Unit III Sdm

7/27/2019 Unit III Sdm

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An organization in general can be

defined as the rational coordination

of the activities of a number of

people for the achievement of some

common explicit purpose or goal,

through division of labour and

function, and through hierarchy of

authority and responsibility.

What is an organization?

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A sales organization is a team of individuals

working together to achieve the set salesobjectives. A sales organization operates within

a organizational / corporate framework.

A sales organization ought to have a well

defined structure to operate efficiently and

effectively.

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A well designed organizational structure

does the following:

Defines jobs - roles, responsibilities and duties of the

personnel

Clarifies authority and power at each level. Promotes specialization

Avoids duplication of work

Facilitates coordination and communication

Facilitates adaptation by being flexible to the

changing environmental needs.

Facilitates growth


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The factors considered while designing a salesorganization structure are - Nature of the product and services

Organizational related factors: Size, volume,product range, geographical expanse of businessetc influence the sales structure.

Marketing mix related factors: The type ofdistribution channel, pricing policy, marketingcommunication influence the sales structure.

External factors: Nature of competition

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Major principles based on which the salesorganization is designed:

Span of control: It refers to the number ofsubordinates a manager can effectively manage.

A narrow span of control

A wider span has fewer levels of supervision.

Centralization and Decentralization:

Centralization of authority refers to the relativeconcentration of authority for decision makingespecially at top level.

Features - Consistency in the marketing plan, uniformityin product and service delivery, uniformity incompensation packages of the sales force, integration ofthe sales force.

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A decentralized structure helps in making the

organization more responsive to the market andregional demands.

In many organizations combination of centralizedand decentralized organizational structures are

used. E.g. - Titan Watches and Modi Xerox.

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Organizations adopt different kinds ofstructures To assure that all necessary activities are

performed

To define authority

To achieve coordination and control

To permit the development of specialists

To economize on execution time

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GeneralManager

Sales Manager

AssistantSales

Manager Div. 1

Salespeople

AssistantSales

Manager Div. 2

Salespeople

AssistantSales

Manager Div. 3

Salespeople

AssistantSales

Manager Office

Office Staff

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BASIC TYPES OF SALES ORGANISATIONS


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President

VP (Marketing)Advertising Manager Manager (Marketing Research)General Sales Manager

Director (Sales and Training)

Director of Dealer and

Distribution Relations

Sales Promotion Manager

Assistant to General

Sales Manager

Assistant GeneralSales Manager

District Sales Managers

Branch Sales Managers

Sales Personnel

Sales Personnel Director

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Director

of

Sales

Administration

Installation

and

Service

Manager

Manager of

Dealer and

Distribution

Networks

Manager

of

Sales

Personnel

Manager

of

Sales

Promotion

Manager ofSales

Supervision

Manager

of

Sales

Training

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Salesperson Salesperson Salesperson Salesperson Salesperson Salesperson



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GeneralSales

Manager

Sales

Personnel

Director

Western

DivisionSales

Manager

Director of

Sales

Analysis

Director

ofSales

Promotion

Central

DivisionSales

Manager

Director of

Sales and

Training

Eastern

DivisionSales

Manager

Branch

SalesManagers

Branch

SalesManagers

Branch

SalesManagers

Sales

Personnel

Sales

Personnel

Sales

Personnel

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General

Sales

Manager

Sales

Manager

Product 1

Director of

Sales

Analysis

Director

of

Sales

Promotion

Director of

Sales and

Training

Sales

Personnel

Director

Sales

Manager

Product 2

Sales

Personnel

Product 1

Sales

Manager

Product 1

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General

Sales

Manager

DirectorProduct

R and D

Manager,

Mining

Industry

Sales

Director of

Sales

Promotion and

Advertising

Director

of

Sales

Training

Manager,

Construction

Industry

Sales

Director ofSales

Planning

Manager,

Lumber

Industry

SalesBranch

Sales

Managers

Branch

Sales

Managers

Branch

Sales

Managers

Sales

Personnel

Sales

Personnel

Sales

Personnel

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General

Sales

Manager

SalesPersonnel

Director

AdvertisingManager

Director ofCustomer

Relations

SalesPromotion

Manager

Director ofSales

Planning

Sales ManagerInstitutional Sales

Sales Personnel

Sales Manager

Wholesale Sales

Sales Personnel

ExportSales Manager

Sales Personnel

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Sales ManagerChain Store Sales

