional Sales Manager and support at any
step along the
ladder
District Sales Manager
Sales Supervisor
Salesperson
PERSONAL
CHARACTERISTICS
AND SALES
APTITUDE
Born or Made ?
Most managers believe :

• things a firm does to train and develop it
salespeople represent the most critical
determinants of their future success.
• a strong ego, self-confidence,
decisiveness, and a need for achievement
must be extant in sales force candidates.
Characteristics of Successful Salespeople
Aptitude and personal characteristics may

place an upper limit on an individual's ability to
perform in a sales job.
Enthusiasm consistently ranks among the most
important personal attributes in selling.
General sales experience typically means more
than specific product or industry experience.
Research into Personal Characteristics
Personal factors influencing variance in

sales performance fall more precisely into
these defined groupings:
(a) physical and behavioral characteristics
(b) psychological traits and abilities
Categories of Physical and Behavioral Variables
Demographic and Physical Characteristics

• Age, sex, physical appearance
Background and experience
• Personal history and family background, level
of education, educational content, sales
experience, nonsales work experience
Current status and lifestyle
• Marital/family status, financial status,
activities/lifestyle
Psychological Traits and Abilities
Aptitude Personality Skills

• Intelligence • Responsibility • Vocational skills
• Cognitive Abilities • Dominance • Sales presentation
• Sociability
• Verbal • Interpersonal
Intelligence • Self-esteem
• General
• Math Ability • Creativity/flexibility management
• Sales Aptitude • Need for achievement / • Vocational esteem
intrinsic rewards
• Need for power/extrinsic
rewards
The Importance of Image
What type of sales-person has a tougher time making sales?

(Percent of respondents indicating it was an issue)
 A sloppily dressed sales-person 94%

 An unstylish sales-person (haircut, out of style outfit) 75%
 A physically unattractive sales-person
59%
 An overweight sales-person 54%
 A sales-person with a heavy accent 54%
 A very young looking sales-person 32%
 An older looking salesperson 8%
The Importance of Image
What type of sales-person would you avoid hiring?

(Percent of respondents indicating it was an issue)
 A sloppy dresser 80%
 A person who used salty language 78%
 An unstylish look 51%
 Male overweight 37%
 Female overweight 23%
 A heavy regional foreign accent 20%
 An unattractive female 20%
 An unattractive male 13%
 A very youthful appearance 12%
 Any older look 2%
The Educated Sales Force
Percent with College Degree
Industry
Health service 100% Business services72%
Pharmaceuticals 100% Electronic components 67%
Air transportation 100% Communications 56%
Printing/Publishing 84% Banking 46%
Rubber/Plastics 83% Construction 40%
Manufacturing 78% Trucking/Warehousing 33%
Electronics 77% Real estate 33%
Chemicals 73% Retail 29%

Transportation equipment 28%
Most Trustworthy
Customers and salespeople were asked, "What

kind of person is most trustworthy?" Salespeople
indicated listening skills were most important in
building trust with the customer while customers
believe product knowledge was the key in
winning trust.
Let’s look at the results…
Most Trustworthy (continued)
Characteristic % of Customers % of Salespeople
Product knowledge 79.5 79.6

Understands business 63.9 73.1
Reliable 63.1 75.1
Understands customer needs 63.1 85.3
Confidence in product 54.1 63.8
Likable 53.3 55.6
Positive attitude 50.8 71.2
Good listening skills 44.3 87.2
Intelligent 41.8 40.3
Asks good questions 39.3 65.9
Self-confident 22.1 45.6
Well-dressed 14.8 29.1
Characteristics Related to Sales Performance
Type of Product Being Sold
Variables Affecting Performance Industrial Consumer

Services
Goods Goods
Personal history/family background Weak Weak Strong

Marital/family status Weak Moderate Strong
Sales aptitude Strong Moderate Weak
Dominance Weak Weak Moderate
Self-esteem Strong Moderate Moderate
Sales presentation skills Strong Moderate Weak
Interpersonal skills Moderate Moderate Weak
Type of Sales Job Relatively Important Characteristics
Trade selling Age, maturity, empathy, knowledge of

customer and business methods
Missionary selling Youth, high energy and stamina, verbal skills,
persuasiveness
Technical selling Education, product an customer knowledge -
usually gained through training, intelligence
New business selling Experience, age and maturity,
aggressiveness, persuasiveness, persistence
Type of Sales Job Relatively Less Important Characteristics
Trade selling Aggressiveness, technical ability, product

knowledge, persuasiveness
Missionary selling Empathy, knowledge of customers, maturity,
previous sales experience
Technical selling Empathy, persuasiveness, aggressiveness,
age
New business selling Customer knowledge, product knowledge,
education, empathy
The Length of Time Before a New Salesperson
Becomes Productive in Selected Industries
TIME INDUSTRY
Glass & Telecom Diversified Transpo

Building Publishing Metal municatio Financial Rubber rtation Soaps & Electroni
Textiles Materials & Printing Manufacturing ns Services Products Service Cosmetics cs
1 Month -- 5 9 5 -- 8 7 6 4 3
3 Months 14 23 32 23 31 22 27 38 20 18
6 Months 45 32 30 42 50 42 37 39 46 51
1 Year 25 25 17 16 16 12 24 10 26 16
More than One 11 9 9 13 2 12 4 5 4 11
Year
Don’t Know/ No
4 6 3 1 -- 3 1 2 -- 1
Answer
SOURCE: Arthur Bragg, “Are Good Salespeople Made or Born?” Sales & Marketing
Management, September 1988, p. 76.
RECRUITMENT
AND
SELECTION
PROFILING
RECRUITMENT
SELECTION
Profiling
QUOTE ...
“Eagles don’t flock. You have to find them one at a time”
Staffing , I.e., the selection of personnel at any level,
specially in the activities related to sales in the organization
is an important activity and has a direct bearing on the
performance of sales force as a whole. I feel that ‘5-R-s’
should be taken into consideration while preparing the
contour of the sales force.
‘5’ R-s for consideration :
• Right people
• Right job
• Right time
• Right compensation
• Right motivation
Sales force profiling in line with strategic
planning
Sales force in any company directly generates revenue

• Sales force is responsible for carrying out company’s strategic
marketing plans
• Selection of sales force would be made in such a manner so that the
same could be in a position to develop necessary cognitive ability in
order to view the strategic plan and be in a position to implement this.
• Selection process for sales force should be consistent in terms of
marketing strategy planning and sales force planning.
Sales Force staffing process
PLAN FOR RECRUITMENT AND SELECTION OR PROFILING

 CONDUCT JOB ANALYSIS
 DETERMINE NO OF PEOPLE WANTED
 PREPARE JOB DESCRIPTION
 DETERMINE HIRING QUALIFICATIONS
RECRUIT APPLCATIONS
 IDENTIFY SOURCES OF RECRUITS
 SELECT THE SOURCES TO BE USED
CONTACT THE RECRUITS
SELECT APPLICATIONS
 DESIGN A SYSTEM FOR MEASURING APPLICATIONS
 MEASURE APPLICANTS AGAINST HIRING QUALIFICATIONS
 MAKE SELECTION DECISIONS
Recruitment
 Describe the recruiting function and its purpose

 Understand the constraints on recruitment
 Describe the techniques involved in recruiting within
the organization and outside the organization
 Explain the development and use of application
forms
Recruitment
Purposes of Recruitment
• generate adequate pool of candidates at minimum
cost
• increase success rate of selection process
• achieve employment equity goals
• attract qualified candidates suited to organizational
culture
The Recruitment Process
Constraint on recruitment
Source(s)
and Pool of
method(s) qualified
of recruits
recruitment is
are generated
selected
Constraints on the Recruitment Process
- organizational policies
- inducements of competitors
- job requirements
- environmental conditions
- recruiter habits
- recruiting sources
Recruiting Within the Organization
Advantages
- enhanced morale if competence is rewarded

- more commitment to company goals
- longer-term perspective on business decisions
- more accurate assessment of candidate’s skills
- less orientation required
Disadvantages
- discontent of unsuccessful candidates

- time consuming to post and interview all
candidates if one is already preferred
- employee dissatisfaction with insider as new boss
- possibility of ‘inbreeding’
Requirements
Human
Human
Job
Job Skills
Skills
Resources
Resources
Posting
Posting Inventories
Inventories
Records
Records
Advantages of Job Posting
- equal opportunity for transfer/promotion for all

qualified employees
- reduces favoritism
- demonstrates commitment to career growth
and development
- communicates organization’s policies on
transfer/promotion
Disadvantages of Job Posting
- reduced morale and motivation of unsuccessful

candidates
- tension if qualified internal candidate passed
over for equal/less qualified external candidate
- difficult decision between two or more equally
qualified candidates
Recruiting Outside the Organization
Advantages
- larger, more diverse pool of qualified candidates

- acquisition of new skills and knowledge for
creative problem solving
- elimination of rivalry for transfers/promotions
- cost savings from hiring skilled individuals with
no need for training
Planning External Recruitment
- type of job will influence method

- relationship between method chosen and quality
of hire
- amount of lead time
- cost
Planning External Recruitment
50 New hires
d
mi
ra
100 Offers made (2:1)

Py
eld
150 Candidates interviewed (3:2)

Yi
200 Candidates invited (4:3)
1200 Leads generated (6:1)

Prominent Methods
- employee referrals
- private employment agencies
- executive search firms
- advertising
- online recruiting
Employee Referrals
Advantages:
- low cost
- skilled employees may know others in their field
- recruits have realistic impression of the firm
- candidates generally of high quality
Employee Referrals
Disadvantages:
- nepotism and inbreeding
- employee dissatisfaction when referral not hired
- systemic discrimination in non-diverse workplace
Use of Private Employment Agency
- no HR department
- past difficulty in generating pool of qualified candidates
- position must be filled quickly
- desire to recruit designated group members
- desire to recruit individuals currently employed
Agency-Employer Relationship
- provide agency with accurate job descriptions

- specify tools/devices for agency screening
- periodically review data on accepted/rejected candidates
- develop long-term relationship with one or two agencies
Executive Search Firms
Advantages:
- often specialize in particular type of talent
- adept at approaching employed candidates not
currently looking for a job
- confidentiality
- saves time
Executive Search Firms
Disadvantages:
- must provide detailed candidate requirements
- non-professional sales approach e.g. may present
poor candidate to make other prospects more
appealing
Advertising
- media to be used depends on:

- type of position
- type of candidate
- construction of the ad:
- AIDA (attention  interest  desire  action)
- want ads vs. blind ads
Online Recruiting
Three approaches:
1. Internet job boards
2. Company Website and intranet
3. Application Service Provider software rental
Recruiting Non-Permanent Staff
Temporary
Temporary Outsourcing/
Outsourcing/
Contract
Contract Employee
Employee
Help
Help Sub-
Sub-
Workers
Workers Leasing
Leasing
Agencies
Agencies contracting
contracting
Developing and Using Application Forms
Application forms provide information on

education and experience, career progress
and growth, and dependability and stability
Standardized forms facilitate candidate

comparison on required information and
reveal information on writing skills
Human Rights Issues
• cannot ask questions that classify candidates

on prohibited grounds
• illegal questions may lead to challenge of
entire selection process; burden of proof is
on employer
SALES
TRAINING
SALES TRAINING
OBJECTIVE
• To improve efficiency of the sales force through improved performance
• Reduction in newly appointed sales force personnel turnover through retention
• Augmentation in the level of motivation
• Value addition in corporate culture
• Increase in the effectiveness of cross-functional team
• Scaling down cost of recruitment and selection
• Effective relation building with the customers
• Digressing from the old attitude, I.e., “SINK-OR-SWIM”
TYPES OF TRAINING PROGRAMMES
1. New recruits – comprehensive and long

2. Experienced sales force - intensive and short / periodic refresher course
TRAINING BENCHMARKS
Building training program requires “5 - MAJOR- DECISIONS” OR “A-C-M-E-E”
AIM CONTENT METHODS EXECUTION EVALUATION

AIM
• Define – Process through which productivity of

sales force could be increased
• Identify needs
• Initial sales training program
IDENTIFICATION OF CONTINUOUS TRAINING
For experienced sales force:

• why
• when
• how
• which
TRAINING CONTENT
Initial sales training program
Product data Sales Markets Company Competitors’

Technique Information Activities
• Type of • Development • Target • Corporate • Present and
product of adequate audience vision & mission projected
• Understanding physical and • Buying • Corporate
of products’ psychological behavior, culture
use and traits habits and • Practices and
application • Basic motives policies
training to sell • Analysis of
potential and
opportunity
TRAINING METHODOLOGY
Objective : purpose is to essentially convey desired content effectively
1. The Lecture
• Characteristics – understanding through listening
passive participation
• Advantages - economical
ambit of coverage
• Disadvantages – teaching is emphasized more than learning
less recall
• Improvisation – through visual aids
interaction
feedback, case study, demonstration
TRAINING METHODOLOGY (CONTD…)
2. Personal Conference
• Characteristics – unstructured
informal
• Advantages - solutions to otherwise difficult situations obtained
helps in relationship building and motivation
• Disadvantages – accountability problem in case of failure
• Improvisation – based upon trainer and trainee
3. Demonstrations
• Characteristics – new products
applied more for consumer durables and engineering products
• Advantages - effective in “closing sales”
useful in the generation of customer confidence
• Disadvantages – possibility of customer aversion in case of inept handling
• Improvisation – with knowledge, training and experience
TRAINING METHODOLOGY (CONTD…)
3. Role Playing
• Characteristics – trainer providing needed sops after describing the situation
and the personalities involved
• Advantages - provides realistic practice and self introspection and new ideas
flexible and adaptable to diverse role playing situations
• Disadvantages – to be handled effectively
audience interest to be maintained throughout
• Improvisation – Repetition of the exercise
active and emotional participation of the characters involved
4. Case discussion
• Characteristics – partial substitution of learning by experience
• Advantages - effective in solution building approach of a real life situation
useful in analyzing a problem situation with the development of
alternatives
• Disadvantages – to be handled effectively
• Improvisation – conclusion based on generalization, if possible
TRAINING METHODOLOGY …. CONTD
5.Impromptu Discussion
•Characteristics – a sales seminar consisting of a trainer, group leader and sales force
an everyday sales problem highlighted
•Advantages - 2-way communication
provides new ideas, dimension and solution to a problem
flexible and adaptable to diverse role situations
•Disadvantages - existence of time constraints
•Improvisation –to be handled effectively
6. Gaming
•Characteristics – known as simulation and uses highly structured contrived solutions
players assuming decision making roles using computer program
•Advantages - identification of key factors in decision making and
development of analytical ability
•Disadvantages –existence of time constraints
•Improvisation – careful game design and administration
7.On-the-job Training
•Characteristics – coach-and-pupil method
telling, showing practicing and evaluating
•Advantages – learning through sweating and from mistakes
•Disadvantages - subjective because of coaches ability to train
•Improvisation –efficacy improved with practice and sincerity
8.Programmed learning
•Characteristics –breaking down the subject matter into units called frames
trainees to understand the problem and apply to another similar frame
•Advantages – possible to measure own progress
•Disadvantages – expertise necessary
•Improvisation – with proper motivation analytical development possible.
9.Correspondence Courses
•Characteristics – both for initial and continuing sales training
beneficial for salespeople with industrial fundamentals
•Advantages – useful for scattered sales force assembling periodically
•Disadvantages - lack of motivation to complete schedule within stipulated time
•Improvisation –through application of administration skill efficiently.
Group and individual training methods
Depending on background of sales trainees,their placements, company’s requirement

and available resources, training assignments are generally made.
EXECUTING TRAINING PROGRAMMES
 Kipling’s “six-honest-service-men”
six-honest-service-men
AIM(S) CONTENT METHOD(S) EXECUTION EVALUATION
WHY? WHAT? HOW? WHO / WHEN / WHERE

EXECUTING TRAINING PROGRAMMES (CONTD…)
• Solicit organizational decisions

• Training philosophies
• Organization for sales training
• Timing for training
• Location
• Training aids and manuals
TRAINING PHILOSOPHIES
1. Conditioned Response
• To train sales people for standardized or programmed response
• Characteristics – uniqueness missing
standardized response for programmed situation
objective in nature
• Advantages - useful for trade or missionary / standard product selling
selling
simplifies evaluation of sales personnel
• Disadvantages – difficult for new business or technical selling
low level of creativity or innovation
TRAINING PHILOSOPHIES (CONTD…)
2. Insight-Response
• To train sales people for development of insight and analytical skill
• Characteristics – situational analysis
non-standard response for individual situation
subjective in nature
• Advantages - useful for new business or technical selling
solving customer problem enhances level of motivation
• Disadvantages – chances of sales person becoming less motivated
reduction of retention of high caliber sale person
Organization for sales training
• Who will be the trainees ?

1. Initial sales training
• Firms up sales job descriptions
• Newly hired sales applicants
2. Continuing sales training
• Reward for good performance
• Enthuse confidence for poor performance
• Company policy
• Seniority
•Who will do the training ?

