Sales Management Book by IGNOU
Sales Management Book by IGNOU
Sales Management Book by IGNOU
UNIT 1
Introduction to Marketing and its Concepts 7
UNIT 2
Introduction to Sales Management 27
UNIT 3
Personal Selling 43
UNIT 4
Sales Process 57
UNIT 5
Communication Skills 73
UNIT 6
Sales Presentation 97
UNIT 7
Negotiation Skills 119
UNIT 8
Handling of Promotional Tools 133
UNIT 9
Pharmaceutical Product Launch 151
UNIT 10
Retail Communication: Sales Displays 169
UNIT 11
Job Analysis, Recruitment and Selection 183
UNIT 12
Training the Sales Force 205
UNIT 13
Compensation and Motivation of Sales Forces 223
UNIT 14
Monitoring and Performance Evaluation 243
UNIT 15
Sales Planning 267
UNIT 16
Sales Organisation 289
UNIT 17
Sales Forecasting and Sales Quotas 313
UNIT 18
Sales Budgeting and Control 325
MS-62 COURSE PREPARATION TEAM (1987-1988)
Prof. Madhulika Kaushik Dr. Neelam Kinra
Director, School of Management Studies Indian Institute of Management
IGNOU, New Delhi Lucknow
Prof. Rakesh Khurana Dr. L.M. Johri
School of Management Studies Asian Institute of Management
IGNOU, New Delhi Manila
Mr. Ravi Shanker Dr. Anupma Vohra
School of Management Studies Faculty of Management Studies
(On Deputation from IIMC) University of Delhi
(Co-ordinator and Course Editor)
Ms. Sangeeta Agarwal
Dr. Kamal Yadava Visiting Faculty
School of Management Studies AIMA
IGNOU, New Delhi
Dr. S. Ramachandran
Dr. Qaseemuddin Haider Management Consultant
Asst. Regional Director, New Delhi
IGNOU, Patna
Dr. B.N. Koul
Mr. Rajiv Khanna Director, Distance Education,
Training Manager IGNOU, New Delhi
Pharmacia & Upjohn India Ltd.
Dr. Abrar Ahmed
Dr. Mukul P. Gupta Dean, School of Management
International Management Institute B.H.U.
New Delhi
Mr. Ramachandran
Dr. J.D. Singh General Manager (Marketing)
International Management Institute Dabur India Ltd.
New Delhi
Prof. M. Chaturvedi
Dr. Mohan Agarwal XLRI, Jamshedpur
XLRI, Jamshedpur
Prof. A. Parvatiayar
Praval Kumar Singh XLRI, Jamshedpur
Technical Consultant
Mr. Saurabh Khosla
Construction Industry Development
Managing Director
Council, New Delhi
Tulika, New Delhi
Dr. Sushila Rao
Mr. Subhash Verma
President
Cameo Communications
Hyderabad Management Association
New Delhi
Mr. J.K. Sharma
Mr. D.K. Bose
Group Product Manager
Media Director
Jacksonpal Pharmaceutical Ltd.
Hindustan Thomson Associates
New Delhi
MVE-006 PROGRAMME EXPERT COMMITTEE (2009)
Prof. V.N. Rajasekharan Pillai Dr. Siva Swaroop
Vice Chancellor, IGNOU, New Delhi Regional Director
IGNOU Regional Centre, Nagpur
Dr. Arvind Bansal
Assoc. Professor, Deptt. Of Pharm. Tech. Prof. S.K. Sharma
National Institute of Pharm. Edu. & Department of Pharmaceutical Sciences,
Research (NIPER), Mohali Guru Jambheshwar University, Hisar
Prof. S. Kannan Dr. Surender Singh
Deputy Dean & Head, Vocational Associate Professor, Department of
Sciences, Distance Learning Education, Pharmacology, All India Institute of
Sikkim Manipal University, Manipal Medical Sciences, New Delhi
Dr. M.K. Khan Dr. Kuldeep K. Wakhloo
M.D., Fermish Clinical Technology Pvt. General Manager (Regulatory and
Ltd., Delhi Corporate Affairs), Okhla Laboratories
Ltd., Noida
Dr. D.P. Pathak
Faculty Members (IGNOU)
Professor, Department of Pharmaceutical
Dr. Kamalika Banerjee, SOS
Chemistry, Delhi Institute of
Prof. Javed A. Farooqi, SOS
Pharmaceutical Sciences & Research,
Prof. Bharat I. Fozdar, SOS
New Delhi
Dr. Lalita S. Kumar, SOS
Prof. V.R. Rajindaran Dr. C.G. Naidu, SOVET
Vice Chancellor, Vinayaka Mission Prof. Sunita Malhotra, SOS
Research Foundation, Selam Prof. Kamal Yadava, SOMS
Programme Coordinator: Prof. Javed A. Farooqi
COURSE EXPERT COMMITTEE
Dr. Nasir Zamir Qureshi Dr. Surender Singh
Deptt. of Commerce, Associate Professor, All India Institute of
Aligarh Muslim University, Aligarh Medical Sciences, New Delhi
Dr. P.K. Sahoo Dr. Kuldeep K. Wakhloo
Department of Pharmaceutics, Delhi General Manager (Regulatory and
Institute of Pharmaceutical Sciences and Corporate Affairs), Okhla Laboratories
Research (DIPSAR), Pushp Vihar, Ltd., Noida
New Delhi Faculty Members (IGNOU)
Prof. Javed A. Farooqi, SOS
Prof. Imran Salim
Prof. Bharat I. Fozdar, SOS
Dean, Faculty of Management Studies,
Prof. Srilatha, SOMS
Jamia Hamdard, New Delhi
Prof. Kamal Yadava, SOMS
MS-62 is a course of the School of Management Studies, IGNOU, which has been
adapted for the Post Graduate Diploma in Pharmaceutical Sales Management
(PGDPSM) after certain modifications as MVE-006.
Course Coordinator: Prof. Javed A. Farooqi
April, 2009
© Indira Gandhi National Open University, 2009
ISBN:
All rights reserved. No part of this work may be reproduced in any form, by mimeograph or any other
means, without permission in writing from the Indira Gandhi National Open University.
Further information on the Indira Gandhi National Open University courses may be obtained from the
University’s office at Maidan Garhi, New Delhi-110 068.
Printed and published on behalf of Indira Gandhi National Open University, New Delhi by Registrar,
Material Production and Distribution Division (MPDD), New Delhi.
Printed at
Introduction to
UNIT 1 INTRODUCTION TO Marketing and its
Concepts
MARKETING AND ITS
CONCEPTS
Structure
1.1 Introduction
Objectives
1.2 Marketing is a Wonderful Thing
1.3 Concepts or Philosophies of Marketing
The Exchange Concept
The Production Concept
The Product Concept
The Sales Concept
The Marketing Concept
The Societal Marketing Concept
1.4 History and Evolution of Marketing Management
History of Marketing
Evolution of Marketing
1.5 The Emergence of Marketing
Consumers
Organizational Capabilities
Competition
Coordination
Performance
1.6 What Marketers do?
Target Markets
Products/Services
Promotion
Distribution
Pricing
Services
1.7 Marketing in the New Economy
1.8 Some Basic Concepts of Marketing
Value and Satisfaction
Markets
Marketing
Core Marketing Activities
Marketing Management
1.9 Marketing Mix
Product
Price
Place
Promotion
1.10 Summary
1.11 Terminal Questions
1.12 Answers 7
Sales Management
1.1 INTRODUCTION
Objectives
Quality production and efficient marketing are the key success factors in
building sustainable competitive edge for ever Business Corporation.
“Marketing is a societal process by which individuals and groups obtain what
they need and want through creating, offering and freely exchanging products
and services of value with others” – Philip Kotler.
The exchange concept of marketing, as the name suggests, holds that exchange
of a product between the sellers and buyers is the central idea of marketing.
While exchange does form a significant part of marketing, but considering
marketing as simply exchange of product and services would amount to gross
undermining of the essence of marketing. Marketing is much broader than
exchange. Exchange, at best covers the distribution aspect and the price
mechanism. The other important aspects of marketing, such as concern for
customers, generation of value satisfactions, creative selling and integrative
activity of serving the customers, get completely overshadowed in the
exchange concept of marketing.
The production concept holds that consumer will favour products that are
available and highly affordable. Here, production and technology dominate the
thinking process of key people. They believe that marketing can be managed
by managing production. The concept holds that consumer would, as a rule,
support those products that are produced in great volume at a low unit cost.
Naturally in such organizations all efforts gets focused on production.
Organizations favouring this concept are impelled by a drive to produce all
they can. They do achieve efficiency in production but they do not get best of
customer patronage. Customers after all are motivated by a variety of
alternatives in their purchases.
The sales or selling concept says that consumers will not buy enough of the
organizations product unless it undertakes the large scale selling and promotion
effort. It cannot expect its products to get picked up automatically by the
customers. The company has to consciously push its products. Aggressive
promotion and advertising, price discounts and publicity and public relations
are the tools that increase sales. However, sales without satisfaction of
consumers may be counter productive in the long run.
The societal marketing concept holds that the organization should determine
the needs, wants and interests of target market. It should then deliver superior
value to the consumers in a way that maintains and improves the consumers
and society’s well being. It questions whether the pure market concept is
adequate in an age of environmental problems, resource shortages, rapid
population growth, worldwide economic problems and neglected social
services. Consider, for example, most of the industries are just garbaging the
by-product in the soil or are drained away in the river causing water and soil
pollution. This causes lot of health related problems to the people. Such
concerns led to the emergence of societal marketing concept. The societal
marketing concept calls on business people to balance three considerations in
setting their marketing policies: company profits, consumer’s wants and
society’s interests.
SAQ 1
Do you agree that marketing increases the standard of living of the society?
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Sales Management SAQ 2
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SAQ 3
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But starting in the 1950s, companies began to see that old ways of selling were
wearing thin with customers. As competition grew stiffer across most
industries, organizations looked to the buyer side of the transaction for ways to
improve. What they found was an emerging philosophy suggesting that the key
factor in successful marketing is to understanding the needs of customers. This
now famous “marketing concept” suggests marketing decisions should flow
from FIRST knowing the customer and what they want. Only then should an
organization initiate the process of developing and marketing products and
services. The marketing concept continues to be at the root of most marketing
efforts, though the concept does have its own problems (e.g., doesn’t help
much with marketing new technologies) a discussion of which is beyond the
scope of this tutorial. But overall marketers have learned they can no longer
limit their marketing effort to just getting customers to purchase more. They
must have an in-depth understanding of who their customers are and what they
want.
The next stage in the evolution of marketing was money economy. The
fundamental change that took place in this period was the replacement of
barter system by money economy. Money becomes the mechanism of
exchanging goods and services.
c) The Stage of Industrial Revolution
Many fundamental changes took place at this stage. Industrial revolution
gave the birth to new business system. It introduced new products, new 13
Sales Management manufacturing system, new transportation mode and methods of
communication, and also brings changes in the physical and economic
environment of man. The concept of mass production was introduced and
variety of low cost products is manufactured in abundance. The industrial
revolution also gave birth to income revolution, giving a great deal of
disposable income to large mass of people. And because of this disposable
income only, mass production and mass distribution sustained during
industrial revolution.
SAQ 4
What was the process of sales of medicines during the pre industrialized and
non monetized era?
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SAQ 5
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1.5 THE EMERGENCE OF MARKETING Introduction to
Marketing and its
Concepts
After the Second World War, especially during the fifties and sixties, the size
and characteristics of market changed drastically in most of the countries
across the world. There was great increase in the disposable income of the
average family, population increased substantially, the new variety of products
and services were introduced that strengthened the consumer market, and
selling of products and services became more difficult because of the stiff
competition among the producers. Abundant choices were made available to
the consumer and consumer began to occupy a place of unique importance.
The firms realized that it was not enough to made one time sale to the
consumer but they have to make their products so differentiated so that the
consumers who once purchased their product, came back to them again and
again whenever they needed the product. They also had to ensure that product
is available at the place convenient to the consumers. In addition, price should
be realistic and there should also be complaint/ grievance handling mechanism
at the firm level. And that is how, the concept of marketing emerged.
1.5.1 Consumers
The guiding principle of marketing is that the central approach of any business
organization should revolve around the needs and wants of consumer. The
consumers taste and preference should be given more importance rather than
focusing on cost and efficiency of production. In order to sustain the business
and remain in market for longer period, it is important that business should
focus on the consumer’s preference. Because the longevity of the business
depends on how consumer responds to the product. If they prefer one
company’s product over other than that company remains in business and other
may shut down. The organization must therefore concern itself with clearly
identifying its consumers. The consumers may be viewed as a single group or
separate sub groups with distinctive needs and wants. The products that are
produced should match the needs of the organizations consumers, in terms of
the features and benefits offered, their availability and their price.
Coordination Performance
MARKETING
Competition Capabilities
Consumer
1.5.3 Competition
1.5.4 Coordination
1.5.5 Performance
SAQ 6
16 ……………………………………………………………………………………
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Marketing and its
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SAQ 7
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In order to reach the goal of creating a relationship that holds value for
customers and for the organization, marketers use a diverse toolkit that
includes (but is not limited to) making decisions regarding:
1.6.2 Products/Services
1.6.3 Promotion
1.6.4 Distribution
It ways for the marketer to adjust the cost to the market for the solution.
1.6.6 Services
Each option within the marketer’s toolkit is tightly integrated with all other
options so that a decision in one area could and often does impact decisions in
other areas. For instance, a change in the price of a product (e.g., lowering the
price) could impact the distribution area (e.g., increases shipments, generates
higher store traffic).
Additionally, options within the toolkit are affected by factors that are not
controlled by the marketer. These factors include economic conditions, legal
issues, technological developments, social/cultural changes, and many more.
While not controllable, these external factors must be monitored and dealt with
since these can potentially cause considerable harm to the organization.
Ignoring outside elements also can lead to missed opportunities in the market
especially if competitors are the first to take advantage of the opportunities. As
part of the strategic and tactical planning process discussed above it would be
wise for marketers to pay close attention to the environment outside the
organization.
SAQ 8
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What is new economy? Is it something different from the old economy? With
the emergence of marketing, we also witness the emergence of new economy
characterized by the following:
The entire growth has been fuelled by the economic growth of the last half a
century. The focus in the early fifties was on marketing of consumer goods,
which shifted to industrial marketing. The latter development was largely due
to increase in size and number of firms. With the growth in maturity of both the
consumer and the supplier, a new school of marketing in the form of non-profit
and societal marketing emerged in early seventies. The business realized that
they have a larger role to perform than mere profit making.
With the changes in life style and enhanced standards of living, newer and
newer services hit the market place. From education, communication,
consultancy to medicare and health — all kinds of services were being offered
in the market. The marketing of services had arrived. Marketing today knows
no borders. From mere exporting, the firms had now acquired global
orientation to herald the era of global marketing. For MNC’s the entire world is
a single huge market. It was time now that some of these MNC’s like Toyota,
Honda, Sony, Mercedes, and Phillips etc became household names. Customer
with a wide choice and variety of products is virtually the king in the market
today. It is for his satisfaction that the firms compete with each other. No
wonder new dimensions to marketing like Customer Relationship Management
have been added. Not only the firms want the customer to come to them but
also retain him for future. Some of the firms want to reach the customer
directly eliminating the middlemen — the concept of direct marketing. Yet
another facet of marketing has emerged with the advent of internet and
revolutionary changes in communication technology — the online one-to-one
marketing. E-commerce and e-marketing are the future of the marketing. In
fact the marketing of twenty first century will be greatly influenced by the new
technologies in the field of communication.
There are some basic concepts pertaining to marketing that shall necessarily be
understood by the students: 19
Sales Management 1.8.1 Value and Satisfaction
• Customer value: Difference between the values the customer gains from
owning & using a product & the costs of obtaining the product.
1.8.2 Markets
“Set of all actual & potential buyers of a product or service”. They share a
particular need or want that can be satisfied through exchange relationships.
1.8.3 Marketing
“Art & science of choosing target markets & building profitable relationships
with them” involves getting, keeping & growing customers through creating,
delivering and communicating superior customer value.
Marketers use numerous tools to elicit desired responses from their target
markets. These tools constitute a marketing mix.
Marketing mix is the set of marketing tools that the firm uses to pursue its
marketing objectives in the target market.
The tools are classified into four broad groups called the “four Ps” of
marketing. They are (also called the components of marketing mix):
1.9.1 Product
Variety, quality, design, features, brand name, packaging, sizes, warranties, etc.
1.9.2 Price
1.9.3 Place
20
Channels, Coverage, Locations, Transport, Inventory, etc.
1.9.4 Promotion Introduction to
Marketing and its
Sales promotion, advertising, sales force, public relations, directs marketing, Concepts
etc.
Example
Price: List price (Rs. 30/100gms, Rs. 55/250gms), discounts (of 10% on 250
gms for one month).
Place: Channels (those serving existing retail outlets and medical stores),
coverage (most parts of Chennai).
Note: It must be noted that every marketing mix is particular for a target
market and it may change with changes in target markets.
There are “four Cs” corresponding to these “four Ps”. The Ps represents the
sellers’ point of view. The Cs represents the buyers’ point of view.
Four Ps Four Cs
Product Customer Solution
Price Customer Cost
Place Convenience
Promotion Communication
Note: Winning organizations would be those which can meet customer needs
economically and conveniently and with effective communication.
Activity
SAQ 9
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Sales Management ……………………………………………………………………………………
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Briefly highlight the basic changing features of the economy that may help in
building your marketing plan.
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1.10 SUMMARY
The unit discussed the basic issues in marketing so that students can integrate it
with real life situations. Marketing means “managing markets to bring about
profitable exchange relationships by creating value & satisfying needs &
wants”. The entire concept of marketing revolves around customer demands
which are a result of their wants which themselves are the product of human
needs. Needs are basic in nature and cannot be created. However, wants can be
created and the entire success of marketing activity would depend upon the
effective creation of wants and demands. A product is a solution to the
customer’s problem and/or provides the customer an opportunity. The unit
explained concepts of exchange and transaction. There was a brief discussion
on customer value and satisfaction. The evolution of marketing and how
marketing would look in the future were also addressed.
• The sales or selling concept says that ……………. will not buy enough
of the organizations product under it undertakes the large scale selling
and promotion effort.
• The marketing concept was born out of the awareness that marketing
starts with the determination of ……………. wants and ends with
satisfaction of those wants.
23
Sales Management
1.12 ANSWERS
4. During non monetized pre industrialized era, the medicines like any other
commodity were subject to barter exchange. Normally Hakims and Vaids
use to attend the sick person and prescribe medicines and in return use to
get various types of commodities from the different households that they
use to produce.
6. Pages 12 to 15.
8. The marketer tries to feel the market to trace the customer’s specification
and advise various departments of the organization accordingly. They keep
track of competitors’ strategies in terms of product features and prices so
that the organization may act accordingly. The marketer has also to provide
after sales service to the customers to build up goodwill of the organization
in the long run.
9. To create value for customers and for the organization, marketers use
various tools like identification of targets and needs, product development,
distribution and promotional strategies so that the organization is able to
attract and retain enough customers and also make good amount and profit
and goodwill for the organization to meet all the short and long term profits
of the organization. He is also a person responsible for after sales services
and for consistent watch of the market to note the emerging changes in
demands and strategies of competitors so that the organization may also
respond accordingly.
10. The new economy has registered increasing income growth, awareness and
availability of plenty of close substitute/competitors making the customer a
king.
The organizations too are able to collect fuller and richer information about
markets, customers, prospects, and competitors. Improved logistics and
service quality and aggressive marketing strategies have resulted into more
comprehensive strategy requirements. There is increasing instance of B to
B business. For instance, Hospitals now urgently need to develop liaison
with insurance companies. With the changes in life style and enhanced
standards of living, newer and newer services hit the market place. From
education, communication, consultancy to medicare and health — all kinds
of services were being offered in the market. The marketing of services had
arrived to a very mature stage and need careful handling.
25
Introduction to
UNIT 2 INTRODUCTION TO SALES Sales Management
MANAGEMENT
Structure
2.1 Introduction
Objectives
2.2 Sales and Distribution Strategy: Role in the Exchange Process
2.3 Interdependence of Sales and Distribution
2.4 Sales Management: Formulation of Sales Strategy
Assessment of Competitive Situation and Corporate Goals
Setting Sales Objectives
Determination of Type of Sales Force Needed
Determination of the Size of the Sales Force
Organising the Sales Effort: Territory Design
Establishing and Managing Channel Support and Coordination
2.5 Framework for Joint Decision Making in Sales and Distribution
Management
2.6 Summary
2.7 Key Words
2.8 Terminal Questions
2.9 Answers
2.1 INTRODUCTION
You are already familiar with the functions and scope of sales and distribution
management through your exposure to units of Pharmaceutical Marketing. This
unit, deals with the inherent interdependence of sales and distribution
management and takes you, step by step, through the strategy formulation
process, in the pharmaceutical sales and distribution management, it also give a
general framework within which joint decisions for sales and distribution are
made.
Objectives
After studying this unit you should be able to:
• explain the scope of sales functions;
• describe the interdependence between sales and distribution functions;
• identify the components of strategy formulation in sales management;
• evolve a framework of joint decision making in sales and distribution
functions; and
• know about the features of selling pharmaceutical products.
Sales and distribution management constitutes one of the most important parts
of marketing management. As you have already seen, “Exchange” is the core, 27
Sales Management aspect of marketing, and it is the sales and distribution management which
facilitates it. Sales Management has been defined as the management of a firm's
personal selling function while distribution is the management of the indirect
selling effort i.e. selling through extra corporate organisations which form the
distribution network of the firm. The sales management task thus includes
analysis, planning,, organising, directing and controlling of the company’s sales
effort. Distribution Management comprises management of channel institutions
as well as physical distribution functions.
The exchange process i.e., the sale and delivery of goods/services from the
manufacturer to the consumer can be consummated directly i.e. by the firm
itself through its own sales force or indirectly through a network of middlemen
such as wholesalers and retailers. The importance of the sales and distribution
function varies across organisations depending upon its nature and variety of
products, target market, consumer density and dispersion, and the competitive
practices among other things. For example, you may recall that in mail order
companies (where the major exercise is distribution in response to orders
received) virtually no personal selling effort is utilised.
After going through the above section you would have realised how interlinked
distribution and sales management are. Apart from the important fact that in
most organisations both sales management and the management of channels of
distribution are the responsibility of the sales manager and should be viewed as
jointly contributing to the accomplishment of the marketing task, some other
pointers towards the interdependence of these two vital functions are as under:
a) All organisations use their own sales force or distribution network to reach
out to their customers. The emerging practice is to use own sales force to
sell to wholesalers/serniwholesalers who in turn sell to retailers. Say for
example, the pharmaceutical manufacturer through its depot transfers the
goods to the wholesaler via distributor to reach finally to the retail
chemist/bulk buyers like nursing home or hospitals. Very few firms (unlike
say Brooke Bond) use their own sales force to reach upto the retail level).
As both the sales and distribution functions are simultaneously performed
to accomplish the firm's sales objectives their dependence on each other for
the effective attainment of overall marketing goals becomes obvious. In
other words, activities of the sales organisation would have to be
coordinated with channel operations if sales goals haves to be effectively
realised.
SAQ 1
How the pharmaceutical products travel from the manufacturer to the end
users.
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The above decisions give a fair idea of the scope of the sales management
function. Strategy formulation in case of sales would involve identification of
the sales goals and. designing of a game plan, using the organisational resources
at hand, to achieve those goals. The strategy formulation process can therefore
be summarised as
The sales objective is directly affected by the corporate mission or goal which
in turn identifies the specific set of common needs and wants the company
would like to satisfy. Another input in objective setting is the macro business
environment. Variables in the political, economic, social and technological
environment have significant bearing on what and how much the company
would be able to sell. The environmental scan thus provides pointer to a
company’s specific opportunities and threats, strengths and weaknesses.
• current strategy
• current performance, including market share analysis ® their strengths
and weaknesses
• expectations as to their future actions.
It may be noted that the role and scope of the sales functions of an organisation
is related to the competitive situations facing its products in each of the
markets participated by it.
These competitive situations affect the corporate goals relating to growth and
profit which in turn affect the marketing goals. The sales related marketing
decisions which significantly contribute to sales strategy formulation that affect
both the quantitative and the qualitative sales management objectives are:
a) decision on what to sell − i.e. what products and what specific mix of
products the company has decided to sell.
Sales objectives, are intended to direct the available sales resources to their
most productive use. These also serve as standards against which actual
performance is compared. The sales objectives are stated in quantitative and
qualitative terms. The qualitative goals generally relate to strengthening dealer
relationships, developing good consumer support, nullifying product
misinformation, attaining desired corporate image.
The qualitative sales objectives reflect the expectations the top management
regarding the contribution of sales function to the total marketing effort. They,
therefore affect both the size and quality of the sales force. For example when a
company selling high value, technical household products relies only upon its
own sales personnel to carry out the entire sales function and take up part of
promotional responsibility too, the quality and the size of the sales personnel it
requires would be significantly different from that of a company where sales
personnel are, only required to coordinate with and service channels. Examples
of the products could be the Eureka Forbes salesman selling vacuum cleaners to
consumer and the Summet salesman servicing Summet dealers. In the former
case the salesmen are expected to carry out the entire selling and market
cultivation function while in the second case, they are mainly expected to
coordinate and service the distributors. The qualitative sales objectives are
relatively long term one and emanate out of the marketing policy; of the
company.
Quantitative objectives on the other hand relate to the operating results that the
company would like to achieve. They, like the qualitative objectives are
heavily dependent on a keen analysis of competitive situation and corporate
goals, and obviously would vary over operating periods. Quantitative sales 33
Sales Management objectives could be in terms of sales volume, market share or number of back
orders per operating period. Drawing from these quantitative objectives, goals
can be set for the sales organisation in terms of
It would be worth noting here that both the qualitative and quantitative sales
objectives, are set in context of the competitive position of the company. As we
get down to the actual task of formulating the strategy we evaluate alternative
plans, against the backup of the competitive strength and weaknesses of the
company at the market place and try to build up the sales effort so as to achieve
the desired goals. The important decisions involved in this task are given
below.
The quality of the sales personnel needed, would depend upon the quality of
contribution that top management expects the sales organisation to make as well
as the actual workload that is expected to be generated. Specifically, it would
depend upon the role that the medical representatives are expected to perform.
If the company has decided to do significant amount of preselling through its
advertising the salesman’s job is considerably simplified and this has
implication for the type of salesmen needed. You can therefore clearly
envisage that the type of sales personnel would vary across organisations,
depending upon the role that has, been decided for them in the-organisation.
Some of the factors that influence the type of sales person are product
characteristics, customer characteristics, competitors practices channel design
and corporate marketing policy.
A strategic choice which has to be made at this stage is related to the degree and
kind of specialisation needed. Should the company go in for product specialists
or market specialists or both? This is often a decision which is taken along with
the decision regarding segmentation strategy. However, for marketing pharma
products, the product specialist is chosen.
Product specialists would be required when the product or its usage is highly
technical, requiring demonstration and/or advice from the sales personnel. The
marketing person should have a qualification and specialisation relating to
drugs. The person has to provide technical information to the doctor.
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SAQ 3
What are the factors to be considered for determining the number of Medical
Representative for a state?
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Sales Management ……………………………………………………………………………………
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Personal selling objectives set the tone of the selling activities to be performed
in an organisation. Defining these activities and their level of performance
would lead you to an estimate of how many sales personnel at various levels
are required in the organisation.
The strategic decisions here include the organisational structure of the sales
force and the choice of the field sales organisation. You will study in detail
about both these aspects in Unit. 3 of this course, here we will just provide you
with a general understanding of the nature of these decisions.
Companies may treat their entire market as their total field of operation and
assign sales duties to their personnel indiscriminately but more often than not
they prefer to divide the market into sales territories either on the basis of
geographical size or sales potential, or both because of valid reasons. Of these
the customer related reasons are that the territories provide for a more intensive
market coverage yielding to higher sales and better customer relations. For the
salesperson they facilitate performance evaluation and foster a far higher
degree of enthusiasm and clearly defined responsibilities resulting in lower
turnover and higher morale. Managerially it becomes possible to have a better
degree of control, reduce expenses and evolve coordinated promotion plans.
