sales and distribution

1. What is Sales Management?
• One definition: “The management of the personal
selling part of a company’s marketing function.”
• Another definition: “The process of planning,
directing, and controlling of personal selling,
including recruiting, selecting, equipping, assigning,
supervising, paying, and motivating the personal
sales force.
1

2. Process of Sales Mgmt
•Formulation of Sales Management
•The strategic sales program should consider the environmental
issues effecting the business. It should organized and planned the
company’s overall personal selling efforts and integrate these with
the other elements of the firm’s marketing strategy
•Implementation
•It involves selecting appropriate sales personnel, training them,
leading them and motivating them, designing and implementing of
policies and procedures that will direct the efforts of the sales
people towards achieving corporate objectives
•Evaluation
•It involves developing methods and practices for monitoring and
evaluating the individual sales force performance.
Refer Sales and Distribution Management- Oxford pub Tapan K.Panda ,page no 26-page no.31 2

3. Roles of a Sales Manager
Some of the important roles of the modern sales manager
are:
• A member of the strategic management team
• A member of the corporate team to achieve objectives
• A team leader, working with salespeople
• Managing multiple sales / marketing channels
• Using latest technologies (like CRM) to build superior
buyer-seller relationships
• Continually updating information on changes in
marketing environment
3

4. Salesmanship
• It is a seller initiated effort that provides
prospective buyer with information and
motivates or persuades them to make favorable
buying decision concerning the seller’s products
or services.
• Salesmanship is an attempt to induce people to
buy goods---- W.G. Carter
• It is the ability to persuade people to buy goods
or services at a profit to the seller and benefit to
the buyer.----- National Association of Marketing Teachers of America
4

5. Functions of Salesmanship
• To introduce products to customers
• To help the customers to make buying decisions.
• To see how the customer’s needs are
transformed into wants and demand.
• To negotiate and conduct effective selling at least
cost.
• To gather information about markets and
competitor’s products and transmit it to the
company.
5

6. Personal Selling –concepts
• The only function / department in a company that
generates revenue / income
• The financial results of a firm depend on the
performance of the sales department / management
• Many salespeople are among the best paid people in
business
• It is one of the fastest and surest routes to the top
management
6

7. Continue……
• If a sales person makes a presentation, the prospect
may or may not buy
• The above “buyer behaviour model” does not tell us
the reasons of buying or not buying
• To understand the psychological aspects of selling or
buying, salespeople should study consumer or buyer
behaviour, including buying process and situations
Stimulus
(Sales Presentation)
Response
(buy or no buy)
Buyer’s decision
making process

8. The Process of Personal Selling
As a part of selling activities, if salespeople follow the steps or
phases shown below, their chances of success are far better.
Prospecting &
Qualifying
Preapproach /
Precall planning
Approach
Presentation &
Demonstration
Follow-up &
Service
Trail close /
Closing the sale
Overcoming
Objections
• The sequence of above steps may change to meet the sales
situation in hand.
• Some of the above steps may not be applicable for selling to the
trade
• We now discuss application of above steps to industrial selling
*source: Sales and distribution Management TMH-Hawaldar
8

9. Prospecting
• It is identifying or finding prospects i.e. prospective or
potential customers.
• Methods of prospecting or sales lead generation are: (1)
referrals from existing customers, (2) company sources (website,
ads., tradeshow, teleprospecting), (3) external sources
(suppliers, intermediaries, trade associations), (4) salespersons’
networking, (5) industrial directories, (6) cold canvassing
Qualifying
• Companies qualify sales leads by contacting them by mail or
phone to find their interests (or needs) and financial capacity.
• Leads are categorized as: Hot, Warm, and Cool
9

10. Pre-approach
• Information gathering about the prospect.
Sources of information: the Internet, industrial
directories, government publications, intermediaries,
etc.
• Precall planning
• Setting call objectives
• Tentative planning of sales strategy: which
products, features and benefits may meet the
customer needs
10

11. Approach
• Make an appointment to meet the prospect
• Make favourable first impression
• Select an approach technique:
• Introductory
• Customer benefit
• Product
• Question
• Praise
• The approach takes a few minutes of a call, but it
can make or break a sale
11

