BY:BY: Mrs. Gurpreet K ChhabraMrs. Gurpreet K Chhabra

Introduction to Sales Introduction to Sales ManagementManagement UNIT-1UNIT-1

Nature and role of sales management

The determination of sales force objective and goals Sales force organization, size, territory, and quota

finalization Sales forecasting and budgeting Sales force selection, recruitment, and training Motivating and leading the sales force Designing compensation plan and control systems Designing career growth plans and building relationship

strategies with key customers

Persuasion

Consultative

Selling

Partnership

StrategiesBusiness

ManagementNegotiation

Evolution of personal selling

Production conceptProduction concept Product conceptProduct concept Selling conceptSelling concept Marketing conceptMarketing concept Societal conceptSocietal concept

Marketing concepts

Customer Needs

Sales Customers

Emphasis on Seller’s Needs

Production

Production

Sales

Emphasis on Customer

Needs

Societal marketing concept

(Sales Orientation)

(Marketing Orientation)

• Industrial selling• Retail selling• Services selling

Types of personal selling

Types of sales personnels

• Order taker sales people• Order creators• Order getters

SellingFunction

OrderTakers

Order Getters

Order Creators

Outside Order Takers

Inside Order Taker

Merchandisers

Delivery Sales People

Missionary Sales People

New Business Sales People

OrganizationalSales People

ConsumerSales People

Technical Support sales People

Front LineSales People

Sales Support

Sales people

Types of Selling

Formulation of a strategic sales programme

Implementation of the sales programme

Evaluation and control of sales force performance

Sales management process

Technology

Relationship sellingCustomer orientation

Global and ethicalIssues

New selling methods

Diversity

Emerging trends in sales

management

Emerging trends in sales management

Technology

Sell ing and buying stylesSell ing and buying styles

99

88

77

66

55

44

33

22

11 22 33 44 55 66 77 88 99

Con

cern

for

th

e cu

stom

ers

(1,9) People Oriented

I am customer’s friend,

I want to understand him and respond to his feelings and interests so that he will like me. It is the personal bond that leads him to purchase from me.

Sales technique Oriented (5,5)

I have tried an effective routine for getting a customer to buy. It motivates through a blended personality and product emphasis

(1,1) Take it or Leave it

I place the product before the customer and it sells itself as and when it comes.

(9,1) Push the product Oriented

I take challenge of the customer and hard sell him, polling on all the pressure it takes to make him buy

(9,9) Problem Solving Oriented

I consult with the customer so as to inform myself of all the needs in his situation that my products can satisfy. We work towards a sound purchase decision on his part, which yield him the benefits he expects from it.

Concern for sales

Sell ing situationsSell ing situations

Sales task and functionSales task and function

Maintenance sellingMaintenance selling

Developmental sellingDevelopmental selling

Sell ing ski l lsSell ing ski l ls

Selling Skills

Listening Skills

Conflict management and resolution skills

Negotiation and bargaining skills

Problem solving skills

Effective communication skills

Communication processCommunication process

Noise

Channel

FeedbackIntended Message

Sent Message

Encoding

Perceived Message

Received Message

Decoding

Sender Receiver

CommunicationCommunication process (cont…)process (cont…)

Managing body language:Managing body language: Personal AppearancePersonal Appearance PosturePosture GesturesGestures Facial ExpressionsFacial Expressions Eye ContactEye Contact Space DistancingSpace Distancing

Process of listening

Attendance

Interpretation

Evaluations

Remembrance

Response Action

Levels of listening

Feedback

Paraphrasing

Emphatic listening

Clarifications

Active Listening

Barriers to Listening !

Confl ict management ski l lsConfl ict management ski l ls

Models of conflictModels of conflict Components of conflictComponents of conflict The conflict resolution process:The conflict resolution process:

- lumping- lumping- avoidance- avoidance- coercion- coercion - meditation- meditation- conciliation- conciliation- arbitration- arbitration- adjudication- adjudication- negotiation- negotiation