Review of call pattern territory-wise and evaluation of territory performance
aided .by field visits may help managers in evolving effective future practices.
While creating territories sales managers can choose from different type of
bases:
Servicing requirement basis where the company splits up its total market
according to servicing requirements of its current and prospective customers
(servicing here means maintaining and developing the account).
36
Workload basis: This approach considers both account potential and Introduction to
servicing requirements and in addition reflects the difference in workload Sales Management
created by topographical, locational and competitive factors.
The channels of distribution usually act as the only point of contact the final
buyer has with the manufacturer. They together with the sales organisation of
the manufacturers collectively bear the responsibility, of consummating
exchanges with the final buyers. When indirect distribution-is adopted, it is -
imperative that the sales organisation initiates dealer cooperation programmes.
Dealer support typically has to be, ensured in the area of maintenance of
adequate stocks of the products and local promotion in the form of point
purchase displays and local advertising. Another key area of support is the
provision of market feedback the norms of which must be decided between the
dealer network and the manufacturing organisation. The management of
manufacturer dealer cooperation, includes inter alias
a) Choice of appropriate dealer incentive programmes to stimulate distributive
outlets to greater setting effort.
SAQ 4
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The following chart shows that the various sales and distribution tasks that
facilitate the exchange transaction may need to be divided between the two
functions.
⎯ distribution channels
a) Achievement of sales goals through:
⎯ company’s sales force
⎯ distribution channels
b) Personal and Prospecting through:
⎯ company’s sales force
Between the two extremes of Mail Order houses which have no corporate field
sales organisation and the totally vertically integrated system which involve no
independent middlemen, majority of our business enterprises today utilize the
service of both – their own corporate sales department and the external
distribution agencies in some proportion or the other. The decision making task
in sales and distribution management, on most issues therefore has to be
accomplished jointly, as decisions in one area necessarily have implications for
38
the other. Let us then evolve framework for joint decision making in sales and Introduction to
distribution management. Sales Management
The allocation of specific sales and distribution tasks between company’s sales
personnel and independent channel depends upon consumer characteristics,
product characteristics, company and competitive characteristics as well as the
environmental factors. Based upon corporate practices some propositions could
be put as under:
2.6 SUMMARY
In this unit you have learnt about the process of developing the sales and
distribution strategy and the major determinants of each. As the two functions
have a high degree of mutual dependence, a joint framework for decision
making for both sales and distribution management has also been discussed.
2.9 ANSWERS
4. The buyer gives his feedback to the retail chemist from there it goes to the
distributor via wholeseller and finally it reaches the manufacturer from
distributor.
41
Personal Selling
UNIT 3 PERSONAL SELLING
Structure
3.1 Introduction
Objectives
3.2 The Growing Importance of Personal Selling
3.3 Situations Conducive for Personal Selling
3.4 The Changing Roles of Sales Persons
3.5 Diversity of Selling Situations
3.6 Qualities of a Good Medical Representative (M.R)
3.7 The Scope of Activities in Sales Situations
3.8 Summary
3.9 Key Words
3.10 Terminal Questions
3.11 Answers
3.1 INTRODUCTION
The terms ‘personal selling’ and ‘salesmanship’ are often used without
distinction. However there are some vital differences between the two terms.
Salesmanship is Seller initiated effort that provides prospective buyers with
information and motivates them to make favourable decisions concerning the
seller's products or services. ‘Personal Selling’ is a highly distinctive form of
promotion. It is basically a two way communication involving not only
individual but social behaviour also. It aims at bringing the right products to
the right customers.
Objectives
Ever growing competition from, domestic and foreign sources have also
increased the importance of sales persons in the marketing effort of a firm. In
personal selling company's sales persons are often referred to as sales
representative, salesman or sales girl they remain on the company’s payroll or
work on commission basis or both to push the product in the market by
positively motivating the prospective customer through oral presentation or
demonstrating the product in question.
Consumers want all sorts of goods and services but inertia may keep them
from buying. Sales efforts stimulate the consumption process by reducing
people's inherent reluctance to make purchase decision. In fact sales person act
as catalyst in the market place.
When the nature of the product is such that the buyer needs special information,
in order to use it properly, sales representative acts as a consultant to
consumer, to apprise them of products technicalities and usage. Sales persons
also work out the details of manner and timing of given physical possession.
On the other hand, consumer product companies use personal selling together
with advertising, to influence prospect to try their brand. But personal selling
in this case cannot substitute for advertising, it can only be used tactically to
intensify marketing effort, mainly because it is expensive.
For example: McDowell, used personal selling tactics during launching of soft
drink “SPRINT” in Delhi.
44
Similarly Eureka Forbes a manufacturer of appliances which includes vacuum Personal Selling
cleaner and a number of home care appliances adopted personal selling for its
premium product vacuum cleaners. Since the vacuum cleaner is a high value
product and the concept is fairly new to the Indian market, demonstration is
necessary to convince buyers, and personal selling has successfully achieved
this. Other Companies e.g. Johnson and Johnson for its product in the so called
‘embarrassment’ category, like sanitary napkins or contraceptive used
personal selling successfully.
During the product launching stage companies selling products like Rich Bru
Coffee, Signal Toothpaste, Surf, Dalda etc. utilised personal selling efforts.
The importance of Personal Selling in the Indian context stands out due to the
following factors:
1) In the absence of the availability of all India media many companies find it
expedient to extensively use personal selling to achieve their promotional
objectives.
2) Companies which cannot afford a large outlay for advertising on a regular
basis also find personal selling a more reliable method.
3) The vast network of our distribution system needs the support of the
manufacturer sales force for market combing as well as development.
4) Low levels of literacy and lack of adequate customer education regarding
various products, make personal selling a very effective method in product
adoption particularly in the rural markets.
5) Orientation of Indian Consumers are such that they want the best value for
their money, owing to high marginal value of rupee, which necessitates
personal selling.
The factors discussed above individually or in combination make personal
selling an integral part of the communication mix of the company.
Product Situation
b) When a product is in the introductory state of its life cycle and require
creation of core demand.
Market Situation
Company Situation
Now we would discuss the changing role of sales persons. Owing to the
increasing importance of personal selling in recent times, the concept of
personal salesman has undergone a sea change from a fast talker to consultant.
46
Now before discussing the selling styles one point should be noted that only Personal Selling
well-developed and established companies have reached to consultant stage
level, every selling task does not require this. Still one or more than one
strategies of personal selling discussed here are used in Indian companies.
Table 3.1 shows the activities relevant to the use of each strategy.
Table 3.1: The changing roles of the sales representative
Strategies for Selling Activities
Business Management • Manage accounts and territory strategies as
a strategic business unit.
• Invest time and expenses in the most
profitable opportunities.
• Sell to meet the clients total system and
long term needs. Be a consultant.
Client Profit-Planning • Become part of the clients’ plan.
Strategies • Expand to other department.
• Find new uses for your product.
• Services are an important part of the offer
at this point.
• The customer become a client.
• Perceive, classify and serve the customer’s
needs.
The primary job of the delivery sales person is to deliver the product e.g., soft
drink, bread, milk etc. The selling responsibilities are secondary. Good service
and a pleasant personality may lead to more sales.
The retail sales person standing behind a counter is an inside order taker. The
customer comes to the sales person with the intention to buy a product or
service, the sales person only serves him or her.
The sales person may use suggestion selling but ordinarily cannot do much
more.
The soap or spices sales person calling on retailer is an outside order taker.
They do little creative selling. In contract with store personnel these
representatives actually may be discouraged from doing any hard selling. That
task is left to executives higher in the hierarchy.
These sales persons we not expected or permitted to solicit an order. Their job
is to build goodwill or to educate actual or potential user or provide services for
the customers, as in the case of Medical representatives, working for the
pharmaceutical company.
In sales job it is often difficult to conduct creative selling for tangible product
such as vacuum cleaners, Automobiles, Airplanes, encyclopaedias etc. The job
happens to be difficult because the customers may not be aware of their need for
the product or they may not realise how new products can satisfy their wants
better than those they are presently using. When the product is of a technical
nature, this category may overlap that of the Sales Engineer.
From the above mentioned variety of sales job it, is clear that different sales
position require different amount and kinds of skills. In today's market where
self service stores and counters have made the selling task easier, technically
developed products or intangible items require greater amount of creativity and
perseverance, on the part of sales person. To facilitate an understanding of the
various roles of sakes person, they can be grouped into four task specific
determinants such as, consultative, technical commercial and direct sales.
49
Sales Management Consultative Sales
Consultative sales are characterised by the product or service that is sold at the
higher level of an organisation e.g. computer system or management
consultancy service. The decision to purchase such products involves higher
capital outlay thus sales job requires a low key, low pressure approach by the
sales person. It would also require a very strong knowledge about product,
patience to discuss product with several people of organisation and potential
benefits to the user. Even at times when the progress of sales slows down
representative has to make creative and sensitive efforts to resume interest but
without appearing to exert pressure on the prospect.
Technical Sales
Commercial Sales
Direct Sales
Direct sales are primarily concerned with the sales of products and services to
ultimate consumers e.g. restaurants, door to door sales, insurance,
encyclopaedias, magazines etc. There is normally some emotional appeal
associated with this type of selling, thus sales persons are required to possess
strong persuasive ability. Often length of time to close sales is shortest in the
case of above product categories. In fact, sales persons are trained to close the
sales on the first visit because it is felt if consumers are given time, they will
either cool off from buying or will buy from competitor.
50
SAQ 1 Personal Selling
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Some people says salesmen are born salesmen, while others believe that
training can help in making good salesmen.
Irrespective of these opinions, good salesman has certain qualities and abilities
as a result he is able to perform better than others. In this section we would
discuss qualities of a good medical representative.
Philip Kolter has identified two basic qualities of a good sales person namely,
empathy and persuasion. But others have listed more. Some of the qualities of a
good sales person are as follows:
1) Ability to estimate customer's needs and desires: He is alert and quickly
determines what the customer wants and the best way to sell.
6) Creativeness: Imagination, vision and the ability to create ideas make your
man dynamic.
51
Sales Management 7) Curiosity: He wants to learn all he can about his job, his products and his
customers.
9) Figure Sense: He should have the mathematical ability to figure and fill up
order form correctly and to make the necessary reports.
11) Friendliness: A salesman should be able to make people like him and he
must like to meet people.
12) Handwriting: He must write legibly so that his paper work can be readily
understood by his office people and by his customers.
13) Health: Good health generates energy and energy is needed to sell. Poor
health prevents many salesmen from fulfilling their potentials.
14) Integrity: A salesman must be trusted to do his job well. He cannot help
but he successful when his customers trust him.
15) Interest in his job: He likes selling and working for your company. .
17) Loyalty: He must be able to impress upon his customers the idea that his
company is the best in the business.
18) Mental abilities: He has the intelligence to understand your products and
those of your competitors. He must know how to use words, to understand
and direct people' and to remember names and faces. He should also be able
to understand prospective customers and know how to act under varying
conditions.
21) Persuasiveness: Very few products of any type actually sell themselves.
They must be sold. Your man must have the ability to get people to agree.
52
There are situations when persuasiveness may vary keeping in view the Personal Selling
consumer’s response.
22) Poise: His maturity is reflected in his behaviour. He should be positive and
confident, energetic and businesslike. He should be able to demonstrate to
your customers that he knows what he is talking about.
24) Self-starter: Your man works well without constant supervision and is able
to make decisions on his own.
25) Speech: He can speak clearly and maturely in a natural tone. He can
emphasize sales points with sincerity and friendliness.
A typical day in a sales person’s life includes making certain number of calls,
opening of new accounts, analysing the account lost, if any, sales presentation,
closing of initiated sales preparing daily reports and keeping records of
transactions. We would now discuss .some of the important activities.
Attending Conventions
In conventions organised by company, sales persons interact with their peers
about work situations and problems and arrive at a consensus of opinion on
issues which impinge on their work. Conventions range in nature from
company convention to industry convention. They may be local, national or
international in nature. These are important motivational and inspirational tools
for the sales persons whose broad purposes are to:
Keeping Records
The job of sales person is not finished until the paper work is completed. A
sales person has to prepare daily call reports including new accounts opening
report, account closing reports etc. It is understandable that these records not
only keep track of their day to day activities, but also provide past and present
data to undertake any future assessment.
SAQ 3
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3.8 SUMMARY
Today personal selling has become a challenging profession. There has been a
significant change in its role from being a simple order taker to that of an order
maker or consultant to the buyers. Modem sales person understand that they are
the major link in the total marketing strategy for the company. If a company
54
wants to maximize the effectiveness of its marketing programme, the personal
selling effort must be effectively integrated with the other elements of the Personal Selling
marketing mix.
1. In view of the cut throat competition, the role of sales persons have
undergone a seachange. Discuss.
2. Empathetic attitude and ego drive in sales persons are essential for success.
Elucidate the statement.
3. Do you agree that presentations can be made more effective by Medical
Representative by using appropriate non-verbal communication? Discuss. 55
Sales Management
3.11 ANSWERS
56
Sales Process
UNIT 4 SALES PROCESS
Structure
4.1 Introduction
Objectives
4.2 Personal Selling and Marketing Effort
Difference between Advertising and Personal Selling
Significance of Personal Selling
4.3 Theories of Selling
AIDAS Theory
Right Set of Circumstances Theory
Formula Theory
4.4 Personal Selling Process
Prospecting
Preparation to Meet Individual Prospects
Making the Sales Presentation
Draw Attention
Hold Interest and Build Desire
Sales Resistance
4.5 Summary
4.6 Key Words
4.7 Terminal Questions
4.8 Answers
4.9 Further Readings
4.1 INTRODUCTION
The goal of all marketing efforts is to increase profits through sales by offering
need gratification to customers. Personal selling is a major promotional method
to achieve this goal. In many companies, personal selling is the largest
operating expense often totalling 7 to 13 per cent of sales. In contrast to this,
the expenses on advertising on an average are just 1 to 3 per cent of sales for
different companies. 57
Sales Management In industrial product companies personal selling is the major selling force. The
nature of the goods, in industrial products, often requires certain specialised
knowledge, which is presented in person by the salesman. The value of the
order generated by the sales person in such a situation is so high that it makes
the hiring of the sales person an economical proposition. Apart from industrial
products, the personal selling is a cornerstone of selling in organisations
marketing products, which require specialised knowledge and skills. Such
organisations are the ones marketing pharmaceutical products, medical
instruments or electronic products, etc.
Let us also try to discover the need of personal selling effort in organisations
marketing the fast-moving consumer goods (FMCG). In such organisations, the
demand is often created through advertising but it is met through the personal
selling effort. For example, the MR of a pharma company or the sales person of
Hindustan Lever Limited does not go door-to-door to meet the prospects to
create demand of his products. But he goes to the grocery store so as to ensure
that the brands being advertised by his company are made available at as many
retail shops as possible. Thus the objective of the personal selling effort in such
a situation would be more of meeting the demand, already created by
advertising or other promotional means, rather than to create it as in the case of
industrial goods or pharmaceutical products.
In order to make it easier for you to understand, we shall discuss the personal
selling process in separate parts.
Objectives
Personal selling is one of the important parts of the total Marketing Mix, and
an essential component of Promotion − Mix. We know that Marketing Mix
comprises of 4 P’s, which are; Product, Price, Promotion, and Place or
Distribution.
Advertising has a major role during the pre-purchase phase as the mass demand
for product has to be generated. The advertising also plays an important role in
post-purchase phase as it gives sound reassurance to the purchaser that he has
taken a sound decision in buying that product. The personal selling, on the other
hand, has an important role to play in all the three phases. It plays a major role
in the purchase phase:
It is the personal selling which collects money from the customers and
brings it to the company. While other components of an organisation are
‘money-utilizing’ components.
60
iii) Personal Selling Makes the Organisation Known Sales Process
All organisations are known to their customers through their sales staff, in
every part of the market. Such companies invariably, do not advertise. For
example, companies engaged in industrial products marketing or marketing
pharmaceutical do riot advertise much. Even in companies, which advertise,
personal selling carries the same significance, as the sales representative
creates goodwill for the company.
Before we, discuss the actual process of selling, let us understand the theories
of selling. There are three main theories of selling, which are as follows:
• AIDAS Theory
• Right Set of Circumstances Theory
• Buying Formula Theory
This theory is based on the premise that during a sales presentation, the
prospect consciously goes through five different stages. These are
ATTENTION, INTEREST, DESIRE, ACTION AND SATISFACTION. In fact 61
Sales Management the name of this theory has been derived from the initial letters of these five
words. The proponents of this theory believe that the sales person should
design his presentation in such a manner, which takes care of all these stages of
the process of selling. The details of five components of AIDAS theory are as
follows:
Attention
The sales person should attract the prospect to his presentation before he
actually goes into the details of the same. This is to ensure that the prospect
becomes receptive to the presentation.
Let us understand the need for securing attention. We would all appreciate the
fact that usually the prospect may be busy in his routine jobs or his daily
assignments. Thus, before meeting the sales person the prospect's mind may be
involved in something other than the topic which even remotely does not
concern the product, about which that the sales person in going to talk about.
Unless the sales person' involves the prospect's mind in the presentation his
total effort may go unnoticed or unregistered. Drawing the prospect’s attention,
therefore, tantamount to dissociating him from other assignments and involving
him in the presentation, both physically and mentally, so as to gain maximum
from the sales meeting.
Interest
Once the salesperson has successfully gained the prospect’s attention, he/she
should maintain the interest of the prospects’ throughout the presentation. In
other words, the sales person should ensure that the prospect remains glued to
his presentation throughout its length and that he does not wander away from
the same. The sales person should be aware of the interest, likes, dislikes,
attitude and motivation of the prospect and should proceed with the
presentation, keeping in view all these factors.
Desire
The next step in the sales process, as per AIDA’s theory, is to create a strong
desire in the prospect’s mind to purchase his product. The sales person should
consciously try to bring the prospect into this stage of readiness to the point of
buying his product. He should concentrate on projecting the benefits of his
product to the prospect. He should go even to the extent of presenting benefits
according to the motivation of the prospect.
The sales person should also be prepared to anticipate the resistance to his sales
presentation in terms of objections or questions from the prospect. Not only
that, he should be prepared with several answers and explanations to the
anticipated objections.
Action
Once the sales person has been successful in taking his prospect through the
62 three stages, as discussed above, he should induce the prospect into actually
buying the product. It would be interesting for us to understand that even after Sales Process
going through the three stages of attention, interest and desire, the prospect
may still have some doubt or some inertia which will stop him from taking the
final decision of actually buying the product. Hence, it becomes an important
task of the sales person to help his prospect in taking the final decision.
As we have observed, the sales person tries to push us into a situation to take a
decision. And he has exercised the technique of closing very skilfully. This is
what is expected of a sales person in this stage.
Satisfaction
Once the prospect has placed an order, the sales person should ensure that the
prospect carries the impressions of having taken the right decision. He should
always thank the prospect and even go to the extent of saying, “I appreciate
your choice sir, you have taken an excellent decision”.
The sales person should also ensure that the delivery of the order takes place
within the time frame and all other promises are kept, regarding installation,
free servicing, etc. Moreover, the sales person should try to keep in touch with
his prospects and should keep enquiring about the efficient performance of his
purchase.
The advocates of this theory opine that all the circumstances, which led to the
sales were appropriate or “right” for the sales to have taken place. In other
words, if the sales person is successful in securing the prospect’s attention,
maintaining his interest and inducing his desire to buy the product, the sales will
result. Moreover, if the sales person is highly skilled, he will take control of the
presentation, which would lead to sales:
In the earlier theories, emphasis was laid on the sales person or the seller. In
this theory the emphasize is on the buyer. This theory emphasises on the needs
or problems of the buyer. The salesperson assists the buyer in finding an
appropriate solution to the problem. This solution may be in terms of a product
or service.
63
Sales Management The Buying − Formula theory is based on the analysis of the sequence of
events that goes in the buyers’ mind during the sales presentation. Thus, the
theory emphasises on the factors internal to the prospect and the factors, which
are external, i.e., influence of the sales person on his prospect’s decision to buy
his product. The theory is based on the presumption that the sales person will
take care of the external factors.
There are all the chances that a continuous relationship will develop between
the prospect and the sales person. As a result of sales, the satisfaction will also
come in the sequence. This sequence can be presented as:
For example, if some one is feeling hungry, he/she has a need. The solution lies
in food. So the sequence of events in his/her mind will progress from need
(hunger) to solution (food). The next step will be “What food”, whether it is
Indian, continental, or Chinese. This step will ensure the decision on the
product (fast-food). Now the person will think about the brand in the fast-food
category. It may be Narula’s, Wimpy’s, Chotiwala’s, Udipi’s, etc. On taking
this decision about the brand the person will purchase the food. His satisfaction
or dissatisfaction will depend on the delivery time, taste, quality, seating space,
etc.
In practice, most of the sales presentations or the personal selling efforts are
based on one or a combination of these theories.
In order to have a better grasp of the subject under discussion, we shall one by
one discuss each of the following stages of the personal selling process:
64
• Prospecting Sales Process
4.4.1 Prospecting
Prospecting is the first and the most important component of personal selling.
Prospecting consists of identification of potential customers and then to rank
them in order to select the customers with the purchasing power and the
authority to make, the decision, to buy the product.
It goes, without saying that the time available should be spent on calling-on
potential buyers rather than on non-buyers. The sales person who practice
prospecting' ultimately emerge out as more productive than others.
In a nut shell, the result-oriented prospecting is a two step process. Firstly, the
identification of potential customers and secondly, the process of selecting /
ranking them.
Before meeting a selected customer, the sales person should find out as much
as possible about the same. In case of an organisation as a customer, the sales
person should know what products the organisation is currently using and how
his product is better than the one already in use. The sales person should also
find out what is the purchase procedure in the organisation and what is the total
budget earmarked by that organisation, for his kind of products. The sales
person should also try to find out personal likes and dislikes of his prospective
buyers so as to tailor make his presentation to suit the prospect. The sales
person should also have a clear idea about the questions that the prospect may
ask so as to prepare himself to face them.
Now, the sales person is ready to contact the prospect and to make the
presentation. It should be borne in mind that the sales person should take a
prior appointment with the prospect so as to exercise a good time
management. By doing so, he can save on his as well as the prospect’s time.
Though these questions help to draw the prospect's attention, these are not as
effective as the questions, which give an opportunity to the prospect to come out
with his real problem r needs/ requirements. Such probes are termed as OPEN
PROBES.
The examples of such probes can be a sales man selling printing machines
asking a prospect, “Sir, how do you feel about the printing machine which
prints 300 copies per minutes?” Another example of an open probe can be a
sales person from a pharmaceutical company asking a lady doctor “How would
you react to the safety of currently available antibiotics, especially during
pregnancy?”
As we can imagine such open probes will draw better attention of the prospects
than closed probes. Not only that, the prospect will also be more interested in
the salesman’s offering due to an open probe, because the prospect has spent
some time thinking about his/her problem while answering the salesman’s
probe. Thus, at times, an open probe is better than a closed probe in drawing
the prospect’s attention.
After drawing attention the sales person should hold the INTEREST of the
customer in his sales talk. Here there is no set pattern. Also there is no choice
other than actually demonstrating the performance of the product. In such
instances where the sales person can't demonstrate the performance of his
product, he should creatively use various audio-video media to hold
INTEREST of the customers. In a large number of cases the sales person uses 67
Sales Management various promotional inputs like literatures, gifts, visual aids, voice modulation,
pitch, tone, body language, etc., to maintain the INTEREST of his customers in
his presentation or the sales talk.
While making the presentation, the sales person uses various presentation
inputs like brochures, literatures (as stated above). What should be emphasized
here is that these inputs are just the promotional inputs, or the sales aids.
Obviously they have no effect without proper use and effective handling by the
sales man in presence of the prospect. Their effectiveness can be best utilised
by a sales person possessing the requisite skills to use these presentation inputs,
and without these skills they are mere objects.
So, what are the skills required for effective utilisation of these presentation
inputs with the objective of holding the interest of the prospect? The skills are
This is the magic that translating features into benefits can create. It is an
essential aspect of a salesman's functioning in the total framework of the selling
process. The objective is to creatively establishes a desire in the prospect for
the product.
68
SAQ 2 Sales Process
4.5 SUMMARY
• The customers have mostly been listening, and suddenly start asking a lot of
questions.
• When the customers favour an alternate close.
• When the customers give a positive stimulus at the right time.
In response to the question the prospect can answer in specific words (like ‘yes’
or ‘no’), such probes are called closed probes.
Those questions which give an opportunity to be prospect to come out with real
70 problem, needs, requirements etc., are called open probe.
4.7 TERMINAL QUESTIONS Sales Process
1. What are the various theories of personal selling? Compare and contrast
them with each other.
4.8 ANSWERS
1. The sources for identifying potential doctors are the nearest chemist shops.
The patients turn out register of a nursing home or hospital.
Allan L. Reid (1996) Modern Applied Selling, New Jersey, Prentice Hall.
Armstrong, Gary, Kotler, P.: Marketing – An Introduction, Pearson Education
– Reference Book.
71
Sales Management Frederic A. Russell, Frank H. Beach, Richard H. Buskirk (1985) Selling,
Principles and Practices, McGraw Hill Book Co.: Singapore (Chapters 7-
15).
G. David Hughes and Charles H. Singler, Strategic Sales Management, Mass
Addison Wesley.
J.C. Gandhi (1985) Marketing, A Managerial Introduction, Tata McGraw Hill
Publishing Co. Ltd.: New Delhi (Chapter 9).
Kazmi, S.H.H: Marketing Management, Text and Cases; Excel Books, New
Delhi – Reference Book.
Louies W. Stem and ADgI El Ansary (1988) Marketing Channels. Prentice Hall
International.
Various Magazines like 4 Ps, Business India, Business World, Business Today
etc.
72
Communication
UNIT 5 COMMUNICATION SKILLS Skills
Structure
5.1 Introduction
Objectives
5.2 How Communication Works
5.3 Communication Objectives
5.4 Communication Media and their Characteristics
5.5 Selecting Media Options
5.6 Non-Verbal Communication (NVC)
5.7 Oral Communication
5.8 Interpersonal Communication
5.9 Non-Verbal Behaviour in Interpersonal Interactions
5.10 Written Communication
5.11 Summary
5.12 Key Words
5.13 Terminal Questions
5.14 Answers
5.1 INTRODUCTION
Objectives
The various elements are (a) the source; (b) the target; (c) the message
(transmitted); (d) the message (received); (e) the goal of the message; (f) the
medium.
The Source
Feedback
Sales, complaints
inquiries
Some studies have been done on key communicators – the effective sources of
communication. Key communicators in villages, influencing adoption of
improved agricultural practices, were found to have higher social preference,
greater contracts with change agents, higher communication skills, and higher
adoption behaviour compared with low communications.
The Target
The message may be one of three types: information, a feeling, or a request for
action. Communication of ideas and knowledge are communication of
information. Communication of concerns, reactions, pleasant or unpleasant
feelings, attitudes, likes and dislikes relate to the second category of massage
(feeling). In addition to these two types of messages, a message may relate to
orders or requests to do certain things.
The Media
A verbal medium can either be in written or oral form, and either in a face-to-
face or distance situation. Letters and telephones are the distance media.
Mutually satisfying exchange being the ultimate goal of marketing, the role of
promotion, therefore, is to encourage such an exchange through linking
communications with the product adoption process of the buyer. Motivating
the adoption of the promoted product as well as effecting the desired change in
the consumer behaviour then are the goals of the promotion function. The
attainment of these goals presupposes that product purchase process be
understood by the marketers before marketing communications are designed.
While there are many models that help to conceptualise the-buying process, two
very specific models that aid in understanding the buying process as well as in
framing communication are; ‘AIDAS’ and ‘Hierarchy-of-effects’ models.