Sales Personnel



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Sales territory is a geographical grouping of existing and potential

customers allocated to

an individual

a group of salespersons.

a branch

a dealer

a distributor

A marketing organization

Essentially designing territory means to divide the market into

convenient clusters.

Sales territory must be designed to meet certain criteria such as

easy administration, accessibility, optimization of travel time.

Designing of sales territories can be done by Equal Workload

Method or Equal Potential Method.

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Designing of sales territory has various advantages:

Better market coverage

Effective utilization of work force Better work load distribution

Easy performance evaluation

Control over costs of sales function

Improves the performance of salespersons

Increases individual attention to key customers

Advantages of segmentation can be gained. As

characteristics of different territory can be different. More effective planning, implementation and

control.

Helps in assigning responsibilities to salespersons.22


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Wedge shaped e.g. FMCGs like P&G Ltd.,Marico Industries, HLL, etc.

Circle shaped sales person is located at thecentre and then he needs to travel equally toall areas. E.g. Maruti Udhyog, HyundaiMotors.

Cloverleaf design clients /accounts are

distributed randomly throughout theterritory. E.g. Airtel


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- Philip Kotler


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Sales quota is the target or goals assigned to sales

units: sales person, dealer, distributor, territory, to beachieved in a specific period of time.

Sales quotas (quantified objectives) may be expressed

either in monetary terms or in volume terms.

These quantified objectives should be realistic.

The basis for fixing the sales quota should not only

be potential of the territory and the past data but also

factors such as territorys importance to the company,the market share expected from it and the profitability

of sales in that territory.

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Participative approach should be followed

while fixing the sales quota. The objective of fixing Sales quotas are :

Motivating the sales force

To bring in the right focus (products to begiven importance)

These form an important basis for feedback,

evaluation of and reward for the performanceof a sales unit.


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Cont.

Importance of Sales QuotasSales quotas serve several purposes. The important

objectives are shown in the diagram below:

Sales

Quotas

Quotas provide

performance

targets

Quotas provide standards

Quotas provide control

Quotas are motivational

Sales

Objectives


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Cont.

Types of Sales QuotasA sales organisation can set many types of quotas. The most common

quotas are shown in the following diagram:

Types of Sales Quotas

Sales VolumeQuotas

Sales BudgetQuotas

ActivityQuotas

QuotaCombinations


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1. Sales volume quota: These are basically ofthree kindsMonetary sales volume quota

Unit sales volume quota ( resorted to becauserupee value may varyprice may vary)

Point sales volume quota ( followed in multiproduct situations. Relative weightage. A unitof a product may get higher points than another

product)

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2. Sales Budget quota: These quotas are set with theobjective of controlling expenses, increasinggross margin / profit. Profit quotas are set. By thisthe salesmen are encouraged to sell more

profitable products. Expenses are often controlledby setting an expense budget as a percentage ofthe territory sales.

2. Sales activity Quota: Activity quotas are fixed forsalesmen in addition to sales quotas.


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As an example the activity quota may be set

for number of

Sales call to be made

Number of dealer contacts Number of product demonstrations to be made

Number of new accounts to be created

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Sales quotas can be fixed based on

1. Sales forecast & market potential

2. Based on sales forecast alone3. Average of Past sale

4. Executive judgment

5. Sales force compensation

6. By Sales people themselves


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Territory Managementrevenues, expenses, marketshare, dealer and trade relations.