1.Initial sales training
• if line function – sales executive to shoulder the responsibility
• If staff function – onus on personnel executive
• balancing cost done
2.Continuing sales training
• Responsibility on functional head
• Cross-functional training imparted, if necessary
3.Sales training staff
• For large companies – separate training department exists
• For smaller companies- senior sales executives to shoulder the responsibility
4.Training the sales trainers

• training program for sales trainers in many companies
• Training program constitutes :
 field knowledge
 Company's vision,objective, policies, practices
 Product knowledge
 Customer knowledge
 Knowledge on competition
 Salesperson’ job description and background of persons in charge of such jobs
5.Outside experts
• For improvisation of sales techniques
• For development of personality and effective communication
•When will the training take place ?

1.Timing of groups versus individual training
 Group training
• For large number of trainees
• Cost low
• Overall acquaintance of the company’s policy, product, culture etc.
 Individual training
• Augmentation level of motivation and confidence
• Compare theory and practice in an effective manner
 Integration
 GROUP AND INDIVIDUAL TRAINING DESIRABLE
 BASED ON COMPNY’S POLICY AND CULTURE
2. Timing initial sales training program

• To assess number of trainees – optimum size
• Sales force turnover
• Sales force, present and projected size
• Company’s training policies
• Availability of trainers
3. Timing continuing sales training program
• Sales force getting acquainted with the new developments in terms of products
and its applications
• Customers’ problems and the possible solutions
• Refinement of selling techniques
• New selling aids
• Improvement in personality and communication for sales force
• Better understanding of vision and mission of the management
•Where will the training site be ?

• At central offices
• At branch offices
• At hotels
• At guest houses
Selection of location depends on –

 Company policy and culture
 Number of trainees
 Cost involvement
 Availability of infrastructure
Training aids and manuals
1. Manuals - workbook
Outline the main presentation
Learning objective
Cases and problems
Orienting questions
2. Other printed materials
company bulletins
sales, product handbook
standard text
business magazines and journals
3. Training Aids - cost – efficacy - time

Blackboard-
OHP
LCD
Photo clip
Tape recording- for sales techniques
CTV
4. Advance Assignment
Case study
Project work
EVALUATING SALES TRAINING PROGRAMMES
Focus on
 program effectiveness
 compare program aim with the result
EVALUATION
OR
COMPARISON
INVESTMENT RESULT
Time Selling
Money Performance
Effort
EVALUATING SALES TRAINING PROGRAMMES
(CONTD…)
TRAINING AND EFFECTIVENESS

•Training leads to increase in efficiency of the sales force in terms
of personal selling
•Other related factors for necessary integration - advertisement,
sales promotion etc.
•Effective training followed by motivation generates further
efficiency for sales force
•Effective training boosts up morale for the sales force – in turn
enhances corporate culture
SALES TRAINING AND STRATEGIC PLANNING
FOCUS - STRATEGIC PLAN
INTEGRATE
INITIAL TRAINING CONTINUING TRAINING
RESULT
PERFORMANCE EVALUATION
COMPARING WITH AIMS
SALES
ORGANIZATION
SALES ORGANISATION
• Fundamental principles of SALES ORGANISATION

1. Unity of command
2. Hierarchy of authority
3. Stability and continuity
4. Coordination and integration
OBJECTIVES of a sales organization –

1. Short run based on quantitative – personal selling objectives, viz.,
sales volume, profitability, scaling down sales cost, enhancement
of market share etc.
2. Long run based on qualitative – attainment of company’s vision
and mission, sustenance of market share and market goodwill,
relationship building etc.
PURPOSE OF SALES ORGANISATION
1. Duplication of effort minimized

2. Less amount of wasted motion
3. Reduction of friction
4. Optimization of cooperation
A suitable combination, depending on the organization's

philosophy and mission, of formal and informal nature of work
culture needs to be inculcated in the sales organization in order to
make it transparent, smooth functioned and attuned to the
changing needs and wants of the customers.
MAPPING A SALES ORGANISATION
• To permit the development of the specialist

1. To divide workload in suitable task segments in order to execute
such jobs smoothly in commensurate with the corporate philosophy.
2. To facilitate effective delegation of authority and fixing of
responsibility for specific job with specific individual.
• To assure performance of all necessary activities.

1. With the increase in the size of the organization, the
enhancement of complexity in its operation, both in terms of day to
day functioning as well as long run becoming important.
2. To cover the entire gamut of activities and in order to perform the
essential tasks effectively, specialization finding importance
MAPPING A SALESORGANISATION (CONTD…)
• To achieve coordination or balance

1. Getting people to pull together as a team rather than an
assortment of individuals, organization‘s performance in terms of
accomplishment more.
2.Individual goals subordinated to or reconciled with organizational

goals and motivating individuals to reach such common goal.
3.To divide sales department into small freely communicating

groups to decrease the possibility of uncoordinated proliferation.
• To define authority
1. Line authority - carrying the power to require execution of orders
by those lower in the organizational hierarchy
• characteristics – decisions taken on the need , place and time of
action over a wide range of matters.
• 2. Staff authority – power to suggest the personnel holding line
authority the method of implementation of an order
characteristics – advice to the line about methods without having
power to ensure implementation of the methods by the concerned
ones.
3. Functional authority – as the specialist in a particular domain,
assist general line personnel.
characteristics – issuance of orders on routine technical problems.
Conflict with regard to authority

• Not having a clear understanding of the the nature of authority in terms of
operations
• Staff personnel attempting to usurped the authority of line ones.
• Receiving directives from more than one sources – involving line, staff or
functional authority
How to avoid Conflict ?

1. Continuing coordination of the work of personnel from different
authorities
2. With free-flowing communication system
MAPPING A SALES ORGANISATION (CONTD…)
• To economize time
1. For higher position, requirement of planning more while for lower
ones operational requirement more
2. Time necessary for coordination more for high position
Span of control
1.limiting the number of subordinates for various higher ups needing
for effective coordination and control.
2. Lower level sales persons – wider span of control
Deciding optimum span of control
∆ efficiency, reliability and speed of communication system
∆ type of task and the location
STEPS IN SETTING UP A SALES ORGN.
1. Specifying objectives
2. Strategic planning
3. Determining necessary activities
4. Grouping activities into positions
5 Assignment personnel to positions
6. Providing for coordination and control

STEPS IN SETTING UP A SALES ORGN. (CONT…)
SPECIFYING OBJECTIVES
1. In consonance with long term objectives of the company, qualitative
sales department objectives being set
Basic qualitative objectives needed –
I. To derive from the long term vision of the company
ii. Survival through continuous generation of sales revenue
iii. Production of profitability
iv. Long term growth in sales and profits
3. Basic quantitative objectives required –
I. To derive definite short term goals from the long ones
ii. Securing a given sales volume for a definite period
iii. Maintenance of desired cash flow and profit
iv. Operating guidance
Overall performance of a company depending on effective
combination of such qualitative and quantitative objectives
STRATEGIC PLANNING
LOW COST STRATEGY SALES ORGANISATION ROLE

Emphasis on cost control Servicing large accounts and prospects,
price important selling parameter
DIFFERENTIATION SALES ORGANISATION ROLE

STRATEGY
Creation of USP leading to high Selling non-price and need and also
brand loyalty and low price service based benefits, educating and
sensitivity offering consultation to customers
NICHE STRATEGY SALES ORGANISATION ROLE

Focusing and servicing target Specializing in the operations and
market effectively considering opportunities existing in this high margin
the need of the same Segment, selling non-price benefits
STEPS IN SETTING UP A SALES ORGN. (CONT...)
• DETERMINING NECESSARY ACTIVITIES

Analysis of qualitative and quantitative objectives of sales department
Determining the volume of performance of such activities
Drawing the hierarchy with identification of positions and marking the relationship
amongst the same
Fixing of duties and responsibilities of such positions
• GROUPING ACTIVITIES INTO POSITIONS

objective-activity-position matrix drawn up
activities classified and grouped and closely related tasks assigned to same position.
job content of each position covering volume, variety for challenge, involvement and
interest
prioritization of activities often depending on the organizational design
due consideration on optimization of levels necessary
STEPS IN SETTING UP A SALES ORGN. (CONT…)
• ASSIGNMENT OF PERSONNEL TO POSITIONS
Assignment of personnel-position drawn up
position to be filled up through –
specialist recruitment, or,
training
modifying position to the suitability of the available individual
PROVISION FOR COORDINATION AND CONTROL

optimization of span of control
existence of both informal and formal control
instrument of formal control through –
written and clear job description / reporting relationship
organizational chart / job objectives / duties and responsibilities /
performance measurement
instrument of formal control through –
leadership / personality – subjective ones
BASIC SALES ORGANISATIONAL STRUCTURES
• LINE
• LINE AND STAFF
• FUNCTIONAL
• HORIZONTAL
• COMMITTEE
• Organizational structure depending upon :

× Grouping of activities into positions
× Charting of relationships of positions
× Need based structural development
BASIC SALES ORGN STRUCTURES (CONT…)
LINE SALES ORGANISATION
GENERAL
SALES
MANAGER
SALES
MANAGER
ASSISTANT ASSISTANT ASSISTANT ASSISTANT

SALES SALES SALES SALES
MANAGER- MANAGER- MANAGER- MANAGER-
DIVN 1 DIVN 2 DIVN 3 OFFICE
SALESPEOPLE SALESPEOPLE SALESPEOPLE SALESPEOPLE

• Characteristics –
1. concept applicable more in smaller firms or with firms

having small numbers of selling personnel
2. chain of command – top down through subordinates
3. no cross communication of persons at the same level
4. subordinate reporting to one person at the higher level
5. higher level personnel exercises line authority vertically
through the structure
• Uses and advantages
1. For companies where all sales personnel reporting to

C.S.O.
2. Simplicity in operation
3. Better discipline and control
4.Effective fixation of responsibility
5.Chance of development of leadership more
6.Less time taken for modification of policy changes,
• Weaknesses
1. Operational efficiency dependent on departmental head

2. Insufficient time for policy making
3. Less planning element
4. Coordination with allied departments minimum
5. For fast growing organization, impediment in building morale
6. Growth of subordinates less
LINE – AND - STAFF
CHIEF
MANAGER
(MARKETING)
MANAGER GENERAL SALES SALES

ADVERTISING
MARKETING SALES PROMOTION ADMINISTRAN.
MANAGER
RESEARCH MANAGER MANAGER MANAGER
SALES PEOPLE
• LINE & STAFF
characteristics –
1. For medium and large organizations
2. Diversified product range
3. Good numbers of sales personnel
4. Wide geographical area
5. A combination of specialists and line personnel
6. Authority and accountability on line generally but modification possible
with situation so demanding

1. Benefits of division of labour
2. Facilitate executive specialization
3. Assists line function in taking an effective decision
4.effective in combating competition
• Weaknesses
1. Chance of increasing the cost of organization
2. Possibility of slower decision making
3. Propensity of people working in staff function to encroach into the job
of line function
FUNCTIONAL
CHIEF MARKETING EXECUTIVE
MARKETING GENERAL SALES

CREDIT ADVERTISING
RESEARCH SALES PROMOTION
MANAGER MANAGER
MANAGER MANAGER MANAGER
ASSISTANT
SALES
MANAGER
SALES
PEOPLE
1. Advanced version of line and staff
2. Certain functional heads may even have the line authority with respect
to the relevant area of a different function – e.g., a credit manager may
direct sales people to collect payment on delinquent accounts.
• Uses and advantages –

1. large companies with varied product lines and markets
2. limiting no. of executives handling functional line authority
3. specialization of labour
4. Authority to command exists
• Disadvantages –
order received from two sources may invite trouble unless proper
coordination at the top prevailing
HORIZONTAL
PRODUCT MANUFACTURING
DESIGN & DEVPT TEAM
CUSTOMER ANALYSIS SYSTEM ENGG
DESIGN ENGG PRODUCTION
QC
STRATEGIC
PLANNING TEAM
CHIEF OPERATING OFFICER
VP-STRATEGIC PLANNING
VP-FINANACE & INFORMATION
HUMAN RESOURCE ADMN
CUSTOMER
CUSTOMER FULFILLMENT
SUPPORT TEAM TEAM
INFORMATION PRICING
TRAINING PROMOTION
SERVICE SALES
RESEARCH DISTRIBUTION
1. Self managed teams
2. Eliminates management levels and departmental boundaries
3. A small group of top executives overseeing support functions like human
resources, finance and long term planning.
4. Everyone else being a member of cross functional team performing core
process like product development, sales and fulfillment of related activities.

1. companies operation based on long run objectives and policies
2. Companies seeking higher efficiencies and more customer responsiveness
3. Selling by cross functional team with less supervision
4. Less overall cost
• Disadvantages
Failure may lead to accountability problem
lack of coordination may create problem
• COMMITTEE SALES ORGANISATION
Characteristics –
1. Not a sole basis for organizing sale department
2. Method for organizing the executive group for planning and policy
formulation while the actual operations being left to individual
executives.
Uses and advantages -

1. May be useful for a company operating on wide domain in terms of
functions or products
2. Prior deliberation with regard to various aspects of a problem before
taking a decision may be of help
Disadvantages
wastage of time and indecision could lead to problems
DIVISION OF RESPONSIBILITY–A MANAGEMENT DECISION
TO DIVIDE SALES ORGANISATION WITH THE BASIS OF
A DEFINITE KIND OF SPECILIZATION
Geographic specialization
GEOGRAPHIC SALES ORGANISATION
CHIEF
MANAGER
(MARKETING)
SALES GENERAL MANAGER SALES

ADVERTISING
PROMOTION SALES MARKETING ADMN.
MANAGER
MANAGER MANAGER RESEARCH MANAGER
SALES SALES SALES SALES

MANAGER MANAGER MANAGER MANAGER
(EAST) (WEST) (NORTH) (SOUTH)
RM - RM- RM- RM-

BENGAL ORISSA BIHAR NE
SALES PEOPLE
WITH INDIVIDUAL
TERRITORY
Geographic specialization
1. Grouped on the basis of physical territories
2. Dividing responsibility and line authority
3.For companies with large sales force

1. Wider coverage
2. Better control
3. Attuned to local competition
4. Effective customer services
• Disadvantage
No specialization of marketing activities
Product specialization - Type 1
PRODUCT OPERATING SPECIALISATION
CHIEF
MANAGER
(MARKETING)
MANAGER GENERAL SALES CUSTOMER

ADVERTISING
MARKETING SALES PROMOTION RELATIONS
MANAGER
RESEARCH MANAGER MANAGER MANAGER
SALES SALES SALES

MANAGER MANAGER MANAGER
PRODUCT X PRODUCT Y PRODUCT Z
SALES PEOPLE SALES PEOPLE SALES PEOPLE

PRODUCT X PRODUCT Y PRODUCT Z
1. For a variety of complex, technical products
2. Very dissimilar unrelated products
• Uses and advantages -

1. Specialized attention on each product line
2. More attention on each product line
Duplication of coverage to customer
PRODUCT MANAGERS AS STAFF SPECIALIST
CHIEF
MANAGER
MARKETING
MANAGER GENERAL
ADVERTISING MANAGER MANAGER MANAGER
MARKETING SALES
MANAGER PRODUCT X PRODUCT Y PRODUCT Z
RESEARCH MANAGER
ASSISTANT
SALES
MANAGER
SALES PEOPLE
For companies -
1. Requiring specialized support in selling the products
2. Needing product line specialization in planning level and not in the
selling level
• Uses and advantages -

1. Better specialization meaning better customer service
2. Less duplication in customer meeting
Escalation of cost
Lack of coordination may lead to problem
Market or customer specialization
MARKET OR CUSTOMER SPECIALISATION
CHIEF
MANAGER
MARKETING
SALES GENERAL MANAGER

ADVERTISING
PROMOTION SALES MARKETING
MANAGER
MANAGER MANAGER RESEARCH
SALES SALES SALES

MANAGER- MANAGER- MANAGER-
CRC SHEET AS
SALESPEOPLE SALESPEOPLE SALESPEOPLE

Combination of specialization
• Many firms may combine the above structures depending upon -
1. CORPORATE OBJECTIVES
2. SHORT AND LONG RUN STRATEGIES
3. ENVIRONMENT AND MARKET CONDITION
4. PRODUCT / SERVICE MIX

NEW ORGNL . CONCEPT IN STRATEGIC SELLING
1. SAM OR GAM
• this is the process of management of large customers

• Large customers are important both in terms of volume sales and
profitability – generally, 20% of the customer contributes 80% of the
sale and profitability of a company
• Complexity in the buying process of such customers are important
consideration for these companies
• Selling approaches for these customers
1. Creating a separate sales force
2. Using executives
3. Creating separate division
2. BUYING CENTERS
• Buying centers may be defined as all the individuals involved in

the purchasing decisions process
• Buying centers include –
a.users of the product
b. influencers or indenters who set the product specifications
c. deciders who decides actual purchasing decisions
d. gatekeepers who control the flow of purchasing information
5. Buyers who process the purchasing orders
3. TEAM SELLING
• A selling team is a group of people representing the sales department and also
other functional areas of the firm such as finance, production, research and
development
• Organizational options in team selling –
flexible and varies from company to company and also from situation to situation
strategic considerations –
size and functional diversity
reward to the individuals in the team
it is expensive and should be used in complex situations only.
4. TELEMARKETING
• Becoming increasingly important for small and medium scale
segments
• Refers to customer contacts using telecommunication technology
• Personal selling without face-to-face contact
• Business to business telemarketing growing at 30 to 40 % rate a year
• Cost effective sales calls
• Speed higher, efficiency more
• Customer reaction sometimes difficult to assess
• Scope –
a. customer service
b. prospecting and lead generation
STRATEGIC COST COMPARISON
INDEPENDENT
AGENT
BREAK-EVEN SALES
SALES FORCE
MATHEMATICAL CONNOTATION
Suppose that the independent agent receive 5% commission on sales
and administrative overhead costs Rs. 50,000. Company sales
personnel receive a 3% commission plus a salary. Total salary and
administrative expenses are estimated at Rs. 5,50,000.
At what sales level would the cost of a company
sales force equal that of sales agents ?
COST EQUATION ?
AT BREAK EVEN :
cost of the company sales force = cost of sales agents
0.03x + Rs. 5,50,000 = 0.05x + Rs. 50,000
where x is the BREAK EVEN SALES VOLUME
OR. x = Rs. 5,00,000 / 0.02 = Rs. 2,50,00,000
• OWN SALES FORCE OR INDEPENDENT