The AIDA acronym stands for: Attention (also called awareness), Interest,
Desire and Action. According to AIDA model, a marketer should begin by
wining attention or gaining awareness, creating interest, inspiring desire
76
and precipitating the action for purchase, in the prospects in order to enable Communication
its product to be adopted by the target public. Skills
Awareness
Teaser Campaigns
Jingles and slogans
classified ads
Knowledge Point-of-purchase displays
Publicity
Linking
Informative or descriptive ads
Status or glamour appeals
Preference Demonstration Image ads
Comparison ads
Conviction Testimonials
Coupons, discounts, other
incentives Point-of-purchase
displays
Purchase Retail Store ads
Reminder ads
Fig.5.2: Promotion and the Hierarchy-of-effects Model
SAQ 1
What is AIDA?
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Sales Management ……………………………………………………………………………………
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vi) Time, Place, Cost: These are the other three points of differentiation
between oral and written communication. A presentation has to be made at
an allotted place, on a pre-decided date and time, while in written
communication the place is non-restrictive and time is flexible. As far as the
cost aspects are concerned, in general, cost of an oral presentation is low as
compared to written communication, unless one is using sophisticated high-
technical equipment.
After noticing the difference between oral presentation and written report
you should be now clear that an oral presentation is just not reading a
prepared text; rather it is an interactive situation with the audience, where
your non-verbal matters and the challenge is in putting across your message
in a simple and short form, which your audience can comprehend and
retain. You also use body language to influence clarity.
There are no hard and fast rules about which channel of communication to
choose. Whether you should speak or whether you should write depends on the 79
Sales Management context. Decisions about communicating, either individually to a group, may
depend on the personalities of the people involved. Nevertheless, it's possible
to establish some guidelines, based on common sense.
Aside from whether you write or speak the particular medium you choose can
affect the reception of your message. The term medium overlaps the term
channel but usually has a more specific meaning, referring to the vehicle or
mechanism you choose to communicate, whether a meeting, the telephone, a
memo, or sophisticated technology. When Marshal McLuhan said, “The
medium is the message,” he may have overstated the case, but there's no doubt
that the choice of medium influences how messages are interpreted.
Source: Adapted from R. Lengel and R. Datt “The Selection of Communication Media as an
Executive Skill.” Executive, 2:3 (1988), 225-232.
One way of attacking the problem of choice is to think about the “richness” of
the medium; that is, the number of different ways a message can be inferred or
reinforced. For example, a telephone is a richer medium than a newsletter,
because the receiver can listen to tone as well as to the words, and can question
80
the sender. Similarly, television is richer than radio, because it permits seeing as Communication
well as hearing. Lengel and Daft have suggested that the more complicated or Skills
controversial the information, the richer the medium you should use. As Fig.5.4
shows, a memo works well for a routine message, but for news about plant
layoffs, a face-to-face meeting would be better.
Kinesics
• Facial Expression
• Eye Contact
• Gestures
• Posture, movements etc.
Like all other forms of communication, non-verbal message should be
sincerely planned otherwise gesture & body movements usually appear to be
just that faked. Use gestures naturally to reinforce the meaning you are
expressing through words. Too much shuffling of gestures, postures is
distracting & annoying.
Space: Proxemics
Second, inspect the four feet, beyond the first circle, friendly conversations and
spontaneous communications normally occur here – Personal Space.
81
Sales Management Third, examine the personal space 4-12 feet around you. It is used more
formally − i.e., for business or social situations.
Last, observe the space beyond 12-16 feet things of least significance occur
here − Public Space.
When we speak apart from the spoken words, the manner in which a word was
spoken, relates to paralanguage. In paralanguage we consider two aspects. First
is the voice set which includes various measurements of voice in terms of
intensity are pitch. Rhythm and resonance. These can be measured through
some physical instruments used for measuring sound.
Oral Communication doesn't mean speaking only i.e., public speaking, making
business presentations, participating or conducting meetings, interviews, etc, but
it also includes listening.
It is said that communication begins with listening and the fact is that you can't
be an effective speaker unless you are a good listener – one can't speak unless
one listens.
Oral Communication, which is face to face communication with others, has its
own benefits. Not only does it provides the opportunity for feedback but when
people communicate orally they are able to interact, they can ask questions and
even test their understanding of the message. In addition people can also relate
and comprehend the non-verbal that serves far more than words. By observing
facial expressions, eye contact, tone of voice, gestures, postures etc., one can
understand the message better. Oral communication also makes people feel
good as it satisfies one of our deepest needs of being part of a community,
82 group identity and high morale.
The only shortcoming of oral communication is that more often than not it is Communication
spontaneous and if you communicate incorrectly your message will not go Skills
understood.
The hierarchical nature of the five basic levels and corresponding types of oral
communication are shown in the given Fig.5.5.
Public
Communications
Multi Group
Communication
Interpersonal Communication
Intrapersonal Communication
Interpersonal Communication
Interpersonal Communication
Interpersonal Communication builds on the intrapersonal level, by adding
another person to the communication situation and introducing a dyadic
relationship. A dyad is defined as two persons who seek to exchange
information, which could be a situation like interviewing, telephoning or
dictating. In each of these situations also one has to decide what to say, when
to say, how to say etc.
83
Sales Management Group Communication
The group communication is further divided into two levels – small group and
multi-group. Small group communications in turn builds on dimensions of
group dynamics and multiple interpersonal relationships to the communication
situation. Multi-group communication exists through the combination of three
other levels (Intrapersonal, Interpersonal and Small group) involving
coordination with a large number of people involved in the shared
accomplishment of complex goods. It is therefore important to recognise group
communication at the small group and multi-group levels. Various types of
meetings, training situations, committees, etc. fall in this category. Arid in such
cases the group communication has to be effective, otherwise it may not help to
meet the objectives for which the group is meeting.
Most of the time in a day is spent in some sort of interpersonal situation rather
than all by oneself without being a member of a group. Most of the daily
experience was based on interaction with other human beings. Some
experiences in these relationships are joyful and others may be upsetting or
remained stagnant or have even been abandoned. Understanding these
relationships will help you develop and improve relationships. This leads to
Interpersonal competence `Interpersonal Competence' refers to the degree to
which one is accurately aware of impact on others and to the impact of others
on you.
When a group begins to interact and acquire information of others views and
attitudes bonds of attraction form most strongly between those who hold
similar views towards things that are important and relevant to both. A person
likes others who have the same feeling towards him or her as that person has
toward himself or herself. This reinforces one’s self-concept and facilitates
interpersonal relations. People interact more frequently with those who are
perceived as confirming their self-concept to the greatest extent. 85
Sales Management
First impressions though often not right are lasting impressions. First
impressions are lasting because they influence the way in which people see
subsequent data about the perceived object or person. When people are
mutually impressed, they are more likely to enter into a long-term relationship.
When this happens, they develop certain expectations about each other. An
effective inter or work relationship cannot develop and be maintained unless the
participants are willing to honour their psychological contracts. The results of
the meeting the psychological contract is an increased level of trust and
influence. When the parties to the contract are able to meet their mutual
expectations, the relationship produces mutual trust and favourable sentiment.
Good work has been done in Transactional Analysis on messages. One part of
the message exchanged between two persons is called a transaction. When A
sends a message, B receives it; B responds and this is received by that is one
transaction. A person can send a prescriptive or admonishing message (from
what is called the Parent ego state); or an information message (from the Adult
ego state); or a feeling message (from the Child ego state). Any of these
message may be sent to (and received by) one of the three ego states of the
other person (Parent, Adult, or Child). If the response is by the same ego state
as through which the message was received, it is called a complimentary or
parallel transaction. Such transactions are very satisfying. These are shown in
Fig. 5.6. The response however, may not originate from the ego state which
has received the message. Then it is a crossed transaction. Fig. 5.7 give
examples of crossed transactions.
A message sent may not be simple one. To use Transactional Analysis (TA)
terminology a message sent may have two targets (of ego states). There may be
an overt message (open and expressed). But it may also contain a convert
message (a hidden one). Transactions with such messages are called ulterior
transactions. Fig. 5.8 shows these transactions.
Having discussed the various forms of non-verbal communication and also the
interpersonal communication, let us now relate the two. This will help you to
understand the relevance of observing the non-verbal during a sales
interactions, which is the most common interpersonal communication
situation, a sales person face.
Smiles Distance
Expansive
gestures
Non-verbal
communications
Speaking quietly
Speaking loudly Controlled Submissiveness saying little
quickly all the time domination signified by
signified by
Allowing interruptions
Ignoring responses
‘Handwriting’ and
‘Stabbing’ fingers
other nervous
and other forceful
Source: John Ldstone, Manual Sales Negotiations, (England: Govers, 1991), p. 214.
88 Fig. 5.9: Non-verbal communication
You would appreciate that facial expressions, gestures and postures can convey Communication
quite a few feelings and emotional responses. Skills
For example, crinkled eyes convey warmth, staring eyes convey hostility and
downcast eves suggest submissiveness.
Facial Expressions
Similarly, a smile on the face conveys a liking far the other; as against a
‘serious’ facial expressions. In Fig. 5.10, types of facial expressions have been
shown, to further illustrate the point.
Gestures
Gestures can also convey various emotional responses. In the Fig. 5.11 we
have taken six examples to illustrate the point. You may notice from these
illustrations that the way you position you hand against the face, would change 89
Sales Management the meaning. For example, hands on chin with pointing up figure held to the
cheek, might suggest critical comparison. The same hand when shifts to the
nose would convey reluctance and when it is held against the lips, it conveys,
disbelief.
Further, hand movements i.e., gestures, can also help in supplementing you
message or describe things clearly, during a sales presentations. (Detailed
discussion on the gestures in relation to a presentation has been given in
Unit 6.)
Fig.5.11: Position of the hand and its gestures: Placement on the face
Postures, i.e., body position can also convey messages or responses.
Assume that in a sales presentation your prospect holds his face between his
hands and bends forward to place elbows on the legs, near the knees. You
would obviously draw a meaning that the person got bored with your
90 prepositions.
Similarly postures can convey to you whether your prospect is defensive, Communication
resentful, enthusiastic or open-minded about your proposals, as shown in the Skills
Fig. 5.12.
Poor Thank you for your order. We at Top packaging are happy to do
business with companies such as yours and look forward to future
orders.
Better The corrugated cartons you ordered have been shipped, and you
should receive in 15 days. They were sent this morning by train.
The corrugated cartons you ordered were shipped by train this morning. You
should receive their in 15 days. At Top packaging we are happy to do business
with companies such as yours.
It is always difficult to say no, especially in writing. You can use two
approaches, the direct approach and the indirect approach.
The Direct Approach: If you know the receiver well, or when the bad news is
expected and not very important say informing a colleague that your report will
be completed later than scheduled or telling your boss details of a known
problem. When using this approach it is suggested that you should:
You may, have better luck by looking in the Times Directory on the
above subject.
Let us take an example of a letter using indirect approach to turn down a request
for conference sponsorship.
93
Sales Management SAQ 2
What is the importance of written communication for a Medical
Representative/ Salesman?
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5.11 SUMMARY
5.14 ANSWERS
2. The Medical Representative has to write the sales report to the marketing
department, distribution channel agents/managers, depot manager etc.
Hence a good written communication skill is must. The MR has to write
business letters to Chief Medical Officers and other govt. officials also.
95
Sales Presentation
UNIT 6 SALES PRESENTATION
Structure
6.1 Introduction
Objectives
6.2 What is a Presentation?
6.3 Types of Sales Presentations
6.4 Typical Structure of a Presentation
Opening or Introduction of a Presentation
Body of Presentation
Ending of Presentation
Question and Answer Period
6.5 Planning the Presentation Strategy
Define the Purpose
Analysing the Audience
Developing Message
Determination of Presentation Method
Deciding the Presentation Media
6.6 Presentation Skills
Personal Aspects
Non-Verbal Behaviour
Oral Delivery
6.7 Effective Presentation: Some Principles
Start Half Way
Plan Out Content
Clarity
Partial Receptivity
Encourage Participation
Control Nervousness
Eye Contact
Body Language
6.8 Summary
6.9 Key Words
6.10 Terminal Questions
6.11 Answers
6.1 INTRODUCTION
For marketing of pharmaceutical products, the Medical Representative
frequently makes a presentation of the products to the Doctors, whole sellers
and retail chemists.
“You can have excellent content with good presentation technique and win the
business., You can have good content with excellent presentation technique and
win. But you may not have ever heard of poor presentation skills and good or
excellent contents winning anything”. 97
Sales Management Poor presentations are consistently losers irrespective of purpose or the
business for which a presentation is made. We will draw some lessons from
winning presentations and some from losers to help you to plan your business
presentation successfully.
In our daily routine we speak more often than write. A majority of us still have
not overcome the fear of a speaking to a group. Each one of us have stage-
fright. It is a matter of degrees that it varies amongst individuals. Yet an oral
presentation is an important part of the business routine and each one has to
deal with such challenges successfully. There are industries in which sales
presentations are the most important marketing tools. Pharmaceutical industry,
information technology industry, advertising agencies, insurance sector is some
examples of the same where success in business depends on the success in
presentation.
Objectives
Typically, all sales people use one of the following types of sales presentations.
Canned Presentation
It is interesting to observe that when you are going deeper into the subject, the
audience start drifting away from you. It is rather difficult to retain the
audience attention through-out the presentation, unless you make deliberate
efforts. The above stated points are some of the suggestions which can help you
in retaining your audience or customers.
As the audience’s attention peaks at this stage it helps in further clarity. The
final summing is not a place to introduce new ideas. It is suggested that you
should begin your conclusions by telling listeners that you are about to finish.
They will make one final effort to listen to you, intently. It is also suggested
that during the concluding stage restate the next step. Some presentations
require the audience to reach a decision or to take specific action. In these cases
the summing must cover the specific action to occur and who would be
responsible for doing what. Take for example, in a sales presentation sales
person may be required to ensure on-time delivery and installation. Thereafter,
the final installment of the payment will be made by the customer.
Your final words should round tip the presentation. You want to leave the
audience with a satisfied feeling, feeling of completeness. It is, therefore,
important that you should always end on a positive note. Your final remarks
should be enthusiastic and memorable.
Majority of the speakers avoid or discourage this period, without realising that
providing opportunity for questions and answers, facilitates interactions. The
thumb rule is to encourage questions throughout, in a smaller group and ask a
large audience to defer questions until later. But do provide time for this stage
as it shifts the audience from listening to participating.
Given below are some categories of questions. You may decide in which
category the question falls and then take action accordingly. Although it is not
possible to remember these tips, but by practice you learn to handle critical
situations:
4. Off Topic Question Suggest the audience that you would not
handle an off topic question.
5. Can’t Answer Question Admit it and say that you would answer
it later. You may not be authorised to
take a decision about the question. Take
time from the audience, check with your
superior, and get-back.
SAQ 1
What are the different types of presentation? Which type is commonly
followed by Medical Representatives (MR)?
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102
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The first reason of failure in a presentation is not thinking through the purpose
of the presentation and focussing it sharply. The amount of audience interaction
varies from presentation to presentation, depending on the speaker’s purpose.
Often a speaker accomplishes more than one purpose simultaneously. The
purpose of a presentation could vary from informing, persuading, exploring to
changing behaviour/attitude etc. The specific purposes for a presentation are:
a) To motivate: you do most of the talking and the audience essentially plays
a passive role. You control the content of the message and the audience
listen. Here the challenge is not to giving information but giving in a
manner for a response.
Your choice of a strategy for composition your purpose must take into account
those who will be attending it. The nature of the audience affects your strategy
for achieving your purpose. You should know your audience and size them up
in advance. You must look for characteristics that will affect your speech e.g.,
audience size, sex, age, education and knowledge. More specially, consider the
followings in as much detail as possible.
a) First consider the size and composition of the audience. A small group may
be drawn into a decision making process. A homogeneous group benefits
from a focussed presentation; a diverse group requires a more generalised
approach. So be sure of the size of the group to which you are going to
address.
b) Consider likely reactions to your speech or presentation. The reactions to
your speech could be hostile, receptive, indifferent. It is easy to talk to a
receptive group. It is also possible to convert indifference into interest. It is
quite challenging to convert hostility into support. But be clear that whether
the audience care about the issues you will discuss and how much they
already know about your subject.
c) Finally, you need to take a cold hard look at their relationship with you. Do
they already know you? Do they respect your judgement?
The answer to these points would help deciding the best way to organize
your material.
SAQ 2
Write the purpose of a Medical Representative meeting a doctor.
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At times, you collect a whole lot of information but you fail to put it together in
an appropriate order. There are specific guidelines available to arrange the
material in suitable order. It is suggested to follow the “Inverted Pyramid”
structure. The suggestion is that you should start with the most important point
and then go down to the least or, start with conclusion and go down to back-up
information or start with a general statement and go down to specifics. Any one
of these options would guide you in sequencing the information.
Although it appears simple but actually it is not. One has to decide and
compartmentalise information in various groups, sequence them and then
present.
There is no hard and fast rule suggesting in which situation what method
should be used. As a speaker it is up to you to decide which method is the best
suited for you in the given situations. But you must practice it in advance
before making a presentation.
All preparations on the ‘structure’ and ‘strategy of your presentation will have
limited impact on your customers or audience if you don’t have the right
presentation skills. For example, it is very important that you should be able to
have control on yourself. The moment you rise to speak you convey some
signals to yourself, which might decide ultimately the success or failure of your
presentation.
Although, it is not all that easy to suggest a definite set of ‘Do’s’ about your
body language during presentations, however, one can easily identify some
‘Don'ts’. If you carefully notice the six body language shown in figure”, you
may realise that, typically, most speakers make some of these mistakes. Let us
analyse each of the six situations in some detail, for better clarity about them. 107
Sales Management i) Reader is a person who does not make eye contact with the audience and
only concerned about his material. Such speakers fail to establish any wave-
length with the audience.
ii) Weakling is a speaker who does not know the utility of Lactorn, which is
fact, is the support for the speaker's materials and not the speaker himself.
iii) Gripper is a speaker who does not make any attempt to supplement the
message; rather he/she is only bothered about the verbal part of the message.
iv) Musician is a speaker who does not adapt the gestures to the contents of the
presentation but continuously relaying these, which does not relate. The
suggestion is that one should-bring some variation is the gestures.
vi) Pacer is a speaker who is, although relaxed but still not too sure about
movements, postures and gestures. The suggestion is that think before hand,
about how to stand, where stand, where to move to, how often to move, etc.
Posture
Sagging shoulders, dropped head forward and sloppy casualness are indicative
of depression, while standing upright with square shoulders and head held high
are indicative of the confidence. Your outward appearance mirrors your inner
mood.
Posture may also be adopted to the size of the audience. An informative talk to
a group of 50+ size would demand more formality, postural variety, particularly
during transitions, to suggest a change in topic. An address to a group of 10-12
managers working under you, could be given while sitting in the edge of the
chair. However, all formal presentations in advertising industry or I.T. industry
are typically given while standing.
To avoid side-to-side rock some women even prefer low heals for longer
duration presentations. Choice of a comfortable pair of shoes helps avoiding
conveying a negative, allat-ease impressions because your shoes are bothering
you. Giving thought to such minor details can help you in making a winning
presentation.
Movements
While presenting a topic, your physical movements can help you in the
following ways:
The above discussion clearly suggests that plan your movements and don't just
walk around when you make a presentation.
109
Sales Management Gestures
Gestures relate to movements of fingers, palm, wrist, arm, elbow and shoulder.
Here are some examples of situations where gestures can help you.
From the last three illustrations, in figure lit can be inferred that planning of
gestures, apart from postures, movements, are all important. If gestures are
important, as you do not want to look like the ‘gripper’ or the ‘weakling’ there
are some suggestions.
The first suggestion is that start involving only one hand but with variations. In
the Fig.6.3 options have been illustrated. Each gestures have specific meaning
to convey. For example ‘the air pulse’ can be used when you are about to open
the various issues relating to a problem, ‘the raised forefinger’ can be used to
emphasise, ‘the air grasp’ can be used for summarisation, etc.
The second suggestion is to use both the hand to supplement your message. For
110 example, ‘the hand scissors’ can be used when you are rejecting a point, ‘the
palm side’ can be used to suggest the magnitude of the problem, ‘the palm in Sales Presentation
front’ can be used to explain ‘the palm up’ for opening of the discussions and
‘the palm down’ for closing, as shown in Fig. 6.4.
Eye Contract
It is suggested that you should have eye contact with your audience. Although,
it is not possible to have eye contact with each and every person sitting
amongst the audience but it is suggested that you may identify, select persons
sitting spread across amongst the audience and establish eye contact with them.
Don't look at one person all the time. Eye contact helps you in gaining
confidence in yourself and it also conveys to the audience that whatever you
are saying, you are very sure of it.
Facial Expressions
It is said that rather having a “cheese” smile all the time, your facial expressions
should be natural. It is also said that the smile which comes on your face
actually originates in your brain on recollecting something pleasant. You can
easily build rapport with your audience using good, natural pleasant facial
expressions.
From the above illustrations let us now refer to some common observations, as
shown in Fig. 6.5.
111
Sales Management You must have experience yourself, if you are nervous, the gestures don’t flow
out of you and you try to bring control to yourself. Here the facial expression
also reflect seriousness.
If you are confident your facial expressions correspond with the contents,
gestures are natural and illustrative and you maintain a definite eye contact with
your audience
You might have also seen in a presentation that people respond differently to
questions. There are some who reflect dominant attitude through their facial
expressions, position of hands, while others, with the same non-verbal
communicate openness, and enthusiasm to respond.
With the help of these illustrations we have tried to explain to you that in any
presentations, your body-language is an integral part of your presentation. We
have also seen that how one can plan the body-language for the presentation. If
you are able to incorporate only 20 percent of the above, you would still notice
a marked improvement in your presentation skills. Therefore, each speaker
must give due attention to his or her non-verbal, the way they give to the verbal
contents.
How confident, you appear through your voice, how effective you become
through the use of your voice, how successful you emerge, by speaking clearly
and holding the attention of your audience are the issues related to the oral
delivery. Every aspect of the oral delivery, i.e., rate, pitch, volume, vocal
quality, etc., all are important.
i) Pitch: It is highness or lowness of your voice. Voice too high or low can
add to word value. A monotonuous voice may drift the audience away from
the speaker
ii) Rate: It relates to the number of words released per minutes. The purpose is
to synchronising speaking with listening pattern of the audience. The rate
should also relate to the subject matter. Often you might have felt that if
you speak a sentence at a higher rate you can create a better impact.
iii) Volume: It relates to the loudness or softness of the voice and by contrast
in volume one can give emphasis on the spoken words.
iv) Vocal Quality: It is difficult to define it but we come across so many words
to describe voice quality. Some of these words which describe voice quality
are: Throaty, loud, vibrant, dynamic, moving, weak, strong, harsh, shrill,
effeminative, gentle, clear, flexible vibrant, colourful, etc.
There are some suggestions to help you in enhancing your non-verbal while you
speak to a group. These suggestions are:
SAQ 3
Mention the importance of oral delivery in pharmaceutical selling and write the
effective parameters of a good oral delivery.
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Sales Management ……………………………………………………………………………………
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Ron Hoff, a hard core advertising professional, head of Ron Hoff and
Associates, based on his presentations to the clients, has suggested some basic
guidelines for effective presentation. Let's discuss these, eight, real-life
principles of presentation that make a measurable, meaningful difference in the
success of your presentation.
Rule Description
Source: Ron Hoff, “How to Make Your Next Presentation a Winner”, In, Strategic
Advertising Campaigns by Don E. Schultz. (Illinois: NTC Business Books,
1996).
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6.7.1 Start Half Way Sales Presentation
In preparing your presentation, may be you should start about halfway through.
There isn’t an audience in the world that hasn’t said to itself, “When is the
presenter going to stop talking about his business and start about mine”. So
instead of “Opening Remarks”, why not structure your outline to begin with,
“an issue of direct concern to my audience”. The sooner you can stop being
self-conscious and start being audience-conscious, the better your chances of
winning a positive verdict.
6.7.3 Clarity
Here is a simple but effective exercise: Ask yourself “If I were going to put a
fifteen-word headline on my presentation, what would it say?” Isolate the meat
of what you want to communicate and make sure you say it – clearly,
prominently. Also ask yourself, “What do I really want my audience to do as a
result of this presentation?”
Keep in mind that your audience is going to remember about one quarter of
what you say. A surprising number of presenters will assume that once a
statement is made, the audience retains it. Iii reality, an average audience retains
approximately 25 per cent of a presentation if the verbal content is given visual
reinforcement (slides, charts, videotapes). If the presenter is simply standing
there, going through a manuscript, flooding the atmosphere with words, he or
she will be lucky to have one tenth of the total message retained by the
audience.
So what do you do about it? May be you would like to “tell them what you are
going to tell them – tell them – then tell them what you told them”, i.e., put your
proposition up and keep referring to it. It is not that audiences have poor 115
Sales Management memories, it is simply that presenters assume that audience have perfect
memories.
Participation by your audience will help them remember you and your
message, but “handle with care”. Participation can backfire. You, the presenter,
can ask you-audience to do almost anything. Most audiences are surprisingly
agreeable. They will do almost anything. Nonetheless, a few words of caution.
Participation by your audience can nuke your unforgettable but just make sure
that it does not backfire.
Nervousness is not all bad, but it can become serious when your audience
becomes more concerned about your nerves than your subject. Nervousness is
the number one problems of people who make important presentations in
advertising, or in any other business. But nervousness (sometimes known as
“stage freight”), is not all bad. There are ways to deal with it, and some of them
can actually work.
i) Take a brisk 2-minute walk, It can be around the block, through the halls,
or anywhere you want to walk. Exercise of any kind breaks the strain that
creates nervousness.
ii) Look at yourself in a minor and check your appearance. Nothing's out of
place and you look like you want to look. That reduces anxiety.
iii) Next, take five deep breaths. Deep breathing always calms the nervous
system. Ask anybody who has hypertension, about the results of deep
breathing.
iv) Tell yourself that your presentation has one goal only: to genuinely help the
audience. That uncomplicates your mind and keeps the focus clear.
Eye contact is the strongest force in your favour during a “Live” Presentation.
When you make your next presentation, you will know whether you are
making eye contact or not because you can see your audience. Here are three
fundamentals on eye contact that will benefit your next presentation:
i) Don't set any specific length of time to maintain eye contact with one
person. Stay only as long as it is comfortable for both people.
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ii) Eye contact should be broken by natural pauses in meaning − between Sales Presentation
phrases − or thoughts. Eye contact usually breaks most comfortably at
punctuation points.
iii) There is a big difference between staring at people and eye contact. Staring
is intimidating, confrontational. Eye contact reduces the distance between
people. It reaches out, asks for understanding on a one-to-one basis.
“People may lie, but body language never does.” Body language, once you
have learned how to read it, is going to tell you more than what your audience
will say. You can rate people by their body language, and use your ratings to
apportion the amount of time you spend with each member of your audience.
Obviously, you will want to work a little harder − with eye contact and
participation techniques − on the person who is scoring low on your body
language scale.
6.8 SUMMARY
In addition, there are eight golden rules, although sound and simple, but you
need long years to fully practice them. Body language is fascinating. And you
can practice just about anywhere. Even if you make a commitment to follow
these rules to the extent you can, you have already improved your presentation
ability.
1. What are the different types of sales presentation? Discuss the advantages
and disadvantages of canned presentation in pharma-selling.
2. What presentation strategy you would adopt if you have to sell vacuum
cleaner, door to door.
6.11 ANSWERS
3. The MR’s principle job is oral delivery before the doctor about the product.
The effective oral delivery is guided by correct pitch, appropriate rate,
synchronised volume and good pronunciation with vocal quality.
