Sales Management Book by IGNOU

Indira Gandhi MVE-006
National Open University

School of Vocational SALES MANAGEMENT
Education and Training
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. Imran Salim
Prof. Bharat I. Fozdar, SOS
Dean, Faculty of Management Studies,
Prof. Srilatha, SOMS
Jamia Hamdard, New Delhi
Prof. Kamal Yadava, SOMS
COURSE PREPARATION TEAM

Dr. P.K. Sahoo (Unit 9) (Editor) Dr. Shibu John (Unit 8)
Department of Pharmaceutics, Delhi Faculty of Management Studies,
Institute of Pharmaceutical Sciences and Jamia Hamdard, Hamdard Nagar,
Research (DIPSAR), Pushp Vihar, New Delhi
New Delhi
Faculty Member (IGNOU)
Prof. Imran Salim (Unit 1)
Dean, Faculty of Management Studies,
Dr. Qaseemuddin Haider, RSD
Jamia Hamdard, Hamdard Nagar,
New Delhi
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
PRINT PRODUCTION TEAM
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
In today’s competitive environment a lot of emphasis is laid on the marketing,

we find every organization carrying out a lot of marketing activities. Hence, it
is important for you to understand what market is, what marketing is, and how
is it different from selling. So in this lesson we shall discuss all the important
concepts of marketing and lay down the foundation for explaining the
marketing process. We will also discuss the development of marketing over a
period of time.
Objectives
After studying this unit you should be able to:
• explain the meaning, definition and scope of marketing management;

• analyze and explain different concepts or philosophies of marketing
management;
• identify key elements of marketing;
• explain the history and evolution of marketing as a management discipline;
and
• explain the functions of marketers.
1.2 MARKETING IS A WONDERFUL THING
Welcome to the wonderful world of marketing! Marketing is not a new word

but evokes feelings of freshness each time it is used. For there is so much
happening in this field that even the oldies have something new to learn every
day. In your class itself, I am sure that there are quite a few students opting for
marketing than any other discipline. Surely, there must be something in this
word marketing that everyone feels attracted to it. Let us move little deeper
inside marketing. Marketing is ancient art but its emergence as a management
discipline is of relatively recent origin. And within this relatively short period,
it has gained a great deal of importance. In fact today marketing is regarded as
most important of all management functions of business.
Now, let us see some definitions of marketing:
• Marketing originates with the recognition of a need on the part of a

consumer and terminates with the satisfaction of that need by the delivery
of a usable product at the right time, at the right place and at an acceptable
price.
• Marketing is a viewpoint, which looks at the entire business process as a

highly integrated effort to discover, create, arouse and satisfy consumer
needs.
• Marketing is the delivery of a standard of living to society.
• American Marketing Association: “It is the process of planning &

8 executing the conception, pricing, promotion & distribution of ideas, goods
& services to create exchange that satisfy individual & organizational Introduction to
goals”. Marketing and its
Concepts
• The Chartered Institute of Marketing defines Marketing as: “Marketing is
the management process for identifying, anticipating & satisfying customer
requirements profitably.”
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.
1.3 CONCEPTS OF MARKETING
Studies reveal that different organizations have different perceptions of

Marketing. These differing perceptions have led to the formation of different
concepts of Marketing. There are six alternative concepts under which
organizations conduct their marketing activities: the exchange concept, the
production concept, the product concept, the sales concept, the marketing
concept, and the societal marketing concept.
1.3.1 The Exchange Concept
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.
1.3.2 The Production Concept
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.
However, production concept as a philosophy work undertow situations 9

Sales Management 1. When the demand for the product exceeds the supply, management should
look for ways to increase production
2. When the products cost is too high, improved productivity is needed to

bring it down.
1.3.3 The Product Concept
The product concept is somewhat different from production concept. Whereas

the production concept seeks to win markets and profits via high volume of
production and low unit costs, the product concept seeks to achieve the same
result via product excellence – improved products, new products and ideally
designed and engineered products. It also places emphases on the quality
assurance. Organizations that are guided by product concept believe that
consumers automatically go for products of high quality. They concentrate on
achieving product excellence. They spend considerable amount of money and
time on research and development activities in order to produce product of
excellence. Yet, in many cases these organizations fail in the market because
they do not study the market and the consumers in depth. They totally get
engrossed with the product and almost forget the consumer, for whom the
product is manufactured, they fail to find what the consumers actually need and
would gladly accept.
1.3.4 The Sales Concept
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.
1.3.5 The Marketing Concept
The marketing concept represents a radically new approach to business and is

the most advanced of all the ideas of marketing that have emerged over years.
Only marketing concept is capable of keeping the organization free from
“marketing myopia”. All others viz. exchange concept, production concept,
product concept and selling concept suffers from marketing myopia in one
form or the other.
The marketing concept has four major distinguishing features
a) Consumer orientation: An overwhelming emphasis on the consumer and

his needs is the first distinguishing characteristic of marketing concept. It
enables the firm to look at a business activity from the point of view of
customer.
b) Integrated management action: Integrated management action simply
10 means that all the different management functions are tightly integrated
with one another, keeping marketing as the pivot. For example, marketing Introduction to
department may have identified that there is going to be increase in the Marketing and its
demand of certain product with some modifications. This information is Concepts
sent to the manufacturing department that in turn informs purchase,
inventory and other related departments, so as to produce the best benefits
and satisfaction to the consumers.
c) Consumer satisfaction: Marketing concept is a means for fulfilling

consumer’s needs. It emphasizes that just consumer orientation of firm is
not enough; it is essential that such an orientation lead to consumer
satisfaction and no firm can afford to ignore it.
d) Realizing organizational goals including profits: The marketing concept

treats consumer satisfaction as pathway of attainment of other goals of the
organization. The firm tries its maximum to control costs and
simultaneously ensure quality, optimize productivity and maintain a good
organization climate and profitability.
1.3.6 The Societal Marketing Concept
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?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
…………………………………………………………………………………… 11
Sales Management SAQ 2
Differentiate between Marketing concept and Societal Marketing concept.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 3
How is marketing different from selling?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
1.4 HISTORY AND EVOLUTION OF MARKETING

MANAGEMENT
Marketing is a concept as old as the business itself, but as a subject it is still of

recent origin and is evolving gradually. Below we take a synoptic view of
history and evolution of marketing:
1.4.1 History of Marketing
It is hard for many to believe, but when compared to economics, production

and operations, accounting and other business areas, marketing is a relatively
young discipline having emerged in the early 1900s. Prior to this time most
issues that are now commonly associated with marketing were either assumed
to fall within basic concepts of economics (e.g., price setting was viewed as a
simple supply/demand issue), advertising (well developed by 1900), or in most
cases were simply not yet explored (e.g., customer purchase behaviour,
12
importance of distribution partners).
Lead by marketing scholars from several major universities, the development Introduction to
of marketing was in large part motivated by the need to dissect in greater detail Marketing and its
relationships and behaviours that existed between sellers and buyers. In Concepts
particular, the study of marketing lead sellers to recognize that adopting certain
strategies and tactics could significantly benefit the seller/buyer relationship. In
the old days of marketing (before the 1950s) this often meant identifying
strategies and tactics for simply selling more products and services with little
regard for what customers really wanted. Often this led companies to embrace
a “sell-as-much-as-we-can” philosophy with little concern for building
relationships for the long term.
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.
1.4.2 Evolution of Marketing
a) The Stage of Barter
The pre-industrial revolution world was characterized by an agricultural

cum handicraft economy. The agriculturist, whether produce wheat or rice,
or wool or cotton, exchange the surplus with other agriculturists because
the products produced by one agriculturist is required by other who were
not engaged in the same activity. In this way, they meet their requirement
by exchanging the product of value with each other. There was no elaborate
distribution system because the need and habit of the people and the
technology did not demand such system.
b) The Stage of Money Economy
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.
d) The Stage of Competition
The mass production and mass distribution brought by industrial revolution

soon to the stage of competition. The ever-increasing size of the industrial
firms leads to stiff competition among the producers. Earlier, during
industrial revolution the main task of the industrial firms was to produce
and distribute the products but now the main issue was to face the
competition and sustain in the business. They started differentiating their
products in order that their products are preferred over the competitor’s
product.
SAQ 4
What was the process of sales of medicines during the pre industrialized and
non monetized era?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 5
How the industrialization has changed the process of exchange of commodities

and what are the benefits of modern exchange system?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
14 ……………………………………………………………………………………
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.
Five key dimensions of marketing
Coordination Performance
MARKETING
Competition Capabilities
Consumer
Fig.1.1: Key dimensions of marketing

15
Sales Management Organizational Capabilities
As we know consumers demands change very frequently and it also differs

from one consumer to other. If we start customizing the products according to
the individual customers needs and wants than market will be flooded with
diverse products. With such diversity, it is likely that production, inventory and
marketing costs will be so high that the organization cannot then operate
profitably. Thus, in reality, marketing approach involves analyzing consumers’
needs and evaluating the organizations capacity to supply those needs and
whether it is appropriate to do so given the nature of the environment of
business. The ultimate aim is to ensure that the organization creates a match
between what consumer wants and the type of product it is capable of
supplying.
1.5.3 Competition
Organization that most effectively meets consumer’s need is placed at

relatively strong competitive position. In practice, in today’s business what
matters most is how effectively firms meets the consumer needs- nobody asks
what type of product they are supplying, if consumers are satisfied than you
remain in business otherwise you are out.
1.5.4 Coordination
Co-ordination is the interrelationship between marketing and other activities of

the organization. In the current competitive environment, it is often suggested
that marketing is far too important a function to be left solely to the marketing
department; rather it should be seen as business philosophy and an orientation
towards consumers that must permeate the entire structure of organization. it is
also about ensuring that marketing plays a key role in organization
development over time. To develop successfully, an organization must remain
aware of its customers and competitors and all departments need to be
responsive to changes in market.
1.5.5 Performance
Marketing should be viewed as an activity that consistently improves

organization performance; certainly it will increase cost but successful
marketing will also provide the means to increase sales and profits. Extra costs
may be incurred in order to establish the nature of consumers demand and
modify products in order to come as close as possible to matching this demand.
In turn, this would result in an increase in sales on the ability to charge a higher
price for a product that more closely matches consumer’s needs, and thus
generate higher revenue.
SAQ 6
Presuming that an Analgesic is to be introduced in the market, how are you

going to use five dimensions of marketing to place your product in the market?
16 ……………………………………………………………………………………
…………………………………………………………………………………… Introduction to
Marketing and its
…………………………………………………………………………………… Concepts
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 7
What do you mean by organizational capacity and how it is beneficial to meet

organizational objectives?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
1.6 WHAT MARKETERS DO?
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:
1.6.1 Target Markets
Those markets identified as possessing needs the marketer believes can be

addressed by its marketing efforts.
1.6.2 Products/Services
A tangible or intangible solution to the market’s needs.
1.6.3 Promotion
Promotion means for communicating information about the marketing

organization’s solution to the market.
1.6.4 Distribution
It means used to allow the market to obtain the solution. 17

Sales Management 1.6.5 Pricing
It ways for the marketer to adjust the cost to the market for the solution.
1.6.6 Services
Additional options that enhance the solution’s value.
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
What difference does a marketer make in achieving organizational goal?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
1.7 MARKETING IN THE NEW ECONOMY
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:
• A substantial increase in purchasing power.

• A greater variety of available goods and services.
• A great amount of information about everything.
• A great ease in interacting and placing orders.
18 • An ability to compare notes on products and services.
Today’s companies also have new capabilities as given below: Introduction to
Marketing and its
• Ability to operate powerful information and sales channels. Concepts
• Ability to collect fuller and richer information about markets, customers,
prospects, and competitors.
• Faster internal communication amongst employees.
• Two-way communication with customers and prospects.
• Send ads, coupons, samples, and information to customers.
• Customize offerings and services to individual customers.
• Improved, purchasing, recruiting, training.
• Improved external communication.
• Improved logistics and service quality.
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.
1.8 SOME BASIC CONCEPTS OF MARKETING
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.
• Customer satisfaction: With a purchase, how well the product’s

performance lives up to the customer’s expectations. Customers’
expectations must be set at the right level of expectations, neither too low
nor too high. Customer Value & Satisfaction are key building blocks for
developing & managing customer relationships.
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
“Managing markets to bring about profitable exchange relationships by

creating value & satisfying needs & wants”.
1.8.4 Core Marketing Activities
Product development, research, communication, sales and distribution, pricing

and service.
1.8.5 Marketing Management
“Art & science of choosing target markets & building profitable relationships
with them” involves getting, keeping & growing customers through creating,
delivering and communicating superior customer value.
1.9 MARKETING MIX
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
List price, discounts, allowances, credit terms, payment period, etc.
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
MARKETING MIX FOR A COMPANY (MAKING TOOTHPASTES)
Product: 3 varieties (regular, mint, gel), brand name extension (Anchor), 2

sizes (100 gms, 250gms), simple packaging (red and blue colours).
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).
Promotion: Advertising (only on radio), direct marketing (occasional), sales

force (20 salespersons to start with and watching the performance over time).
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
1. “Marketing is hunting or harvesting”, discuss with suitable examples. Try

to apply these concepts to the retail scenario.
SAQ 9
What is the role of a marketer?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
…………………………………………………………………………………… 21
Sales Management ……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
Briefly highlight the basic changing features of the economy that may help in
building your marketing plan.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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.
1.11 TERMINAL QUESTIONS
1. Fill in the blanks:
• Marketing is not a new phenomenon, its emergence, as a ………

discipline, however, is of relatively recent origin.
22
• Marketing and selling are …………………….. Introduction to
Marketing and its
• The essence of marketing lies in creating lifetime ………………… Concepts
• The exchange concept of marketing holds that ………………. of a
product between the sellers and buyers is the central idea of marketing.
• The production concept holds that consumer will ……………..

products that are available and highly affordable.
• A product is a customer ……………………..
• Value means ………………………
• A market is a set of …………………….
• 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.
• Integrated management action simply means that all the different

management functions are tightly integrated with one another, keeping
…………… as the pivot.
• The societal marketing concept holds that the ………………. should

determine the needs, wants and interests of target market.
• The guiding principle of marketing is that the central approach of any

business organization should revolve around the needs and wants of
……………...
2. What are the key dimensions of marketing? Discuss.
3. Knowledge of marketing makes you a more sophisticated customer.

Discuss in the light of your experience.
4. “Marketing has evolved through a period of time”. Discuss.
5. “Marketing improves the standard of living of the society”. Discuss.
6. “The aim of marketing is not to sell but to create a pool of lifetime

profitable customers”. Discuss.
7. Explain the societal marketing concept.
8. What suggestions can you give to modern marketers?
9. Explain the concept of marketing mix. Give an example to illustrate your

answer.
23
Sales Management
1.12 ANSWERS
Self Assessment Questions
1. Marketing inevitably increases in the standard of living as corporate try to

satisfy customers by providing quality goods at competitive prices. Intense
competition forces organizations to innovate and provide newer features,
cut cost and operates at nominal profit margins. These strategies benefit the
customer in terms of better purchasing power and quality goods.
2. Marketing concept necessarily focuses customer as the king and tries to

provide everything that he demands. Cutting cost and quality at competitive
prices is the crux of all the efforts. On the other side, societal marketing
aims to prevent any potential harm to the environment and the society,
while satisfying customers. This concept calls on business people to
balance three considerations in setting their marketing policies: company
profits, consumer’s wants and society’s interests.
3. Marketing is based on consumers need and wants. The organization tries to

satisfy consumers by providing quality product at competitive prices at a
place of convenience with after sales services. Attempts are made to make
enhance the quality and features of the product to make it more acceptable
in the market and hence profitable for the organisation. While sales focuses
on selling of available products to the customers, without focusing on their
satisfaction part. Various tactics are used like discount and promotional
sales etc. to attract customers and they are convinced to buy the products
even if they don’t need it.
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.
5. Mass production and distribution systems were evolved during the

industrialized era. Disposable income of people and increasing competition
has pawed way to make customer as the focal point of all the business
activities. Producers were forced to come out with best of products at
competitive prices benefiting the consumers and the society at large.
6. Pages 12 to 15.
7. The modern concept of marketing focuses on consumers satisfaction. If we

start customizing the products according to the individual customers needs
and wants than market will be flooded with heterogeneous products leading
to higher cost and eroding profitability. The capable organization
synthesize all needs into common viable product of quality at affordable
price and still maintain profitability. Thus, in reality, marketing approach
involves analyzing consumers’ needs and evaluating the organizations
capacity to supply those needs and whether it is appropriate to do so given
24
the nature of the environment of business. The ultimate aim is to ensure Introduction to
that the organization creates a match between what consumer wants and the Marketing and its
type of product it is capable of supplying. Concepts
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
2.9 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.
2.2 SALES AND DISTRIBUTION STRATEGY: ROLE IN

THE EXCHANGE PROCESS
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.
In any marketing process the following staffs are involved:
a) Contact - Finding and communicating with prospective

buyer.
b) Prospecting - Bringing together the marketers or suppliers

offering the product or service and the prospective
buyer.
c) Negotiation and - Reaching an agreement on price and other terms of

transaction the offer so that ownership and possession can be
transferred or the service be utilised or consumed.
d) Promotion - Of the marketers or suppliers offerings, and his or
her satisfaction generating potential.
e) Physical - Actual transfer of possession i.e. timely and safe

Distribution delivery.
f) Collection - Of relevant consumers information and revenue in

exchange of goods or services.
Except for extreme instances of organisations which make exclusive use of

either their own sales force or distribution channels, most organisations get the
above functions performed through a combination of their own sales force and
the distribution net work they choose to hire. A major decision in sales and
distribution therefore becomes the judicious allocation of the above tasks
between the sales force and channel members. The determinants of task
allocations are: competitive practice, product and market requirements,
(including market size, frequency of purchase and customer concentration)
preference and buying practices of the target customers, and certainly the
management philosophy towards control.
28
2.3 INTERDEPENDENCE OF SALES AND Introduction to
Sales Management
DISTRIBUTION
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.
b) The decision of the organisation to allocate certain responsibility in the

exchange process to its channel members would define the scope of
responsibility of its own sales force and thereby would determine the type
of personnel and training required.
c) Even though, an organisation may decide to deal directly with its

wholesaler, semiwholesaler, retailer or consumer, it is required to decide
upon the type of help it will provide to the first and subsequent level of
intermediaries. Since the requirements of each of the above types of first
level contact entities are different from that of the other, the company’s
sales task would have to be defined in context of first level of contact
chosen by it.
d) The choice before an organisation to have direct distribution, indirect

distribution or a combination of the two is of strategic importance and
depends upon factors such as the degree of control, flexibility, costs and
financial requirements etc. Marketing through channels implies lower
degree of control but would also mean lesser funds tied up in maintaining
inventory and lower fixed and variable costs of managing the channels.
Depending upon it own set of variables the organisation would try and
optimise the effectiveness of the exchange process through the use of some
combination of the two. Necessarily then the scope of one (i.e.
distribution) would define that of the other (sales management).
29
Sales Management e) To implement overall marketing strategy, the manufacturers need the
cooperation of distribution outlets in terms of adequate stock maintenance,
in-store displays, local advertising, point of purchase, promotion. Within
the corporation, the sales organisation is the initiator as well as the
implementor of these dealer support operations. The effective functioning
of dealer-sales organisation relationship often becomes the key to
successful working operations within the organisation. This would mean
that the sales management has the responsibility of structuring
organisational relationship within their own department and with interacting
organisational entities so that the sales task can be performed and co-
ordinated with the overall marketing goals.
Before understanding the framework for developing the sales distribution

strategy in an integrated way let us look at some of the important aspects of the
two functions.
SAQ 1
How the pharmaceutical products travel from the manufacturer to the end
users.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
2.4 SALES MANAGEMENT: FORMULATION OF SALES

STRATEGY
The sales management function, as noted earlier comprises the management of

the sales personnel and activities that make up the corporate sales effort. Sales
managers are entrusted with the task of organising, planning and implementing
the sales effort so as to achieve corporate goals related to market share, sales
volume and return on investment. The task involves the sales manager in a set
of activities both within the organisation, and outside with other organisations.
Within the organisation he has the responsibility of structuring relationships

both within his own department and with interacting organisational entities so
that the sales task can be coordinated with other marketing tasks and performed
effectively. It also includes allocating and operationalising the sales effort
30
among the sales personnel.
Outside the organisation, his task would include developing and maintaining Introduction to
channel relationships effectively so that the flow of goods and service, and also Sales Management
promotion and feedback is facilitated.
Embodiment of all these functions can be seen in the development of sales

strategy which often proves vital to the success of the organisation. To reiterate
what you have already, learnt about Sales Management while going through
your MS-6 course (Unit - 19 Block 6), key decision areas in sales management
which are particularly relevant to strategy formulation are:
a) Deciding upon type and quality of sales personnel required

b) Determination of the size of the sales force
c) Organisation and design of the sales department
d) Territory design
e) Recruitment and training procedures
f) Task allocation
g) Compensation of sales force
h) Performance appraisal and control system
i) Feedback mechanism to be adopted
j) Managing channel relationship
k) Coordination with other Marketing department
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
Macro Environment Assessment of the Market Analysis

Analysis: Social competitive situation and the
Step 1
Political Economic corporate goals to determine
Technology the output that sales
management is expected to
give
Define sales management

objectives in terms of
Step 2
delivering these outputs both
quantitative and qualitative
Design sales strategy by

deciding upon
1. type of sales effort
required
Step 3 2. type of sales personnel
required
3. size of the sales force
4. territory design
5. channel support and
coordination
Let us go through the sequential stages of this process. 31

Sales Management 2.4.1 Assessment of Competitive Situation and Corporate Goals
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.
A sound market analysis is also a prerequisite to objective, setting for sales

strategy. Specifically the company would need to know.
i) Current size and growth rate of the market. In multiproduct companies

this analysis would have to be made by product/market and by
geographical territories covered:
ii) Consumer needs, attitudes and trends in purchasing behaviour
iii) Competitor analysis covering
• 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.
Under conditions of pure competition, each seller is too small to be able to

influence prevailing market price. Identical undifferentiated products make it
difficult to specialise sales effort. Under this sort of competitive situation, sales
effort is usually limited to maintenance of adequate market supplies.
Most of the markets today are competing under varying degrees of

monopolistic competition where there are large number of sellers for a product
but the offering of each seller, is capable of being differentiated in a discernible
manner.
However, in the Indian situation most marketers seek to differentiate their

products through variation in product attributes, packaging and promotional
efforts. Under these market conditions sales efforts support the promotion and
maintenance of market share objective of the firm and coordinate with the
distribution and customer service needs of the product. Distribution function, on
its part, complements the sales efforts in so far as the regular availability of
products at almost every purchasing point is concerned. The market conditions
characterised by oligopoly are also characterised by aggressive competition.
Selling effort here becomes an effective tool of market cultivation, building
dealer relationship and maintaining them, providing vital informational
feedback on competitors and their market operations.
32
In case of new product, where the marketer is faced with little or no direct Introduction to
competition, selling effort plays a very vital role in market cultivation. Sales Management
Missionary ‘Salesmen’ are used to familiarise and demonstrate the product,
both to the channel members and the ultimate consumers.
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.
b) decisions on whom to sell − i.e. whether to sell directly to the ultimate

consumer or to make the wholesaler or the retailer the first level to contact.
This has vital implications for the size and type of sales force needed.
c) decision on the price.

These decisions define the scope of the sales effort, in the total marketing
effort.
2.4.2 Setting Sales Objectives
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
a) Sales volume in units or rupees

b) Sales cost
c) Accounts receivables
d) Inventory levels Basic. Functions
e) Dealer support
f) Feedback input
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.
2.4.3 Determination of the Type of Sales Force Needed
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.
Market specialisation would be needed when different groups of target

customers need specialised service or different sales approaches. In still other
situations salesman may need to be knowledgeable about more than one line of
company’s products and deal with more than one set of customers dictating a
34 combination of market and product expertise.
SAQ 2 Introduction to
Sales Management
What should be the qualification of a Medical Representative (MR)?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
2.4.4 Determination of the Size of the Sales Force
Another key decision is the determination of the number of sales persons

needed to achieve the sales objectives. Recruiting more than the optimum
number would mean that the company 'is bearing unnecessary costs at-the
expense of its net profits. Recruiting less than optimum would mean losing
opportunities for exploiting sales prospects. It is not easy to prescribe an ideal
sales force size as the important determinants of sales force size-market size,
and potential, competitive activity, allocation of sales task between the channel
and corporate organisation differ from company to company. With respect to
their own set of variables, companies do try to arrive at an ideal figure by using
various methods such as (a) the incremental method, (b) the workload method
and the (c) sales potential method. The incremental method utilises incremental
reasoning in that it suggests that salesmen should be added to the sales force if
incremental margins exceed incremental sales costs. The sales potential method
uses estimates of sales personnel units (which means the set of activities
expected to be carried out by one personnel unit); expected productivity of
sales personnel and the estimated sales volume to arrive at the ideal size. In the
workload method, through the computation using total market size, sales,
volume potential and volume of non-selling activities like travelling the
company arrives at the total workload. Dividing this by the work it expects one
individual salesman to carryout, gives the sales force size. In case of pharma
marketing, the number of Medical Representative required is determined by
considering the number of doctors or medicals/nursing homes and chemist
shops spread over an estimated area. Of course the sale volume and workload
is considered in addition to the above.
SAQ 3
What are the factors to be considered for determining the number of Medical
Representative for a state?
……………………………………………………………………………………
…………………………………………………………………………………… 35
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
2.4.5 Organising the Sales Effort: Territory Design
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:
Geographical basis which utilizes the existing geographical boundaries and

assigns them to the sales personnel.
Sales potential basis which consists of splitting up a company's customer

base according to the dispersion of its sales potential.
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.
2.4.6 Establishing and Managing Channels Support and Coordination
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.
b) Deciding upon procedures for sharing information with the dealer

network.
c) Deciding upon measures to ensure and promote dealer loyalty.
SAQ 4
How the information moves in a distribution channel from buyer to the

manufacturer?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
2.5 FRAMEWORK FOR JOINT DECISION MAKING IN

SALES AND DISTRIBUTION MANAGEMENT
As assessment of the strategy formulation in both sales and distribution would

again bring you to the realisation that most of the strategic both decisions in
sales and distribution require compatibility.
37
Sales Management Joint decision making would necessarily involve determination of the
components the total marketing tasks to be allocated to sales management and
distribution management, which essentially being a marketing mix decision
need not be discussed here. What we-shall examine in the allocation of the
distribution responsibility is the division of responsibility in relation to
contacting, prospecting, negotiating and transaction, promotion, physical
distribution and information collection. The criteria of allocation of these tasks
would evolve from an analysis of the end user behaviour, competitive practices,
channel attributes and expectation, and company’s strengths and weaknesses.
These criteria as discussed earlier in context of channel selection could be
quantitative – cost per rupee of revenue, financial commitment, sales volume
achieved etc., and qualitative e.g. desire for control and channel adaptability.
Though these criteria would differ from organisation to organisation, certain
guidelines for decision making can be evolved from the following
generalisation developed on the basis of, observed market behaviour and
distribution trends.
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
b) Personal and Prospecting through:
⎯ company’s sales force
Personal and non-personal promotion ⎯ distribution channels

c)
through: ⎯ company’s sales force
d) Maintaining Inventory through: ⎯ corporate organisation/
co-owned depots
e) Accounts Receivables through: ⎯ sales force/corporate
sales organisation
f) Information feedback through: ⎯ company’s own 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:
a) The involvement of the company’s own sales organisation would be higher

in case of technically sophisticated high unit value products targeted at a
small number of consumers. (e.g. Eureka Forbes, Mainframe Computer
System, energy system by BHEL, etc.) Intensive competition or lack of
appropriate channels to distribute such products may also favour direct
distribution. Conversely the distribution channels will be utilized more in
case of frequently purchased low unit value standardised products (various
Brands of Coffee, Bread, Butter etc.,) where the geographical dispersion of
the consumers is quite high.
b) As companies grow larger in size and generate resources to make their
financial position strong, the tendency is to favour direct sales.
c) Market conditions characterised by a limited number of consumers and/or
intense competition, necessitate a high degree of personal prospecting and
personal promotion. In case of low or medium value, relatively
standardised products, a higher proportion of this task would be assigned to
the channel while in case of complex high value products requiring
specialised service the direct sales force is much more likely to be given the
responsibility. Another, trend here, specially in exclusive distribution is that
the task may be performed by the dealer’s staff provided the company pays
for or provides for the training of the staff, e.g. Refrigerators, Water
Coolers etc.
d) A greater allocation of the non-personal promotion would have to be
carried out by these two functions i.e. sales and distribution function if
mass media is not available or is unsuitable for reasons of adaptation to
local preferences. A higher proportion of non-personal promotion may be
assigned to the distribution channels if they have easy access to local
media.
e) A higher level of inventory would need to be carried in case of highly
competitive goods and seasonal goods at the point of purchase. In case of
non-postponable purchases like bread, butter, channel members may be
required to participate to a higher extent in the inventory carrying task. This
position, is modified to a certain extent when the supply logistics of the
manufacturer is streamlined enough to manage replenishment at the retail
outlets with a high degree of regularity.
f) In case of industrial products, where the consumers are few and products
are technically complex, the information feedback task is generally assigned
to the company’s own; sales force or even to dealers where exclusive 39
Sales Management distribution is followed. In case of consumer products where the number
and dispersion of buyers are very high a higher proportion of the feedback
task is assigned to specialised agencies under the MR function.
g) As the company has much more to lose if reliable information about market
position and trends is not collected, a larger proportion of the market
intelligence task should be assigned to the company’s own sales force.
h) While marketing to the rural markets, in case of both household
consumption goods and low or medium value durables like electrical
appliances cooking utensils etc., the middlemen, particularly the feeder
town stockist becomes a vital factor in market cultivation. As the markets
are far flung and the volume of consumption also varies from one rural area
to another, the trend in rural marketing is towards a more extensive use of
middlemen.
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.
2.7 KEY WORDS
Channel of distribution : The route that the title to a product takes

from the producer to the ultimate user.
Direct distribution : A distribution system in which the ultimate

buyer acquires the title directly from the
manufacturer of the product.
Exclusive distribution : A distribution system that involves

territorial protection for authorised dealers.
Indirect distribution : A distribution system that uses middlemen

i.e. wholesalers and retailers to reach the
ultimate buyer.
Intensive distribution : A distribution strategy that strives to have

the firm represented in the maximum
number of outlets.
Monopolistic competition : A market situation where many sellers offer

differentiated products to a large number of
customers.
Territory : The geographical area a sales person is

assigned.
40
Vertical integration : The strategy by the manufacturer, which Introduction to
involves acquiring ownership rights down Sales Management
the channel of distribution.
1. Design and discuss the distribution channel for a pharmaceutical product.
2. Describe the key decision areas in sales and distribution management.
3. Discuss the factors responsible for interdependence of sales and distribution.
2.9 ANSWERS
1. The pharmaceutical products through the distribution channel travels from

company warehouse to the distributor and from distributor to the
wholeseller and finally to the chemist shops.
2. The qualification of the MR should be a degree in pharmacy or related

fields with specialised training of drugs and chemicals.
3. The number of MR required for a state is determined by considering

(a) work load (b) sales potential (c) number of doctors and chemists
(d) estimated market growth.
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
3.11 Answers
3.1 INTRODUCTION
The job of Medical Representative (MR) is personal selling of the pharma

products through detailing about the product to the doctor. The pharma product
marketing is mostly based on personal selling.
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.
It takes several forms including calls by company's sales representative,

assistance by a sales clerk, an informal invitation from one company executive
to another.
It is employed for the purpose of creating produce awareness, stimulating

interest, developing brand preference, negotiating price etc.
Thus keeping in view the diversified nature of personal selling, we would
discuss in this unit the growing importance of personal selling, its changing
role, functions and process.
Objectives
The objectives of this unit are to help you:

43
Sales Management • define personal selling;
• evaluate the importance of personal selling under different conditions;
• explain the nature and type of activities involved;
• describe its complimentary role in marketing strategy; and
• describe the selling process.
3.2 THE GROWING IMPORTANCE OF PERSONAL

SELLING
The increase in complexity of products has increased the importance of

personal selling. Manufacturers of highly technical products such as
computers, electronic typewriters, digital phones, microwave kitchen
appliances, remote control equipments etc. depend more heavily on personal
selling than do grocery or toiletry products manufacturers. However the core
pharmaceutical products are marketed by personal selling method.
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.
In case of pharma product, the promotion mix mostly consist of personal

selling rather than advertising. Being high speciality and complex product,
personal contact with the doctor is essential to convince him of the product's
quality and utility.
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.
Personal selling is more effective during product launching stage.
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.
3.3 SITUATION CONDUCIVE FOR PERSONAL

SELLING
In certain marketing situations, personal selling provides an effective and

efficient solution to most of the selling problems. However its economic
efficiency relative to other element of the marketing mix needs to be
thoroughly appraised.
Now we will discuss some of the situations when personal selling in a company
becomes more relevant.
Product Situation
Personal Selling is relatively more effective and economical in case:

45
Sales Management a) When a product is of a high unit value like xeroxing machine, computers
etc.
b) When a product is in the introductory state of its life cycle and require
creation of core demand.
c) A product requires personal attention to match specific consumer needs e.g.

insurance policy.
d) Product requires demonstration e.g. most of the industrial products.
e) Product requires after-sales service.
f) Product has no brand loyalty or very poor brand loyalty.
Market Situation
Personal selling situation can be best utilised when:
a) A company is selling to a small number of large-size buyers.

b) A company sells in a small-local market or in government or
institutional market.
c) Desired middle men or agents are not available.
d) An indirect channel of distribution is used for selling to merchant-
middlemen only.
Company Situation
Personal selling is relatively more effective and economical when:
a) The company is not in a position to identify and make use of

suitable non-personal communication media.
b) A company cannot afford to have a large and regular advertising,
outlay.
Consumer Behaviour Situation
Personal selling is more effective when:
a) Purchases are valuable but infrequent.

b) Consumer needs instant answers to his questions.
c) Consumer requires persuasion and follow-up in the face of competitive
pressures.
3.4 THE CHANGING ROLES OF SALES PERSONS
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.
Negotiation Strategies • The product is adjusted to meet the

customer’s needs.
• The representative understands the
immediate and narrow needs of the
customers.
Persuasion Strategies* • The representative tries to fit the customers
into the existing product mix by skillfully
overcoming objections.
Communication • The representative is a personal

Strategies* communicator, providing product and
service information close to the point of the
buying decision.
* These two strategies are followed in pharmaceutical marketing.
Adapted From: M. Haven, J. Cribben and H. Keiser, Consultative Selling American
Management Association, Inc. New York 1970 eds., G. D. Huges and C. H. Singler
‘Strategic Sales Management’, London, 1983.
Communication Strategies
At the lowest level of personal selling, the sales representative is an alternate
medium for communicating information about the product or service offered
by company. The only strategy appropriate for increasing sales at this level is
walking more and talking more. There is little reason to use representatives as a
communication medium when there are alternative mass communication media
like press, radio, television available. 47
Sales Management Persuasion Strategies
The persuasion level requires the sales representatives to go beyond the role of
a mere communicator to the role of understanding at least the immediate and
narrow needs of the customers. At this stage, the sales representative tries to fit
the customer into the existing product or service mix by skillfully anticipating
and overcoming objection. This is what Indian market is experiencing.
Negotiation Strategies
During negotiation, the product and commercial terms are adjusted to meet the
customer’s needs rather than just attempting to skillfully overcoming
objections as practiced in previous stages. The critical skill at this stage of
selling is analysing and understanding the customer needs and determining how
the company's products and services can meet these needs. At this point, the
customer becomes a client and the process of consultative selling begins.
Client Profit-planning Strategies
In India, client profit-planning strategy is applicable in industrial product
selling. The representative is put to work with clients team to learn about profit-
planning system, product, finance, marketing, research and development and
future plans etc. so that the product meeting the client's needs could be
developed.
Business Management Strategies
At this stage professional representative is responsible for managing territory
as a strategic business unit-investing time and expenses in most profitable
manner. Few Indian Companies are using a system of national account
management (like Modi Xerox) in which manager is responsible for all sales to
a few key accounts. Territory representatives along with sales managers and
accounts managers develop business strategies and bottom line responsibility
to meet objectives of the organisation.
3.5 DIVERSITY OF SELLING SITUATIONS

All of us being consumers often come across variety of selling situations.
Differences in marketing factors cause each company to have individualised
selling styles. Each different type of selling job requires the sales person to
perform a variety of different tasks and activities under different
circumstances. The job of a soft drink driver salesperson who calls in routine
fashion on a number of retail stores is different from that of a computer sales
person who sells a system for managing information to executive of a
consultancy firm.
Before categorising sales persons into basic selling styles, one convenient way
to classify, the many different types of sales job is to array them on the basis of
the creative skill required in the job, from simple service – or repeat order
selling to the complex developmental selling. Let us now discuss the different
48 kinds of selling positions prevalent 'in Indian companies.
Delivery Sales Person Personal Selling
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.
Inside Order Taker
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.
Outside Order Taker
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.
Missionary Sales People
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.
Creative Sales person of Tangible Products
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.
Creative Sales person of Intangible Product
Saws of intangible products such as insurance, advertising services, consulting

services, communication systems or educational programmes, require creativity
of sales person to handle me situation. Generally selling the intangible products
is difficult as their benefits cannot be demonstrated tangibly.
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
The most distinctive characteristic of technical sales is the product knowledge

required by its sales person, unlike the consultative sales, where sophistication
in organisation relationship and persuasive ability we sales persons' most
valuable assets. Even time required to sell the product is relatively less than
consultative sales. Most of the technical purchasing requires approval of several
people but only one or two pups with technical knowledge influence decision.
If the sales representative is able to satisfy; these people with product
characteristics, application, installation process approval from higher
management is usually forthcoming. The technical sales persons though not
strangers to the process of making a sale, are trained to utilise the rational
approach; by going into details of product utility and features.
Commercial Sales
This field generally includes non-technical sales to business, industry,

government and non-profit organisation e.g., office equipment, wholesale
goods, building products, business services and others. Unlike the previous two
types, it is customary for the commercial sales person to make sales on first or
second call. The process stresses approach to right person (decision maker),
making a smooth presentation and closing the sales.
The field is composed of order takers, to follow up and maintenance of accounts

and order getter, to develop new accounts. Since these require different
approaches, they normally require different personality traits e.g. the order
getter are more aggressive and more highly motivated.
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
Which type of personal selling situation is applicable for pharma products?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
3.6 QUALITIES OF A GOOD MEDICAL

REPRESENTATIVE (M.R)
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.
2) Ambition: He likes to do a good job and is interested in getting ahead with

your company.
3) Appearance: Appearances mean a lot toady and the successful salesman is

neat and organised. He presents himself well in person. Also, he keeps his
desk, books and manuals neat and ready for use.
4) Business Sense: He understands that you are in business to make a profit

and quickly learns the ins- and -outs of your organisation.
5) Courtesy: He reveals a sincere desire to help customers and treats them as

guests even when he visits their places of business.
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.
8) Enthusiasm: There is nothing that can drain away a prospect's buying

interest more than a half-dead salesman. Dullness should be left at home. A
salesman must radiate enthusiasm during and after the sales call.
9) Figure Sense: He should have the mathematical ability to figure and fill up
order form correctly and to make the necessary reports.
10) Flexibility: A good salesman is able to adapt himself to a variety of

customers. Each contact may require a adapting the sales talk, speech
habits and even appearance.
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. .
16) Knowledge: In some business, an applicant must also have a through

knowledge of the highly specialized products or services his employer
offers. In some cases, this knowledge can be gained only by years of
experience. It is most applicable for pharma product marketing.
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.
19) Motivation: He must have more than just an interest is selling.