AGENTS – AN IMPORTANT MANAGEMENT
DECISION
• FACTORS FOR CONSIDERATION –
1. ECONOMICS
2. LEVEL OF CONTROL
3. COMPETITIVE MARKET ENVIRONMENT

SALES
PROCESS
SELLING PROCESS
STEPS IN A SALES
PROCESS 8. FOLLOW - UP
7. GAINING COMMITTMENT
6. MEETING THE OBJECTIONS
5. PRESENTATION
4. NEED ASSESSMENT
3. APPROACH
2. PREAPPROACH – PLANNING THE SALE
1. PROSPECTING
SELLING PROCESS (CONTD…)
1. MANAGING A SALES FORCE HAS A DIRECT LINKAGE WITH
THE SELLING PROCESS
2. THIS PROCESS FACILITATES EFFECTIVE GENERATION OF
SALES ALONG WITH BUILDING CUSTOMER SATISFACTION
3. TIME MANANGEMENT OF A SALESPERSON ( DEPENDS ON
COMPANY)
10%
ON PAPERWORK
70% OF TIME
ON STEPS IN
20% ON
SELLING PROCESS
TRAVELLING &
WAITING
• PROSPECTING
QUOTE ….
“ THE IDEA IS THAT THROUGH OUR
ADVERTISING AND PROMOTIONAL EFFORTS WE STAND ON A
LADDER SHOUTING LOUDLY ALL OVER DALLAS, ‘ EVERYONE
WHO IS READY RO BUY A COMPUTER PLEASE RAISE YOUR
HANDS.’ THHEN WE GO SELL ONE TO EACH PPERSON WHO
RESPONDS. “
…. PHIL CLARK …. RSM, IBM, DALLAS, USA.

• PROSPECTING –
• OBJECTIVE
1. Continuous searching for new and potential customers
2. Customers must have potential and need to buy products
STEPS
IDENTIFYING LEADS QUALIFYING LEADS

• IDENTIFYING LEADS
• Spotting the names and addresses of potential customers
1. Referrals from customers (lead around 67%) –
Q UOTE ….
“ IF YOU PROVIDE VALUABLE, WORTHWHILE PRODUCTS

AND SERVICES TO YOUR CLIENTS, THEY WILL WANT TO SHARE
YOU WITH OTHERS ”
…. KUZMESKI, PRESIDENT, RED ZONE MARKETING, USA

2. Referrals from internal company sources (lead around 23%) –
a. sales department
b. marketing / telemarketing department / teleprospecting
c. company advertising
d. direct mail
e. company websites
f. Trade shows
3. Referrals from external referral agencies

leads through dot.com companies at a certain charges
4. Published directories
a. journals of trade associations
b. yellow pages
c. journals of chamber of commerce
5. Creating networking through clubs, professional bodies etc.

6. Cold canvassing –
unannounced call on business that can lead to generation of customers
T ECHNOLOGY ………….. & …………… P ROSPECTING
 IN 2000, FORD MOTOR COMPANY COLLECTED AN

ESTIMATED HALF-MILLION ONLINE LEADS FROM WEBSITE
VISITORSGENERATING SALES MORE THAN 50000
VEHICLES
SOURCE – JEAN HALLIDAY “ FORD FINDS E-LEADS

PRODUCTIVE” : ADVERTISING AGE 72 NO. 4.
• QUALIFYING LEADS
in order to qualify, the prospect should satisfy three conditions :

1. Customer has the needs for products
2. Customer can afford to buy the products
3. Customer is receptive to being called on by the salesperson
Lead generation – whose responsibility ?
• Earlier it was salesperson’s

• Today a combination of
a. sales person
b. marketing department
c. telemarketing and teleprospecting
• PREAPPROACH – PLANNING THE SALE
• Information gathering activities about –

1. Relevant facts about prospects
2. Their needs
3. Environment
4. Match prospect needs and company objectives
• Selection of appropriate strategy for each call
• Planning sales presentations

• Customer research
Following series of information should be collected –
1. Customer’s background
2. Present occupation or business and location
3. Needs and expectations
4. Key person in buying decision making
5. Influencer, if any
6. Problems, if any
• Selection of appropriate strategy for each call -
Q UOTE ….
“ In-depth research into prospects
makes salespeople stand out ”
1. Strategy not to complete sale in one presentation

2. To complete sale 4-5 calls generally necessary
3. Through each call some commitment towards
proceed further ib terms of the sale is expected to
be obtained
• Planning sales presentations
1. To plan how to approach the buyer

2. What kind of interaction may crop up
3. Situational analysis
4. Understanding customer’s needs and wants
5. Match products with such needs
6. Reading buyer psychology properly
Finally, goes into adaptive kind of selling

• APPROACH
GOAL –
to see that the salesperson can draw the buyer’s attention during the interaction
Effective approach needs–
1.Firm handshake or wishing positively with smiling face

2.Professionally attired
3.Make good eye contact
4.Interaction starts with brief introduction
5.Small talk on background of company and products offered
6. Refer product benefits based on customer needs
7. Sample or literature handing over
8 To create buyer’s interest in the products so that need assessment stage of the call
may be agreed upon
• NEED ASSESSMENT OF THE BUYER
1. To discover
2. To clarify
3. To understand
• THROUGH QUESTIONS
1. Situational questions -
to obtain facts about a given situation
“how much inventory for this product do you carry ? “
2. Problem discovery questions

to obtain information being faced by the customer currently with
a product with an aim to solve it with the product suggested
“ do you find timely obtaining of this product ? “
3. Problem impact questions

impact of buyer’s problem towards company’s operations
“how do these maintenance problems affect your operations? “
4. Solution value questions

how solution could improve operational efficiency –
“how important is reducing downtime to minimize your
production cost? “
5. Confirmatory questions
some confirmatory statement result in through such questions –
“ so you are keen to maintain programme that reduce your
downtime ? “
• THE PRESENTATION
A discussion of the product or service
features,
advantages
and benefits
both in written or oral
• GOAL
to satisfy customer's needs better than that of a competitor
Feature Advantages Benefits

Characteristics How feature Change How the advantage
of product or the performance of would help the buyer
product or service in meeting needs
Services
LIST OF PRODUCTS WITH FEATURES, ADVANTAGES, BENEFITS
PRODUCT FEATURE ADVANTAGE BENEFIT

FORKLIFT ONE MONTH HIGHER SAVES MONEY
TRUCK TRIAL OPERATIONAL AND TIME
FLEXIBILITY
MOTOR OIL RUST ENGINE HAS SAVES MONEY
INHIBITOR LONGER LIFE
• PRODUCT DEMONSTRATIONS
1. Important as – “ seeing is believing “

2. Should be forceful presentation
3. May be prototype of the product with personalized presentation
4. May include multimedia effect
5. Web – based presentation
IMPORTANT FACTOR IN DEMONSTATION

PERSONAL TOUCH AND UNDERSTANDING WITH THE
ULTIMATE OBJECTIVE TO MEET CUSTOMER’S NEED MUST
BE ADHERED TO
• PREPARED SALES PRESENTATION
1. Salesperson gains in confidence
2. Effective tested sales techniques may be used
3. Simplifies sales training
4. Coverage is good
However, for cases where situational analysis necessary,
salesperson should apply additionally personal feeling and own
dimension of the problem on site.
• DEVELOPING EFFECTIVE PRESENTATION

WAYS –
1. Keep the presentation simple
2. Talk in prospect’s language

3. Stress the application of product or service to the prospect’s
situation
4. Above all, try to generate credibility at every turn
MEETING OBJECTIONS
• OBJECTION KINDLES HOPE FOR A DEAL
• BUYER’S INTEREST COULD BE FELT
Responding to buyer’s objection –

1. Listen to the buyer
2. Clarify the objection
3. Respect the buyer’s concern
4. Respond to the objections
• TYPES OF OBJECTIONS
1. Price or value objections

2. Product / service objections
3. Objection due to finance problem
4. Objection due to other miscellaneous problems
• PROCRASTINATING OBJECTIONS
1. Case histories
2. Demonstration
3. Testimonials
4. Trial use
5. Expert opinion
6. Creation of interest and commitment
• HIDDEN OBJECTIONS
1. TO DISCOVER HIDDEN OBJECTIONS THE PROSPECT
SHOULD BE KEPT ON TALKING SO THAT THE REASON
COMES OUT
2.” APPEAL FOR HONESTY “ TECHNIQUE
TO ASK REAL BOTHERATION TACTFULLY – NEED TO
DEVELOP FRIENDSHIP AND INTERACTION
• GAINING COMMITMENT
1. Once buyer is fully or partially convinced with the product
or services – this process starts
2. Seller requests the buyer to initiate some action that would
help to move the sale forward
3. Sale close generally in the fourth or fifth call
4. Each call is a further confidence building measure
• FOLLOW – UP
1. Important in terms of relationship selling
2. Building loyalty with the existing customers
3. Even for a new account, you need to be one step ahead than your
competitor in terms of follow up towards closing of sale
4. Globalization has made the word follow up much more important
An interesting example –
Bose Corporation, a Massachusetts-based high end stereo
equipment manufacturer has formed close relationship with select
suppliers. Ultimately, the supplier’s salesperson, who developed the
account, was replaced by a fellow employee who worked full time in
the Bose Corporation’s office – even though the employee still used to
draw the pay packet from the selling firm. Being part of the customer’s
social system made the the supplier employee especially effective as
he used to place the purchase orders and helped design products for
the customer firm.
SHARE OF BUYER’S
BUSINESS, IF FOLLOWED UP
83%
SHARE OF
BUYER’S
BUSINESS,
IF NOT
FOLLOWED
UP
40%
• MEETING CUSTOMER NEEDS - AFTER THE SALE
Erica Fiedner has been the top salesperson at Steinway &

Sons since 1994. “ We do not know anyone who has done
what Erica has done” says head of sales and marketing
Frank Mazurco. “ If could only clone her. How does she do
it?”Certainly, it does not stem from a high “closing ratio” as
there are other people in the company with a greater
percentage of walk-in customers who actually buy a piano.
In fact Erica refuses to sell a piano that she feels not right
for a customer. She in such case would request the
customer to wait till the particular type of piano becomes
available.
• Key to Erica’s success –
Large volume of referrals that result from her commitment to customers after
the sale has been made.
Her follow-up is extraordinary
Includes steady stream of correspondence regarding sales events, reminders

to insure the piano, advice on where to take piano lessons, invitations to
recitals
Customers pleased and referrals generated for such outstanding customer

service and even customers ask for Erica by name
SOURCE : J.B.STEWART “ MATCHMAKER : ERICA FIEDNER KNOWS

THE PIANO YOU WANT” THE NEW YORKER,AUGUST 20,2001
• CLOSING SALE
1.Closing occurs when a salesperson asks from commitment

from the customer
2. Timing is difficult
3. QUOTE ….
“ ONE OF THE BIGEST MISTAKES
SALESPEOPLE TEND TO MAKE IS NOT
ASKING FOR THE ORDER ” ….
SALES MANAGER, MNC
4. Big hurdle – fear of rejection
• WHEN TO CLOSE
DEPENDS ON
1. SITUATION
2. QUALITY OF PRESENTATION
3. SIGNAL OBTAINED IN TRIAL CLOSE
4. SALESPERSON’S PERCEPTION ABOUT CUSTOMER’S

NEED SATISFACTION
• COMMON CLOSING TECHNIQUES
1. THE ASSUMPTIVE CLOSE

many salespeople rely on the assumptive close – they merely
assume that prospects are going to buy and begin taking orders
by asking such questions as :
a. Now, what size do you want ?

b. When we can deliver this - today or tomorrow morning ?
c. will three dozen be enough, or should we send four ?
if the prospect answers such question with interest, the seller can
assume that the sale is under way.
2. SPECIAL – OFFER CLOSE
Sometimes many sales managers give their sales-force special

customer offer.
For example -
In India, often this type of offer could be seen prior to the festive
season.
A company like Berger Paints offer to its customers some
special package prior to Durga Puja every year. The idea
behind such offer is to facilitate salespeople of the
company to close the sale.
3. SUMMARY CLOSE
Another frequently used sales close technique is to provide a
summary of the benefits that the buyer has already
acknowledged and then to suggest an action for finalizing the
sale.
Example –
ION EXCHANGE, an MNC, has designed a water treatment
plant which can also take care of the Arsenic present in the
water for consumption. The customer also has agreed the
poisonous effect of Arsenic in water and also acknowledged the
ability of the newly designed plant of the company for removal of
the poisonous element.
sales person of the company can ask the customer to place
order for one unit immediately.
WHAT WOULD YOU SAY IF YOU WERE CALLED –
“ AN OKYAKU – SAMA ” ?
Are Japanese salespeople different from American salespeople ?
According to George Leslie, president of Meitec Inc., the answer is yes.

“Today’s Japanese salespeople” says Leslie, “ still have a tendency to
behave as if they are at the bottom of the social ladder, respecting and
trying to satisfy their customers. In fact, the customers are often
referred to as OKYAKU-SAMA, - SAMA used as a reference to God.,
the emperor or other deserving honor.
1. This attitude of Japanese salespeople assists the company
2. Japanese salespeople are always team players
3. Japanese salespeople assume immediate responsibility for any
difficulty which could be associated with the product
4. Japanese salespeople are fanatically proud of their company
• U.S. SALEPEOPLE ARE :
1. Traditionally more independent
2. Assess the merits of independent action
3. Reward reinforces image of independence and responsibility
4. Generally, individually oriented
PRESENT TREND – JAPANESE STYLE OF MANAGEMENT
FOR SERVICE INDUSTRY AND FOR TEAM BUILDING

RELATIONSHIP
MARKETING
RELATIONSHIP MARKETING
• It is the process of collaboration between the

buying and selling firms that results in economic
benefit for both, I.e.,
SITUATION ------- WIN-WIN
• Relationship built on :
1. Co-operation
2. Trust
3. Commitment
4. Information
RELATIONSHIP MARKETING (CONTD…)
CONCEPT DEVELOPMENT
COMPANY BUYER
SALESPERSON
PROPAGATING
CONCEPT OF
RELATIONSHIP
THROUGH
DEVELOPMENT OF
TQM, IMPROVISED
PRODUCT AND PROCESS,
RELOOK AT COSTING
RESULT IMPROVED EFFICIENCY AND COMPETITIVENESS

• BENEFITS –
1. IMPROVEMENT IN AREAS OF SUPPLY CHAIN

2. SAVING MONEY
3. AUGMENT COLLABORATION
4. MINIMISE CONFRONTATION
5. IMPROVED INTERDEPENDENCE
6. LESS INDEPENDENCE
Example :
( Waller, 1994 ) - Marcedez Benz claimed to have saved $588
million by closer partnering agreement with the suppliers
• IMPORTANCE OF RELATIONSHIP IN ORGANISATIONAL

MARKETING EXCHANGE
Jackson, 1985 and Dwyer, 1987 advocated :
Promoting relationship through -
• Trust
• Commitment
• Involvement of customers in the planning process
• Working in teams
• A MODEL ON RELATIONSHIP BASED UPON TRUST AND
COMMITMENT
• DONALDSON AND OTOOLE, 1997
High Commitment Low Commitment

Bilateral Relations Recurrent
High
Trust
Hierarchical Supplier / Discrete or

Buyer Dominant Opportunistic
Low
Trust
• PRACTICE :
Bilateral Relations
1. Bilateral relations are high both in trust and commitment

2. Partners cooperate for mutual advantage characterized by
openness in communication and strategic collaboration
3. Unique in nature and potentially offer in the context of
performance of interfirm relationship
4. Dominated by bilateral content and process
Example – experienced by packaging suppliers of Philips

for their TV-sets – design and development could be
augmented by the joint effort of one of the suppliers and
the company
• Recurrent Relations
1. A hybrid form between discrete and bilateral

2. Elements of reciprocity and temporal duration creep into the
exchange as trust between the parties but committed actions
are low
3. Focus is more on operational issue rather than strategic ones
and purchases are likely to be transaction based rather than
relations based.
4. Salesperson has to ensure that the operational performance
of the supply organization should be equal, if not more, than that
expected by the purchase.
Example – experienced by the seller of a high value medical
equipment
• Dominant or Hierarchical Relations
1. In such a case, the dominant partner out of the two would

specify the nature of interaction between the partners
2. The weaker partner faces a combination of low trust and high
commitment
3. Decisions were mostly resolved by the dominant partner
4. Environmental condition, specially the forces of competition
play a pivotal role in the balance of authority and power-
dependency
Example – experienced by suppliers of OEM