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Negotiation Skills
UNIT 7 NEGOTIATION SKILLS
Structure
7.1 Introduction
Objectives
7.2 What is Negotiation?
7.3 Difference between Selling and Negotiating
7.4 The Negotiating Continuum
7.5 Steps of Negotiation
Prepare
Discussion
Signalling Behaviour
Proposing
Packaging the Offer
Bargaining
Closing and Agreeing
Deadlock
7.6 Negotiation Strategies
Strike Back
Give In
Break Off
7.7 Principles of Sales Negotiations
7.8 Summary
7.9 Key Words
7.10 Terminal Questions
7.11 Answers
7.1 INTRODUCTION
Negotiation is a fact of life. It is the basic means of getting what you want from
others. It is a two-way communication process designed to reach an agreement
when the two sides have some interests' that are shared and others that are
opposed. When we look around ourselves we find that almost everything needs
to be negotiated -whether in business, industry or family.
However, this skill has limited or very rare use in pharma marketing. This skill
gives an extra edge to the salesman’s confidence.
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Sales Management Objectives
• define negotiation;
• understand and explain different steps of negotiation;
• describe the various skills required for each step; and
• make the use of negotiation skills in selling process.
• Negotiation does not mean persuading the others to accept our offer.
Rather we should listen to others, and their propositions. If possible
modify one stand or suggest/guide the others to modify there demand.
One important point to keep in mind is that negotiation is not just stating a
grievance or point of conflict. As you must have experienced complaints at best
can produce apologies and at worst, they lead to arguments. In negotiation what
we really want is to suggest, or encourage a proposal which will put things
right, and take the parties concerned to an acceptable solution. In the selling
situations, whenever the buyer and the seller differ on terms on sale, be it price,
discounts, terms or place of delivery, a negotiation opportunity arises.
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7.4 THE NEGOTIATING CONTINUUM Negotiation Skills
Ideal Limit
A
Bargaining Arena
B
Limit Ideal
If you look at the above continuum in the context of sales process as a sales
person your ideal position is to sell your product at maximum benefit while
from the customers’ angle the ideal position may to get all the benefits at a
much lower price. As the sales process moves both of you are likely to move
from ideal positions and reach a mutually agreeable state if the transaction has
to take place.
SAQ 1
OFFER
PROPOSE
SIGNAL
DISCUSS
PREPARE
vii) Closing and agreeing • Decide where you intend to stop trading.
• What type of close are you going to use.
• Always list the agreement in detail.
• If the agreement is oral, always send a
written note to your opponent, as soon as
possible after the meeting.
Source: Gavin Kennedy, John Benson and John McMillan, Managing Negotiations, (London:
Hutchonson Business, 1990)
7.5.1 Prepare
What you do, or don't do, before you arrive at the negotiating table will
become evident when you get to negotiations. If you are not fully prepared you
can only react to events, you cannot lead them. In the preparation phase you
define what needs to be achieved and also decide how it will be achieved. As a
negotiator you must know what you want in the short term and in the long
term. You must be clear why you want them. You must be aware of your
opponents expectations and environment. For easy understanding we can sub-
divide preparation under a number of key headings: -objectives, information,
concessions, strategy and tasks.
Objectives
Relating this step to the sales process as a salesperson it is very important that
you decide your call objectives before you meet the customer and categorize
them, e.g. from a particular customer you may
Information
Strategy
Strategy as a separate step will be discussed in detail later in this unit. However
you must keep in mind that in preparation phase your strategy will need to be
mapped out. Thus the framework of game plan you need to follow to achieve
your objectives must be clear. Always ensure that your strategy is not too
inflexible. It should be able to respond to developments within the negotiation.
Thus, at any stage of negotiation, if you feel that the strategy is not working
you must be able to modify it.
Tasks
In the day-to-day minor negotiations where we are involved, we act as an
individual rather than as a member of a team. However in more important
negotiations both the groups involved are likely to have more than one member.
In such situations where the group has more than one member it becomes very
essential that each member's role and the tasks he has to do are clearly defined
and explained. Many times when you are calling a major customer, you may
visit him as a team from your company. At such meetings it is important that
everyone in your team knows what exactly his role is and what he is going to
say during negotiations.
The second step in the process of negotiation is the discussion. This step is
also called arguing. Within the second step of discussion we will also look
at another important aspect of negotiations i.e. signalling.
When the parties involved in negotiation first meet each other, they are aware of
124 the conflict of issues between them. In the instance where the parties have not
met each other before this they are most wary of each other. Thus, during the Negotiation Skills
opening phase of the negotiations the atmosphere tends to be very tense.
The discussion step is a major opportunity as you can gain all kind of
information regarding the other party’s behaviour, his intentions, his objectives
from him only. To gather more and more useful information about your
opponent, however you must avoid the habit of interrupting your opponent
when he is speaking.
As is normally seen when emotions are charged up, most of us make certain
threats, not necessarily intending to carry them out. The most natural reaction to
a threat from either side is a counter threat from the other party. In such a
situation during a negotiation both the parties may end up with mutual
exchange of sanctions. Thus it becomes very critical, that as a party involved in
negotiation you depict constructive behaviour. But the problem is how to show
constructive behaviour?
The most important thing is to listen more than you talk. Your positive listening
must be supported and followed by positive talking behaviour. The technique
for doing this is to ask open questions which will encourage your opponent to
explain and elaborate his views and ideas.
When the discussions are in progress, one of the factors that will determine the
outcome is how well you can send signals. We learnt at the beginning of the
unit that the essence of negotiation is movement along the continuum. Both the
parties involved need to move from their ideal state to mutually acceptable
state. The parties involved in the negotiations use sanctions and incentives to
ensure movement towards their ideal state.
When you are involved in negotiations the way to handle concessions with
confidence is to develop skills in signalling behaviour. A good negotiator
always tests how strong is his opponent's apparent stonewall position. This is
the same situation which any salesman recognizes when he is facing objections
from his customers. The first thing that a good salesman does in such a
situation is to test whether the objection is real or false. So he will ask his
customer, “If I was able to overcome this problem, would you be prepared to
buy?” For a real objection the customers answer to above question is yes. With
the help of signals, the parties involved in negotiations indicate their
willingness to negotiate.
What is a Signal?
The dictionary defines signal as a message. For any message to convey the
meaning it has to: be interpreted correctly by the receiver. Signals are
qualifications placed on a statement of a position. Thus, instead of saying ‘I will
never agree to your demands’ you may say, “In the present from your demands
are unacceptable to me”. A signal is expected to lead to movement.
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Sales Management How to signal: For signals to convey message effectively it is essential that the
parties involved in negotiations are listening to each other. What normally
happens is that as both the parties are focusing on their issues, many times they
will miss the signals and prolong the argument. If you are not listening to what
your opponent is saying and how he is saying it, you will inevitably miss his
signals. However there are many situations during negotiation when you may
want to consciously miss a signal. Consciously missing a signal requires a
different skill.
During a deadlock, if you are willing to negotiate a solution, you can try to
break the argument by signalling or responding positively to signals sent by
your opponent. Remember, the method to signal is by adding qualifications to
your statements. For e.g. ‘It is not a normal practice over here to give credit’,
‘Everything you are suggesting cannot be accepted etc.’
SAQ 2
7.5.4 Proposing
When you present a secondary proposal you are trying to initiate a move
forward to common ground. Thus the language used for secondary proposals in
most cases is tentative. ‘I may look into the possibility of considering this’.
Adjournments
SAQ 3
Before presenting the offer you must think carefully and creatively about all the
possible variables.
7.5.6 Bargaining
The single most important rule of bargaining is to make all propositions and
concessions, conditional. Thus while bargaining you give away nothing
absolutely nothing free. You always use the big IF.
While during the proposal step you make tentative offers. ‘I will consider’, ‘I
will look into’ etc. in the bargaining step you firm up your proposals and
become more positive ‘If you do X, I will do Y’.
Very often in negotiation, a party will present a list of demands, objections,
requirements etc. followed by the ‘logical’ suggestion that each item is dealt
with one at a time. If other party presents such an idea, don't agree to such a
demand. Always try to ensure that you keep all the issues in dispute linked. If
you agree to negotiate item by item the other party has good chances of
squeezing you.
The purpose of closing is to lead both the parties to final agreement. Thus
closing must be credible. Your closing package must meet enough of your
opponents needs to be acceptable. Two common types of closes used during
negotiations are concession close and summary close.
Concession Close: When you use a concession close you terminate the
bargaining step by offering a concession to secure agreement.
7.5.8 Deadlock
We have seen all the steps of negotiation process. During any of the steps
negotiations could enter deadlock. A deadlock stops the negotiation process
deadlock has a price. Its most obvious price is the fact that the time spent in
trying to negotiate a deal becomes a dead loss to the organisation, if the
deadlock is irresolvable.
The way to handle deadlock is to keep your emotions, prejudices out of the
issue and work towards finding some common objectives. Your basic intention
should be to get negotiation process moving again, so as to enable a solution,
acceptable to both parties.
During the negotiation process, as the discussion happen you would be reacting
to the other party’s continents in various ways. However three natural reactions
that are commonly observed in most people are:
In this strategy you respond to your customer in the same tone and language as
he is doing to you. Occasionally striking back will show your prospective that
you can also play the same game and will make him stop. But more often this
strategy will land you in a futile and costly confrontation.
7.6.2 Give In
Many times your customer may succeed in making you feel so uncomfortable
with the negotiations that you give in just to be done with it. Giving in results
in an unsatisfactory outcome specially for you. Giving in also gives you a
reputation for weakness that your opponent and others may try to exploit in the
future.
At rimes, the negotiation process can come to such a stage, that avoidance is a
perfectly appropriate strategy. Sometimes it is better to end a business
relationship if continuing wear being taken advantage of or getting into fights
again and again. But the costs of a break off are high. Breaking off is frequently
a hasty reaction that you come to regret later.
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Sales Management This negotiating requires you to be a very good communicator. As we stated
earlier the objective of negotiation should be a ‘win-win’ solution for both the
parties. This requires that you show empathy with the other person. If we
consider empathy and overall projection (i.e. how you come over to others by
your tone, language etc.), we can have four kinds of communications:
High Projection
Low Projection
7) State clearly your objectives and take a feedback as to whether the other
person has clearly understood your objectives or not.
8) Avoid confrontation and avoid getting into a corner you cannot get out of.
When you have to disagree, do it carefully. When you have to make
concessions, make them one at a time, unwillingly.
9) Aim high, and settle as high as possible. Know when to drop the whole
thing rather than agree to a totally inappropriate deal.
12) End positively. Neither party will get exactly what they want, but the deal
should be agreeable.
7.8 SUMMARY
3. Discuss how negotiations and conflicts go hand in hand with each other?
7.11 ANSWERS
1. Unlike the consumer goods marketing, the use of negotiation skills are of
limited use in pharmaceutical marketing. It is used while fixing the
business terms and conditions with the distributors, whole sellers and
chemist shops.
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Handling of
UNIT 8 HANDLING OF PROMOTIONAL Promotional Tools
TOOLS
Structure
8.1 Introduction
Objectives
8.2 Visual Tools
Purpose of Visual Tools
Classification of Sales Promotion
Posters, Billboards and Electrical Displays
Window Display
Television Radio and Other Audiovisual Media
8.3 Handling of samples
Essential Criteria for Promoting a Brand by Samples
8.4 Use of Information Technology and Internet
Online Advertising
Purchasing Variations
Affiliate Marketing
Contextual Advertising
Ads and Malware
8.5 Other Promotional Materials
Direct Mailing
Personal Contact or Detailing
8.6 Summary
8.7 Terminal Questions
8.8 Answers
8.1 INTRODUCTION
The section will also cover various methods involving handling of sales
promotion like visual tools, IT and internet applications, handling of samples, 133
Sales Management media applications, various types of tools etc. As the term implies - the
ultimate goal is sales or transactions. However, promotions can be planned to
increase sales over a long period within a specific market segment, so it is not
always about immediate results.
Objectives
•
•
•
•
•
SAQ 1
SAQ 2
“Sales promotion means any step that are taken for the purpose of
obtaining an increased sales” by, A.H.R. Delens 135
Sales Management “Sales promotion as a tool of market promotion gives rise to increase
in production usage as well as expansion of market for a product or
introduction of a new product” by, John. L. Luickkand and William
Lee Ziegler.
The main aim of window display is to attract customers and thus to promote
sales. It creates a good impression about the retail pharmacy. The following
principles of window display should be kept in mind.
• It should reflect the characters of pharmacy. For this purpose the insignia
of pharmacy (green cross +) should be fixed.
• It should display seasonal items.
• It should show the price of items.
• The window display should be well lit during night.
• The items displayed in the window should be changed frequently gives
freshness and newness to the display.
• It should include certain moving objects if it is compatible with the display.
• There should be decorative background of the display, which can be made
by using coloured wallpapers, thermo-cool, flowers of good quality stain
cloth etc.
Dark and light shades of the same colour can attract the attention of large
people. It is better to use a deep colour in contrast with or in harmony with
other colours. Brilliant lighting in window display attracts people. The reflector
concealed at the top and front the merchandise should be used. Coloured
lighting of the entire window is not effective for drug stores. Only the non-
ethical products should be displayed in show windows. The table below
indicates both contrasting and harmonizing colour combinations with primary
colours that make for impressive window display.
Television is the latest and the fastest growing medium of advertising. It is very
effective medium because it appeals to both the eye and ear. The product can
be demonstrated and explained on the television. However, it is very costly
method of advertising. Radio advertising is becoming more popular these days
and the advertisements are generally transmitted through commercial services
of All India radio. Radio advertisements carry an effective appeal as they reach
out to all sections of society. People can listen to them even when they are busy
with other activities. The big pharmaceutical companies generally sponsor
entertaining programs on TV and radio to popularize themselves and their
products.
SAQ 3
SAQ 4
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8.3 HANDLING OF SAMPLES Handling of
Promotional Tools
Handling of samples is an integral part of any pharmaceutical product
promotion where free samples are distributed to users (both doctors and
patients) by personal contacts. The pharmaceutical manufacturers engage
persons (sales representatives and medical representatives) for making personal
contacts with sellers or prescribes and influence them in favour of their
products. This method of advertisement is very costly. However, the
pharmaceutical manufacturing companies for the following reasons prefer it.
• It also helps to refresh the memory of physicians regarding the old products
of the firm.
• It helps to have a feed back from physicians regarding the products of the
firm.
• It should educate the people about the use of the product and its benefits.
For example, in the advertisement of baby milk powder, the instructions for
preparing milk are required.
• It should create the need for the product in the minds of the people. It
should appeal to the various instincts of the people.
139
Sales Management SAQ 5
SAQ 6
Online product promotion is a form of advertising that uses the internet and
world wide web (www) in order to deliver marketing messages and attract
customers. Examples of online advertising include contextual ads on search
engine results pages, banner ads, Social network advertising, advertising
networks and e-mail marketing, including e-mail spam.
The three most common ways in which online product is purchased are CPM,
CPC, and CPA.
• CPM (Cost Per Impression) is where advertisers pay for exposure of their
message to a specific audience. CPM costs are priced per thousand
impressions. The M in the acronym is the Roman numeral for one
thousand. CPV (Cost Per Visitor) or (Cost per View in the case of Pop Ups
and Unders) is where advertisers pay for the delivery of a Targeted Visitor
to the advertisers website.
• CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers
pay every time a user clicks on their listing and is redirected to their
website. They do not actually pay for the listing, but only when the listing
is clicked on. This system allows advertising specialists to refine searches
and gain information about their market. Under the Pay per click pricing
system, advertisers pay for the right to be listed under a series of target rich
words that direct relevant traffic to their website, and pay only when
someone clicks on their listing which links directly to their website. CPC
differs from CPV in that each click is paid for regardless of whether the
user makes it to the target site.
Though, as seen above, the large majority of online advertising has a cost that
is brought about by usage or interaction of an ad, there are a few other methods
of advertising online that only require a one time payment.
141
Sales Management • Floating ad: An ad which moves across the user's screen or floats above
the content.
• Expanding ad: An ad which changes size and which may alter the contents
of the webpage.
• Trick banner: A banner ad that looks like a dialog box with buttons. It
simulates an error message or an alert.
• Pop-up: A new window which opens in front of the current one, displaying
an advertisement, or entire webpage.
• Video ad: similar to a banner ad, except that instead of a static or animated
image, actual moving video clips are displayed.
• Map ad: text or graphics linked from, and appearing in or over, a location
on an electronic map such as on Google Maps.
SAQ 7
SAQ 8
What are the three most common ways in which online product is purchased?
……………………………………………………………………………………
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143
Sales Management SAQ 9
a) Floating ad
b) Expanding ad
c) Wallpaper ad
……………………………………………………………………………………
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……………………………………………………………………………………
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SAQ 10
SAQ 11
8.6 SUMMARY
Public Relations: Because sales promotion often loses money, and advertising
is becoming less effective and expensive, companies should investigate the
impact of marketing public relations. Marketing public relations is designed to
create a positive image of the company to a target market. It uses non-paid
communication by presenting commercially significant news in a published
medium or obtaining favourable presentation of the business or product on
radio or television.
Sales Force: The more complex the product or service, the more necessary to
use sales people who can answer questions and help customers. However, a
company’s sales force is one of the most expensive marketing communication
tools. Across all businesses, more money is spent on personal selling than on
any other form of promotion. What is important is not the sales person’s costs
but his/her costs in relation to the sales he/she generated. A top sales person
can often sell five to ten times more than an average sales person. In addition to
hiring good people, a company should help its sales people be more productive
by providing them sales tools, i.e., computers, fax machine, and e-mail, and
giving them easy access to company data to help them become more informed.
They should be trained to consciously find out what customers want and alert
the company.
3. What are the essential criteria for promoting a brand by samples? 147
Sales Management 4. What is CPC?
8.8 ANSWERS
3. Sales promotion means any steps that are taken for the purpose of obtaining
an increased sales.
7. Online advertising is a form of advertising that uses the internet and world
wide web in order to deliver marketing messages and attract customers.
Examples of online advertising include contextual ads on search engine
results pages, banner ads, Social network advertising, advertising networks
and e-mail marketing, including e-mail spam.
8. The three most common ways in which online product is purchased are
CPM (Cost Per Impression, CPC (Cost Per Click) and CPA (Cost Per
Action).
b) Expanding ad: An ad which changes size and which may alter the
contents of the webpage.
11. The main aim of window display is to attract customers and thus to
promote sales. It creates a good impression about the retail pharmacy.
Terminal Questions
− It should create the need for the product in the minds of the people.
It should appeal to the various instincts of the people.
4. CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers
pay every time a user clicks on their listing and is redirected to their
website. They do not actually pay for the listing, but only when the listing
is clicked on. This system allows advertising specialists to refine searches
and gain information about their market. Under the Pay per click pricing
system, advertisers pay for the right to be listed under a series of target rich
words that direct relevant traffic to their website, and pay only when
someone clicks on their listing which links directly to their website.
150
Pharmaceutical
UNIT 9 PHARMACEUTICAL PRODUCT Product Launch
LAUNCH
Structure
9.1 Introduction
Objectives
9.2 Pre-launch Exercise
Phase-I
Phase-II
Phase-III
Phase-IV
9.3 New Product
The Product Launching Team
Product Manager
Training of MR in the New Product
9.4 Development of Promotional Aids
9.5 Competing Products
9.6 Appointment of Stockiest
9.7 Product Launching Meeting
9.8 Type and Nature of Middlemen
Different Type of Middlemen
9.9 Channel Levels
Size of the Market
Order Lot Size
Service Requirements
Product Variety
9.10 Pharmaceutical Distribution Channel
9.11 Institutional Buyers
9.12 Follow Ups
9.13 Summary
9.14 Key Words
9.15 Terminal Questions
9.16 Answers
9.1 INTRODUCTION
Product launch is an event in the selling procedure that influences the success
rate of the marketing of a product. It is an initial thrust given to a product
which helps to prolong the product life cycle. In this process the product gets a
very good platform to disseminate the information about the product to the
channel members i.e. wholesalers, stockiest retailers and the consumer. It helps
to penetrate very deep into the memory of the user. The product will gain a
position in a particular place in the marketing mix. The way a rocket is
launched from a launching pad to outer space to achieve a particular orbit and
the initial thrust determines the distance it will travel, the same mechanism 151
Sales Management works here to penetrate the product deep into the memory of the user so that he
may not forget it very easily.
Objectives
After studying this unit, you should be able to:
• design the new product features;
• design the visual aids;
• proper channel management;
• deal with institutional buyers; and
• exercise effective controls.
Take the case of an automobile, where the product launch exercise involves
extensive product feature, advertisements, comparison with the competitors
product, in terms of fuel efficiency, technology, servicing, safety and finally of
152
course a discussion on the price, depending on the market segment.
It will be clear from the following comparison that that marketing of a Pharmaceutical
Pharmaceutical product requires special considerations; Product Launch
Pharmaceutical products
ii) Except the OTC products the information about the products can not be
advertised in the mass media.
iii) The referee of the product i.e. doctor, who is highly learned and it is not
easy to convince him.
iv) Replacement of the product is easily available, hence can not wait for the
product if it is not available in the right time.
Consumer goods
9.2.1 Phase-I
9.2.2 Phase-II
In this phase the patients with target disease are taken to determine the efficacy
in two phases called early phase and late phase. In early phase 20-200 patients
are taken to observe potential therapeutic benefits and side effects in a single
blind study. In late phase 50 to 300 patients are taken and the above effects are
studied in controlled and double blind manner.
9.2.3 Phase-III
9.2.4 Phase-IV
It is the post market surveillance of the drug in new drug status conducted for
many years after it has been launched in the market.
SAQ 1
A new product can be of two types, new to the company or new to the market.
In the first place, it may not be a completely new to the market as it may be a
product available and marketed by the competitors but it may be a new
addition to the existing product line of the company. Second it may be a new
drug molecule. A new drug molecule comes to the market after a prolonged
and intensive research which includes pharmacological, toxicological and
efficacy and safety level tests in laboratory by using computerized models
followed by animal models. Once the drug is successful in the animal model, it
can be tried clinically on human being. After successful results in the clinical
trial, the drug is patented and then comes to the market as a new product.
Moreover it is such a long process that it takes 5-10 years for a new molecule
to come to the market and after spending a huge amount on the research.
Unlike other Engineering or FMCG products where only by changing few
features of the existing product, a concept of new product can be achieved. In
case of pharmaceuticals or medicines, the product will be a new product when
it gives a completely new pharmacological effect with definite and established
cause and effect relationship to cure any disease condition on facilitating
disease curing activity.
The product launching team includes the following marketing people and in
coordination among themselves they execute there respective marketing
functions to successfully launch the product.
154
The team consists of: Pharmaceutical
Product Launch
• The Marketing Managers
• Product Manager – Medical Representative
• Group Product Manager – Medical Advisor. The medical representatives
are the front line managers and play the crucial role of executing the
product launch activity in the market and the product manager is the key
person in the entire event.
SAQ 2
SAQ 3
SAQ 4
• Financial situation
• Man power
• Experience in the field
• Trade record
• Technical know how of the owner or manager.
• Agreement
• Location
• Area of operation
• Fleet size
• Facilities provided etc.
SAQ 5
An experienced stockiest with good track record can boost the marketing of a
product a) True, b) False.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
The channel members like stockiest, distributor, retailer, product manager, MR,
leading physicians etc. are invited. Usually a product launching event is held to
make all the concerned aware about the product. It is such that when the
product comes to the market every body is familiar about it. In case of big
organizations it is managed like an event management project. But in case of a
pharmaceutical product it may be limited to the selected stockiest, Medical
Representatives, Product Manager, Marketing Managers, Selected retailers and
leading physicians of the locality where the product is launched and people
associated with healthcare systems like Pharmacists, Nurses, Technicians etc.
The product launching may be made initially at a particular area or covering all
over the country and it determines the scale of the launching event.
In the product launching event all the channel members are invited. The health
professionals like the leading doctors, nurses, pharmacists and other health
professionals who are directly or indirectly associated with the marketing of
158
the product are addressed in the meeting. The promotional aids, sample trial Pharmaceutical
packs of the products are distributed to provide initial force for wide publicity. Product Launch
SAQ 6
Product launching meet is also a part of promotional method a) True, b) False.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
The role and functions of any marketing channel can be viewed from five
different perspectives or marketing flows as shown in Fig. 9.1.
Transporters and C
Suppliers of Transporter and & F Agents for
Manufacturer
Inputs Warehouses Company
Warehouses
2. Title Flow
3. Payment Flow
Wholesalers/ Customers
Suppliers Bank Manufacturer Retailers
Dealers
4. Information Flow
Customers Retailers
5. Promotion Flow
Many a time, as in the case of consumer products. customers are spread all
over the country and the market is large. To reach out to such a vast market, a
162
firm has to necessarily increase the length of the channel and one finds two, Pharmaceutical
three and even four levels of distribution. The firm may sell or transfer its Product Launch
goods to a wholesaler or agent, who in turn sell the goods to a retailer and
through the retailer the goods finally reach the customer. In other cases, the
firm may appoint a distributor or franchise the territory to another business
firm. This distributor or franchisee sells to a wholesaler, who in turn sells the
goods to retailers. At times, some retailers appoint sub-retailers in smaller or
rural markets to distribute the product. In most consumer goods, their prompt
availability often becomes the reason to buy them. Since the firm cannot
directly reach out in all its markets, it has to depend on this form of
distribution.
The Indian market has undergone a significant change with the emergence of
middle class consumers all over the country. Even in rural markets there has
been an increase in income levels and the demand for branded and packaged
goods is on the increase. Not only incomes, but even customer awareness
levels are on the increase, following the spread of satellite and cable television.
These changes necessitate a firm to assess its distribution system. Traditionally,
most firms transported their goods from the factory to state capitals, which had
earlier been the major markets. Wholesalers would buy their requirements from
this point (also called a HUB) and then redistribute the goods in different
towns. Normally the wholesaler would have his sales force or direct contact
with some major retailers and would sell through them. This often left gaps in
the market as, many a time, the wholesaler would sell to retailers, not
necessarily because of market demand but because the retailer was financially
sound and could pay the wholesaler immediately. If the product demand is
more than the supply, the wholesaler or retailer would ask for a premium. This
would lead to speculative trading as well as uneven distribution in the market.
Gaps are exploited by new competitors and smaller firms who served these
niches. To overcome this problem and respond to market conditions, more
hubs need to be created in different parts of all states and from these hubs,
spokes, or small retailers and commission agents should reach out to smaller
markets.
Fig. 9.2 sums up the concept of length and width of the distribution system. As
one may observe, increasing the length of the distribution often distances the
customer from the manufacturer. This can affect the quality of feedback that
the latter may want from the market place. To overcome this problem of
feedback, most firms now insist on their channel members to giving
information on customer preferences and expectations. Some of them even
directly contact opinion leaders among customers to get a direct feedback. For
example, in the automobile component industry, a mechanic meet is a common
promotional tool used by many firms. The firms also use these parameters to
163
Sales Management understand how their products are working vis-à-vis the competition and gauge
the expectations of the mechanics. These meets also generate new product
ideas. In consumer product companies, this problem is overcome through
periodic market researches, consumer panels and the like.
SAQ 9
Market Market
Market
Market
Market Market
Market
Market Dealer/
Market Wholesaler
Market Hub in
Market Market market place
at district or
Market block level
(Dealer Hub)
MAJOR Market
Market HUB
Market Market
Market
Market
Market Market
Market
Market
Franchise
Market Market (Major
Market Hub of
Parent
Market Market Company
Market
Market Market
Market
Market
Market
Fig.9.2: Length (i) and width (ii) of channel of distribution. Hub and spoke
pattern of distribution of a soft drink firm
164
Factors Determining the Length of the Channel Pharmaceutical
Product Launch
From the above discussion, it may be concluded that following factors will
determine the length of the channel of distribution.
The larger the market size, the more economical it is to indirectly serve the
market and hence the longer the channel. Conversely the smaller the market,
smaller the channel.
If the average order lot size is small, it is better to have a longer channel than
when the average order is in bulk or if a container load is bought.
If the product and the market require a high level of service and it is a major
factor in the buying decision, it is advisable that the firm keep a shorter channel
like zero or one level only.