Psychologists have found certain predominant patterns in men who have
become realty successfully sales men. They live in the present and not in
the future. They do want power over others and prefer not to work under
close supervision.
20) Originality: He is constantly searching for new ideas to be used in selling

your products and will suggest better ways of doing things.
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.
23) Self-control: He can handle difficult people and situations calmly.
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.
3.7 THE SCOPE OF ACTIVITIES IN SALES SITUATIONS
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.
Problem Solving Activity for the Customer

Problem solving requires substantial knowledge and decision making skill. In
the case where prospective customers are not aware of utility of products or
services in question, there is a problem. The sales person can contribute by
identifying and suggesting best solution for it. In many sales situations, these
activities make up a substantial part of the total sales effort.
Co-ordinating Buyers and Sellers Activities

With the multifarious and complex system of today’s business situation there is
a need for a catalyst to bring together and work with the parallel departments of
supplier and customer.
Most of the sales persons are in position to perform this function.
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:
a) Provide strength to the sales persons identity with the company to

executive.
b) Exchange information with sales persons.
c) Provide specialised training.
d) Provide sales persons with a change of pace. 53
Sales Management Attending Trade Show
Trade shows are held seasonally or annually. Sales persons usually attend these
trade fair not only to achieve sales, but also to understand competition’s
products and prices. Technological, advancement in different area is also
communicated to them through these trade shows. Ever since Trade Fair
Authority of India has been set up various types of fairs and exhibitions
including the Annual India International Trade Fair are being held more
regularly.
Attending Educational Workshops

Many lines of sales work afford the opportunity for continued formal education
throughout a career. Many companies like NTPC, GNGC, TISCO, etc. require
their sales persons to follow a continued programme of studies in addition to
company training.
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
Out of the various qualities of a medical representative, which one is most

important?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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.
More specifically this unit sought to highlight the importance of personal

selling, various selling jobs, diversity of selling situations, and its relationship
with marketing mix and process. With the growing complexity of products,
importance of personal selling has increased. They now act as introducers,
intelligent communicator as well as demand pushers and also add unique utility
to product. Their role has changed drastically from being a simple
communicator to business manager. In order to be successful a: sales person
must possess a set of personal, product related and functional qualities, as
variety of analytical and administrative duties are important component of the
job. Before approaching a prospect every sales person is advised to do bit of
homework regarding company’s name, size, authority concern and general
requirement. While meeting the prospect, sales person should introduce
himself, his company and the product under promotion. Product presentation
and overcoming of customer objections, leads to convincing the customer and
results in the closing of mutually satisfying sale.
3.9 KEY WORDS
Stimulated demand : Increasing demand by ways of introducing

product to consumer to reduce reluctance,
Trade selling : Long-term, business relationship with a

stable group of customers like wholesalers
or retailers.
Missionary selling : When salesman persues indirect customers

to buy product. Like medical
representatives persue doctors to prescribe
the product.
Technical selling : Providing technical advice and assistance

as part of sales job.
New business selling : Primary task is to seek out and persuade

new customer to buy the product.
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
1. The consumer behaviour situation is best suitable for application to

pharmaceutical marketing. In this situation the purchase is infrequent,
needs constant information and constant follow up through M.Rs visit.
2. Among a set of good qualities of empathy and persuation the most

important quality is the M.R should have thorough knowledge about the
product he is marketing.
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
4.8 Answers
4.9 Further Readings
4.1 INTRODUCTION
When a Medical Representative is visiting a doctor and detailing about a

product, is a process of personal selling. Similarly, when a sales person of
Eureka Forbes contacts a house-wife and sells his vacuum cleaner, he is
actually doing personal selling. When the sales person of Hindustan Lever
visits a grocery store and sells Lux, Lifebuoy, Wheel, etc., he’s also practicing
the personal selling. When a candidate wants to be selected as a Marketing
Manager in a company, he sells himself to his prospective employers and
practices personal selling. A child asking for a favour from his mother by
requesting her to buy him a chocolate or a pack of cookies is also practising
personal selling. So vast is the scope of personal selling that everybody has
experienced.
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
After reading this unit you should be able to:
• understand the relationship of personal selling in total scheme of

marketing;
• evaluate different theories of personal selling;
• understand various components of personal selling to design the personal
selling effort for your organisation; and
• understand each step of the actual sales process.
4.2 PERSONAL SELLING AND MARKETING EFFORT
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.
The promotion mix, which is an important component of Marketing − Mix, also

has four mix parts. These are: Personal Selling, Advertising, Publicity, and
Sales Promotions.
The above introduction would help you in understanding the significance of

Personal Selling in the overall marketing scene. Since the Personal Selling
58
effort is managed by Sales Management Personnel, the topic is discussed under Sales Process
Sales Management and not in promotion Management.
Personal selling is the process by which the representatives of the organisation
(Management Manufacturing and Marketing) come in direct contact with the
prospects (potential buyers) to convince and persuade them to purchase their
products. Personal selling, along with other components of promotion mix and
marketing mix, is a means to implement marketing plans and strategy.
Almost all the organisations, in any industry, involved in marketing their
products employ sales representatives or sales personnel to directly contact the
potential buyers and to persuade them to buy their products.
It may be worthwhile to distinguish between personal selling and
salesmanship. While personal selling forms an important element in total
scheme of Marketing Management, salesmanship, on the other hand, is one of
the skills used in personal selling. Thus, salesmanship is a part of personal
selling in the same manner as personal selling is a part of the promotion − mix,
and promotion is a part of the Marketing Mix.
4.2.1 Difference between Advertising and Personal Selling

Though the pharmaceutical products are not advertised in the mass media
except the OTC products. Let us try to understand the difference between
advertising and personal selling also so as to clearly distinguish between these
two important components of the marketing mix.
From a broad perspective, both − the personal selling as well as the
advertising − are the means to communicate with the target customers for the
product or service of an organisation. To be effective, i.e., to produce results, in
terms of sales or orders, both should be understandable, interesting, believable
and persuasive. We shall discuss the process of designing a personal selling
effort involving all these four criteria of an effective communication.
However, there are some notable differences between these two means of
communication. While the personal selling effort is a two-way communication
process, the advertising is a one way communication. In the personal selling
situation, as we have observed, the customer comes in direct contact with the
sales person who, in turn, is representing an organisation. The customer can
ask any number of questions so as to satisfy his/her quarries about the product,
the sales person is offering. It is the sales person's, responsibility to satisfy his
customer on the benefits of his product. If he does so, he gets the desired sales
or an order. Thus, the result of the personal selling, whether positive in terms
of an order or negative in terms of no order, is also quick and easily
measurable.
In advertising, on the other hand, the customer does not coarse in direct contact
with any representative of the organisation: Thus it is a one-way
communication. The reactions, attitudes or perceptions of the viewers can not
be immediately gauged in advertising.
59
Sales Management Let us also understand a very interesting aspect of advertising and selling, about
their relative importance of the two, during three different stages of a
products/brand’s market. The three phases can be the-pre-purchase phase, the
purchase phase and the post-purchase phase. The pre-purchase phase is
characterised by the phase where the organisation is trying to convince the
targeted customers on the benefits of the product/brand. The purchase phase is
the time/duration when the customer is making his mind to annually buy the
product. The post-purchase phase is one when the customer has bought the
product and is evaluating the decision.
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:
4.2.2 Significance of Personal Selling
It is important to understand the significance and objectives of personal selling

effort in overall scheme of Marketing. More specifically it helps in the
following manner:
i) Personal Selling Implements the Marketing Strategies
Whatever the Marketing Strategy of the company, it has to boil down to

strategic communication, targeted at customers or prospects. The person
who communicates with the prospects is the sales representative, though
different companies attach different designations to them. It is the
salesmanship of that sales representative which brings orders, the tangible
results, to meet the marketing objectives.
ii) Personal Selling Brings Money to the Company
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.
iv) Personal Selling Maintains and Creates Customers
The sales representative is the best overall manager of his territory. He

has the responsibility of maintaining the current business, as well as
developing it. He meets these objectives by maintaining existing
customers and developing, new ones at the same time.
v) Personal Selling is a Source of Feed back
A company is known at the market place through its sales representatives

which the company also knows the market place through its
representatives. That is why the field sales personnel are considered to be an
excellent source of market information.
vi) Personal Selling Makes New Products Successful
It is through the personal selling effort a sales-representative is able to

provide adequate information on new products to prospective customers.
Personal selling effort also ensures the availability of the product in the
market place, widely as the sales representative has developed the
relationships with the trade, i.e., retailers, wholesalers and other middlemen.
The sales representative provides the information to the company on
customer’s response to a new product and the competitor’s activities.
Thus it can rightly be said that an organisation sees and hears through the
personal selling effort. Sales-representatives are the eyes and ears of an
organisation.
4.3 THEORIES OF SELLING
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
4.3.1 AIDAS 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.
At times, we ourselves also experienced that inertia, as a prospect. We might

have liked the vacuum cleaner of Eureka Forbes during its presentation at our
home by the company’s sales person. He might have answered all of our
objections quite satisfactorily. It is now upto us to take the final decision of
placing an order to the Eureka Forbes’ sales person. But we keep on thinking
whether to go for the same or not. Try to recollect, what the sales person told
you at that time. He must have said, “Sir, should I send the machine tomorrow
or today?” or “Sir, we also have an attractive finance option whereby you can
pay in instalments.” or “Sir, only for you I can ask my sales manager for a 10%
discount on the billing price.”
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.
4.3.2 Right Set of Circumstances Theory
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:
4.3.3 Buying − Formula Theory
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.
The sequence of events in a prospect’s mind can be represented as:
Needs Solution Purchase
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:
Needs Solution Purchase Satisfaction
Furthermore, whenever a need is felt, the solution is available in the form of a

product or service or both. A product or a service belongs to some manufacturer
or a marketing agency. The product, service or the manufacturer may also have
a brand name.
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.
This sequence of events may thus be represented as:
Needs Solution Brand Purchase Satisfaction

Name Dissatisfaction
In practice, most of the sales presentations or the personal selling efforts are
based on one or a combination of these theories.
4.4 PERSONAL SELLING PROCESS
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
• Preparation to meet individual prospects

• Making the presentation
• Maintaining the interest and to arouse desire
• Fielding the objections
• After sales service
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.
To be more productive, the sales personnel should plan as many of their

activities as possible. In other words, they should always do the proper home
work in order to utilise their time in the marketplace, more productively.
Hence, they should plan their travel and call-schedules so as to spend
maximum of the available time on meeting their customers. Moreover, the
time available to the sales personnel should not be wasted in making an effort
to convince those people about their products, who can not buy them. Thus, the
planning which involves eliminating non-productive calls is known as
prospecting.
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.
Identification of potential customers can be done with the help of Sales

Manager who has earlier handled the territory or has a good knowledge about
the territory. It can also be done by collecting the list of prospects from trade
associations, or by looking at the directories of individual customers’
associations. The response to advertising (response coupon) other companies’
sales personnel, and meeting in general, the potential buyers, are some other
sources of potential customers.
Ranking of the identified prospects can be achieved by contacting the

customers’ present relationships at the market place. For example, a potential
doctor or nursing home can be found out from the number of prescription from
the nearest chemist shop. The objective of customers ranking is to avoid these
customers, with limited requirements of the company’s products.
65
You are the Sales Manager of a pharmaceutical company marketing medicines.

Enumerate various sources that you can look for enlisting the potential
prospects for your products.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
4.4.2 Preparation to Meet Individual Prospects
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.
4.4.3 Making the Presentation
This is a very important component of the total process of personal selling. In

essence, it amounts to using all the information, knowledge and skills of the
sales person, so as to actually make the sales. In this stage, a sales person
draws ATTENTION of the customers, holds INTEREST in his offering, builds
the DESIRE for his product and finally stimulates his customer to take a
favourable ACTION towards his product, i.e., the prospect purchases his
product. As discussed in the theories of selling, it involves implementing the
AIDAS theory of selling.
66
4.4.4 Draw Attention Sales Process
The prospects, attention can be drawn by asking a creative question, or by

pointing out a startling new fact about the product. By finding out the actual
need of the customer and then phrasing the question in such a manner that it
actually tells the customer that your product can meet the prospect’s needs.
For example, if a printer (customer) is looking for a printing machine, which

prints at double the speed of his present machine, the sales person can ask “Are
you looking for a printing machine which prints at 600 prints per minute at the
cost of 300 prints per minute of the currently available machine?”
A sales person, of a company marketing medicines, can ask a lady doctor

who is looking for an antibiotic which is safe during pregnancy may ask the
prospect, "are you in need of an effective antibiotic which is also safe in
pregnancy"?
This technique of asking questions to the prospects with the objective of

drawing his/her attention to the salesman's presentation is called the technique
of probing. As we have observed from the types of questions cited above that
the prospect can answer such questions in ‘Yes’ or ‘No’ (one word answer).
Therefore, such probes are known as CLOSED PROBES.
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.
4.4.5 Hold Interest and Build Desire
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
• excellent communication ability

• good command over language
• excellent knowledge about the product and the competitors’ product
• ability to keep the presentation coherent
• good public speaking ability
• ability to win the customer by understanding his/her needs
Moreover, before he goes to make the presentation to the prospective buyer,

the sales person must rehearse his complete presentation, several times at
home. This will go a long way in inculcating the necessary confidence in the
sales person, which in turn, will help him in clinching the deal or getting an
order.
The desire of a customer can be built by emphasising on those benefits of the

product, which meet a customer’s present needs, and promise the customer his
value for money.
In other words, the sales person should translate the features or attributes of his
product into the benefits that the prospect is going to desire. The prospect is
not interested in the features or attributes of the product. He is only interested in
benefits and how the product is going to make his life better. For example, the
aluminium engine in Maruti Zen car is a feature of the car. It makes the car
lighter in weight and hence more mileage per litre of fuel is the benefit to its
owner. The use of a Super Horn speaker in Samsung colour TV is only a
feature. The benefit to the owner is a better quality of sound and a stereo
effect. Similarly, a medicine works 24 hours in the body, is a feature. The
benefit is that the medicine has to be taken only once in 24 hours by the
patient. This is much better than a medicine which works for 8 hours, and
has to be taken 3 times in a day.
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
How to build interest in a pharmaceutical product?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
4.4.6 Sales Resistance

Though sales resistance is rare in case of pharmaceutical product, let us have
an idea bout it. This part of the selling process is also a very important part: It
concerns with tine resistance that the prospect exhibits during a sales call. Even
after proper prospecting, preparation to meet each individual and making a
winning presentation, the sales personnel can face some resistance from the
prospects. Such a resistance may be exhibited, typically, in terms of objections.
The objections are the sincere or insincere reasons put forth by the prospects in
order to circumvent or the culmination of a sales call into the actual purchase.
An objection requires a tactful handling by the sales person at its best.
Otherwise, it can spoil the sales person's total effort in securing order .the
sincere objections are the real objections or real reasons put forth by the
prospect for not buying the product. Insincere objections, on the other hand,
are the imaginary or unreal objections.
A few examples of real objections are, “I have no surplus cash at the moment to
buy your product, though I am convinced about its utility”. “I have recently
bought a similar product”. Sincere objections can also be put by the prospects
to gather more information about the product, like, “What will you guarantee
about the product”, or “How quickly your service network responds,” or “How
much time your service personnel usually take to attend complaint.”
The examples of insincere objections are “Why did you go for a green colour
cough medicine, had it been red. I would have purchased it,” or “The
weight of you printing press is amore, I do not think our floor can
accommodate its weight.”
4.5 SUMMARY
Personal selling is an important component of overall marketing effort of an

organization. The association of personal selling in total scheme of things in the
overall view of marketing is that it is an important component of ‘Promotion
Mix’, which in turn, is one of the constituents of ‘Marketing Mix’. 69
Sales Management It significance in total marketing effort can't be underestimated as the Personal
selling implements the marketing strategies, brings money to the company,
makes the organisation know, maintains & creates customers, makes new
products successful and works as a feedback source.
The personal selling process is a scientific process involving the creative

utilisation of various steps like prospecting, preparation to meet individual
prospects, making the presentation, and meeting the objection to closing the
sales. It is the creative implementation of the concepts of drawing attention,
holding interest, building the desire and stimulating the action, which makes
the presentation very effective.
An effective sales person should close a sales presentation when:
• 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.
This completes our discussion on the process of personal selling. It goes

without saying that a sales person who practices various steps of this process,
sincerely and diligently, would definitely become an ace sales person.
4.6 KEY WORDS
Prospect : A potential customer with not only the need

for the product but also the purchasing
power and the authority to make the
decision.
AIDAS theory : It is suggests that the prospect goes through
five different stages of Attention, Interest,
Desire, Action and Satisfied during a sales
presentation.
Buying formula : It emphasises the needs and problems of the

buyer and suggests that the sales person
must assist in finding solution to those
problems.
Probe : A technique of asking questions to be

prospects with the objectives of drawing
his attention to be contents of salesman's
presentation is called probing.
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.
2. Personal Selling is one of the important components of Marketing Mix.

Discuss and explain the various steps involved in the sales process
highlighting the importance of each.
3. Medical Representative is the pharmaceutical company to many of its

doctors and it is the representative who brings back to the company much
needed information about the product-performance. Discuss.
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.
2. If the medicine is providing any special benefit or any special technique is

adopted to manufacture the medicine or any patient convenience feature is
there like long acting medicine will build an interest.
4.9 FURTHER READINGS
Allan L. Reid (1996) Modern Applied Selling, New Jersey, Prentice Hall.
Armstrong, Gary, Kotler, P.: Marketing – An Introduction, Pearson Education
– Reference Book.
Brand Equity, Supplement of the economic Times.
Czinkota and Kotabe. Marketing Management; Thomson, South-Western /

Cengage; India Edition – Reference Book.
David J. Bowersox, M. Bixby Cooper, Douglas M. Lambert. Donald A. Taylor.
Management to Marketing Channels, McGraw Hill Book Company.
Eugene M. Johnson, David Kurtz and Elurand Scheuberg, Sales Management,

McGraw Hill.
Eugene M. Johnson, David L. Kurtz, Eberhard E. Scheuing (1986) Sales

Management, Concepts, Practices, and Cases, McGraw Hill: Inc. USA
(Chapter-4).
Frederic A. Russel, Frank H. Brach, Richard H. Buskirk and Bruce D. Buskirk
(1995) Selling Principle and Practices, New York: McGraw Hills.
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.
Kotler, P. Marketing Management (PHI) / Kotler, P., Keller, Koshy, Jha:

Marketing Management, 12th Edition, Pearson Education – Text Book.
Louies W. Stem and ADgI El Ansary (1988) Marketing Channels. Prentice Hall
International.
Madura, Jeff. Fundamentals of Business; South-Western Cengage Learning;

India Edition – Reference Book.
Meenakshi, N. and Kumar, Arun. Marketing Management, Vikas Publishing

House, New Delhi – Reference Book.
Panda, Tapan K: Marketing Management, Text and Cases, Indian Context;

Excel Books, New Delhi – Reference Book.
Ramaswamy, Namakumari: Marketing Management (McMillan) – Reference

Book.
Richard It. Still, Edward W. Cundiff, Norman A.P. Govani (1988) Sales
Management, Decisions, Strategies and Cases, Prentice Hall of India Pvt.
Ltd.: New Delhi. (Chapters 2,3,5).
Richard R. Still Adward, W. Cundiff and Norman A. P. Govoni. Sales
Management, Decisions, Strategies and Cases.
S. Neelamegham (1988) Marketing in India Cases and Readings Vikas

Publishing House Pvt. Ltd., New Delhi.
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
5.14 Answers
5.1 INTRODUCTION
Good communication is one of the important skills required for marketing of

pharmaceutical products. The word ‘communication’ is based on the Latin
word meaning ‘common’. Thus the term communication has come to mean
sharing something of common use.
In marketing, communication has a very important place. It is that function of

marketing which is charged with the task of informing the target customer
about the nature and type of the firm's products and services, their unique
benefits, uses and features as well as the price and place at which those would
be available in the market place. Since marketing communication aim at
influencing the consumer behaviour in favour of the firm’s offerings, these are
persuasive in nature. These persuasive communications are more commonly
called Promotion' and constitute one of the Ps of the marketing mix.
A study of marketing communication, therefore, is a study of the promotion

function of marketing. Notwithstanding the continuing debate whether
promotion is the first element of the marketing mix or the last, the fact remains
that sound management of the marketing function is dependant on the effective
management of its promotion function. Similarly, the examples of the products
which misfired due to faulty management of the promotion function are not to
seek. As stated above communication will be complete only when the receiver
understands in the same sense what the sender wished to convey. The
73
Sales Management effectiveness of the communication process, therefore, independent upon the
level of congruity and compatibility obtaining among the various elements of
the communication process, i.e., between the sender and the message, the
message and the media, the media and the receiver, and so on. Incongruity
and/or incompatibility between the various elements of the communication
process might make the promotion function, and in turn the marketing function,
ineffective.
With growing competition in the market place, as well as the customers

becoming better informed and more. choosy it is imperative now that
marketing communications, of the right kind only are made to the right group of
target buyers. In order to understand how the promotion function can be
managed effectively let us begin by first taking a look at how communications
work.
Objectives
After completing this unit you will be able to:
• outline the process of marketing communication, which is also relevant in

sales communication;
• identify the various communication objectives, media and types;
• discuss the factors that influence a firm’s choice of the media;
• relate the non-verbal to interpersonal transactions; and
• understand how to write effective sales letters.
5.2 HOW COMMUNICATION WORKS
We know by now that communication, simply speaking, is sharing of

information between the two parties. Such an exchange could be oral or
written, personal or public using words, figure, symbols or a communication
thereof. The process of communication beings when one party (called source,
sender or communicator) wishes to communicate with another party (the
receiver). Communication is complete when the receiver understands in the
same sense what the sender wished to communicate. The various elements of a
typical communication process are given in Fig. 5.1.
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
The source of communication contributes to its effectiveness. A lot of research

has been done on source credibility. One source may be more credible than
others, and communication from such a source may produce more effective
results. For some messages a senior manager may be a more credible source,
whereas for other types of messages a union leader may have higher
74
credibility. It may be useful to determine the credibility level of the various Communication
sources for different categories of messages. Skills
Who Says What How To whom
Senders Encoding Media Encoding Receiver

(of Message) (of Message)
Examples Examples Examples Examples Examples
Manufa- Words Newspapers Depending Individual

cturers Phrases Magazines upon Past Group
Marketer Pictures TV Experience Companies
s Symbols Radio Perception Retailers
Retailers Figures Hoardings Attitudes Resellers
Actions Direct Mails Other Publics
Signals Telephone
Personal visit
With what effect
Feedback
Sales, complaints
inquiries
Fig.5.1: Elements of the communication process
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
If the target of communication is receptive, the communication is likely to be

effective. It may, therefore, be useful to assess a target's readiness and
receptivity, and take necessary action to ensure a minimum level before
sending the message. Communication should meet the target's needs.
75
Sales Management Receptivity may be determined by the perception of the source, his own need,
and the instrumentality of communication (that the act of communication will
satisfy his felt need).
The Message and its Goal
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
The media used in communication can be classified in several ways. Media

may be verbal or non-verbal. Non-verbal communication is an important as,
and in some cases even more – important than verbal communication. Non-
verbal communication includes such a variety of behaviour that these cannot be
enumerated. Even silence may be eloquent and may communicate a message.
In. attitudes and values, nonverbal communication is much more influential.
Researches have shown that one of the most effective way of developing social
skills and attitudes is modelling, living the values and attitudes you want to
others to practice. People learn more from what they experience than what they
bear. In an organisation the message of a General Manager orally delivered
about the importance of technical people may have no effect if he himself does
not have respect for them, and may often overrule the decision recommended
by them on the basis of analysis of technical data.
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.
5.3 COMMUNICATION OBJECTIVES
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
Under the hierarchy-off-effects model, the buyers purchase decision is

preceded by steps such as conviction about the product benefits, preference for
the brand, liking for the brand, knowledge relating to the benefits and features
of the product, after an awareness of the product has been gained.
The basic implication of these models is that the function of persuasive

communication or promotion should be handled deftly at every stage of the
buyer's adoption process. Based on Lavidge and Steiner research, Gaedeke and
Tootelian illustrate the various promotional tools that might be relevant to each
stage of the hierarchy-of-effects model which is given in Fig. 5.2. This Figure
also brings out the variety of promotional tools that are available to marketers
for making marketing communications.
Hierarchy-of-effects stage (movement promotion that might be relevant

toward purchase) to various stage
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?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
77
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
5.4 COMMUNICATION MEDIA AND THEIR

CHARACTERISTICS
For marketing communication, or in the sales function we use a variety of

communication media, both written and oral. It is, therefore, important that
before we start discussion on sales communications, let us first see the
differences between any written and oral communication. These differences are
summarised in Fig. 5.3. It is important to understand these differences clearly
before we plan our sales communication.
Communication Written Oral

Mix
PURPOSE Analytical &Reasoning Assimilative & Emotive
AUDIENCE Non-Interactive Interactive
MEDIUM Frozen (Verbal) Seeing Fluid (Verbal & Non-

verbal, Bearing
MESSAGE Complicated/Long Simple/Short
FEEDBACK None or Delayed Quick & Immediate
TIME Long/Flexible Short/Inflexible
PLACE Non-restrictive Restrictive
COST High Low

Source: Srinivas Rao “Purposive Presentation Mix”, copyright Q 1979 by the Indian Institute
of Management, Ahmedabad.
Fig.5.3: Differences between written and oral communication
i) Purpose: Any document is written with a purpose to analyse the situation

and to give reasoning for the recommendations which were being made.
Whereas an oral presentation is assimilative and emotive, speaker has to
make his/her presentation impactful by involving himself/herself with the
topic or subject. Speaker is an integral part of the message, and therefore
the challenge is in selecting the right combinations of facial expressions,
tone of voice, gestures, postures etc.
78
ii) Audience: The other difference is that in an oral presentation the audience Communication
are interactive, i.e., you can read the audience's reaction in their body Skills
language and you may accordingly adjust your message if desired. While in
a written communication the audience, are non-interactive as you write
down a message to send across and you may not have any interaction with
the receiver.
iii) Medium: In a written communication, whatever you write or illustrate is

frozen in words and visuals. While in the case of oral presentation the
medium is fluid. The audio-visual aids, their synchronisation with verbal,
body language, atmosphere, etc., can make a sales presentation successful.
The non-verbal, particularly in oral presentation is of extreme importance.

Your facial expressions, tone of voice, gestures etc. help to make spoken
words clear, meaningful, convincing and effective.
iv) Message: In a written communication the message is invariably long and

complex, whereas an oral presentation has to be short and simple. For
example, if you are making a presentation on a report you have written, you
can make your presentation in the form of paper reading. Imagine how
much time you would require to read a fifty page report and do you think
that the audience will have patience to listen to you for that long?
Therefore, you have to tailor your message which should appeal to your
audience and for this reason it should be small and simple.
v) Feedback: The chief advantage of oral communication is the opportunity

for an instant feedback. This channel or medium can be effectively used
when you don’t require a permanent record of feedback. In a written
communication invariably the feedback is delayed or it doesn't exist at all.
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.
5.5 SELECTING MEDIA OPTIONS
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.
You write when:
you or the reader wants a record of the communication;

you don't need an answer but are simply supplying
information;
the receiver is preoccupied with other pressing matters;
the information is complicated or detailed;
costs of telephoning are excessive.
You talk when:
you want to encourage discussion;

you need a quick response;
you want to foster a personal relationship;
you want to build group rapport;
you are dealing with a personal or sensitive matter.
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.
Media Richness Message Type

Highest Non-routine
………….. Physical presence (face-to-face) ……………………
………….. Interactive media (telephone, electronics media)…..
………….. Personal static media (memos, letter, tailored

computer reports) ………………………………….
Lowest …….. Impersonal static media (flyers, bulletins ……… Routine

generalised computer reports)
Source: Adapted from R. Lengel and R. Datt “The Selection of Communication Media as an
Executive Skill.” Executive, 2:3 (1988), 225-232.
Fig.5.4: Choosing the best medium
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.
5.6 NON-VERBAL COMMUNICATION (NVC)
Non-verbal means of communication include all communication forms that

involves neither written nor spoken words, but occur without the use of words.
Some of the types are as follows:
• Body Movements: Kinesics

• Space: Proxemics
• Voice Patterns: Paralanguage
• Time: Chronemics
• Touch
• Colour
• Layout/Design/Graphics
• Objects
Kinesics
When communicating with others in a face-to-face situation our entire body

participates in communication, which is called body language, like
• 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
Special change gives tone to a communication. It accents it and at times even

overrides the spoken words. Proxemics involves how we arrange personal space
and what we arrange in it. It is said that each one of us have four space circles
around us, which are as follows:
First, consider the one & half feet circle around you. Only special but a few
people are permitted here – Intimate Space.
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.
A “Superior” can, by placing himself physically extremely close to a

subordinate create a certain type of atmosphere or otherwise.
Voice & Non-Verbal Vocalisation – Paralanguage
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.
The second is the -un-Verbal Vocalisation which includes laughing, crying,

verbal pause & interludes of silence like: “AH’s,” “OH’s”………etc…
5.7 ORAL COMMUNICATION
Communication to most of us means writing something for someone. When it

comes to improving communication skills we are only concerned with
improving written communication skills and we don't pay any attention to
improving our oral communication skills. We even think that there is no scope
for improvement and we therefore don't even attempt.
According to a research, an average manager in general spends only 9% of

his/her time in writing, 16% in reading, 30% in speaking and 45% in listening,
as shown in the following Fig. 5.5.
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.
Significance of Oral Communication
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.
It is primarily due to this reason one needs to develop effective oral

communication skills as a message, if not understood at appropriate time, can
lead to disaster.
Levels of Oral Communication
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
Small Group Communication
Interpersonal Communication
Intrapersonal Communication
Fig.5.5: Levels of sales communication
This is most basic form of communication relating to listening, observing and

interpreting. We all process the information which we receive. Each one of us
observe things and draw meaning out of it. When we talk to someone we listen.
The degree of attention we are able to give to the speaker, would determine our
understanding. We also observe body language, the manner in which a word is
spoken, facial expressions, etc., and we reassure ourselves that the meaning we
have drawn out of this information which we received is correct.
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.
Public or Mass Communication
In addition to the above levels of communication, there are other forms of

communication also. These additional forms of communication are public
communication or mass communication. Public communication takes place
when one person or a small number of people address a larger group of people.
Although the speaker assumes the major responsibility for public
communication and sends the preponderance of verbal messages, the speaker is
not the only person engaging in communication. The audience sends messages
to the speaker, primarily through nonverbal channels. Speeches, lectures, oral
reports and dramatic performances are Be different form of public
communication.
In a situation of public or mass communication one should be very selective

and specific. A number of times an unclear statement made orally to a large
group might be interpreted differently by different people who can further
complicate a situation, rather than solving it.
In sum, as a corporate manager when you communicate, you communicate at
different levels, at each level you spend your time differentially. However, all
these five levels namely; interpersonal, interpersonal, small group, multi group
and public communication are important. To be successful as a manager,
therefore, you need to develop skills to communicate effectively all the levels
of communication.
5.8 INTERPERSONAL COMMUNICATION PROCESS
Interpersonal communication is the basis of most interactions in organisation.

Persons in organisations interact with the others within their own groups,
across groups, and across levels. The effectiveness of these communications
may contribute a great deal to the smooth functioning of organisations.
Interpersonal communication can be defined as the process of sharing of goal-

oriented messages between two or more sources through a medium or media.
Communication is a process. It consists of several units. The basic unit of
84
communication can be called a communication act. This can be defined as Communication
follows: A communication act is the transmission through a medium or Skills
media, of a goal-oriented message from source to and its reception by a target.
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.
A person in an organisation is surrounded by three other types of persons:

Superiors, colleagues and subordinates. Besides there three types of role one has
to interact with a lot of other people from different positions. Consumers,
suppliers, people from regulatory agencies, general public, etc.
The determinants of interpersonal behaviour are:
Self-concept: Self-concept is a reflection of all the past experiences one has

with others and includes characteristics with differentiates from others. Once
self-concept is established and certain specific patterns of behaviour are
adopted, it tends to resist change. In order to maintain interpersonal
environment arid-to maximise congruence of harmony, certain mechanisms are
used.
1. Misperception: Misperceiving how others look at you.

2. Selective Interaction: Interact with those persons who can establish a
congruent state
3. Selective Evaluation of the other person
4. Selective Evaluation of self
5. Response Evocation: Behave in a way that results in others behaving
towards you in an amicable manner.
People need people for three main interpersonal needs:
1. Inclusion – the need for interaction and association

2. Control – the need for control and power
3. Affection – the need of love and affection.
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
Fig.5.6: Complimentary transactions
Fig.5.7: Crossed transactions
Fig.5.8: Ulterior transactions

86
There are four stages of developing interpersonal relationship: Communication
Skills
1) Forming first impressions
2) Developing mutual expectations
3) Honouring Psychological contracts
4) Developing trusts and influence.
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.
In ‘developing interpersonal skills’, interpersonal competence can be greatly

enhanced by enlarging ‘Arena’ with the help of feedback and self-disclosure.
Arena represents the ‘public Self’ that is known to the self and others.
Development of cooperative relationships is facilitated when there are shared
goals, mutually perceived power and the minimum level of distrust. Thus, it
shows that interpersonal relations cannot flourish unless the parties are prepared
to take certain interpersonal risks.
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.
In the definition of communication a distraction is made between the

transmitted message and the received message. The received message (the
interpretation) may not be the same as the transmitted message. For example, a
message of feelings may be transmitted by an employee when he narrates an 87
Sales Management experience to his boss, but the latter may receive only the information message,
and not the feeling message. Or, a boss may transmit a message of negative
feelings (he may receive a message of sarcasm when the boos may actually be
expressing appreciation). There is no guarantee that the transmitted and
received messages will be the same. In many cases these turn out to be
different, and this distortion causes problems.
5.9 NON-VERBAL BEHAVIOUR IN INTERPERSONAL

INTERACTIONS
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.
Most human feelings, a emotional and thoughts can be communicated through

a mix of non verbal forms of communication. Let us take some typical
examples, as shown in Fig. 5.9.
Sympathetic gestures Aggressive posture
Proximity Harsh tone of voice
Relaxed tone of voice ‘Set’ mouth
Smiles Distance
Warmth Hostility Staring eyes

‘Crinkled’ eyes signified by signified by
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
Meek tone of voice

Interrupting
‘Controlling’ tone Downcast eyes

of voice
‘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.
Fig.5.10: Facial expressions conveying acceptance – rejection and interest –

disinterest
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.
Fig.5.12: Postures in interpersonal interaction
To win a customer, in all sales interactions, it is important to take the feedback,

continuously. The feedback can help you to re-adjust your message, clarify the
doubts, or supplement the sales talk with more information. This feedback
invariably, can be taken by observing the body language of your prospective
customer. You may observe the facial expressions, gestures or postures.
91
Sales Management Each of these forms of non-verbal communication, can give you a feedback
about the response of your customer which can help you in effectively adopting
your message to win a sales or a customer.
5.10 WRITTEN COMMUNICATION
A good salesperson has strong written communication skills very often as a

salesperson you are required to write to your customers. Also a salesperson has
to communicate with different people within the organization.
The purpose of writing is to communicate a thought, an idea, feeling or fact.