RELATIONSHIP MARKETING ….CONTD
• Discrete or Opportunistic Relations
1. Lowest in relationship strength

2. Operate on minimum level of trust and commitment
3. Opportunism is expected to dominate whatever may be the
tie exists between the partners.
4.salespeople have to focus on winning the business and must
be aware of the needs of the buyer at different points in time.
Example – turn key project marketing

STAGES IN RELATIONSHIP-BUILDING
RELATIONSHIP DESCRIPTION KEY SELLING OBJECTIVES
STAGE
AWARENESS RECOGNITION THAT A SUPPLIER MAY 1.GAIN CUSTOMER’S ATTENTION

BE ABLE TO SATISFY AN IMPORTANT 2.DEMONSTRATE HOW PRODUCT/SERVICE CAN
NEED SATISFY A NEED
EXPLORATION A TENTATIVE, INITIAL TRIAL WITH 1. GAIN INITIAL ACCEPTANCE
LIMITED COMMITMENTS BY BOTH 2. BUILD A SUCCESSFUL RELATIONSHIP
PARTIES. THE TRIAL PERIOD MAY BE
EXTENDED, IF REQUIRED
EXPANSION EXPANDING THE REWARDS FOR EACH 1. GET TO KNOW CUSTOMERS AND THEIR
PARTY IN THE RELATIONSHIP BUSINESS BETTER
2. EXPAND WAYS TO HELP THE CUSTOMER
COMMITMENT THE COMMITMENT BY BOTH THE 1. INTERACTIONS AT LEVELS

BUYER AND SELLER TO AN BETWEEN THE BYUER’S AND SELLER’S
EXCLUSIVE RELATIONSHIP ORGANISATION
2. EARLY SUPPLIER INVOLVEMENT IN
DEVELOPMENT PROCESSES
3. LONG TERM FOCUS TO THE
RELATIONSHIP
DISSOLUTION TOTAL DISENGAGEMENT FROM 1.LOOK FOR WARNING SIGNALS

THE RELATIONSHIP 2.ATTEMPT TO REINITIATE
RELATIONSHIP
• AWARENESS
1. Recognition by the customer that the seller is a viable source

of a product or service
2.Objectives of buyer and seller unilateral
3.Commitments low
4. Beginning of a relationship
Example : Selling a new generation PC to a company

• EXPLORATION
1. Partners developed a heightened sense of mutual benefit
2. Buyer starts exploring seller’s offerings and capabilities
3. Seller begins understanding of unique needs of the buyer and

try to match the benefit of the products or services offered
accordingly
4. Focus on trial relationship based on certain level of trust and

commitment
Example : Manufacturers of space saving furniture

• EXPANSION
1. Partners experienced some of the benefits and problems

associated with the relationship and attempt to expand the
benefits
2. Building of joint activities – value analysis, product design,

cost targeting, design of delivery systems etc.
3. Increased dependency between buyer and seller
4 Both parties to make unique investment in terms of time,

personnel and information sharing
• STAGE OF EXPANSION AND BUSINESS GROWTH
This stage has a direct linkage with the growth of business. The growth
may be attribute through :
1.Retention of existing customers

2.Solution provider in respect of –
a. Existing use
b. Possible needs
c. Optimum possible solutions
d. Probable new uses
e. Decision criteria
Present management orientation – usage of cross functional team

• COMMITMENT
1. High degree of commitment in terms of relationship, between

individual as well as the organization, is likely to creep in between
the buyers and the the sellers
2. Customers are looking for suppliers who could also assist in the
enhancement of productivity and competitiveness
3. Suppliers are trying to evaluate and select customers, on the
other hand, who could be the likely winners in the present day of
globalization when technology, information and markets without
boundaries knock at the doorsteps.
4. Important considerations while choosing a customer –
a. Potential for impact
b. Common values
c. Good environment for partnering
d. Consistency with supplier’s goals
• DISSOLUTION
1. Possibility of disengaging a buyer-seller relationship is implicit at each

stage
2. In this stage, seller should continuously monitor issues like financial
health of the customer, cost of transactions, changing organizational
needs, changes in key personnel
3. Buyer-seller relationship is a changing process and some of the
warning signals could be indicated, as below.
a. Missing information
b. Uncertainty about information
b. Reorganization
c. Customer pommel new to the job
• RELATIONSHIP BINDERS
V ALUE -Rewards exceed costs associated with establishing

or expanding a relationship
SELLER BUYER
Seller with highly committed Buyer would look for highly committed
relationship could leverage skills and relationship through development of
resources, develop brand and build acceptable quality product at an
strong competitive position optimum price, wider choices and
quicker access to their choices
• EXPECTATIONS
1. Mutually agreed upon set of team values is the
crux of buyer-seller relationship
2. Acceptable rules or norms with respect to
conduct and performance based on individual
preference and company policies
3. Buyer’s expectation should be assessed correctly
by the seller. However, unfavorable buyer’s
expectations should not be encouraged.
4. Salesperson should also advocate his/her
company’s expectation in the long run from the
buyer
N EGOTIATING –
To consider each partner’s obligations, benefits and burdens
BUYER SELLER
A buyer should perceive a seller's A seller should start negotiating early
willingness to negotiate on significant in order to avoid misconceptions
factors in the relationship regarding future obligations and norms
of conduct
• TRUST
SELLER BUYER
To create opinion in the minds To create an atmosphere of
of the buyer that his/her long partnership with the seller and
run interest shall be served also take seller’s assistance in
reaching long run goal of the
company
Trust earning attributes of salespeople

a. Dependability
b. Competence
c. Customer orientation
d. Honesty
COMPENSATING
SALESPEOPLE
COMPENSATING SALESPEOPLE
• MAJOR OBJECTIVES
TO
1. motivate salespeople
2. retain salespeople
3. attain company’s goal
4. maximize customer satisfaction
5. optimize sales expenditure
6. maintain market competitiveness of the company
COMPENSATING SALESPEOPLE (CONTD…)
CHARACTERISTICS OF A GOOD COMPENSATION PLAN
ATTRACT
ENSURE PROPER CONTROL CORRELATE EFFOTRS
AND KEEP
TREATMENT OF SALESPEOPLE’S AND RESULTS
COMPETENT
CUSTOMERS ACTIVITIES WITH REWARDS
SALESPEOPLE
BE ECONOMICAL
MOTIVATE
GOOD SALES COMPENSATION PLAN YET
SALESPEOPLE
COMPETITIVE
GIVE
BE FLEXIBLE
SALESPEOPLE BOTH
YET
SECURITY AND
STABLE
INCENTIVE BE SIMPLE BE FAIR
COMPANY OBJECTIVES IN THE CONTEXT OF
CUSTOMER – PRODUCT – MATRIX
NEW CONVERGENCE NEW BUSINESS

SELLING DEVELOPMENT
CUSTOMERS
ACCOUNT LEVERAGE
CURRENT
MANAGEMENT SELLING
CURRENT NEW
PRODUCTS
GROWTH OPPORTUNITY –COMPENSATION - MATRIX
EXISTING PRODUCT – EXISTING CUSTOMER –

EXISTING CUSTOMER NEW PRODUCT
COMPENSATION
SALARY
PLAN
EXISTING PRODUCT – NEW PRODUCT –

SALARY NEW CUSTOMER NEW CUSTOMER
PLUS
INCENTIVE
CUSTOMER - PRODUCT
STRATEGY –CUSTOMER – PRODUCT – COMPENSATION - MATRIX
EXISTING PRODUCT – EXISTING CUSTOMER –

EXISTING CUSTOMER – NEW PRODUCT –
SALARY SALARY
HOLD STRATEGY HARVEST STRATEGY

STRATEGIC PLAN EXISTING PRODUCT – NEW PRODUCT –
NEW CUSTOMER – NEW CUSTOMER –
SALARY PLUS INCENTIVE SALARY PLUS INCENTIVE
BUILD STRATEGY NICHE STRATEGY
CUSTOMER – PRODUCT - COMPENSATION

DESIGNING A SALES COMPENSATION PLAN
REVIIEW ESTALISH
IDENTIFY PLAN’S
JOB LEVEL OF
OBJECTIVES
DESCRIPTIONS COMPENSATION
PRETEST
AND DEVELOP THE METHOD OF
INSTALL COMPENSATION
PLAN
• REVIEW JOB DESCRIPTIONS
1. It indicate the services and abilities for which the business is paying
2. Should disclose the exact nature and scope of the job and also the
probable difficulty of the same.
• IDENTIFY SPECIFIC OBJECTIVES ( Emphasizing aspects and

controllability and measurability )
1. Increase profit by 10%

2. Increase sales volume of a certain class of products by 10%
3. Develop a new territory
4. Increased volume of existing accounts
• ESTABLISHING THE LEVEL OF COMPENSATION
1. The average earnings of the salespeople over a given period

2. It is a direct sales cost
3. The level of sales compensation is directly related to experience of the
salesperson
• DEVELOPING THE METHOD OF COMPENSATION
Following elements should be included in sales compensation plan
1. Salaries
2. Commissions
3. Bonuses
4. Indirect monetary benefits
5. Expenses
BUILDING BLOCKS OF A SALES COMPENSATION PLAN
OTHERS
PROFIT OTHERS
SHARING
PENSION ENTERTAIN
MENT
COMPANY
OTHERS TRAVELLING
CAR
BONUS INSURANCE LODGING
LEAVE
SALARY COMMISSION TRAVEL
ENCASHMENT
SECURITY INCENTIVE BENEFITS EXPENSES

• SALARY PLAN
• Characteristics
1. Fixed amount for a specific period
2. Easier control on wage levels
3. Loyalty exhibited higher
4. Easier to implement geographical blanket coverage
• Motivation
1. Provides security
2. Assures of steady income
• Limitation
1. No incentives for extra efforts
2. Closer supervision necessary
• Application
Missionary selling / service selling
• COMMISSION PLAN
• Characteristics
1. Paid a percentage of sales or gross profit
2. Based on accomplishment and not effort
3. Loyalty exhibited less
4. Easier to implement for better qualified persons
• Motivation
1. Provides high incentives
2. Action independent and creativity more
• Limitation
1. Less control
2. Attracted to accounts where earning potential more
• Application
For areas with less after-sales-service and missionary work
COMMISSION SALARY
• COMBINATION PLANS
1. Salary plus commission
2. Salary plus bonus
3. Salary plus commission and bonus
Salary plus commission

Characteristics
1. For company with high growth vision
2. May be for complex products or services
2. Specific products/ market segments may attract such schemes
Motivation
1. High earning potential with some security
2. Some amount of loyalty exists
Limitation
Controlling cost difficult
Application
Used in areas of building materials, machinery, electrical suppliers
• Salary plus Bonus

Characteristics
1. Base salary is lowered and bonus added
2. Used areas where products presold by advertising
3. Determination of bonus done is sales to quota, no. of new
accounts, unit sales
Motivation
1. Good earning potential with some security
2. Some amount of loyalty and also high level of confidence exist
due to support advertisement
Limitation
effectiveness lost if bonus is not determined effectively
Application
Used by consumer companies
• Salary plus Commission plus Bonus

Characteristics
1. Stability cum incentive cum special reward
2. Salesperson rewarded virtually for every activity
Motivation
1. Excellent earning potential
2. Security and liquidity together
3. Loyalty created
Limitation
1. Complex in administering
2. High cost
Application
IBM, ZYDUS CADILA
CUSTOMER SATISFACTION AND SALES FORCE COMPENSATION
SALES FORCE
COMPENSATION TQM CUSTOMER
SATISFACTION
“5 – R”
REDUCTION OF CUSTOMER ATTRITION
CUSTOMER RETENTION
• PRETEST THE PLAN
1. A simulation exercise normally done in a computer

2. By assuming various levels of sales at different compensation
plans can be worked out
• INSTALL THE PLAN
1. Introduce the plan to the sales force

2. Discuss various pros and cons
3. Final implementation is made
4. Periodic review may be made
TERRITORY
MANAGEMENT
MANAGEMENT OF TERRITORY
• WHY USE TERRITORIES
1. A territory is defined as customers located in a geographic area which

may be assigned to an individual sales person
2. To augment the market coverage
3. To understand and assess customer’s needs and requirement more

clearly
4. To focus on long run and improved customer relationship marketing

based on retention of customers through Bilateral Relationship involving
high level of Trust and Commitment
MANAGEMENT OF TERRITORY (CONTD…)
• BENEFITS OF USING TERRITORY
1. Motivation for salespersons -

• Benchmarks in terms of -
• Assessment and satisfaction of customer needs and wants
• More involvement with the customer
• Improvement in the level of morale
• Augmentation of effectiveness
• Increase of pride in individual job
2. Cost saving
• Less duplication of sales costs including travel costs
• Saving of time
3. Evaluation and control

• Performance of individual salesperson could be gauged and monitored
• Evaluation and control; becomes more effective
• Sales analysis and corrective measures could be better incorporated
• WHEN TERRITORY BECOMES UNIMPORTANT
1. For salespeople involved in Direct Selling
2. Salespeople involved in discrete or opportunistic selling
3. In case of salespeople handling strategic accounts
Example : insurance salespeople, Amway

DESIGNING OF TERRITORY - A SIX-PART DECISION PROCESS

1.SELECT GEOGRAPHIC
CONTROL UNITS
EVENTS
TRIGGERING 2.DECIDE ON ALLOCATION
SALES CRITERIA
TERRITORY
ADJUSTMENT 3. DETERMINE BASIC
MERGER REVISE TERRITORY
TERRITORIES
DIVISION BOUNDARIES TO
CONSOLIDATION BALANCE
DIVISION SPLIT 4. ASSIGN SALESPEOPLE WORKLOAD AND
SALES FORCE TO TERRITORIES POTENTIAL
TURNOVER
PLANT
RELOCATINS 5. SET UP TERRITORIAL
PRODUCT LINE COVERAGE PLANS
CHANGES
6. EVALUATE
EFFECTIVENESS IN DESIGN
1. SELECT GEOGRAPHIC CONTROL UNITS
a. Unit of geography that can be combined to form sales territory
b. Flexible and have clearly recognized boundaries
c. Selection of control units is dependent ( in India ).on the type of
business orientation the company- i.e., urban , semi-urban,rural,
semi-rural
G eographical C ontrol units used in territory design
COUNTRY CITY
VILLAGE TOWN
METRO CITY INDUSTRIAL TOWN

2. DECIDE ON ALLOCATION CRITERIA

Based on the criteria, as below, the allocation is made –
1. Number of current customers:

provides an opportunity for estimation of workload
Indicator of cash flow and gross contribution for the company
2. Potential:
Indicator of business growth for the company, both short and long run
3. Size:
Balancing of territory in terms of size and characteristics has a direct
bearing on the efficiency of the sales force
Special topographical features

Example - NE
3. DETERMINE BASIC TERRITORIES
Establishment of a fundamental territory based on statistical

measures
• USING –
A. BUILD-UP METHOD
B. BREAKDOWN METHOD
BUILD-UP METHOD
DESCRIBE CALL
TOTAL CALLS
MANAGEMENT PARTNERS
NEEDED
MUST • CALL FREQUENCY
IN EACH
DETERMINE : PER ACCOUNT
CONTROL GROUP
PER YEAR
TENTATIVELY SET WORKLOAD CAPACITY

TERRITORIAL BOUNDARY • TOTAL CALLS POSSIBLE
MODIFY
LINES BY COMBINING PER SALESPERSON
TERRITORIES
CONTROL UNITS UNTIL PER YEAR =
AS NEEDED
TOTAL CALLS NEEDED = (NUMBER OF DAILY
TOTAL CALLS POSSIBLE CALLS) X (DAYS SELLING)
BUILD-UP METHOD
DESIGN STAGES DETAILING
DESCRIBE CALL PARTNERS DETERMINE OPTIMUM CALL FREQUENCIES
• CALL FREQUENCY PER ACCOUNT • AFFECTED BY – SALES POTENTIAL, NATURE OF
PER YEAR PRODUCTS, COMPETITION, COST OF CALLING,
CUSTOMER BUYING HABITS ETC.
TOTAL CALLS NEEDED NO. OF EACH TYPE OF ACCOUNT * NO. OF
IN EACH CONTROL GROUP CALLS
WORKLOAD CAPACITY AVG. NO. OF CALLS THAT THE SALESPERSON

• TOTAL CALLS POSSIBLE PER SALESPERSON CAN MAKE IN A DAY * NO OF DAYS THE
PER YEAR = SALESPERSON WILL MAKE CALLS IN A YEAR –
NUMBER OF DAILY CALLS * DAYS SELLING DEPENDS ON – AVG. LTIME PER CALL,, AVG.
TRAVEL TIME ETC.
TENTATIVELY SET TERRITORIAL BOUNDARY DRAW ENOUGH CONTIGUOUS TERRITORIAL

LINES BY COMBINING CONTROL UNITS UNTIL THE YEARLY NO. OF
CONTROL UNITS UNTIL TOTAL CALLS NEEDED = CALLS NEEDED IN THOSE CONTROL UNITS
TOTAL CALLS POSSIBLE EQUALS THE TOTAL NO. OF CALLS THAT THE
SALESPERSON CAN MAKE ( WRKLOAD )
MODIFY TERRITOEIES AS NEEDED TENTATIVELY DRAWN BOUNDARY LINES OF A