Stage I

Potential opposition or

Incompatibility

Stage II

Cognition &

Personalization

Stage III

Intentions

Stage IV

Behaviour

Stage V

Outcomes

Antecedent Conditions

Communication

Personal Variables

Structure

Perceived Conflict

Felt Conflict

Conflict handling Intentions

Competing

Collaboration

Compromising

Avoiding

Accommodating

Overt Conflict

Party’s behaviour

Others reaction

Increased group

performance

Decreased group

performance

Conflict management process

Negotiation ski l lsNegotiation ski l ls

• Situation and timing for negotiationsSituation and timing for negotiations• Formulation for a bargaining strategyFormulation for a bargaining strategy• The theory and strategy of principle The theory and strategy of principle negotiationsnegotiations- separate the people from the problemseparate the people from the problem- focus on interests, not on positionsfocus on interests, not on positions- invent options for mutual gainsinvent options for mutual gains- insist on objective criteriainsist on objective criteria

Problem solving ski l lsProblem solving ski l ls

• Habit I: be proactiveHabit I: be proactive• Habit 2: begin with an end in mindHabit 2: begin with an end in mind• Habit 3: put first things firstHabit 3: put first things first• Habit 4: think win–winHabit 4: think win–win• Habit 5: seek first to understand, then to be Habit 5: seek first to understand, then to be

understoodunderstood• Habit 6: synergizeHabit 6: synergize• Habit 7: renewalHabit 7: renewal

Define the problem

Generate alternative solutions

Decide the solution

Implement the solution

Evaluate the solution

Problem solving processProblem solving process

Decision on the best solution

Approval

Planning

Carry through

Follow up

Evaluation

IMPLEMENTATION

Solution implementation process Solution implementation process

Stages in the selling process

Pre-sale preparation

Sales Presentation

Handling Customer Objections

Closing the Sale

Follow up action

Approach to the customer

Pre- approachbefore the interview

Prospecting

Selling process

• Pre approach to selling• Approach to the customer• Sales presentation

- approach to sales presentation- attracting customer attention- creating interest- arousing desire and building conviction

• Methods of sales presentation- canned presentation- organized presentation- tailored presentation

Process of prospecting

Identify and define prospects

Search for sources of potential accounts

Qualify the prospects from the suspects

Prospecting

Successful prospecting

50 potential prospects

15 Qualified prospects

6 Interviews

1 sale

50 potential prospects

25 Qualified prospects

17 Interviews

7 sales

Successful prospecting

No Yes

Methods of prospecting

Cold canvassing Endless chain customer referral Prospect pool Centers of influence Non competing sales force Observation Friends and acquaintances Lists and directories Direct mail Telemarketing Trade shows and demonstrations

Handling customer objections

• Start with your highest expectations

• Avoid conceding first

• BE sure the customer understands the value of a concession

• Make concessions in small amounts

• Admit mistakes and make corrections willingly

• BE prepared to withdraw a concession

• Avoid ‘split the difference’ strategy

• Do not advertise willingness to concede

• Use TRACT formula to buy time

Suggested by SMITH

Forecasting process

The forecasting process is defined as the series of decisions and actions taken by a business organization in:

identifying the forecasting objectives

determining the independent and dependent variables

developing a forecasting procedure

using the available data in the selected method to estimate the sales in future

Qualitative methods

Expert opinion

Survey of buyer’s

expectation

Sales force composite

Delphi technique

History analogy

Quantitative methods

Test marketing Naïve method Trend method

Moving average Regression method

Exponential smoothening

Popular methods in forecasting

Observed sales Forecasted sales

Trend lin

e

Time

Sales

Trend forecast of Sales

Naïve Method

Sales (at the period t) = Sales T+1

The following formula shows how to adjust the naïve method to account for a change in rate of sales levels. The formula is stated this way: Next Year’s Sales = This Year’s Sales X This Year’s Sales Last Year’s Sales

Free Hand Graphic Method

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10

Years

Sale

s

Series1

Freehand Method

In this method available data are divided into two parts, usually with equal number of years on both the parts

YearYear SalesSales

19931993 102102

19941994 105105

19951995 114114

19961996 110110

19971997 108108

19981998 116116

19991999 112112The average of the first three years will be:

102+105+114 321 ----------- = -------- = 107

3                    3 Similarly, for the last three years,

108 + 116 + 112 336 ---------------------- = --------- = 112

3                            3

Method of semi-averages

Forecasting market demand

It is the estimated rupee or unit sales for a specific future timePeriod based on the company’s marketing plan and an assumed marketing environment.