If the customers shop for a product assortment it is advisable that the firm
ensures the availability of its product range at all outlets selling complementary
and substitute products. Hence this pushes the demand for a wider channel of
distribution. For example, a car buyer would prefer to buy from a dealer who
offers him or her a choice of brands as well as the full range of car accessories.
Hence, for the car manufacturer and the accessories manufacturing firm,
availability of their brands at all dealerships is important.
SAQ 10
1. Manufacturer-stockist-wholesaler-retailer-consumer.
2. Manufacturer-wholesaler-retailer-consumer.
3. Manufacturer-retailer-consumer
4. Manufacturer-consumer.
5. Manufacturer-C&F agent.
SAQ 11
After the product is launched in the market it is very much important to find
out the market behaviour for the product and based on those observations
166
further course of action or marketing strategy can be decided. The feed back is Pharmaceutical
taken by the medical representatives from the dealers, retailers, physician, Product Launch
nurses, and pharmacists. The feed back form is a structural one and gushes
with relevant columns are made to collect the info. This info is accomplished,
analysed and decisions are taken based on these info for further improvement.
9.13 SUMMARY
The event of product launching involves all channel agents like wholesaler,
stockiest, retailers, product managers, medical representative team which
provides an easier process for the product to the marketing channel to reach the
end user. Over all it is a coordinated process involving all the marketing agents
to provide the product an appropriate place in the marketing mix.
3. What is a visual promotional Aid for pharmaceutical products and what are
its various features.
9.16 ANSWERS
168
Retail
UNIT 10 RETAIL COMMUNICATION: Communication:
Sales Display
SALES DISPLAYS
Structure
10.1 Introduction
Objectives
10.2 Objectives of Sales Displays of OTC Products
10.3 Principles (and Aesthetics) of Display
10.4 Types of Display
10.5 Managing Displays Effectively
10.6 Training Retailers
10.7 Motivating the Retailer
10.8 Summary
10.9 Key Words
10.10 Terminal Questions
10.11 Solutions and Answers
10.12 Further Readings
10.1 INTRODUCTION
Retailing of pharmaceutical products in India has undergone a significant
change in the last two decades. Not only there has been a quantitative increase
in the number of retail medicine stores but also their size, location, nature of
selling operations, exteriors as well as interiors, and merchandise displays etc.
have seen a qualitative improvement. This improvement, however, has been
more pronounced in the retail medicine stores located in metropolitan cities and
urban towns. Over there we notice an increasing use of various methods for
attracting customer traffic at the stores. One of such methods is the sales
displays.
Meaning of Sales Displays
Believing in the concept of “come and get it, we have it”, dales displays are in-
store presentations and exhibitions of the products alongwith the relevant
information. Effective displays increase the interest of the shoppers in the
products on display and lead to increasing the level of the pass-by ratio and
hence the sales. Sales displays have come to form an integral part of store
atmospherics and play a useful role in medicine retail store promotions.
However, in case of pharmaceutical products, the sales display is made only
for the over the counter (OTC) products.
Objectives
After reading this unit, you should be able to:
• explain significance and purpose of sales displays;
• describe principles of display designs and types of displays; and
• outline the planning and execution phases of effective sales displays
management. 169
Sales Management
10.2 OBJECTIVES OF SALRS DISPLAYS OF OTC
PRODUCTS
• attract people who otherwise might not go into the store, such as passers-by
out window shopping, to come inside,
• after they are inside the store, whether they came in to buy or just to
look, expose them to buying suggestions by counter displays and
literature, and
• those who come in to buy something, induce them to buy a larger supply by
smart packaging or display, or to buy additional products.
The power of sales displays in accomplishing the above objectives can be felt
by visiting retail stores say Bata, Raymond’s, Intershoppe, Akbarally's, Flury's,
Benetton, Singer's Kitchen Collection, Usha-Shriram, Titan Watches and Ceat
Shoppe to name a few. The effect of sales display is remarkable in case of
company operated showrooms. However in case of pharma products the effect
is of low degree and also limited to OTC products.
Effective displays result from the use of both the design principles as well as
the creative and artistic talents of the designers. Some of the important design
principles (see Fig. 10.1) are discussed below:
170
Retail
Communication:
Sales Display
Principle of Proportion concerns with the relative sizes of the various objects
of displays. It involves the positioning of objects in a certain pattern’. Popular
display patterns are: the step, fan pyramid and zigzag (see Fig. 10.2)
171
Sales Management
Use of giant Easter eggs in the show window of Flury's at Calcutta, of snakes
and ladder game at Raymond's and placing of chotiwala person at a restaurant
in Rishikesh near Haridwar are some examples of displays based mainly on
this principle.
172
SAQ 1 Retail
Communication:
Which category of products are showcased in a medicine store? Sales Display
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
The closed displays, on the other hand, keep the products within the glass
windows or pre-packaged form. Counter service retail stores and those
stores that sell expensive items (say jewellery) or fragile products generally
use closed displays.
Bata, probably, was among the first to introduce the theme displays, initially
for their range of footwear, and now for their whole host of accessories.
Imagination can perhaps be the limiting factor to such creative theme
displays one comes across now. For instance, once around Christmas
Raymond's had a window display depicting the story of three kings and the
shepherds with the underlying aim to display Raymond's blankets which
were used as coats by the shepherds. Similarly, Intershoppe played on the
“denim magic” theme – even dressing windows in denim blue to sell its
range of jeans and jean accessories. Renowned beautician Shahnaz Hussain
projects the ethnic image to promote her herbal range of cosmetics at her
Saloons in India and abroad.
5. Unit Displays: Unlike the related displays, the unit displays use
merchandise that is identical in size, colour, shape, use etc. for display
together as one unit and at one place. Generally the display of knives or
spoons in cutlery, shoes, bags, shirts etc. as seen in a good number of stores
follows this pattern.
7. Rack Displays: These are mainly used by clothing and household goods
retailers for neatly hanging or presenting the products. A variety of vertical
chrome or steel tubing racks in circular and side wards shapes as well as
mobiles are used for display.
174
Cut Cases and Dump Bins also find use as inexpensive and effective Retail
displays. Used at wholesale and large discount sale stores, merchandise is Communication:
left open in these cases and bins for providing ease of handling to shoppers. Sales Display
SAQ 2
In order to get maximum advantage from sales displays it is necessary that these
be organized and managed effectively. The process of display management can
be divided into two phases:
• checking the quality and features of the display fixtures procured for
use in displays
• attending to display related aspects such as store name board, store front,
display window size, style and colour of display signs to be used, and
display window lighting and atmospherics including floors, walls, ceilings,
ventilation, cooling, heating etc.
1) It must be easy to set up, and sturdy to stand up well. Should have its own
easel or base and not require fastening, tacking or attaching to any other
fixture.
Sales displays at the retail store can be organized either singly by the store
owners or jointly with the manufacturers of the products. The manufacturers
176 sponsored product displays at retail stores carry one more important dimension.
This relates to selling of the display scheme to the retailers and obtaining their Retail
cooperation for proper usage of display material and scheme. Communication:
Sales Display
Motivating and Training Retailers
This relates to the zeal with which the retailers support the manufacturer’s
efforts. In other words, for maximising results from sales displays, participating
retailers need to be convinced of the objectives, and trained as well as
motivated to get their utmost cooperation in the conduct of sales displays. The
remaining part of this unit covers this aspect.
With growing competition for the limited display space at the retail store on the
one hand, and rising costs of organizing displays on the other, it is becoming
necessary retailers participation with equal enthusiasm.
It is not unusual to find that not all the display schemes offered by
manufacturers get retailers participation with equal enthusiasm. An
investigation into the reasons for retailer's poor interest in some of the display
schemes pointed out to the following inadequacies:
A Company Practice
4) All displays should be placed where they can be seen and read by the
customer.
5) Displays designed to be hung from the ceiling should be hung low enough
for the customer to read and look over easily.
6) All displays should be placed where they will not conceal merchandise.
7) Never place displays where they will have to be moved back and forth by
salesmen when taking care of customers.
With a view to motivating retailers to put in their best efforts in the conduct of
sales displays, sponsoring organizations encourage them by:
10.8 SUMMARY
Pyramid display
arrangement : Display arrangement in the shape of a
three dimensional pyramid, with each side
presenting an attractive triangle (see
Fig. 2.3).
Zig-zag display
arrangement : A display arrangement which uses the basic
approaches of step and pyramid display
arrangements. The merchandise put on it
appears to be zig-zag along the way. (see
Fig. 2)
2. Using the above checklist compare the effectiveness of sales displays in any
of the following three cases:
i) Chemist shop
ii) Cosmetic shop
iii) Consumer durable store
180 iv) Beauty parlour
v) A jewellery shop Retail
vi) Book Stores Communication:
Sales Display
10.11 ANSWERS
1. The OTC products like soap, pain killers, antiseptics, sanitary products are
displayed in a medicine store.
2. Hair oils, dye, cosmetics, antiseptics, sanitary napkins, baby food etc. is
found as sales display in a medical store.
Bates, Albert D, Retailing and Its Environment, New York, Van Nostrand,
1979, p. 128
Burstiner, Irving, Basic Retailing, Illinois, Irwin, 1986, Chapter 20 Lewison and
Delozier, Retail Marketing, pp 67 2-7 3
Kerkar, Urshila and Cordo, Dhur (1989) Putting up a Smarter Front, The
Economic Times (ET Esquire) 28 Oct., page II.
Phillip Kotler (1992) Marketing Management, Prentice Hall of India Pvt. Ltd.,
New Delhi.
Stern, Louis Wam El-Ansary, Adel I (1988) Marketing Channels, third edition,
New Jersy Prentice Hall.
182
Job Analysis,
UNIT 11 JOB ANALYSIS, Recruitment and
Selection
RECRUITMENT AND
SELECTION
Structure
11.1 Introduction
Objectives
11.2 Nature of the Sales Job
11.3 Sales Job Analysis
11.4 Recruitment
11.5 Recruitment Sources
11.6 Selection
11.7 Selection Tools
11.8 Conclusion
11.9 Summary
11.10 Key Words
11.11 Terminal Questions
11.12 Answers
11.1 INTRODUCTION
Attracting and selecting new sales personnel is an important aspect of the sales
manager’s job. This unit on job analysis, recruitment and selection will tell you
about the procedures used for obtaining sales recruits with the potential
capability of becoming good sales people. Once this pool of talent has been
generated, it becomes feasible to select the individuals who match the needs of
the organisation. Selection is a step-by-step procedure that the sales managers
go through to staff the sales organisation. Selection which follows recruitment,
requires that the sales manager must reverse the roles and become a buyer
instead – a buyer of sales talent and potential.
Objectives
All sales related jobs, irrespective of the type of industry, have very distinctive
characteristics. Some of the characteristics are as follows:
i) As sales personnel works in the field, away from the head offices, they are
responsible for managing their territories or accounts. Therefore, sales
personnel are expected to take their own decisions for planning and
executing their individual activities.
ii) Most sales persons, while on their journey cycle, get fewer opportunities for
interactions in person with their supervisors. Most of the time they provide
feedback or receive instructions, telephonically or through fax in their hotel.
iii) The third characteristics of the field sales job is that the sales personnel
remain away from their home and family for days together. This is a regular
feature. In some consumer product companies sales people travel for as
many as 21 days in a month.
iv) Another important aspect of the sales job is the job monotony. Each sales
person is doing the same work, repetitively with different customers. For
example, a medical representative, makes the same presentation to all
the medical doctors, day-after-day.
Each of the above characteristics have specific implications for recruitment and
selection, and therefore, it is recommended while you are developing your
recruitment and selection policies, you should not overlook the above points.
Accordingly, job specifications should be decided.
The starting point of all sales force management activities is the Job Analysis,
as shown in Fig. 11.1.
184
Job Analysis,
Recruitment and
Selection
In fact, the job analysis relates to the identification of job objectives, duties and
responsibilities, analysis of working conditions, performance norms and the
position in the organisation hierarchy to identify the reporting relations.
Typically, a job analysis helps in three distinct ways. Most importantly, it helps
in the Job Description, i.e., in identifying various activities-major and trivial, to
be performed under the job It also helps in identifying the qualifications, and
individuals characteristics, in relation to the job, which is called job
specifications.
Once the job specifications are laid down, it becomes easier for a company to
initiate the process of recruitment and selection. Also training can help a sales
person to fulfil job responsibilities more effectively.
None the less, it is generally believed that recruitment and selection process
should be such, that it should help you to handpick those sales persons with `just
right' kind of personality, since it is difficult to develop personality through the
training programmes. Job Analysis also helps in clearly identifying the job
performance norms based on which the job evaluation can be done. Such an
exercise provides a good bases for compensation management.
(In the remaining part of this unit issues related to recruitment and selection
have been discussed and in a separate unit sales training has been covered).
186
11.4 RECRUITMENT Job Analysis,
Recruitment and
Selection
Once a company has determined the number and kind of salesmen it requires,
the next step in the selection is to get the right applications, in sufficient
number, for the positions. All the activities involved in securing the
applications for the sales positions are referred to as Recruitment. It does not
include, but is followed by the selection process to evaluate and screen the
applicants. The nature of recruitment effort for sales personnel differs from one
company to another, mainly with respect to their recruitment sources. The
recruitment policy of a company is influenced by its selling style, products,
customers, financial resources and sales management policies. Different
companies call for individuals with widely varying abilities, skills, education,
training and experience. The scope of recruitment effort is influenced by the
number of recruits desired, which in turn, is influenced by the size of sales
organisation, rate of turnover, the forecasted sales volume distribution channels
and promotional strategy.
Advertisements
Employment Agencies
Many companies use employment agencies to get the recruits for the sales
positions. To use this source effectively, sales manager must ensure that the
agency understands the company and its needs thoroughly. Whenever an
agency is used, it should have the clear' understanding of the job's objective,
job specifications and the literature about the company. Also agencies need
time to learn about an employing firm and its unique requirements-thus
considerable gains accrue from continuing relationships with agencies that
perform satisfactorily. If the agency is selected carefully and good long-term
relations are established with it, the dividends can be satisfying.
Educational Institutions
11.6 SELECTION
After a company has determined the type and number of salesmen it needs and
the applications for the job have been received, the management is ready for the
third and the final stage of the selection system, i.e. selection process. It
involves processing the applicants to select the individuals who best fit the
needs of a particular company. The sales force selection process refers to the
steps, the sales management goes through to staff the sales organisation.
Specifically the process involves
The basic objectives of the selection process is to gather information about the
applicants for sales job, which is used for predicting their success/failure
probabilities. A selection system can be visualised as a set of successive
screens at any of which an applicant may be dropped from further
consideration. It can range from simple one step system consisting perhaps of
nothing more than an informal personal interview to a complex multiple step
system. The following figure shows an example of a selection system
consisting of seven steps.
190
Employment Job Analysis,
offer Recruitment and
Selection
Physical
exami-
Expenses
nation
Psycholo-
gical tests
References
Interview(s)
Former
Appli-
Preliminary cation
interview
Time Reject
The type of selection tools and their order of arrangement varies from company
to company. Each company must design its own selection system to fit its
information needs and budgetary limitations. The factors like the size of
company, type of industry, the type of selling job, the financial condition of the
company, affect the selection policy decisions of the firm. Management must
compare the cost of each tool with its ability to predict success/ failure
probability (i.e. its helpfulness in hiring decisions) for deciding the type of tools
to be used for selection process. For sequencing the tools, the principle that is
generally followed is to use inexpensive and brief tools like short application
form, brief interview or a simple test, in the initial stages of the selection
process. The purpose of initial screens is to eliminate, as soon as possible, the
obviously unqualified/undesirable recruits at the least cost. The more expensive
and time consuming tools are used in the later stages of the selection process.
The commonly used tools for selecting the salesmen are as follows.
Application Form
It is one of the two most widely used selection tools (the other is the interview).
Generally, the application forms used by most of the companies fall under two
categories: Short Application Form and Detailed Application Form. 191
Sales Management Short application form is ordinarily used as an initial screening device. It asks
for the factual information about the candidate in brief, so as to serve its
purpose of eliminating the obviously unqualified applicants at the least cost
and quickly. It includes items such as personal background, education and
experience. This form can either be provided by the company or in the
alternate, the applicants are asked to apply by sending their bio-data in brief.
Detailed application form is more extensive and covers each topic in depth. It
is designed by each company according to its own information requirements. It
varies widely from one company to another, for the designing depends upon
the detailed description of the sales job. For example; a detailed application for
sales engineer will be quite different from the detailed application form for
medical representative. This form may be used as the only application form or
alongwith the short application form. A longer form may be used as an initial
screen if it is used to the exclusion of the short form. The facts stated on the
form can be the basis for probing in an interview, for instance, by asking
several questions related to the job experience as stated on the form. Also, if
the applicant passes through the initial screens, management may need to refer,
many times to the information stated on the form. This form is also used as a
source of information to study the backgrounds of its good and poor salesmen
and to establish scores and weights on specific requirements.
Information on the application form: Some of be factors that affect the type
and amount of information requested on an application form, may be
i) The objective, the company has in using the application form-if it serves as
an initial screen, it is shorter than one that will be used for complete
personal history record.
ii) The other selection tools and records used, often influence the design of the
application form. Use of patterned inter-view, for instance, may enable a
concern to shorten its form. On the other hand, a firm may want to duplicate
its questions in order to check on a recruit's honesty, by seeing, if his
answers on the form coincide with those obtained from other sources.
iii) The nature of the job is another factor that influences the questions asked
on the application form, because different sales jobs call for different
qualifications. A firm trying to hire men with 5-10 years of sales experience,
for example, is not so concerned about a recruit's activities in school and
college. The information required on the application form., for hiring a
salesman, for sales engineer's job to sell the technical product will be
different from the information for hiring door-to-door salesman for selling
low priced consumer product.
iv) Another factor is the degree to which the selection function is
decentralised. If home executives take part in the hiring of salesmen, the
application form, probably, is detailed. But if territorial managers do the
hiring, the form may be short because the other tools, especially the
interviews, can be used more extensively.
Ideally each company should prepare its own formal application form, since no
two companies have precisely the same information requirements. But, if a
company has only a small sales force and recruits relatively few people, the
time and cost of preparing its own application from may warrant the choice of
a standard form. Certain items of information, which are almost always
relevant to selection decisions, make the standard form the information that is
typically requested on standard form includes personal background, education
and employment record. Company using standard application form can obtain
the additional information required, during the interview.
SAQ 2
What are the informations sought in the short application for a Medical
(Trainee) Representative?
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Sales Management ……………………………………………………………………………………
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Interview
The interview is the most widely used selection tool and in some companies, it
comprises the entire selection system. This tool may be used as preliminary
interview for initial screening of applicants and plays an important part in the
subsequent stages of the hiring process as final interview. This is the most
satisfactory tool to find out something about conversational ability, general
appearance, personal impact on others and certain behavioural aspects.
Personality traits like initiative, imagination, aggressiveness, tactfulness;
enthusiasm can come out, when an applicant is talking. Another purpose of
interviewing is to verify and supplement the information obtained through
other tools. Unusual or omitted references on the application form can be
discussed, or more details about personality, attitudes and previous work
experience can be explored. For example, the applicant might have stated that
he was a district sales manager in some previous job. The prospective
employer may ask: What were the man’s responsibilities? How many
employees did he supervise? What were his administrative duties? It is
important that the interview serves as a two-way channel of communication.
The interview is not only a means by which a company determines applicant’s
fitness for the job; it also offers the employer an opportunity to answer the
recruit's questions about the company and the job. He can be told about such
things as the nature of the job, the physical and social conditions involved, the
compensation, the nature of training and supervision and the opportunities for
the future. The nearer firm is to hiring a man, the more information it gives to
an interviewee.
Who and where: Persons to do the interviewing and place for interviewing
depends upon the she and degree of decentralisation of sales Organisation. In
large and highly decentralised organisations, it is done at local and regional
level by district/branch/regional sales managers e.g. New India Assurance
Company. In medium size organisations with less degree of decentralisation,
initial interviewing is handled at the branch level and final interviewing at the
head office. Interviewing is the responsibility of top personnel of sales and
marketing department in small and centralised organisations.
How many: Number of formal interviews vary .with the selling style of the
company. One large steel which needs salespeople do the highly specialised
selling to important customers, puts the applicants through three interviews,
involving regional sales managers, the general sales manager and marketing
vice-president. An office supply manufacturer, which requires sales personnel
for routine trade selling, many hire applicants after two interviews. In another
194
situation, where salesmen are required for door-to-door selling of simple Job Analysis,
products, one interview is enough together the necessary information. Recruitment and
Selection
When: The interview may be used at the initial stage of screening process as
preliminary interview and it also usually plays an important part in the
subsequent stage of the hiring process, as final interview. At the initial stage,
its main purpose is to quickly eliminate the applicants whose qualifications do
not meet the job’s basic requirements. For example, a few of the company
executives visit the college campus to do the initial screening of people, who
have responded to the company’s advertisement in the college. The
detailed/depth interview is used at the later stage of the selection process. It is
more time consuming and requires people with expert skills to probe the
personality traits of the candidate in depth.
Techniques of Interviewing
iii) Semi-structured interview: Most firms today use interview that falls
somewhere between the two extremes discussed above. Usually the
interviewer has in mind a prepared outline of topics to be covered during 195
Sales Management the interview and also has the freedom to deviate from the plan and to
determine the depth to which a topic will be pursued for each candidate, at
the time of interview itself.
Guidelines for interviewing: Some general guidelines that will assist one
in doing the effective interviewing are suggested below:
• Taking few notes: Most interviewers will need to refer to notes about
the performance of the candidate at the time of the, interview, for
evaluating him, for selection decision. However, taking notes during an
interview distracts the applicant and slows down the tempo of the
interview. So, in most of the situations, candidate should be marked on
the evaluation sheet after he/she has left the room.
• Select a suitable environment: The interviewer must make sure that the
setting is appropriate and conducive for interviewing and there are no
interruptions during the interview.
SAQ 3
What is a structured interview?
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Psychological Tests
i) The firm hires a relatively large number of men and its cost of training
per person is quite high.
ii) The firm is hiring young inexperienced men about whom little is known.
iii) The persons being selected are not likely to be test wise, i.e. danger of
faking is minimised.
iv) The executives responsible for interviewing the recruits are not adept at
discovering personality traits and selling aptitude.
v) In companies, where the cost of a man’s future development is high, the
expense of testing may be a small insurance premium, just to be more
accurate in judging a candidate.
Tests of mental ability: Give the administrator some idea of the man's present
abstract intelligence. These tests are designed to show how well a person
reasons, thinks, and understands and thus measure the abilities like problem
solving and learning. Beyond a minimum level, this type of intelligence is
seldom of vital importance in selling. In the alternate, if the sales job requires a
man with higher than average intelligence, because of its being a complex job,
then probably such intelligence tests should be made a part of the selection
process.
Tests of special abilities: These tests measure the sales aptitude and the
special abilities required for a person to be successful in sales position. Sales
aptitude tests are designed to find out the recruit's behaviour in certain common
selling and social situations. One such test asks, “You are a sales clerk. The best
of your response to the customer’s objection, ‘It is not exactly what I want’,
would be:
a) Do let me show you another style that is very popular this season.
b) This is the latest style.
c) I am song you didn't like what we have.
Interest tests: The basic assumption implicit in the use of interest tests is that a
relationship exists between interest and motivation. Hence, if two persons have
equal ability the one with greater interest in a particular job will be more
successful salesman. Interest tests measure the extent to which one's interests
are similar to those of successful people in a given occupation: Probably, a
person who scores low on an interest test will not make a good salesman.
These tests are relatively easy and inexpensive to administer.
ii) Test reliability: It refers to the consistency of test results. A test has
reliability, if an individual gets approximately the same score on
subsequent retesting in the same type of tests. Perfect reliability is given the
maximum score of 1. The tests having the reliability near one, are
considered as reliable tests for use in selection process.
Reliability
iii) Test objectivity: If the scorer’s opinion does not affect the test score, it is
an objective test. For a good test, it is important to have high objectivity.
iv) Time effort and cost: Of administering the tests must be compared with
their benefits.
How the psychological tests should be used: Any test should be used only as
an aid to judgement, and definitely should not be the deciding factor in
determining who should be hired. It is a mistake to automatically accept or
reject a given applicant on the basis of his test scores. They are a tool to assist
the sales executive in selecting the right kind of salesmen, but they should not
relied upon the exclusion of other tool. Test results may help in avoiding a
serious error, but they must not make the selection decision for the manager.
Sales executives need to recognise the fact that psychological testing, although
capable of making a valuable contribution, is but one step in the selection
system. The sales manager should not believe that the best score on a test
means that the man is the best prospective employee. All that can be said is that
a man does or does not fall within a range and all those who do fall within that
range should be judged as being equally qualified for the job. Test results
should be used to probe deeper into any questionable areas.
SAQ 4
Physical Examination
Many sales jobs are very demanding physically and/or mentally. So, near the
end of the selection process, some companies require a physical examination to
eliminate the candidates who do not meet the minimum physical qualifications
deemed necessary for the job.
SAQ 5
What should be the physical health of a Medical Representative?
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11.8 CONCLUSION
Appropriate recruiting and selection policies and procedures, and their skilful
execution, result in greater overall efficiency of sales department. A higher
grade salesperson is produced, and the advantages of having such employees
make an impressive list-better work quality, improved market coverage,
superior customer relations and a lower ratio of selling expense to sales.
Moreover, good selection fits the right person to the right job, thereby
increasing job satisfaction end reducing the cost of personal turnover. In
addition, training costs are reduced,other because those hired are more capable
of absorbing training or because they require less formal training. 201
Sales Management
11.9 SUMMARY
The recruitment and selection of sales people constitute one of the primary
responsibilities of sales management. After a thorough analysis of each sales
job, the sales manager prepares a list is of qualifications to be used in
recruiting. Depending upon the type of job to be filled and company policy, the
sales manager then seeks applicants through various sources-educational
institutions, other departments within the company, employment agencies,
advertising and even competing or non-competing firms. Managers must
evaluate the pool of applicants in order to select the most promising candidates.
The selection process involves the use of application forms, inter-views,
references and psychological tests in order to identify those persons meeting the
job qualifications. The final step in the hiring programme requires that the sales
manager decide which, if any, of the candidates should be offered selling
positions.
1. One sale executive claims he knows a good man when he sees one, and
therefore, he does not like to be bothered by so called scientific selection
process? What can you offer to refute this claim? Would your answer be
any different if you knew that the sales manager who made the statement
had a low rate of turnover in his sales force and was running a highly
profitable operation?
4. The following firms want to hire salesmen, and as recruiting sources, the
executives are considering-other departments of the company, competitors
salesmen and educational institutions. Evaluate each of these three as
sources of salesmen for each company:
11.12 ANSWERS
204
Training the Sales
UNIT 12 TRAINING THE SALES FORCE Force
Structure
12.1 Introduction
Objectives
12.2 Logic of Training
12.3 Training Process
12.4 Areas of Sales Training
12.5 Process of Identifying Training Needs
12.6 Methods of Identifying Training Needs
Self Observation
Reports
Survey of Questionnaires
Face-to-Face Interviews
Focus Group
12.7 Learning Styles
12.8 Designing and Conducting the Programme
Self Learning Modules
Class Room Training and Refresher Courses
On the Job Training
12.9 Trainer’s Abilities
Analytical Abilities
Educational Abilities
Training Techniques
Ensuring Participants’ Participation
Course Organisation
12.10 Training Follow-Up
12.11 Summary
12.12 Key Words
12.13 Terminal Questions
12.14 Answers
12.1 INTRODUCTION
If you ask any sales person or a sales manager about how did they learn the
selling skills, majority of them will answer, ‘by experience’. The statement,
however is really useful when we learn the correct things by experience and
more importantly when we are able to use the lessons successfully. But what
happens when we make mistakes? Next time we don’t do the same mistake and
we say, “I learned it all the hard way.” It is suggested that, as training manager,
you should be sure to check what he learnt the hard way. However for a
pharmaceutical organisation the Medical Representative has to be trained on
the medicines the company is dealing with.