GIVEN TERRITORY MAY BE ADJUSTED AS
REQUIRED
EXAMPLE OF CALL FREQUENCY

FOR DIFFERENT CUSTOMER CLASSES
AREA ‘X’ AREA ‘Y’
CUSTOMER CALL NO. OF NO. OF NO. OF NO. OF

CLASS FREQUENCY ACCOUNTS CALLS PER ACCOUNTS CALLS PER
YEAR YEAR
A 2 PER MONTH 10 240 5 120
B 1 PER MONTH 25 300 15 180
C 1 EVERY 2 15 90 60 360
MONTH
TOTAL 50 630 80 660
BREAKDOWN METHOD
MANAGEMENT SALE POTENTIAL

COMPANY SALES
MUST IN EACH
DETERMINE : POTENTIAL
CONTROL UNIT
TENTATIVE
TERRITORIAL BOUNDARY
MODIFY SALES VOLUME
LINES BY COMBINING
TERRITORIES EXPECTED FROM
AS NEEDED CONTROL UNITS UNTIL
EACH SALES PERSON
TOTAL CALLS POTENTIAL=
EXPECTED SALES VOLUME
BREAKDOWN METHOD
DESIGN STAGES DETAILING
DETERMINE SALES POTENTIAL DETERMINE WHAT SALES VOLUME THE
COMPANY CAN EXPECT IN THE ENTIRE MARKET
– USING FORECASTING PROCEDURES
DETERMINE SALES POTENTIAL IN EACH BASED ON A MARKET INDEX TO BE ASSIGNED

CONTROL IN EACH CONTROL UNIT -
UNIT
DETERMINE THE SALES VOLUME EXPECTED MANAGEMENT TO ESTIMATE HOW MUCH A
FROM EACH SALESPERSON SALESPERSON MUST SELL TO HAVE A
PROFITABLE BUSINESS – BASED ON PAST
SALES EXPERIENCE AND COST ANALYSIS
DRAW TENTATIVE TERRITORIAL BOUNDARIES DEPENDING ON THE BASE SALES POTENTIAL

OF THE CONTROLLING UNITS, ENOUGH
CONTIGUOUS UNITS TO BE ADDED TO THE
AREA OF THE SALESPERSON SO THAT IT
EXCEEDS THE SALES VOLUME EXPECTED OUT
OF EACH PERSON
MODIFY TERRITOEIES AS NEEDED TENTATIVELY DRAWN BOUNDARY LINES OF A

GIVEN TERRITORY MAY BE ADJUSTED AS
REQUIRED
4. ASSIGN SALESPEOPLE TO TERRITORIES
Factors for consideration :
1) Selling effectiveness
2) Matching of Selling skills and customer
3) Background of salesperson
4) Type of marketing – Emphasis on TM or RM
5) Experience of the salesperson
REVISING SALES TERRITORIES
1. Required based on the need of the situation
2. Indications of need for adjustment – when c jlaim umping is practiced or there has
been a change in p otential or malpractices due to the salesperson’s h obnobbing
with the c m hannel embers

5. SET UP TERRITORIAL COVERAGE PLANS
Routing the sales force –
• Indicates the order with which the territory to be covered.
• Saves time
• Saves money
• Optimum coverage
Objections to routing
• Less flexibility
• Rigid even if situation warrants
THE CIRCLE SYSTEM
FRIDAY MONDAY
THURSDAY
TUESDAY
HOME
WEDNESDAY
TERRITORY BOUNDARY
PROBLEM COVERAGE
AREA AREA C OK
AREA B
AREA A
SALESPERSON’S COVERAGE
HOME OK
6. EVALUATE EFFECTIVENESS IN DESIGN
INDICATIONS :
1. Optimum output
2. Well coverage
3. Cost and time within permissible limit
4.. High level of customer satisfaction
5. Salesperson’s morale should be high
6. Maintenance of company’s goodwill

TERRITORY MGMT PERFORMANCE – A CONCEPTUAL MODEL
MARKET TERRITORY SALES OTHER

COMPANY
POTENTIAL WORKLOAD PERSON VARIABLES
ACCOUNT GEOGRAPHY
SALESMAN SALESMAN COMPANY COMPANY DISTRI
CHARACTE- CHARACTE-
EXPERIENCE EFFORT EXPERIENCE EFFORT BUTION
-RISTICS -RISTICS
PAST SPECIAL
TRAINING QUANTITY QUALITY
EXPERIENCE SKILLS
COMPARISON OF TWO TERRITORIES
S A L E S ( U N I T S )
TERRITORY ‘A’ TERRITORY ‘B’
NO OF ACCOUNTS
INDUSTRY SALES
WORKLOAD PER ACCOUNT
PERFORMANCE OF SALESMAN
LENGTH OF EMPLOYMENT
ADVERTISING EXPENDITURE
TOTAL UNITS UNITS
ACTUAL UNITS UNITS
ACTUAL TO BENCHMARK % %
AN IMPORTANT ANALYSIS ON TERRITORY
MANAGEMENT
Following points need to be considered while managing a

territory
1.COST PER CALL
2.BREAK-EVEN SALES VOLUME
1. C P C
OST ER ALL
cost per call = f ( no. of calls/per day, available no. of selling days, direct selling
expenses )
EXAMPLE OF COST PER CALL FOR AN INDUSTRIAL SALESPERSON
DESCRIPTION COST PER CALL

COMPENSATION – SALARY, COMMISSION, BONUS, FRINGE RS. 50,00000=00
BENEFITS
DIRECT SELLING EXPENSES – AUTOMOBILE, LODGING AND MEALS, RS. 60,00000=00
ENTERTAINMENT, COMMUNICATIONS,, SAMPLES AND
PROMOTIONAL MATERIALS
TOTAL DIRECT EXPENSES RS.110,00000=00
CALLS PER YEAR – TOTAL AVAILABLE DAYS LESS HOLIDAYS ETC. 260DAYS
AVERAGE CALLS PER DAY 4 CALLS
TOTAL CALLS PER YEAR (260 *4 ) 1040 CALLS
AVERAGE COST PER CALL (RS.110,00000=00 / 1040 ) RS.10577=00

STATISTICS ON COST PER CALL

AND NO. OF CALLS NEEDED TO CLOSE A SALE
INDUSTRY COST PER NO. OF CLOSE SALES COST AS A

CALL ($) NEEDED TO PERCENTAGE OF
CLOSE A SALE TOTAL SALES ($)
CHEMICALS 165.80 2.8 3.4

CONSTRUCTION 111.2 2.8 7.1
ELECTRONICS 133.3 3.9 12.6
FOOD PRODUCTS 131.6 4.8 2.7
MACHINERY 68.5 3.0 11.3
2. BREAK-EVEN SALES VOLUME
1. The sales volume necessary to cover direct selling expenses

2. Help to determine the minimum size customer that should be pursued
3. Average number of calls required to close a sale
4.a sales call indicates a face to face interaction with the customer
BREAK-EVEN SALES VOLUME =

COST PER CALL * NUMBER OF CALLS TO CLOSE
SALES COST AS A PERCENTAGE OF SALES

STATISTICS ON COST PER CALL
AND NO. OF CALLS NEEDED TO CLOSE A SALE
INDUSTRY COST PER CALLS NEEDED SALES COST BREAK–EVEN

CALL TO CLOSE A AS A % OF SALES VOLUME
SALE TOTAL SALES
(ALL IN $) (A) (B) (C) (A) x (B) / (C)

CHEMICALS 165.80 2.8 3.4 13650
CONSTRUCTION 111.2 2.8 7.1 4380
ELECTRONICS 133.3 3.9 12.6 4130
FOOD PRODUCTS 131.6 4.8 2.7 23390
MACHINERY 68.5 3.0 11.3 1820
TERRITORY ANALYSIS AND STRATEGY BUILDING
BUSINESS SITUATION
GROWTH STAGNATION DECAY
1. SALES GROWING DUE 1. CUSTOMER'S BUSINESS 1. SALES FALLING DUE

TO CUSTOMER'S STAGNANT TO CUSTOMER'S
BUSINESS GROWTH 2. NO IMPROVEMENT BUSINESS FALL
2. SHARE OF BUSINESS MORE IN BUSINESS SHARE 2. SHARE OF BUSINESS LESS
TERRITORY ANALYSIS BASED ON PORTFOLIO MODEL
COMPETITIVE POSITION
STRONG WEAK
CORE ACCOUNTS GROWTH ACCOUNTS

ACCOUNTS ATTRACTIVE ACCOUNTS ARE
INVEST HEAVILY IN POTENTIALLY
HIGH SELLING RESOURCES ATTRACTIVE
ACCOUNT DRAG ACCOUNTS PROBLEM ACCOUNTS

ACCOUNTS MODERATELY ACCOUNTS ARE VERY
OPPORTUNITY ATTRACTIVE UNATTRACTIVE
INVEST TO MAINTAIN MINIMAL INVESTMENT OF
CURRENT COMPETITIVE SELLING RESOURCES
LOW POSITION
SALES FUNNEL
BASED ON HEWLETT – PACKARD – MODEL
24 20 19 17 16 14
13 21 15 23 22 18
UNQUALIFIED
PROB – 50%
CLOSURE
9 12 11
10
QUALIFIED 7 5 PROB – 75%

8 6 CLOSURE
3 4
1 2
PROB – 90%
BEST FEW CLOSURE
• TERRITORY DESIGN AND BUSINESS PROFITABILITY
1. ALLOCATION OF EFFORTS
• Salesperson to apportion time and effort based on profit

opportunity of each account
2. MIX OF PRODUCTS
• Salesperson to concentrate on product lines based on

volumes and profitability
3. PRICE CONCESSIONS
• Salesperson should be rational in offering price concessions

TERRITORY AND TIME MANAGEMENT
OVERALL TIME MANAGEMENT – A MODEL
IMPORTANCE
HIGH LOW
TIME
EMERGENCIES WASTERS
HIGH
URGENCY
PERSONAL RECREATION
GROWTH
LOW
• CONNOTATION
1. Importance refers to activities necessary to meet objectives
2. Urgency is the time pressure needed to perform such

activities
3. Activities in emergencies and recreation quadrants are given

priorities by the sales persons as such
4. Less time should be spent on time wasters but more on

personal growth activities
•Q UOTAS ……..
QUANTITATIVE GOALS TO INDIVIDUAL
SALESPEOPLE FOR A SPECIFIED PERIOD OF
TIME QUOTAS, SALES FORECAST AND
SALES POTENTIAL
QUOTAS SALES FORECAST SALES POTENTIAL

QUANTITATIVE GOALS TO WHAT A FIRM EXPECTS TO MAXIMUM DEMAND THAT A
INDIVIDUAL SALESPEOPLE SELL DURING A A TIME EIRM CAN OBTAIN DURING A
FOR A SPECIFIED PERIOD FRAME USING A PARTICULAR TIME USING A
OF TIME PARTICULAR MARKETING DEFINITE MARKETING
PLAN PROGRAMME
1. SALES QUOTAS MAY BE LESS THAN OR EQUAL TO OR GREATER THAN SALES

FORECAST
2. SALES POTENTIAL USED FOR LONG RANGE FORECASTING AND STRATEGIC
PLANNING
• REASONS FOR ESTABLISHMENT OF QUOTA
1. MOTIVATING SALESPEOPLE
2. TO DIRECT THE SALESPEOPLE WHERE TO PUT THEIR

EFFORTS
3. TO PROVIDE STANDARDS FOR PERFORMANCE

EVALUATION
4. SALESPEOPLE TO UNDERSTAND VISION AND MISSION

OF THE COMPANY
SALES
VOLUME
QUOTAS
> 60 %
55 %
>
PROFIT 32 %
BASED 14 %
QUOTAS
28 %
ACTIVITY
QUOTAS > 14 %
SMALL FIRMS LARGE FIRMS

• SALES VOLUME QUOTA
1. On the basis of units – where price fluctuation exists

2. On the basis of value – where price similarities prevail
3. On the basis of points – where management wants to incorporate
points for different product lines
• PROFIT BASED QUOTAS
Incorporated on the basis of expected quotas for profit lines, different

products
• ACTIVITIES QUOTAS
Quotas based on non-selling activities and long run goals

e.g., calls/day, no dealer display, proposal submitted, dealer meetings
etc.
• WHEN QOUTAS ARE EFFECTIVE
1. Providing feedback to salespersons by the management

2. Gaining in goal commitment – for salespeople
3. Building morale of the sales persons
• ADMINISTERING OF QUOTAS - BASED ON :
• PAST SALES
• SALES FORECAST
• SALES POTENTIAL
• REMARKS
• WHEN QUOTAS DIFFICULT TO ADMINISTER

cross-functional selling, pharmaceutical selling, frequent change in
market conditions
SALES
BUDGETING
SALES FORESTING AND BUDGETING
QUOTE …
“ GENERALLY SALESPERSON UNDERESTIMATE
HOW MUCH THEY WILL SPEND AND
OVERESTIMATE HOW MUCH THEY WILL SELL ”
SALES FORESTING AND BUDGETING (CONTD…)
SAGA OF OTIS – THE ELEVATOR GIANT

1. Sales Budgeting begins with the preparation for Sales forecasting
2. Sales forecasting starts with the development of estimate for the
coming year
3. Such estimates are to be provided by the sales/area sales manager of
different territories
4. OTIS uses these forecasts for making of sales budget for the coming
year and while preparation of such budget allocation of resources
across different functional areas needs to be made as shown below
5. Allocation of resources :
a. production – to develop production schedules and and quantity
requirements
b. materials – to regulate inventories
c. finance – to operating budgets and projected cash flow
d. human resource – to establish hiring levels
e. marketing – to allocate resources in different marketing
activities
• Budget adjustment – OTIS needs to adjust the budget thus prepared due
to change in external conditions which can dampen or stimulate sales of
company’s products
• Budget accuracy – OTIS wishes to formulate budget within acceptable
accuracy limits
BASICS OF SALES BUDGET
SALES FORECASTING,
ADJUSTMENT &
ACCURACY
SALES FORECASTING AND STRATEGIC AND OPERATIONAL PLANNING
DEVELOP
ESTABLISH FORMULATE CORE
MARKETING
MARKET GOALS MARKETING PLAN
STRATEGIES
CONCEPPUALISE DETERMINE
SALES
OPERATIOANAL SALES
BUDGETING
PLANNING FORECAST
REVIEW TO INCORPORATE
REVISED
RECTIFY
BUDGET
ANY ERROR
MARKET SALES SALES
POTENTIAL POTENTIAL FORECAST
1. TOTAL EXPECTED 1. MAXIMUM VOLUME THAT 1. ESTIMATED SALES

DEMAND OF A CAN BE GENERATED FOR A THAT AN
PRODUCT OR PRODUCT OR SERVICE OF INDIVIDUAL FIRM
SERVICES FOR A COMPANY DURING A EXPECTS TO
THE ENTIRE SPECIFIED PERIOD OF ACHIEVEDURING A
INDUSTRY IN A TIME UNDER A DEFINITE SPECIFIED TIME
SPECIFIC MARKET MARKETING PROGRAMME PERIOD IN A
OVER A DEFINITE 2. IT IS ALSO CONSIDERED TO STATED MARKET
PERIOD OF TIME. BE THE MAXIMUM SHARE UNDER A
2. AFFECTED THAT MAY BE OBTAINED BY PROPOSED
PRIMARILY ON THE A COMPANY IN A MARKET MARKETING PLAN
ENVIRONMENTAL FOR THAT SPECIFIC 2. IT IS BASED ON
FACTORS PERIOD UNDER A REALISTIC
SCHEDULED MARKETING SITUATION
PLAN
ESTIMATION OF MARKET AND SALES POTENTIALS
a. CUSTOMER ANALYSIS
TYPE - FMCG TYPE - B….TO…. B ASSOCIATED FACETS

FOR BOTH THE TYPES
1. WHO ARE BUYERS 1. QUALITY 1. CUSTOMER’S NEED
2. WHO ARE USERS 2. QUANTITY ASSESSMENT
3. WHO ARE BUYERS 3. PURCHASE CYCLE 2. CUSTOMER’S BUYING
AND USERS 4. COMPETITORS HABITS
4. CHARACTERISTICS 3. PRICES
5. DMU
OF USERS 4. MOTIVATION
6. SPECIAL
A. DEMOGRAPHY REQUIREMENT
B. LIFESTYLE (IF ANY)
INFORMATION
b. MARKET FACTOR DERIVATION
1. USED FOR DETERMINATION OF SIZE OF THE POTENTIAL

MARKET
1. A MARKET FACTOR IS AN ITEM OR ELEMENT IN A MARKET

THAT –
i. Causes the demand for a product or service

ii. Otherwise related to the demand
EXAMPLE :
An independent supermarket operator in Denver, Colorado
compute the store’s sales potential by using Sales & Marketing
Management’s estimate of food and beverage sales in the Denver
metropolitan area (about $4.158billion) as the market factor. The
store did not sell to the entire area but rather appealed only to a
region in which about 15% of the population resided. Also, since other
large supermarkets plus some smaller stores competed in that same
area, the operator set 20% as the store’s probable share of the market.
DESCRIPTION AMOUNT
DENVER FOOD SALES $ 4,158,287,000
TIMES : % MARKET COVERED * 0.15
MARKET POTENTIAL $ 623, 743, 050
TIMES : POTENTIAL MARKET SHARE * 0.20
SALES POTENTIAL $ 124,748,610