Price/ Unit

Price / Unit

Price/ Unit

Price/ Unit

Price/ Unit

Price / Unit

Qty per Unit (E)Qty per Unit F

Qty per Unit C

Qty per Unit (B)

Qty per

Unit (A)

Qty per Unit (D)

Total Market demand

P1

P2

Q1Q2

D D1

D D2

D D1

D D2

Market demand curve

Correlation analysis

• a correlation is basically the degree of linear association between two variables where one variable is treated as independent variable and sales as the dependent variable

• sales managers look for variables that correlate with or relate to sales

• correlation analysis involves the determination of whether a relation exists, and if it does, then measuring it, testing whether it is significant, and establishing the cause and effect relation

• the degree of relationships between the variables is called co-efficient of correlation

• regression analysis is another form of correlational technique

• reveals average relationship between two variables and this makes possible estimation or prediction

• a statistical method used to incorporate independent factors that are thought to influence sales into forecasting procedures

Population

Sales

Population

Sales

(Liner Relationship) (Curvilinear Relationship)

Regression analysis

Sales organization

• an organization of individuals either working together for the marketing of products and services manufactured by an enterprise or for products that are procured by the firm for the purpose of reselling

• a sales organization defines duties, roles, rights, and responsibilities of sales people engaged in selling activities meant for the effective execution of the sales function

Sales organization (cont….)

• a structural body through which the functions of sales management are carried out

• sales organization always makes efforts to increase sales, thereby achieving the principle of profit maximization, which contributes to the overall growth of enterprise

Factors influencing structure

• product and service related factors

• organization related factors

• marketing mix related factors

• external factors:

- the speed of market change- reduction in the number of vendors per buyer- closer to customer relationships- changes in regulations and international practices

Organizational principles

span of control

unity of command

hierarchy of authority

stability and continuity

coordination and integration

homogeneity

objectivity

specialization

Organizational design

- formal and coordinated task- assigning territories - establishing flows of communication and responsibilities of sales groups and individuals to customers effectively

Line organization Mr. Ratnakar ShettyPresident / Owner

Mr. ChandrakantVP (Sales)

Five sales people

Consumer market

Institutional market

Corporate market

National Distributors Direct to

HomeDirect

marketing Distributors /Bundling Gifting

ConsumerRegionalDistributors

Retailers

Consumers

Typical structure of a line organization

Design by territory

VP Marketing

National Sales Manager

Divisional Manager(East)

Divisional Manager(North)

Divisional Manager(West)

Regional Sales Manager

District Sales Manager

Sales Staff(City wise)

Regional Sales Manager

District Sales Manager

Sales Staff(City wise)

Regional Sales Manager

District Sales Manager

Sales Staff(City wise)

Design by management function

Mr. S.P. singh,VP

(Marketing)

Mrs. Chitra Mohanty

(Advt / Sales Promotion Mgr)

Staff Function Line Function

Mr. Dibya Behera(Sales Manager)

Mr. Chandra DeManager

(MR)

20 Sales People

Design by product

President,Marketing

Product Manager (A)

Product Manager (B)

Manager(Sales)

Manager(Training)

Manager(Promotion)

Manager(Sales)

Manager(Training)

Manager(Promotion)

Design by customer

President(Marketing)

Sales ManagerWholesalers

Sales ManagerRetail Sales

Sales People

Sales ManagerIndustrial Relations

Vice President(Marketing)

Sales People Sales People

Functional

Geographic

Customer

Combined Sales Org. Design

President

Marketing ManagerInternational

G.MInternational Sales

Marketing ManagerIndia

Vice President(Marketing)

G.MConsumer care

G.MInternational Sales

Vice President(HRD)

Vice President(Production)

Divisional ManagerSoaps

Divisional ManagerFood

Divisional ManagerPaper

Eastern Sales Division

Western Sales Division

Northern Sales Division

Europe Division America Division Gulf Division

Product

Number of sales people

• determined by:- territories vary in their demand structure for prospecting- product mix demands- levels and types of prospecting- nature of the customer segments

Affordability method (based on sales budget)

Incremental method

Workload method

Number of sales people =(Number of

existing customers)

(Number of Potential

customers)

(Ideal frequency

of calls)

(Length of a call)XXX

Ideal selling time available for a salesperson

Sales territory

• a group of present and potential customers assigned to

an individual

• sales person, a group of sales person, a branch, a dealer,

a distributor or a marketing organization at a given

period of time

Sales territory (contd.)