12. Presentation and Demonstration
There are four components:
• Understanding the buyer’s needs
• Knowing sales presentation methods / strategies
• Developing an effective presentation
• Using demonstration as a tool for selling
We will examine each of the above points
12

13. Understanding the buyer’s needs
• Firms and consumers buy products / services to
satisfy needs
• To understand buyer’s needs, ask questions and listen
• In business situations, problem identification and
impact questions are important
E.G.
• Have you experienced any problems on quality and
delivery from the existing supplies?
• What impact the quality and delivery problems will
have on your costs and customer satisfaction?
13

14. Knowing Sales Presentation Methods/Strategies
Firms have developed different methods / styles / strategies of sales
presentation
• Stimulus response method / canned approach.
• It is a memorised sales talk or a prepared sales presentation.
• The sales person talks without knowing the prospect’s needs. E.G.
Used by tele-marketing people
• Formula method / formulated approach.
• It is also based on stimulus response thinking that all prospects are
similar.
• The salesperson uses a standard formula – AIDA (attention,
interest, desire, and action).
• It is used if time is short and prospects are similar.
• Shortcomings are: prospects’ needs are not uncovered and uses
same standard formula for different prospects. 14

15. Sales Presentation Methods (Continued)
• Need – satisfaction method
• Interactive sales presentation
• First find prospect’s needs, by asking questions and
listening
• Use FAB approach: Features, Advantages, Benefits
• Effective method, as it focuses on customers
• Consultative selling method / Problem-solving approach
• Salespeople use cross-functional expertise
• Firms adopt team selling approach
• It is used by software / consulting firms
15

16. Developing an Effective Presentation
• Plan the sales call
Some of the guidelines are:
• Adopt presentation to the situation and person
• Communicate the benefits of the purchase
• Present relevant and limited information at a time
• Use the prospect’s language
• Make the presentation convincing – give evidence
• Use technology like multi-media presentation
16

17. Using Demonstration
• Sales presentation can be improved by
demonstration
• Demonstration is one of the important selling tools
EGs: Test drive of cars; demonstration of industrial
products in use
• Benefits of using demonstration for selling are:
• Buyers’ objections are cleared
• Improves the buyer’s purchasing interest
• Helps to find specific benefits of the prospect
• The prospect can experience the benefit
17

18. Overcoming Sales Objections / Resistances
• Objections take place during presentations / when
the order is asked
• Two types of sales objections:
• Psychological / hidden
• Logical (real or practical)
• Methods for handling and overcoming objections: (a)
ask questions, (b) turn an objection into a benefit, (c)
deny objections tactfully, (d) third-party certificate,
(e) compensation
18

19. Trial close and Closing the sale
• Trial close checks the attitude or opinion of the
prospect, before closing the sale (or asking for the
order)
• If the response to trial close question is favorable,
then the salesperson should close the sale
• Some of the techniques used for closing the sale are:
(a) alternative-choice, (b) minor points, (c)
assumptive, (d) summary-of-benefits, (e) T-account,
(f) special-offer, (g) probability, and (h) negotiation
19

20. Follow-up and Service
• Necessary for customer satisfaction
• Successful salespeople follow-up in different ways:
For example,
• Check order details
• Follow through delivery schedule
• Visit when the product is delivered
• Build long-term relationship
• Arrange warranty service
20

21. Negotiation
• Salespeople, particularly in business to business selling, need
negotiating skills
• When to negotiate?
(a) When the buyer puts certain conditions for buying to the
seller, (b) When agreement between the buyer and the seller
is needed on several factors, (c) When the product is
customized, (d) When the final price is to be decided
• How to prepare for negotiation?
(a) planning, (b) building relationship, (c) purpose
• Styles of negotiation
(a) I win, you lose, (b) Both of us win (or win-win style), (c)
You win, I lose, and (d) Both of us lose
21

22. Qualities of a Successful Sales manager
• People skills include abilities to motivate, lead,
communicate, coordinate, team-oriented
relationship, and mentoring
• Managing skills consist of planning, organizing,
controlling and decision making
• Technical skills include training, selling, negotiating,
problem-solving, and use of computers
22