There are salesmen who have never learnt the art of closing their sales. There
are others who have talked too much for all the years they were in selling. In 205
Sales Management fact, there are still many more, who, never discovered the best way to sell or
manage their time. Experience alone is perhaps never sufficient. We all have to
learn from the knowledge and experience of the others. This is where the right
training can make a difference. Training can help transform a below-average
salesman to an average salesman, or the average salesman to sell higher and the
top salesman to reach newer heights.
In a competitive market, sales training can bridge the gap between success and
failure. Customers generally evaluate a company’s product based on the
salesman’s performance, confidence or lack of confidence, inability to fully
explain the product benefits, etc. When the market is competitive the customer
may place the order with salesman who performs better than the other in a sales
interview.
Objectives
However, the more important part is when the participant uses this new
knowledge, skills and attitude at his work place to get better results, than he
was getting prior to training. These results will benefit the organization and
will add more value to the organization. Thus to consider the total value of any
training, it is important to consider the sequence of training activity in its
totality, i.e., before the training, the training event and after the training.
Identifying
Training Needs
Developing Training
Resources
Assembling Training
Materials
In case of pharma products, the M.R. will be trained each time a new product is
introduced in the market. A training need can be defined as a gap between the
desired level and the actual level of knowledge, skills or performance that can
be bridged by training. The starting point for organising and conducting an
effective training programme for the salesmen is the careful and precise
identification of training needs. Well intentioned, but general sales training
may not yield good results. To the salesmen it may not appear to be tailored to
their needs, or it failed to take account of the special selling situations they
generally face.
Thus it is very important to perceive and identify the individual's training needs
and then decide about the objectives and contents of the training programme.
The identification the sales training needs is a rational undertaking and it has to
be done in proper sequence, which are as follows:
The first step in the identification of the training needs is to define the jobs, to
be done, the specific tasks involved and the performance standards required.
This involves writing of the jobs description.
Secondly, specifying what knowledge, skills and attitudes are needed to achieve
the standards set for the job. Based on the job description, a training needs
analysis can be done setting out the knowledge, skills and attitudes. Some
examples of such an exercise are given below:
208
Job description: Liase with companies and organisations Training the Sales
Force
a) Make contact Who they are? Establish mutual We all need all
with Where they respect, the extra
Representatives operate? ‘salespersons’
Sell one self,
we can get
b) Maintain contact Who they know? Establish mutual
for mutual Who knows benefits
advantages them?
209
Sales Management Job description: Make effective sales contract
Thirdly, define what knowledge, skills and attitudes each salesman has, how
and what performance standards each is achieving. The collection of this
information requires the setting up and constant use of an effective salesman
performance appraisal system. It also involves agreement on measurement
standards and techniques. Fourthly identifying the training gaps in each areas of
knowledge, skills and attitudes.
Lastly, define the training priorities for the current period, i.e., to identify what
are the training needs in the immediate future, in the mid-term and in the long
term, and accordingly prioritise the training activity. 213
Sales Management SAQ 1
What is training need?
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For the success of any training it is of utmost importance that the training needs
are identified, objectively and correctly. Training need analysis will help in
identifying employees who need training and also you can set specific criteria's
to measure the results of training. Some of the methods used for identifying
training needs are:
Observations can work only when a salesman is observed doing his job,
continuously for a specific period, by an observer.
Advantages: Observation gives you an idea about the actual working of a
salesman. It is a low cost technique with minimum disruption to the work.
Also, in this technique you yourself observe the salesman and thus the bias is
avoided, in the observations.
12.6.2 Reports
Any organization will have number of reports that record different aspects of
job performance regularly, like, work records, sales output, sales trend, etc. A
careful study of these reports can help in identifying training needs.
Advantages: You have a long track record of performance which can be used.
The salesman is not aware that you are watching him. In this method, you do
214 not incur any additional cost.
Disadvantages: As the quantum of information available through the sales Training the Sales
reports is large, his method is time consuming. Force
These are the written forms that are completed and returned either by the
Salesperson himself or by his manager, after filling them up.
Advantages: These forms bring out opinions and facts about a current
situation by questioning the people involved. These are useful in getting
information from a large or geographically dispersed people. The respondents
can complete them at their convenience, without any distraction.
Advantages: These interviews are helpful when you are dealing with sensitive
issues that require explanatory answers. Another advantage of this process is
that you can clarify things by asking questions and also you can observe the
non-verbal clues.
Disadvantages: The salesperson may not like such interviews where you are
making notes. Face to face interview is also a time consuming process.
Advantages: Focus groups offer valuable but general data. With the help of
focus group discussions you can identify questions and issues that can be used
to conduct specific surveys.
As you must have observed, you can use any or all of the above methods for
identifying training needs. Once the data is collected, you need to analyze data
for prioritizing different needs that may emerge. One important point that
should be kept in mind is that during these surveys certain needs can emerge
that cannot be handled by training. These may include pay increases,
incentives, work conditions, etc. Therefore, the suggestion is that when you are
analyzing data you must focus only on those needs that can be addressed by
training. 215
Sales Management
12.7 LEARNING METHODS
When you are designing a training programme, you must keep in mind that
different people, learn easily from different learning styles. Therefore, you
should be able to identify the best learning style. Broadly speaking any person
has one of the following as dominant learning style: Activist, Reflector,
Theorist or Pragmatist. You must appreciate the fact that these are the learning
styles and need not reflect the personality of any individual.
Reflector: He likes to stand back to ponder experiences and observe them from
varied perspectives. He will collect data, himself and from others, and prefer to
think it thoroughly before coming to any conclusion. He prefers to take a back
seat in meetings and discussions and enjoys observing other people in action.
He tends to adopt a low profile. While designing a programme for a reflector,
be sure to include actual case studies and experiences and guide him to make
his own decisions.
For training of sales force, you can use one of the three major types of
programmes. These methods are self study modules, class-room training, on
the job training. However for all the programmes, the planning must be done
comprehensively to ensure effectiveness of the training.
In this programme, the participants are given the course material which they
are required to study themselves. Written totes can be sent, and if needed audio
and video cassettes can be used. This kind of training is useful when you want
the participants' to revise some material or you want to send some pre-
conference study material. The major disadvantage of this method is that you
216
cannot be sure whether the participants have actually studied the material. Also, Training the Sales
in this method, there is no feedback. Force
Once all the information is gathered, the trainer can plan different session of
refresher course which can include case studies, role plays, syndicate
presentations, simulations etc.
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A good trainer is able to analyze the situations and identify the exact training
needs for salespersons. The analytical ability will help the trainer to focus on
issues of prime importance rather than touching superficial issues.
A trainer needs to have the knowledge about the jobs the salespersons perform.
He should also know the principles of communication. It would be still better if
the trainer has some knowledge about the adult learning.
A successful trainer needs to understand what makes people learn and accept
new things. He should have clear knowledge about the different techniques of
training. He should be able to employ such techniques, for maximum results.
• Discussion groups: Trainees are divided into groups and given various
topics, issues etc. which they have to discuss amongst themselves and come
up with probable solutions.
• Questions and answers period, after each session.
• Decision making exercises, e.g. finding product benefits and converting
them into sales presentations for various types of customers.
• Demonstrations: These can be either trainees acting out certain role plays or
video demonstrations or demonstrations by the trainer.
• Case studies: Participate attempt to find the best possible solution for a real
life problem.
Once the total written material for a course is ready, the session can be put into
practice. A good trainer will always keep in mind some basic rules of
organizing a training session, like:
• Punctuality is essential.
• All material related to training like, slides, demonstration pieces, samples,
etc., must be carefully checked before the programme.
• The room where the training is to be held must be checked for adequate
lighting and seating arrangements.
219
Sales Management
12.10 TRAINING FOLLOW UP
Training follow up refers to the time immediately following the training. This
may vary from, the time when learners are still a captive audience, to possibly
months or years after the training. What happens after training is vital to any
training session. After any training session you must gather and analyze
feedback to review training. Measure and analyze results especially in relation
to job performance. Provide additional inputs, if there has been a shortfall, of
similar training programmes are organised in future.
12.11 SUMMARY
On job training on
field training : In on the job or field training the trainer
can make a sales call himself which the
220 salesman observes and learns. In the other
method, the trainer gives feedback to the Training the Sales
salesman after observing him during his Force
sales call. The salesman, in the future calls
thereafter, practices the recommendations.
12.14 ANSWERS
2. The different modules are i) self learning module, ii) classroom training,
iii) on-the-job. For a newly recruited M.R. classroom and self learning is
appropriate.
221
Compensation and
UNIT 13 COMPENSATION AND Motivation of
Sales Forces
MOTIVATION OF SALES
FORCES
Structure
13.1 Introduction
Objectives
13.2 Types of Compensation (Direct)
13.3 Types of Compensation (Indirect)
13.4 Factors Influencing Design of Compensation Schemes
13.5 Criteria for Designing a Compensation Package
13.6 Motivation of Salesforce
13.7 Motivation and Needs
13.8 Salesperson and Motivational Technique
13.9 Summary
13.10 Key Words
13.11 Terminal Questions
13.12 Answers
13.1 INTRODUCTION
The salesforce of any company needs to be compensated adequately to keep its
morale high and to enable it to contribute to its maximum. The direct salary and
allowances etc. are similar for all kinds of companies. However, the direct
benefits (such as incentives and perquisites) provided by each of them may
differ. The general trend is towards increasing the indirect incentives of the
salesforce.
A salesforce is the representative of the company’s philosophy and business
principles. It is the medium which builds the company’s perception among its
clients. The building of the salesforce is a phenomenal task but its maintenance,
as you will agree, is also important. This is possible through proper
compensation schemes including provision of indirect benefits in a planned
manner. In this lesson we shall study the methods adopted by companies in
designing their compensation packages and in keeping their salesforce
motivated.
Objectives
The objectives of this unit are to enable you to:
• describe the importance of compensation;
• explain types of direct and indirect compensation;
• discuss compensation schemes used by different companies;
• enumerate factors influencing design of compensation schemes;
• explain the need for motivating salesmen; and
• discuss the different motivational techniques. 223
Sales Management
13.2 TYPES OF COMPENSATION (DIRECT)
The direct compensation package of salesperson thus consists of the basic pay
+ allowances covering all travel and entertainment expenses etc. In case, the
salesman has to stay overnight, his boarding and lodging allowances are also
provide for. All the above expenses needless to say, are budgeted and
controlled as per the salesman’s route and cycle of travelling. The Medical
Representative is normally required to present necessary vouchers to get his
expenses reimbursed.
The basic salary and other allowances are revised from time to time. They also
increase with promotion of the salesman. More important than the basic salary
are the other benefits made available to the salesman. We shall discuss these in
the next section.
SAQ 1
What are the situations where a high basic salary is fixed for a M.R.?
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SAQ 2
Study a pharmaceutical company you come into contact with respect to the
travelling allowance given to the Medical Representative. Using this, answer
the daily allowances and travelling allowance.
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224 ……………………………………………………………………………………
13.3 TYPES OF COMPENSATION (INDIRECT) Compensation and
Motivation of
Sales Forces
These consists of financial as well as non-financial incentives. The financial
incentives are again in more than one form:
SAQ 3
What is the type of compensation the M.R. selling -2-3 formulations and
tablets will get from a pharma company?
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225
Sales Management Non-financial incentives
The trend these days is to provide other non-financial incentives like:
a) Training programme
b) Awards, recognitions and prizes.
Although the basic structure of a compensation plan may be similar across the
companies, some factors do predominantly shape the structure of the
company’s compensation plan. They are:
The amount of selling effort is directly related with the stage at which a
product is in its life cycle. The compensation structure is a function of
selling effort. So, in effect, the compensation structure is an indirect
function of the selling effort.
When the product is in the introductory stage the company needs a dynamic
salesforce which can establish the product in the desired market. The
salesforce must be enterprising, willing to travel, take criticism easily, have
a good knowledge of the product, have good communication skills and last
but not the least, have tremendous stamina to work. To keep such a
salesforce motivated, adequate compensation is the basic need. So, in the
introductory stage of a product, the direct salary may be on a higher side
but indirect benefits may not be introduced at this point.
When the product has firmly established itself, the salesforce also needs a
break from the monotony. Other indirect benefits like training programmes
in good environmental locals; foreign trips for training and understanding
the market; promotions to much responsible positions are the requirements
at this stage. These programmes not only enhance their knowledge but lend
a new direction of looking at things.
With the break in monotony, certain problems with the product which may
have started emerging get due consideration. Schemes for sales promotion
and dealer promotion which are inevitable at this stage can be designed
with a fresh outlook. The basic increased in salary and incentives, however,
are made as per schedule.
When the product is in the decline stage some fresh incentive schemes may
be introduced in the compensation scheme to generate fresh interest in the
product. The number of people involved with the product also has to
increase marginally. The existing product managers who may be
concentrating on a more successful product at this stage would require
added incentives to revive the declining sales of the product concerned.
You are already familiar with the PLC curve. Incorporating the discussions
we have had above a PLC in relation to changes in compensation over time
would look like Fig. 13.1.
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228
13.5 CRITERIA FOR DESIGN A COMPENSATION Compensation and
Motivation of
PACKAGE Sales Forces
We can now set a few important criteria which must be kept in mind while
designing a salesforce compensation package. These are primarily:
The present day trends lay greater emphasis on the last two mentioned
considerations along with a direct compensation programme inclusive of direct
salary. With selling having become more and more difficult a satisfactory
compensation package is must to avoid high turnover within the salesforce.
Effective selling, therefore, requires creative skills. Thus, the salesforce has to
be kept highly motivated and committed both externally as well as internally. 229
Sales Management Attracting and maintaining a well motivated salesforce is a challenging task.
The confidence and motivation of a salesperson get worn out by the inevitable
rejections he suffers from customers as part of his everyday activities. In some
situations such as selling office automation products (Electronic typewriters,
Computers, Xerox machines), consumer durables (television, refrigerators,
scooters etc.), rejections may greatly outnumber successes. In the case of a
pharmaceutical product the Medical Representative faces the problem like the
physician not responding to the presentation of the M.R. and not prescribing
any of the product in spite of several visits. Thus, motivation of salespersons
poses a major challenge to the management. The challenge of motivation is
magnified by the fact that the salesperson and supervisor are normally
geographically separated, as a result the salesperson may feel isolated and even
neglected. He is prone to frustration of success and failure coupled with extra
working hours. He requires extensive travelling, many days of separation from
family and with sense of risk involved in travelling. Above all he has to live in
the environment of competitiveness with his own colleagues to meet his
targets. In market situation characterised by keen competition he is constantly
exposed to the offerings of the competing manufacturers – in terms of their
sales compensation packages, working conditions etc.
Activity
Stimulus
Needs &
Wants
Every salesperson has different types of needs, goals, and problems of his life
and the leader i.e. sales executive has to understand these needs of each
individuals salesperson of his team before applying the principles of
230
motivations.
According to A.H. Maslow needs can be classified into five categories: Compensation and
Motivation of
1. Physiological Needs Sales Forces
Food, clothing, shelter are primary needs which are ordinarily satisfied.
2. Safety Needs
Protection from threat, danger and deprivation etc.
3. Social Needs
Need to feel that everyone belongs to a relationship, to feel as being
accepted as part of the society.
4. Ego Needs
Needs which satisfy the enhancing of self-image, self-esteem, self-respect
and achievement. Salespersons in general has high level of ego needs.
5. Self-Actualisation Needs
These are the desires of self-development, self-fulfilment and self-growth.
As you all know that level of the needs and understanding of the sales
personnel do not remain stationary. As the sales personnel grows in life, in age
and career, his needs shift and to keep the motivational level high, the
supervisors and sales manager must be able to foresee such changing needs and
desires and must manage for these needs.
The simple motivational tools of early years such as only financial benefits
prove to be a poor method of motivation beyond physiological and safety needs
satisfaction on account of the unique aspects of a salesperson’s job.
Two Surveys
232
Table 13.2: Level of ‘Need Fulfilment’, ‘Need Deficiency’ and ‘Need Compensation and
Importance’ of the salesmen Motivation of
Sales Forces
(Sample Size = 114)
3. Relations with
High High Low
Fellow Salesmen
4. Confidence of
High High Medium
Supervisors
5. Prestige of
Salesmen’s High High Low
Position
6. Recognition for
Medium Medium High
Good Work
7. Control over
Means of Medium Medium Low
Accomplishment
8. Supporting Help
Medium High Low
from Superiors
9. Feeling of Self-
Medium Low Medium
esteem
2) Regular accompaniment
in the field by the sales manager
4) Participation in setting
sales targets.
5) Salesforce meetings/convention.
6) Sales contest/competition.
8) Fear of dismissal or
unemployment. 5 10 15 20 25 30 35 40 45 50 45 50 55
The findings of the study showed that individual meetings between sales
manager and salesmen were thought to be the most effective of the eight
factors taken. Sales contest and competitions were ranked only sixth in
importance, although a more detailed analysis of questions revealed that this
form of motivation was ranked first among the consumer goods companies
replying to the questionnaire.
These are highly regarded by sales managers in the motivation of their sales
teams.
2) Clarity of Job
4) Sales Contests
These are the devices of group motivation. They provide opportunities for
salespersons to participate, gain social satisfaction and express their views
on matters, directly affecting their work. They promote team work, dissolve
social barriers, inspire and raise salesperson’s morale. Most of the
companies in India are now-a-days adopting this method to motivate their
salesforce.
6) Positive Affect
The proper application of praise, positive feedback, and human warmth and
understanding can impel others to perform up to their capabilities. This
must be done in a genuine way and not be perceived as overtly – self
serving.
Another form of motivation through positive affect occurs via small group
and peer relations. Friendship, support and comradeship frequently serve as
vehicles for creating a positive feeling towards the company and job.
8) Freedom to Work
236
9) Reward and Recognition Compensation and
Motivation of
Although sales quotas, sales contents, conventions and conferences have Sales Forces
positive carry over effects, these are short lived techniques of motivating
salespersons. On the other hand reward and recognition of salesperson’s
accomplishments are more enduring and relatively more sound methods of
motivation. Some of the ways to extend recognition and honour to
salespersons include conferment upon the title of “salesperson of the
month/year.” Congratulation telegrams from top management, sales
trophies, offering membership of social clubs, mention in company
newsletter, certificate, etc. Recognition and honour satisfy salesperson’s
need for self-esteem and self-respect. These are like status pay – a public
acknowledgement of the value that management places upon an individual.
10) Persuasion
One of the more common and recommended forms for including high
levels of motivation is through persuasion. In this situation, managers use
rational arguments to convince salespersons that it is in their own best
interests to act in a preferred way. Persuasion has the advantage of getting
people to conclude that their actions were performed out of their own free
will. This leads to higher levels of self direction than reward or coercive
modes of influence where one perceives he or she acts more as a function
or external compulsion than internal volition.
Financial Incentives
Rating
1 2 3 4 5 6 7 8 Notes
Survival
Need for
income to
meet more
than minimum
requirements
Health
Physical and
mental well
being of self
and family.
Security
Need for
stability of
income,
employment,
homelife and
environment.
Acceptance
Need for
acceptance by
family,
friends, peer
groups,
colleagues,
supervisors.
Respect
Need to
receive or
show respect
in home,
social or work
environment.
238
Compensation and
Rating
Motivation of
Sales Forces
1 2 3 4 5 6 7 8 Notes
Dependence
Need for
support and
supervision.
Consolidation
Satisfaction
with present
role/status.
Activity
Need for
physical
and/or
intellectual
activity
beyond
minimum job
inputs.
Recognition
Preference for
public
recognition
rather than
obscurity.
Responsibility
Need to have
and seek
responsibility
rather than
avoid it.
Status
Need for a
feeling of self
worth or
recognition of
status.
239
Sales Management
Rating
1 2 3 4 5 6 7 8 Notes
Power
Need for
power through
position or
knowledge.
Source: Sales Management, The Complete Marketers Guide by Chris Noonan.
13.9 SUMMARY
In this unit we have studied the various dimensions a compensation scheme for
a salesforce can assume. Both direct and indirect compensation play a vital
role. However, indirect compensation is assuming greater importance, of late.
Factors like the PLC, demographic characters of the salesforce; sales strategy,
competitors practices, company policy on motivation and retention; budgeted
amount for compensation, etc. Maintenance of salesforce through adequate
compensation schemes is imperative for the growth of any company. A
salesforce compensation plan should be simple enough for every salesperson to
understand and fair enough for every salesperson to remain motivated.
Motivation of salesmen which forms the other aspect of this unit is among the
most important responsibilities of salesmen. It is not something a manger adds
after the organisation has been set-up and is in operation. It involves basic
relationships that are built into the organisational structure.
2. How does the compensation package differ between the companies selling
different types of products?
4. As the existing salesforce are managing the existing products, and the
company is going to introduce a new product, the marketing work load will
increase. The salesforce has to be rewarded with extra package for the new
product. The extra package may be in form of unit linked incentive or it
may be on percentage of sales volume or it may be a lumpsum amount. In
some cases the incentive may be a promotion or quantum jump in basic
salary of medical representative.
242
Monitoring and
UNIT 14 MONITORING AND Performance
Evaluation
PERFORMANCE
EVALUATION
Structure
14.1 Introduction
Objectives
14.2 Monitoring: Needs and Objectives
14.3 Parameters used to Monitor Salesforce
14.4 Contents of a Sales Report
14.5 Basic Sales Reports and their Analysis
14.6 Performance Appraisal Evaluation
14.7 Salesmen’s Evaluation: Some Basic Issues
14.8 Setting Performance with Norms
14.9 Comparing Performance with Norms
14.10 Case Study: Monitoring and Performance Appraisal of Medical
Representatives
14.11 Summary
14.12 Key Words
14.13 Terminal Questions
14.14 Answers
14.15 Further Readings
Appendix
14.1 INTRODUCTION
Even the best organised sales department will not function effectively unless
the sales effort is planned and controlled on a regular basis. Sales reports form
the basis for the monitoring of sales personnel. Finns need regular sales
information on effort by product line, customer type or by geographic segment
for appraising then salesmen and analysing them for profitability. Most
organisations today have formal performance appraisal systems to aid them in
evaluating their salesforce. In this unit, you will learn about the processes for
monitoring the sales effort and the procedures for performance evaluation
generally used for sales personnel.
Objectives
Once the sales plan has been put into action, it is important for the sales
manager to know whether the sales effort is being operationalised in the way it
was expected to be. Organisations depending upon their own needs, through
periodic reporting or field visits, design a monitoring system, to keep
themselves informed about the activities of the sales-force on a regular basis.
Monitoring has been explained as “keeping abreast of the salesmen’s activities
through a formal feedback system”. It is a vital aid in controlling the sales
effort, and by furnishing a wealth of data about the salespersons day-to-day
activities the monitoring system becomes an input in the formal appraisal of the
Medical Representative’s performance. Sales reports are the basic tool used for
monitoring sales personnel. The sales manager uses the information from these
reports to judge whether sales personnel are calling on and selling to the right
people and whether they are making too many or too few calls.
A well designed monitoring system also aids in the self improvement of the
salesmen/Medical Representative. Regular recording of their own
accomplishments forces individuals to take a stock of their own work, compare
it to their own past performance or their aspirations, and leads them to a
periodic self-evaluation, which may become an effective motivating force. The
basic purposes for which a good monitoring system is designed could be:
a) to keep the sales manager informed about all the sales activities of the sales
personnel/Medical Representative.
b) to enable the sales manager to get data for evaluating performance; for
example, details of doctors called upon, number of calls made, number of
orders obtained, days worked, kilometres travelled, selling expenses
incurred, displays arranged, missionary work performed etc.
c) to enable the sales manager to detect deviations from standard performance
and take timely remedial action.
d) to help the salesperson plan his work e.g. in planning specific approaches
for specific accounts; planning a travel schedule etc.
e) to record consumers reactions and complaints in respect of new products,
price changes and service policies.
f) to record information on competitors activities e.g. new products, changes in
promotion and pricing, changes in service and credit policy etc.
g) to record information on local changes.
h) to build a rich database of territorial information which can be put to a
variety of uses.
i) to furnish information requested by marketing research- i.e. data on dealers
244
sales, productwise.
14.3 PARAMETERS USED TO MONITOR SALES Monitoring and
Performance
Evaluation
The monitoring of salesforce is closely related with the monitoring of sales. One
depends on the other. The sales performance of a company and its salesforce is
measured using a number of parameters on a continuous basis. Some of the
commonly used parameters are:
Though the format of the sales report will vary across companies, some basic
components are common to the sales reports in all organisations. Some of these
components are:
SAQ 1
……………………………………………………………………………………
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246 ……………………………………………………………………………………
14.5 BASIC SALES REPORTS AND THEIR ANALYSIS Monitoring and
Performance
Evaluation
You are now familiar with the type of information sought through the sales
reports. This section discusses the basic types of sales reports and explains how
they can be analysed to monitor sales performance. (Some standard formats of
reports used to monitor salesmen are given in Appendix.)
Weekly sales report: The basic sales report to be prepared by the salesman is a
daily report or a weekly report depending upon again the type of product and its
movement. This report forms a basis for estimating the future trend of sales of
individual products/brands. It also assists in production planning, cost planning
and product portfolio planning.
Tonnage
Week Current Cumulative Comparison with same Comparison with Remarks
% change on last year week last year last week
Product A
Product B
Product C
A study of weekly sales estimates reveals the seasonality of sales, if any. This
enables proper production planning and monitoring of sales performance.
Condensing of monthly figures into quarterly figures is used to establish sales
estimates for the next quarter.
Apart from the basic volume analysis information on other parameters is also
sought.
i) The value of goods sold gives the contribution from each product. This
contribution needs to be maximised.
ii) Sales are broken down geographical area wise to assess the potential
demand and monitor salesmen performance in the light of this information.
iii) A customer wise break-up of sales indicates whether the right kind of
customer is being serviced or whether the salesman is concentrating on a
segment which is not a prospective buyer in the long run. 247
Sales Management Regional sales analysis: The strength of sales region wise is indicated through
this analysis. Variation in regional sales reveals the effectiveness of particular
localised sales developments and the importance of competitors in different
regions. The regional sales figures are adjusted for the area of the region as also
the size of the population of that region.
The boundaries of the regions should be permanent so that trends over a long
period of time can be watched. The unit upon which division will be based is
the buying area. Depending upon the type of product the buying area will
differ.
Wholesaler
Provision
Store
Chemists
Retailers
Independents
Total
Number of Accounts
ii) How do services given by competitors compare with those given by the
company?
iii) The perception of retailers with respect to the company’s product and the
competitor’s product is very essential. The reasons to which retailers
attribute the success or failure of the leading brands is very essential to
determine. The retailers serve as a vital link between the company and the
consumer and it is his opinion which generally forges the link. Also,
technical faults in the product, if pointed out as detrimental to sales by the
retailers need to be rectified.
SAQ 2
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
Every sales manager is engaged in the task of appraising and evaluating his
salesmen continuously, in an informal way. Informal evaluation however is not
enough to arrive at realistic and astute assessment of the worth of a salesman in
absolute or relative terms. The ultimate goal of any evaluation programme is to
make a salesman more valuable to the company. In order to achieve this, the
evaluation programme must involve:
a) A study of the salesman himself – his skills, habits, aptitudes and attitudes.
b) A study of his selling record – his efforts and accomplishments.
c) An analysis of the direction the development function is to take.
There are some basic issues involved in all performance evaluations systems
for salesmen, which require consideration while the system is being designed.
You will note that unless adequate attention is given to these issues they might
result in discontentment of these being evaluated. Some of these issues are:
e) The last issue here refers to the accounting system or the database of the
company as a basis of developing the evaluation system. Actual data taken
from typical sales records are not adequate to provide precise comparison
of salesmen or salesgroup performance. For example, if the product mix
sold by different salesgroups differs, it will be difficult to compare the
performance of the salesmen in the two different groups merely on
accounting data.
You will realise that unless adequate attention is given to these important
details, evaluation may not be very effective. The above issues also underline
the need for developing an evaluation system involving multiple criteria to
make data more comparable.