BENEFITS DISADVANTAGES
1. HIGH VALIDITY, 1. DEPEND ON SALES

B. MARKET HENCE CHANCES FORECAST WHICH
FACTOR OF ERROR LESS SHOULD BE
DERIVATION 2. SIMPLE IN ACCURATE WITHIN
UNDERSTANDING LIMITS
AND APPLICATION
C. SURVEYS OF BUYER INTENTIONS

1. Contacting potential customers
2. Contacting to find out their intention to buy the product or service at the
price asked
EXAMPLE :
A manufacturer contemplating the production of aluminum
playpen to be used for babies. The playpen would replicate the
wooden ones in design excepting the fact that wooden bars
shall be replaced by aluminum tubes. The manufacture
established that selling of 5000 nos. of such item per year would
satisfy them. Since the cost of aluminum units Is higher than the
cost of wooden ones, the manufacturer wanted to know the
following information:
A. how many customer would buy the product at a retail price of $59.95 ?
B. what did customer think the price of such product should be ?
METHODOLOGY
A.SURVEY
1. Survey conducted through personal interview.
2. Sample size – 240 parents of infants
B. RESULTS
1. 170parents (71%) shown interest in such a product
2. Their preferred price - $39.95
3. Mean price quoted - $45 and would eliminate half of the respondents
who showed interest in the product
4. 10 people (4%) said they would be involved in purchasing the product
even at $59.95
5. 1/3rd of the parents with infants purchase playpens
6. Market potential = no. of births/year * 1/3rd * 4% = 52800units
STRATEGY
Therefore, market potential for this diversified product > 5000units
Diversification accepted
1. FEEDBACK 1. COST HIGH

C. SURVEYS OF RECEIVED FROM 2. TIME CONSUMING
BUYER DIRECT USER
INTENTIONS
D. TEST MARKETS
1. Involves introducing and marketing a new product in

a market that is similar to the company’s other
markets in terms of demography and socioeconomic
profiles
2. The demand of a product in the test market may be

used to forecast sales of the product in other
markets.
1. ACCURATE IN 1. COST HIGH

MEASUREMENT OF 2. TIME CONSUMING
D. TEST MARKETS SALES POTENTIAL
FOR CERTAIN
PRODUCTS
2. APPLICABLE WHEN
RELATIVELY SMALL
NUMBER OF UNITS
CAN BE PRODUCED
AT A MINIMUM
COST
TERRITORY POTENTIALS
1. Company determines total sales potential

2. Divide into territories
3. Determine territory potential
4. Allocate resources to territories
MARKET INDEX
A market factor expressed as base Percentage

or in some other quantitative form relative to
some base figure. A market index is based on
two or more factors.
BUYING POWER
BUYING POWER INDEX
INDEX
EFFECTIVE
EFFECTIVE RETAIL
RETAIL
POPULATION
POPULATION BUYING
BUYING SALES
SALES
INCOME
INCOME
% OF TOTAL TERRITORIAL
TERRITORY RETAIL SALES SALES POTENTIAL
$25M * COL2 *100
NEW ENGLAND 5.6 1400000
MIDDLE ATLANTIC 12.1 3025000
EAST NORTH CENTRAL 16.5 4125000
WEST NORTH CENTRAL 7.5 1875000

SALES FORECASTING
1. After the market or sales potential determined , process of

sales forecasting sets in
2. This is essential step in sales planning
DIFFICULTY IN SALES FORECASTING
1. Difficult for a new product in view of lack in historical data

2. Products having unstable sales pattern
SALES FORECASTING PERIOD
1. Depend on fiscal year

2. Affected by the type of trade and company’s vision
FACTORS INFLUENCING THE SALES FORECAST
1. MARKETING PLANS
2. CONDITIONS WITHIN THE INDUSTRY
3. MARKET CONDITIONS
4. GENERAL BUSINESS CONDITIONS
SALES FORECASTING METHODS
SOURCES OF SALES FORECAST DATA
EXECUTIVES
HISTORICAL COMPANY
AND CUSTOMERS
DATA OPERATIONS
MANAGERS
SURVEY
MOVING
EXECUTIVE OF “MUST-DO”
AVERAGE
OPINION BUYERS’ APPROACH
MODELS
INTENSIONS
SALES CAPACITY
EXPONENTIAL
FORCE BASED
SMOOTHING
COMPOSITE APPROACH
REGRESSION TEST
ANALYSIS MARKETS
1. SURVEY
A. EXECUTIVE OPINION
1. SIMPLE AND OLDEST
2. FORECASTS MADE BY ALL EXECUTIVES

AVERAGED TO YIELD ALL FORECASTS FOR ALL
EXECUTIVES
3. HIGHLY SUBJECTIVE
4. NOT SCIENTIFIC
B. THE DELPHI TECHNIQUE
1. HIGHLY PUBLICIZED TECHNIQUES

2. DEVELOPED BY RAND CORPORATION
3. COMPANY SELECTS A PANEL OF EXPERTS
4. EACH EXPERT IS ASKED TO MAKE A PREDICTION
5. THE RESULTING SET OF FORECAST IS SET BACK TO
THE WHOLE PANEL
6. THE EXPERTS ARE THEN ONCE AGAIN ASKED TO MAKE
PREDICTION ON THE SAME MATTER WITH THE
KNOWLEDGE OF FORECAST OF OTHER MEMBERS OF
THE PANEL
7. PROCESS REPEATED UNTIL THE EXPERTS ARRIVES AT
SOME CONSENSUS
SALES FORCE COMPOSITE
1. FIELDPEOPLE ASKED TO GIVE ESTIMATE FOR A

STIPULATED PERIOD
2. AGGREGATED TO YIELD TOTAL FORECAST OF THE FIRM
3. CLOSE TO THE FIELD MAY PRODUCE A REALISTIC
FEEDBACK
4. OFTEN THE FEEDBACK IS TO OPTIMISTIC OR TO
PESIMISTIC WITH LESS RATIOALE
1. Average of sales from several periods
2. Sales t+1 = 1/ n ( Sales t + Sales t - 1 + ……….. + Sales t - n )
3. The sales of designated periods are summed and then divided by the no of
periods to yield the average
4. When a sales forecast is developed for the next period the sales in the
oldest period is dropped and is replaced by act5ual sales in the newest
period –
hence the name Moving Average
QUARTER PER YEAR

3/00 4/00 1/01 2/01 3/01 4/01 1/02 2/02 3/02 4/02
ACTUAL 52 52 74 55 64 66 83 76 78
SALES
2 PERIOD
52 63 65 60 65 75 80 77
M/AVG
3 PERIOD 59 60 64 62 71 75 79
M/AVG
1. EASY TO COMPUTE 1. PRODUCTS WITH

DRAMATIC SALES –
MOVING 2. ACCURATE
FORECAST FOR LESS ACCURATE
WITH THIS METHOD
AVERAGE PRODUCT WITH
STABLE SALES 2. IMPACT OF NEW
MARKET FACTORS
CANOT BE TAKEN
INTO
CONSIDERATION

1. WEIGHTED MOVING AVERAGE
2. WEIGHT FOR RECENT OBSERVATION IS SELECTED
3. EXPONENTIAL SMOOTHING MODEL
F t+1 = C*Yt + (I–C)*Ft
FORECASTED SALES ACTUAL SALES FORECASTED SALES

FOR PERIOD t+1 IN PERIOD t FOR PERIOD t
C = SMOTHING CONSTANT ( 0 < C < 1 )
4. SMOOTHING CONSTANT OF HIGH VALUE INDICATES FORECASTED

SALES INFLUENCED BY RECENT SALES FIGURE AND VICE VERSA
QUARTER PER YEAR
3 / 00
4 / 00
1 / 01
2 / 01
3 / 01
4 / 01
1 / 02
2 / 02
3 / 02
4 / 02
ACTUAL SALES 52 52 74 55 64 66 83 76 78
FORECASTED
SALES 52 52 59 58 60 62 68 70 72
( C = 0.3 )
ACTUAL SALES
FORECASTED
SALES 52 52 74 55 64 66 83 76 78
( C = 0.7 )
1. THE DEGREE TO 1. SELECTION OF

EXPONENTIAL WHICH A SMOOTHING
SMOOTHING PARTICULA PERIOD CONSTANT IS
CAN AFFECT THE SOMEWHAT
MODELS FORECASTED ARBITRARY
SALES

REGRESSION MODEL
ARMAND’S PIZZA IS A CHAIN OF ITALIAN FOOD RESTAURANTS

LOCATED IN A FIVE STATE AREA. THE MOST SUCCESSFUL
LOCATIONS OF ARMAND’S HAVE BEEN NEAR COLLEGE
CAMPUSES. THE MANAGER’S BELIEVE THAT THE QUARTERLY
SALES OF THESE RESTAURANTS ( DENOTED BY “ y ” ) ARE
RELATED POSITIVELY TO THE SIZE OF THE STUDENT
POPULATION ( DENOTED BY “ x “ ) THAT IS THE RESAURANT
NEAR THE CAMPUS WITH A LARGE STUDENT POPULATION TEND
TO GENERATE MORE SALES THAN THOSE LOCATED NEAR
CAMPUSES WITH A SMALL POPULATION. THROUGH
DEVELOPMENT OF REGRESSIN MODEL IT IS POSSIBLE TO
GENENRATE EQUATION SHOWING RELATIONSHIP BETWEEN “ x “
AND “ y “ AND THEREAFTER TREND COULD ALSO BE ARRIVED AT

REGRESSION MODEL
ESTIMATED SIMPLE LINEAR REGRESSION EQUATION :
y ‘ = b0 + b 1* x
Estimated value of y intercept slope dependent variable

For a given value of x
STUDENT POPULATION VS QUARTERLY SALES
RESTAURANT STUDENT POPULATION QUARTERLY SALES
(RS. ‘000) (RS. ‘000)
i xI yi
1 2 58
2 6 105
3 8 88
4 8 118
5 12 117
6 16 137
7 20 157
8 20 169
9 22 149
10 26 202

REGRESSION MODEL
∑ min ( y i - y I‘ )
IN ACCORDANCE WITH LEAST-SQUARE-METHOD
THE ESTIMATED REGRESSION LINE FOUND -
y‘ = 60 + 5x
REMARKS – SLOPE OF SUCH LINE IS ‘5’ . THIS

INDICATES THAT FOR EVERY 1000NOS OF STUDENT
INCREASE, SALE GOES UP BY 5000

“ MUST-DO” FORECAST
1. OFTEN MANAGEMENT FORECASTS WHAT VOLUME OF SALES IT
NEEDS TO ACCOMPLISH CERTAIN GOALS.
2. FOR NEW PRODUCTS MANANGEMENT FORECASTS A MINIMUM
VOLUME NECESSARY TO GENERATE SUFFICIENT CASH IN
ORDER TO RECOVER FIXED AND VARIABLE COSTS
CAPACITY BASED FORECASTS

FORECASTS DEPENDING ON THE CAPACITY FOR THE FIURM TO
MAKE OR BUY
TEST MARKETS
HOW MUCH SHOULD BE THE POTENTIAL OF SUCH MARKET
UNDERSTAND
MATHS AND
STATISTICS
USE MINIMUM / MINIMIZE
MAXIMUM NUMBER OF
TECHNIQUE MARKET
FACTORS
FORECASTING
PRINCIPLES
FIT THE
RECOGNIZE METHOD TO
SITUATION THE PRODUCT /
LIMITS MARKET
USE MORE
THAN ONE
METHOD
DEVELOPING SALES BUDGETS
1. THE SALES FORECAST IS THE BASIS FOR DEVELOPMENT OF COMPANY

OPERATING PLANS
2. BUDGET DEPENDS ON SALES FORECAST
3. BUDGET IS A TOO, ROADMAP, FINANCIAL PLAN THAT AN
ADMINISTRATOR USES TO PLAN FOR PROFITS BY ANTICIPATING
REVENUES AND EXPENDITURES AT A CERTAIN LEVEL OF OPERATIONS
4. EACH OPERATING UNIT ( MARKETING, SALES, PRODUCTION, FINANCE,
FINANCE ETC.) DEVELOPS ITS OPERATIONAL PLANS ACCORDING TO
THE BASIC SALES AND PROFIT TARGETS FOR THE YEAR PROVIDED BY
THE TOP MANAGEMENT
5. EACH DEPARTMENT HEAD THEN DEVELOPS A DETAILED PLAN OF
WHAT THE UNIT MUST DO TO ACHIEVE SUCH GOALS
6. THE PLAN ALSO INCLUDE DETAILED ITEMIZATION OF COSTS OF DOING
THESE THINGS – THE PROJECTED COST WHICH IS THE BASIS OF
UNIT’S BUDGET
PURPOSE OF BUDGETING
PLANNING COORDINATION EVALUATION

1. COMPANIES FORMULATE 1. “BUY REVENUES” AT A 1. ANY GOAL ONCE
MARKETING AND SALES REASONABLE COST MAY ESTABLISHED BECOMES A
ACTIVITIES BE CONSIDERED AS A TOOL FOR FOR
2. BUDGET DETERMINES HOW BASIC BUDGET OBJECTIVE EVALUATION OF
SUCH OBJECTIVES SHALL 2. BUDGET ENABLES PERFORMANCE
BE MET SALESPEOPLE TO 2. SALESPEOPLE SHOULD
3. BUDGET IS BOTH PLAN OF COORDINATE EXPENSE MEET THE TARGET FOR
ACTION AND STANDARD OF AND SALES AND ALSO SALES AND COSTS IN AS
PERFORMANCE FOR WITH THE BUDGETS OF THE SET IN THE BUDGET IN
VARIOUS DEPARTMENTS OTHER DEPARTMENTS ORDER TO BECOME
4. DETAILED BREAKDOWN OS 3. COORDINATION HELPS IN EFFECTIVE AND EFFICIENT
SALES BUDGET AMONG EFFECTIVE COST 3. PERFORMANCE
PRODUCTS, TERRITORIES MONITORING EVALUATION IN TERMS OF
AND CUSTOMERS 4. IN TURN, ASSISTS THE SUCH YARDSTICK IS
FACILITATE SALESPEOPLE COMPANY TO ACHIEVE THE CONSIDERED TO BE A
TO ACHIEVE THE GOAL SET SET GOAL FOR VERY IMPORTANT CRITERIA
FOR THEM PROFITABILITY AND CASH FOR SUCH PEOPLE IN
FLOW. RESPECT OF THEIR
APPRAISAL.
DETERMINING SALES BUDGET
PERCENTAGE – OF - SALES – OBJECTIVE – AND – TASK - METHOD

METHOD
1. SALES PEOPLE MULTIPLY THE SALES 1. PROCESS BEGINS WITH SALES OBJECTIVES AS
FORECAST BY A PRE-SET PERCENTAGE SPECIFIED IN THE SALES FORECAST
FOR EACH CATEGORY OF EXPENSES 2. DETERMINATION OF TASK THAT MUST BE
2. PRODUCTS OF THESE CALCULATION ACCOMPLISHED IN ORDER TO ACHIVE THESE
BECOMES THE BUDGETED AMOUNT OBJECTIVES AND COST ESTIMATION IN
FOR EACH CATEGORY PERFORMING THESE TASKS
3. SUCH PERCENTAGE IS DERIVED BASED 3. THESE COSTS ARE THEN REVIEWED IN THE
ON THE PERSONAL EXPERIENCE OR LIGHT OF COMPANY’SOVERALL PROFIT
INDUSTRY AVERAGE OBJECTIVES
4. PRIMARILY A SUBJECTIVE METHOD AND 4. IF THE COST IS TOO HIGH THEN A DIFFERENT
DEPEND GREATLY ON THE PATH IS CHOSEN TO REACH THE GOAL OR TO
JUDGEMENTAL SKILL AND ALSO THE ADJUST THE OBJECTIVES TO THE POSSIBLE
ACCURACY OF THE SALES FORECAST. EXTENT
5. SIMPLE AND EASY TO ADMINISTER 5. THE ITERATIVE PROCESS CONTINUES TILL
6. METHOD EFFECTIVE WTIHIN MANANGEMENT IS SATISFIED WITH BOTH THE
TOLERABLE LIMITS OBJECTIVES AND MEANS TO TO ACHIEVING THE
SAME – MATCHES COMPANY AND SALE
OBJETIVES
6. NOT SO EASY / TIME AND COST HIGH
BUDGETS FOR SALES DEPARTMENT ACTIVITIES
SALES BUDGET SELLING – EXPENSE ADMINISTRATIVE