The more concrete and concise these elements in a communication, the more
easy it is for a reader to respond to your communication. Also make sure that
when you are writing you don't miss out on some essential detail e.g. you are
informing your key customers about the launch of a new product, but forget to
write to them where and whom to contact for the product. How irritated your
customer will feel.
Good letter writing
Whenever writing to your customers be as specific as possible, giving all the

pertinent information as accurately as possible. Keep only the required
information in your letter as no customer has spare time these days to go
through unnecessary information. As a guideline you can divide your letter into
three parts: -
The basic patterns of a routine or good-news letter is:
• Write most important points first,

• give supporting details,
• end with a good-will statement.
Let us take an example of structuring a letter.
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.
Often the first sentence of a letter or a memo is weakened by an unneeded

92 opening phrase such as I would like to inform you..., This is to tell you.... etc.
For most business correspondence avoid such openings and start right with the Communication
main point. On some occasions, it may be useful to refer to the date of previous Skills
correspondence.
Structuring refusals or bad news correspondence
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:
• state the bad news simply and directly,

• give the reasons, and
• close with a good-will statement.
Let us take an example of structuring a bad news correspondence using the

direct approach.
We have not been able to locate the quotation you requested. We

have searched our records and haven't been able to find anything
similar to one you mentioned.
You may, have better luck by looking in the Times Directory on the
above subject.
We hope your search is soon successful.
The Indirect Approach: In this approach it is suggested that you should:
• begin with a neutral opening statement,

• give reasons or circumstances leading to bad news,
• state the bad news in as positive terms as possible,
• give a helpful suggestion or alternative, and
• close with a good will statement.
Let us take an example of a letter using indirect approach to turn down a request
for conference sponsorship.
Every year in February our conference committee meets to discuss

the sponsorships from our company, such as your request for
Annual Conference. Your proposal arrived in March, after we had
already committed our funds for this year. Hence we are unable to
help you this year. If your annual conference is going to be a
regular event every year, do send us the details by January next year
so that we can add this to our list. In the meantime, I wish you
every success with your conference.
93
What is the importance of written communication for a Medical
Representative/ Salesman?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
5.11 SUMMARY
The basic purpose of communication is to develop understanding with your

audience. In a sales situation your customers are your audience. To be
successful in all communication situations, it is important to take feedback
form, both, verbal and non-verbal forms. If you are able to take correct
feedback you can successful adapt your message to match with the information
requirements of your customers.
In this unit all communication related principles were discussed to prepare you
to gain the maximum from the next two units, which are on sales negotiations
and sales presentations.
5.12 KEY WORDS
Non-verbal communication : All forms of communication, without the

use of words, both written and spoken.
Kinesics : It is another word for body-language.
Paralanguage : It relates to voice modulation. Sometimes

the way you speak a particular word, can
affect its meaning.
Good News vs. Bad News

Message : Typically all messages can be divided into
two categories, depending on their impact
on the receiver.
1. What do you understand by non-verbal communications? How do it help in

sales interaction.
94
2. Do you think setting objectives from any sales related communication task Communication
are important? Why? Skills
3. How interpersonal communication helps in smooth function of

organisation? Discuss.
5.14 ANSWERS

1. It is Attention, Interest, Desire, Action. The attention of the consumer is
drawn followed by creation of interest in the product and developing a
desire to purchase and finally the purchase action.
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
6.11 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
The objectives of the unit are to:
• define what is a presentation and describe types of sales presentations;

• describe the structure of a presentation;
• identify in detail each of the variables affecting effective presentation
strategy; and
• elaborate how to develop appropriate presentation skills.
6.2 WHAT IS A PRESENTATION?
A presentation is a commitment by the presenter to help the audience to do

something for solving a problem. An interesting thing to note is that in a
presentation commitments are made by the presenter and the audiences are
making judgement, simultaneously. The presenter advocates and audience
evaluate, to render a verdict. In terms of content and structure, presentations
and speeches have a good deal in common with formal reports – many of them
are oral version of a written document.
6.3 TYPES OF SALES PRESENTATIONS
Typically, all sales people use one of the following types of sales presentations.
Canned Presentation
Canned presentations are those presentations where text of the presentation is

carefully worded, tested and finally written down. Each sales person is expected
to memorise it and strictly follow the contents in the defined order, while
making a presentation.
This presentation method is most commonly used in non-technical product

selling, like, Pharmaceuticals, telephone selling, door to door selling, etc.
98
The specific advantages of this technique are that one can finish the presentation Sales Presentation
in a short-time and still have a successful close. The other advantage of this
method is that it require lesser time in training the field sales personnel.
The disadvantage of such technique is that the prospect has limited
participation. He might view it, as a high pressure selling and defer taking a
purchase decision.
Planned Presentation
It is, no doubt carefully planned and organised but still it has a personal touch of
the individual making the presentation. In this method, the training department
provides just a format and the individual sales person then writes explanations,
descriptions and illustrations.
The advantage of this presentation method is that it appears more conversational
and less formal, as the sales person is using his own wordings. As a result, in
this presentation method the prospect also gets involved and his doubts and
questions can be carefully handled.
Audio-Visual Presentation
For such presentation the sales persons heavily depend on the AV aids. These
aids range from charts, slides, video films, prototypes, computer based
presentations to the use of actual product. In advertising industry, computer
software industry, such presentation methods are used. In these presentations
the speaker or the sales person takes the back, seat and the prospect's attention
remains centred around the AV aids.
Such aids are typically used, not only to gain the attention but in the absence of
these it might be difficult to explain or demonstrate.
Take for example, in door-td-door selling of vacuum-cleaners or photocopying
machines, where the actual product is used as a integral or central ‘character’ of
the presentation. In the absence of which the sales person might find it difficult
to sell.
Problem Solving Presentation
This is a two-step presentation method. The first stage is to study the individual
prospect's needs and the second is suggesting a proposition. Thus helping the
prospect to solve the problem. Such method is commonly used in insurance
sector where the insurance agent ask the prospect about the requirements and
accordingly, he proposes a specific policy, its advantages and benefits.
Similar methods are also used in management consultancy assignments relating
to all functions or high-tech customised products.
Having understood the various types of presentation methods being following

in different product categories, we appreciate the relevance of it in the sales
job. Let us now systematically discuss the structure of a typical presentation,
presentation strategy and the skills required at the end of each speaker.
99
Sales Management
6.4 TYPICAL STRUCTURE OF A PRESENTATION
It is a problem for a person to structure the presentation appropriately so as to

clearly decide from where to start and where to end. A presentation has four
parts: opening, body, closing and question and answer. It is suggested that in a
presentation first, tell what you will tell, secondly, actually tell them and
thirdly, tell the audience what you have told them.
6.4.1 Opening or Introduction of a Presentation

The opening of a presentation is very important. It is in the first a few minutes
you gain or lose the audience. The major purpose of the introduction are:
• To catch the audience attention and arouse their interest
• To relate the speakers' purpose with the audience interest
• To build the focus for the contents
Although these points appear so simple, but spending say ten per cent time of
your presentation on this phase of the presentation would help you
considerably in providing clarity to your audience.
6.4.2 Body of Presentation

The body of the presentation should relate to the selected important points (3-4)
you want to make. You want the structure of your presentation to be clear and
you don’t want to lose the audience's attention.
At times, during your presentation you realise that you have started loosing
audience. From their body-language you are able to make out that they are not
with you. Some of body positions suggesting their lack of attention are shown in
Fig. 6.1.
100 Fig.6.1: Audience lack of interest reflected in their body language

These situations are, in fact, difficult to handle. Because, in such situations, Sales Presentation
there is no point to keep the presentation continued. You have to adopt a
strategy to gain their attention. Some of the suggestions far gaining audience
attention are as follows:
• Emphasising structure and help the audience follow your presentation by

summarising your remarks as you go along and by emphasising the
transition (links) from one idea to the next.
• Holding the audience’s attention not only by relating the subject to the
audience's needs or by using clear language but by introducing variety in
your speech or presentation.
• You may pause for questions and comments as it shifts the audience
from listening to participating.
• Visual aids can be used to provide clarification and stimulation.
• Variety in your tone and gestures will help in breaking the monotony of
your voice.
• Consider the use of humour. Sometimes humour helps in stearing through
difficult situations.
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.
6.4.3 Ending a Presentation
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.
Irrespective of whether you accept questions, as you go along or you defer

them till the end, this phase of a presentation is most important. It is only helps
in providing better clarity but also in removing some misconceptions, if any,
among you audience, about your product or company.
101
Sales Management 6.4.4 Question and Answer Period
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.
Some tips for Landing Questions:
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:
Sl. No. Type of Question How to Handle
1. Confused Question Reformulate/Paraphrase the question.

Ask the questioner to restate the
question. It also gives you time to think
and it can be followed by all. Be clear, a
confused question can never be
answered.
2. Hostile Question Don’t be defensive or hostile. Rephrase

it and unload emotions from it to
understand the message.
3. Two-part Question Separate the parts and prioritise them

before answering.
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)?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
102
……………………………………………………………………………………
…………………………………………………………………………………… Sales Presentation
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
6.5 PLANNING THE PRESENTATION STRATEGY
Developing a strategy for delivering an oral message is just as crucial as

developing a strategy for a written message. You have to put information in an
easily understandable form. For maximum impact, therefore, it is important
that one must define the purpose, analyse the audience, construct or develop
the message with due estimate of time and appropriate length, decide on the
most appropriate style and media for presentation. These are some of the
important variables, which one has to keep in mind to develop an appropriate
strategy for a presentation.
6.5.1 Define the Purpose
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.
b) To inform or analyse: A group of people meet to hear the oral equivalent

of a written report, then members of the audience offer comments or ask
questions. Typically when a medical representative meets a doctor, the
purpose is to inform about the new formulation his company has
launched in the market.
c) To persuade or collaborate: The most interaction occurs when you aim to

persuade people to take a particular action or to collaborate with them to
solve a problem or reach a decision. You generally begin to provide facts
to increase the audience’s understanding of the subject. You offer
arguments in defence during discussion and you invite audience to express
their needs. In this audience interaction process, therefore you have little
control, so one has to be flexible to adjust to an unexpected reaction. Most
sales persons, involved in door-to-door selling (like, Eureka Forbes etc.)
must have this purpose when they call on a household. 103
Sales Management 6.5.2 Analysing the Audience
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.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
6.5.3 Developing Message

A message should be carefully developed with a view to generating a desired
response. It is, therefore, important that while developing messages one should
define the main idea, construct an outline and estimate the appropriate length.
A number of times a speaker is required to carefully choose the words,
particularly while handling sensitive subjects. In such situations if you loose
control on what you speak, your message will not be understood in the right
104
spirit. It is, therefore, important that we define the main idea and construct a Sales Presentation
concrete outline around the identified idea. Then collect sufficient information
which should be adequate for the available time you have to make the
presentation.
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.
Having decided the sequencing of information for developing an appropriate

message, the next step is how to deliver it. Knowing your abilities, time
available for preparation, audience size, etc., would influence your presentation
method.
6.5.4 Determination of Presentation Method
We may follows any of the following presentation methods depending on our

own abilities, subject, purpose, etc.
1. Extemporaneous Extemporaneous presentation is that which is

prepared in advance and delivered afresh. The
exact wordings are figured out, as the speaker
goes along. It combines prior organisation and
spontaneity. The audience prepare an outline,
may write down, at best, full opening and
closing sentences, and prepare visual aids to
promote a set sequence of thoughts and
contents.
2. Impromptu Impromptu is that when you are given no time

to think and organise. You never know when
your superior will ask you for a two minute
update on your field experiences of the
previous day.
3. Memorising Memorised is a presentation which is learnt by

heart. If a link is broken while speaking the
whole presentation gets affected. Typically in
Pharma-selling canned presentation are
used.
105
Sales Management
4. Reading Reading is yet another method. In paper
reading it is said that even the speaker looks at
his notes for 35% of time and for the remaining
65% to the audience, it is still a paper-reading.
In business this method is followed least.
5. Speaking from Speaking from notes is similar to the first

Notes method with a difference that the speaker has
his points, with explanations written down and
he speaks from the notes. To prepare these
notes normally reference cards are used which
the speaker can hold in one hand.
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.
6.5.5 Deciding the Presentation Media
In an oral presentation which is an interactive medium, you can choose from a

wide range of audio-visual (AV) materials. Here also you require carefully
planning. A number of times, a presentation gets killed because of over
emphasis on AV material. Always keep in mind while selecting any AV
material that to what extent the selected media would help supplementing or
reinforcing your message. You can select audiovisual material out of a large
variety, ranging from, brochures, leaflets, slides, prototypes, actual product,
audio tapes, video material, computer based aids, etc. Preparing or it is
suggested to follow the following guidelines for selecting the best suited
media:
• Do not cram information if you have too much to say, may be you should
write it out, separately.
• Keep only relevant material as irrelevancies create distractions, and
confusions.
• Organise and break up your material into small modules. Disorganised
compels the audience to concentrate on finding the structure of your
presenting, rather than listening to you.
• Visualise your ideas as much as possible. Understanding, rememberance
and clarity are the highest in the picture form.
• Use as few words as possible. Use only those points which the audience
can understand, and don't write complete sentences.
• Make the pictures and letters bright enough to be visible from a distance.
Make the letters bright enough and think enough to be read by all. Use light
colour for background. Use dark or bright colours for pictures or letters to
improve visibility.
106
• Make the sound material audable, pleasing in tone, varied and synchronised Sales Presentation
with visuals.
• Finally, before the presentation check particularly the audibility, risibility
and readability of your AV material, if possible, in the actual place of
presentation.
6.6 PRESENTATION SKILLS
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.
6.6.1 Personal Aspects

A logical step in preparing a presentation is to analyse yourself. You are an
integral part of the message. You should seek following characteristics:
i) Sincerity is vital. Project an image of sincerity by being sincere to yourself,

to your subject and to your audiences.
ii) Thoroughness – giving the listeners all they need.
iii) Confidence in yourself is important so as to gain your audience’s
confidence. You must earn the confidence of your audiences. Project the
right image, and talk in a strong, clear voice.
iv) Friendliness – help your communication effort by creating the right
environment.
Although these four points appear as four different things. But they do relate to
each other. For example, if you are ‘sincere’ you would do a ‘thorough’
preparation for your presentation. If you are ‘thorough’ you would feel
confident. And if you are confident, you would be more open and friendly with
your prospects or audiences. Therefore, these personal aspects should be well
taken care.
6.6.2 Non-Verbal Behaviour
In any presentation non-verbal also plays a major role to supplement your

message. Let us take up some typical examples to identify the variables
elements of non verbal communication.
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.
v) Bon-Voyager is a speaker who is overdoing the gestures; as a result the

presentation becomes more theatric. The suggestion is that in a typical
business presentation the hands should not go above the shoulder level.
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.
Fig.6.2: Non-verbal in presentations

108
The above illustrations must have given you some idea about the importance of Sales Presentation
nonverbal forms, including body language. Let us now examine each element of
the nonverbal communication in the context of a presentation.
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:
• To hold attention: Lectern restricts movement. Rather than moving back

and forth it is suggested to move left to right to gain attention of the
audience, sitting on both sides. However, don't move continuously, like a
caged lion.
• To get rid of nervousness: Movement helps decreasing stage fright in the

beginning of your talk and the way you walk upto lectern or podium, tells
something about you non-verbally to the audiences. Do you move with
assurance, determination and enthusiasm? However, over-enthusiasm is also
not productive.
• To suggest transitions: In writing, the cues for transition are headings,

words, numerical hints. In speaking, the cues are physical moving yourself,
a directional shift in the posture helps, the audience to follow the transition.
• To increase emphasis: In writing we underline, we use italics, capitals,

exclamation etc. While in speaking a movement towards the audience,
accompanied by a gesture, can imply your stressing a point.
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.
1. To emphasise Clenched fist of one hand hitting the palm of

the other hand emphasises the point you want
to make.
2. To point The index finger calls attention of the audience
3. To reject Hand may go on a side in an act of rejection.
4. To describe You may communicate and describe

everything through hands. Even an
approximation of the verbal message through
gestures is worthwhile than none.
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.
Fig.6.3: Gesture with one hand
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.
Fig.6.4: Gestures with both hands
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.
112 Fig.6.5: Non-verbal during interactions with audience

6.6.3 Oral Delivery Sales Presentation
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.
v) Pronunciation: It should be your constant endeavour to find out the right

pronunciations of each word. You may not get any advantage for correct
pronunciation but you are certainly at in disadvantage when it is incorrect.
You would be surprised to know, how carefully your audience are
observing your mistakes, and on every mistake they drift away from you.
There are some suggestions to help you in enhancing your non-verbal while you
speak to a group. These suggestions are:
• Sincerely like your audience

• Know your subject thoroughly in order to appear confident
• Be well dressed (not overdressed)
• Look your listeners in the eye (Not too long at any one) and talk with them
• Avoid excessive, meaningless, gestures and nervous movements
• Keep calm
• Remain objective, no matter what the provocation
• Speak clearly and pleasantly, make sure that you can be easily heard
SAQ 3
Mention the importance of oral delivery in pharmaceutical selling and write the
effective parameters of a good oral delivery.
……………………………………………………………………………………
…………………………………………………………………………………… 113
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
6.7 EFFECTIVE PRESENTATION: SOME PRINCIPLES
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
1 In preparing your presentation, may be you should start about

halfway through.
2 Content is always the first requirement of any presentation.

Once content breaks down, delivery is never far behind.
3 It's impossible to be too clear.
4 Keep in mind that your audience is going to remember about

one quarter of what you say.
5 Participation by your audience will help them remember

you and your message, but “handle with care”.
Participation can backfire.
6 Nervousness is not all bad, but it can become serious when

your audience becomes more concerned about your nerves
than your subject.
7 Eye contact is the strongest force in your favour during a “Live”

presentation.
8 “People may lie, but body language never does”.
Source: Ron Hoff, “How to Make Your Next Presentation a Winner”, In, Strategic
Advertising Campaigns by Don E. Schultz. (Illinois: NTC Business Books,
1996).
114
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.
6.7.2 Plan Out Content
Content is always the first requirement of any presentation. Once content

breaks down, delivery is never far behind. If you don't know your subject, your
voice is going to tighten. If you don't believe what you are saying, your
gestures are going to be half-hearted. If you get a question that catches you
unprepared, your body language is going to answer for you. How much
substance do you need in order to feel supremely confident about your next
presentation? The answer is, have in your head about seven times as much
information as you are likely to use in your presentation. Know your subject
better than anybody in the room and your delivery may not be magnificent, but
it will carry conviction – and that's better than empty theatrics any day.
6.7.3 Clarity
It’s impossible to be too clear. Many presentations are so muddled that

members of the audience say to themselves, “What in the world is that person
talking about?” or, “What on earth am I doing here?”
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?”
6.7.4 Partial Receptivity
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.
6.7.5 Encourage Participation
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.
• Study your audience carefully before you get up to present.

• Look for the most animated people in your audience to be your
participators.
• Never force anybody to participate if you detect even a hint of reluctance
• Never allow anybody to look bad.
Participation by your audience can nuke your unforgettable but just make sure
that it does not backfire.
6.7.6 Control Nervousness
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.
6.7.7 Eye Contact
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.
116
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.
6.7.8 Body Language
“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
To summarise the discussion on the structure of a presentation, we can say that

the first thing in any presentation is the preparation you do in advance. You
research the information, club the information under subtopics, subheads etc.,
sequence these subheads appropriately. You identify specifically what you
would say in the opening section of your presentation, you decide the core i.e.,
the main body and you also plan your closing remarks. You have not started
speaking to your audience but you have spent considerable time in preparing. In
fact, those who overlook this phase they find it difficult to make a winning
presentation.
While developing any presentation you have to progress very systematically.
Each of the strategic variables should be considered in as much detail as
possible. Knowing your purpose, understanding of audience, development of a
message, identification of presentation method, and integration of various
media are all important in development a presentation strategy.
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.
6.9 KEY WORDS
Presentation : A presentation is a commitment by the

presenter to help the audience to do
something to solve a problem.
117
Sales Management Presentation structure : It relates to the three main phases of a
presentation, opening, body and closing.
Presentation strategy : It is a mix of all the presentations variables,

like, objectives, audience profile, message
contents, media available, time at the
disposal, which are adjusted to achieve a
success.
Presentation skills : These are the abilities of an individual in

making successful presentations.
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.
3. Why overall appearance and body language are important, when to a

prospect your contents are more important than anything else? Discuss.
6.11 ANSWERS
1. The different types of presentation are: a) Canned presentation, b) Planned

presentation, c) Audio-visual, d) Problem-solving. The MR frequently uses
canned type and audio-visual presentation.
2. The purpose of a MR meeting is to inform a doctor about the new product

or formulation the company has launched in the market.
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.
118
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
7.11 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.
Negotiation is a demanding activity and the best way to learn it is to practice it

with seasoned negotiators and get a personal feedback. It is essentially a
practioners art. The primary objective of every negotiation is goal achievement.
Both the sides involved in negotiation will have their own goals. But the
desirable goal is a “win-win” situation – with a win-win situation both the
parties get a feeling of satisfaction with the outcome.
However, this skill has limited or very rare use in pharma marketing. This skill
gives an extra edge to the salesman’s confidence.
119
Sales Management Objectives
After studying this unit, you should be able to:
• 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.
7.2 WHAT IS A NEGOTIATION?
Negotiation can be defined as a process for resolving conflict between two or

more parties where both or all modify their demands to achieve a mutually
acceptable solution. You may note from this definition some of the following
important points.
• Negotiation is a process of resolving conflicts and if there are no conflicts,

there is no need to negotiata.
• There is a need to resolve conflicts, more so with our customers. If we

don't resolve conflicts we may even loose them.
• 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.
• Through negotiations we try to reach at a mutually acceptable

compromise to solve a problem.
7.3 DIFFERENCE BETWEEN SELLING AND

NEGOTIATING
SELLING : Can be described as the Process of identifying customers,

then getting through to them and persuading them to act, or
accept our propositions.
Whereas NEGOTIATING is a : Process of getting the best terms, once the

other side starts to act on their interest.
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.
120
7.4 THE NEGOTIATING CONTINUUM Negotiation Skills
Negotiation involves movement of both the parties. Thus in a negotiation we

must have somewhere to move from and somewhere to move to. We move
from our ideal position to a settlement point that is acceptable to both parties.
Our opponent also does exactly the same. It is the relative bargaining strength
and skill of the negotiators that decides the position of this settlement point.
Ideal Limit
A
Bargaining Arena
B
Limit Ideal
This sample diagram is static. Negotiation in reality however is a dynamic

process. Both the sides often, as the negotiation proceeds have to review and
modify their limits. In pharmaceutical marketing the Medical Representative
negotiates with the whole seller or distributors relating to commission on trade
and free samples or percentage benefits from sale.
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
Write the use of negotiation skills in pharmaceutical marketing.

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
7.5 STEPS OF NEGOTIATION
The negotiating process, for understanding purposes is broken down into

following steps through which negotiations will go, if agreement is to be
reached. However, please keep in mind that this is not a rigid order, and the
time and attention devoted to different steps varies.
121
Sales Management However, it is essential for you to appreciate the importance of each stage,
irrespective of their sequence in which they may take place. Table 7.1
summaries each of these studies.
CLOSE
AGREE
BARGAIN
OFFER
PROPOSE
SIGNAL
DISCUSS
PREPARE
Table 7.1: Different steps of negotiation
Steps What you should do

i) Preparing • Have you decided your objectives?
• Have your prioritized them?
• Are they realistic?
• What are your opponent’s objectives?
• Do you have any information regarding
buyer attitudes, personalities, assumptions
etc.?
• Is your strategy simple and flexible?
• In a group negotiation, have each members
tasks been clearly defined.
ii) Discussion • Always try to avoid interrupting, talking
too much, using sarcasm and threats.
• Practice listening, and summarizing.
iii) Signalling • Is your signal generating some movement?

• What signals save you made?
• If your signals have been ignored, have
you tried rewording them?
• Are you listening attentively for your
opponents’ signals?
iv) Proposing • What is the language you are using to
convey your proposal?
• Have you itemized your proposal?
• While receiving a proposal ensure that you
122
do not interrupt it. Negotiation Skills
v) Offer • Before making an offer review your
opponents and your own objectives.
• How can your offer meet all/some of your
opponents inhibitions/objectives?
• Have you considered all the possible
variables in your offer?
vi) Bargaining • Everything must be conditional.
• Decide what you require in exchange for
your concessions.
• Keep all unsettled issues linked.
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
The first priority in preparation is to decide your objectives as everything else

will follow this. Once you decide your objectives, you must assign relative
priorities and question how realistic they are. If your objective is clearly
unattainable you are not likely to gain anything from negotiation. Once you
decide your objectives, these also become your criteria for measuring whether
the negotiation has been a “success” or a “failure”. The first step in deciding
objectives is to make a list of all your objectives. The objectives set in any
negotiation are only fixed at a given moment of time. Circumstances, people,
information and so many other factors can alter the objectives and their ranking.
After you have listed down all the objectives you can classify them into three
categories: 123
Sales Management • Like to get
• Intend to get
• Must get
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
Like to get : order for 20 machines at 25% profit margin.

Intend to get: order for 20 machines at 20% profit margin.
Must get: order for 15 machines at 17% profit margin.
Information
To establish and prioritize your objectives realistically, considerable amount of

information is required. The person with the best information in a negotiation
carries a lot of power. After you collect all the information you have to then
decide which information to use and which not to use. After deciding your
sales objective the more information you can gather about your customer in
terms of his personality, likes and dislikes, past usage pattern etc. the easier it
will be for you to plan a strategy to deal with him.
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.
7.5.2 Discussion or Arguing
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.
7.5.3 Signalling Behaviour
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.
125
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.’
What to do when your opponent ignores the signal: If there is no response to

your signals from your opponent you must analyze first whether he has missed
the signal or is intentionally ignoring the signal. If your opponent has missed
the signal you can either repeat it verbatim or in modified form. ‘Everything
you are suggesting cannot be accepted in its current form’ can be repeated as
‘you cannot expect us to accept everything you are suggesting in its current
form’.
After having tried a signal, repeated it in different forms, and positively

responded to any signals from your opponent, you must decide whether you
want to move out of discussion or more importantly whether negotiations are
possible in current circumstances.
SAQ 2
In a negotiation, what is signalling behaviour?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
7.5.4 Proposing
Discussions, opinions and prejudices cannot be negotiated, only proposals can.

When an argument is prolonged, the way out is by a signal which leads to a
proposal. In the context of negotiation a proposal is an offer which establishes a
126 realistic opening position.
When you are presenting an initial proposal you would most likely state your Negotiation Skills
ideal position, and your language will effect the firmness of your position, ‘I
had expected much better service’.
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’.
How to Present a Proposal: The best way to present a proposal is to keep it

separate from reasoning and justification. The reasoning must be reserved for
only those cases where it is absolutely necessary. The party that puts the
proposal first usually gains a upper position in the negotiation as after having
put the proposal, it can always seek a response, “Is my proposal acceptable?”
How to receive a proposal: To effectively receive a proposal, you must curb

two common behaviour patterns: interrupting and instant rejection. When you
interrupt a proposal you at likely to miss something which was yet to be
proposed as very often experienced negotiator will tag a concession at the end
of a proposal.
The other important behaviour to control is instant rejection. Even when the
opponent’s proposal is absolutely unacceptable to you, treat the proposal and
the prepares with some respect. Listen carefully to the complete proposal and
then ask questions to clarify the point that may not be clear to -you. If you are
well prepared then reply to the proposal and in case you need some time to
finalize ask for an adjournment. The most useful skill in handling proposals
and counter-proposals is the summarizing skill. Regular summarizing of issues
keeps both the parties concentrated to issues.
Adjournments
The main purpose of an adjournment is to review and assess progress against

the set objectives. The actual number and frequency of adjournments depends
upon the practice of negotiators involved
SAQ 3
What is trade proposal?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
…………………………………………………………………………………… 127
Sales Management 7.5.5 Packaging the Offer
Offer moves the negotiations into the bargaining arena. But before the
bargaining begins, one should package the offer, suitably.
What is an offer: In the context of negotiations, an offer is a considered

activity in response to the opening moves of the negotiation. When you present
an offer, you present the variables in a form which more clearly matches the
other party's interests and inhibitions.
Before presenting the offer you must think carefully and creatively about all the
possible variables.
7.5.6 Bargaining
Bargaining is about exchange – you give up something and gain something.

This is the most intense phase of negotiation.
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.
"If you agree to X, I will agree to Y'
Another point to keep in mind is put your bargaining proposals as statements

and not as questions ‘If you inform the discounts, and promise to deliver in
seven days, then I will process the order’.
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.
7.5.7 Closing and Agreeing
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.
Summary Close: Summary close terminates the bargaining step by

summarizing everything that has been agreed upto then, highlighting the
concessions that the customers have secured from your side, and emphasizing
128 the benefits of agreeing to what is on the table.
Agreeing is the last step towards which both the parties have been working. Negotiation Skills
The purpose of closing is to secure agreement to what is on offer. It is of
utmost importance that both or all the parties involved are absolutely clear on
what they have agreed to before they leave the table.
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.
Deadlocks occur in many negotiations despite the best efforts of the

negotiators. Some deadlocks are temporary, others can be permanent.
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.
7.6 NEGOTIATION STRATEGIES
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:
7.6.1 Strike Back
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.
7.6.3 Break Off
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.
129
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
1. High Pressure 4. Ideal/Assertive
Low empathy High empathy
2. Little interest 3. Weak
Low Projection
Type 1 – High Pressure Communicator: He is the kind of person who is

over aggressive and insensitive to other person's feelings. He feels, due to
sheer pressure, he can win over the argument. In fact, mostly what happens is
that as he has very low empathy, it becomes self-defeating and switches off the
other people who are taking part in negotiation.
Type 2 – Little Interest Communicator: He is the kind of person, who has
little interest in either person, or surprisingly his own ideas. His general
attitude in the process is take it or leave it kind. It often appears that mentally
he has no interest in the process of negotiation. Thus a lack of commitment to
the whole process tends to just run the process.
Type 3 – Weak Communicator: He is the kind of person, who is over
sensitive to the other person’s needs and comes over as essentially nice. He can
take the side of the other person so much on occasion that there is no
persuasion and thus no commitment is achieved.
Type 4 – The Ideal/Assertive Communicator: He is the kind of person who
has understanding of the other person's ideas but is also firm about his ideas. He
produces agreement and commitment to the satisfaction of both the sides.
7.7 PRINCIPLES OF NEGOTIATIONS
To end this unit on negotiation, let’s summarize the principles of negotiation: -
1) Negotiation is about bargaining to reach a mutually agreeable outcome.

Thus your endeavour should be a win-win outcome for both the parties.
2) Never neglect your preparation and you must have a clear plan. It is also
advisable that you select the right starting point.
3) All the participants of the negotiation must regard each other as equals as
mutual respect is essential to both the conduct and the outcome of
130
negotiation.
4) Always keep in mind that negotiation is not a debate but a discussion. Negotiation Skills
Therefore each person must ‘fight his corner’ without trying to over
dominate or show one-upmanship.
5) Patience is a key characteristic of a good negotiator, thus take your time

and do not rush into decision making. Delay is much better than a poor
outcome.
6) Empathy is another vital characteristic, therefore see things from other's

point of view objectively.
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.
10) Maintain your stamina.
11) Never underestimate people.
12) End positively. Neither party will get exactly what they want, but the deal
should be agreeable.
7.8 SUMMARY
Negotiation is about bargaining to reach a mutually agreeable outcome. As a

party to negotiation your endeavour should be a win-win outcome for both the
sides. All the participants of negotiation must regard each other as equals. If
you want to be a good negotiator patience should be your key characteristic.
Always end positively. Remember neither party will get what they want, but
the final deal should be agreeable to both the sides.
7.9 KEY WORDS
Negotiation : Process for resolving conflict between two

or more parties when both or all modify
their demands to achieve a mutually
acceptable compromise
Preparation : The activities you carry out before you

arrive at negotiation table.
Signals : Qualifications placed on a statement of a

position to convey a message. 131
Sales Management Offer : Considered activity in response. to the
opening moves of the negotiation.
Bargaining : Process of exchange: going up something

to gain something.
1. Differentiate between deadlock, stonewallings and non-conclusive

negotiations.
2. Do you think you need to prepare yourself in advance for negotiations?

What specific preparations you would do to meet a prospect for sales
negotiations.
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.
2. Signal behaviour is the set of words used in the negotiation, statement,

keeping scope for continuing the discussion on trade rather than abruptly
terminating the trade discussion or negotiation helps in modifying the
business deal.
3. Out of the negotiation, many options or alternatives come out through

signalling. These options are called proposals and the suitable proposal is
accepted for trade.
132
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
8.8 Answers
8.1 INTRODUCTION
Handling of promotional tool is an integral part of advertisement and sales

promotion for any pharmaceutical brand. These are important features used to
promote the sale of the product. Advertising on one hand is the form of mass
media communication directed towards influencing the end consumer.
Whereas sales, promotion on the other hand deals with the mass
communication directly towards informing and influencing the channels of
distribution. Both the sales promotion and advertisement help in product
promotion; they enable a firm to face the competition in the market for its
survival. This unit is designed to understand the insight of promotional tools. In
this section we will also look at the methods of distribution and display of
promotional materials. We believe that imaginatively and carefully planned
sales promotions can deliver long-term benefits to any pharmaceutical
organization.
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
•
•
•
•
•
Essential Features of Good Promotional Tool
The text or body of an advertisement is known as an advertising copy. It

contains headings, messages, advertiser’s name and address, photographs etc.
The advertising copy should be carefully drafted so as to include the following
essential features:
• It should be made attractive by using pictures; headline, attractive boards

etc. so as to make people read, see or listen to it.
• It should create a permanent impression on the minds of people. Repeated
use of a brand name of trademarks is very helpful.
• It should give useful suggestions to the public. For example, the
advertisement of Vicks 500 tablet suggests its use for cold and cough.
• 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 must contain solid arrangement and proof to convince the consumers
about the superior quality of the product. For example, Anacin tablet
relives pain faster as it is micro fined.
• It should create the need for the product in the minds of the people. It
should appeal to the various instincts of the people.
• It should induce people to buy the advertised product.
SAQ 1
What is the use of sales promotion?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
134
…………………………………………………………………………………… Handling of
Promotional Tools
……………………………………………………………………………………
SAQ 2
What all sales promotion contains?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
8.2 VISUAL TOOLS

Visual tools for promoting pharmaceutical products should be truthful. There
should not be any wrong statement regarding its contents and their percentage.
It should provide full details regarding the action and uses, proprietary name as
well as the genetic name, dosage form, mode of administration, side effects,
treatment of toxic, effects, precautions and contraindications. The above
statement should be truthful, scientifically correct and proved. W.H.O (World
Health Organization) has passed this resolution regarding advertising of the
pharmaceutical products. The purpose of this in the ethical pharmaceutical
market is the same as that for any other products there are a lot of restrictions
on it.
8.2.1 Purpose of Visual Tools

The main aim of any business is to earn maximum profit and this is possible
only through maximum sales. The maximum sales can be achieved by using
various visual tools for promoting sales. Sales promotion includes those
marketing activities, other then personal selling, advertising and publicity, that
stimulates consumers purchasing and dealers effectiveness such as window
display, shows and expositions, demonstrations etc. Sales promotion is
concerned with the creation, application and dissemination of materials and
techniques that supplement advertising and personal selling. Sales promotion
makes use of direct mail, catalogues, trade shows, sales contents, premiums,
samples, window display and other aids. Its purpose is to sell a certain brands
and to make consumers more eager to buy that brand. Personal selling and
advertising do include prospects to make their decisions. ‘Sales promotion
provides an extra stimulus’.
According to various authors sales promotion can be defined as:
“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.
8.2.2 Classification of Sales Promotion

There are three types of sales promotion: Customer promotion, trade promotion
and sales trade promotion
Customer promotion
There the target beneficiaries are the customers. Here the offers are offered
to the unlimited customers. Such an offer is always for a short period. If the
period increases, the validity of the promotional measures decreases.
Trade promotion
There the target is the middleman. They are being offered the incentives with
the hope that they will stock more and push the product to the customers. This
type of sales promotion is very important effort to seek the cooperation of
the middleman.
Sales trade promotion
This type of sales promotion emphasis to increase and boost up the morale of
the sales people. They are being offered commissions, bonus and other
incentives for the increase of sales so that they work directly.
8.2.3 Posters, Billboards and Electrical Displays

Posters, billboards and electrical displays are also used as visual tools for
advertisements. The posters are pasted on walls. Billboards are part on
electrical poles and at crossings. Colourful electrical lights in artistic designs or
neon signs are put up at railway stations, bus stops and other public places. Out
door advertising is highly flexible and attracts immediate public attention.
Many pharmaceutical firms offer gift items to the physicians and retailers to
pass on to selective customers. These items may be diaries, ball pen,
penholders, desk trays, key chains, paperweights and calendars. These articles
are of the daily use and therefore they continuously remind their uses of the
firm and its products. Generally the name and address of the advertiser is
printed or inscribed on those items.
A customer (patient) cannot use a medicine without proper prescription of a
physician. The majority of pharmaceutical products and their direct
advertisement are prohibited according to the drug and magic remedies
(objectionable advertisements) act. However, general/home remedies, products,
such as, pain balm, inhalers, Iodex, antiseptic creams and other products, which
do not require any prescription for their purchase can be advertised by any of
the direct methods of advertisement.
8.2.4 Window Display

This is one of the mediums of advertising and sales promotion. The goods are
exhibited in artistically laid-out window in front of the shops or at important
136
business centers like railway stations, bus stops. Big business firms set up large Handling of
show rooms to display their products. The retail chemists exhibit their products Promotional Tools
in the show windows of their shops.
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.
S.No. Primary colour Contrast with Harmonizes with
1. Red Green, olive, Pink, Purple,

grey, chocolate orange, rose,
lemon
2. Green Red, purple, Blue, yellow,

orange green
3. Yellow Purple, blue, Golden, red, green

olive
4. Blue Orange, yellow Light blue, purple,

cream grey, red
5. Orange Purple, blue, grey Yellow
6. Purple Lemon, golden, Blue, red

red 137
Sales Management Advantages of Window Display
• Window display acts as a silent salesman for promotion sales

• It is a good methods of advertising
• it makes a drug store move decorative and attractive
• it attracts the customers as the passerby’s
• It creates good impression on the customers when he entered the drug store
8.2.5 Television Radio and Other Audiovisual Media
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
How will you define sales promotion?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 4
Write various types of sales promotion?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
138
……………………………………………………………………………………
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 provides an opportunity to inform the physician about new products of

the firm.
• It also helps to refresh the memory of physicians regarding the old products
of the firm.
• It clears doubts a physician may have regarding a particular product of the

company.
• It helps to have a feed back from physicians regarding the products of the
firm.
• It provides the company with an opportunity to demonstrate and explain its

products.
8.3.1 Essential Criteria for Promoting a Brand by Samples
There should be enough literature alongwith samples. Sample is known as an

advertising copy. It contains headings, messages, advertiser’s name and
address, photographs etc. The advertising copy should be carefully drafted so
as to include the following essential features:
• It should be made attractive by using pictures; headline, attractive boards

etc. so as to make people read, see or listen to it.
• It should create a permanent impression on the minds of people. Repeated

use of a brand name of trademarks is very helpful.
• It should give useful suggestions to the public. For example, the

advertisement of Vicks 500 tablet suggests its use for cold and cough.
• 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 must contain solid arrangement and proof to convince the consumers

about the superior quality of the product. For example, Anacin tablet
relives pain faster as it is micro fined.
• 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
What is the significance of samples?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 6
How samples are distributed?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
8.4 USE OF INFORMATION TECHNOLOGY AND

INTERNET
Following are some of the IT and Internet applications in promoting a specific

brand.
8.4.1 Online Advertising
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.
A major result of online advertising is information and content that is not

limited by geography or time. The emerging area of interactive advertising
presents fresh challenges for advertisers who have hitherto adopted an
interruptive strategy.
Online video directories for brands are a good example of interactive

advertising. These directories complement television advertising and allow the
viewer to view the commercials of a number of brands. If the advertiser has
140 opted for a response feature, the viewer may then choose to visit the brand’s
website, or interact with the advertiser through other touch points such as Handling of
email, chat or phone. Response to brand communication is instantaneous, and Promotional Tools
conversion to business is very high. This is because in contrast to conventional
forms of interruptive advertising, the viewer has actually chosen to see the
commercial.
8.4.2 Purchasing Variations
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.
• CPA (Cost Per Action) or (Cost Per Acquisition) advertising is

performance based and is common in the affiliate marketing sector of the
business. In this payment scheme, the publisher takes all the risk of running
the ad, and the advertiser pays only for the amount of users who complete a
transaction, such as a purchase or sign-up. This is the best type of rate to
pay for banner advertisements and the worst type of rate to charge.
Similarly, CPL (Cost Per Lead) advertising is identical to CPA advertising
and is based on the user completing a form, registering for a newsletter or
some other action that the merchant feels will lead to a sale. Also common,
CPO (Cost Per Order) advertising is based on each time an order is
transacted.
Cost per conversion describes the cost of acquiring a customer, typically

calculated by dividing the total cost of an ad campaign by the number of
conversions. The definition of “Conversion” varies depending on the situation:
it is sometimes considered to be a lead, a sale, or a purchase.
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.
• Polite ad: A method by which a large ad will be downloaded in smaller

pieces to minimize the disruption of the content being viewed
• Wallpaper ad: An ad which changes the background of the page being

viewed.
• 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.
• Pop-under: Similar to a Pop-Up except that the window is loaded or sent

behind the current window so that the user does not see it until they close
one or more active windows.
• 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.
• Mobile ad: an SMS text or multi-media message sent to a cell phone.