Sales quotas: Sales quotas are quantitative sales targets assigned to a specific
salesman expressed absolutely either in terms of rupee value or units. They are
the most widely used performance standards. If we assume that the
management is being realistic while setting quotas, this standard can specify
desired levels of accomplishment for sales volume, gross margin, net profit and
expenses. If quotas are based upon valid sales forecasts where the probable
strength of demand has been realistically considered, they represent good
performance standards. However, when they are chosen mainly to inspire or are
based on guesses, they lose meaning as performance standards.
Net profit ratio or gross margin rates per territory: In this case target ratios
of net profit or gross margin to sales, are decided upon for the sales territories.
Each sales territory is considered as an organisational unit that should make a
contribution to the corporate profit. The positive impact upon the salesforce is
that the sales personnel try to meet the ratio by attaining a higher sales volume
and by reducing expenses. On the other hand, this approach may lead the
salesman to concentrate on more profitable products and accounts. The
shortcoming of both net profit and gross margin ratio is that sales personnel
pinpoint the more lucrative accounts in their territory and may not spend
enough time in soliciting new accounts and may overemphasise high margin or
high profit products at the expense of new products which might prove
profitable in the long run.
Sales expense ratio: This performance standard is used to control the selling
expenses relative to sales volume. As many of the factors affecting sales
expenses are uncontrollable for salesmen, target selling expense ratios should
be carefully set, considering the factors which are likely to affect the expenses.
The salesman can manage this ratio by either controlling expenses or by
making sales or both.
The major weakness of this performance standard so that it does not provide for
variation in the profitability of different products. A salesman may meet the
sales expense ratio and yet show disproportionately low profits. In times of
declining business conditions, this ratio has been found to inhibit salesmen
from exerting efforts to generate higher sales volume.
253
Sales Management Companies show different practices as far as defining selling expenses is
concerned. Some companies feel that both indirect and direct selling expenses
should be included while developing this standard. This, however, means that
the salesmen are held accountable for some expenses (the indirect expenses)
over which they have no control. Some companies use the concept of direct
expenses i.e. expenses incurred and controllable by salesmen to define norms-
for selling expenses.
Average cost per call: Target cost per call standards are set to underline the
importance of making profitable calls and reducing expenses associated with
calls different norms may be set for different classes of customers if the cost in
relation to different customers is significantly different.
4. Number of calls.
5. Number of orders.
7. Value of order per call-this is also called the batting average. (In industrial
marketing, the expression hit ratio is used to indicate the percentage of
business obtained against a tender.)
11. Average inventory (average being calculated on the basis of opening and
closing inventory figures).
15. Marketing R.O.I. – Direct sales margin (item no. 10) as a percentage on
working capital (item no. 14).
After norms have been fixed, the periodicity of evaluation can be decided
upon. The following table shows a hypothetical situation using six of the above
variables, and gives a comparative evaluation of six salesmen.
255
Sales Management Table 1: Monthly evaluation criteria, weightage and norms product
As noted earlier, certain aspects of the sales job are not easy to quantify and
measure. Use of some qualitative criteria therefore is unavoidable in evaluation
of sales personnel factors like effectiveness in dealing with customers problem.
Contribution to the team-spirit of the sales team, building up goodwill in the
territory, establishing cordial dealer relationships, affect sales results in the long
run, but their degree of excellence can only be judged subjectively. Most sales
executives do not precisely define the desired qualitative criteria and prefer to
arrive at informal conclusions regarding these criteria. Some prefer to have a
detailed check-list, with subjective factors scaled on a five-point or seven-point
scale on which salesmen can be formally rated.
256
SAQ 3 Monitoring and
Performance
What are the criteria used to evaluate sales performance of a Medical Evaluation
Representative?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
The most crucial and also the most difficult step in the evaluation process is the
comparison of actual performance with the defined norms. The difficulty arises
because evaluation requires an exercise of discretion. The same standards,
indiscriminately cannot be applied to all salesmen as the sales territories
assigned to them differ in terms of sales potential, level of competition,
personalities of sales personnel and their customers. Though variations in
territories may be adjusted by setting territory wise norms, personality
variations cannot and therein judgement of the executive has to be exercised.
The performance of the sales personnel results from many variables, some of
them beyond the control of either the salesperson or the sales management. It
is, therefore, important that while comprising actual performance with the
defined norms, the effect of the other variables that affect performance should
also be kept in mind.
SAQ 4
Study the case problem given below and answer the question at the end of it.
……………………………………………………………………………………
……………………………………………………………………………………
…………………………………………………………………………………… 257
Sales Management ……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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258
Monitoring and
Performance
Evaluation
The field control measures exercised by the Area Sales Managers consist of
insisting on completed daily reports on time. The method of working with
stocks, merchandising ability of the medical representatives are also reviewed
continuously.
Performance Appraisal
SAQ 5
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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14.11 SUMMARY
Evaluation Frequency
or Periodicity : The timing of salesforce evaluation.
4. What are the different reports generated to monitor sales force? How are
they used?
14.14 ANSWERS
Albert H. Dunn and Eugene M. Johnson (1980) Managing Your Sales Team,
Englewood Cliffs, N.J. Prentice Hall.
MS-22, Block-1.
MS-23, Unit-12.
262
APPENDIX Monitoring and
Performance
Evaluation
MONITORING AND APPRAISAL FORMS
Date Prepared by
Territorywise variation Weightage Salesmen Activities
1. Size 1. Growth compared with
national average
2. Market Segments 2. Selling costs / enquiries
3. Transportation Facilities 3. Selling costs / orders
4. Delivery Service 4. Selling costs / sales
5. Local Promotional Media 5. Sales costs to marketing
costs
6. Competitive Activities 6. Number of calls made
7. Territory Cultivation 7. Number of enquiries
received
8. Political Environment 8. Number of orders
obtained
9. Strength of Local 9. Cost per call
Economy
10. Pricing Policies 10. Cost per interview
11. Average value of orders
12. Average gross margin
per order
13. Local advertising
against competitors
14. Number of accounts to
service
15. Average value of
accounts
16. Ratio of customers to
prospects
17. Number of new
accounts opened
18. Number of accounts
lots
263
Sales Management
(B) Productwise Monitoring of Sales Volume
Date Prepared by
Salesman Standard Actual Devia- Standard Actual Devia- Standard Actual Devia- Standard Actual
Perfor- Perfor- tion Perfor- Perfor- tion Perfor- Perfor- tion Perfor- Perfor-
mance mance from mance mance from mance mance from mance mance
norm norm norm
Adapted from: How to Prepare a Marketing Plan, “John Stapleton Gower, Publishing Company
England, 1989.
Date
265
Sales Planning
UNIT 15 SALES PLANNING
Structure
15.1 Introduction
Objectives
15.2 Product-wise Sales Planning
15.3 Territory Management Meaning
15.4 Why Sales Territories
15.5 Steps in Territory Planning
Salesman’s Capacity
Frequency of Calls per Month
Parity in Sales Potential
Minimise Travel Time and Expenses
Suitably Station the Salesman
15.6 Approaches to Territory Design
15.7 Territory Coverage Planning
15.8 Territory Expense Planning
15.9 Control Systems
15.10 Improving Territory Productivity
15.11 Sales Programme Planning
15.12 Planning Sales Manager’s own Itinerary
15.13 Summary
15.14 Key Words
15.15 Terminal Questions
15.16 Answers
15.1 INTRODUCTION
Since, sales planning is an integral part of the overall sales department, let us try
to understand the concept of sales management in brief. The concept and the
role of sales management has been evolving over the years.
There was a time when selling the goods was no problem at all. Orders for
goods produced, were always on hand even before the goods were actively
produced. The problem was to produce enough goods so as to meet the demand
of nearby customers. Maximum time of the management was devoted to
manufacturing problems, while selling and marketing were handled on a part-
time basis.
With the increase in production and setting-up of large scale organisations, the
problems of market expansion started cropping-up. Total production of goods
went so high that nearby customers could not absorb the goods produced, but
even under such circumstances other departments took precedence over sales
management.
The other departments which were preferred over sales management, were
manufacturing and financial department. It was after these departments were
set-up that the sales management came into being. 267
Sales Management As the companies, business and market expansion increased, the distance
between its customers and the company also went on increasing. It was here that
the problem of communication with its customers, on a regular basis, came up.
This function of communication and other aspects of marketing therefore was
also assigned to sales management.
Thus, we can very well infer, that the meaning of sales management has been
undergoing a change over the years. Initially it meant the market expansion and
the management of sales force. Later on all the marketing activities like
advertising, sales promotion, marketing research, pricing etc. were also assigned
to it. But still later the term marketing management was used to define the
broader concept and the term sales management was defined as “Planning,
Direction, and control of personal selling, including recruiting, selecting,
equipping, assigning, routing, supervising, paying and motivating the sales
force.” When looked from the top and given an overall view, the sales
management is responsible for organising the sales process, both within and
outside the companies. Inside the organization, it builds an informal
organisation structure which ensures effective communication not only inside
the sales department but also in its relations with other organisational units. And
outside the company, the sales management has to service as the company’s
representatives with the customers and other external organisations. Apart from
the responsibilities listed above, the sales management is responsible for some
other important functions too. Some of these functions are important in making
some key marketing decisions such as budgeting, deciding the objective, sales
force size, territories etc.
While performing all these important tasks of sales effort management and
personal selling effort, the sales managers have to plan. This planning consists
of sales territory planning, product-wise sales planning, manpower planning
etc. All such planning is the centre of our discussion here.
Objectives
After reading this unit, you should be able to perform following functions of a
sales manager:
Productive sales planning entails planning the unit-wise sales for various
products of a company. This is done, usually in organisations, on annual,
quarterly and monthly bases. Once, the product-wise planning is completed for
the organisation, it can then be divided into regional, area and territory-wise
planning. An example of the product-wise sales planning for a company having
6 products can be as follows:
3. C 20,000 50 10,00,000
4. D 75,000 25 18,75,000
5. E 1,00,000 35 35,00,000
6. F 50,000 80 40,00,000
Rs. 3,13,75,000
Once this product-wise sales planning is acceptable to the top management, the
same can be divided into regional, area-wise and territory-wise sales planning.
While determining the sales plan for each product, the sales management has to
derive the market potential, sales potential and the sales forecast for their
products. Market potential is the total number of units of a product which can
be sold by all the companies in a given market. Take the example of a cough
syrup market by pharmaceutical companies. The total number of cough syrup
which can be sold by all the pharmaceutical companies taken together in a
specified period is the market potential for cough syrup. Similarly for an auto
industry – for example, the market potential of 10 million cars in India, would
indicate that combined sales of all the car manufacturers will not be more than
10 million cars in a year in our country. Sales potential, on the other hand,
would indicate maximum units of product which a single manufacturer can sell
in a given market in a year. For example, the sales potential of 5 million cars for
Maruti Udyog Limited would indicate that the company can sell a maximum of
5 million cars in India in a year.
Sales Forecast, indicates the number of units of a product which} that single
manufacturer actually plans to sell. For example, sales forecast of 2.5 million
269
Sales Management cars of Maruti Udyog Limited would indicate that this company plans to sell 2.5
million cars out of total sales potential of 5 million carox that it can sell. A
company goes for a lower sales forecast than its sales potential, because of
various reasons like lower production capacity, limited working capital, scarce
availability of raw material etc.
While deciding on sales forecast, the sales management should try and find out
the answers to following questions.
1. What is the number of its customers? This should include the present
customers as well as the potential or planned or future customers (planned
or future customers would be the ones that Sales Management wants to
include in the year for which the sales forecast is being made).
2. What is the size of the customers (The ABC Analysis of the customers in
terms of their sales turnover, profit etc.).
4. Why do they buy such products or what are their needs to buy such
products.
7. Under what conditions do they buy? Whether they buy on cash or credit.
Realistic and fact – based answers to all these questions plus the information on
what marketing activities our own company is going to perform, will help
determine the product-wise sales.
SAQ 1
What is market potential of a pharmaceutical product?
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15.3 TERRITORY MANAGEMENT MEANING Sales Planning
First of all, let us discuss why sales territories are carved. Sales territories are
established for achieving some of the following goals.
Territory Planning is another very important aspect of the total sales planning
exercise. It should be carried out as systematically and as scientifically as
possible. Various steps to a scientific territory planning are as follows:
The Sales Management should also decide the frequency of calls per month to
each customer. An A class customer can be visited twice-a-month also, while B
and C class customers can be visited once-a-month. The sales man should
devote time with individual customers on the basis of the sales potential of each
customer. More the potential, more should be the time devoted. In case of
pharmaceutical products, the doctors are classified according the demand and
the M.R. calls them as per their demand.
Various territories should have some parity in sales potential. This enables
more realistic appraisal of various salesmen though there would be some
difference in the capacity of various salesmen to perform. One territory of sales
potential of Rs. 1,00,000/- can not be compared with the other with potential of
Rs. 50,000/- .
Let us now take another example where the sales potential of territories A,B and
C is Rs. 10,00,000/- Rs. 5,00,000/- and Rs. 4,50,000/- respectively. In this case,
the appraisal of all the salesmen can not be a realistic one. Even if the salesman
with the lower ability index of 0.9 is assigned to territory A, his achievement
(Rs. 10,00,000 × 0.9 − Rs. 9,00,000/-) will be more than the salesmen with the
ability index of 1.0, assigned to territory B, his achievement being Rs. 5,00,000
× 1.0 = Rs. 5,00,000/-. Though the ability of the second salesman is more than
that of first salesman, his achievement will be lower and hence his appraisal
will also be lower.
In such a case the sales manager should divide the territory with the sales
potential of Rs. 10,00,000/- into two territories of Rs. 5,00,000/- each and put
two salesmen, instead of one. This action would not only be conducive to a
realistic appraisal of all the salesmen but would also help in realising the
complete potential of territory A (sales potential = Rs. 10,00,000/-)
H B
G C
D
F
This type of a sales territory is more common in fast moving consumer goods
companies and pharmaceutical companies. .
The clover leaf shape is desirable for the companies marketing industrial goods.
This shape is suitable when the customers are located randomly. In other
words, their concentration is riot equal in all areas of a territory. In this shape,
the salesman is based at the centre of the territory and plans his tour to cover all
customers along one leaf. This ensures that the salesman comes to his base
town at the weekend, spends sometime to meet his customers here and moves
for towns on other leaf, the next week.
The wedge shape of a territory is suitable when the salesman is based at a town
with dense population of customers and has to visit the satellite towns also for
small customers or sparsely populated customers, such a shape we is an
alternative to circle shape for companies marketing fast moving consumer
goods or pharmaceutical products.
In the graphic illustrated above, where the salesman is based at town A with
low customer’s concentration, the salesman will have to remain mostly on tour
to meet more customers in town F, which will not only put more pressure on
the time available to the salesman but will also increase his expenses on tour
and travel.
SAQ 2
What are the factors to be considered for determining the sales territory for a
Medical Representative?
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Sales Management ……………………………………………………………………………………
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The above discussion so far brings out that the design, assignment and
management of sales territory plays a crucial role in the effective management
of the sales functions. Given the dynamics of the market place, sales territories
once formed to not hold good for ever, instead they evolve and undergo
transformation in response to market needs. The two basic approaches
commonly used for designing sales territories are discussed below:
1. Customers are grouped into class sizes according to the annual sales
volume that the company has.
2. Optimum call frequencies for each class of customers are estimated e.g. in
one case present and potential customers are grouped into volume classes
and then theoretical call frequencies are assigned to them.
3. Present and potential customers are then located geographically and
arranged volume and value-wise.
4. The number of present and potential customer in each volume/value group
is then multiplied by the desired call frequency to get a total number of
planned calls required for each geographical control unit.
5. This is followed by determination of geographical control units in these that
the carved out territory is combed to the maximum, giving adequate
workload to the sales person as well minimising, if not eliminating the
unproductive time spend in covering distance between two calls and post
call activities.
The basic weakness of this approach is that, since the call frequency is already
established it may not provide for development of mediocre or neutral
customer accounts into super accounts due to lesser number of calls assigned
to them. The other shortcoming lies in establishing parity in workload and
potential territories, in different markets. In practice no two territories are equal
in terms of travel time, current sales or potential. For example territory A may
cover only two cities of state and be reasonably compact, whereas territory B
might include five cities of a state. These inequities affect such sales persons
the most, who are dependent mainly on commission on sales as their income in
a specific territory. The workload approach to territory design, therefore would
be more suitable in situation where sales persons are employed on fixed salary
basis. If may be noted that as the market conditions change sales territories
need adjustment and even redesigning. The principle of equating territories on
marginal profit values make useful contribution in this regard.
Once the customers have been identified, the frequency of visits has been
determined, and the potential of each customer (and thus each town) has been
determined, the TERRITORY COVERAGE PLAN in now drawn. 277
Sales Management Each town is listed on a sheet of paper and it is noted that on which date of the
month, the salesman will visit a particular town. Mode of Transport is also
indicated on the same sheet and the address of salesman or his contact point in
each town is also mentioned. This enables the Sales Manager to contact the
salesman in a particular town. A typical Territory Coverage Plan may look as
follows:
Company XYZ
Territory Coverage Plan
Name of Salesman: Arvind Sharma
Headquartered: F
Territory Coverage Plan for the Month of: January, ‘98
Date of Preparation: 25 / 12 / 97
S. Date Town Mode of Distance Address, Telephone
No. Travel from No. Contact Point
HQ
1. 1.1.98 F - - -
2. 2.1.98 F - - -
3. 3.1.98 F - - -
4. 4.1.98 F - - -
5. 5.1.98 F - - -
6. 6.1.98 Sunday - - -
7. 7.1.98 F - - -
8. 8.1.98 F - - -
9. 9.1.98 F - - -
10. 10.1.98 F - - -
11. 11.1.98 F - - -
12. 12.1.98 F - - -
13. 13.1.98 Sunday - - -
14. 14.1.98 A Bus 25 Km Hotel Kuber
15. 15.1.98 A - - -
16. 16.1.98 B Bus 35 Km Hotel Kuber
17. 17.1.98 B - - -
18. 18.1.98 C Train 85 Km Irawati Guest House
19. 19.1.98 C Train 85 Km
20. 20.1.98 Sunday Train 95 Km Amar Lodge
21. 21.1.98 D Bus 30 Km Hotel Kushak
22. 22.1.98 E Bus 25 Km Hotel Relax
23. 23.1.98 G Bus 28 Km Relax Hotel
24. 24.1.98 H Bus 12 Km Virender Lodge
25. 25.1.98 I - - Ashok Guest House
26. 26.1.98 F - -
27. 27.1.98 Sunday - -
28. 28.1.98 F - -
29. 29.1.98 F - -
30. 30.1.98 F - -
278 31. 31.1.98 F - -
It is appropriate to keep looking at Territory Coverage Plan at frequent intervals Sales Planning
and the sales performance from each town in this plan. This analysis helps the
Sales Manager to take necessary steps to improve sales in a poor – performing
town. It also helps him to take a decision to drop a town from the Territory
Coverage Plan, if there are no chances of sales improvement. On the other hand,
another town which was not being visited earlier but promises good sales
potential, can be added to the Territory Coverage Plan.
Alongwith the Territory Coverage Plan, Sales Management can also plan for a
Standard Customer List with each salesman. This list can also be reviewed
periodically so as to find out the sales result from each customer. The
individual customers can also be deleted from this list (if sufficient sales are not
being generated from the customer) and new customers added (which have
better sales potential).
Once the Sales Manager has completed the Territory Planning and the
Territory Coverage Planning, he can take a decision as to how many salesmen
will be needed to cover all the customers efficiently and effectively. For
example, if there are 10,000 potential customers in a Sales Manager’s total area
and one salesman can effectively cover 1000 customers every month (as
illustrated in Territory Planning Para (I) above), the Sales Manger will require
a total of 10 salesmen.
Once the number of salesmen has been decided, the Sales Manager can work
out the expenses which will include salesmen’s salaries, travelling expenses,
bonus, incentives, fares and other administrative expenses. The total of all
these expenses would provide the Sales Manager with Sales Territory Expense
Planning.
SAQ 3
If the number of doctors are gradually increasing then, what measure can a
Sales Manager of a pharmaceutical company would take to improve the sales
and reduce the expenses on sales.
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All these qualitative data about his salesmen can be analysed while working in
the field with the salesmen. A sales manager should call-on the customers with
the salesmen, should travel with them using the same mode of travel and should
interact with his salesmen as much as possible.
The quantitative data is available from the salesman’s daily reports and his
territory coverage plan. The sales manager can analyse the number of customers
being called by the salesmen on day-to-day basis, the value of the business
received by the salesmen, the expenses made and the ratio of sales to expanses.
As we can see, the sales manager can have the qualitative and quantitative data
about all his salesmen. Thus a sales manager can analyse the difference between
what was planned to be achieved and what has actually been achieved in terms
of customers calls, business produced, expenses made and proper
280
communication of messages about the product to the customers.
Once the sales manager has analysed all these data, he can take corrective Sales Planning
actions. He can ask the salesman to improve his daily average of customers
contacted, or to improve value of orders generated or to improve his
communication etc. He can also ask his training manager to conduct the
salesman's training in a particular aspect where he found the salesman weak.
In brief, attention to every single profit detractor and timely action on all profit
generators helps a company to optimise the sales territory; productivity.
Superior quality of the sales force facilitates in the attainment of this goal.
SAQ 4
I) Check whether the following statements are true or false for marketing of
pharmaceutical products.
Statement True/False
a) The emphasis in the concept of the sales territory is
upon the geographical area in which a M.R. works …………………
281
Sales Management b) Good territorial design allows Medical Representative
to spend sufficient time with doctors and prospects
and minimizes non-selling time ………………….
c) As a rule, sales territories should be very large in
order to make sure each Medical Representative
has adequate sales potential. Which will give him
or her incentive to spend maximum effort ………………….
d) Differences in territory coverage difficulty
represent differences in the work required of
sales person. …………………..
e) Establishing sales territories assures proper
market coverage …………………...
i) Market potentials
ii) Sales potentials
iii) Sales person’s workload
iv) Selling expenditure
v) Incremental sales per selling rupee
i) should estimate the percentage of the total sales potential that each
sales persons, on
ii) an average should be capable of realizing and proceed from that
point
iii) should use the major competitor's territories as the basic starting
point
iv) should first find out how many good sales persons are available
While undertaking this planning, the Sales Manager plans as to what each of
his salesmen should do and when should he do it. All this is planned with the
objective of meeting the objectives i.e. the sales targets.
For achieving the product-wise and thus value-wise sales planning, the Sales
Manager should plan his tour or work plan quite objectively. Before he goes on
tour or to work with a salesman, he should find answers to questions like
Generally, in any given area, 60 percent of the members of a team are average
producers of sales, 20 percent are above average and 20 percent are below 283
Sales Management average performers. Usually the Sales Managers work more with either the
above average or below average performers. In the process, they neglect the
average performers who bring about the major chunk of the business.
Therefore, the sales managers should concentrate more of their time on this
group of salesmen who will mostly do an adequate job.
Apart from this, a sales manager should have a TOUR PLAN, which should
elaborate on who is he going to visit, why and how many days he will spend
with each salesman. It need not necessarily be a standard of two days, work
with each salesman, it should be four days with one and only one day with
other salesman, depending upon the performance and development objectives
for each salesman.
A Sales Manager should circulate his tour plan to other departments within the
organisation. This will enable other departments to voice their concerns to be
discussed with a particular salesman. This way a lot of unnecessary
correspondence can be avoided and full advantage of Sales Manger's tour can
be taken by the organisation.
In a nutshell, while planning his own tour plan, the Sales Manager should
know WHERE there is a problem and he should go there, WHY there is the
problem, he should investigate when he is there, and HOW & WHEN to solve
it.
Therefore, what is needed for a high level of Sales Planning is
15.13 SUMMARY
Sales Territory Expense Planning is done once all the planning as listed above
is properly done. After deciding the number of salesmen required, a Sales
Manager can workout the expenses. A Sales Manager can add or discontinue
salesmen depending upon the requirements which may alter his Sales Territory
Expense Planning. This planning also helps a Sales Manager to operate proper
control systems.
Sales Programme Planning involves planning the efficient and optimum use of
various Sales Promotion measures like putting up point of sales material,
Improving shop window display, conducting, demonstrations, distribution of
samples etc.
A Sales Manager should also plan his own itinerary well - he should be clear
as to what is his tour objective, why is he going there, what will he achieve on
tour etc. A Sales Manager should devote more of his time with average
performers, and should circulate his TOUR PLAN to other departments.
1. How does sales forecasting help in sales planning suggest at least five
requirements of a sales manger in which sales forecasting can be of help?
15.16 ANSWERS
1. It is the number of units of a particular product which can be sold by all the
companies manufacturing that product. For example number of units of
cough syrup sold by all the companies taken together is market potential for
cough syrup.
2. The most important factor for setting up a sales territory for a M.R. is to
find out the number of doctors present in the area. If the doctors density is
high then the territory is small, if it is low then the territory is larger.
Further the travel time from one town to other and the sales volume also
play an important role to decide the territory.
iii) Let us now try to understand what controls a sales manager can exercise
for optimum results and for improved performance of his Medical
Representative. It would be worthwhile to add here that the most
important aspect of sales manager's job is to exercise effective controls.
In other words controls are the key to effective sales planning or sales
management.
4. I) a) False
b) False
c) False
d) True
e) False
II) a) v
b) iii
c) i
d) v
e) iv
287
Sales Organisation
UNIT 16 SALES ORGANISATION
Structure
16.1 Introduction
Objectives
16.2 Need for Sales Organisation
16.3 Developing a Sales Organisation
16.4 Centralisation vs. Decentralisation in Sales Organisation
16.5 Basic Types of Organisational Structure
16.6 Developing Territories
16.7 Field Sales Organisation
16.8 Specialisation in a Field Sales Organisation
16.9 Role of the Sales Executive
16.10 Summary
16.11 Key Words
16.12 Terminal Questions
16.13 Answers
16.1 INTRODUCTION
Once the sales plan has been formulated, the next logical step is to organise a
sales force to achieve the enterprise objectives. Decisions must be made as to
the type of sales tasks required to be performed and as to how the sales people
should be grouped together to ensure effectiveness and efficiency. The scope of
their sales responsibility, line authority and accountability must be defined so
that the sales activities can be well coordinated. In this unit we shall discuss the
basic types of organisational structures and territorial designs that are used to
define work relationships between sales personnel and their superiors.
Objectives
Through your exposure to the previous units of this block, you know that it is
the sales organisation which bridges the gap between the market and the
productive capacity of the firm. As the market changes, the sales function
accommodates through adjusting its organisation and manner of operation. 289
Sales Management Shifts in size of market operation, market trends, competitive position and
other environmental factors may necessitate changes in existing sales
organisations. An effective sales organisation usually provides for growth and
adaptability to such changes.
You can compare the role of an organisation to that of the skeleton in the
human body. It provides a framework within which normal functions can take
place. However while the skeletal system is uniform for all human, sales
organisations vary widely over firms. This is because every enterprise has its
own objectives and resources, and corporate plans to achieve those objectives.
The structure of the sales organisation reflects this diversity. Apart from
providing a basic structure to facilitate working, sales organisation has the
following basic purposes.
SAQ 1
How you will organise sales of a pharmaceutical company dealing with
different class of drugs?
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291
Sales Management
16.3 DEVELOPING A SALES ORGANISATION
Next, you must define the positional levels at which these activities will be
performed. Similar activities and tasks will have to be grouped together and
assigned the positions, such that each position has adequate tasks to perform
which are also varied enough to provide challenge and motivation. The number
of the different classes of activities assigned to a single position would depend
292
upon the degree of specialisation associated with each position. The place of an Sales Organisation
activity in the hierarchy would depend upon the relative importance of that
activity for the sales department, for example, in an organisation trying to sell a
new product through middlemen, dealer relations becomes a crucial activity and
has to be assigned to positions higher up in the sales organisation.
Once the different positions and .the activities associated with them have been
decided upon, these positions have to be assigned to personnel. An interesting
dimension in sales organisation exercises has been whether to build positions
around individuals, to take advantage of the special capabilities of a particular
individual or to recruit individuals specifically to fill in the identified positions.