Advantages of designing a sales territory :

it ensures better market coverage effective utilization of the sales force efficient distribution of workload among sales people it is convenient to evaluate the performance of sales people to control over the direct and indirect costs of the sales function optimum utilization of sales time by sales people

Designing sales territories

Select the basic geographic control units

Decide on the criteria for allocation

Decide on the starting point

Combine control units adjacent to starting pointCompare territories on allocation criteria and

conduct workload analysisAssign sales force to new

territories

Factors influencing the

modifications of a territory:

• mergers• market consolidation• split in division• sales force turnover• customer relocations• product life cycle change• product line change

Modify territorial

boundaries to balance workload

and potential

Territory shapes

circlewedge

Clover leaf

CASELET-1CASELET-1YOU ARE A SALES EXECUTIVE WORKING WITH M/S YOU ARE A SALES EXECUTIVE WORKING WITH M/S

RAJEEV MOTORS LTD. YOUR SHOWROOM STOCKS RAJEEV MOTORS LTD. YOUR SHOWROOM STOCKS VARIOUS MODELS OF MATIZ CARS. YOU HAVE VARIOUS MODELS OF MATIZ CARS. YOU HAVE BEEN SPEAKING TO A PROSPECT WHO IS A BEEN SPEAKING TO A PROSPECT WHO IS A SENIOR EXECUTIVE IN A REPUTED COMPANY. HE SENIOR EXECUTIVE IN A REPUTED COMPANY. HE HAS TOLD YOU THAT ONE OF THE REASONS WHY HAS TOLD YOU THAT ONE OF THE REASONS WHY HE IS LOOKING FOR A SMALL CAR IS THAT HE HAS HE IS LOOKING FOR A SMALL CAR IS THAT HE HAS NOT BEEN CLAIMING CAR ALLOWANCE FROM HIS NOT BEEN CLAIMING CAR ALLOWANCE FROM HIS COMPANY.COMPANY.

HE HAS A SMALL FAMILY OF FOUR PERSONS, HE HAS A SMALL FAMILY OF FOUR PERSONS, WHICH INCLUDES HIS WIFE, 2 SMALL CHILDREN-9 WHICH INCLUDES HIS WIFE, 2 SMALL CHILDREN-9 AND 5 YEARS OLD AND OF COURSE HIMSELF. HE AND 5 YEARS OLD AND OF COURSE HIMSELF. HE WANTS YOU TO GIVE HIM A STEREO AND OTHER WANTS YOU TO GIVE HIM A STEREO AND OTHER ACCESSORIES FREE AS THESE ARE BEING ACCESSORIES FREE AS THESE ARE BEING OFFERED BY ANOTHER DEALER. HE IS ALSO VERY OFFERED BY ANOTHER DEALER. HE IS ALSO VERY PARTICULAR ABOUT THE AFTER SALES SERVICE.PARTICULAR ABOUT THE AFTER SALES SERVICE.

WHAT WILL YOU NEGOTIATE ON?WHAT WILL YOU NEGOTIATE ON?

CASELET-2CASELET-2• YOU ARE THE SALES OFFICER WITH DHL YOU ARE THE SALES OFFICER WITH DHL

LTD. THE COURIER SERVICES OFFERED BY LTD. THE COURIER SERVICES OFFERED BY YOU ARE THE CHEAPEST IN THE YOU ARE THE CHEAPEST IN THE MARKET.YOU ARE GOING TO MEET A MARKET.YOU ARE GOING TO MEET A CLIENT WHO IS REPRESENTING A BIG CLIENT WHO IS REPRESENTING A BIG HOUSE. THE CLIENT HAS MENTIONED THAT HOUSE. THE CLIENT HAS MENTIONED THAT THEY NEED A COURIER WHO CAN ADAPT THEY NEED A COURIER WHO CAN ADAPT TO THE FLEXIBLE REQUIREMENTS OF THE TO THE FLEXIBLE REQUIREMENTS OF THE COMPANY-SOMETIMES MATERIAL HAS TO COMPANY-SOMETIMES MATERIAL HAS TO BE SENT EARLY IN THE MORNING AND BE SENT EARLY IN THE MORNING AND SOMETIMES LATE IN THE EVENING. HE HAS SOMETIMES LATE IN THE EVENING. HE HAS ALSO MENTIONED THAT YOUR PRICE IS ALSO MENTIONED THAT YOUR PRICE IS HIGH.HIGH.

WHAT WILL YOU NEGOTIATE ON? WHAT WILL YOU NEGOTIATE ON? PLEASE GIVE REASONS FOR YOUR PLEASE GIVE REASONS FOR YOUR APPROACH.APPROACH.