• Email advertising or E-mail marketing is often known as “opt-in e-mail
advertising” to distinguish it from spam.
8.4.3 Affiliate Marketing
Affiliate marketing is a form of online tool where advertisers place campaigns

with a potentially large number of small (and large) publishers, whom are only
paid media fees when traffic to the advertiser is garnered, and usually upon a
specific measurable campaign result (a form, a sale, a sign-up, etc). Today, this
is usually accomplished through contracting with an affiliate network or CPA
network, such as Performics, Hydra Network, Motive Interactive, Commission
Junction/BeFree, LinkShare, Primeq, Consorte Media or Azoogle.
Affiliate marketing was an invention by CDNow.com in 1994 and was excelled

by Amazon.com when it launched its Affiliate Program, called Associate
Program in 1996. The online retailer used its program to generate low cost
brand exposure and provided at the same time small websites a way to earn
some supplemental income.
8.4.4 Contextual Advertising
Many advertising networks display graphical or text-only ads that correspond

to the keywords of an Internet search or to the content of the page on which the
142 ad is shown. These ads are believed to have a greater chance of attracting a
user, because they tend to share a similar context as the users search query. For Handling of
example, a search query for “flowers” might return an advertisement for a Promotional Tools
florist's website.
Another newer technique is embedding keyword hyperlinks in an article which

are sponsored by an advertiser. When a user follows the link, they are sent to a
sponsor’s website.
8.4.5 Ads and Malware
There is also class of advertising methods which may be considered unethical

and perhaps even illegal. These include external applications which alter
system settings (such as a browser's home page), spawn pop-ups, and insert
advertisements into non-affiliated webpages. Such applications are usually
labelled as spyware or adware. They may mask their questionable activities
by performing a simple service, such as displaying the weather or providing a
search bar. Some programs are effectively trojans. These applications are
commonly designed so as to be difficult to remove or uninstall. The ever-
increasing audience of online users, many of whom are not computer-savvy,
frequently lack the knowledge and technical ability to protect themselves from
these programs.
SAQ 7
What is online advertising?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 8
What are the three most common ways in which online product is purchased?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
143
Please definitions of following:
a) Floating ad
b) Expanding ad
c) Wallpaper ad
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 10
What is Affiliate marketing?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
8.5 OTHER PROMOTIONAL MATERIALS
8.5.1 Direct Mailing
In this method a mailing list of registered medical practitioners, chemists

and druggists is prepared. Letter, leaflets, folders and catalogues are sent
to them regularly through mail to inform them of the details of the products
manufactured by the firm. Mail advertising has a personal appeal because it
is addressed to a particular person. It also maintains secrecy in advertising.
The main drawback of this technique is that it has the limited coverage
8.5.2 Personal Contact or Detailing
It is a process of sales promotion and advertisement by personal contacts. The

pharmaceutical manufacturers engage persons (sales representatives and
medical representatives) for making personal contacts with sellers or prescribes
144 and influence them in favour of their products. This method of advertisement is
very costly. However, the pharmaceutical manufacturing companies for the Handling of
following reasons prefer it. Promotional Tools
• It provides an opportunity to inform the physician about new products of

the firm.
• It also helps to refresh the memory of physicians regarding the old products
of the firm.
• It clears doubts a physician may have regarding a particular product of the
company.
• It helps to have a feed back from physicians regarding the products of the
firm.
• It provides the company with an opportunity to demonstrate and explain its
products.
SAQ 11
What is the main aim of window display?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
SAQ 12
What do you understand by personal contact or detailing?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
8.6 SUMMARY
Promotion is an intricate part of market mix. Marketing mix includes product,

price, Place/distribution and promotion (4 Ps). The activities of the first three
Ps – product planning, pricing, and distribution – are performed mainly within
the firm or between the firm and its marketing “partners.” With promotional
activities, a firm communicates directly with potential customers. 145
Sales Management Promotion is an attempt to influence. Promotional activities are designed to
inform, persuade, or remind the market of the firm and its products and
ultimately to influence consumers’ feelings, beliefs, and behaviour. A
successful promotion program should include all the communication tools that
can deliver a message to a target audience. A promotion program can include
five components: advertising, sales promotion, public relations, sales force, and
direct marketing.
Advertising: Advertising is a paid form of non-personal communication by an

identified sponsor. The mass media used include TV, radio, magazine,
billboards, newspapers, and direct mailing. Advertising is the most effective
tool for building awareness of a company, product or service. The drawback is
that most advertising does not deliver sales quickly. It works mostly by
changing minds, not changing behaviours.
Sales Promotion: On the other hand, sales promotion changes behaviour.

Customers will act upon a sale, an offer, or a chance to win something. Sales
promotion activities include coupons, discounts, in-store displays, trade shows,
samples, in-store demonstrations, and contests. A company can also sponsor
trade promotion, in which supermarkets or other retailers are given discounts to
promote a specific product. However, most incentives are short-term in nature.
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.
Direct Marketing: Direct marketing by mail, phone, or personal contact can

be used to effectively communicate with a very narrowly targeted group. Lists
for direct marketing purposes can be purchased from different sources.
However, for direct marketing to be effective, it is important to maintain a
comprehensive customer database in the company and manage the database in
a way that it can be divided into subcategories for different promotional
146
programs. In developing a promotion program, a company must first determine Handling of
the target audience, the most important objectives, and a promotion budget and Promotional Tools
then design the promotion activities accordingly.
Various activities in promoting a particular brand can be defined under

following heads.
Visual Tools: Visual tools for promoting pharmaceutical products should be

truthful. There should not be any wrong statement regarding its contents and
their percentage. It should provide full details regarding the action and uses,
proprietary name as well as the genetic name, dosage form, mode of
administration, side effects, treatment of toxic, effects, precautions and
contraindications. It should be made attractive by using pictures; headline,
attractive boards etc. so as to make people read, see or listen to it. It should
create a permanent impression on the minds of people. Repeated use
of a brand name of trademarks is very helpful.
Distribution of Samples: Handling of samples is a 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, it provides an opportunity to inform the physician about
new products of the firm. It also helps to refresh the memory of physicians
regarding the old products of the firm.
IT and Internet Applications: Online product promotion is a form of

advertising that uses the internet and world wide web in order to deliver
promotional 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. A major result of online advertising is information and content that
is not limited by geography or time.
Online video directories for brands are a good example of interactive

advertising. These directories complement television advertising and allow the
viewer to view the commercials of a number of brands. If the advertiser has
opted for a response feature, the viewer may then choose to visit the brand’s
website, or interact with the advertiser through other touch points such as
email, chat or phone.
1. What are the advantages of window display?
2. Why pharma companies prefer sample distribution?
3. What are the essential criteria for promoting a brand by samples? 147
Sales Management 4. What is CPC?
5. Define contextual advertising.
6. What is ads and malware?
7. Define direct mailing and how it works.
8.8 ANSWERS
1. Both the sales promotion and advertisement help in product promotion;

they enable a firm to face the competition in the market for its survival.
2. Sales promotion contains headings, messages, advertiser’s name and

address, photographs etc
3. Sales promotion means any steps that are taken for the purpose of obtaining
an increased sales.
4. Three types of sales promotion: 1) Customer promotion, 2) Trade

promotion, and 3) Sales trade promotion.
5. Handling of samples is a integral part of any pharmaceutical product

promotion where free samples are distributed to users (both doctors and
patients) by personal contacts.
6. 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.
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).
9. a) Floating ad: An ad which moves across the user's screen or floats

above the content.
b) Expanding ad: An ad which changes size and which may alter the
contents of the webpage.
c) Wallpaper ad: An ad which changes the background of the page being

viewed.
10. Affiliate marketing is a form of online advertising where advertisers place

148 campaigns with a potentially large number of small (and large) publishers,
whom are only paid media fees when traffic to the advertiser is garnered, Handling of
and usually upon a specific measurable campaign result (a form, a sale, a Promotional Tools
sign-up, etc).
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.
12. It is a process of sales promotion and advertisement 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.
Terminal Questions
1. Following are the advantages of window display:
• Window display acts as a silent salesman for promotion sales.

• It makes a drug store move decorative and attractive.
• It attracts the customers as the passerby’s.
• It creates good impression on the customers when he entered the drug
store.
2. The pharmaceutical manufacturing companies for the following reasons

prefer distribution of samples.
• It provides an opportunity to inform the physician about new products

of the firm.
• 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 provides the company with an opportunity to demonstrate and explain
its products.
3. Essential criteria for promoting a brand by samples.
• There should be enough literature alongwith samples. It contains

headings, messages, advertiser’s name and address, photographs etc.
• The advertising copy should be carefully drafted so as to include the

following essential features:
− It should be made attractive by using pictures; headline, attractive
boards etc. so as to make people read, see or listen to it.
− It should create a permanent impression on the minds of people.

Repeated use of a brand name of trademarks is very helpful.
− It should give useful suggestions to the public. For example, the

advertisement of Vicks 500 tablet suggests its use for cold and
cough. 149
Sales Management − 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 must contain solid arrangement and proof to convince the

consumers about the superior quality of the product. For example,
Anacin tablet relives pain faster as it is micro fined.
− 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.
5. Many advertising networks display graphical or text-only ads that

correspond to the keywords of an Internet search or to the content of the
page on which the ad is shown. These ads are believed to have a greater
chance of attracting a user, because they tend to share a similar context as
the user’s search query. For example, a search query for “flowers” might
return an advertisement for a florist's website.
6. This is a class of advertising methods which may be considered unethical

and perhaps even illegal. These include external applications which alter
system settings (such as a browser’s home page), spawn pop-ups, and insert
advertisements into non-affiliated webpages. Such applications are usually
labelled as spyware or adware.
7. In this method a mailing list of registered medical practitioners, chemists

and druggists is prepared. Letter, leaflets, folders and catalogues are sent
to them regularly through mail to inform them of the details of the products
manufactured by the firm. Mail advertising has a personal appeal because it
is addressed to a particular person. It also maintains secrecy in advertising.
The main drawback of this technique is that it has the limited coverage.
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
9.16 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
• design the new product features;
• design the visual aids;
• proper channel management;
• deal with institutional buyers; and
• exercise effective controls.
9.2 PRE-LAUNCH EXERCISE
Pharmaceutical product includes all the medicines used against various

diseases both in human or animals and the cosmetics, hygiene products like
disinfectants, tooth pastes and toiletries etc. However few of the products can
be purchased from the retail out let without the prescription of a registered
medical practitioner and called over the counter (OTC) products and other than
the OTC products all pharmaceutical products are sold on the prescription of a
medical practitioner and these are called ethical products. The ethical products
are the major volume of the pharmaceutical products.
Before the pharmaceutical product is launched, the information is passed on to

the medical representatives for on ward transmission to the wholesalers and
retailer. The pricing, packaging and the commercial schemes are discussed
with the wholesaler or retailer. The retailer or wholesalers would compare the
commercial aspects with the competitors product if any and gives the feed back
to the medical representatives and based on these information any suitable
decision are taken like changes in packaging or pricing or commission to the
channel members. Before the launching of the product, the medical
representatives are technically trained about the product, given visual aids,
price list, packaging samples etc. In case of FMCG (Fast Moving Consumer
Goods) product, the pre-product launch exercise is different from a
pharmaceutical product. In case of FMCG product, the product advertisement
in mass media starts long before the product comes to the market or retail
outlet or show room. All the product features are highlighted and an intensive
temptation is developed in the minds of the consumer about the product. For
example, before launching a new model motor car the advertisements are
flooded in the mass media, similarly before release of a movie, so many
advertisements come in all the mass media, trailers are shown on all the
channels and comments and criticism appear in the news paper columns for
good publicity.
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
i) Most of the products are purchased by the customer on advice of the

physician.
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.
v) Brand loyalty is very low.
Consumer goods
i) The products are purchased as per the likings of the customer.

ii) The information about the products are advertised in the mass media.
iii) The consumer can be convinced easily by various marketing techniques.
iv) The customer can wait for the product of his choice.
v) Brand loyalty is high.
Before a new pharmaceutical product (new drug molecule) is launched, it

undergoes many technical phases. The product has to undergo clinical trial
phase-I to phase-IV as per schedule Y of the drugs and cosmetics act. In such
cases the technical efficiency comes in the professional journal in detail and as
general news in the mass media. Usually any pharmaceutical product before
used clinically has to be tested in the animal model. If the response in the
animal model is convincing then it is allowed by the drug control authorities
for clinical trials in the human being. The clinical trials are of Four Phases:
9.2.1 Phase-I
In this phase the study is conducted to determine the pharmacokinetic

differences between human and animals and to ascertain the safe and tolerated
human dose (non-blind or open level) involving 20-25 healthy volunteers.
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
It is a multi centered test conducted on diseased patients involving 250-1000

plus volunteers and the study is carried out in double blind crossover design. 153
Sales Management After this the NDA is filed with the drug control authority. The drug control
gives it as the status of new drug.
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
How a pharmaceutical product differs from a consumer product?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.3 NEW PRODUCT
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.
9.3.1 The Product Launching Group
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.
9.3.2 Product Manager
Each individual product is managed by a Product Manager. All the marketing

activities/decisions about the product are handled by the product manager. The
positioning of the product vis-à-vis the competitors, packaging, pricing,
advertising etc. is looked after by the product manager. Sometimes for a group
of similar products, there is a group Product Manager. For example, all the
cardiovascular medicines or Generic group of products are looked after by a
group product manager. Further under him, there are individual product
managers to look after individual product. The product manager is the strategic
link between the medical detail man and PSR who passes on appropriate
information for successful marketing of the product. Hence before launching of
a new product there is a constant touch between the Medical Representative
and Product Manager.
9.3.3 MR and Training of the MR in the New Product
The Medical Representative is the frontline manager to manage the sales

activities of a Pharmaceutical product. He is the person to meet the Doctors,
whole sellers, retailers etc. to brief about the products. Apart from the required
professional qualification the MR has to be equipped with leadership skills and
managerial abilities to successfully market the products. Few of the qualities
like pleasing personality, effective communication skills, smartness, extrovert,
good health, self confidence, cultured, perfectly dressed, ambitious, matching
voice and body languages, resourcefulness with good command on selling
techniques are the important requirements. Finally he should have very good
technical knowledge about the products.
The MR is provided with all the information, visual aids, promotional

materials, gift items, gift physician samples etc. Apart from the above, the MR
is trained by the Medical Advisor about the disease on which the product acts
the etiology of the disease and the mechanism of the drug action, side effects,
toxicology, and its remedy. The dos and do notes are clearly explained along
with the patient counselling information. Finally the medical representative is
given with a post marketing feed back form on the particular product.
SAQ 2
Write the qualities of a medical representative.

…………………………………………………………………………………… 155
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.4 DEVELOPMENT OF THE PROMOTIONAL AIDS
The promotional materials include visual aids, stickers, calendars, wall

hangings, small gift items for physician day to day use. For whole sellers and
retailers materials like calendars, stickers are developed attractive eye catching.
Display materials are developed for retail show rooms display of the product.
Some organizations provide suitable illuminating boards to be displayed in the
retail store. The most important promotional material is the visual aid or
literature used by the MR during medical detailing to the Physician. The visual
aid or literature should be eye catching or attractive, carry the right message
about the product, the most important information i.e. punch line should be
bold and attracting, scientifically reinforcing the product quality and gives
complete and clean information about the product.
Developing a visual aid requires specific skills .The document is developed in

such a manner that it carries all the important messages about the product and
transmit the same very easily to the viewer without any ambiguity. Take the
example of a quick pain reliving tablet should show the graphic situation of a
severe pain in an individual .After taking the tablet the images should reflect
instant joy on the face of the individual to prove the quick pain relief .The
punch line should be the quick pain relief.
SAQ 3
What are promotional materials?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
156
9.5 COMPETING PRODUCT Pharmaceutical
Product Launch
When a new product is going to be launched and if it is not completely a new
molecule but already existing in the market by the other manufacturer then the
competing advantages of the product over the existing products has to be
highlighted while promoting.
The competing product if any available may be considered while explaining

about the product to the channel agents i.e. retailers and whole seller and
doctors. The technical points of the competing product may be considered and
classified as strengths and weaknesses. Matching to the strength and
weaknesses the extra edges of the new product has to be emphasized by the
M.R. For example the competitor has a tablet product of short duration activity
and has to be taken three times a day. If the new product developed by the
representative company is having a sustain release action and one tablet
compensates the doses of all the three tablet of the competing product and has
to be taken once a day to give the same therapeutic effect then inconvenience
and further patient compliance is competitive edge of the new product. Here
the convenience and technology advantages are the competitive edges over the
other products. Further pricing and packing size etc may be highlighted as
other factors of competition.
SAQ 4
A sustain release tablet has advantage(s) over an ordinary tablet in respect of a)

Technology, b) Convenience, and c) both a & b.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.6 APPOINTMENT OF STOCKIST
A pharmaceutical distribution channel consists of whole seller, distributor or

Stockiest and retailer. Choosing the whole seller or distributor is the most
critical factor. The inter-marketing efforts becomes useless if any one of the
channel agent fails to deliver the goods in regular time at right place. If there is
a situation of stock out or unavailability of the product at the chemist shop, and
this situation leads to purchase of alternate or substitute product. In any case of
a pharmaceutical product the requirement of the medicine is time bound and
157
Sales Management urgent. When the product is not available in the retail store the patient
approaches the physician stating that the product is not available. Since lot of
alternate an equally god products are available, the physician easily hangs the
order in the prescription leading to the purchase of alternate product. Hence it
is a loss of market and the same goes to the competitor. The above example
clearly states the importance of appointment of stockiest or distributor. To
appoint a perfect distributor or stockiest is an important task. As the success of
marketing of the products depends on the activeness of the stockiest, the
factors to be considered to find out the right distributor or stockiest are:
• 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.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.7 PRODUCT LAUNCHING MEETING
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.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.8 TYPE AND NATURE OF MIDDLEMEN

When the size of the market is huge and the customer population is high and
area of operation is vast, the involvement of middlemen is inevitable. To
decide on the issue of middlemen let us have an insight into the Indian Market
in general:
To visualize the specialty character of an Indian pharmaceutical market let us
have a discussion on the general character of the Indian Market.
The heterogeneity is not just on account of culture and demographic profile of
the population but also due to the infrastructure existing in the country.
Consider for example the following fact sheet on the Indian Pharmaceutical
market: The pharmaceutical market is well spread all over the country.
Number of towns and cities; 3700, Number of metros: 4, Number of villages:
6,30,000.
The number of pharmaceutical manufacturers are 25000, which includes
small, medium and large manufacturers like Cadila. Ranbaxy, Torronto, Sun
Pharma, Dr. Reddys, Dabur and multinational companies like Glaxo, Pfizer,
Aventis, Sandoz, Bayer, Johnson etc.
The total number of retail outlets are more than 2,00,000 with a ratio of outlets
to population as 1 outlet per 5500 people. The outlets are spread over both
rural and city areas .The number of accessible villages: 5,00,000.
The total volume of pharmaceutical products sold in Indian market per annum
is in the tune of Rs.25,000 crores and the export volume is of Rs.10,000 crores.
This diversity in terms of accessibility of markets today poses a major

marketing challenge. Increasingly the consumer goods marketers realize that if
they were to make their brands available in the right size, at the right time and
at the right price, the Indian consumer can be motivated to buy and consume it.
The experience of the telecommunication industry and of FMCG leaders like
HLL and Colgate only tend to confirm the hypothesis that an aggressive supply
strategy can help the marketer not only garner a good market share but also to
develop the total market for the product category. Reaching out to the market,
therefore, holds the key to the competitive advantage of firms. The same is true
even for a nation’s competitive advantage in the world market. Reach is also 159
Sales Management important for growth and profitability of an enterprise. When markets shrink, it
is only the firms with a vast reach that survive. Reaching out to market
involves planning and strategizing at two levels — distribution structure and
logistics. The distribution structure refers to the channel design and structure,
and management of channels. Logistics refers to the physical aspect of
distribution.
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
Customers Retailers Transporters Wholesalers
2. Title Flow
Input Suppliers Manufacturer Wholesalers/ Retailers Customers

Dealers
3. Payment Flow
Wholesalers/ Customers
Suppliers Bank Manufacturer Retailers
Dealers
4. Information Flow
Suppliers Transporter & Transporter & Transporter &

Warehouse Manufacturer Wholesalers/
of Inputs Warehouse Warehouse
and Banks Dealers
and Banks and Banks
Customers Retailers
5. Promotion Flow
Supplier of Advertising Advertising Customer

Manufacturer Trade
Input Agency Agency
Fig.9.1: Marketing flows in marketing channels for a typical consumer product

company
(Courtesy: Marketing Management, Rajan Saxsena, 2nd edition, third reprint 2003)
160
Viewed from the above perspective, one can also conclude that the definition Pharmaceutical
of a channel member goes beyond the traditional one of middlemen. Today it Product Launch
has come to include even suppliers of inputs (like raw material, components,
capital and even labour) and other institutions like transport companies and
banks that facilitate the distribution process. It is in this sense that marketing
channels have to be “viewed as sets of interdependent organizations involved
in the process of making a product or service available for use or
consumption”.
SAQ 7
Write down the various flows found in the marketing channel.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.8.1 Different Type of Middlemen

There are three types of middlemen that facilitate the flow of goods and
services from the manufacturer to the customer.
Merchant middlemen
These are the intermediaries who take title to the goods and services and resell
them. We know them as dealers, wholesalers and retailers. These middlemen
get margins and bonuses as compensation. They share the risk with
manufacturers when they take title and physical possession of the goods.
Agents
These are intermediaries who do not take title to the goods and services but
help in identifying potential customers and even help in negotiations. The
typical example is that of C&F agents, brokers, jobbers and so on who act on
behalf of the producer only to the limited extent of prospecting, warehousing
and redistributing the products. They do not share risk with the manufacturers
as they do not take the title to goods services. Agents earn a commission and
are reimbursed for all expenses by the manufacturer.
Facilitators
These are independent business units that facilitate the flow of goods and
services from the producer to the customer, without taking a title to them or
negotiating for them on behalf of the producer. Transport Companies, banks
and independent warehouses are examples of these institutions. These are paid
their service charges, as in the case of a transporter who charges freight or a
banker who is paid service charges or warehouses, cold storages and godowns
which earn rent. 161
Write the middle men involved in the marketing channel?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.9 CHANNEL LEVELS

One important decision that the firms have to often take is regarding the
number of channel levels appropriate to serve a given market. Channel levels
represent channel members who have a specific role to play. From as low as
zero, or in other words, directly from the manufacturer to the customer, one can
have as 1of 5 levels involved in distribution. Typically, zero level exists in
most industrial product marketing.
Market capital equipment or project marketing. For example, a firm like Ion
exchange, that specializes in water treatment has its own sales force to directly
market water treatment plants. This type of distribution works well in a product
markets characterized by few or many customers concentrated in a specific
geographical area. These customers want prompt after sales service and are
considered to have high service expectations. In such cases most products
require service support and the point of differentiation between competing
firms is the quality of service. Furthermore, these customers buy in large lots or
in other words their average order size in value terms is high and hence these
purchase decisions have high perceived risk. To reduce any post purchase
dissonance in the customers mind, the firm uses direct marketing or zero level.
When the number of customers is high and they are concentrated in specific
geographical areas without any uniform pattern in their order lot size, that is
some buy in smaller volumes and others in bulk, the firm adopts a one channel
level of distribution. Here the firm sells its goods to a wholesaler or large
dealer or transfers them to an agent. This channel member then distributes the
product in his area. An example of this pattern of distribution is industrial
chemicals. A firm like Deepak Nitrite transports its products, say dilute nitric
acid, to dealers in Ahmedabad, Baroda, Mumbai, Delhi, and so on, who then
sell the acid, to the users in their area. Most of the buyers, who have small
steel-rolling mills, buy in smaller lots like a full carbouy or about fifty litres
and even lesser at times, hence it is economical for the company and the buyer
to deal through middlemen. The customer’s prime requirement in such cases is
the ready availability of the product in the desired lot size.
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.
This obviously implies increasing the width of the channel, or identifying

multiple members at the same level to serve the market. Increasing the width
will ensure regular availability of the firm’s brands all over the country and
hence strengthen its competitive position in the market.
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
What are the different marketing channel levels?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
Retail Spokes i.e.

Chemist Shop
Market Market
Market
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.
9.9.1 Size of the Market
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.
9.9.2 Order Lot Size
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.
9.9.3 Service Requirements
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.
9.9.4 Product Variety
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
Write the factors determining the length of the channel?

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.10 PHARMACEUTICAL DISTRIBUTION CHANNEL
After a discussion on Indian Market let us view the pharmaceutical distribution

channel.
165
Sales Management The pharmaceutical distribution channel may be of different levels as follows:
1. Manufacturer-stockist-wholesaler-retailer-consumer.
2. Manufacturer-wholesaler-retailer-consumer.
3. Manufacturer-retailer-consumer
4. Manufacturer-consumer.
5. Manufacturer-C&F agent.
The pharmaceutical distribution channel followed by different organization

varies as per their suitability. Some organizations follow mixed level of
channel at different locations. Few organizations passion their products to the
C&F agents whose total responsibility is to further market the product on
company behalf.
9.11 INSTITUTIONAL BUYERS
Pharmaceutical products are marketed through a distribution channel to reach

the consumer through the retail outlets. Further there are few different sets of
consumers where the distribution channel may not be the same as general
consumers. This set of consumers where the distribution channel may not be
the same as general consumers. This set of consumers is the institutional
buyers. Hence the materials are purchased in bulk and sometimes supplied
directly from the manufacturers. Hence there are no channel members are
involved and the channel expenses are very less and the commission of the
channel agents may cut down from the pricing.
This type of Buyers include Defence, Railways, ESIC, Corporate Hospitals,

LIC, Govt. corporations like Air India, Autonomous bodies, boards, councils
etc. where they have their own hospitals for their employers. Further state
Govt. supply, central govt. supply etc. are made by their own depot and own
purchasing system directly from the manufacturer in bulk.
SAQ 11
Name few institutional buyers of pharmaceutical products.

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
9.12 FOLLOW UPS
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 new Pharmaceutical product launching is a specialized function in

pharmaceutical marketing which involves proper planning, directions and
control to give the new product and initial thrust to penetrate into the minds of
the people concerned with the use of the product i.e. Doctors, Pharmacists,
Chemists, and Nurses.
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.
9.14 KEY WORDS
Product Manager : Product manager is a member of the

marketing team who looks after a particular
product or category of the product. He
keeps a vigil on the product features,
profiles, pricing etc. vis-à-vis the
competitor’s product. Moreover he grooms
the product as per the market situations and
needs.
Promotional Visual Aids : For pharmaceutical product promotional

aids in form f visual aid required by the
medical representative to show to the
doctor while detailing or explaining about
the product.
Institutional Buyers : Large hospitals, Nursing Homes,

Corporations, Govt. Depots, Railways,
Central Govt. and state Govt. supply where
medicines are purchased in bulk are called
Institutional Buyers.
New Product : In case of pharmaceutical products a new

drug molecule showing effects in animal
and subsequently clinically tried in human
beings and further marketed under a new 167
Sales Management product patent and the drug is not
mentioned in any of the pharmacopoeias
called new products.
1. How does product launching helps in disseminating the information about

the product in the distribution channel.
2. What is a new pharmaceutical product and the procedures followed to

market it commercially.
3. What is a visual promotional Aid for pharmaceutical products and what are
its various features.
4. What are the general characters of Indian market?
9.16 ANSWERS
1. Most of the pharmaceutical products are purchased on the advice of a

doctor and the products are not advertised through mass media like FMCG.
Ref. 9.2.
2. The MR is the first line manager and should have all the leadership
qualities, qualified and command over the technical know how of the
product and should have pleasing personality and smart. Ref. 9.3.3.
3. The promotional materials charts, literatures, calendars, stickers small gifts,
wall hangings and visual aids used by the MR. Ref 9.4.
4. (c)
5. (a)
6. Refer the factors mentioned in 9.6.
7. The various flows found in the channel are information, goods, payment,
promotion, title.
8. The middlemen involved in the channel are merchants, agents, facilitators.
9. The different channel levels are zero, one, two, three. Ref 9.10.
10. Size of the market, order lot size, service requirements, product variety.
11. Defence, Railways, ESIC, Corporate Hospitals, LIC, Govt. corporations
like Air India, Autonomous bodies, boards, councils etc. where they have
their own hospitals for their employers.
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
10.11 Solutions and Answers
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
The OTC pharmaceutical products are treated similar to that of FMCG

products and sales display is made similar as consumer goods as follows.
According to Lewison and Delozier, sales displays are used to:
• maximize product exposure

• enhance product appearance
• stimulate product interest
• exhibit product information
• facilitate sales transaction
• ensure product security
• provide product storage
• remind customers of planned purchases, and
• generate additional sales of impulse items.
In pursuit of the above objectives, displays perform a three-fold job:
• 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.
In short, sales displays project a retail outlet, as well as a product's personality,

create store atmospherics, stimulate desire to buy, trigger moods and act as
silent sales people.
10.3 PRINCIPLES (AND AESTHETICS) OF DISPLAY
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
Fig.10.1: Basic principles of design
Principle of Unity means that the various elements of display (such as

merchandise, display materials, signs, accessories, etc.) appear unified and be
seen as a whole and complete unit.
Principles of Balance means a harmony among the components of and items

on display. Balance may be formal or informal. Formal balance believes in
symmetry, that is, same weight, height or number of items on both the left and
right sides of window display. Informal displays aim at being novel and extra-
ordinarily attractive and thus are asymmetrical in nature.
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
Fig.10.2: Display patterns
Principle of Dominance means dominating the display scene/space by using

specially made products/packs of size much larger than the original size, or
dominating with the use of unusual special effects as attention arresters/crowd
pullers.
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.
Principle of Contrast concerns with focusing on a product by stressing on the

contract, such as, displaying a light shaded product in dark shade background, a
small cute offering against the giant size product in the background, using
contrasting colours of lights, etc.
172
SAQ 1 Retail
Communication:
Which category of products are showcased in a medicine store? Sales Display
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
10.4 TYPES OF DISPLAY
The different types of display followed other than pharma-products are

discussed here for an idea bout display. As has already been stated, good
displays act as powerful traffic builders and result in raising the store sales.
Going by the increase in competition at the market place and the felt need of
each retailer to attract more shoppers to its store, the question facing them
today is not whether to use displays or not but how to use displays effectively.
Blending creativity with principles of display designs, nature of product and
specific market needs, has resulted in the creation of impact making sales
displays which can be broadly classified into the following types. Before
gaining familiarity with the different types of displays it will be desirable to
remember that a creative retailer for gaining the unique display edge may make
use of a combination of some or many of the display types discussed below.
1. Assortment Display: In this type of display a retailer puts on display a

wide variety of merchandise for the customer. This display is organized in
two ways – open and closed. The open display provides an opportunity to
the customer to feel or try the product. Self service stores, Super Bazars,
Kendriya Bhandars and ready-to-wear garment stores commonly use open
displays.
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.
2. Theme Displays: These displays work on the principle of unifying the

merchandise on display around a common theme or event, and accordingly
call for the creation of appropriate mood or atmosphere in the store. These
displays aim at enhancing customer enjoyment while involving him more
deeply in the merchandise and the event. The theme may relate to national,
international or local event, a season, festival or even could be internal to
the store. Some popular themes include Republic, Independence and 2nd
173
Sales Management October Days at Khadi Gramudyog, New Year, Christmas, Easter, Diwali,
Pooja and even off-season sale themes at other stores. Bridal themes at
saree shops, holidays themes at travel agency firms, school opening themes
at shoe stores, etc. are some more examples of theme 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.
3. Life-Style Displays: Using the market segmentation approach life-style

displays are used by retail stores focusing on the activities, interests and
attitudes of a segment of customers. The purpose is to make the retail store
appear homely for the target customer and give him the feeling that he has
come to the right place for shopping. Benzer, Sheetal, Roopam and FUs
garment stores, Usha-Shriram household furniture and items represent
some examples of these displays.
4. Coordinated or Ensemble Displays: Using the approach of suggestive.

selling, in this type of display generally a mannequin is dressed in matching
say combination of shoes, socks, pants or short, shirt or T-shirt, sports
jacket and even tennis racket and bags as at Bata’s, “Power” range stores or
Raymond’s shops. The customers are thus provided with the ease to buy
related Raymond's items in one department or place instead of going over to
different departments or stores. Ensemble displays focus on selling a
concept rather than just a product.
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.
6. Classification Dominance Displays: This type of display focuses on

exhibiting a large variety of width and depth of the product lines carried by
the store. This is organized on product basis which are put in vertical order
for displays on the walls, on the selling floor or sometimes all over. In case
of baby foods in a medical store, this display is usually seen.
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
Some other complementary materials that aid in making sales displays

attractive include window streamers, stickers, posters, hangers, counter
cards, dummy cartons and balloons.
8. Videotape Displays: An interesting development in retailing in the

developed countries is the growing use of audio-visual merchandising.
These displays use technology to “speak” to and show shoppers the
available merchandise. These pre-recorded audio/video devices include
“shelf talkers” and “rear screen projections” thus adding anew dimension to
products needing demonstration.
SAQ 2
Give few examples of pharma products displayed on a medical store.