The practice in the industry has been ambivalent. Usually the job requirements
are general enough and allow the possibility of many individuals having the
requisite qualifications. On the other hand, the organisation may have, or come
across an individual with such unique sales related qualities that it might be
considered profitable to modify the job requirements to suit him or even create
a position specifically for such an individual. Notwithstanding this, people
charged with the planning of organisations prefer to let individuals adapt to, or
acquire skills for particular position rather than building positions around
individuals.
A decision that has to be taken along with the identification of positions, is that
of the relationship between these positions in the organisation – how many
individuals would a person have reporting to him, who shall be accountable to
whom, which positions in the structure would have the authority to command
and which shall only advise and guide. In other words, the delegation of
authority, span of control and the lines of authority, both line and staff have to
be decided upon. The span of control has direct bearing on the coordination
responsibility of the higher level executives and care should be taken that it is
not too wide to tax the capabilities of top management and lead to weaker
coordination of subordinate activities.
SAQ 2
Assume that you are a manufacturer of a new food product which is yet to get a
foothold in the market. The food is a vital diet supplement, with no direct
competitors in the market. In trying to develop your sales organisation how
would you define the sales organisation objectives?
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Sales Management ……………………………………………………………………………………
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When firms are small and have only a few sales people, operating from the
corporate office may be more efficient and effective. As the size of the
operations increases, a system of branch offices gradually emerges, to allow
sales people to be more responsive to local consumer needs. Travel and other
expenses go down. Decentralisation of operations in this case provides for
greater freedom to the field sales managers allowing them to display initiative
and managerial skill.
Most medium sized and large firms combine the advantages of both centralised
and decentralised operations. Decentralised sales offices are utilized to ensure
better customer service while training and part of recruitment function are
centralised.
Among the designs of sales organisations that prevail in Indian industry, line
and staff are more common forms, while functional organisation is relatively
294 rare.
No two firms would have identical sales organisation as their needs and Sales Organisation
expectations, markets and products, company size and marketing channels
differ from each other.
The line sales organisation is the most basic forms of sales organisation,
characterised by a chain of command running from the top sales executive
down to the level of the salesman. All executives have line authority over their
subordinates who in turn are accountable only to their immediate superior.
Since lines of authority run vertically in this structure, executives at each level
are generally independent of all others at the same level. Through assignment
of quotas or sales targets, responsibilities are usually, clearly delineated.
Fig. 16.2 gives the sales organisation of liquor division of Jagatjit Industries
Ltd., designed as a line sales organisation.
Sales Representative
Fig.16.2: Line sales organisation
The liquor division is headed by the Vice President Marketing, who has two
Marketing Managers looking after the South West region and North East
region, reporting to him. The marketing manager has a line authority over a
number of Regional and Area managers who in turn control a field staff of sales
executive, field sales officer and sales representatives, each level connected to
the subordinate level by scalar lines of command.
The line organisation places great demands on the time and abilities of the top
sales executive. You can realise that with all field reporting finally coming to
him through his subordinate/area sales manager, most of his time would be
taken up by the task of sales supervision and direction leaving him with little
time for planning and policy making. As the, line organisation has no
subordinate specialists, the top sales executive needs to be a person with 295
Sales Management outstanding ability and all round knowledge of every facet of the sales
function. Since operational details of managing the sales department take up a
large part of the line executive's time, he is at times forced to take decisions
without benefit of adequate planning. Line organisation also becomes
inappropriate in case of rapidly growing organisations or those with large sales
staffs, as growing departments necessitate additional layers of executives to be
added. Increase in vertical levels is often accompanied by distortion directions
and reduced efficiency of communication, resulting in poorer results.
Line and Staff organisations usually result as the size of the operations grows.
It is characteristically found in medium and large firms with sizeable sales staff
selling diversified product lines. The line and staff department is differentiated
by the presence to staff specialists or staff assistants to advise and assist the top
sales executive. These specialists are experts in their own fields which could be
sales training, service, sales analysis and planning, dealer relations, sales
promotion, sales personnel development and so on. While staff executives and
assistants do not have the line authority to command, they advise the line
executives through recommendations and provide the benefit of specialisation
in the organisation. The inclusion of the staff component frees the line
executive from the burden of detail. By delegating problem involving in depth
study or detailed analysis to staff specialists, the time executive gets more time
for policy making and planning. A pool of experts becomes available for
providing advice and assistance in specialised fields. The activity of planning
can also be subdivided and assigned to staff specialists. More information is
also made available for better decision marketing. Fig. 16.3 gives the sales
organisation of Prentice Hall of India Ltd. which has both line and staff
components.
Managing Director
Sales Promotion Mgr. Customer Service Mgr.
Sales Executive
Fig.16.3: Line and staff organisation
The problem that arises with line and staff organisation is basically one of the
coordination. The work of the staff specialists needs to be actively coordinated
with the operations of the line department and generally a lag develops, as
reports and recommendations take time to compile.
SAQ 3
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After the basic control unit has been determined, various allocation criteria
may be employed by the sales manager in defining them into viable sales
territories. These criteria may include basic factors like equality of opportunity,
quantitative factors related to sales and potential or qualitative factors like the
ability and preferences of the sales force. The idea of ‘equality’ in some
measure appeals greatly to both sales managers and sales personnel, as it
generates a sense of fair play. Further, approximately equal territories makes it
easier for the sales executive to identify and reward outstanding performance.
There are two quantitative methods popularly used to design sales territories.
One is based on the estimates of workload in the territories and the other on the
estimates of sales potential. Using these methods, firms try to design territories
which are either equal in workload or equal in terms of sales potential.
Estimates of present rupee sales in a given area should not be used as a basis of
defining territories as they do not furnish enough information on workloads
and ignore potential.
After the starting points have been selected, the next step is to begin combining
basic control units to get viable sized territory. To do this effectively, the
manager needs to keep getting the aggregate estimates of the allocation criteria
for each new territory. If the number of customers per district is the criterion,
the manager first combines the districts adjacent to each starting point and
keeps a track of the total number of customers in each territory. Then he
assigns districts in between different starting points to balance the number of
customers across new territories. The process of assigning districts to starting
points continues till all control units are assigned to individual sales people.
After the initial allocation of control units to the starting points is completed,
the sales manager then compares the territories in terms of other criteria. In our
example, since the territories have been designed such that they should have
equal number of customers, the manager would need to see how they compare
in terms of size. If there is a marked imbalance, he would try to switch the
border districts to improve initial allocation. Size, however is not the only
criterion used. The new territories need to be balanced on several criteria i.e.
number and dispersion of customers, sales potential, geographical and climatic
conditions etc. You will read more about these aspects of territory management
in Unit 9 of this course. The two quantitative methods of territory
development, the build up method and the breakdown method have also been
discussed in detail in Unit 9.
Consider Situation 1: Where the sales potential of the territories is equal but
the salesmen differ in their abilities.
SAQ 4
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The field sales forces are typically organised on the basis of geographic,
customer or productwise specialisation, with many sales organisations
combining customer and product specialisations with geographic territories.
302
Geographic Specialisation: The most common pattern of organising a sales Sales Organisation
force is by geographic territories where sales personnel are assigned to a
specified geographic area, and will sell only to customers in that area. For
example Fig. 16.5 shows the field sales organisation of Food Specialities
Limited, where the whole of the country has been divided into four areas and
put in charge of Area Sales Managers. These areas representing North, South,
West, and East regions are Delhi, Madras, Bombay and Calcutta. These major
divisions are further divided into smaller geographical territories which are
covered by Area Sales Officers. The area sales officers have in turn reporting
to them area sales representatives who look after customers in the specific area
assigned to them.
Marketing Manager for India
Area Sales Mgr., Area Sales Mgr., Area Sales Mgr., Area Sales Mgr.,
Delhi Madras Bombay Calcutta
The disadvantage with geographic specialisation is that the sales persons need
to be responsible for the entire product line in their territory and they may not
be equally knowledgeable about all products. Further within the territory, they
may choose to concentrate on products and customers that are easy prospects.
303
Sales Management Product Specialisation: Product specialisation is usually called for when the
product line is large and diverse or when the products are technical enough to
warrant specialised applications knowledge, or when adequate technical
knowledge an important determinant of successful selling. Product
specialisation is generally combined with geographic territorisation at the
higher levels, while at the level of the field operators, different salesmen may
be assigned to specific product lines. Instead of selling the entire product line
in a specific territory, a salesperson assigned to a particular product/product
group, will sell only that product to the customers in that area. Given below is
the example of a company selling office equipment ranging from typewriters
to computers, The initial geographic division is followed by product
specialisation at the field personnel level.
Sales person Sales person Sales person Sales person Sales person
office intercom typewriters calculators photocopies minicomputers
system
Fig.16.6: Production specialisation of the field sales force
In the above example since the product line is both technical and diverse, it is
not possible for one sales person to acquire enough technical knowledge to sell
the entire product line successfully. Product specialisation, as shown above
would allow the sales personnel to specialise in their respective product lines
which in turn would result in more effective sales performance. Customer
queries and sales resistance can be handled more effectively on account of
intensive product knowledge. On the other hand, each salesman in the above
example would have to tour the entire state, which would result in higher travel
time and expenses.
Even when the product line is not too technical but the product range is wide
enough, organisations find splitting the sales responsibility productwise a more
effective arrangement. At Dabur, which produces a very wide range of health
and personal care products the sales organisation has initially been divided
geographically but the field operators have been given charge of different
product groups. The company has divided its product line into two major
product groups i.e. health care products and family use products. Even though
two salesmen may be assigned to the same territory, each will be responsible
for only the product group assigned to him. The sales organisation is given
below in Fig. 16.7.
304
National Sales Manager Sales Organisation
Regional Sales RSM (Bihar) RSM (U.P.) RSM (North) RSM (M.P.)
Manager Eastern Delhi, Punjab
Region Rajasthan
Sales Representatives
305
Sales Management Sales Manager for India
Regional Manager
The role and functions of the sales executive have undergone a marked change
over a period of years. Through your exposure to Unit 1 Block 1 of MS-6 you
are familiar with the changes in marketing orientations vis-à-vis the stages of
economic development. With the changing orientation to marketing, the top
management’s conception of the sales job has undergone a change and
accordingly the role of the sales executive has also been shifting. Some of the
factors, apart from the changing marketing orientation, affecting this trend are
greater concern over personal development of salesmen, a higher degree of
professionalism in personal selling and the greater use of computers in sales
management. Table 16.1 gives a representation of the changing emphasis in
sales management in this century.
307
Sales Management Table 16.1: Changing emphasis in sales management
You will study the operating and planning functions of the sales executive in
detail in Units 4, 5 and 6 of Block 2 of this course. Here let us discuss the role
of sales manager as a coordinator, which is one of the important aspects of his
position in the organisation.
Though sales managers are not directly responsible for designing the
promotional policies, they provide valuable inputs in their formulation.
Coordinating the promotional functions with the activities of the sales
organisation is imperative because not only are the two functions
interdependent, the sales executive is also responsible to quite an extent for
the implementation of the promotional programmes. Sales personnel have
to be responsible for coordinating dealer effects with advertising programs
and for getting their cooperation for point of purchase displays.
The sales executive must also ensure that sales personnel are fully
informed about the latest advertising and other promotional campaigns so
that they can maximise the total promotional effort. Further, the role of
personal selling, an important ingredient of the promotional mix needs to
he coordinated with the rest of the promotional mix elements in terms of
total promotion cost and the expectation from personal selling. In
particular, advertising efforts needs to be synchronised with personal
selling, to enable the latter to capitalise on it.
You have already read about the interdependence of sales and distribution
function in Unit 1 of this Block. The important areas of dealer activities which
309
Sales Management need to be coordinated with the sales effort are: gaining distribution support
and overcoming obstacles to product distribution, ensuring dealer identification,
reconciling sales and distribution goals and sharing promotional tasks with the
dealer. Even if advertising of the product has been successful in creating a pull
for the company’s products, no sales will result if final buyers do not have
information on the local outlets that stock the product. Dealer identification
becomes even more crucial in case of new products.
The perception of business goals may differ between the channel members and
the manufacturing organisation and this may lead to conflict between the two
entities. Through coordination between the activities of the dealer and those of
the organisation, sales executives can prevent this conflict to a certain extent.
Regular sharing of information with the middlemen regarding the company
programmes and policies, goes a long way in reducing disharmony. Similarly,
by making the information about dealer activities and needs available to the
organisation, the sales executive can ensure that the organisation will be in a
position to render promotional and other assistance to the middlemen.
Coordination with the Pricing Function
Though the sales manager’s role in formulating pricing policies is only
advisory, he is responsible for the implementation of the pricing policy. As
price is an important variable affecting sales, all price changes need to be
coordinated with sales policies as well as with related areas like distribution.
The sales executive because of his intimate knowledge of the market and
market behaviour becomes an important source of information when changes
in pricing policies are being planned. On the operational side, compensating
changes in the marketing mix need to be made to offset the negative impact of
the price change: the advertising campaign may need to be changed, sales
presentations may need to be altered, even packaging may need to be changed
to justify the price rise. In order to make it a coordinated effort, however, the
sales executive would need to coordinate the personal selling activities with the
pricing changes and its resultant effects.
16.10 SUMMARY
Sales management performance depends in part on the effectiveness of the sales
force organisation. The organising process seeks to accomplish three basic
tasks.
1. Identifying sales force goals and objectives
2. Assignment of specific tasks and responsibilities
3. Integration and coordination of these activities with other functions in the
firm.
In this unit, we have discussed the need for sales organisation and the process
of developing it. The basic types of sales organisations and the different
specialisation of the sales force have also been discussed. The unit also gains
an exposure to the design and development of sales territories. The last section
310 deals with the role of the sales executive in a sales organisation.
16.11 KEY WORDS Sales Organisation
1. Discuss the process of developing a sales organisation. What are the factors
which affect the size of the sales organisation?
3. What are the relative advantages of a line sales organisation and line and
staff sales organisation?
16.13 ANSWERS
This type of sales organisation helps the Medical Representative to plan his
duties and to plan his territory and doctors etc.
Medical Representative
312
Sales Forecasting
UNIT 17 SALES FORECASTING AND and Sales Quotas
SALES QUOTAS
Structure
17.1 Introduction
Objectives
17.2 Sales Forecasting: A Quick Recapitulation
17.3 Managing Sales Forecasts
17.4 What to do When Sales Forecasts Differ?
17.5 Monitoring the Sales Forecast
17.6 Sales Forecasting for New Products
17.7 Sales Quotas: Meaning and Importance
17.8 Why Quotas?
17.9 How Quotas are Set?
17.10 Attributes of a Good Sales Quota Plan
17.11 Summary
17.12 Key Words
17.13 Terminal Questions
17.14 Answers
17.1 INTRODUCTION
Objectives
• suggest the importance of sales forecasting and sales quotas for territory
management;
• describe some of the managerial issues concerning sales forecasting;
• explain the importance and types of sales quotas, and how they are
established; and
• discuss some of the attributes of effective sales quotas.
Sales forecasts are time span related and therefore are termed as, short term
forecast – covering time period of upto a year, medium team forecasts – for a
time period of around five years. The exact time period for which a forecast is
developed is dependent on the product/ market characteristics as well as the
purpose for which it is developed and hence may very from company to
company. Notwithstanding thus the longer the time span covered, the more
qualitative will be the forecast, and the shorter the time span covered, the more
quantitative the forecast.
The pay off of sales forecasting lies in the accuracy of the forecasts made. Since
the attainment of sales forecasts require the deployment of resources in its
anticipation, the manager must do his best to make the forecast come true.
Evaluation of the approach and methods used for sales forecasting as well as
monitoring of the actual and its comparison with the estimated performance
form part of the regular activities of the manager.
Many a firms in order to minimise the error factor in sales forecasting, use
multiple experts and approaches. At times this results in varying levels of sales
forecasts under the circumstance, the manager may examine the differing
forecasts by:
• Looking into definition and scope of the terms used in the construction of
the forecast.
• Pooling of wisdom of the experts and arriving at the most agreeable level of
forecast.
As the sales realize for the operating period these should be monitored at a
regular periodicity. The unfolding of market reality often creates the need to
adjust the sales forecast. Business prudence desires that in the case of annual
sales forecast, these be thoroughly reviewed at least on a quarterly basis and if
need be corrected too. A similar review on an annual basis in the case of long-
term forecast is felt necessary. In the process of carrying out corrections in the
sales forecast emphasis should be laid on diagnosing the causes warranting such
corrections so that the accuracy level of sales forecasts be improved. In any
case a strong justification must be made for modifying the sales forecast so that
suitable adjustment in the marketing and sales strategy be also carried out.
Unlike the established products, forecasting of the sales for new products is
more difficult. Depending upon the degree of similarity/dissimilarity with the
existing products, sales forecast for new products are based on:
In addition, sales curve of such a new product in foreign markets and its
analysis on a product life cycle basis provides meaningful insights.
In the case of a totally new product, a close watch on the actual sales alongwith
the experts opinion, lessen to some extent the otherwise impossible task of
developing reliable forecasts for such products.
SAQ 1
Check whether the following statements are true or false:
The chief merit of activity quota lies in its ability to direct the salesforce to
perform the “urgent” selling activities and “important” non-selling but market
development related activities in a balanced and regular manner.
Combination Quotas: Depending upon the nature of product market selling
tasks required to be performed as well as selling challenges facing the
company, some companies find it useful to set quotas in combination of the
two or three types discussed above. Rupee sales volume and net profit quotas or
unit sales volume and activity quota in a combined manner are found in
common use in a large number of consumer and industrial products companies
in India.
319
Sales Management SAQ 2
Check whether the following statements are true or false:
SAQ 3
II) Sales volume quotas specify the sales level management expects to attain
under:
a) sales volume
b) expense
c) net profit
320 d) activity
IV) Which of the following is NOT a reason for setting and using quotas. Sales Forecasting
and Sales Quotas
a) to motivate desired performance
b) to provide more effective budgetary control
c) to guarantee the attainment of objective
d) to provide quantitative performance standards
V) One of the crudest procedures for setting sales volume quotas is to base them
solely on
Usually, the sales department is responsible for establishing the sales quota,
and no review or approval of a higher executive is needed. Within the sales
organisation, the task may rest with any of several executives, depending on the
size of the company, the degree of centralization in the sales force
management, and the method used to determine the quotas. The chief sales
executive may be responsible for setting the total company quota, but the
individual. breakdown may be delegated down through the regional and branch
district managers. Or territorial sales potentials may be given to the branch or
territory managers, and they set the salesmen's quotas.
Fairness: A good quota plan is fair to the men involved. As much as possible,
the work load imposed by quotas should be comparable, but this does not mean
that quotas must necessarily be equal for all men. Differences in potential,
competition, and salesmen's abilities exist and, therefore, the performance
goals may not be comparable by absolute measures. They can be compared but
only in relative terms.
17.11 SUMMARY
A sales forecast constitutes a critical component of the sales planning task of the
company. To do this with desired accuracy, a detailed market knowledge and
the existence of the comprehensive marketing information system are required.
1. Discuss how sales forecasts and sales quotas relate to each other.
2. What are the distinct advantages of sales forecasting. In your opinion does
forecasting helps even when there is a recession in the industry. Discuss.
3. Give a comparative account of various types of sales quotas and identify the
attributers of a good sales quota plan.
17.14 ANSWERS
1. i) True
ii) False
iii) True
iv) True
v) False
2. i) True
ii) False
iii) True
iv) True
v) True
3. I) (b)
II) (c)
III) (d)
IV) (c)
V) (a) 323
Sales Budgeting
UNIT 18 SALES BUDGETING AND and Control
CONTROL
Structure
18.1 Introduction
Objectives
18.2 Purpose of the Sales Budget
18.3 Methods of Sales Budgeting
18.4 Preparation of Sales Budget
18.5 Budget Implementation and Establishment of Feedback Mechanism
18.6 Flexibility in Budgeting
18.7 Introduction and Purpose of Sales Control
18.8 Sales Control System
18.9 Methods of Sales Control
18.10 Marketing Cost Analysis
18.11 Usefulness of Marketing Cost Analysis
18.12 Sales Management Audit
18.13 Summary
18.14 Key Words
18.15 Terminal Questions
18.16 Answers
18.17 Further Readings
18.1 INTRODUCTION
Objectives
3. A Tool of Control: The sales budget on adoption becomes the mark against
which actual results are compared. For example look at the following
Fig. 18.1:
(in ’000 Rs.)
Preparation of sales budget is one of the most important elements of the sales
planning process. Generally three basic budgets are developed, the sales
budget, the selling expense budget and the sales department administrative
budget. Mostly sales organisations have their own specified procedures,
formats and timetables for developing the sales budget. While all sales
budgets relate to the sales forecast, the steps taken in systematic preparation of
budget can be identified in the following sequence.
327
Sales Management Review and Analysis of Marketing Environment: Generally companies
prepare sales budget on the principle of bottom up planning with each echelon.
To prepare a tentative budget of revenue and expenses, depending on the
organisational structure of the sales department, each departmental head is
asked to predict their sales volume and expenses for the coming period and
their contribution of overhead. For example, in a leading tyre company each
District sales manager prepares his/her district budget and submits to the
Regional or Divisional office, where they are added together and included
with divisional/regional budget. In turn these divisional budgets are submitted
to the sales manager for the particular product or market groups. At the end of
this chain of subordinates' budgets, the top executives in the sales department
scan and prepare a final sales budget for the company. Now the marketing
budget is combined with the budgets of the sales department and the staff
marketing departments, to give a total of sales revenues and of selling and
other marketing expenses for the company. Some of the common items in
each sales budget include the following:
This review of past budget performance helps the sales manager to minimise
variances in the coming period.
Communicating Overall Objectives: Sales executives at the top level must
communicate their sales goals and objectives to the marketing department and
argue effectively for an equitable share of funds. The chief sales executive of
the firm should encourage participation of all superiors and managers in the
budgets process so that, as a part of its development, they will accept
responsibility for it and later enthusiastically implement it
Source: Professional Sales Management by Anderson, Hair & Bush Page 104
Experiences bring out the following main items on which variance between
budgeted and actual costs often arise, are
The sales manager must give attention through in varying degree, to each of the
above and other items .It is wise to tighten control over expense especially
under circumstances when sales forecasts are not being met or sales budgets
are being exceeded A general attitude of caution before incurring an expense is
considered prudent .A leading material handling equipment company has a
norm that not more than forty per cent of sales expense budget will be spent
unless more than fifty per cent of the forecasted sales have been realized.
All shortfalls in budgeted sales that affect gross profit contribution must at least
make a case for a thorough review of the sales and marketing programmes of
the firms. Researches reveal the causes of shortfalls as: production stoppages,
distribution problems, shift in market mood, competitive activity, wrong
pricing, under manning of sales staff or inexperienced sales staff, delays in
new product launch, etc.
There is one more dimension of flexibility in sales budget and this arises out
of the very, nature of sales budget. As we all know that a sales budget is an
330 estimation relating to the future period under assumed market conditions. In the
event of change in market conditions necessitating a change in the firm's Sales Budgeting
expenditure of efforts the sales budget should carry flexibility of inter-item and Control
reallocation of expenses and other resources e.g. sales allowance to additional
sales persons to display contest to fast cargo movement to cash discount etc.
SAQ 1
Check whether the following statements are true or false:
SAQ 2
II) The sales budget is developed with a view toward obtaining the forecasted
volume of sales, and
IV) When the budget is in error because of faulty sales forecasting one should
ideally:
a) secure a new sales forecast
b) alter the various estimates by applying standard ratios of costs to
the adjusted sales volume figures
c) maintain close watch over current sales and expenses on a
day-to-day basis
d) discard budgetary estimates and use figures from previous years
operations.
Sales Analysis
In this method sales managers scan the total sales on territory basis. It assumes
that each quota assigned to sales person was based on, air and sound
measurement of potential. In addition, any unusual conditions in the individual
territories such as intense competition, strike by labour union or transportation
etc. which made an adverse effect on sales of the company's product was
considered in order to guide further sales analysis. The following example will
further throw light on the aforesaid discussion.
This example shows that almost all the territories achieved or exceeded their
quota except north region which achieved 98 per cent of quota. It will thus help
the sales manager to investigate the reasons for shortfall in north territory and
of best performance in south territory.
Concentrating on the north territory, the Sales Manager should see the sales
performance of all the sales persons working in the territory. From the figure
below it is crystal clear that out of eight sales persons working in the territory,
four have made or exceeded their quota, three others barely missed, only one
i.e. (Gulani) fell significantly below his sales quota with a performance of only
82 percent:
Computers 22 23 104%
Portable Typewriters 28 28 100%
Manual Typewriters 30 06 20%
Electronic Typewriters 24 24 100%
Spares and Consumables 26 25 96%
Total 130 106 82%
It is clear from the above table that Gulani did an excellent job of reaching
product quotas with the exception of manual typewriter, where he achieved
only 20 per cent of quota. With total sales of manual typewriter running slight
ahead of the last year in all other territories and no unusual situation in Gulani’s
territory, the sales manager should look into Gulani’s customer-wise details for
detecting the causes of the shortfall.
Attainment of targeted sales volume is only one part of fulfilment of the sales
objective of the firm, the other important part being the level of selling costs
incurred to attain the given sales volume. It is not mere sales rather sales with
budgeted profits or expenses that really matter.
It would be worth repeating that the above listed valuable information can only
be generated by systematizing the cost accounting system in the firm. This
costing system among other, dimensions should be set up sales function-wise,
cost centre-wise and as a criteria for allocation and absorption of selling
marketing and other general management costs.
336
18.11 USEFULNESS OF MARKETING COST ANALYSIS Sales Budgeting
and Control
Successful conduct of marketing cost analysis benefits the sales manager in
ascertaining:
Trends in marketing cost analysis cover a period of time within the same firm
and cross comparisons with leading competitors and the average norm of the
industry provides a valuable advantage of knowing the relative strength of the
firm in the industry.
Though important, the previous two techniques focus only on routine and
operational aspects of sales control. This third technique of sales control relates
to the strategic dimensions of sales control.
SAQ 3
Check whether the following statements are true or false:
SAQ 4
I) The sales manager can assure that sales efforts are continually focused on
objectives through the use of:
IV) In marketing cost analysis selling expenses are allocated according to:
a) size of order H
b) customers
c) territories
d) any of the above
18.13 SUMMARY
The sum of money required over a specified period to run a sales department is
the sales budget and how much should we spend on the sales function is
essence of a sales budget. The process of developing a sales budget deals with
identifying ways of optional resource allocation to various selling activities. A
sales budget aids in sales planning, and acts as both a standard of performance
and a tool of control. While sales budget acts as a tool of salesforce evaluation
and control, there is certainly a distinct need for continuous monitoring and
control of the total sales function. The other methods used for controlling the 339
Sales Management sales function are – sales analysis, marketing cost analysis and sales
management audit. For obtaining best return, from the scarce resources
budgeted for the sales function, it is essential that a sales control system be
established in the company. The effective use of a sales control system requires
the existence of both a comprehensive sales information system as well as an
elaborate cost accounting system, the systems which generate information for
control purposes.
2. What is zero base budgeting and flexible budgeting? What are their
advantages over traditional approach?
1. i) True
ii) True
iii) False
iv) False
v) False
2. I) (d)
II) (b)
III) (c)
IV) (b)
V) (a)
3. i) False
ii) False
iii) True
4. I) (c)
II) (d)
III) (b)
VI) (d)
VII) (d)
Arthur Median (1986) Industrial Sales Force Management, Croom Helm Ltd.,
Provident House, Burrell Row, Beckenham, Kent BR3 ]AT.
Chris Noonam (1986) Sales Management, George Allen & Unwin, London.
Gordan J. Bolt (1987) Market and Sales Forecasting : A Tool Approach. Essex
Kogan Page Ltd., 130 Pentonville Road, London.
Willian J. Stanton and R.H. Buskirk (1987) Management of the Sales Force,
Irwin Homewood: Illinois.
342