23. Goal Setting
• Companies set different objectives for their
sales force, depending upon their overall
corporate objectives and the nature of
commercial activities.
• From company’s point of view there are three
general objectives of goal setting
– Maintaining continual growth
– Achieving sufficient sales volume
– Providing sufficient contribution to profits.
23

24. Setting goals by Objectives
• The setting goals by objectives is a process
consisting of two steps:
Setting goals jointly with the salesman
Planning strategy to reach the objectives.
24

25. Market Demand and Sales Potential
• Market demand for a product or service is the
estimated total sales volume in a market (or
industry) for a specific time period in a defined
marketing environment, under a defined marketing
program or expenditure. Market demand is a
function associated with varying levels of industry
marketing expenditure.
25

26. Cont….
• Market potential is the maximum market (or industry)
demand, resulting from a very high level of industry
marketing expenditure, where further increases in
expenditure would have little effect on increase in
demand
• Company demand is the company’s estimated share of
market demand for a product or service at alternative
levels of the company marketing efforts (or expenditures)
in a specific time period
Market Potential
Market Forecast
Market Minimum
Fig. Market Demand Functions
Industry marketing expenditure
Marketdemand

27. Cont…
• Company sales potential is the maximum estimated company
sales of a product or service, based on maximum share (or
percentage) of market potential expected by the company
• Company sales forecast is the estimated company sales of a
product or service, based on a chosen (or proposed)
marketing expenditure plan, for a specific time period, in a
assumed marketing environment
• Sales budget is the estimate of expected sales volume in
units or revenues from the company’s products and services,
and the selling expenses. It is set slightly lower than the
company sales forecast, to avoid excessive risks
27

28. Forecasting
• Market (or industry) forecast (or market size) is the
expected market (or industry) demand at one level
of industry marketing expenditure
28

29. Forecasting Approaches
• Two basic approaches:
• Top-down or Break-down approach
• Bottom-up or Build-up approach
• Some companies use both approaches to increase
their confidence in the forecast
29

30. Steps followed in Top-down / Break-down
Approach
• Forecast relevant external environmental factors
• Estimate industry sales or market potential
• Calculate company sales potential = market potential
x company share
• Decide company sales forecast (lower than company
sales potential because sales potential is maximum
estimated sales, without any constraints)
30

31. Steps followed in Bottom-up / Build-up
Approach
• Salespersons estimate sales expected from their
customers
• Area / Branch managers combine sales forecasts
received from salespersons
• Regional / Zonal managers combine sales forecasts
received from area / branch managers
• Sales / marketing head combines sales forecasts
received from regional / zonal managers into
company sales forecast, which is presented to CEO
for discussion and approval
31

32. Sales Forecasting Methods
Qualitative Methods Quantitative Methods
• Executive opinion • Moving averages
• Delphi method • Exponential smoothing
• Salesforce composite • Decomposition
• Survey of buyers’
intentions
• Naïve / Ratio method
• Test marketing • Regression analysis
• Econometric analysis

33. Executive opinion method
• Most widely used
• Procedure includes discussions and / or average of all
executives’ individual opinion
• Advantages: quick forecast, less expensive
• Disadvantages: subjective, no breakdown into subunits
• Accuracy: fair; time required: short to medium (1 – 4 weeks)
Delphi method
• Process includes a coordinator getting forecasts separately
from experts, summarizing the forecasts, giving the summary
report to experts, who are asked to make another prediction;
the process is repeated till some consensus is reached
• Experts are company managers, consultants, intermediaries,
and trade associations
33

34. Delphi Method (Continued)
• Advantages: objective, good accuracy
• Disadvantages: getting experts, no breakdown into subunits,
time required: medium (3/4 weeks) to long (2/3 months)
Salesforce composite method
• An example of bottom-up or grass-roots approach
• Procedure consists of each salesperson estimating sales.
Company sales forecast is made up of all salespersons’ sales
estimates
• Advantages: Salespeople are involved, breakdown into
subunits possible
• Disadvantages: Optimistic or pessimistic forecasts, medium to
long time required
• Accuracy: fair to good (if trained)
34