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
10.5 MANAGING DISPLAYS EFFECTIVELY
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:
1) planning of sales displays, and

2) execution of sales displays.
Planning of Sales Displays
The planning phase of sales-displays covers dimensions such as :
• optimal use of display space

• use of cost-effective fixtures for display which provide maximum exposure
to the merchandise
• type and pattern of displays to be used and their suitability with both
the available store space as well as store layout ; and
• cost and frequency of change of displays in the retail store. 175
Sales Management Execution of Sales Displays
This phase of display management includes:
• ensuring adequate stock of merchandise to be displayed as well as in

inventory
• earmarking area and allocation of speck space of different displays and

fixtures
• 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.
• organizing men and materials for the display including selection of

outside experts, if any, and coordination with other employees of the
store
• instructing store staff on handling of displays and merchandise, and -

arranging for timely advertising and publicity of the store.
• Ovid Riso in his-edited book “Sales Promotion Handbook” cites the

following requirements for a good product display:'
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.
2) It should illustrate the product in use if there is the slightest chance if

consumer cannot see at a glance exactly how to use it.
3) It should be colourful, well designed and simple.
4) It should be informative, including the price.
Given the importance of proper planning and execution, incorporating creativity

and innovativeness in sales displays emerge as the primary need in its effective
management. It, therefore, requires the use of outside experts as well as search
for newer materials to achieve distinctive edge in the product display. The
other requirement relates to the frequency at which display designs are changed
which in turn is linked to the budget available for this promotional activity. Big
budget companies are known to change their displays quite frequently and for
this purpose even employ interior decorators and designers and some have an
in-home merchandising and display department.
Obtaining Retailer's Cooperation
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.
10.6 TRAINING RETAILERS
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:
• unreasonable terms of participation and unattractive rewards ;

• mismatch between display space available at the store and display
requirements
• complicated display fixtures and material ;
• monotonous repetition of old display ideas ;
• non-availability of professional help required for setting up of creative
displays;
• unclear instructions regarding use of display material; and
• receipt of incomplete display kits.
In view of the above reasons, it, therefore, becomes necessary to satisfactorily

involve retailers in the organization and conduct of sales displays. A beginning,
in this regard; should be made by explaining to the retailer and his staff the
purpose of the display and how to make it a success. The latter could be done
through personal discussion, supply of printed self-instructional material,
provision of do’s and don’ts and availability of assistance from interior
decorators where needed. In any case, a salesperson’s visit to the retail store
after the display material has arrived at the store to ensure its completeness as
well as for guiding its handling has been found very useful in both reducing
material wastage as well as disinterested participation.
A Company Practice
In order to ensure proper usage of the display material as well as to make

retailers promotion conscious, a U.S. Corporation made the following
suggestions to its display scheme participating retailers: 177
Sales Management 1) When the display features a general idea, place it in a prominent location
where it will be seen by all customers. The space opposite the front door is,
incidentally, the preferred position in the whole store.
2) A specific item or specific line display should be placed as near as possible

to the merchandise described.
3) A display offering the merchandise for the consumer to examine should be

placed where the customer can touch it.
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.
8) Always place displays in a well-lighted position.
10.7 MOTIVATING THE RETAILER
With a view to motivating retailers to put in their best efforts in the conduct of
sales displays, sponsoring organizations encourage them by:
• provision of display goods and fixtures at special subsidised prices
• cooperative advertising and sales promotion i.e., promoting the retail

chemist stop as well as the manufacturer's product on cost-sharing basis
• publicity through newsletter as well as keeping the retailer informed of the

market movements of the product on display in different markets
• organization of display contests carrying catchy rewards and effort related

consolation prizes
• photoflashing of retailer’s displays at work to other retailers
• visit of mystery shoppers who assess and award prizes to outstanding

retailers.
For example, Food Specialities Limited in India attaches considerable

importance to the retail trade. Even much before the trend of hiring display
windows had caught on, it embarked on a drive to enrol all high-visibility
shelves and counters for displays. The company, generally speaking, offers
nearly 25 per cent more money for shelf space than almost any other company.
It has also devised a host of retail dispensers – hanging net baskets, counter top
and floor racks to carry a range of its brands. Likewise, one of the principal
factors for the success of brands such as Vicks Vaporub and Gold Cafe in 1988
178
is attributed to the ability of their sponsors in motivating retailers and hiring Retail
out premium display windows. Communication:
Sales Display
With the passage of time we find that the art of organizing effective sales
displays has been perfected. Quite a few consumer goods companies in India
which have been using sales displays almost regularly have developed very
comprehensive checklists covering pre-planning steps; event planning; design
preparation and procurement of aids for displays; selection and signing of
select retailers; monitoring of display scheme in action; judging criteria,
rewards, follow up and lessons for the future. These checklists also find an
outline of the role of the sales force at the various stages of the sales displays.
10.8 SUMMARY
Sales displays have acquired a place of significant importance in modem

retailing. These help in both enhancing the store image as well as attracting
shoppers to the store. Effective sales displays make use of aesthetic principles
and are generally built around a popular theme suiting the market needs of the
product. Sound management of sales displays requires an eye for detail on the
part of sponsors so far as minute details relating to planning and execution of
sales displays are concerned. Retailers• play a critical role in the success of sales
displays and hence require careful handling and proper motivation.
10.9 KEY WORDS
Cut-case display : Inexpensive display, where merchandise is

left in its original cartons/cases.
Dump-bin displays : Case/Bins display which carry a large

number of sale items.
Ensemble displays : Display where related or coordinated

merchandising is put together.
Fan display arrangement : Set up vertically, the display arrangement

rises from the heavy base and widens
drastically as the height increases. Often
seen at chocolates, confectionary, and
grocery shops. (See Fig. 2.2)
Merchandising space : Space used for keeping items in stocks or

inventory, while not on display.
Merchandising : Planning and presentation of merchandise

and services at places and in quantities that
best serve the interest of the customer and
the retailer.
179
Sales Management Open assortment : Display of merchandise inviting access to
the customer to feel or try them.
Pyramid display
arrangement : Display arrangement in the shape of a
three dimensional pyramid, with each side
presenting an attractive triangle (see
Fig. 2.3).
Rack display : Displays of merchandise on racks generally

used by textile retail stores.
Scrambled merchandising : A wide variety unrelated to additions to the

retail store's original business merchandise.
Selling space : Space in the store earmarked for displaying

merchandise, interactions between sales
personnel and customers, space of
demonstrations, etc.
Step display arrangement : A multi-tiered placing of trays, resembling a

series of steps, for display of merchandise
on it. (See Fig. 2.1).
Store front : The total physical exterior of the store itself

including entrances, windows, lighting and
construction materials, etc.
Width of assortment : Variety of different or unrelated product

lines handled by a store.
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)
1. Why is it becoming increasingly important for the manufacturer to properly

manage the sales displays of their brands? Develop a check list for
evaluating the sales display at a retail store.
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.
A. Pease (1981) Body Language, Londong, Sheldon Press.
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
Gavin Kennedy, John Benson and John McMillan (1990) Managing

Negotiations, London: Hutchonson Business.
Harta A. Murphy, Herbert W. Hidbrandt (1991) Effective Business

Communications, New York: McGraw Hill Inc.
Herschell Gorden Lewis (1995) Sales letters that Sizzle, Illinois: NTC Business
Books.
John Lidstone (1991) Mammal of Sales Negotiations, England: Govers.
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.
R.L. Bhatia (1994) Development Presentations Skills, New Delhi: Wheeler

Publishing.
Rajan Saxena (2003) Marketing Management, Tata McGraw Hill Publishing

Company.
Retailers: A Growing Power, Advertising and Marketing, June 1989, pp 44-47.
Riso, Ovid (ed) (1979), Sales Promotion Handbook, Chicago, Dartnell

Corporation, Ch. 17 and pp. 922-23 and 952-53.
181
Sales Management Ron Hoff (1996) “How to Make Your Next Presentation a Winner”, In,
Strategic Advertising Campaigns by Don E. Schultz, Illinois: NTC Business
Books.
S. Neelamegham (1988) Marketing in India Cases and Readings, Vikas

Publishing House 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
11.12 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
After completing this unit, you will be able to:
• identify the issues relating to sales force management;

• understand the importance of job analysis for better sales force
management;
• identify, evaluate and prepare lists of recruitment sources for a company;
• design the selection process for hiring salesmen for a company;
• frame application form and conduct interviews for screening the
candidates; and
• select and administer psychological tests in the selection process. 183
Sales Management
11.2 NATURE OF THE SALES JOB
The field sales personnel in pharma industry is called the Medical

Representative. The nature of job is similar as that of other industries.
However, there are few specialities in pharmaceutical marketing and those
skills are learnt by the Medical Representatives.
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.
v) Lastly, success in a sales call doesn’t depend on an individual’s effort. It

may so happen that the customer doesn’t need your product or the
customer was not happy with his previous experience, on delivery or after
sales service or spares. All field sales job create, therefore, a normal
tendency to get disheartened or discouraged.
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.
11.3 SALES JOB ANALYSIS
Sales force management is the personnel function in the marketing department

of an organisation. The issues in sales force management are, therefore,, the
same as that of the personnel management. However, these issues relate to only,
those personnel who work in the sales department.
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
Fig.11.1: Activities involved in managing the sales force
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.
A good approach to developing job description is to use a checklist of various

activities relating to a sales personnel job. Some of these responsibilities are as
follows:
Table 11.1: Basic responsibilities of a salesperson
Sl. Sales responsibilities Specific activities

No.
1. Direct Selling a) Locating prospects
b) Determining prospects’ needs
c) Planning selling strategy
d) Interviewing
e) Creating desire
f) Handling objectives
g) Completing sales
2. Customer Relations a) Helping customers by solving their
problems and providing special
services. In case of a Medical
Representative, a cordial
relationship has to be kept with the
doctor.
185
Sales Management b) Training customers to use their
purchases
c) Arranging displays and promotions
d) Keeping customers up-to-date on
new developments
e) Settling complaints
f) Establishing and maintaining good
personal relations with customers
3. Product/Service a) Knowing products/services and
Knowledge their applications
b) Looking for new products/services
c) Keeping up-to-date on merchandise
style and price changes
d) Keeping up-to-date on competing
products/services
4. General Administration a) Maintaining call records
b) Carrying on routine
correspondences
c) Checking customer’s credit
d) Follow-up on inquiries
e) Maintenance expense-account
records
5. Management Relations a) Making required reports
b) Reporting competitors’ activities
c) Working with other departments
A detailed account of basic responsibilities of a sales person help in the

identification of qualifications and individual characteristics, iii relation to the
job. The process by which qualifications and personality characteristics are
identified, is called Job Specifications which the person may have at the time of
joining or they are imparted to the sales person, through training.
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.
11.5 RECRUITMENT SOURCES
Frequently used sources of salesmen are as follows:
Advertisements
Advertisements are both a source of recruits and a method of reaching them.

Newspapers, magazines and trade journals are the most widely used media for
advertisements. Advertisements ordinarily produce large number of applicants
in a very short time and at a low cost. However, this factor may be offset by the
increased expense of carefully screening the large number of prospects and the
average quality of applicants may be of questionable character.
Recruitment advertisements usually include information about the company,

nature of the job, specific qualifications required and compensation. The
specific details in the advertisement vary with the company and its situation.
The quality of prospects recruited by advertisement may be increased by
careful selection of media and by proper statements of information in the
advertisement. For example, by advertising in a trade journal rather than in a
daily newspaper, a firm is being more selective in its search. An advertisement
in trade journal assures responses from people who are already in the
profession and would be interested in selling. The amount and type of
information given in the advertisement affects the quality and quantity of the
applicants. The more the information given in the advertisement, the more it
serves as a qualitative screening device. A firm, by stating minimum
qualifications rather than optimum requirements can generate large number of
applications, requiring more careful screening. There is no simple answer to
the question of whether a company should place its name in its recruiting
advertisement. The company name, if well-known, is prominently featured,
whereas small companies often follow the policy of giving a ‘box no.’ in the
187
Sales Management advertisement. Further, on the mechanics of advertising, management must
decide on such points as the day of the week to insert the advertisement, where
to locate it in the medium and what size it should be. For instance, Sunday
papers are read more leisurely and thoroughly, but-in a week-day edition, a
company’s advertisement stands out more because these are fewer such other
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
This source includes colleges, universities, technical and vocational institutes

offering courses in pharmacy in case of M.R. This source is, tapped for getting
qualified people for entry level positions in sales. Students from technical/
vocational institutes or with specific subjects like Physics, Biology, Hotel
Management are recruited by the companies, where selling requires specialised
knowledge and skills for that particular industry. College graduates are
generally taken by the companies having formal sales training programme or
for simple selling jobs. Recruits from educational institutions are more easily
adaptable than their more experienced counterparts. They have no developed
loyalties for a firm or industry and they probably have not acquired any bad
work habits. Usually, they have acquired certain social graces, are more poised
and mature. They are supposed to have developed their ability to think, to
reason logically and to express themselves reasonably well. Ordinarily, they do
a good job of budgeting their time and managing their daily activities. Their
main limitation is lack of selling experience. Men recruited from this source
need training and thus take time for reaching the desired productivity level. To
use this source effectively, it is important for the company to develop and
maintain good relations with suitable educational institutions. In particular if a
pharmaceutical industry is interested to recruit Med. Rep., then relation with a
pharmacy institutes has to be developed.
Salesmen of Non-competing Companies
Individuals currently employed as salesmen for non-competing companies are

often the attractive recruiting prospects. Such people already have selling
experience, some of which may be readily transferable. For those, who have
worked for companies in related industries-there is additional attraction of
knowing something about the product and the market. Recruits from this
source presumably have some selling skills and thus reduce the amount of
188
training required. A firm that hires salesmen from other companies should be Job Analysis,
especially careful to determine, why the man is interested in changing jobs and Recruitment and
why he wants to work for the hiring company. People hired from other Selection
companies may not have the same degree of loyalty that recruits possess when
promoted from within.
Salesmen of Competing Companies
The question of whether to hire competitors’ salesmen is argued on ethical

grounds and from an economic standpoint. It is considered unethical to recruit
the competitors' salesmen actively, after he has spent the money on hiring and
training them. Furthermore, these salesmen may be able to divulge company
secrets to the competitors. It is also seen as an attempt to take away
competitors' customers. From an economic point of view, these are mixed
feelings regarding this source. On one hand, they know the product, customers
and competitors. They also are experienced sellers and, therefore, no money is
required to be spent for their training. On the other hand, it is a costly source as
generally, higher pay must be offered to them to leave their organisations. Some
sales managers, as a matter of policy, refrain from hiring competitors’
salespersons, as their loyalty towards company is questionable. They feel that
an individual hired away from one organisation for higher pay or other
enticements may be similarly tempted in future. In considering the recruitment
of individuals currently working for competitors, a key question to answer is-
why does this person want to leave his present position? When the new job will
not improve the applicant's pay, status or future prospects, the desire to change
the company may be traced to personality conflicts or instability. But the
dissatisfaction with the present job does not always mean that the fault is that
of an applicant. If the applicant has sound reasons for switching companies, the
opportunity maybe presented to obtain a promising person, who is ready for
productive work almost immediately.
Internal Transfers
The persons working in other departments of the company maybe transferred as

salesmen to the sales department. This is generally used along with the other
recruitment sources. Transfers are good prospects for sales positions, whenever
product knowledge makes up a substantial portion of sales training. They are
also familiar with company's objectives, policies and programmes. The
accuracy of evaluating these men is more, as the management is able to observe
their and evaluate their potential as salesperson before they are transferred to
sales department. Factory and office employees may consider the transfer to
sales department as promotion, which helps in increasing their moral and
loyalty.
Recommendations of Present Salesmen
A company’s sales force is a good source of leads to new recruits. Salesmen

typically have wide circles of acquaintances, since both on and off the job, they
continually meet new people and generally have many friends with similar
interests. Their contacts may yield good sales people because of their 189
Sales Management understanding of the job and the kind of salesmen required by the company.
However, management faces the risk that the salesmen may recommend friends
or business associates on the basis of personal feelings rather than on an
impartial evaluation of prospects' qualifications. The firm should be able to
weed them out through its selection process. When an applicant recommended
by a salesmen is to be turned down, management should explain clearly but
diplomatically to the salesman why his recruit is not being accepted. Sales
people are valuable source of recommendations, when job must be filled in
remote territories because sales personnel in the same or adjacent areas may
know considerably more about unique territorial requirements and local
sources of personnel than home-office executives.
SAQ 1
Suggest the suitable recruitment sources for Medical Representatives.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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
i) critical analysis and evaluation of each tool and procedure.

ii) development of a system for measuring the applicants against the
predetermined requirements.
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
Fig.11.2: A seven step selection system
Selection Policy Decision
i) Which tools should be used?

ii) In what order should the tools be used?
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.
11.7 SELECTION TOOLS
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.
Objective scoring of application form: Each company, according to its job

requirements, decides the ideal personal history requirements that would make
the person successful on the sales job. Individuals possessing all the personal
history requirements are the ones most likely to succeed on the job. However,
many potentially successful salespeople do not possess all the requirements.
One company found that most of its best salespeople were of the age group of
3035 yews at the time of hiring, yet there were some as young as 19 and omen
as old as 48. Although the age group 30-35 years, may be the preferred age
range, applicants outside this age range should still receive consideration, since
other factors in their backgrounds may more than offset the fact that they are
outside the desired age range. One of the ways to determine the total value of
candidate is by using application form, on which an objective score has been
assigned to each item. The maximum possible score for each of the item
depends upon its importance in sales success. A higher score is allocated for
the requirements which are more essential than those which are not so
important. The points are assigned to an individual, for each of the item,
according to its proximity to the ideal.
Example: Education Maximum Score -8

High School -5
Diploma -6
Graduate -8
Job Experience Maximum Score - 10

1-2 years - 4
3-5 years - 10
192 5-7 years - 7
For example, in an application form of a firm, 12 personal history items are Job Analysis,
used as selection factors. A maximum value is assigned to each of them Recruitment and
according to its relative value on the form. The maximum total score is 150 Selection
points and the cut off score is 100. All the successful salespersons in this
company scored over 100 when hired and the company automatically
disqualifies all applications with score under 100.
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?
……………………………………………………………………………………
…………………………………………………………………………………… 193
……………………………………………………………………………………
……………………………………………………………………………………
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.
Interviewing decisions: The following important decisions are arrived at, by

the management regarding interviews:
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
i) Patterned/structured interview: It is totally guided and highly

standardised technique of interviewing. The interviewers are given a
specific list of questions or an outline of questions, designed to elicit a basic
core of information. Each man interviewed is asked these questions and
answers are recorded on standardised form. Since all the applicants are
queried on the same points, different persons can do the interviewing at
different places and the results will still be comparable. The reasons for
using this technique of interviewing can be attributed to the situations,
where the interviewing is to be done at different regions/ branches
simultaneously or where the interviewers may not know in detail about
what the job entails and what are the necessary qualifications, or, they may
know what qualifications are necessary for the job but they may not know
what questions will bring forth the information about the applicant's
possession of these characteristics, or interviewers may be unable to
interpret the answers in non-structured type of interviews.
ii) Non-directed/non-structured interview: This method does not follow a
set format; instead it involves a relaxed discussion. The candidate is urged
to talk freely about his business experiences, home life, school activities,
future plans and on certain outwardly irrelevant topics. The interviewer
asks few questions and says only enough to keep the conversation rolling
along the desired line. The theory for this type of interview is that it
produces truthful answers and thus draws out the real person. This
technique yields maximum insight into an individual's attitudes, interests
and personality traits. The interviewer is allowed maximum freedom in
determining what will be discussed during the interview to probe an
individual's personality in depth. Obviously, the major problem is that it
requires skilled and experienced people for administering and interpreting
it. Also the value of standardisation is lost in the non-structured type.
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.
iv) Stress interview: It is a more complex and sophisticated technique of

interviewing. The interviewers create stressful environment for the
candidate through interruptions, criticism, by asking him for solutions for
tricky situations, by rapidly firing questions. While interviewing, the
interviewer may hand the applicant an object and say, “Here, sell
this to me,” and may then raise unreasonable objections during his sales
presentation. This technique is used for selecting the sales personnel who
are supposed to work under stressful conditions in actual selling situations.
The stress interview needs to be planned, administered and interpreted by
well trained interviewers.
v) Rating scales: One shortcoming of the interview is its tendency to lack

objectivity, a defect that can be reduced through rating scales. These are so
constructed that interviewers ratings are channelled into limited choice of
responses. For instance, in evaluating an applicant's general appearance, an
interviewer is forced to choose one of the three answers nicely dressed,
presentable, untidy. It results in more comparable ratings of the same
individual by different interviewers. One drawback of the rating scale is the
lack of precise description of many personal qualities. It is a good practice,
therefore, to encourage interviewers to explain ratings in writing whenever
they feel that the comments are needed. Examples:
Enthusiasm: Bored, somewhat indifferent, normal enthusiasm, sparkling

effervescence.
Judgement: Jumps to conclusions, less than sound reasons for opinions;

sound opinions and reasons, excellent judgement and uses reasons as
problem solving device.
Sales drive: Low, normal, above average, pushes himself.
Attitude: Negative and complaining, pessimistic, positive and healthy,

strong loyalty.
Guidelines for interviewing: Some general guidelines that will assist one
in doing the effective interviewing are suggested below:
• Prepare for the interview: Effective interviewing requires adequate

pie-planning to be done prior to the interview. This involves renewing
the job description, the company’s personnel policies and procedures
and existing data about the candidate. The review will enable the
interviewer to determine exactly what he wants to know about the
candidate and prepare the topics for discussion.
• Established rapport: A pleasant relaxed atmosphere must be

established during the interview. The interviewee must be made to feel
at ease by asking general questions about his family, education,
196
experience, that is the subjects about which most people feel free to talk Job Analysis,
about. A quick review of the interviewee's application form may Recruitment and
suggest a suitable opening for it. A pleasant rapport between Selection
interviewer and applicant must be maintained throughout the interview.
• Listen and observe: It is important for a successful interviewer to be a

good listener and good at observation. He begins to learn about the
candidate, as soon as, he enters the room-Is the applicant dressed
appropriately? Is he/she poised and confident? Alert? Observation
provides many a clues about the personality of the applicant. For
instance, clasping and unclasping of hands, fidgeting, not maintaining
eye contact are sighs of nervousness, uncertainty and lack of
confidence.
• 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?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
Psychological Tests
Use of psychological tests as selection tool, though still in its infancy, is

increasing for the reasons like – greater importance being given to selection as
the sales management is becoming more formalised, rising cost of selection
and training, increased size of sales force and increased knowledge of
psychological tests and their applications. Psychological testing refers to having
the recruit answer a series of written questions, the proper answers to which
have been previously determined. The major purpose of testing is to identify
and measure more accurately, the various aspects of person's behaviour such as
intelligence, achievements, interests aptitude, personality traits, etc. It requires
197
Sales Management trained specialists for designing, administering and interpreting the
psychological tests.
Factors conducive to successful testing: The existence of following conditions

are conducive to, a successful testing programme:
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.
Types of Psychological Tests
i) Tests of Ability − Tests of mental ability

Tests of special abilities
ii) Tests of Habitual − Attitude tests

Characteristics Personality tests
Interest tests
iii) Achievement Tests
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.
198 d) We expect another shipment of articles next month.”

Many sales managers administer their own informal aptitude tests by way of a Job Analysis,
situation in which they give a product to the recruit and say, “Here, sell this to Recruitment and
me.” General sales aptitude tests are used for measuring the basic qualities of a Selection
good salesman and specially designed sales aptitude tests are used for
measuring special qualities required for a particular type of sales job of a
company.
Tests of habitual characteristics: These tests gauge how the prospective

employee would normally act in his daily work, i.e. when he is not at his best
behaviour.
Attitude tests: Are more appropriate as morale measuring techniques. They

are used to ascertain employee’s feelings towards working conditions, pay,
advancement opportunities and like. Used as sales personnel selection device,
they make limited contribution by identifying abnormal attitudes on general
subjects.
Personality tests: Success in selling depends mainly on the multitude of

behaviour traits called personality. By adroitly asking many questions
concerning what the test taker would do in certain situations, how he feels about
certain things and what his attitudes are towards various occurrences, the test
hopes to uncover specific personality traits. These tests attempt to identify and
measure the traits like stability, tact and diplomacy, self-sufficiency, self-
control, dominance, initiative, etc. The obvious difficulties in using these tests
are first in stating precisely what aspects of personality are true job
qualifications and then finding and designing tests which would measure these
aspects correctly. These tests need to be administered and interpreted by skilled
testers.
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.
Achievement tests: Provide an assessment of expertise, an applicant possesses

in such areas as customer relations, marketing channels product, etc. These
tests seek to deter-nine how much an individual has learned from his education,
training and his knowledge about certain subjects.
Evaluation of Psychological Tests
Tests to be used for selection of salesmen are evaluated on the basis of

following criteria:
i) Validity: A test is valid if it actually measures what it is supposed to

measure. Following are the three ways to check the validity of a test: (a) A
test is given to the present sales force and test score of successful salesmen
199
Sales Management is compared with the score of unsuccessful salesmen. If there is close
correlation between the score and job performance, the test is a valid test.
(b) A test is given to all the applicants, but the test scores are withheld from
the persons matting the selection decision. After the new salesman have
begun work, their performance is compared with their test scores. Again
the degree of correlation will reveal the validity of test. (c) Another way to
validate a test is through the use of control groups. One group of salesman
is chooses by making, use of tests along with other tools in the selection
process, while a control group is hired without the benefit of testing. The
job performance of both the groups is compared after a period of time to
determine the validity of test.
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
Example: Social intelligence test .45

Numerical ability test .95
Vocabulary test .75
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
What is a psychological test?

……………………………………………………………………………………
200 ……………………………………………………………………………………
…………………………………………………………………………………… Job Analysis,
Recruitment and
…………………………………………………………………………………… Selection
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
References
Names of references are sometimes requested on the application form by the

company. As a selection tool, the basic purpose of the reference is to verify the
facts such as the dates of employment, earnings, sales volume, absenteeism and
the nature of the past selling job. The typical procedure is to check the
references by personal visit, telephone or letter.
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?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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.
11.10 KEY WORDS
Patterned interview : Also called guided interview, this method

employs a list of prepared questions that the
interviewer asks in order to obtain the
required information.
Unstructured interview : Also called a non-directed interview, this

method has no set format or plan. It
involves a relaxed discussion in which the
interviewee is encouraged to talk.
Semi-structured interview : Also called an outline interview, this

interview format combines the
characteristics of both structured and
unstructured interviews.
Stress interviewing : An interview technique in which
stress is placed on an applicant
through interruption, criticism or
silence.
Rating scales : A widely used sales evaluation method that

uses specific desired traits, behaviour
factors or performance criteria.
Psychological testing : Tests designed a measure a person's

behaviour and to attempt to predict
employment success.
Test validity : The authenticity of the test as a measure of

behaviour.
202
Job Analysis,
Test reliability : The quality of the test related to Recruitment and
consistency of test results. Selection
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?
2. “Careful selection is important, but not essential, in building an effective

sales force. Improper selection of sales people can be overcome by a good
training programme, sound supervision and an excellent compensation
programme.” Do you agree? Discuss.
3. When selecting salesmen many companies have adopted a policy of hiring

only experienced salesmen and preferably men who have had experience of
selling similar or directly competitive products. What are the merits or
demerits of such a system?
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:
a) Manufacturer of paper and paper products

b) Manufacturer of office furniture and equipment
c) Manufacturer of breakfast cereal
11.12 ANSWERS
1. The ideal place for recruitment of Medical Representative is a pharmacy

institution offering courses in pharmacy and institutions offering degree
course in science with biological sciences.
2. The informations like, age, education, health, selling aptitude, travelling
and convincing abilities are required for a trained M.R. in the short-
application form.
3. The structural interview has a set of questions which are asked to all the
candidates. The answers are evaluated and scores are compared. In this
method uniformity in judging the ability is maintained. The biasness factors
are mostly eliminated. However certain skills are not discovered by this
process. 203
Sales Management 4. The psychological test is designed to measure more accurately, the various
aspects of a person’s behaviour, such as intelligence, achievements,
interest, attitude, personality traits etc. It require special personnel with
special skills to administer this test.
5. The M.R. should be physically strong enough to undertake extensive
travelling and visiting doctors, chemists and whole sellers. Height and body
weight should be proportionate with pleasing personality and free from
diseases.
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
12.14 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
• understand the importance of training for the sales personnel;

• learn the training process;
• identify the areas in which training for the field sales personnel can be of
use; and
• understand how to conduct each step of training.
12.2 LOGIC OF TRAINING
It must be clearly understand that a training programme is just a small portion

of the total learning experience of any participant. Before any participant
attends a training programme, the trainer must identify specific area of
knowledge, skills, or attitude in the participant that needs to be improved. (A
detailed account on these points is given in 10.5). After the training
programme, it is expected that the participants have gained the required
knowledge, skills or attitudinal change.
Before the Training Training After the Training Total Value

of Training
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.
12.3 TRAINING PROCESS
Training can be defined as learning to change the performance of people,

206 doing certain tasks. From this definition we observe that training revolves
around helping people to learn so as to improve their performance. The Training the Sales
training process can be broken down into four major steps, for easy Force
understanding. These steps are, identifying training need, designing the
programme, conducting the programme, training follow up. Apart from the
above distinctive steps, a trainer must have knowledge about adult learning
styles, so that the programme can be tailored as per requirements.
Diagrammatically, the training process can be represented in the following
manner:
Identifying Performance
Opportunity or Problem
Identifying
Training Needs
What Knowledge and

Skills are Required
Developing Training
Resources
Assembling Training
Materials
Conducting the Programme
Reviewing the Feedback
12.4 AREAS OF SALES TRAINING

The purpose of a sales training programme is to impart training in the following
broad areas mentioned below:
• Company’s knowledge – nature of industry to which the organisation is
related. The organisational place in its industry and industrial practices
• Product knowledge and applications
• Sales techniques – the selling process, negotiation skills, sales presentation,
handling complaints, post sales follow-ups, etc.
• Reporting systems. 207
Sales Management Depending upon the contents of training programme the training methods or
technique are selected. These methods are discussed under item 9.8, in this unit.
12.5 PROCESS OF IDENTIFYING TRAINING NEEDS
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:
JOB DESCRIPTION/TASK / KNOWLEDGE SKILLS / ATTITUDES

ANALYSIS
Job description: Keep technically and commercially up-to-date
Task Knowledge Skills Attitudes
a) Read Journals What knowledge Ability to: self Training is not

and skills are train, learn, a class room
b) Attend relevant needed as defined interpret and operation.
meeting and by the job and the apply, Good training
events company. information and is self-inspired,
c) Assess own use initiative. continuous and
training needs accumulative
with manager
on a continuous
basis
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?
Job description: Sales planning
a) Identify Number of unit sizes Ability to select Time, effort

target priorities, good and thought
Location
administration given to
Present planning make
Situation/usage the whole job
Future needs easier, more
enjoyable and
Finance more effective
b) Draw up Company activities Good An agreed

action communication plan of action
Competitor activities
plans with managers makes success
Distributor and distributors. more likely
involvement
Ability to set
Timing Management realistic
assistance available objectives in a
own time available reasonable time
scale.
c) Plan with Distributor coverage Motivation of Liaison is

distributors distributor essential for
Distributors
representatives success
representatives
Credit problems
Distributor needs
209
Sales Management Job description: Make effective sales contract

a) Plan Journeys Geography Ability to assess Time and
Market Days/events timing of effort saved,
individual calls makes work
Whether
Ability to plan easier,
appointments are
journeys enjoyable
needed
economically and effective
b) Plan calls Customer needs Ability to identify
products available customer needs
Distributor Communication
involvement with distributors
Customer attitude
c) Make Products and system How to open an Professional
effective sales knowledge interview selling is
presentations Economics How to create essential in a
interest competitive
Customer needs
How to present market
Selling techniques/
negotiation benefits
Sales benefit How to overcome
objections
Nature of objectives
Alternative methods Negotiation
of closing How to close
positively
d) Involve Own limitations of Communication A team
management authority with management works better
when Customer needs and distributors than a
necessary collection of
Price limitations
individual
Job description: Motivate and train distributors
a) Identify needs Priority ‘gaps’ to Distinguish Efficient

for each be filled between between profitable
distributor company needs knowledge, skills distribution is
and each individual needs, and attitudes and essential to
representative and customer’s establish priorities Co’s own
needs prosperity
Distinguish
between ‘lack of’
and ‘need for’
210
Training the Sales
b) Agree what Methods of training Liase with It is our
Force
should be other facilities management responsibility
done and by available ‘Sell’ training to to equip our
whom distributors and distributors
Other personnel
representatives with the
Own limitations knowledge
Setting of
Own skills and skills to
objectives
sell products
Planning and
and services
preparation
c) Carry out Methods: On-the- Applying the right Training is

training job Method not only a
Translating class room
Off the job
knowledge to suit operation.
Product knowledge audience Use of the
Sales knowledge techniques and right method
aids and careful
Use of training preparation is
techniques essential
Preparation of aids
Appropriate
location
d) Evaluation on Gap in the Interpret reasons

All good
a Continuous objectives set for gap training is
basis Objectives achieved Take appropriate continuous
and
steps i.e. change
objectives, change accumulative
training methods
and change
training contents
Job description: Investigate quality complaints

a) Investigate Character of Look at problems A quality
the situation customer objectively complaint is
Distributor involved Assess likely an
Representative causes tactfully opportunity
involved and accurately to build
Methods of: customer
Establish rapport
reporting, handling confidence
with the customer
and delivery and loyalty
Complaint factors
Product knowledge 211
Sales Management b) Report back In addition to above Accurate report The customer
to checks, place of writing should
Management origin Date of Accurate neither check
delivery and interpretation of nor gain if
manufacture facts, people and the complaint
Interpretation of circumstances is handled
situation Empathetic correctly
Recommendations presentation of
for action information
c) Conclude Laboratory report Selling skills in The customer
Complaint Interpretation of presenting should feel
satisfactorily report Character of information that his or
customer Relation Obtaining her
between loss and agreement complaint
views of Co. without haggling has been
Positive closing handled
fairly,
speedily and
sympathetica
lly
Job description: Provide after sales service
Task Knowledge Skills Attitude

a) Identify what is Priorities Ability to select
needed: Customer needs and prioritise
i) For personal Customer attitude Ability to
action Distributor delegate
ii) For Distributor coverage
action Representative’s
iii) For individual abilities
customers
b) Keep personal As Above Tactful
involvement to a delegation to
minimum distributor
representatives
Training of
representatives
c) Provide first class Technical Ability to Service is a
personal services Knowledge provide service tool to be
where necessary Product effectively used in
knowledge gaining and
Management of Use service as a maintaining
finance and sales aid business not
economics an end in
itself
212
Job description: Support promotional activities and participate in Training the Sales
meetings/demonstrations Force
Task Knowledge Skills Attitude

a) Apply Company plans Selling of Use Distributors
promotional Area plans promotion to: and Distributors’
Plans in own District Plans distributors Representatives
district distributor to Sell
Distributor needs
representatives
Consumer needs
b) Take part in Suitable venues Public We are
meetings and Meeting speaking professional
demonstrations organisations Discussion
Press coverage leading
Products/systems Chairmanship
Company policy Report writing
Job description: Internal communication

Report competitor Competitors Accurate Effective action
activities to representatives Report writing depends on
management Competitors Objective accurate and
customers interpretation balanced
reportage
Suitable speakers Competitors Communicatio
products and n with third
policies parties
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.
Fifthly, define what additional training needs arise as a result of changes

external to the salesman's past achievements and standards. This necessitates
checking on a systematic and continuous basis the directions and future plans
for the company's marketing planning, sales planning and recruitment
functions. For example; a decision to add a couple of products to the existing
product line could involve every salesman in revising his method of working,
route planning and scheduling, thus giving rise to a new training need in the
field. It is therefore, necessary to relate the company's future plans to its current
sales force needs.
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
What is training need?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
12.6 METHOD OF IDENTIFYING TRAINING NEED
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:
12.6.1 Self Observation
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.
Disadvantages: The major disadvantage of this technique is that the

salesperson may not act normally when someone is with him as he feels
scrutinized. Also you may not observe all the attributes due to infrequency of
occurrence of some attributes. Another disadvantage of this technique is that
sometimes it is difficult to record the observation data.
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
12.6.3 Surveys and Questionnaires
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.
Disadvantages: If the questions are not framed in a simple language, the

respondents may not understand the questions. Secondly, only those people
who are interested, will generally send their reply to a survey.
12.6.4 Face-to-Face Interviews

A face to face interview is the process of meeting a salesperson individually to
discuss issues that concerns him the most.
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.
12.6.5 Focus Groups
In a focus group, 10-15 salespersons meet to discuss a topic and exchange

views, attitudes to give suggestions. Such discussions are useful when
handling an undefined issue.
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.
Disadvantages: A focus group has to be followed by other hypes of surveys

for getting specific information. A focus group is time consuming and in such
studies it is difficult to quantify results.
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.
Activist: An activist involves himself fully and without bias in new

experiences. He is open minded, riot skeptical and is enthusiastic about
anything new. He is happy to take problems by brainstorming. Thus, if you are
designing a programme for an activist, be sure to include situations of his
participation's like, games, simulation exercises, etc.
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.
Theorist: He integrates observations into complex but logically sound theories.

He thinks problems through in a step by step way. He likes to analyze and
synthesize. He tends to be detached, analytical and dedicated to rational
objectives rather than anything subjective or ambiguous. His approach to
problems is consistently logical.
Pragmatists: He is keen on trying out ideas, theories and techniques to see if

they work in practice. He is the sort of person who will return from training
brimming with new ideas that he wants to try out in practice.
12.8 DESIGNING AND CONDUCTING THE

PROGRAMME
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.
12.8.1 Self Learning Modules
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
12.8.2 Class Room Training

Each training programme needs to be individually planned based on the pre-
decided objectives decided for the programme. However the following are the
important areas that can be covered in a typical sales related programme:
• Company knowledge – history and future plans
• Product information – It is very important in case of a pharmaceutical

product. The etiology of the disease against which the product will be used
is also needed in detail.
• Marketing strategies for various products
• Learning the features, advantages, benefits of products
• How to obtain interview with prospective customers/physician
o The sales presentation

o Different ways of finding customer's needs
o Answering objections
o Closing the sales presentation
o Planning geographical territory and planning each day
o Time management
o Administrative responsibilities
o Communication abilities
o Writing reports
The objective of a class room based refresher course is to reinforce some

aspects in the salesmen which they are likely to forget and also to add new
knowledge and skills to the salesmen. Thus, as the name suggests a refresher
and development course must refresh the memory and develop the true
potential of the salesmen. To truly meet its objective, a refresher course must
be based on factual information. Thus complete information on salesmen's
behaviour, weaknesses and general morale must be available before designing
any refresher course. The information can either be obtained through a
questionnaire sent to participants or through personal interviews, or any other
methods, as discussed under 9.6. Some of the questions that need to be
answered for running an effective refresher course are:
Planning Does a salesman prepare and work his plan

Does he keep up to date records
Does he call regularly on his customers
Appearance Is his appearance professional

Does he keep his presentation material neat and clean
217
Sales Management Attitude Does he have a positive or a negative attitude
How is his response to official communication
How much is he influenced by outside
influences
Selling Skills How good is his product knowledge
How updated are his selling skills
Does he have knowledge of any special techniques
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.
12.8.3 On the Job Training

One of the very important ways of teaching new skills to sales people is through
on the job field training. The important advantage of this method offers is that
the skills are demonstrated to the salesmen in the real life situation and thus the
impact on the salesmen is expected to be much stronger. Also the individual
salesman's needs can be identified and attended to. In on-the-job or field
training, the trainer can either make a sales call himself which the salesman
observes and learns. In the other method of on-the-job training the trainer gives
feedback to the salesman after observing him during his sales call. The
salesman, thereafter, practices the recommendations in the future calls.
SAQ 2
What are the different modules of training and which are you suggest to train a
newly recruited M.R.?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
12.9 TRAINER’S ABILITIES
A successful trainer needs to posses various skills to do a good job of training.