BUDGET BUDGET
1. 1. REVENUE OR UNIT 1. VARIOUS EXPENDITURE 1. OVERHEAD EXPENSES LIKE
VOLUME ANTICIPATED NEEDED FOR PERSONAL RENT, SALRY FOR OFFICE
FROM SALES SELLING ACTIVITIES PERSONNEL, POWER
2. KEY BUDGET AND NEEDS 2. EXAMPLES ARE SALARY, CHARGES, OFFICE
TO BE DONE ACCURATELY COMMISSION,AND ALSO EQUIPMENT TO BE TAKEN
AS THE BUDGETS FOR OTHER COST S NECESSARY INTO CONSIDERATION
FINANCE AND PRODUCTION FOR THE SALES FORCE. WHILE CALCULATING THE
AREAS DEPEND PRIMARILY SUCH TYPE OF BUDGET
3. MUST BE WELL
ON SALES BUDGET ONLY. COORDINATED WITH THE 2. SHOULD ALWAYS BE
3. BASED ON THE SALES SALES BUDGET OPTIMIZED
FORECAST BUT CALLS FOR 4. SALESPEOPLE TO JUSTIFY
EXTREME DETAILS HOW MUCH TO ALLOCATE
4. SALES BUDGETS TO BE FOR DIFFERENT PRODUCT
MADE ON THE BASIS LINES, CUSTOMERS ETC.
OFTERRITORY, PRODUCT
LINE OR CLASS OR MAY BE
ON THE BASIS OF
CUSTOMER
SALES BUDGET
SALES
ADMINISTRATIVE PRODUCTION
DEPARTMENT FINANCE
EXPENSES DEPARTMENT
EXPENSES BUDGET
BUDGET BUDGET
BUDGET
PROFIT
CASH AND
BUDGET LOSS
BUDGET
BUDGET PERIODS
1. BUDGET MAY BE QUARTERLY, HALF-YEARLY OR ANNUALLY IN NATURE
2. DEPENDS ON THE TYPE OF INDUSTRY AND THE CORPORATE POLICY
SALES
ANALYSIS
SALES ANALYSIS AND EVALUATION
STRATEGIC RELATIONSHIP BETWEEN PLANNING AND EVALUATION
PLANNING:
• SET GOALS
• DETERMINE STRATEGIES
AND TACTICS
EVALUATION:
IMPLEMENTATION:
• COMPARE GOALS
AND RESULTS • ORGANIZE
STAFF
• EXPLAIN VARIANCES
• OPERATE
SALES ANALYSIS AND EVALUATION (CONTD…)
• SALES FORCE PERFORMANCE EVALUATION
• MARKETING AUDIT
1. AN AUDIT IS A REVIEW OR EVALUATION OF SOME ACTIVITY
2. MARKETING IS A COMPREHENSIVE, PERIODIC REVIEW AND

EVALUATION OF THE MARKETING FUNCTION IN AN
ORGANISATION, ITS MARKETING GOALS, STRATEGIES, AND
PERFORMANCE
3. IT IS AN APPRAISAL OF THE ORGANISATION, PERSONNEL AND

TACTICS EMPLOYED TO IMPLEMENT THE STRATEGIES AND
REACH THE GOALS
4. IT IS AN EXTENSIVE, TIME CONSUMING PROCESS THAT HELPS

THE MANANGEMENT TO TAKE KEY DECISIONS AT THE
APPROPRIATE TIME.
• SALES FORCE PERFORMANCE EVALUATION
• SALES AUDIT
1. A MARKETING AUDIT IS A REVIEW OF COMPREHENSIVE,

PERIODIC REVIEW AND EVALUATION OF THE ENTIRE
MARKETING FUNCTION IN AN ORGANISATION.
2. A SALES AUDIT MAY BE UNDERTAKEN BY THE

MANANGEMENT OF THE ORGANISATION COVERING
CERTAIN DOMAIN LIKE DISTRIBUTION, ADVERTISING,
PERSONAL SELLING
3. IT IS THE COMPREHENSIVE AND PERIODIC REVIEW OF

THE FIRM’S SALES OBJECTIVES, STRATEGIES AND
TACTICS
COMPONENTS OF EVALUATION IN SALES
PERFORMANCE
EVALUATION
PERFORMANCE
SALES MARKETING
OF
VOLUME COST
INDIVIDUAL
ANALYSIS ANALYSIS
SALES PEOPLE
PERFORMANCE EVALUATION AND

MISDIRECTED MARKETING EFFORT
1. RELATIONSHIP BETWEEN SELLING UNITS AND

PROFITS HAS BEEN CHARACTERISED AS THE
80-20 PRINCIPLE
2. 80% OF THE ORDERS, CUSTOMERS, TERRITORIES OR

PRODUCTS CONTRIBUTES ONLY ONLY 20% OF THE
SALES VOLUME OR PROFIT
3. CONVERSELY, THE OTHER 20% OF THESE MARKETING

UNITS ACCOUNT FOR 80% OF THE PROFIT OR VOLUME
4. STRATEGIES ARE TO BE WORKED OUT ACCORDINGLY
ANALYSIS OF SALES VOLUME

TOTAL SALES VOLUME SALES BY SALES BY SALES BY
TERRITORIES PRODUCTS CUSTOMER
CLASSIFICATIONS
1. TO ANALYSE IF 1. TO CALCULATE 1. ANALYSIS OF 1. POTENTIAL OF
GROWTH EXISTS TERRITORY DIFFERENT CUSTOMER TO
2. HOW SUCH POTENTIAL PRODUCT LINES BE ASSESSED
GROWTH USING MARKET 2. ANALYSIS OF 2. ACCORDINGLY
COMPARES WITH FACTOR INDEX PRODUCT LIFE STRATEWGY TO
THE INDUSTRY 2. COMPARE WITH CYCLE BE DEVELOPED
GROWTH ACTUALS 3. DEVELOP
3. IN CASE, OF FALL STRATEGIES
IN SALES VOLUME, BASED ON
THE REASON MATRIX
4. EXPE CTED TREND
MARKETING COST ANALYSIS
1. DETAILED STUDY OF FIRM’S MARKETING COSTS

2. ANALYSIS DONE ON
ANALYSIS
ANALYSIS OF ANALYSIS OF ANALYSIS OF

LEDGER ACTIVITY TERRITORIES,
EXPENSES EXPENSES PRODUCTS
PROBLEM IN MARKETING COST ANALYSIS
• ALLOCATING COST
MARKETING ANALYSIS - METHODS
CONTRIBUTION – MARGIN - METHOD FULL-COST-METHOD

SALES SALES
LESS COST OF GOODS SOLD LESS COST OF GOODS SOLD
EQUALS GROSS MARGIN EQUALS GROSS MARGIN
LESS DIRECT EXPENSES LESS DIRECT EXPENSES
EQUALS CONTRIBUTION MARGIN ( AMOUNT TO LESS INDIRECT EXPENSE

COVWER OH EXP. PLUS A PROFIT)
EQUALS NET PROFIT
FINDINGS FROM PROFITABILITY ANALYSIS
1. TERRITORIAL DECISIONS
• TO ASSESS THE POTENTIAL
• RE-LOOK IN MARKETING STRATEGY
• SPLITTING / AMALGAMATION
• RE-ORIENTATION OF MARKETING MIX
2. PRODUCTS
• ANALYSIS OF SLOW AND FAST MOVING PRODUCTS
• STRATEGY DEVELOPMENT
3. CUSTOMER / SIZE OF THE ORDER

• MINIMUM PROFITABLE ORDER SIZE TO BE ASSESSED
RETURN ON INVESTMENT (ROI) –

AN EVALUATION TOOL
NET PROFIT SALES

ROI = X
SALES INVESTMENT
EVALUATING SALESPEOPLE
ESTABLISH SELECT SET

BASIC EVALUATION PERFORMANCE
POLICIES BASES STANDARD
COMPARE
DISCUSS RESULTS
PERFORMANCE
WITH SALESPEOPLE
TO STANDARDS
EVALUATION OF SALESPEOPLE PERFORMANCE
MR. J. JACKSON MR. G. DEAN
TOTAL SALES $ 1200 TOTAL SALES $ 680
TOTAL CALLS MADE 700 TOTAL CALLS MADE 900
TOTAL ORDERS TAKEN 500 TOTAL ORDERS TAKEN 600
DAYS WORKED 220 DAYS WORKED 240

EXPENSES $ 48000 EXPENSES $ 40000
MILES TRAVELLED 60000 MILES TRAVELLED 45000
TOTAL MARKET POTENTIAL $6M TOTAL MARKET POTENTIAL $ 3.6 M
AVERAGE ORDER $ 2400 AVERAGE ORDER $ 1133

BATTING AVERAGE 0.714 BATTING AVERAGE 0.666
CALLS PER DAY 3.18 CALLS PER DAY 3.75
MILES PER CALL 86 MILES PER CALL 50

EXPENSE PER SALES 4.00 % EXPENSE PER SALES 5.9 %
COST PER CALL $ 68.57 COST PER CALL $ 44.44
COST PER ORDER $ 96.00 COST PER ORDER $ 66.67
TOTAL % OF THE MARKET 20.00 % TOTAL % OF THE MARKET 19.00 %

MARKETING
CHANNELS
MARKETING CHANNELS
• A MARKETING CHANNEL EVERYTHING ?
• ASK COCA COLA
• THE CARBONATED SOFT DRINKS MARKET IN THE US WEIGHS IN AT A

MAMMOTH $54 BILLION ANNUALLY. COCA-COLA PRODUCTS IN US ACCOUNT
FOR 43% OF HIS TOTAL BUT THE COMPANY IS LOOKING TO CAPTURE 50% BY
THE YEAR 2004. COKE HOPES TO LEAVE ITS LARGEST COMPETITOR, PEPSI,
WHICH NOW CONTROLS 31% OF THE MARKET EVEN FURTHER BEHIND.
• HOW WILL COKE ACCOMPLISH THIS FEAT IN A MATURED MARKET WHERE

TAKING MARKET SHARE AWAY FROM COMPETITORS THROUGH NEW
PRODUCTS, AGGRESSIVE PRICING AND MASSIVE PROMOTION HAVE ALREADY
BEEN PLAYED UP TO THE HILT ? COKE’S CHAIRMAN AND CEO M. DOUGLAS
THINKS THE ANSWER IS OBVIOUS:
• “EMPHASISE PLACE , THE FOURTH “P” IN THE

MARKETING MIX ” - BUT HOW STRATEGICALLY ?
MARKETING CHANNELS (CONTD…)
• BY PROVIDING MASSIVE AVAILABILITY FOR COCA-COLA

PRODUCTS - AGREEMENT WITH COLLEGES, DRUG
STORE CHAIN AND HOST OF OTHER OUTLETS LIKE
SCHOOL, CHURCHES ETC .ETC.IN ORDER TO BECOME
EXTENSIVE SOFT DRINKS PROVIDER
• FINANCIAL INCENTIVES TO THE STOCKISTS AND

DISTRIBUTORS FOR STOCKING AND PUSHING COKE’S
PRODUCTS RATHER THAN COMPETITORS - THROUGH
DISPLAY AT CONVENIENTLY LOCATED PLACES
SHUTTING OUT COMPETITIVE PRODUCTS IN THE
PROCESS
• NEW DEPTH AND BREADTH ADDED TO COKE’S EXISTING

MARKETING CHANNELS WHICH ALREADY
• INCLUDE 2MILLION STORES THAT STOCK COKE PLUS

450000RESTAURANTS AND FAST FOOD OUTLETS AND
ALSO 1.4MILLION VENDING MACHINES
• RESULT OF IMPROVISATION OF DISTRIBUTION STRATEGY

OF COKE PAYING RICH DIVIDENDS
REF : “ WALL STREET JOURNAL” MAY 8, 1997

• DISTRIBUTION OBJECTIVES
• WESTWOOD (1999) STATED THAT OBJECTIVES AND
STRATEGIES MUST EXIST IN ALL THE LEVELS OF THE
ORGANISATION
CORPORATE OBJECTIVES
STRATEGIES AND CORPORATE PLAN
PRODUCTION FINANCE MARKETING HR
DISTRIBUTION
OTHER OBJECTIVES
OBJECTIVES
• ELUCIDATE DISTRIBUTION OBJECTIVES

• IT IS THE STATEMENT THAT WOULD GOVERN THE
FORMATION AND OPERATION OF THE DISTRIBUTION
CHANNEL
EXAMPLE –
GODREJ AND BOYCE FOLLOWS AN INTENSIVE

DISTRIBUTION POLICY IN 1995 LAID DOWN THAT IT
WANTS TO REACH ITS PRODUCTS TO CONSUMERS WITH
A MAXIMUM DELAY OF ONE WEEK AFTER PLACEMENT OF
ORDERS. FOR MAJORITY OF THE PRODUCTS, AFTER-
SALES-SERVICE IS NOT THAT CRITICAL EXCEPTING THE
SECURITY EQUIPMENT . HENCE ABILITY TO PROVIDE
AFTER-SALES-SERVICE IN THE CHANNEL STRUCTURE
SHOULD ALSO BE TAKEN INTO CONSIDERATION WHILE
DESIGNING THE CHANNEL STRICTURE
DISTRIBUTION OBJECTIVES OF GODREJ MAY BE

AS FOLLOWS –
1. THE CHANNEL SHOULD ENSURE THAT THE MOVEMENT

OF THE PRODUCT IS DONE WITHIN A WEEK
2. AFTER-SALES-SERVICE ALTHOUGH IMPORTANT ONLY

FOR SECURITY PRODUCTS, IT SHOULD BE
CONSIDERED FOR THE ENTIRE GAMUT OF PRODUCTS
CONCEPTUAL FRAMEWORK
DISTRIBUTION OBJECTIVES MAY BE DETERMINED BY
TAKING INTO CONSIDERATION :
1. THE DECISION PROCESS OF THE TARGET GROUP AND

THE CHANNEL’S INFLUENCE ON IT
2. THE OUTLETS THE COMPANY WISHES TO REACH
GIVEN ITS BRAND POSITIONING
3. THE ROLE THE CHANNEL HAS TO PLAY TO MEET THE
COMPANY NORMS
4. MARKET ORIENTATION OF THE COMPANY TAKING INTO
CONSIDERATION THE INFLUENCE OF THE
COMPETITION
DECISION MATCHING COMPANY’S ROLE OF MARKET
PROCESS AND POSITION or IMAGE WITH CHANNEL AND ORIENTATION
CHANNEL’S THE CHANNEL V COMPANY NORMS
INFLUENCE MEMBER
1. HABIT 1. COMPANY’S BRAND 1. BOTTOMLINE 1. BASED ON

2. EXTENDED MUST MATCH THE SERVICES SUPPORT
PROBLEM BRAND OF THE TO BE FROM THE
SOLVING ARTICLE TO BE MAINTAINED CHANNEL
SOLD 2. MATCHING MEMBERS IN
EXAMPLE: THE TERMS OF
COMPANY’S “PUSH
WRANGLER BY
SET ORIENTED”
WRONGLY
STANDARD OR “PULL
DEFINING ITS
OF NORMS ORIENTED”
REACH TO EVERY
STORE HAS
DILUTED THE
IMAGE OF A
FOREIGN BRAND
WITH LIMITED
AVAILABILITY
• MANUFACTURERS NORMALLY USE INTERMEDIARIES FOR TAKING THE
PRODUCTS TO THE CUSTOMERS OR USERS.THE VARIETY OF NAMES GIVEN
TO THE INTERMEDIARIES ARE SHOWN BELOW. THESE INTERMEDIARIES
ARE CALLED CHANNEL MEMBERS. SOME OF SUCH CHANNEL MEMBERS DO
TAKE TITLE OF THE GOODS AND SOME DO NOT.
MEMBERS TAKING TITLE MEMBERS NOT TAKING

OF THE GOODS TITLE OF THE GOODS
SOLE – SELLING AGENT / SUPER- C & F AGENT
DISTRIBUTOR
DISTRIBUTOR TRANSPORT COMPANIES
DEALER BANKS
STOCKIST INDEPENDENT WAREHOUSES
SEMI - WHOLWSALER FRANCHISEE
RETAILER BROKER / COMMISSION AGENT

CHANNEL FUNCTIONS
1. PROVIDE DISTRIBUTION EFFICIENCY

A. MINIMISE THE NUMBER OF CONTACTS NEEDED FOR
REACHING CUSTOMERS
B. QUANTIYY REQUIRED IS CUSTOMER’S CHOICE
C. SUPPLLY PRODUCTS IN SUITABLE ASSORTMENT
P1 C1 P1 C1
P2 C2 P2 D C2
P3 C3 P3 C3
2. PROVIDE SALESMANSHIP
3. ASSIST IN PRICE MECHANISM
4. FACILITATE PHYSICAL DISTRIBUTION AND GENERATION

OF CASH FLOW
5. ASSIST IN MERCHANDISING
6. PROVIDE MARKET INTELLIGENCE

FLOWS OF DISTRIBUTION
DESCRIPTION TYPE
PHYSICAL FORWARD
NEGOTIATION 2-WAY
TITLE FORWARD
INFORMATION 2-WAY
PROMOTION FLOW 2-WAY

PHYSICAL NEGOTIATION TITLE PROMOTION INFORMATION

EXTERNAL AND
UNCONTROLLABLE
ECONOMY, GOVT.,
COMPETITION,
TECHNOLOGY, SOCIO-
CULTURAL, BUYER
BEHAVIOR
NON MARKETING
FUNCTIONS
FINANCE,
PERSONNEL, R&D,
PRODUCTION, PUBLIC
IMAGE
4 P’s [Marketing Mix]
CUSTOMER
MARKETING MIX STRATEGY MODEL

TYPICAL CHANNEL ARRANGEMENT OF FMCG
M M M M
SSAGT
W
R W
R
R
C C C C
MARKETING CHANNEL FOR TOYS
MANUFACTURER
40%
60%
W
14% 12% 13% 14% 7%
SPECIALITY GENERAL DEPT. SUPER MISC.