35. Survey of Buyers’ Intentions Method
• Process includes asking customers about their intentions to
buy the company’s products and services
• Questionnaire may contain other relevant questions
• Advantages: gives more market information, can forecast new
and existing products, good accuracy
• Disadvantages: some buyers’ unwilling to respond, time
required is long (3-6 months), medium to high cost
Test Marketing Method
• Methods used for consumer market testing: full blown,
controlled, and simulated test marketing
• Methods used for business market testing: alpha and beta
testing
35

36. Test Marketing Method (Continued)
• Advantages: used for new or modified products, good accuracy,
minimizes risk of national launch
• Disadvantages: Competitors may disturb if some methods are
used, medium to high cost, medium to long time required
Moving Average Method
• Procedure is to calculate the average company sales for
previous years
• Moving averages name is due to dropping sales in the oldest
period and replacing it by sales in the newest period
• Advantages: simple and easy to calculate, low cost, less time,
good accuracy for short term and stable conditions
• Disadvantages: can not predict downturn / upturn, not used for
unstable market conditions and long-term forecasts
36

37. Exponential Smoothing Method
• The forecaster allows sales in certain periods to influence the
sales forecast more than sales in other periods
• Equation used:
Sales forecast for next period=(L)(actual sales of this year)+(1-
L)(this year’s sales forecast), where (L) is a smoothing
constant, ranging greater than zero and less than 1
• Advantages: simple method, forecaster’s knowledge used,
low cost, less time, good accuracy for short term forecast
• Disadvantages: smoothing constant is arbitrary, not used for
long-term and new product forecast
37

38. Decomposition Method
• Process includes breaking down the company’s previous periods’ sales data
into components like trend, cycle, seasonal, and erratic events. These
components are recombined to produce sales forecast
• Advantages: Conceptually sound, fair to good accuracy, low cost, less time
• Disadvantages: complex statistical method, historical data needed, used for
short-term forecasting only
Naive / Ratio Method
• Assumes: what happened in the immediate past will happen in immediate
future
• Simple formula used:
• Advantages: simple to calculate, low cost, less time, accuracy good for short-
term forecasting
• Disadvantages: less accurate if past sales fluctuate
yearlastofsalesActual
yearthisofsalesActual
yearthisofsalesActualyearnextforforecastSales ×=
38

39. Regression Analysis Method
• It is a statistical forecasting method
• Process consists of identifying causal relationship between
company sales (dependent variable, y) and independent variable
(x), which influences sales
• If one independent variable is used, it is called linear (or simple)
regression, using formula; y=a+bx, where ‘a’ is the intercept and
‘b’ is the slope of the trend line
• In practice, company sales are influenced by several independent
variables, like price, population, promotional expenditure. The
method used is multiple regression analysis
• Advantages: Objective, good accuracy, predicts upturn /
downturn, short to medium time, low to medium cost
• Disadvantages: technically complex, large historical data needed,
software packages essential
39

40. Econometric Analysis Method
• Procedure includes developing many regression
equations representing (i) relationships between
sales and independent variables which influence
sales, and (ii) interrelationships between variables.
Forecast is prepared by solving these equations
• Computers and software packages are used
• Advantages: Good accuracy of forecasts of economic
conditions and industry sales
• Disadvantages: need expertise & large historical
data, medium to long time, medium to high cost
40

41. What is a Sales Budget?
• It includes estimates of sales volume and selling expenses
• Sales volume budget is derived from the company sales forecast
– generally slightly lower than the company sales forecast, to
avoid excessive risks
• Selling expenses budget consists of personal selling expenses
budget and sales administration expenses budget
• Sales budget gives a detailed break-down of estimates of sales
revenue and selling expenditure
Purposes of the Sales Budget
• Planning
• Coordination
• Control
41

42. Sales Budget Process
• Many firms follow a process for preparation of
annual sales and company budgets. It generally
includes:
• Review past, current, and future situations
• Communicate information to all managers on budget
preparation – guidelines, formats, timetable
• Use build-up approach, starting with first-line sales
managers
• Get approval of sales budget from top management
• Prepare budgets of other departments
42