Some of the basic things without which a trainer cannot be successful are,
218
thorough job knowledge and an ability to relate to the actual situations the Training the Sales
salesman experiences. The other main abilities which a trainer must posses are: Force
12.9.1 Analytical Ability
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.
12.9.2 Basic Educational Abilities
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.
12.9.3 Training Techniques
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.
12.9.4 Ensuring Participants’ Participation
To ensure effective learning, the training session must be interactive where

participants freely participate. Some of the methods employed for ensuring
trainee participation are:
• 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.
12.9.5 Course Organization
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
In order to meet the sales and marketing objectives successfully, it is necessary

for each organisation to train their sales personnel, as objectively as possible.
The training activities should be tailored to the specific needs of the sales
personnel and the typical market situations they face. Therefore, it becomes
mandatory to identify the training needs. Once the training needs have been
identified, then commences the process of executing the training programme.
Activities, such as identification of teaching material, appropriate trainer and
training methods, all should be decided, as carefully as possible. Lastly, one
should learn from one’s experience and therefore, evaluation and review of a
training programme is also an important and integral component of any
training activity.
12.12 KEY WORDS
Training : Training can be defined as learning to

change the performance of people doing
certain tasks. Training revolves around
helping people to learn so as to improve
their performance.
Training needs : 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.
Self learner module : The participants are given the course

material which they are required to study
themselves. Written notes can be sent, and
if needed audio and video cassettes can also
be used.
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.
1. How an applicant, before accepting a job, could appraise himself quality of

training that will be provided to him?
2. Why is sales training a continual managerial activity?
3. Why is product knowledge also considered to be a sales related training

need?
4. Why do sales trainers rely so much on role-play in teaching sales

techniques? Discuss its advantages over other training methods?
12.14 ANSWERS
1. Training need is the process where the desired level of competence is

compared with the existing actual level of competence. This gap in
competence level is filled up by training.
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
13.12 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)
As mentioned above, the direct compensation package for a salesman is more

or less the same in all companies. However, as you must have also seen in your
experience, a company employing a technical person as salesman for selling,
say, industrial or electronic products may offer a high basic salary. Sometimes,
when the product is in the introductory stage the function of the salesman is to
create new markets and make doctor understand how to use the product as in
the case of a new antibiotics or new molecule. The basic salary of the salesman
may be on the higher side.
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.?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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:
i) salary plus commission on sales above a certain amount;

ii) salary plus a share in profits.
i) Salary plus commission on sales above a certain amount
Herein, the salesman receives direct salary and a commission in addition to

it. Every salesman is assigned a fixed quota, territory wise/customer-wise
to be achieved in a fixed period of time. The commission is awarded on
achievement of the targeted quota. Again, a fixed percentage of sales
achieved over and above the target is also set. This type of compensation
scheme ensures a direct salary as well as an in-built motivation system
through incentives.
This method for compensation with an in-built incentive scheme is adopted

by most consumer non-durable as well as consumer durable companies.
Certain industrial product companies and financial service companies,
insurance companies, also are increasingly adopting this method. In case of
pharma product the M.R. received an incentive on each unit of medicine
sold.
ii) Salary plus share in profits
This is not a very prevalent method. It is generally suggested for a company

selling high value items with high profit margins. The incentive here is
based on profits earned. Herein, the selling expenses to sell a product may
also be large and this is incorporated in the profit sharing scheme as it acts
as a control mechanism. Also salespeople working to obtain contracts are
generally given a share in profits rather than awarded on direct sales.
SAQ 3
What is the type of compensation the M.R. selling -2-3 formulations and
tablets will get from a pharma company?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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.
Most companies offer training programmes for their salesmen. On an average a

salesman has to undergo a training course every one or two years. These
programmes enable interaction between salesmen of different territories as well
as provide them with latest developments in the field. These training
programmes are viewed as an indirect benefit by the salesmen. They may be
held in the company premises or preferably at an outdoor locale. They break
the monotony of the salesman’s job as well as make him feel a part of the
company team. A sense of belonging is cultivated which also motivates him.
Certain companies with foreign holding companies may also send their
salesmen for training abroad providing them with good opportunities to learn
about their field.
In addition to the training programmes the award ceremonies for outstanding

achievements in sales are held in exotic locales like hill stations or five-star
hotels. The awards are presented through foreign dignitaries or important
people in the field, thus providing the salesman with the much needed
recognition.
13.4 FACTORS INFLUECING DESIGN OF

COMPENSATION SCHEMES
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:
i) The Relation with Product Life Cycle
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.
In the growth stage, the motivation of the salesforce has to be sustained to

226 exploit all the opportunities available in the market. They have to approach
the market with renewed vigour. At this point indirect compensation Compensation and
schemes which are incentive linked play in important role. Incentives Motivation of
linked with achieving targeted quotas; giving adequate feedback on market Sales Forces
and competitor activities will keep the salesforce happy and at the same
time help the product in its growth.
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.
Fig.13.1: Compensation during stages of product life cycle

227
Sales Management ii) Compensation Related with Demographic Characteristics
You might be slightly surprised to know that in practical situation the

compensation package preferred by the salespeople depends upon their
demographic characteristics also. Their age and size of family or the
number of dependents play an important part in the preference for a basic
salary and / or incentives. However, this cannot be generalised and depends
largely on the individual. The table below classifies the preference
according to demographic data.
Salesman Preferred job Preferred compensation

style
Age Family Size
20-28 Bachelor High risk Straight Commission
High reward or Incentive
Aggressive
Company
28-35 Married with Established Intensive plan

one-two young Company Basic + Incentive
children preferably with higher
stability
basic component
35 & Married with Stability and Preferably straight salary

above growing up steady job basis
children
Source: Marketing in India by S. Neelamegham.
iii) Role of selling in Marketing strategy of the company
iv) Competitor’s practices.

SAQ 4
A multi-product pharmaceutical company is introducing a new product in a
new market. Its existing salesforce is managing the existing products which are
in various stages of the PLC. What are the alternatives available to the
company with respect to the salesforce for the new product? Given the
salesforce what are the compensation scheme alternatives available? In the
light of the factors discussed above, list all possible alternatives.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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:
i) The budget set for the compensation of salesforce;

ii) A proper study of job requirements is the second step followed by a concise
job description;
iii) Defining the organisational hierarchy of the salesforce the role and
functions of each responsible person in the structure;
iv) The current trend in the competitors selling similar products in the similar
markets;
v) The company’s policy of motivating salespeople whether through an in-
built incentive system or through provision of indirect benefits like
entertainment allowance / liberal travelling allowances, other out of pocket
expense reimbursements;
vi) Formal and compulsory training programmes for all sales personnel to
make them feel a part of the company as well as to develop their skills and
provide them with the necessary break from the monotony of daily routine
sales reports;
vii) Human resource development programmes to create a feeling of attachment
towards the task at hand and imbibe the culture of the organisation.
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.
13.6 MOTIVATION OF SALESFORCE
Motivation is generally regarded as the process of getting people to work

towards the achievement of an objective. Ideally it should go beyond the
achievement of company objectives, plans forecasts or targets and help the
company win commitment of salesforce to the company.
Salesforce is primarily responsible for achieving the sales targets and as

already mentioned the salesforce can not be controlled, administered in the way
factory workers or office staff can be monitored. The salesforce is required to
be self starters, highly ambitious, result oriented and go-getters. All the sales
situations cannot be predicted and pre-planned in view of the dynamics of the
market place.
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.
All these peculiar conditions, therefore, require an understanding of the

motivational needs of salesperson by the management.
13.7 MOTIVATION AND NEEDS
While studying motivational theory, behaviour research studies have revealed

that motivation can be created if needs can be studied, evaluated and predicted
and fulfilled. We know that various types of needs arise out of ambitions /
dreams and all needs create tensions leading to that extra bit of effort and
activity which help fulfil these needs and achieve the goals. Hence to study the
motivational pattern of salespersons / sales executive we need to study the
process of creating ambitions, leading to arousal of needs and hence to that
extra activity.
Ambitions, Needs & Tension

dreams Wants
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.
13.8 SALESPERSON AND MOTIVATIONAL TECHNIQUE
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.
The non-financial incentives, thus, become an important component of the

motivation mix of a company. These are especially relevant as Dawson has
pointed, “business is on the threshold of a new era of human and social
concern, which will inevitably result in greater attention to total human
resource development by sales management.”
Two Surveys
A study was conducted to analyse the factors which motivate salesperson

employed in the pharmaceutical industry in India and to examine the extent to
which they perceive their need fulfilment on their job. More specifically its
objectives were to find out:
a) The kind of needs of salesmen which according to them must be fulfilled as

per their jobs and relative importance.
b) Salesmen’s perception of their need fulfilment, and deficiency.
c) How the level of motivation of the salesforce could be improved. 231
Sales Management The study is based on a sample of salesmen taken from 30 pharmaceutical
companies registered with DGTD, India. In order to measure the extent of
motivation, a list of need factors that a salesman was expected to satisfy
through his job were selected. The results of the investigation are summarised
in the tables given below:
Table 13.1: Average scores for the motivational perceptions of the

salesmen
(Sample Size = 116)
S. Need factors Medium score for the Importance of

No. the needs
Need Need Need Average Rank
fulfilment expectation deficiency
1. Job Security 5 7 2 2.98 1
2. Financial Earning 4 7 2 3.45 2
3. Relations with
6 7 1 8.51 10
Fellow Salesmen
4. Confidence of
6 7 1 6.49 7
Supervisors
5. Prestige of
Salesmen’s 6 7 1 7.31 8
Position
6. Recognition for
5 7 2 4.0 3
Good Work
7. Control over
Means of 4 7 2 7.74 9
Accomplishment
8. Supporting Help
5 6 1 9.31 11
from Superiors
9. Feeling of Self-
4 7 3 5.77 6
esteem
10. Prospects for
3 6 3 4.88 4
Promotion
11. Opportunities for
Personal Growth 5 7 3 5.20 5
and Development
Average Across All
5 7 2
Needs
Source: Marketing in India: Cases and Readings by S. Neelamegham
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)
S. Need factors The level of need Need Importance

No. fulfilment satisfaction of the needs
1. Job Security Medium Medium High
2. Financial Earning Medium Medium High
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
10. Prospects for

Low Low High
Promotion
11. Opportunities for

Personal Growth Medium Low Medium
and Development
Source: Marketing in India: Cases and Readings by S. Neelamegham
Institute of Marketing (PA Consultant, 1979) conducted a study into the

salesforce motivational practice by asking the sales managers to rank eight
factors excluding financial benefits (i.e. salary, bonus, commission) which
could be effective in motivating their salesforce to improve upon their usual
performance.
233
Sales Management 1) Individual meetings
with supervisor to discuss
career, job problem etc.
2) Regular accompaniment
in the field by the sales manager
3) Merit promotion system rather

than “dead man’s shoes”.
4) Participation in setting
sales targets.
5) Salesforce meetings/convention.
6) Sales contest/competition.
7) Bigger car for higher

sales turnover.
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.
Some of the unconventional factors that make a special mark on salesforce

motivation are discussed below:
1) Meetings between Manager and Salesforce
These are highly regarded by sales managers in the motivation of their sales
teams.
This provides an opportunity to managers to meet their salesforce in the

field, at head office and at the sales meetings/conventions. This further
provides a number of opportunities for improving motivation.
These meetings allow the sales manager to understand the personality,

needs and problems of each salesperson. The manager can then better
understand the causes of demotivation/frustration in individual salesperson
and respond in a manner which takes into account the needs, problems and
personality of the salesperson. Sales techniques can be improved and
confidence boosted. According to Likert, when the sales manager
encourages an “open” style of management, salesmen are encouraged to
234 discuss their problems and opportunities so that the entire sales team
benefits from the experience of each salesman. This results to a greater Compensation and
sense of group loyalty and improved performance. The process of the Motivation of
marketing team can be easily attributed to the open door policy adopted by Sales Forces
companies in India. As one manager put it, “I know all my team of 166
sales representatives personally, by name and make it a point to keep in
touch with all of them. They can walk in any time with their problems and
they have got the confidence that most of their problems will be handled to
their satisfaction.”
2) Clarity of Job
Clarity of job and what is expected from the salesperson is a great

motivator. The objectives when duly quantified and well defined, properly
connected and linked with the reward and recognition, serve as source of
motivation to the salesperson.
3) Sales Targets or Quotas
If a sales target or quota is to be effective in motivating a salesperson, it

must be regarded as fair and attainable and yet offer a challenge to him or
her. Because the salesperson should regard the quota as fair, it is usually
sensible to allow him or her to participate in the setting of the quota.
However, the establishment of the quotas is ultimately the sales manager’s
responsibility and he or she will inevitably be constrained by overall
company objectives. If sales are planned to increase by 10 per cent, then
salesmen’s quotas must be altered in a manner consistent with this
objective. Variations around this average figure will arise through the sales
managers knowledge of individual salesperson and changes in commercial
activity within each territory; for example, the liquidation of a key
customer in a territory may be reflected in a reduced quote. Quotas can be
set on Rupees sales, unit volume margin, selling effort or activity and
product type. The attainment of a sales target or quota usually results in
some form of financial benefit to the salesperson.
4) Sales Contests
The sales contest is an important tool to motivate salesperson. The purpose

of the sales contest varies widely. It may encourage a higher level of sales
in general, to increase the sales of a slow-moving product or to reward the
generation of new customers. It provides an incentive to show better
performance and secure more satisfactory results. However, sales contests
have a few disadvantages too, one such disadvantage is that it can
encourage cheating. For example, in one company which used a sales
contest to promote sales at a series of promotional events around country
with its dealers, salespersons “stored up” orders achieved prior to the
events in order to increase the apparent number of orders taken at the
events. Also, contests, by pitching salesperson against salesperson, go
against the spirit of mutual help and cooperation which can improve
salesforce performance.
235
Sales Management 5) Sales Conventions and Conferences
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 positive affect method is also an important technique for motivating

the salesforce to their best.
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.
7) Leadership Style of the Manager
Leadership style of the manager plays an important role in motivating the

salespersons. Inspirational leadership, which refers to influence through
referent power, identification or charismatic charm is an important tool in
the motivational strategy of the management. It infuses the images and
expectations for extremes of effort, sacrifice, achievement and in general
“the right stuff”. It is practiced through the use of professional speakers
special audio tapes and video tapes designed to arouse and stimulate
salespersons. It also tries to create and perpetuate certain corporate myths
and success stories, which indirectly motivates salespersons to perform at
their best.
8) Freedom to Work
In order to perform the onerous duties and responsibilities, the salespersons

must be given a reasonable amount of freedom and discretion in
performing their job. Likert in his studies has mentioned that lack of
enough discretion has a negative impact on employees job satisfaction.
Discretion and freedom may be accomplished by allowing salespersons to
develop their own call patterns, more control over the types of promotional
packages that are offered to their customers, etc.
Freedom or autonomy satisfies the psychological needs and is like power

pay (which is a reward), making the job of salesperson more important in
the organisation.
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
Now we come to the financial aspects of the motivational technique.
Financial incentives are definitely a motivating factor, but it varies at the

hierarchical level of the salesperson. The need is great at lower end of the
salesperson. It not only keeps the salesperson on the company rolls but also
motivates them to contribute to the growth of the company and thereby get
grown individually. It is also important managerial tool to control and direct
the salesforce to attain the sales objectives.
A poorly developed or administered financial plan may invite unions to
organise salesforce as happened in some of the pharmaceutical companies in
India.
Therefore in the management and motivation of salesforce, a fairly reasonable

financial incentive plan plays a very important role and “a salesforce cannot be
considered soundly managed unless there is a well developed and well
administered compensation plan.” We shall not concentrate more on the
financial aspects of the motivational strategy because salient features of the
plan has already been discussed in MS-6, Block 6.
Activity 1
1. A chart of some basic motivational needs is drawn here. Make a team of
your friends or colleagues and attempt a rating on the scale to identify the
237
Sales Management stronger needs within each individual in the team. The rating scale 1-8
gives the weightage points in ascending order, 8 being the highest rating.
Motivational Need Audit
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.
Behavioural scientists have classified motivational needs. According to them

each individual is a different entity and hence to understand what would
motivate the salesperson, individually the nature, character and needs of
individual have to be understood. Within the available resources of the
organisation and the limitations, these have to be fulfilled to achieve the results
with high productivity. The sales manager / supervisor plays an important role
in motivating his salesforce as he interacts most with his salesforce and can
understand empathise closely with the salespersonnel. His role as a primary
source of understanding his team and motivating his team is of great
importance. In order to be a good motivator, he has to be a capable leader with
the leadership style suiting the particular environment and conditions.
13.10 KEY WORDS
Bonus : A payment made at the discretion of

management for a particular achievement.
Call Planning : A specific planning sequence with which
240 the sales representative defines the
objective of the call devices a selling Compensation and
strategy to achieve his objectives and Motivation of
makes the payments. Sales Forces
Combination plans : A compensation plan that uses salary,

commission and / or bonus.
Commission : A payment based on performance.
Financial incentives : Direct monetary payment such as salaries

and wages.
Fringe benefit : Indirect rewards such as paid vacations,

pension plans, medical reimbursement and
insurance payments.
Motivation : The how-to aspect of getting salespeople to

do their jobs well.
Non-financial incentives : Incentive techniques used for specific,

special efforts situation. Sales convention
and meetings, sales contests honours and
awards, special privileges and favourable
communication are the major forms of non-
financial incentives.
Varied commission plan : A compensation plan where higher

commissions are given for selling products
with high profitability and lower
commissions for products with smaller
profitability
1. Why is it necessary to have an adequate compensation package for the

company salesforce?
2. How does the compensation package differ between the companies selling
different types of products?
3. What are the basic components of a compensation package?
4. Describe your views on training programmes as an indirect incentive to

salesmen?
5. How do factors like PLC and demographic characteristics influence the

compensator scheme offered?
6. What are the factors affecting motivational needs of salesmen?
7. Comment upon the non-financial incentives given to salesmen?

241
Sales Management
13.12 ANSWERS
1. When the company is introducing a new molecule or drug in the market

and to have a strong penetration, the M.R. has to work hard and sincerely.
Hence high basic salary would motivate the M.R. Further, when there is a
situation where the company wants to attract a talented and hard working
M.R. from the competitor’s sales force, the basic has to be higher.
2. A medical representative covering 4 suburban areas of a city has the

headquarter in the same city will be paid the DA for in-station duty. The
outstation DA is not allowed. The travelling allowance by taxi or own
conveyance as per K.M. applicable is paid as reimbursement.
3. A medical representative selling 2-3 formulations and tablets of a

pharmaceutical company will ideally receive a compensation consisting of
a basic salary plus daily allowance as station and outstation and DA
outstation with boarding and lodging. Apart from it, travelling allowance
actually spent. Any further incentive based on the formulations marketed
will be a further motivational factor. This incentive may be fixed
formulation-wise.
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
14.14 Answers
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
• explain the need and purpose of monitoring systems;

• explain the monitoring systems used for sales personnel;
• describe the various types of information sought through sales reports;
• discuss the quantitative and qualitative criteria used for performance
appraisal; and
• evolve a composite measures for evaluating sales performance. 243
Sales Management
14.2 MONITORING: NEEDS AND 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 good monitoring system also helps the sales management in determining

what can be done to secure more and larger orders. The data furnished by the
sales reports is processed to gain insights in the type of direction and help that
can be given to field sales personnel.
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:
i) sales per salesman, per dealer, per product

ii) expense to salesman, ratio for each dealer and salesman
iii) calls per day
iv) order call ratio
v) average cost per call
vi) direct selling expenses
vii) profit contribution analysis
viii) number of accounts
ix) number of customer complaints / feedback.
The emphasis in monitoring is on gathering information on day-to-day activities

with respect to the chosen parameters and taking a timely stock of deviation
from expected performance. Monitoring therefore is a way of achieving day-to-
day control over the sales effort.
As mentioned earlier, two of the most common methods of monitoring sales

performance are through sales reports or through field visits by the field sales
managers.
The details required in sales reports vary from company to company. A

company with a decentralised large field sales organisation covering a wide
geographical area needs more detailed sales reports than a company using a
few salesmen covering a compact area. Generally, the greater the discretion the
salesmen have in planning and scheduling their own activities, greater the
details required in the sales report.
14.4 CONTENTS OF A SALES REPORT
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:
a) Progress report: This part of the report is meant to give information on

the progress or day-to-day work done by the salesman. It may be prepared
after each call, or commutatively for calls made during a specified period.
This component furnishes valuable data on company's position in different
territories and in respect of each account. Usually the progress report also
records information on specific class or customers, extent of competitive
activity, best time to call upon the competitor items which become
valuable input in future sales planning. 245
Sales Management b) Expense component: Since all salesmen are reimbursed for expenses
incurred or are given an expense account for which they have to account
for, most sales reports have on expense component. The objective of
incorporating this component is to keep a check on the nature and extent of
salesmen's expenses.
c) Work plan component: Usually for a week or a month in advance,

salesmen are expected to submit a work plan or call schedule: The work
plan may include details of prospective and present customers to be called
upon, routes to be taken, the non-selling activities to be performed etc. The
main aim is to help the salesperson in his planning and scheduling activities
and keep a track of his whereabouts. This component also helps the
management in process of control by allowing comparisons of salesman's
plans and accomplishments.
d) New business or potential business component: The report may require

the salesman to inform on accounts recently obtained or those who may
become sources of potential business. This component furnishes
information on the prospecting capabilities of salesperson.
e) Lost business component: As salesmen are required to sell under

competitive conditions, they may at times lose prospects to competitors.
This component of the report provides information on* the salesman's
ability to retain customers. It can also be utilised to develop pointers for
gaps in sales training changes in service and credit policy and product
improvements.
f) Complaint and adjustment component: This component is related to the

specific complaints that a customer or class of customers may have in
relation to the work of the salesman, the product or the company policy and
the adjustment if any made by the salesperson. The information generated is
useful in detection of needed product improvements, service improvements
and changes in merchandising practices.
SAQ 1
In marketing of pharmaceutical products, what are the parameters used in

monitoring system and what is the frequency of the report and what are the
contents?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
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.
A summary of the daily/weekly reports for all the branches is made on a

monthly basis to arrive at total sales for the month and to study its variance
from estimated sales. The budgets for the next month may be revised
accordingly. At times sales in a particular territory/area may be effected on
account of stock-outs; as a result, more stocks need to be sent.
Weekly Sales Report - Format
Weekly sales report for week ending …………..
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.
In addition to value, volume, productwise and areawise categorisation of sales

it is also important to study the volume of sales through different types of
outlets such as sales through wholesalers or direct to retailers - which are
further, classified into cooperatives; departmental stores etc. This has
implication on the distribution channel effectiveness and proper monitoring of
salesmen performance. A summary of monthly, quarterly and annual value
sales by areas can be presented in the following format:
Value of sales for period ending …………..
Product A Product B Product C Product D
Area Last This % Last This % Last This % Last This %
No. Qtr. Qtr. Change Qtr. Qtr. Change Qtr. Qtr. Change Qtr. Qtr. Change
Sales by customer type
No. of direct Product A Product B Product C Total

accounts
Wholesaler
Provision
Store
Chemists
Retailers
Independents
Total
Distribution of Accounts by Size

In this analysis, the total trade of different output types is divided as per the
248 account sizes. The number of outlets which fall into each size are ascertained.
This enables the management to decide whether the sales generated from the Monitoring and
smaller size accounts are commensurate with the cost of running them. The Performance
format of this form is given below: Evaluation
Area No……………………….. Year : ……………………..
Number of Accounts
Account Size Wholesalers Chemists Provision Retailers Total

Stores
Under Rs. 100 Rs.

No.
Rs. 100-Rs. 250 Rs.

No.
Rs. 250-Rs. 500 Rs.

No.
Rs. 500-Rs. 1000 Rs.

No.
Rs. 1000-Rs. 1500 Rs.

No.
Rs. 1500-Rs. 2500 Rs.

No.
Rs. 2500-Rs. 4000 Rs.

No.
The reports described above, in addition to supplying the regular information

on the different aspects of marketing, reveal certain additional information
also:
i) What are the main competitive brands? On what system of distribution do

they work - direct sales to retailers, through wholesalers only or both or
otherwise?
ii) How do services given by competitors compare with those given by the
company?
• Does any manufacturer supply goods on a “sales or return basis”?

• What are the credit terms offered?
• What are the discounts offered?
• Do the competitors give any specialised treatment to some traders?
• Are the in-shop displays supplied by the competitors regularly?
249
Sales Management • What is the frequency with which competitors call upon their
distributors as also the promptness in delivery? The above analysis
seeks to point out the factors which contribute to the competitor’s
success and the policy the company must employ to counteract it.
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
Write the use of sales report of a Medical Representative.

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
14.6 PERFORMANCE APPRAISAL EVALUATION
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.
Evaluating salesmen’s performance is a complex task not only because

salesmen are required to perform a variety of activities, but also because
different types of selling situations require different kind of selling skills,
250 which may not lend themselves to equitable comparisons.
In addition, salesmen differ in terms of selling acumen and personal qualities, Monitoring and
then territories differ and they are required to spend a large part of their time Performance
away from their immediate supervisor. A good monitoring system, as you have Evaluation
learnt in the preceding section, becomes a basis for developing an appraisal
system and for evaluating sales performance.
Performance evaluation consists of setting performance standards, both

quantitative and qualitative and then periodically comparing them with actual
sales performance to judge salesmen in terms of their contribution to the sales
objective. The concept of productivity is relevant here. A salesman is
considered to be productive only when the results achieved by him offset not
only the costs incurred by the company on his account, but also show some
contribution towards the corporate profit. Appraisal and performance
evaluation systems besides enabling the sales manager in judging the
contribution of his sales team and improving its efficiency have also been
found to be useful in:
a) Developing salesmanship as an interpersonal influence process.

b) Motivation of salesmen and supervisory leadership.
c) Identifying the need for continuous training and development of salesforce.
d) Improving selling aids like demonstration materials, working documents
etc.
e) Determining and restructuring salesmen's territories and work assignments.
f) Improving sales planning for example, planning call cycles routes and
visits, job preparation etc.
g) Introducing sound compensation and incentive systems supported by a
national evaluation system.
14.7 SALESMEN’S EVALUATION: SOME BASIC ISSUES
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:
a) The first issue relates to evaluation based on qualitative vis-à-vis

quantitative data. It is obvious that in any qualitative assessment, personal
bias and subjective value judgement may vitiate evaluation. On the other
hand evaluation based entirely on statistical data may not give entirely
valid results as certain important determinants of a salesman's effectiveness
(for example personal effectiveness of a salesman in handling consumer
relations problems) do not lend themselves to quantitative definition. In
addition selling skills are broadly determined by one's ability to impress,
influence or persuade prospects as well as an alternation between
aggressiveness and submissiveness depending upon the situation. It
therefore is evident that sales managers, based upon their own set of
251
Sales Management circumstances, would have to evolve a judicious mix of qualitative and
quantitative criteria on which to base the evaluation of their sales
personnel.
b) Another issue relates to the comparisons between salesmen on the basis of

the results of evaluation. Such comparisons can never be on a “man to man”
basis since a great deal of human element is involved and different
salesmen have to work under different geographical and environmental
conditions; and may handle different set of products or customers.
c) The third issue is related to the problem of determining standards of

performance. The whole evaluation exercise rests on the comparison of
actual sales performances against predetermined standards or norms. If
these norms or standards are not realistic, the whole exercise would become
self-defeating
d) Another issue worthy of consideration is the periodicity of evaluation.

Evaluation based on very short-term results may not be very correct as it
ignores the value of some criteria which are of long-term valve to the
company. A small example is the effectiveness of particular salesman in
cultivating good customer relations, which may give the company an added
acceptability when it introduces a new product. On the other hand,
evaluation based on very long-term results is not desirable because if the
results are unsatisfactory, it will have a great impact on the operating results
of the company for a longer period. Periodicity of evaluation has been
found to vary with the type of product sold, industry practice and
management’s outlook towards control. Yearly evaluations are a very
common practice though longer periods are also prevalent, especially in
case of capital goods and industrial goods companies.
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.
14.8 SETTING PERFORMANCE WITH NORMS
As noted earlier it is important to decide on a judicious mix of quantitative and

qualitative standard against which performance of salesmen can be realistically
compared. Standards must be reflective of the company’s analysis of its own
252
market situation vis-à-vis its competitors. As sales-effectiveness is a function Monitoring and
of both quantifiable and non-quantifiable criteria, let us discuss both, the Performance
quantitative and the qualitative standards that are used by companies. Some of Evaluation
these criteria have already been mentioned earlier as criteria for monitoring
sales performance. Though all companies use some quantitative standards, the
past tendency of using sales volume as the only yardstick of performance is no
longer prevalent. Sales managers today realise that it is possible to make
unprofitable sales, or to generate high present sales at the expense of future
sales. Each company today selects a combination of quantitative standards that
are best suited to its marketing situation. Some of the important quantitative
criteria are:
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.
This performance standard tends to be used more by industrial companies than

by consumer products companies.
Sales coverage effectiveness index: This measure evaluates the thoroughness

with which a salesperson covers and cultivates his territory. The index is
calculated by getting the ratio of the number of customers to the total prospects
in the assigned territory.
Call frequency ratio: This performance standard is calculated by dividing the

number of sales calls on a particular class of prospects by the total number of
prospects in that class. By defining different call frequency ratios for different
classes of customers, an effort is made to direct sales effort to accounts which
would lead to profitable sales. While defining call frequency ratio it must be
ensured that the interval between calls is proper. It should neither be so short
that only small orders are possible, nor so long that competitors take away, the
sale.
Calls per day: In case of consumer products, salesmen may be required to

contact large number of customers or prospects. Calls per day in such cases
become a criterion of judging whether a salesman is making too few or too
many calls a day. Establishing a norm regarding calls per day also helps the
salesmen in scheduling their activities on a day-to-day basis. Territorial
variations are taken into account and different call norms are individually set
for different territories.
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.
Multiple quantitative measures: In practice the companies rarely use a single

parameter to judge the effectiveness of its salesforce. A combination of factors,
weighted according to their relative importance in the organisational set-up, is
generally used to arrive at a composite measure. A simple example listed
below (and successfully in use in two companies) shows a multivariate
approach to evaluation. The author of this simple model suggests a list of
twenty factors, out of which a suitable number of variable which are relevant in
a given case may be chosen to evaluate salesman.
These variables are:
1. Market share-proportion of actual sales in quantity to the total sales of the

254 product in the market or the size of the market.
2. Sales quantity. Monitoring and
Performance
3. Sales value. Evaluation
4. Number of calls.
5. Number of orders.
6. Value of orders booked.
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.)
8. Gross margin or contribution and also PN ratio (contribution on sales).
9. Direct selling expenses.
10. Direct sales margin (contribution minus direct selling expenses).
11. Average inventory (average being calculated on the basis of opening and
closing inventory figures).
12. Average outstanding receivables.
13. Average credit enjoyed from suppliers.
14. Working capital locked up (item nos. 11 + 12-13).
15. Marketing R.O.I. – Direct sales margin (item no. 10) as a percentage on
working capital (item no. 14).
16. New product performance (comparison between actuals and earlier

projections).
17. Number of accounts obtained.
18. Number of accounts lost.
19. Number of customer, complaints.
20. Information about competitors’ plans and strategies.
The list is by no means exhaustive. It is neither practicable nor desirable to use

all of them together. Depending upon the needs of the organisation, a few of
these criteria might be chosen. Norms can then be established for each of these
criteria, and their respective weightage in the total evaluation score can also be
assigned. There are certain criteria (for example those listed in no. 19 and no.
20) for which norms cannot be easily established. Past experience of the
organisation could become a guideline in these cases.
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
Sl. Evaluation Weightage Norms Basis of Score:

No. criteria Maximum 12 for
each. (6 points for
achieving the
norm; + or - for
deviation as given
below)
1. Market share 30 25% + (-) 1 for increase
(decrease) by every
5% or part.
2. Value of orders 15 Rs. 10 lakhs - do - by every
Rs. 1 lakh or part.
3. Batting average 10 Rs. 25,000 - do - by every
Rs. 5,000 or part.
4. Sales value 10 Rs. 10 lakhs - do - by every
Rs. 1 lakh or part.
5. PN ratio 15 40% - do - by every 5%
or part.
6. Marketing R.O.I. 20 20% -do- -do-
Total 100
Source: Marketing Management: A Finance Emphasis by Dr. B.K. Chatterjee, Jaico Publishing
House, 1982.
Qualitative Performance Criteria
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.
Individual discretion of the sales executive has a major role to play in

qualitative evaluation. Written job descriptions become an input in deciding
what combination of qualitative criteria should be used to evaluate sales
personnel at different levels and in different kinds of sales jobs. The manner in
which these criteria are applied would depend upon the needs of management
in a specific organisation.
256
SAQ 3 Monitoring and
Performance
What are the criteria used to evaluate sales performance of a Medical Evaluation
Representative?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
14.9 COMPARING PERFORMANCE WITH NORMS
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.
Similarly, there may be varying results in respect of the same salesperson, on

quantitative and qualitative criteria. A salesman who does not quite meet his
quota may be making compensating qualitative contributions by developing
excellent dealer relationships, which have long-term implications. Again
executive judgement is called for to arrive at an overall assessment of
performance.
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
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
14.10 CASE STUDY: MONITORING AND PERFORMANCE

APPRAISAL OF MEDICAL REPRESENTATIVES
Background: The pharmaceutical industry is characterised by a number of

‘Me-too’ products manufactured by a number of different companies. The
success of any particular company depends upon the doctor prescribing the
product of that company. This, in turn, is largely dependent upon the selling
effort put in by the salesforce of the company. The medical representative
forms the nucleus of the salesforce. The function of a medical representative is
critical to the success of the company. At the same time, the company has to
spend a huge amount of its marketing budget on its medical representatives.
The monitoring and performance appraisal of the medical representatives
becomes all the more essential. In this context, we had visited Glindia Ltd., one
of the leading pharmaceutical companies today, and studied the system used by
them for monitoring and performance appraisal of its medical representatives.
The company: There exist two divisions (i) Food Product Division (FPD) and
(ii) Pharmaceutical Division (PD). The total number of products handled by the
salesforce is 110. The organisational structure of the salesforce is as follows:
While the FPD functions like any ordinary consumer product marketing
salesforce dimension the pharmaceutical division has a different approach
Setting of budgets: The budgets are set quarterly. Regression analysis of the
past 4 years’ sales is used, with a weightage of 30% assigned to the previous
two years and 20% assigned to the earlier two years. The sales figures so
obtained are broken down into sales quotas for the medical representatives with
a range of ± 10%n used judgementally.
Monitoring of performance: The daily coverage of a medical representative
consists of making 10 doctor calls and 5 chemist calls a day. In these visits he
not only has to make them aware of the company's product and its benefits but
it also has to check stocks with chemists and observe competitors activity.
These findings are then sent in a daily report to the Area Sales Manager. A 45-
day cycle has been assigned to each representative. A summary report areawise
is presented to the branch manager after the completion of each cycle. The
branch manager presents a summarised report to the product manager to
develop the marketing strategy further accordingly.
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
The evaluation of Medical Representatives is done by the Area Sales Manager

concerned. A more or less objective evaluation is adopted with subjectivity
involved in certain parameters. The evaluation is done on an annual basis.
A total of 150 marks is assigned to each salesman. The weightage given to

different parameters is as under:
Primary sales 50 (sales to stockists)

Redistribution 30
Collection 20
Merchandising 15
Stock Rotation 10
Reporting 10
Market Servicing 5
Market Information 5
Film Checks 5
150
Subjective Judgement is exercised towards parameters like attitude towards

job; integrity, representatives development on the job; analytical ability,
initiative and adherence to company guidelines. 259
Sales Management Incentives offered: An achievement of 105% over budgeted targets entitled
the medical representative to certain incentives in the form of awards given by
the company. Each year the company felicitates 25-50% people for
achievement of targets. Certificates, medals and gifts are awarded at a grand
award function held in a hill resort in the presence of foreign dignitaries. This
gives the necessary encouragement to future medical representatives. In
addition, the company also holds training programmes for on-the-job training.
Each representative has to undergo a 2-week compulsory training at the
company’s training centre. In spite of these efforts the turnover rate of the
medical representatives is high and the company has to live with this industry
phenomenon.
SAQ 5
Critically evaluate the monitoring and performance appraisal system followed

by Glindia Ltd. State the criteria used for evaluation of the system?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
14.11 SUMMARY
In this unit we have discussed the importance of monitoring salesmen and

appraising their performance. Different parameters are used by different
companies depending upon their product-market portfolio. Sales reports
generated by salesmen give information on many decision-making areas for
the top management. Every company in accordance with its requirements sets
standards of performance for specific criteria and develop a reporting system
for comparing actual performance with the norms. Both qualitative and
quantitative criteria are used to arrive at proper evaluation of sales
performance.
14.12 KEY WORDS

Call Planning : A specific planning sequence with which
the sales representative defines the objective
of the call devices a selling strategy to
achieve his objectives and rakes the
260 payments.
Contribution Margin Monitoring and
per Salesman : The amount that a salesman contributes to Performance
the firm’s fixed cost and profits. Evaluation
Evaluation : A comparison of planned and actual results

identifying reasons for deviations.
Evaluation Frequency
or Periodicity : The timing of salesforce evaluation.
1. Describe the importance-of monitoring and performance appraisal of

salesforce.
2. Consider an industrial product company. What should the reporting

system of its salesforce be? State reasons for the same.
3. Mention some of the parameters used to monitor salesforce.
4. What are the different reports generated to monitor sales force? How are
they used?
14.14 ANSWERS
1. In case of monitoring the works of a Medical Representative, the best

parameter is the sales target. Apart from it the daily report of the M.R. and
feedback from the whole seller helps to monitor the M.R. The territorial
sales growth indicates the performance of the M.R. The medical
representative sends daily reports, weekly report and monthly report to the
marketing department. The report contents are the hospitals, nursing homes
and doctors visited. The chemist shops and w/s visited and the stocks
available product-wise and the orders placed by them. The complaints and
any marketing feedback/problem faced is also highlighted in the report.
2. The medical representatives report is feedback system for the marketing

department and very good source of information to take further decisions
on marketing. It provides the demand potential for the product. It provides
the information about the potential doctor. It informs if any market is lost
or any new prospective market. It also helps to monitor the M.R.
3. The performance of a Medical Representative is assessed by looking to the

sales target achieved. The number of physicians visited and the number of
chemists / whole sellers he has visited along with the amount of orders
placed adds to performance. The new customers identified by the M.R. and
the degree of expansion of the market with providing solutions to various
marketing problems are also the index of a good performance. 261
Sales Management
Albert H. Dunn and Eugene M. Johnson (1980) Managing Your Sales Team,
Englewood Cliffs, N.J. Prentice Hall.
Anderson, B. Robert (1981) Professional Sales Management, Prentice Hall,

Inc.
Dalrymple, J. Douglas (1982) Sales Management Concepts and Cases, John

Willey and Sons, Inc.
Joseph P. Guiltinan and Gordon W. (1982) Paul, Marketing Management

Strategies & Programmes, New York: McGraw Hill.
Philip Kotler (1988) Marketing Management, Analysis, Planning,

Implementation, and Control. Prentice Hall of India Pvt. Ltd.: New Delhi.
Richard R. Still, A.P. Govani, Edward W. Cundiff (1988). Sales Management,

Decisions Strategies and Cases, Prentice Hall of India Pvt. Ltd.: New
Delhi.
Robert F. Hartley (1979) Sales Management, Boston: Houghton Mifflin.
S. Neelamegham, Marketing in India, Cases and Readings, Vikas Publishing

House Pvt. Ltd.
Smith, F. Roger (1987) Sales Management A Practitioner's Guide, Prentice

Hall, Inc.
The following units of the Management Programme are recommended for

further readings.
MS-2, Unit 6.
MS-22, Block-1.
MS-23, Unit-12.
262
APPENDIX Monitoring and
Performance
Evaluation
MONITORING AND APPRAISAL FORMS
(A) Activity Monitoring
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
Product Group A Product Group B Product Group C Total Product Gr
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.
(C) Performance Appraisal of Salesmen (Composite Measures)
Date
Performance Weightage Specification Remarks Total

Rating
Above Par Under
Customer Relations
General
Prospects
Complaints
264
Performance Weightage Specification Remarks Total Monitoring and
Rating Performance
Evaluation
Above Par Under
Objections
Selling Skills
Approach
Presentation
Closing the sale
Product-
demonstration
Technical and
Product Knowledge
General
Industry
Product
Pricing
Benefits
Personal Planning
Reporting and
paperwork
Maintenance of
records
Catalogues
brochures
Planning of
time
Customer
records
Journey
planning
Personality
characteristics
Appearance
Manner
Health
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
15.16 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.
Interestingly, as more and more goods were produced, the differentiation

between the similar goods of different manufacturers started becoming more
and more difficult. Thus a need for the specialised job functions of advertising,
promotion, marketing research etc. was felt. Though initially all these functions
(now assigned to of marketing management) were assigned to sales
management, later on separate specialised functional departments for these
functions were created and grouped under the marketing manager rather than a
sales manager.
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:
• design the product-wise / brand-wise sales planning for a company;

• design an effective territory planning for the salesmen;
• plan the total expenses on effective coverage of your area; and
• exercise effective controls.
268
15.2 PRODUCT-WISE SALES PLANNING Sales Planning
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:
XYZ Pharmaceuticals Ltd.