STORE STORE STORE MARKET STORE
CHANNEL STRUCTURE
• GROUP OF CHANNEL MEMEBERS TO WHOM A SET OF

DISTRIBUTION TASK IS ALLOCATED
• DONE ON THE BASIS OF DISTRIBUTION OBJECTIVES OF
THE FIRM
ALLOCATION DECISIONS BASED ON :
1. SPECIALISATION AND DIVISION OF LABOUR

2. CONTRACTUAL EFFICIENCY
SPECIALISATION AND DIVISION OF LABOUR
W1 M
W2 PRODUCTION DISTRIBUTION
SSAGT
TASK TASK
ASSIGNED ASSIGNED
W3 TO TO
WORKERS, W INTERMEDIARIES
SPECIALISED SPECIALISED
W4 IN IN
PERFORMING PERFORMING
TASKS R TASKS
W5
W6 C
RESULT ? RESULT ?
HIGHER PRODUCTION EFFICIENCY HIGHER DISTRIBUTION EFFICIENCY
SPECIALISATION AND DIVISION OF LABOUR PRINCIPLE
PRODUCTION TASKS DISTRIBUTION TASKS

1. THICKENING / SHAPING 1. BUYING
2. GLUING 2. SELLING
3. ASSEMBLY 3. TRANSFERING OF TITLE
4. FINISH 4. TRANSPORTATION
5. INST. ELECTRIC COMP. 5. STORAGE
6. ATTACH M/C HD. ETC. 6. PROCESSING ORDERS
7. ADJUSTMENT 7. PROVIDING INFORMATION
CONTRACTUAL EFFICIENCY - DISTRIBUTION THROUGH RETAILERS
NEGOTIATION ESTIMATED DOLLAR DISTRIBUTION CONTRACTUAL

EFFORTS (INPUTS) COST OF INPUTS OBJECTIVES EFFICIENCY
1500 SALES VISITS $ 75,000 GET 500 MUSIC NEGOTIATION

STORES TO CARRY EFFORT IN DOLLAR
NEW GUITAR LINE TERMS RELATIVE TO
ACHIEVING THE
DISTRIBUTION
OBJECTIVE OF
$ 79,000
1000 PHONE CALLS $ 3,000
10 MAGAZINE ADS $ 1,000
TOTAL $ 79,000
CONTRACTUAL EFFICIENCY - DISTRIBUTION THROUGH WHOLESALERS
NEGOTIATION ESTIMATED DOLLAR DISTRIBUTION CONTRACTUAL

EFFORTS (INPUTS) COST OF INPUTS OBJECTIVES EFFICIENCY
100 SALES VISITS $ 5,000 GET 500 MUSIC NEGOTIATION

STORES TO CARRY EFFORT IN DOLLAR
NEW GUITAR LINE TERMS RELATIVE TO
ACHIEVING THE
DISTRIBUTION
OBJECTIVE OF
$ 25,300
100 PHONE CALLS $ 300
20 MAGAZINE ADS $ 20,000
TOTAL $ 25,300
CONTRACTUAL EFFICIENCY
THE LEVEL OF NEGOTIATION EFFORT BETWEEN BUYER
AND THE SELLER TO ACHIEVE DISTRIBUTION
OBJECTIVES
CONTRACTUAL EFFICIENCY AND

USE OF INTERMEDIARIES
LEVEL OF CONTRACTUAL EFFICIENCY IS AUGMENTED
BY THE INCREASE IN NUMBER OF INTERMEDIARIES
HYPOTHETICAL AVERAGE COST CURVE FOR
PRODUCTION AND DISTRIBUTION OF CRAYONS
PRODUCTION
OF CRAYONS
ATC
$ PER BOX OF
CRAYONS C1
PRODUCED
Q1
BOXES OF CRAYONS
PRODUCED
DISTRIBUTION
OF CRAYONS
C2
$ PER BOX OF
CRAYONS ATC
DISTRIBUTED
Q2
BOXES OF CRAYONS DISTRIBUTED
• M/S BINNY AND SMITH MANUFACTURER OF FAMOUS CRAYOLA
CRAYONS COVERING 80% OF US CRAYON MARKET.
• AVERAGE COST CURVE OF THE PRODUCTION OF CRAYONS SHOWS
THAT AT C1 OPTIMUM COST IS ACHIEVED WHEN Q1 QUANTITY OF
CRAYONS COULD BE PRODUCED BY THE COMPANY.
• IT MAY ALSO NOTED THAT AT POINT Q1 ECONOMIES OF SCALE
COULD BE REACHED
• WHEN IT COMES TO THE PERFORMANCE OF THE DISTRIBUTION
TASKS, SUCH ECONOMIES OF SCALE MAY NOT BE ATTAINABLE.
DISTRIBUTION DIRECTLY BY THE COMPANY DISTRIBUTION THROUGH INTERMEDIARIES
1. COST ENORMOUS 1. IT IS POSSIBLE TO ATTAIN A COST

2. Q1 QUANTITY CANNOT BE DISTRIBUTED CLOSE TO C1
AT A COST C1 BUT MUCH HIGHER THAN C1 2. SPREADING OF FIXED COST AND
ALSO THE VARIABLE COST
C2 > C1
QUESTION ?
• “COMPETITION ON A GLOBAL SCALE HAS MADE THE

COMPETITIVE ENVIRONMENT MUCH MORE INTENSE.
HAVING A SUPERIOR PRODUCT, A CLEVER ADVERTISING
CAMPAIGN AND REASONABLE PRICES MAY NOT BE
SUFFICIENT TO HOLD ONE’S SHARE OF A MARKET IN
THE 90S AS WE APPROACH THE TWENTY - FIRST
CENTURY”.
… DISCUSS THIS STATEMENT IN TERMS OF

HOW A FOCUS ON MARKETING CHANNELS MIGHT HELP.
CHANNEL
INTERMEDIARIES
CHANNEL INTERMEDIARIES
• ALREADY DISCUSSED - FLOW IN MARKETING

CHANNELS
• SUCH FLOW TAKES PLACE BASICALLY IN TWO
LEVELS
1. WHOLESALE INTERMEDIARIES
2. RETAIL INTERMEDIARIES
CHANNEL INTERMEDIARIES (CONTD…)
AGENTS, BROKERS MANUFACTURER’S
MERCHANT & COMMISSION SALES BRANCHES &
WHOLESALERS MERCHANTS OFFICES
FIRMS ENGAGED GENERALLY DO NOT SEPERATED

PRIMARILY IN BUYING, TAKE THE TITLE OF PHYSICALLY FROM
TAKING TITLE TO, THE GOODS BUT THE MANUFACTURING
USUALLY STORING AND ACTIVELY UNITS AND ARE
PHYSICALLY HANDLING PARTICIPATE IN PRIMARILY
PRODUCTS IN NEGOTIATING RESPONSIBLE FOR
RELATIVELY LARGE FUNCTIONS LIKE SELLING
QUANTITIES AND THEN BUYING AND MANUFACTURER’S
RESELLING THE SELLING AND ACT ON PRODUCTS AT
PRODUCTS IN SMALLER BEHALF OF THEIR WHOLESALE.
QUANTITIES TO CLIENTS. CONCEPT OF
RETAILERS, OTHER GENERALLY, THEY INDEPENDENT PROFIT
WHOLESALERS AND ARE COMPENSATED CENTER IS
INSTITUTIONS. THEY GO WITH COMMISSIONS. DEVELOPED HERE.
UNDER MANY NAMES
LIKE WHOLESALER,
JOBBER, DISTRIBUTOR,
IMPORTER, EXPORTER
ETC.
TRENDS IN WHOLESALING
WHOLESALE TRADE
62.1
MERCHANT WHOLESALERS
% CHANGE
59.3
MANUFACTURERS’ SALES BRANCHES & OFFICES
65.8
AGENTS, BROKERS AND COMMISSION MERCHANTS
66.1
1982 1992
YEAR 1945 TO 1995
60
MERCHANT
WHOLESALER
43 35
MANUFACTURERS’
PERCENTAGE
SALES BRANCHES
OF TOTAL
AND OFFICES
SALES
28
18 15
AGENTS, BROKERS
AND COMMISSION
MERCHANTS
1945 1995
DISTRIBUTION TASKS OF MERCHANT WHOLESALER AND THEIR EFFECT ON
MARKETING CHANNEL
MARKET COVERAGE PRODUCT AVAILABILITY
SALES CONTACT CUSTOMER SERVICE

MERCHANT CREDIT & FINANCIAL
INVENTORY HOLDING WHOLESALER
PERFORMS ASSISTANCE
ORDER PROCESSING ALL THESE ASSOTMENT
DISTRIBUTION CONVENIENCE
TASKS
MARKET INFORMATION BREAKING BULK
CUSTOMER SUPPORT ADVICE & TECHNICAL

SUPPORT
RESULT ?
DISTRIBUTION TASKS DISTRIBUTION TASKS
PERFORMED FOR PERFORMED FOR
MANUFACTURERS CUSTOMERS
MORE EFFECTIVE
AND EFFICIENT
MARKETING CHANNELS
DISTRIBUTION TASKS OF MANUFACTURERS’ REPRESENTATIVE AND THEIR
EFFECT ON MARKETING CHANNEL
MANUFACTURER’S REPRESENTATIVE AGENTS / BROKERS COMMISSION

MERCHANTS
1. MARKET COVERAGE  MARKET  MARKET
2. SALES CONTACT COVERAGE COVERAGE
 SALES  SALES
COMPANY’S INDEPENDENT CONTACT CONTACT
SALESFORCE SALES AGENT
 ORDER  ORDER
WHOLESALERS’ GENERALLY ON PROCESSING PROCESSING
ACITIVITIES BASED COMMISSION OR  MARKET  HOLDING
ON TRANSFER INCENTIVE INFORMATION INVENTORY
PRICE WITHOUT
 PRODUCT
AVAILABILITY TAKING TITLE
 CUSTOMER  CUSTOMER
SERVICE SERVICE
• RETAILERS CONSIST OF BUSINESS FIRMS ENGAGED
PRIMARILY IN SELLING MERCHANDISE FOR PERSONAL
AND HOUSEHOLD CONSUMPTION AND RENDERING
SERVICES INCIDENTAL TO SALE OF GOODS.
• KINDS OF RETAILERS BASED ON:

1. OWNERSHIP OF ESTABLISHMENT
2. KINDS OF BUSINESS
3. SIZE OF ESTABLISHMENT
4. DEGREE OF VERTICAL INTEGRATION
5. TYPE OF RELATIONSHIP WITH OTHER BUSINESS
ORGANISATIONS
6. METHOD OF CONSUMER CONTACT
7. TYPE OF SERVICES RENDERED
RETAILERS GROWING POWER IN MARKETING CHANNEL
INCREASE IN SIZE AND BUYING POWER
APPLICATION OF ADVANCED TECHNOLOGIES
USE OF MODERN MARKETING CONCEPTS AND TECHNIQUES

RETAILER REVENUE PROFIT

$ - 000 $ - 000
1996 1995 1996 1995
WAL-MART 106,146,000 94,749,000 3,056,000 2,740,000
J.C. PENNY 23,649,000 21,419,000 565,000 838,000

INDIAN CHANNEL ENVIRONMENT EMERGING PHILOSOPHY :
– NEVER SAY ‘NO’ TO THE CUSTOMER
– CONCEPT OF MBO AND HYPERMARKET
– PLAN TO START RFID ON THE ANVIL
– EXAMPLE:
NANZ’S CUSTOMERS IN BOMBAY ARE DRAWN BY –
₪ THE AMBIENCE
₪ SOFT MUSIC OF THE STORES
₪ NEAT AND CONVENIENTLY PLACED ARTICLES
ON THE SHELF – DEALER DISPLAY TO
FACILITATE EASY MOVEMENT
₪ CASH DISCOUNT + BONANZA PACKAGE
+ PRIZE SCHEMES
2000+ CROWD VISIT ON EACH

NANZ’s STORE EVERYDAY
STUDY HARD
WORK WELL
AND COME OUT WITH ALL COLORS

SAMPLE QUESTIONS: PAGE 1
SALES MANAGEMENT
– What do you mean by sales management? What are

its objectives?
– What is the role of selling?
– What is the difference between transactional selling
and relationship selling?
– Define salesmanship (seller initiated efforts that
provide prospects). What are its objectives?
(Providing information and motivating to make buying
decisions in favor of sellers’ product or service)
– What are the characteristics of a good salesperson?
RECRUITMENT AND SELECTION
– Which are the factors that would be necessary wile

preparing the contour of a sales force?
– Explain sales force staffing process.
– What is the purpose of recruitment? What are its
constraints?
– Explain different methods of recruitment.
SALES TRAINING
– What is the purpose of sales training?

– Explain ACMEE model in the context of Kipling’s 6
honest service men.
– State 3 different training methodologies.
– What kind of methodology would you suggest for:
• Fresh recruits
• Experience sales personnel
• Dealer sales personnel
– Short note:
• Role-play
– How do you evaluate a training program?
SALES ORGANIZATION
– Why sales organization is necessary?

– What are its objectives?
– What do you understand by the term conflict? How
this could be avoided in a sales organization?
– What are the steps in setting up a sales organization?
– Describe the bases for the structural division of a
sales organization?
SELLING PROCESS
– Elucidate the distinctive stages of selling with

emphasis on “closing the sale”.
– Short note:
• Prospecting
• Product demonstrations
• Sales objectives
• Sales presentations
RELATIONSHIP MARKETING
– What do you mean by relationship marketing?

– Explain the stages of relationship marketing.
– Elucidate relationship binders.
– What is the basic difference between transaction and
relationship marketing?
COMPENSATING SALESPEOPLE
– What are the characteristics of a good compensation

plan?
– What are the different kinds of compensations sales
force?
TERRITORY MANAGEMENT
– Why territories are used?

– When territories become unimportant?
– Designing of a territory is 6-part decision process.
Explain.
– Time management is a key factor while designing a
territory - do you agree?
– What are the different kinds of quotas? When quotas
are difficult to administer?
– Explain the difference between sales forecast, sales
potential and quotas.
SALES BUDGETING
– Explain the sales forecast, market potential and sales

potential.
– What are the different methods of sales forecasting?
– What is a sales budget?
– Explain a purpose of sales budgeting?
– Short notes:
• Test markets
• Survey of buyer intention
• Percentage of sales methods
• Administrative budget
SALES ANALYSIS
– Short notes:
• 80-20 principle
• Analysis of sales volume
• ROI
– What is the difference between marketing and sales
audit?
– What are the methods of marketing cost analysis?
– What are the basic factors of comparison of
performance of 2 sales persons?
STUDY HARD
WORK WELL
AND COME OUT WITH ALL COLORS

Sales and Distribution Full

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Sales Management Distribution

Sales Program Marketing Channel

Assess the External Environment

The implementation process . . .

Sales Analysis – Monitor . . .

Sales Management Activities Outcomes Control

1. Environmental variables or changes determine the

Transactional selling Relational selling

 Retain existing accounts

 Cut the price to get the sale  Price for profit

 Manage all accounts to  Manage each account for long-

 Sell to anyone  Concentrate on high profit

Vice President of Sales

National Sales Manager

Most managers believe :

Aptitude and personal characteristics may

Personal factors influencing variance in

Demographic and Physical Characteristics

Aptitude Personality Skills

What type of sales-person has a tougher time making sales?

 A sloppily dressed sales-person 94%

What type of sales-person would you avoid hiring?

Pharmaceuticals 100% Electronic components 67%

Air transportation 100% Communications 56%

Printing/Publishing 84% Banking 46%

Rubber/Plastics 83% Construction 40%

Manufacturing 78% Trucking/Warehousing 33%

Electronics 77% Real estate 33%

Chemicals 73% Retail 29%

Customers and salespeople were asked, "What

Product knowledge 79.5 79.6

Type of Product Being Sold

Variables Affecting Performance Industrial Consumer

Personal history/family background Weak Weak Strong

Type of Sales Job Relatively Important Characteristics

Trade selling Age, maturity, empathy, knowledge of

Type of Sales Job Relatively Less Important Characteristics

Trade selling Aggressiveness, technical ability, product

Glass & Telecom Diversified Transpo

Sales force in any company directly generates revenue

PLAN FOR RECRUITMENT AND SELECTION OR PROFILING

 Describe the recruiting function and its purpose

- enhanced morale if competence is rewarded

- discontent of unsuccessful candidates

Advantages of Job Posting

- equal opportunity for transfer/promotion for all

Disadvantages of Job Posting

- reduced morale and motivation of unsuccessful

- larger, more diverse pool of qualified candidates

Planning External Recruitment

- type of job will influence method

Planning External Recruitment

100 Offers made (2:1)

150 Candidates interviewed (3:2)

200 Candidates invited (4:3)

1200 Leads generated (6:1)

Use of Private Employment Agency

- provide agency with accurate job descriptions

Executive Search Firms

Executive Search Firms

- media to be used depends on:

Recruiting Non-Permanent Staff