Account Managementneed to manage customers

on the basis. Companies use BCG matrix for this:

Starsneed more attention -> high future potential

Cash cowsmaintain current business deals & build a long

term relationship

Problem childcustomer who has high potential but does

not give adequate returns

Dogsneed to be divested as they have low sales potential

& declining sales


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Call Managementmanager need to managethe sales call by checking the sales person in:

Selling techniques

Repeating mistakes

Knowledge about the product

Planning about customer objections & adequate

responses

Self Management


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- Cundiff and Still


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Businesses are forced to look well ahead in order to

plan their investments, launch new products, decide

when to close or withdraw products and so on.

Key decisions that are derived from a sales forecastinclude:-

- Employment levels required

- Promotional mix

- Investment in production capacity


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Forecasting can be:

Short-termdeals with day-to-day operations like

Production processes, Logistics management,

Raw-material procurement,

Sales management,

Marketing management,

Advertising management, etc.

Long-term


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1. Used to establish quotas

2. Used to plan the personal selling efforts and other

types of promotional activities

3. Used to budget expenses

4. Used to plan and coordinate production, logistics,

inventories, personnel and so forth.


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Accuracy

Plausibilityno manipulation of figures under any

pressure

Durability

Flexibility

Availability of statistical indexes

Organizational participation

Demand patterns in the market for the product


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Qualitative User expectationsfor industrial products where no. of

customers is less

Sales force compositesales forecast is based on the

expectation and experience of the salesperson Jury of executive opiniontop management give their opinion

based on experience and intuition which is the combined.

Delphi techniqueexperts give their opinion . Experts from

government institutions, universities, industry are involved

Market test -


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Quantitative

Time series analysishelps in estimating future trends

based on the past performance of the organization Moving averageextension of time series average

of several periods is considered

Exponential smoothingfurther refinement of

Moving average greater weightage is attached tosales in recent period than earlier

Regression and correlation analysisis used to

identify the factor that influence sales

Multiple regression model - is used to identify the

more than one factor that influence sales


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A budget is a plan expressed usually in monetary

terms. It is a process of allocating a portion of anorganizations resources for its various activities for a

specified period of time.

It helps in planning and coordination of the

organizations activities. Sales budgets are developed

for the smooth functioning of the sales function.

Developing sales budgets serve two purposes

1. As a mechanism of control and

2. An instrument of planning.


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In practice, sales managers prepare three types of budgets

1. A sales budget gives a plan showing the expected salesfor a specified period in the future for a division rather

than a customer or territory .

2. Selling expense budgets details the schedule of expenses

that may be incurred by the sales department to achieve

planned sales.

1. Commission, Salaries, Travelling and entertainment, Training

3. Administrative budget specifies the budgetary allocations

for general administrative expenses that would be

incurred by the sales department.

1. Rent, electricity, office furniture, stationery, etc


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The different methods for budgeting include the-1. Affordability method

2. Percentage-of-sales method

3. Competitive parity method4. Objective-and-task method

5. Return-oriented method.

1. ROI

2. ROA3. ROTA

4. ROAMReturn on Assets Managed


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Control is defined as a process used by managersto direct, regulate, and restrain the actions of people

so that the established goals of an enterprise may be

achieved.

Goals of Control

Revenue control

Optimize number of sales

Maximize profitControl revenue


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Like any other control system, sales control

requires the establishment of standards, the

evaluation of actual performance and the

correction of deviation in performance. Sales control implies not only managerial action

with regard to actual sales, but it also embraces all

other marketing functions required for the even

flow of products or services form producers to

consumers.


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All promotional and auxiliary efforts in marketing

require as much control as the actual selling efforts

demand.

Nevertheless, control of promotional and auxiliary

efforts in marketing is more difficult and cannot be

exercised with that exactness which is possible in

case of actual selling efforts.


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Because of their intangible performances,

ancillary activities in marketing are placed under

some broad measures of control, and they are

measured and appraised by managerial judgment,skill or experience.

The basic tool for controlling these efforts is to be

found in the sales expense budget .

For controlling performances of salesmen, the sales

budget or in the absence of a sales budget, the sales

programme provides the standard for control.

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Unit III Sdm