43. Marketing and Sales Strategies
• Figure below shows how sales strategy is developed from marketing
strategy
Marketing
Strategy
* IMC: Integrated Marketing Communication
Target
market
strategy
(Long-
term)
Marketing
mix strategy
(Short-term)
Product /
service
strategy
Promotion /
IMC* strategy
Price
strategy
Distribution
strategy
Sales promotion
strategy
Advertising
strategy
Personal selling / sales
strategy
Public relations & Publicity
strategy
Direct marketing
strategy
*source: Sales and distribution Management TMH-Hawaldar
43

44. Components of Sales Strategy
• Classifying market segments and individual customers
within a target segment
• Each firm should first decide on target market segments
and if possible, to classify customers into high, medium,
low sales & profit potentials
• Sales strategy is developed accordingly
• Relationship strategy
• Whether a selling firm should use transactional, value-
added, or collaborative relationship depends on both
the seller and the customer
• Each selling firm to decide which segments and
individual customers respond profitably to collaborative
relationship
44

45. Components of Sales Strategy (Continued)
• Selling Methods
• These are: (1) Stimulus response, (2) formula, (3) need-
satisfaction, (4) team selling, (5) consultative
• Selection of appropriate selling method depends on
relationship strategy
• Channel Strategy
• There are many sales / marketing channels. For example:
company salesforce, distributors, franchisees, agents,
the internet, brokers, discount stores
• Selection of a suitable channel depends on both the
buyer and the seller, products / services, and markets
45

46. Sales Territories
• A sales territory consists of existing and potential customers,
assigned to a salesperson
• Most companies allot salespeople to geographic territories,
consisting of current & prospective customers
Major Reasons / Benefits of Sales Territories
• Increase market / customer coverage
• Control selling expenses and time
• Enable better evaluation of salesforce performance
• Improve customer relationships
• Increase salesforce effectiveness
• Improve sales and profit performance
46

47. Procedure for Designing Sales Territories
• Select a control unit*
• Find location and potential of present and
prospective customers within control units**
• Decide basic territories by using
• Build-up method,
Or
• Break-down method
*A control unit is a geographical territorial base
**Unnecessary & expensive for consumer products
47

48. Procedure in Build-up Method
• Decide customer call frequencies
• Calculate total customer calls in each control unit
• Estimate workload capacity of a salesperson
• Make tentative territories
• Develop final territories
Objective is to equalise the workload of salespeople
48

49. Procedure in Breakdown Method
• Estimate company sales potential for total market
• Forecast sales potential for each control unit
• Estimate sales volume expected from each
salesperson
• Make tentative territories
• Develop final territories
Objective is to equalise sales potential of territories
49

50. Assigning Salespeople to Territories
Sales Manager should consider two criteria:
(A)Relative ability of salespeople
• Based on key evaluation factors:
(1) Product knowledge, (2) market knowledge, (3) past
sales performance, (4) communication, (5) selling skills
(B) Salesperson’s Effectiveness in a Territory
• Decided by comparing social, cultural, and physical
characteristics of the salesperson with those of the
territory
• Objective is to match salesperson to the territory
50

51. Management of Territorial Coverage
• It means: How salesperson should cover the assigned
sales territory
• It includes three tasks for a sales manager:
• Planning efficient routes for salespeople
• Scheduling salespeople’s time
• Using time-management tools
51

52. Routing
• Routing is a travel plan used by a salesperson for making
customer calls in a territory
• Benefits of or Reasons for routing:
• Reduction in travel time and cost
• Improvement in territory coverage
• Importance of routing depends on the application:
• Nature of the product – Important for FMCG
• Type of jobs of salespeople – Important for driver-
cum-salesperson job, but creative selling job needs a
flexible route plan
52

53. Procedure for Setting up a Routing Plan
• Identify current and prospective customers on a territory map
• Classify each customer into high, medium, or low sales
potential
• Decide call frequency for each class of customers
• Build route plan around locations of high potential customers
• Computerised mathematical models are developed
• Commonly used routing patterns are:
B
Circular
B
Clover Leaf
Base
(B)
C5
C1
C4 C3 C2
Straight line / Hopscotch
Sales and distribution Management TMH-Hawaldar 53

