Sales Management - Final

Course Material
Selling and Sales Promotion
Prepared by
Ahmed Sabbir
Evening MBA Program,

Patuakhali Science & Technology University, Dumki, Patuakhali
Unit-I
Sales Management and Overview
Definition of Sales Management
Originally, the term ‘sales management’ referred to the direction of sales force personnel. But in
the present business scenario, the sales management meant management of all marketing
activities, including advertising, sales promotion, marketing research, physical distribution,
pricing, and product merchandising.
The American marketers association (AMA’s) define, “Sales management” as, the planning,
direction, and control of the personnel, selling activities of a business unit including recruiting, selecting,
training, assigning, rating, supervising, paying, motivating, as all these tasks apply to the personnel
sales-force.
Sales management is the process of developing a sales force, coordinating sales operations,
and implementing sales techniques that allow a business to consistently hit, and even
surpass, its sales targets.
Sales Management helps the organization to achieve the sales targets efficiently. The primary
focus of sales managers should be to maximize profit for the team a while delivering the best
possible value to customers.
Objectives of Sales Management

The most important objectives of sales management are:
i) Increase sales volume
ii) Contribution to profit
iii) Continuing growth
iv) Capture Market share
Salesmanship:
The term “Salesmanship” is referred as “the level of skill you have in convincing people to buy
or in persuading people to do something.” Shortly, salesmanship is nothing but “the technique
of selling a product”. Some of definition of salesmanship are-
 Salesmanship is the art of persuading persons to buy goods or services, which will give them
lasting satisfaction.
 Salesmanship is the art of helping prospects and customers achieve their goals.
 Salesmanship is the art of solving the customers’ problems through the benefits offered by the
products or services being sold by the salesman.
 The American Marketing Association defined the term ‘salesmanship’ as “the personal or
impersonal process of assisting and/or persuading a prospective customer to buy a commodity or
service to act favorable upon an idea that has commercial significance to the seller.
MKT-311: Selling and Sales Promotion for the EMBA Program, PSTU by Ahmed Sabbir 2
Thus, salesmanship is an art of winning over the buyers’ confidence so that a permanent
goodwill may be built and a lasting satisfaction may be given to them when they go for the
product offered to them.
Essential features of salesmanship:

– It is the ability to persuade
– It benefits both the buyer and seller
– It aims at winning the buyers’ confidence
– Ideal salesmanship aims at serving the producer, distributor and consumer
– It is educative process
– It creates satisfied customers
Differentiate (i) selling, (ii) sales, and (iii) salesmanship.
Selling is the act, sales is the result of this act, while salesman is the person who does this act.
So, salesmanship is the quality of act of selling. Thus, selling and salesmanship cannot be used
synonymously. Salesmanship serves the dual purpose of discovering and persuading
prospective buyers.
Various roles of Sales force

In a company, the sales force has to cover a broad range of position. The actual nature of the
role and the position may vary with the company; still some of the roles played by sales force
are as under:
1. Deliverer: In many cases, the role of sales persons is mainly to deliver the products to
the customer. For example, Milk, newspapers to households.
2. Order taker: This type of sales person takes the sales order from the customer and
delivers himself or forwards the order to others in the organization. For example, Food,
clothing products’ orders from retailers
3. Missionary: The salesperson is expected to build goodwill, educate and ultimately
influence the actual or potential user rather than only solicit orders. For example,
medical representatives calling on doctors cannot make a direct sale since the doctor
does not buy drugs but prescribes them for patients.
4. Technician: In certain cases where the product is technical in nature, the sales personnel
may have to act as a technical consultant not merely focus on booking orders.
5. Demand Creator: This person approaches people who have a need but have not yet
decided to buy and creates demand for the product he is selling. Thus the sales personnel
have to stimulate the demand by product demonstration or customer, e.g., the demand
for vacuum cleaner by the salesman visiting the customers. Similarly, the role played
insurance agents by educating the customers helps them in selling the insurance policy.
6. Solution Vendor: Solution vendor is similar to technician, but he is dealing with a variety
of products, a combination of which will provide the solution to a customer's problem.
Tasks performed by Sales force
The sales force will have one or more of the following specific tasks to perform:
 Prospecting-The sales force has to be on the lookout for new customers always. The
customers have the prospect of purchasing must be identified and persuaded to
purchase the products of the company.
 Communicating-The sales force has to skillfully communicate the information about
companies’ products and services.
 Selling- This is the core function of the sales representatives because all the activities
must ultimately culminate into sales. The sales representatives have to learn the art of
negotiations and closing the deal.
 Servicing: The task of sales force does not end after taking the order. The customers have
to be visited again in order to resolve their difficulties or complaints. In case the product
is not performing well, the sales representatives have to get the same repaired. So, once
a relationship is established between the sales person and the customer, it has to be
strengthened with the help of services.
 Information gathering- The sales personnel have to gather the information about the
customers and the market conditions and report the same to the company. The market
information helps the company in fighting competition. The information about the
customers helps the company in identifying customer needs and designs the products,
which the customers want. This helps the company is getting an edge over the
competitors.
 Allocating- The sales representatives have the first hand information of the market
conditions. So, their opinion is significant in distributing or allocating the products to
the customers at the times when the product is in short supply.
Functions of Sales Organization