Product-wise Sales Planning for the Financial Year 1998-99
S.No. Product Unit-wise A Value Per Total Sales

Sale Plan Unit (Rs.) Value (Rs.)
1. A 10,000 1,000 1,00,00,000
2. B 1,10,000 100 1,10,00,000
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.).
3. What products will they purchase?
4. Why do they buy such products or what are their needs to buy such
products.
5. How much quantities do they buy for a particular product.
6. How many times, in a year do they buy such products?
7. Under what conditions do they buy? Whether they buy on cash or credit.
8. What is the competition doing in these product markets or even what

the competition is expected to do?
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?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
270
15.3 TERRITORY MANAGEMENT MEANING Sales Planning
A sales territory represents a group of customer accounts, an industry, a market

or a specific geographical area. Some of the factors that influence sales volume
of a territory are territory size, its market potential, number of customer
accounts, firms experience and market share in of the sales effort the territory,
quality of sales person assigned and the frequency of sales calls made. One of
the important function of sales management is to set up sales territories with
optional profit potential. The major factors that govern the territory size are,
number of customers and prospects, call frequency on existing customers, and
the number of calls that sales person makes in a day.
15.4 WHY SALES TERRITORIES
First of all, let us discuss why sales territories are carved. Sales territories are
established for achieving some of the following goals.
Proper Market Coverage: Systemic mapping of sales territories facilitates

sales persons in effectively combing the territory, covering present as well as
potential customers. Proper understanding of the market potential helps in
establishing an ideal territory which represents a seasonable workload for the
sales person while assuring that all potential customers can be followed up as
desired.
Effective Deployment of Sales force: Proper knowledge of the demands of the

sales territory results in assignment of the right person for the territory. The
specificity in job description and responsibility definition paves the way for
parity in workload and potential among sales person. Therefore when
territories are distributed equitably to the sales persons fewer conflicts arise
from calling someone else’s customer and on workload carried out.
Efficient Customer Service: Well designed sales territories improve buyer

seller contacts and enable better customer orientation on the part of the sales
person. This results in regularity of customers call as provision of more
satisfying customer service.
Objective Evaluation of Sale Force: Comparison of the sales persons

performance to the potential of the assigned territory results in their adjective
evaluation. Territory by territory evaluation of the sales performance in turn,
helps spot market condition as well as to make needed adjustments in the
strategy.
Improving Selling and Marketing Productivity: A well designed sales
territories coordinates territory selling activities with other marketing function
of the company. Market planning on a territory basis can be used more
effectively and efficiently of the sales quota and developing profits plans.
Similarly sales and cost analyses can be done more easily on a territory basis
than for the entire market. It has been found that launching advertising 271
Sales Management campaigns, selling dealers on co-operative advertising, distribution point of
purchase display or launching sales promotion schemes, are generally more
satisfactory if the work is assigned and managed on a territory by territory
basis rather than for the market as a whole.
15.5 STEPS IN TERRITORY PLANNING
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:
15.5.1 Salesman’s Capacity
A proper analysis should be made as to how many customers / prospects can a

salesman meet in a day. The number of customers thus obtained should be
multiplied with the number of working days in a month, say 25 working days.
The resultant number should determine the territory. For example, a salesman
in a consumer product company is expected to call on 40 customers a day. This
number when multiplied by 25 (working days in a month) would give us a
figure of 1000. Thus, the salesman should be given a territory consisting of
1000 customers.
For a company in pharmaceutical industry the call average is 10 doctors /

customers per day, and for a sales man in industrial products the call average is
4 to 5. Their territories can be worked out, accordingly.
15.5.2 Frequency of Calls per Month
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.
15.5.3 Parity in Sales Potential
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 discuss it with the help of some illustrations so as to understand it with

clarity. Suppose there are three territories which have to be managed by the
sales manager. These territories are A, B and C. The sales potential of each
territory is Rs. 10,00,000/-, Rs. 8,00,000/- and Rs. 7,50,000/- respectively. The
sales manager has three salesmen too with their respective ability index of 1.0,
272
0.9, and 0.8 respectively. The sales manager will obviously assign territory A to Sales Planning
the first salesman, territory B to the second and territory C to the third
salesman. This will optimise the actual sales achieved and such a situation will
allow for realistic appraisal of all his salesmen also.
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
15.5.4 Minimize Travel Time and Expenses
The territory should be planned in such a manner where maximum amount of

salesman’s time is spent in interacting with the customers rather than in
travelling. This would automatically reduce the expenses also.
It will be worthwhile for us to discuss here various alternatives of shapes of a

territory which can be of use to optimise the travel time, expenses and results
(in terms of sales). There are three general shapes in use. These are the circle
shape, the clover leaf shape and the wedge shape.
The circle shape is appropriate for a territory where the concentration of

customers is more or less the same throughout the territory. The salesman is
based at a town which is near the centre of his complete territory. This shape 273
Sales Management ensures almost equal concentration of the salesmen to all his customers
because the time involved in travelling to any area of his territory will be the
same.
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.
15.5.5 Suitably Station the Salesman

The salesman should be based at a, place in his total territory, with the highest
concentration of customers.
274
Suppose a territory consists of towns A, B, C, D, E, F, G, H, I and J and most of Sales Planning
the customers are located in town F, then the headquarter of the salesman
should be town F only. Moreover, other towns should be well connected with
town F and distances should be minimum between the towns. This can be
graphically represented as follows:
The dimensions of circle represent the concentration of customers in each

town.)
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?
……………………………………………………………………………………
275
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
15.6 APPROACHES TO TERRITORY DESIGN
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. The market build up approach

2. Workload approach
The Market Build Up Approach: This approach estimates the present and
potential product/service demand by looking as how the market is build up, that
is, who are its present/potential users, and how much do they consume and at
what frequency. Unfortunately it is not so easy as it looks.
Its major use is industrial goods companies where complete listing of users is
feasible alongwith approximate consumption norms. Publications such as
annual survey of industries, trade directories, state, district and city-wise list of
manufacturing establishments etc. come very handy in this regard. Starting with
one user industry in an area and then adding up all the relevant industries in that
area one can estimate the potential for that area. Aggregating the estimates for
all the areas we arrive at on all India market potential for the product. To this
we apply the firms market share objective and arrive at its sales potential. This
sales potential when divided on territory basis constitutes the territory sales
potential and specifies the corresponding level of sales and marketing support
requirements for the territory.
For example, if for an ultrasound equipment manufacturer, the market potential

for all the areas sums to 3000 and for Maharashtra state 600, i.e., 20%m then
its might warrant the firm to invest 20% of its marketing and sales effort in
Maharashtra. Given the customer wise market potential and the classification of
customers into A, B, C etc categories, number and frequency of sales calls
required to tap the sales potential among customer are determined. This leads to
estimate of total sales call required per area, and number of sales persons
276
required. Sales territories are then formed in a manner that the sales potential Sales Planning
and workload for each territory is nearly equal.
The Workload Approach: W.J. Talley’s Workload approach of territory

design is based on creation of territories that are equivalent in terms of
workload performed by sales persons. The steps involved in the creation of
sales territories under this approach are:
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.
15.7 TERRITORY COVERAGE PLANNING
Territory coverage planning is nothing but a plan to systematically visit the

customers as defined in step 2 above (Territory Planning).
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).
15.8 SALES TERRITORY EXPENSE PLANNING
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.
Following illustration can be of use to understand the same in a better way.
S. Particulars Rate No. of Total

No. (Rs.) salesmen amount
(Rs.)
1. Salary (including P.F. L.T.A., E.S.1. etc. 4,000 10 40,000
2. Travelling Expenses 2,500 10 25,000
@ Rs. 100/- per day for 25 working days
/ month)
3. Fare (Approximate) 3,000 10 30,000
4. Bonus @10% of salary per year) 400 10 4,000
5. Administrative Expenses 500 10 5,000
Total 10,400 1,04,000 279

Sales Management Thus Rs. 1,04,000/- will be the approximate sales Territory Expanse
Planning for the Sales Manager for one month. For complete year, it will be
Rs. 1,04,000 × 13 = Rs. 13,48,000/-.
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.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
15.9 CONTROL SYSTEMS
What do we mean by control? Control is checking and evaluating the difference

between what was planned and what was actually done and achieved. A sales
manager has to analyse the qualitative as well as the quantitative data about his
salesmen to exercise effective controls the qualitative aspect of controls can be
exercise to gauge the salesmen's attitude towards his, customers, company and
to supervise his territory knowledge, the knowledge, about his customers, the
knowledge about his products, and competitors product knowledge, his
communication skills, his presentation skills, his leadership qualities etc.
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.
15.10 IMPROVING TERRITORY PRODUCTIVITY
For obtaining maximum productivity out of 2 sales territories, it is essential that

the sales force lay emphasis on its effective management, than on mere
coverage. In practice its means that sales territories be mapped and managed on
profit oriented basis taking into consideration, the following points:
• profit contribution made by different customers, clarity of approach to

account development, as well as to small/marginal customer.
• profit generators and detractors in the territory.
• allocation of sales, marketing and other resources based on territory's profit
contribution potential.
• effective utilization of sales force time.
The process of improving territory production, therefore, requires establishment

of a system of monitoring and review of the sales territory.
The system should focus on:
a) Sales territory performance in terms of its market potential, resources

deployed and required, and profit contribution potential.
b) Sales force itinerary planning, covering call planning, journey planning,
appointment scheduling, preparation and usage of sales aids and equipment
during sales calls, and post call planning.
c) Documentation of customer call records, daily activity reports, cost and time
on, various activities, market intelligence, etc.
d) Individual sales person’s productivity.
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 …………………...
II) Tick the most appropriate answer:
a) Ideally the optimum territorial arrangement is

achieved by establishing territories so that there is an equalising among
territories of:
i) Market potentials
ii) Sales potentials
iii) Sales person’s workload
iv) Selling expenditure
v) Incremental sales per selling rupee
b) The main reason for establishing sales territories is to:
i) secure optimum market coverage

ii) reduce selling expenses
iii) facilitate planning and control of selling operations
iv) improve sales force performance and morale
c) In deciding how many sale territories, a sales manager:
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
d) Among other things, revising territories to adjust for differences in

territory coverage on account of differences in workload involves:
i) estimating the time required for each sales call

ii) deciding call frequencies
iii) calculating the number of calls possible within a given time period
iv) determining the length of non-selling time between calls
282 v) all of the above
e) Profitable management of sales territories helps in matching selling Sales Planning
efforts with:
i) sales person’s assignments

ii) selling expenses
iii) marketing plans
iv) sales opportunities
15.11 SALES PROGRAMME PLANNING
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.
Primarily, this planning includes the activities like.
a) Putting up point of sales material like danglers, posters, stickers, billboards

etc. at retail counters.
b) Improving shop window display like arranging product packs attractively in

the glass windows at retail shops.
c) Conducting outside the shop promotion like distributing gifts to the

customers who purchase their product or distributing coupons for some
discounts or free goods to customers.
d) Conducting demonstrations like demonstrating the actual performance of a

product like a Juicer, Mixer Grinder, at a shopping complex.
e) Sampling programme like distributing free samples of the product ( a new

detergent) to some housewives in a colony.
f) Presentation on the performance and benefits verbally to a group of

potential customers.
15.12 PLANNING SALES MANAGER’S OWN ITINERARY
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
a) Why is he going there?

b) What is he going to do there?
c) What he will achieve?
d) What has been the performance of the salesman he is going to work with?
e) What are his developmental objectives for the salesman?
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
i) Customer definition and classification

ii) Product-wise emphasis – which products should receive high priority.
iii) Self-training in selling skills and product knowledge.
iv) Optimum usage of promotion material like posters, dangles, coupons etc.
v) New business activity.
vi) Objectivity in self tour plan.
15.13 SUMMARY
The function of Sales Management is a specialised function which involves

planning, direction and control of personal selling, including recruiting,
selecting, equipping, assigning, routing, supervising and motivating the sales
force. All this is primarily done to achieve the specific sales objectives, setting
which involves a comprehensive Sales Planning process. Various steps in this
process are 1) Product-wise Sales Planning 2) Territory Planning 3) Territory
coverage Planning 4) Sales Territory Expenses Planning 5) Control Systems
6) Sales Programme Planning 7) Planning Sales Manager’s Own Itinerary.
Product-wise Sales Planning consists of identifying the Market Potential, Sales

Potential and then the Sales Forecasts. The Sales forecasts are compiled after
though study of customers, their size and their buying behaviour. Territory
Planning is done by analysing each salesman's capacity to work, identifying
frequency of calls per month, building in parity in sales potential, minimising
284 travel time & expenses, and deciding on proper headquarters.
Territory Coverage Planning should be standardised and it should be made on a Sales Planning
sheet of paper where the contact point and address of the salesman should also
be indicated. Frequent review of this plan should also be made so as to
accommodate necessary changes of towns and customers.
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.
15.14 KEY WORDS
Sales territory : An area of responsibility for an individual

sales person to develop sales in it.
Sales territory design : The means of allocating customers or group

of customers as a basis for assignment to a
sales person to achieve sales objectives.
This is usually on a geographical, product
or market basis or on a combination of
these basis.
Sales plan : A determinant of personal selling strategy

reflecting a clear understanding of overall
company goals and market characteristics,
and incorporating techniques and
information which will allow for more
effective decisions in eliciting competitive
success.
Process of sales plan : It is in three stages. Firstly, prepare sales
forecasts and budgets on the basis of
identified firm's market. Its sales potential
by product line, geographic area or
customer type. Therefore, divide the market
into territories so that sales effort can be
allocated most effectively to current and
285
Sales Management potential customers. Finally, set quotas as a
means of guiding and motivating salesmen,
as well as a means of controlling and
evaluating their effort.
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?
2. What specific points you would consider while territory planning?

Explain each of them, briefly.
3. Critically examine the workload approach for designing sales

territories.
4. What measures can be taken to improve the territory productivity?

Explain by taking the samples of a) Jewellery watches and b)
Agricultural pesticides.
15.16 ANSWERS
Self Assessment Question
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.
3. However, with the growth in the number of doctors and / or increase in

frequency of visits to the same doctor, the Sales Manager may have to
select more salesmen / Medical Representatives and thus his Sales Territory
Expense Planning may undergo a change. The Sales Territory Expense
Planning may invite changes because of some more reasons. These are:
i) The Sales Manager may reduce the territory of a Medical

Representative to allow for more concentrated working. This will
reduce the expenses on travelling and the total Sales Territory Expense
Planning will be reduced. While doing this, let us remember that a sales
manager should not reduce the territory of a Medical Representative just
to reduce his expenses He / She should strike a balance between the
territory, its sales potential and the expenses.
286
ii) The sales Manager may have to discontinue some Medical Sales Planning
Representative because their sales performance in not upto the mark.
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
16.13 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
• explain the need for a sales organisation;

• describe the process of designing a sales organisation;
• differentiate between the basic types of sales organisation;
• explain the process of development of territories;
• describe the various kinds of specialisation in field sales force; and
• comment upon the role of sales executive in an organisation.
16.2 NEED FOR SALES ORGANISATION
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.
a) Defines lines of authority
Any sound sales organisation defines the relationships between people in

the organisation in terms of authority responsibility and accountability. It is
important to define and identify the flow of authority, indicate where
responsibility lies, specify who is to be held accountable and to whom. You
are already familiar with the concept of line and staff authority. The
organisation of the sales department should enable the sales personnel to
identify whether their authority is line, staff or functional.
b) Ensures that all necessary activities are assigned and performed
The process of organising presupposes identification of necessary activities

which have to be performed to achieve the sales objectives. As companies
grow, the tasks and performed within the organisation also multiply. One of
the basic purposes of the sales organisation is to ensure that all necessary
activities are specifically assigned to personnel, and that procedures are
devised to supervise the performance of all these activities.
c) Establishes lines of communication
In the earlier days, because of relative simplicity of the organisation

structure and the smaller size of the organisation in most cases, lines of
communication were synonymous with lines of authority. Today, with
growing complexity in business, access to much greater volume of
information; increasing emphasis on staff assistance, the lines of
communication may be more flexible and varied. The flow of information
may be both horizontal and vertical. The organisation structure becomes a
good aid in identifying the sources of information and recipients of data,
and may also tell as who is responsible for generation of information.
d) Provides for coordination and balance
By clearly delineating formal relation between different positions in the

sales department; the sales organisation reduces confusion about the
individuals role and responsibility. Since you will have to identify the types
of activities to be performed, group them together and make specific
290
persons responsible for the various jobs, while organising your sales Sales Organisation
department, you will be able to generate information that is basic to
function of coordination. The answers to the questions, who is responsible
for what and when, provide vital inputs in developing the coordination
programmes for sales effort.
e) Provides insight into avenues of advancement
The personnel in the sales department look at the organisational structures

as one of the indications of the direction in which their future careers may
grow. A good use of the organisation chart may be made by the
management, in communicating to the subordinates, the possible avenues
of advancement. As the organisation grows, or as the personnel become
more experienced in their present assignments, you may sometimes feel the
necessity of moving personnel horizontally or even giving lower level sales
employees a vertical jump in the organisation depending upon their merit.
The fact however remains that the organisation chart depicts the normal
promotion route to the subordinates.
f) Economises on executive time
As operations and activities in the sales department increase in number and

complexity, delegation of authority becomes imperative. A sound
organisation design allows effective use of specialisation so that executives
may spend less time in operations and more on planning. In growing
organisations, the need for effective coordination often results in limiting the
number of subordinates who report directly to a certain executive. This span
of control, however may vary widely over organisation depending upon the
management orientation towards delegation, superiors abilities of
coordination, qualities of the subordinates etc. Improvements in the
efficiency and reliability of communication systems also encourage wider
spans of control. One of the main purposes of all delegation is achieving
economies in the use of executive time.
SAQ 1
How you will organise sales of a pharmaceutical company dealing with
different class of drugs?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
291
Sales Management
16.3 DEVELOPING A SALES ORGANISATION
Sales organisations develop in response to market and company requirements.

Primary to the development of a sales organisation is the identification of the
expectations that the top management has in respect of the sales function and
the place, of the sales department in the total organisational structure. Figure 1
gives a step by step process of developing a sales organisation. The objectives
of the sales organisation need to be defied in the light of the corporate'
objectives and may be both quantitative and qualitative. The step that follows
is the identification of the necessary activities that need to be performed if
these quantitative and qualitative objectives are to be achieved. The analysis of
the type and volume of activities needed to be performed will lead you to an
assessment -of how many executive and operating positions would be required,
and how would these positions relate to each other. Though the general sales
activities to be performed may be similar in most companies, the relative
volume and the emphasis that a firm may put on a group of activities will
differ. A good key therefore would be to move backwards from-the objectives
statement and identify necessary activities.
Step 1
Step 2
Step 3
Step 4
Step 5
Define sales
organisation a) Define the
objectives by asking various activities a) Identify the
what does the that need to be positions to a) Define the
company want to performed to whom these relationship Check the
achieve in terms of achieve these activities may be between organisation structure
a) Growth/survival objectives assigned positions to ensure
b) Market share b) Define the b) Classify and b) Define the nature a) Provision for
c) Cost and expenses volume and cost group closely of authority in coordination and
d) Market leadership s of each of these related activities respect of each control
e) Customer relations activities and assign them position b) Provision for
to the same c) Assign personnel growth
position to positions c) Provision for
c) Decide on flexibility and
hierarchy of control
activities by
defining the level
at which each
activity will be
performed
Fig.16.1: Process of 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.
Sales organisations have to be responsive to changing market trends, growth in

both products and markets as well as to competitive requirements. While
designing a sales organisation therefore a key consideration is the provision of
flexibility, effective coordination procedures and defined lines of
communication.
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?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
293
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
16.4 CENTRALISATION VS. DECENTRALISATION IN

SALES ORGANISATION
One of the key decisions in sales management is related to the degree of

centralisation or decentralisation of the various sales functions. In centralised
systems recruitment, training compensation and evaluation are all managed
from the central headquarters; while in a decentralised system the field sales
managers take up most or all of these functions. In organisations involving the
use of a field sales force some decentralization would obviously result, though
the extent of it tends to vary across firms. The degree of centralisation or
decentralisation in sales organisation may depend on size of operation, costs,
effectiveness and competitive necessity.
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.
Managerial philosophy towards control and delegation is also an important

variable affecting the extent of decentralisation of activities in sales
organisation.
A recent development, which has affected the centralisation/decentralisation

choice is the increased use of computers to process and handle sales data. As
computers can process vast amounts of sales information at lower costs and
much more speedily, the trend towards computerisation has encouraged
centralised decision making.
16.5 BASIC TYPES OF ORGANISATIONAL STRUCTURE
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.
Vice President (Liquor)
Marketing Manager (South West) Marketing Manager (North East)
Regional (or Area) Sales Manager
Sales Executive Marketing Executive
Field Sales Officer
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.
Line organisation is extensively used in smaller firms or those dealing in a

narrow product line, or selling in a limited geographic area.
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.
Regional Manager Regional Manager
Regional Sales Manager (NE) Regional Sales Manager (South)
Sales Executive
Fig.16.3: Line and staff organisation
The organisation is headed by the Managing Director who has, reporting to

him line managers called Regional Managers and staff managers who look
after the staff functions of customer service and sales promotion. The
Customers Service Manager is basically in-charge of feeding in information
and facilitating procurement of international editions for the organisation. He
advises the line managers on the suitability of the various international editions
and keeps them informed about the developments in this field. The sales
promotion manager performs the advisory function with respect to the sales
296
promotion activities of the organisation and coordinates with the Regional Sales Organisation
Sales managers as to the promotional needs. The Regional managers are the
line executives who are accountable for the operating results in their territories
and control their own field staff of sales executives and salesmen.
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.
Line and staff organisation also sometimes generate problems of interpersonal

relations. The staff executives tend to overstep their advisory authority and try
to assume and sometimes succeed in assuming the authority to issue orders and
directions. This presents difficulties of dual subordination and may create
confusion. The fact that staff specialists do not share direct responsibility for
results is also resented by some line executives. Experience has shown that. to
a large extent these problems can be minimised if all areas in which line and
staff executives have to share authority and responsibility are specifically
written down as components of the job description.
The functional sales organisation is aimed at utilizing the benefits of

specialisation to its fullest extent. In the functional sales organisation, all sales
personnel receive direction from, and are accountable to different executives,
on different aspects of their work. Somewhat in contravention to the principle
of unity of command, the functional organisational structure gives all
executives, each a specialist in his own field, a direct authority to command
and issue orders to his functional authority therefore, simply means that at any
given time, a sales person could be under instruction from a number
(depending upon the functional specialisations set up) of executives. The top
sales executive has coordinating responsibilities in respect of the actions of
functional heads e(as shown in the following figure each sales person is under
direction of several executives) functional organisations have not been found to
be a very appropriate structure for sales organisation. In larger firms where the
Fig.16.4: Functional sales organisation 297

Sales Management size of the sales force is substantial, the degree of centralisation necessitated by
the functional organisational structure, renders the operation inefficient.
Smaller and medium sized firms on the other hand find the system expensive
because of the high degree of specialisation. Another weakness of the structure
is that burden of coordinating the activities of highly diverse specialists is
placed on a single individual. In case that individual is not capable enough in
this regard, the whole structure is likely to become cumbersome and
ineffective.
SAQ 3
Give the general structure of sales department of a pharmaceutical company

and supportive marketing personnel.
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
16.6 DEVELOPING TERRITORIES
Designing sales organisation is incomplete till territories are formally defined,

because a territory is a defined part of the company’s sales potential from
present accounts and prospective ones that can be specifically assigned to a
sales person. These accounts and prospects may be grouped to form territories
according to their geographic location, industry, product use, method of
buying, or channel of distribution. As a result of territorisation, organisations
can achieve better coverage because it permits better planning, proper coverage
of potential markets, efficient call patterns, better customer service, clearer
statement of responsibility and the opportunity to match representatives to
accounts. Some services, such as insurance, stocks and mutual funds are sold
on the basis of social and personal contacts and such firms prefer not to develop
sales territories.
The companies which opt for territorial development, design territories on the
basis of sales potential or sales representatives' workload. Though in practice
territories may be established arbitrarily by assigning each person a few states
or cities, most of the firms today develop their territories on rational bases to
maximise market coverage and sales returns. The steps followed in developing
territories are discussed below.
298
Determination of Basic Control Unit for Territorial Boundaries Sales Organisation
The first step in developing a territory is to select a geographical control unit to

serve as a territorial base. Commonly used units are states, countries, cities,
metropolitan areas, and trading areas. A typical territory may comprise several
individual units. One person's territory may consist one metropolitan area,
another’s may be of many districts. The unit should preferably be small because
it aids the management in realizing one of the basic values of territories – the
geographic pinpointing of potential. Further, the use of small control, units
makes it easier for management to adjust the territories. If an organisation
wants to add a little to one person's territory and reduce another’s, a district
unit facilitates the adjustment better than a state unit. The political units (state,
country, or city) particularly states are still used extensively as a basis for
territorial boundaries. This is simply because of the availability of statewise
market data. However, a marked change has occurred in their manner of use.
Other market factors, such as customer buying habit and normal patterns of
trade flow are also now considered in defining territories.
Deciding on Allocation Criteria
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.
Although equal opportunity territories are desirable, they are difficult to

achieve in practice. A few firms deliberately create territories with varying
workload and size, with the objective of keeping the smaller sized territories for
sales trainees, a large number of middle sized territories for the experienced
sales persons and a few large territories for the senior sales personnel.
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.
Choosing a starting point
The next step in designing a territory is to select a geographical location to

serve as the organising point for the new territory. A common starting point is a
large city; the sales person in an urban location has access to a large, number of
customers and needs less transportation. Another alternative is to design the
sales territory around the needs of Sales Organisation major clients, i.e. the 299
Sales Management location of the largest customer in an area might be selected as the house base
for the sales person and other areas are then added to complete the territory.
Combining of Adjacent Units
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.
Assigning Territories to Sales People
Having developed sales territories, management is in position to assign

districts to individual sales people. One must keep in mind that in any given
sales force, the sales people differ in their selling effectiveness. Representatives
also vary in experience, age, physical condition, initiative and creativity. Still
in assigning territories management aims at placing each sales person in the
district where they will contribute the most to the company’s profit over the
long run. This general principle however is not simple to follow in practice.
There may be situations where territories of equal size or approximately equal
workload may vary in potential. Conversely, if management has been able to
design territories with equal potential, the members of its sales force may differ
in their relative sales abilities. Another situation may be where Management
does not feel inclined to relocate sales personnel in order to prevent the
disruption of established customer relationship. In still other cases certain
personnel are not transferable but others can be freely relocated from one
territory to another. This would mean that in certain cases the territories are
redesigned to fit the ability levels of non-transferable personnel while in others
sales persons are assigned to territories considered suitable to them. Coming
back to the general rule however, the sales management will try to achieve
optimum territorial arrangement which would result when the incremental
sales per rupee of sales expenditure are equated for all territories.
300
Let us try to understand, through an illustration, how, in different situation, Sales Organisation
redesigning relocation may have implications for profit contribution.
Consider Situation 1: Where the sales potential of the territories is equal but
the salesmen differ in their abilities.
Territory Sales Salesmen Ability Expected* Expected

potential to be index sales profit
assigned contribution
(20% of
sales)
1 Rs.20,000 X 1.0 20,000 4000
2 Rs.20,000 Y 0.7 14,000 2800
3 Rs.20,000 Z .65 13,000 2600
Total Rs.60,000 47,000 9400

*Expected sales per territory are obtained by multiplying the sales potential with the
ability index per sales person.
Now consider Situation 2: Where the management in order to improve profit

contribution redesigns sales territories and allocation, so that, the sales potential
of the territories varies directly with the abilities of the sales personnel. The
total potential still remains the same.
Territory Sales Sales Ability Expected Expected

potential person index sales profit
assigned contribution
(20% of
sales)
A 25530 X 1.0 25530 5106.0
B 17870 Y .7 12509 2501.8
C 16600 Z .65 10790 2158.0
Total 60000 48829 9765.8
We see that redesigning territories to that territory potentials are proportional to

the abilities increases the profit contribution from Rs. 9,400 to Rs. 9765.80. We
have made an assumption that the ability index of sales personnel remains the
same regardless of the territory in which they operate, which may not be true.
Sales personnel have different effectiveness in different territories depending
upon their adjustment to the environmental conditions in the territories. In case
the change, in effectiveness, with different relocations is appreciable, the
management may find the relocation task considerably more complex, trying to
arrive at an assignment pattern which would maximise total profit contribution. 301
Sales Management Linear programming and, computer programming is then utilized to solve the
assignment problem.
Routing the Sales Force
After management assigns territories, a formal pattern has to be established for

sales / medical representatives to follow as they go through their territories.
This pattern is usually reflected on a map or list that shows the order in which
each segment of territory is to be covered. It does not mean that routing is done
only at some executive level, often firms ask its sales people to prepare their
own route schedules as part of their job.
SAQ 4
How the route map in a territory is planned for marketing of pharmaceutical

products?
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
16.7 FIELD SALES ORGANISATION
In most companies utilizing direct selling to retailers or consumers the

development of a field sales organisation, sooner or later becomes a necessity.
A field sales organisation consists of all sales personnel working away from the
head office, and would include the travelling salesman, the sales supervisors,
the branch and Area Managers as well as the support staff in these branch and
area offices. The major purposes of setting up a field sales organisation are
more adequate market coverage control of sales expenses. Better coordination
with regional requirements, and in case of new products, more vigorous market
cultivation.
16.8 SPECIALISATION IN A FIELD SALES

ORGANISATION
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
Sales Manager for India
Area Sales Mgr., Area Sales Mgr., Area Sales Mgr., Area Sales Mgr.,
Delhi Madras Bombay Calcutta
Area Sales Officer
Area Sales Representatives
Fig.16.5: Geographic specialisation of field sales organisation
A major advantage which characterises the geographic organisation is that the

sales personnel usually have a smaller area of operation than in the other
organisational schemes and over a period of time get to know their customers
and markets intimately which can lead to intensive market cultivation. The
organisation becomes more responsive to local needs. The geographic
organisation is generally a flat rather than tall organisation and the shorter lines
of communication make for greater effectiveness of supervision and control.
Another advantage that follows is that travel time and expenses can be reduced
if call patterns are properly devised. On the other hand, because of multiple
offices being set up, administrative expenses and the burden of coordinating
the sales activities of a widespread organisation become heavy. Geographic
organisation is generally more effective when the product line is not too wide
or consists of relatively simple, non-technical products.
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 Manager for India
Regional Manager (North)
Area Manager (Statewise)
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
Area Managers (Statewise)
Field Sales Supervisor
Sales Representatives
Health care products Family products
Fig.16.7: Product specialisation in sales organisation
Organising the sales force by product specialisation generates additional

expenses which should be carefully weighed against the benefits of such a
structure. There is an obvious increase in travel and administrative expenses.
There is some duplication of effort also as two salesmen from the company
selling different products in the same territory may call on the same customer to
which many customers may object.
Customer specialisation: Customer specialisation is practiced in situations

when almost identical products are marketed to consumers each of which may
present a different set of selling problems. In this kind of organisational
scheme each sales person sells the entire product line to the selected buyers.
The sales organisation of Modi Xerox, a manufacturer of photocopiers is
organised by customer specialisation. As the figure below shows, each Branch
Sales Manager controls 3 Sales Managers – Major Accounts who in turn have
reporting to them Major Account Managers. Each Major Account Manager is
given the charge of a certain number of customers (accounts) and is supposed
to service all their requirement with respect to the company’s products.
305
Sales Management Sales Manager for India
Regional Manager
Branch Sales Manager
Sales Manager Sales Manager Sales Manager

Major Accounts Major Accounts Major Accounts
Major Accounts Major Accounts Major Accounts

Manager Manager Manager
Fig.16.8: Customer specialisation in sales organisation
Customer specialisation enables the sales persons to become more

knowledgeable about the unique problems and needs of each group of
customers. A customer oriented sales force is consistent with the marketing
concept with its increased emphasis on consumer satisfaction. The greater
market specialisation developed as a result of constantly working with the
same set of consumers imparts a degree of professionalism to the sales task
and has been found to result in lower turnover of sales personnel.
The main disadvantage of this form of specialisation is that geographical
territories may typically overlap. There may be a number of the company's
representatives covering the same geographical area, but serving different
customers, often resulting in higher costs.
Geographic, product and customer specialisation present the basic approaches
to organisation structure. As is evident from some of the examples given above
quite a high proportion of organisations use a combination of these basic types,
in order to achieve a class organisation that most efficiently serves the needs of
their target customers.
16.9 ROLE OF THE SALES EXECUTIVE

After going through the section on sales organisation, you are now aware that
within the marketing organisation, the sales operations are usually put under the
charge of a sales executive. Depending upon the organisation practice this
position may be given different nomenclatures viz. Vice President Sales, Sales
Manager, Corporate Sales Manager, National Sales Manager or Sales
Executive. This section on role of Sales Executive is designed to give you an
306
understanding on the type of responsibility the sales executive is expected to Sales Organisation
undertake in an organisation.
Sales management function in an organisation is mainly concerned with the
attainment of goals related to sales volume, contribution to profits and
sustained growth of the company. The sales executive who is in charge of the
sales operation carries the major burden of this responsibility and is expected to
make a significant contribution to these general objectives.
The American Management Associations definition of sales management given

below, gives a fair idea of the scope of the role the sales executive is expected to
play in an enterprise, with respect to the sales force management. “Sales
management is the planning, direction and control of the personal selling
activities of a business unit including recruiting, selecting, training, assigning,
routing, supervising, paying and motivating as these tasks apply to the personal
sales force.”
Present day sales managers however have considerably wider responsibilities

than merely personnel related ones. Within and outside the organisation, they
are responsible for managing the entire sales effort and coordinating it with
related marketing activities as well as the overall marketing strategy. Internally,
the sales executive is expected to structure formal and informal relationships to
ensure effective communication within the sales department as well as with
other organisational units.
Outside the company he is expected to develop and coordinate effectively with

distribution network, and serve as a contact for external publics and customers.
As a line executive in charge of a vital operation, the sales executive is
responsible for timely preparation of information critical to marketing
decisions related to budgeting and cost planning. Depending upon the corporate
policies which may vary over organisations, sales executives are also expected
to participate in decisions on promotion planning, distribution channels and
pricing. A sales executive therefore acts both as an operating manager and a
member of the strategic planning group in the organisation.
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
1910-1930 1940-1950 1960-70 80 onwards

Business Production Sales Beginning of Marketing
response to orientation orientation marketing orientation
perceived orientation
dominant
environmental
conditions
Emphasis in Personality Systematic Professionalism Personal
management’s art salesmanship fulfilment
conception of (also referred coordination
the sales job as scientific) with total
salesmanship marketing
task
Emphasis of Tight Broadening Strategies and Total human
sales supervision responsibilities profits resource
management and control development
Source: Adapted from Leslie M. Dawson “Towards a new concept of Sales
Management in Modern Marketing and Sales Management” ed. M.K. Singh,
Anant Mahadevan, Discovery Publishing House, 1989.
Functions of the Sales Manager

This changing emphasis in the role of the sales manager has implications for
nearly all the aspect of his personnel related as well as other responsibilities. Let
us briefly discuss the functions performed by a sales executive. The sales
executive basically performs two distinct kinds of functions the operating
functions and the planning functions. Fig. 16.9 below gives the list of these
functions.
Sales Executive
Operating Functions Planning Functions
A Management of the sales force

1. Recruitment
a) Setting the sales objectives
2. Selection b) Designing the sales program
3. Training c) Formulating sales policies
4. Development d) Designing and developing the
5. Compensation sales organisation
6. Motivation e) Participating in the marketing
7. Direction planning function
8. Control
9. Territory Management
B Establishing working relationship with other
departmental heads
C Establishing communication systems both
upward and downward
D Establishing relationship and distributive network
Fig.16.9: Functions of a sales manager

308
The relative emphasis given to the operating and planning function by a sales Sales Organisation
executive varies across organisations. Some of the determinants of the
allocation of his time between the two types of responsibilities are the size of
the company, the type of product and the top management’s expectations from
the sales executives. Generally the smaller the size of the company, the greater
the tendency on part of the sales executive to devote more time to the operating
function. In case of industrial products, operating functions take up a greater
part of the sales executives time while the trend is reversed for consumer goods.
Again, the extent to which the top management expects the participation of the
sales executive in the strategic marketing planning also affects the time spent
on the planning functions.
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.
Sales Manager as a Coordinator

In order to be effectively discharged, the sales function needs to be closely
coordinated with related functions like pricing, promotion and distribution. An
important responsibility that the sales manager has is to coordinate personal
selling with the functions so that the overall marketing programme may be
made more effective. Let us briefly discuss the coordination function of the
sales executive.
Coordination with Promotion Management
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.
Coordination with Distribution Channels
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
Span of control : The number of employees who report to an

individual at the next higher level in an
organisation.
Line organisation : The simplest form of organisation structure

where every superior has an authority to
command his subordinate.
Line and staff organisation : The organisation structure which is

characterised by some line executives who
are given the authority to order and some
staff executives who have an advisory role
to play.
Functional organisation : An organisation structure where an

individual receives instruction from
different specialists on different aspects of
his job.
Territory : The geographical area a sales person is

assigned to cover.
Routing : Deciding the formal pattern of travel the

salesmen are expected to follow.
1. Discuss the process of developing a sales organisation. What are the factors
which affect the size of the sales organisation?
2. Analyse the factors that favour centralisation of sales activities.
3. What are the relative advantages of a line sales organisation and line and
staff sales organisation?
4. What are the bases used to design sales territories?
5. How can redesigning territories or reallocating territories affect total profit

contribution from sales territories?
16.13 ANSWERS
1. Developing specialisation: The drugs are grouped according to their class

i.e. cardiac drugs, anti-diabetic, anti-inflammatory etc. Then the doctors
specialised in the respective group are called upon accordingly by the M.R. 311
Sales Management and respective sales target is fixed. The M.R. is provided training in the
specialised class of products and the incentive is calculated based on the
specific product sold.
This type of sales organisation helps the Medical Representative to plan his
duties and to plan his territory and doctors etc.
2. Define the sales organisation objectives: Since it is a food product and a

vital diet supplement the Medical Representatives or sales persons has to
see that the product is widely available in the market to meet the response
of the consumers after it is advertised in the mass media. Trial packs or
sample packs should be available as free trial.
The sales activities include extensive advertisement in mass media, channel

agents and retailers should have clear information about the product and
incentive to the retailers to push the sales as there are no competitors and
boost the sales volume.
3. General Manager (Marketing)
Marketing Manager (Divisional/State)
Regional Manager/Zonal Manager
Medical Representative
The above marketing team is supported parallaly by Product Manager,

Medical Director, Advertising, Sales/Distribution Manager.
4. The route map planning is assigned to the Medical Representative in his

territory and the M.R. plans the route depending on the location of
hospitals/nursing homes/physicians and the supply points like chemist
shops and whole sellers.
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
17.14 Answers
17.1 INTRODUCTION
The following discussion on sales forecasting is an extension of Unit 6 of MS-6

on sales forecasting. Besides a quick recapitulation of the aspects covered in
the referred unit, managerial practices of refining the sales forecast are given
next. This is followed by discussion on sales forecasting for new products.
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.
17.2 SALES FORECASTING: A QUICK

RECAPITULATION
Sales forecasting is an estimation of projected sales for a time period. Simply

speaking, the process of sales forecasting involves reviewing performance,
history of the product or service, and relates it to the marketing and sales effort 313
Sales Management of the firm within the anticipated market environment (economic, competitive,
technological, public policy etc.) and buyer behaviour.
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.
Time series (trend fitting, moving average), correlations and regression,

customer/ dealer surveys and executive judgement are the most commonly
used methods for preparing sales forecasts. The selection of the appropriate
forecasting method(s) depends upon (i) its purpose (ii) availability of reliable
and relevant data and (iii) market conditions. For increased usefulness, the
overall sales forecasts should be broken down by product, month, territory,
geographical area, and segment-wise as per the needs of the company.
17.3 MANAGING SALES FORECASTS
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.
17.4 WHAT TO DO WHEN SALES FORECASTS DIFFER?
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:
• Probing into the methodology of sales forecasting adopted by different

experts.
• 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.
• Conducting retrospective-prospective analysis of the suggested levels of

314 sales forecasts using fine tuned historical data and executive judgement.
Experience brings out that the sales managers who have detailed market Sales Forecasting
knowledge, and their companies the comprehensive marketing information and Sales Quotas
system providing data on product, customer and segment-wise basis of their
competitors sales, succeed in making more accurate sales forecasts.
17.5 MONITORING THE SALES 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.
17.6 SALES FORECASTING FOR NEW PRODUCTS
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:
• Past records and experience
• Study of competing product’s demand

• Market research findings
• Test market results
• Demand behaviour of substitute products and rate of substitution
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:
Sl. No. Statement True/False

i) A firm’s sales potential and its sales
………………………….
forecast are normally identical
315
Sales Management Sl. No. Statement True/False
ii) Projecting past sales is totally unreliable
………………………….
for use in sales forecasting
iii) The key limitation of all past-sales
projection methods lies in the assumption
………………………….
that past sales history is the sole factor
influecing future sales
iv) Deriving a company sales forecast from
an industry sales forecast requires an
………………………….
appraisal of company strengths and
weaknesses against those of competitors
v) Sales forecast of totally new products
can be developed with equal degree of ………………………….
accuracy as of established products
17.7 SALES QUOTAS: MEANING AND IMPORTANCE
A sales quota is a quantitative goal assigned to a sales unit relating to a

particular time period. A sales unit may be a sales person, territory, branch
office, region or distributor. Sales quotas are used to plan, control and evaluate
selling activities of a company. They provide a source of motivation,' a basis
for incentive compensation, standards for performance evaluation of sales
person and uncover the strengths and weaknesses in the selling structure of the
firm. For example, a company manufacturing electronic office equipment
discovered that it took twice as long as to sell an electronic typewriter than to
sell other similar products in the product line. Since the electronic typewriter
was considered more important by company, quotas on the electronic
typewriter were set for each sales person. The result was that a sales person in a
control group having a rigid electronic typewriter quota outsold the
uncontrolled quota group. This example shows that generally speaking sales
persons are quota achievers and their motivation may fall off if easy or no
quotas are set for them to achieve.
17.8 WHY QUOTAS?