54. Scheduling
• Scheduling is planning a salesperson’s visit time to customers.
It deals with time allocation issue
• How to allocate salesperson’s time?
• Sales manager communicates to salesperson major
activities and time allocation for each activity
• Salesperson records actual time spent on various activities
for 2 weeks
• Sales manager and salesperson discuss and decide how to
increase time spent on major activities
• Companies specify call norms for current customers, based on
sales and profit potentials, and also for prospective customers
54

55. Time Management Tools
To help outside salespeople* to manage their time
efficiently and productively, the tools available are:
• High-tech equipment like laptop computers and
cellular phones
• Inside salespeople to provide clerical support,
technical support, and for prospecting, and qualifying,
as they remain within the company
• Outside salespeople can then spend more time
getting more orders & building relationships with
major customers
*Outside salespeople travel outside the organisation
55

56. Sales Quotas
• What are Sales Quotas?
• Sales quotas are sales goals or targets set by a company for its
marketing / sales units for a time period
• Marketing / sales units are regions, branches, territories,
salespeople, and intermediaries
• Generally, company sales budget is broken down to sales quotas
for various marketing units
• Objectives of Sales Quotas
• To use quotas as performance standards or performance goals
• To control performance
• To motivate people by linking quotas to compensation plans
• To identify strengths and weaknesses of the company
56

57. Types of Quotas
• Organisations set many types of sales quotas: (1) sales
volume, (2) financial, (3) activity, (4) combination
• Sales volume quotas
• For effective control, sales volume quota should be
set for the smallest marketing units, such as
salesperson, districts / branches, product items /
brands
• Sales volume quotas can be stated in (a) rupees /
dollars, (b) units, or (c) points
• Rupees / dollars sales volume quotas are appropriate
when salespeople are required to sell many products
57

58. Sales Volume Quotas (Continued)
• Unit sales volume quotas are suitable when
• Salespeople are selling a few products
• Prices of the product fluctuate rapidly
• Price of each product / service is high
• Point sales volume quotas are appropriate when the
company wants salespeople to sell products that
contribute more to profits
58

59. Financial Quotas
• Financial quotas control (a) gross margin or net profits, and (b)
expenses of marketing units
• Gross-margin / Net-profit quotas
• Calculate gross margin by subtracting ‘cost of goods sold’ (i.e.
cost of manufacturing) from sales volume. Sales managers are
not responsible for cost of manufacturing
• Net profit quotas are generally accepted by sales mangers as it is
calculated by subtracting direct selling expenses from the gross
margin
• Expense quotas
• In many companies, expense quotas are stated as a percentage of
sales
• Expense quotas to be administered with flexibility, to make
salespeople cost conscious, allowing reasonable expenses
59

60. Activity Quotas
• These are set when salespeople perform both
selling and non-selling activities
• Objective is to direct salespeople to carry out
important activities
• For effective implementation, activity quotas
are combined with sales volume and financial
quotas
• E.G. Calling on high potential customers,
payment collection from defaulting customers
60

61. Combination Quotas
• Used when companies want to control salesforce performance on
key selling and non-selling activities
• Focus on a few types of quotas, to avoid confusing salespeople. An
example:
Type of Quota Quota Actual Percent
Quota
Weight
(Importance)
Percent
Quota x
Weight
Sales Volume (Rs) 5,00,000 4,50,000 90 3 270
Receivables (days) 45 50 89 2 178
New Customers
(Nos)
04 05 125 1 125
Total 6 573
• Total point score=573/6=95.5 for a salesperson
• Typically use ‘points’ as a common measure to resolve the problem of
different measures used by various types of quotas

62. Methods for Setting Sales Quotas
• Several methods are used for establishing sales quotas
• In practice, companies use more than one of the
following methods to increase their confidence in sales
quotas
• Total market estimates
• Territory potential
• Past sales experience
• Executive judgement
• Salespeople’s estimates
• Compensation plan
We shall briefly discuss each of the above methods
62

63. Total Market Estimates Method
• The Process followed by established companies is
as under:
1) Estimate next year’s total market demand, or
industry sales forecast, using sales forecasting
methods
2) Decide the company’s estimated market share for
next year
3) Company’s next year sales forecast= (1) x (2)
4) Find each territory’s percentage share out of the
total company sales in the previous year
5) Territory sales quota = (3) x (4)
63