Sales quotas serve several purposes. The principal purposes include.
Providing Goal and Incentives: Quotas provide sales persons, distributive
outlets and others engaged in the selling activities, goals and incentives to
achieve certain performance level. Many companies use quotas to provide their
salesforce the incentives of increasing their compensation through
commissions or a bonus if the quota is surpassed and/or recognised for superior
performance. Needless to mention, to be true motivators sales quotas, set should
be perceived as being realistic and attainable.
316
Controlling Sales Persons Activities: Quotas provide an opportunity to direct Sales Forecasting
and control the selling activities of sales persons. Sales persons are held and Sales Quotas
responsible for certain activities of customer per day, calling on new accounts,
giving a minimum number of demonstrations and realisation of company's
account. If the sales person fails to attain these quotas, the company can take
corrective action to rectify the mistake.
Evaluating Performance: Quotas enable the company to evaluate performance
of its sales person, territory or distributive network. Performance against quotas
also helps identify the strong and weak points of the sales persons.
Controlling the Selling Expenses: Quotas are also designed to keep selling
expenses within limits. Some companies reimburse sales expenses only upto a
certain percentage of sales quota. Other tie expenses to the sales person's
compensation in order to curb wasteful spending. Expense quota helps
companies to set profit quotas.
Making Effective Compensation Plan: Quotas play an important, role in the
company's sales compensation plan. Some Indian companies follow the
practice that their sales person will get commission only when they exceed
their assigned quotas. Companies may also use attainment of the quotas in full
or in part as the basis for calculating the bonus. If the sales person does not
reach the minimum desired quota, he/she will not be entitled for any bonus.
17.9 HOW QUOTAS ARE SET?

Having understood the meaning and usefulness of sales quotas let us now learn
how quotas are set.
There are four types of quotas:
i) Sales volume quota
ii) Financial quota
iii) Activities quota
iv) Combination of the above quotas.
These quotas alongwith the approach used for their determination are discussed
below:
Sales Volume Quotas: The most commonly used quotas are those based on
sales volume. This type of quotas are set for an individual sales person
geographical areas, product lines or distributive outlets or for any one or more
of these in combination. Sales volume quotas are also set to balance the sales
of slow moving products and fast moving products or between various
categories of customers per sales unit. The sales volume quotas may be set in
terms of units of product sales, or rupee sales or both on overall as well as
product-wise basis. Some companies combine these two and set quota on
“Point” basis. Points are awarded on the attainment of a certain specific level of
sales in units and rupee terms for each product/customer. For example: A
company might consider Rs. 1000 equal to 1 point, Rs. 2000 equal to 2 points 317
Sales Management and so on. At the same time company may award 3 points for unit sales of
Product A and 5 points – for unit sales Product B. Companies use this type of
approach generally because of problems faced in implementing either Rupee
sales volume or unit sales volume quota. Unit sales volume quotas are found
useful in market situations where the prices of the products fluctuate
considerably or when the unit price of the product is rather high. Rupee sales
volume quotas are found suitable in the case of sales force selling multiple
products to one or different types of customers.
Methods for Setting Sales Volume quotas
Past Sales: One of the earliest methods of setting sales volume quotas is to
base them solely on past sales experience. The method in this case would be to
determine the percentage by which the company's market share is expected to
increase and then add this into last year’s quota. For example, .if a company
expects an increase of 8 per cent this year then the new quota for each
marketing unit would be last year’s quota plus 8 per cent or 108 per cent of last
year’s quota. This method assumes that the preceding year was a typical year,
and if not, it suffers from the limitations of being based on unrealistic figures.
An improved method is to take the average of say past three years and then add
to it to the planned rate of growth.
Total Market Estimates: The other method is to derive sales quotas from the
total market size estimates made by the company for the year. Two approaches
are used to arrive at such market estimates. One approach is to estimate the
market size in an aggregate manner as per the data available as well as the
judgement of the executive at the head office. The other is to build estimates
based on projections made by the field staff at each territory office of the
companies. In either case the market estimates need moderation to be realistic
as well as to match with the company's sales objectives.
Financial Quotas: Financial quota§ are determined to attain desired net profit as
well as to control the sales expenses incurred.
Net Profit Quota: Net profit quotas are particularly useful in multi product
companies where different products contribute varying level of profits. It
emphasises on the sales force to make right use of their time. The following
figure clearly depicts a selling situation in which a sales person optimally
balance their time between high and low profit yielding products. Let us look at
the following figure.
318 Fig.17.1: Ratio of sales volume to net profit

This figure illustrates how important it is for the management to ensure that its Sales Forecasting
sales persons do not spend more time on less profitable products, because the and Sales Quotas
sales persons are costing the company the opportunity of earning higher profits
from their high margin products. In other words, it should ensure that its sales
persons spend their maximum time on more profitable customer. The objective
can be achieved by setting a quota on net profit for its salesforce, and thus
encouraging them to sell more of high margin products and less the low margin
products.
Expense Quota: In order to make the salesforce conscious of the need to keep
selling costs within reasonable limits, some companies set quota for expenses
linked to different levels of sales attained by their salesforce. And to ensure its
conformity they even link compensation incentives to keeping expenses within
prescribed limits. Since sales are the result of the selling tasks performed which
vary across sales territories, it is not easy to determine expense quotas as
percentage of sales in a uniform manner. Also very strict conformity to
expense quota norms result in demotivation of salesforce. As such expense.
quota is generally used as a supplement to other types of quotas.
Activity Quotas: Good performance in competitive markets requires the
salesforce to perform the sales as well as market development related activities.
The latter activities have long term implications on the goodwill of the firm.
To ensure that such important activities get performed, some companies set
quota for the salesforce in terms of the various selling activities to be
performed by them within a given periodicity. Finally the company must set a
target level of performance for the sales persons. Some of the common type of
activity quotas prevalent in Indian companies are as under:
• Number of prospects called on

• Number of new accounts opened
• Number of calls made for realising company’s account
• Number of dealers called on
• Number of service calls made
• Number of demonstrations made
Fig.17.2: Common type of activity quotas
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
i) Quotas are quantitative objectives

………………………….
assigned to specific sales units
ii) The only ingredient necessary for

effective quotas is sound executive ………………………….
judgement
iii) Usually, the smaller the selling unit for

which a quota is set the more effective it
………………………….
is as a device for directing and
controlling sales operations
iv) One reason for not using quotas is that

………………………….
the product is in such short supply
v) Activity quotas are appropriate when

sales personnel perform important non- ………………………….
selling activities
SAQ 3
Tick the most appropriate answer:
I) Financial quotas are particularly appropriate when:

a) Management wants to emphasize the inspirational value of quotas.
b) Added sales volume is obtainable only at greatly increased cost.
c) Sales people perform important non-selling duties.
d) New products are being introduced.
II) Sales volume quotas specify the sales level management expects to attain
under:
a) the worst possible circumstances

b) the most favourable conditions
c) somewhat less-than-ideal conditions
d) the average conditions existing in the past
III) If it is important for a company to maintain contacts with the customers

who buy infrequently but in large quantities. Serious consideration should
be given to using ................... quotas.
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
a) past sales experience

b) expenses
c) the sales forecast
d) the market potential
17.10 ATTRIBUTES OF A GOOD SALES QUOTA PLAN
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.
There are several characteristics of a well-designed quota structure. Many of

these attributes are the same attributes found in good compensation plans,
territorial designs, organisational structures and 'other aspects of sales
management.
Realistic attainability: If a quota is to do its intended job of spurring a man to

the efforts management wants, the goal must be realistically attainable. If it is
too high or out of reach, the salesmen may loose initiative.
Objective accuracy: Regardless of whether a firm is using volume, profit,

expense, or activity quotas, they should be related to potentials. Obviously,
executive judgement is also required, but it should not be the sole factor
considered. If the men are to have faith in the performance goal, they must be
convinced it was set impartially and based on factual, qualitative market
assessment.
Ease of understanding and administering: A quota must be simple and easy

for both management and the sales force to understand. A complex plan
probably will cause friction and make the men resentful and even suspicious.
Also, from management’s point of view, the system should be economical and
cost effective, to administer.
321
Sales Management Flexibility: No quota ordinarily is a good one unless there is adequate
flexibility in its operation. Particularly if the quota period is as long as one year,
management may have to make adjustment because of changes in market
conditions. At the same time, caution must be exercised to avoid unlimited
flexibility, which may result in confusion and destroy the ease with which the
system is understood.
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
Relating Sales Forecast to Sales Quota
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.
Development of sales forecasts on product, segment, customer and geographical

area basis enables a company to keep sales as planned. This lead to
establishments of a quantitative goals relating to an identified sales unit for a
specific period to time. The sales quotas also determined facilitate the carving
of profitable sales territories and their management in the most in the most
productive manner.
17.12 KEY WORDS
Sales forecast : An estimate of Rupee or unit .sales for a

specified, future period, under a proposed
marketing plan or period.
Market potential : The expected sales of a commodity, a

group of commodities, or a service for an
entire industry in a market during a stated
period.
Sales potential : The share of a market potential which a

company expects to achieve.
Sales quotas : The share of the company's overall sales

job, which is assigned as a performance
goal to some marketing unit in an effort to
aid in the planning, control and evaluation
of sales activities and effectiveness.
322
Financial quotas : Financial quotas are those which set for Sales Forecasting
desired net profit as well as to control the and Sales Quotas
sales expenses incurred.
Sales efficiency : A measure of performance to evaluate the
relationship between sales volume or value
and individual and total selling cost.
Sales volume planning : A means of allocating targets, expressed in
quantitative terms, to individual sales
persons to achieve overall sales volume
objectives.
Sales targets : A performance standard against which the
degree of achievement can be measured.
Targets are usually set on a geographical,
product or customer basis in either selling
quantities or sales performance terms.
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
18.16 Answers
18.1 INTRODUCTION
A sales budget is a financial plan depicting how resources should best be

allocated to achieve the forecasted sales. The purpose of sales budgeting is to
plan for and control the expenditure of resources (money, material, people and
facilities) necessary to achieve the desired sales objectives. Sales forecast and
sales budget are therefore intimately related as much as that if the sales budget
is inadequate, the sales forecast will not be achieved, or if the sales forecast is
increased the sales budget must be increased accordingly. Sales budget by
relating sales obtained and resources deployed also acts as a means for
evaluating sales planning and sales effort. It aims at attaining maximum profits
by directing the emphasis on most profitable segments, customers and
products.
Objectives
• understand importance of sales budget and control in sales-management;

• examine methods and approaches used for preparing sales budget; and
• discuss various methods of sales control. 325
Sales Management
18.2 PURPOSE OF THE SALES BUDGET
A sales budget generally serves three basic purposes.
1. Planning
2. Coordinating
3. Controlling
1. A Planning Tool: In order to achieve goals and objectives of the sales

department, sales manager must outline essential tasks to be performed and
compute the estimated costs required for their performance. Sales
budgeting, therefore, helps in profit planning and provides a guide for
action towards achieving the organisational objectives.
2. An Instrument of Coordination: As we all know selling is only one of

the important functions of marketing. To be effective it needs support from
other elements of the marketing mix. The process of developing realistic
sales budget draws upon backward and forward linkages of selling with
marketing and in turn brings about necessary integration within the various
selling and marketing functions, and co-ordination between sales, finance,
production and purchase function.
3. A Tool 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.)
Budget Actual Variance

Favourable Unfavourable
Sales Rs. 7000 Rs. 8900 Rs. 1900
Expenses
Direct selling 2500 2375 125
Sales promotion 1500 1650 Rs. 150
Advertising 997 1075 78
Administrative 875 775 100
Total Expenses Rs. 5872 Rs. 5875 03
Profit (before tax) Rs. 1128 Rs. 3025 1897
Fig.18.1: Budget variance
The above figure is self explanatory and points out to both the favourable and
unfavourable variance. The analysis of the factors causing variance enables the
sales manager to quickly spot potential problem areas or better plan for
unexpected outcomes such as higher than budget sales.
The budget variance analysis approach thus helps in improving insights of
sales manager and enables him to refine and develop realistic sales budgets in
326 future with minimal variance.
18.3 METHODS OF SALES BUDGETING Sales Budgeting
and Control
A variety of methods ranging from the sales manager’s gut feeling to
application of management science models are used for determining the sales
budgets. The popular methods are as under:
• What is affordable: This method is generally used by firms dealing in

capital industrial goods. Also, companies giving low emphasis to sales and
marketing function or having small size of operation make use of this
judgemental method.
• Rules of Thumb: Such as a given percentage of sales. Mass selling goods

and companies dominated by finance function are major users of this
method.
• Competitive parity: Large sized companies whose products face tough

competitions and need effective marketing to maintain profits make use of
this method. The use of this method presumes knowledge of the
competitors activities and resource allocation.
• Objective and Task Method: A systematic method help in determination

of the sales budget by identifying the objective of sales function, and then
ascertaining the selling and related tasks required to achieve each objective.
Later, the cost of each task/activity is calculated to arrive at the total budget.
The finalisation of the budget may require adjustment both in the objectives
as well as in the way the task may be performed.
• Zero-based Budgeting: It is relatively a new approach to budgeting. It

involves a process in which the sales budget for each year is initiated from
Zero base thus justifying all expenditure and discarding the continuation of
conventions and rules of thumb. The method suffers from practical
limitations which relate to a very elaborate and time consuming process
required by it.
In practice, companies make use of a combination of the above methods and

depending upon the experience gained sales budgeting approach stands refined.
The status of the sales and marketing function within the organisation
determines the extent of sophistication used in the approach to sales budgeting.
18.4 PREPARATION OF SALES BUDGET
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:
• Salaries, sales persons, administrative support etc.

• Direct selling expenses – travel, lodging, food, entertainment.
• Commissions on sales, bonus.
• Benefits packages covering medical insurance, gratuity and retirement
contribution
• Office expenses – mailing, telephone, office supplies and other
miscellaneous costs.
• Advertising and promotional materials, selling aids, contest awards,
product samples catalogues, price-lists etc.
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
Setting a Preliminary Plan for Allocation of Resources and Selling Efforts

to Different Activities: Particularly products, customers and territories, so
that revisions can be made in this initial sales budget. The sales manager must
emphasize that the budgets should be as realistic as possible at each stages of
its development, so that it can maximise its favourable impact on the firm.
When budget goals are achieved through a co-operative team effort, a strong
feeling of organisational confidence is created. In case of failure to stay within
budgets, sales manager should stress on rewards and public commendations to
encourage positive attitudes towards budget goals and pride in their
achievement.
328
Selling the Sales Budget to Top Management: The top sales and marketing Sales Budgeting
executive must visualise that every budget proposal they are presenting to the and Control
top management must remain in competition with proposal submitted by the
heads of other divisions. Each and every division- usually demands for an
increased allocation of funds. Unless sales managers rationally justify each
item in their budgets on the basis of profit contribution, the item may not get
due consideration by the top management.
18.5 BUDGET IMPLEMENTATION AND

ESTABLISHMENT OF FEEDBACK MECHANISM
Actual budgetary control features go into operation, as soon as the approved

budgets have been distributed to all units of the firms. Each item in the budget
serve as quotas or standards against which management measures performance.
In case of actual performances showing a variance from budgeted performance,
two courses of actions are available to the organisation.
1. To ascertain whether the variance is a result of poor performance by the

sales group – necessary steps should betaken to ensure that sales persons
organise their selling efforts more carefully, so that budgeted expenses can
be brought back into line.
2. To revise the sales budget by incorporating the changed allocation of the

item. For example, if it is discovered that travel expenses have increased
because of the necessity of calling on new customers not previously
covered, action should be taken to revise the budget to reflect changed
conditions.
Source: Professional Sales Management by Anderson, Hair & Bush Page 104
Fig.18.2: Quarterly sales budget 329

Sales Management Sales persons are generally trained to be budget conscious, it is the
responsibility of the sales manager to ensure that sales revenue and cost ratios
remain within reasonable budget limit. Fig. 18.2 shows quarterly sales budget
form that sales manager might consider using to monitor budget variances and
taken timely corrective action to rectify it if need be.
Experiences bring out the following main items on which variance between
budgeted and actual costs often arise, are
• salaries and fringe benefits

• direct selling expenses
• maintenance of company 'vehicles
• sales and other product/business promotional costs
• promotional allowances including discounts, rebates, etc.
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.
18.6 FLEXIBILITY IN BUDGETING
Flexible sales budget is an alternative to overcome the rigidity of the traditional

sales budget which makes the sales manager merely an analyser of the
financial performance of the company. Flexible budgets make use of standard
costs (based on past records or managerial judgement) for different revenue
forecasts. It allows the sales manager to continuously monitor financial
performance in terms of standard cost ratios. For example, the standard cost for
promotion materials (brochure, display samples etc. might be Rs. 5 for every
Rs. 100 sales or a ratio of 0.05. After nine months Rs. 400 has been spent on
promotional materials while Rs. 2400 worth of revenue has been generated.
The sales manager observed that the ratio has risen to 0.166. In this case
expenditure on promotional materials need to cut back reasonably. In the past
use of flexible budgeting was limited to large sized companies, but now small
companies also are adopting flexible budgeting technique.
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
i) The sales budget is a projection of what a

given sales programme should mean in ………………………….
terms of sales volume and profits.
ii) The primary orientation in sales

………………………….
budgeting is toward control.
iii) Historical cost data is of no value in the

………………………….
sales budgeting process.
iv) “Top-down” approach to sales budgeting

is superior to “bottom-up” approach
………………………….
because most sales people tend to dislike
work and prefer to be told what to do.
v) Although there is competition for the

available funds, the sales department
should always get what it asks for since ………………………….
the most basic ingredient to success is
sales
SAQ 2
I) Preparation of the sales expense budget is primarily the responsibility of

a) Finance Manager
b) Chief Executive
c) Marketing Manager
d) Sales Manager
II) The sales budget is developed with a view toward obtaining the forecasted
volume of sales, and
a) a maximum net profit

b) an optimum net profit
c) a target market share
d) a minimum amount of expense
331
Sales Management III) The sales budget uses the ……………………. as a point of departure
a) sales quota
b) territory objective
c) sales forecast
d) market potential
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.
V) The sales budgetary procedure ultimately leads to:

a) the setting of goals for company net profits from selling
operations
b) better defined sales territories
c) establishment of quotas
d) all of the above.
18.7 INTRODUCTION AND PURPOSE OF SALES

CONTROL
One of the most important responsibilities of a Sales Manager is to exercise
control over the sales results and the performance of the selling activities. In
order to ensure that the sales targets are achieved, sales need to be controlled
both on an on-going basis (or continuously) as well as overall at a fixed
periodicity. The sales control function assists the sales manager to ascertain
what level of sales results have been attained, why there has been a variance, if
any between actual and budgeted results, and what remedial action be taken to
achieve the targeted results.
Purpose of Sales Control
By comparing the actual sales results with the objectives set and diagnosing the
causes for the variance between the two, sales control assists the sales
manager:
• to initiate remedial steps
• to revise the sales policy and the strategies followed.
• to implement steps for improving the productivity of the salesforce.
• to improve the quality of target setting, sales planning and budgeting
functions, and
332 • to increase sales profitability.
18.8 SALES CONTROL SYSTEM Sales Budgeting
and Control
A sales control system can be set-up by a firm by instituting action on the
following five steps:
1. Setting detailed objectives (at least around key result areas).

2. Establishing standards for appraising performance.
3. Gathering information on actual sales activities and results.
4. Comparison of actual results with established standards.
5. Taking remedial actions (need based).
The existence of a comprehensive sales information system in the firm is a

prerequisite for an effective sales control system. Such an information system
can be built by regularly recording sales by unit, by value, by customer, by
sales person, by territory, by distribution outlet, by cash or credit. In addition
to invoice, other important information sources include despatch notes, credit
notes, customer call reports, daily activity (and time spent) reports, journey
plans, sales quotation slips, sales expense forms, discount and allowances
records, customer complaints, warranty claims settled, market intelligence
including sales promotion special reports sent by sales person. In short, only
comprehensive sales information system can lead to timely and meaningful
sales control.
18.9 METHODS OF SALES CONTROL
Three most commonly used methods of sales control are:

1) Sales analysis, 2) Marketing cost analysis, and 3) Sales management audit.
These methods are discussed below:
Sales Analysis
Sales analysis is a detailed examination of sales volume by territory, sales

person customer, product line, etc. It works on a basic principle that the trends
of the total sales volume conceal rather than reveal the market reality.
Researches point out that in most sales organisations a large percentage of the
customers, orders, products or territories bring in only a small percentage of the
total sales volume as well as net profits. This situation is popularly referred as
80-20 principles i.e. 80 per cent of the orders, customers, territories or products
contribute only 20 per cent of the sales or profit. Conversely, 20 per cent of
these selling units account for 80 per cent of the volume or profit. Likewise,
there are examples of Iceberg principle which show that the total sales volume
may reveal only about ten per cent of the real market situation which is above
the surface and the mighty 90 per cent may remain unknown. It is, therefore,
strongly recommended that for unearthing the reality and gaining meaningful
insights regarding company’s selling strengths and weaknesses sales must be
analysed on the bases discussed below:
333
Sales Management Sales Analysis by Territory
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.
Sales Analysis based on Territory
Territory Quota Actual Value in ’000

Rupees Performance
East 825 850 103%
West 750 750 100%
North 890 870 98%
South 850 920 108%
Adapted from Professional Sales Management by R.E. Anderson, Joseph F. Hair and
Allan J. Bush – Page-483.
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.
Sales Analysis by Sales person
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:
North Territory: Sales by Sales persons
Sales person Quotas Actual Performance as % of quota

Mukherjee 95 93 98%
Singh 115 117 102%
Singa 110 109 99%
- 106 110 104%
- 108 107 99%
- 110 112 102%
Gulani 130 106 82%
Reddy 116 116 100%
Totals 890 870 98%
334
Sales Analysis by Product Line: Before asking for any explanation from Sales Budgeting
Gulani for his poor sales performance, the Sales Manager should see his sales and Control
performance based on product line:
Sales Person: Gulani’s Sales by Product Line
Product Lane Quotas Actual Performance as % of quota
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.
Sales Analysis by Customer: Customer-wise break-up of manual typewriters

sales attained by Gulani showed that one important account i.e. Government
department was responsible for Gulani’s poor performance on that product
line. Government Department was Gulani’s biggest customer and has been
targeted for 80 per cent of his entire sales-quota for manual typewriters. With
an entry of another office automation company, the customer had switched
over to the same. Gulani did not feel the gravity of situation, as the sales to
Government department was taken for granted by him. If he had foreseen the
alarming situation in time, he could have asked for assistance by the sales
manager. Analysis of Gulani’s sales by customer also validates the existence
of 80-20 principle referred above.
Sales Person: Gulani’s Sales of Manual Typewriter
Product Lane Quotas Actual Performance as % of quota

Banks 2 2 100%
Financial Institutions 1 1 100%
Educational Institutions 1 1 100%
Govt. Department 24 0 0%
Industrial Undertaking 1 1 100%
Private Parties 1 1 100%
Total 30 6 20%
335
Sales Management The above illustration clearly brings out the importance of conducting detailed
sales analysis. It also leads the sales manager to diagnose the factors
responsible for variance between targeted and actual performance. Sales
analysis thus makes a good beginning in the sales control function of the Sales
Manager.
18.10 MARKETING COST ANALYSIS
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.
Marketing cost analysis is a detailed examination of the costs incurred in the

organisation and administration of the sales and marketing function and its
impact on sales volume. It is a fact finding analysis which relates costs to sales
volume and resultant profitability. ,
It pre-supposes the existence of a good costing and financial accounting system

in the firm. By relating sales, cost and financial dimension of each selling
transaction and activity it can generate:
• Cost of goods per rupee of sales

• Profit per rupee of sales
• Profit per segment, channel, territory, product pack, sales person, etc.
• Sales volume and turnover of receivables
• Turnover of stock and profitability
• Average value of orders
• Average cost per orders
• Total value of orders
• Inquiry – order conversion ratio and cost
• Number of inquiries generated say in response to advertisement, sales
person call, Direct mail etc.
• Total operating and functional cost – product-wise, region-wise, etc.
• Sales to call ratio
• Expense to sales ratio
• Profit contribution, on various bases, etc.
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:
• relative cost and profitability of sales operations.

• profitable, not so profitable and not profitable-territories, products, pack
size, market segments and distribution channels.
• minimum order level quantities.
• productivity of sales persons
• profitability of different sales promotion techniques.
• profitability of different marketing mix programmes.
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.
18.12 SALES MANAGEMENT AUDIT
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.
Sales management audit is a comprehensive, systematic, independent and

periodic audit of the sales policy, objectives strategies, organization and
procedures followed by the firm.
The purpose of sales management audit is to evaluate the soundness of the

sales management of the firm. It examines the validity of the very basis and
assumptions on which the sales function is planned and managed. It appraises
the suitability of the prevailing sales management system in the emerging
market environment of tomorrow. By critically evaluating the strength of the
sales management against the changing market environment it points out to the
emerging areas of opportunity as well as the areas which need intervention.
Some of the aspects covered in the sales management audit include:
• Appropriateness of selling function objectives.

• Role of the selling function in the promotion-mix and sales-marketing
integration.
• Organization and work-norms of the sales force and its size.
• Recruitment, selection, promotion policy, compensation and motivation
of salesforce.
• Basis of sales quota, sales budget, territory allocation and their market
need suitability.
337
Sales Management • Quality of salesforce, appraisal criteria and training and development of
sales personnel.
• Productivity of the sales function.
• Sales planning and control system.
• Commercial procedures and sales promotion method used, etc.
Sales management audit, is relatively a new technique of sales management

control. Its conduct and format is yet to be standardized and so is its coverage.
From the limited experience it is felt that if conducted by outside professionals
it benefits the company immensely. In the case of a leading consumer durables
company this audit inter alia resulted in the re-organisation of its sales
department from the functional system to product manager system, as also a
change in its selling system from selling through distributor to retailers. This
change carried out two years ago has improved the market share as well as
profitability of the company. In the case of another company dealing in
vanaspati and edible oils, the sales audit brought out the redundancy of the
position of Assistant Sales Officer between the sales supervisor and regional
sales manager.
SAQ 3
i) The original source of data for sales

………………………….
analaysis is sales forecast.
ii) Sales analysis are especially effective at

explaining why strengths and ………………………….
weaknesses exist.
iii) Sales management audits, sales analysis

and marketing cost analysis are not ends
in themselves; rather they are a means to
………………………….
achieve greater efficiency and
effectiveness in the personal selling
function.
SAQ 4
I) The sales manager can assure that sales efforts are continually focused on
objectives through the use of:
a) sales management policies

b) sales planning
c) sales control techniques
d) sales quota
338
II) Through regular sales analysis, management seeks insights on matters such Sales Budgeting
as: and Control
a) The sales territories, where it is strong and where it is weak

b) The products responsible for the most and the least sales volume
c) The types of customers who provide the most satisfactory and the
least satisfactory sales volume
d) All of the above
III) The general objective of marketing cost analysis is to:

a) Obtain cost data for the selling expense budget
b) Determine relative profitability of various sales and marketing
operations
c) Keep expenses in line with sales operations
d) Analyse costs by territory
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
V) Which of the following statements about the sales management audit is

false:
a) The sales audit provides a basis for evaluating overall selling
strategy.
b) Each sales manager should design the type of sales audit most
appropriate to fit the needs of firm.
c) Proponents of tile sales management audit stress the importance
of focusing on the overall selling strategy and the methods used
in implementing it rather than examining individual components
in a piece meal fashion.
d) There are several standardized formats for making sales
management audit and, one of the top management’s job is
to select the correct format.
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.
18.14 KEY WORDS
Budgetary control : The processes by which an organisation

ensures that a close watch is kept on the
organisation's progress towards achieving
its annual budget - its revenue and profit
goal.
Natural expenses : The traditional expense categories (salaries,

rent, depreciation etc.) used in accounting
statement.
Cost vs. expenses : Two terms that are often used

interchangeably in describing marketing
cost analysis. But costs tend to be specific
and directly related to volume output, while
expenses are more general or indirect
expenditure.
Sales analysis : The process of interpreting the pattern of

sales orders obtained in the market place.
This term may also refer, more widely, to
the interpretation of all data -including sale
orders from the market place.
Standard costs : Predetermined costs based on experience

and research studies for achieving certain
levels of volume.
1. What are the facts to be considered in setting-up an annual sales budget?
2. What is zero base budgeting and flexible budgeting? What are their
advantages over traditional approach?
3. In what ways Marketing Cost Analysis and Sales Management Audit is

helpful in effective functioning of the organisation.
340
18.16 ANSWERS Sales Budgeting
and Control
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.
Douglas J. Dalrymple (1982) Sales Management: Concepts and Cases. John

Wiley and Sons, New York, Chichester, Brisbane, Toronto, Singapore.
Eugene M. Johnson, David L. Kurtz, Eberhad Scheuing (1986), Sales

Management, Concepts, Practices and Cases, McGraw Hill Inc.
Gordan J. Bolt (1987) Market and Sales Forecasting : A Tool Approach. Essex
Kogan Page Ltd., 130 Pentonville Road, London.
Henry Mintzberg (1979) The Structure of Organisations, Prentice Hall:

Englewoods Cliffs N. J.
Richard R. Still Edward W. Cundiff, Nornia, A.P. Govoni (1988) Sales.
341
Sales Management Richard R. Still, E.W. Cundiff, N.A.P. Govoni (1998) Sales Management:
Decisions, Strategies and Cases, Prentice Hall of India Pvt. Ltd.: New
Delhi.
Richard R. Still, Edward W. Cundiff, Norman A.P. Govoni (1996) Sales

Management: Decisions, Strategies and Cases, Prentice Hall of India Pvt.
Ltd. New Delhi
Rolph E. Anderson, Joseph F. Hair, Alan J. Bush (1988) Professional

Sales Management, McGraw Hill Inc.
William J. Stanton and Richard M. Buskirk (1905) Management of the Sales

Force, Butterworth.
Willian J. Stanton and R.H. Buskirk (1987) Management of the Sales Force,
Irwin Homewood: Illinois.
342

Sales Management Book by IGNOU

Uploaded by

Copyright:

Available Formats

Sales Management Book by IGNOU

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sales Management Book by IGNOU

Uploaded by

Copyright:

Available Formats

Indira Gandhi MVE-006

National Open University

COURSE PREPARATION TEAM

PRINT PRODUCTION TEAM

In today’s competitive environment a lot of emphasis is laid on the marketing,

After studying this unit you should be able to:

• explain the meaning, definition and scope of marketing management;

1.2 MARKETING IS A WONDERFUL THING

Welcome to the wonderful world of marketing! Marketing is not a new word

Now, let us see some definitions of marketing:

• Marketing originates with the recognition of a need on the part of a

• Marketing is a viewpoint, which looks at the entire business process as a

• Marketing is the delivery of a standard of living to society.

• American Marketing Association: “It is the process of planning &

1.3 CONCEPTS OF MARKETING

Studies reveal that different organizations have different perceptions of

1.3.1 The Exchange Concept

1.3.2 The Production Concept

However, production concept as a philosophy work undertow situations 9

2. When the products cost is too high, improved productivity is needed to

1.3.3 The Product Concept

The product concept is somewhat different from production concept. Whereas

1.3.4 The Sales Concept

1.3.5 The Marketing Concept

The marketing concept represents a radically new approach to business and is

The marketing concept has four major distinguishing features

a) Consumer orientation: An overwhelming emphasis on the consumer and

c) Consumer satisfaction: Marketing concept is a means for fulfilling

d) Realizing organizational goals including profits: The marketing concept

1.3.6 The Societal Marketing Concept

Differentiate between Marketing concept and Societal Marketing concept.

How is marketing different from selling?

1.4 HISTORY AND EVOLUTION OF MARKETING

Marketing is a concept as old as the business itself, but as a subject it is still of

1.4.1 History of Marketing

It is hard for many to believe, but when compared to economics, production

1.4.2 Evolution of Marketing

a) The Stage of Barter

The pre-industrial revolution world was characterized by an agricultural

b) The Stage of Money Economy

d) The Stage of Competition

The mass production and mass distribution brought by industrial revolution

How the industrialization has changed the process of exchange of commodities

Five key dimensions of marketing

Fig.1.1: Key dimensions of marketing

As we know consumers demands change very frequently and it also differs

Organization that most effectively meets consumer’s need is placed at

Co-ordination is the interrelationship between marketing and other activities of

Marketing should be viewed as an activity that consistently improves

Presuming that an Analgesic is to be introduced in the market, how are you

What do you mean by organizational capacity and how it is beneficial to meet

1.6 WHAT MARKETERS DO?

1.6.1 Target Markets

Those markets identified as possessing needs the marketer believes can be

A tangible or intangible solution to the market’s needs.

Promotion means for communicating information about the marketing

It means used to allow the market to obtain the solution. 17

Additional options that enhance the solution’s value.

What difference does a marketer make in achieving organizational goal?