64. Territory Potential Method
• The procedure followed by new companies is as under:
1) Estimate next year’s industry sales forecast or market
potential, using sales forecasting methods
2) Estimate multiple factor index (MFI) for each territory,
based on factors that influence sales of the product. These
factors are given weights corresponding to the degree of
sales opportunity.
3) Industry sales forecast in a territory (or territory market
potential=(1)x(2)
4) Territory sales quota = (3) x estimated market share of the
company in the territory
64

65. Past Sales Experience Method
• The process consists of taking past one year’s sales
(or an average of previous 3 to 5 year’s sales), adding
an arbitrary percentage (or a percentage by which
the market is expected to grow), and thus setting
each territory sales quota
• The assumption that future sales are related to past
sales may not be always correct
• This method should not be the only method used
• Past sales should be one of the factors used for
deciding sales quotas
65

66. Executive Judgement Method
• Senior executives use their judgement when the
product, territories, and the company are new or very
little market information is available
• Executives predict company sales budgets and also
territory sales quotas
• This method should generally be used along with
other methods
Salespeople’s Estimate Method
• Some firms ask their salespeople to set their own
quotas
• Many salespersons either set very high or too low
sales quotas
66

67. Salespeople’s Estimate Method (Continued)
• For setting proper quotas, many sales managers use 2 or 3 of
above methods, discuss with salespersons to get their inputs,
and decide sales quotas
Compensation Plan Method
• Some organizations set quotas to fit with their sales
compensation plan
• E.G. A company wants to pay a monthly salary of Rs 5000, and
a commission of 3% on monthly sales above Rs 1,00,000. The
quota of Rs 1,00,000 is set in such a way that salesperson
would find it very difficult to cross total compensation of Rs
8000 per month (5000+3000)
• Sales quotas should not be based only on this method,
because it would “put the cart before the horse”
67

68. Objectives
1.A plan drawn up by sales managers to ensure that all prospective
markets are visited by the sales team is known as a __________ plan
Coverage (b) Beat (c) call (d) market
2.The schedule and sequence for visitng the outlets in any market is
known as __________ plan .
(a)Call (b) beat (C) outlet (d) visit
3.A _____________ made by sales managers is part of the demand
management process.
(a)promise (b) estimate (c) forecast (d) guess
4. A _____________ concept ensures that there is no wastage of effort
and time in covering market.
(a)Milk run (b) call plan (c) outlet coverage (d) scheduling
5. Breaking bulk storage and delivery to customers are the task performed
by a ____________
(a)C&FA (b) Distributor (c) Transporter (d) Warehouse
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69. Objectives
6. Sales Management has an important position in the organization because it is
(a)Closer to customer (b) The only income generating function
7. Organizations many times use relationship selling approach to
(a)Large (b) medium (c) few number of customers
8.Out of three important skills for the success of a sales manager the two are
(a)managing and technical skills. The third skill is
Communication (b) Negotiation (c) Problem solving (d) People
9.The first stage in buying decision process , in both consumer and business markets is
(a)Information search (b) Deciding the characterstics and quality of needed
product © Problem or need recognition (d) None of the above
10. A prospect who needs the product and has an ability to buy, is also referred to as a
(a) Suspect (b) Sales lead (c) Probable prospect (d)potential customer
11. In defining a sales territory key word is
(a) Sales (b) customers (c) geographic area (d)none of the above
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70. Objectives
12. Effective territories design and allocation of sales people to territories
result in
(a) improves sales force performance (b) improves company performance
(c) growth of above
13 In designing sales territories , the sales manager should start the process
by selecting a geographic control unit that is
Small (b) large (c) medium size (d) any size
14. Basic territories can be determined by using
(a) build up method (b) breakdown method (c) both the above method
15.In build up method company tries to
(a) equalize the sales potential of territories (B) equalize the workload of
sales people (c) equalize both sales potential of territories and workload
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71. References
• Sales and Distribution Management: K.
Havaldar, Cavale.: Tata Mcgrawhill
• Sales and Distribution Management: Tapan K
panda, Sahdev : Oxford publication
• Sales Management : Cundiff .
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