A sales organization performs the following functions:
i) Analysis of markets thoroughly, including products and market research.
ii) Adoption of sound and defensible sales-policy.
iii) Accurate market or sales forecasting and planning the sales-campaign, based on
relevant data or information supplied by the marketing research staff.
iv) Deciding about prices of the goods and services; terms of sales and pricing policies
to be implemented in the potential and existing markets.
v) Labelling, Packaging and packing, for the consumer, who wants a container, which
will satisfy his desire for attractive appearance; keeping qualities, utility, quantity,
and correct price and many other factors in view.
vi) Branding or naming the product(s) and/or services to differentiate them from
the competitors and to recognize easily by the customer.
vii) Deciding the channels of distribution for easy accessibility and timely delivery of the
products and services.
viii) Selection, training and control of salesmen, and fixing their remuneration to run
the business operations efficiently and effectively.
ix) Allocation of territory, and quota setting for effective Selling and to fix the
responsibility to the concern person.
x) Sales-programmes and sales-promotion-activities prepared so that every sales activity
may be completed in a planned manner.
xi) Arranging for advertising and publicity to inform the customer about the new
products and services and their multiple uses.
xii) Order-preparation and office-recording to know the profitability of the business and
to evaluate the performance of the employees.
xiii) Preparation of customer’s record-card to the customer loyalty about the products.
xiv) Scrutiny and recording of reports to compare the other competitors and to compare
with the past period.
xv) Study of statistical-records and reports for comparative analyses in terms of sales, etc.
xvi) Maintenance of salesman’s records to know their efficiency and to develop them.
Designing the Sales Force/Steps to establish a sales structure

The following procedure may be adopted to, establish a practical and viable sales-
organizational structure-
 Begin with a historical profile of the company’s allegiance, overall organization and
top-management philosophy of the firm.
 Analyze the requirements of the company and the sales department, particularly in
terms of its’ size, position in the market, nature of activities, product mix, nature of
customers, state of competition, and sales-people and their ambitions.
 Appraise the potential of the company, in terms of its impact on the financial, technical,
scientific and human resources, existing currently.
 Analyze the prevailing working-atmosphere and state of communications, especially
from the view-point of relationship and human-feelings involved in such relationships.
 List the various administrative-details, connected with the company.
 Prepare a note, relating to the various administrative-details including aspects like
hierarchy, span of control, etc. on the sales-department, and overall organization of the
department.
 Describe the procedures and Processes to be followed for executing various tasks.
 Based on the above, prepare a draft-structure of the sales department, giving job-
descriptions of the whole of the department, and a who’s who of the department.
 Examine the structure, from the point of view of viability and practicality.
In the light of the complexities and vastness of the above process, for creating a sales structure,
once again, we state that various industries, though being equally efficient, and of the same
category, organize their sales-departments, in different ways.
SMBO APPROACH
It is another approach to formulate and accomplish sales-objectives is the sales management by
objectives (SMBO) technique. It is formulated combined by sales manager and sales-force
(representatives). It aims to focus on (i) results, within a specified set of objectives and (ii)
participative style of management.
Thus, Sales Management by objective is a selling technique or approach which focus on result
within a specified set of objectives.
The operationalization of SMBO is a process, comprising of the following steps:

 Setting goals jointly with the salesman: In this process the goals for sales-man and sales
managers are settled simultaneously in the organization so that they can built a close
coordination between them and lastly they achieve the main objective of the
organization.
 Planning strategy to reach the objectives: As it is a participative style of management,
the outcome of the joint exercise would be the development of a strategy that directs the
salesman to his objectives, following a plan, in the correct sequence, with the correct
timing, and must be efficient, in the use of resources of time and money.
Importance of SMBO
The importance of SMBO for a business firm is as follows:

(a) Directing the salesman towards the broader sales and marketing objectives of the Company;
(b) Providing a better approach, from the view-point of the salesman; and
(c) Motivating the salesman.
Unit-II
Personal Selling and Sales Promotion
Define Personal Selling
The person who sells goods to customer is called a ‘salesperson’ and the technique of selling is
known as ‘personal selling’.
Thus, personal selling refers to the presentation of goods before the potential buyers and
persuading them to purchase it.
‘Personal Selling’ is a highly distinctive form of promotion. It is basically face to face interaction
with one or more prospective purchasers for the purpose of making presentations, and
answering questions, and procuring orders.
According to American Marketing Association, “Personal selling is the oral presentation in a

conversation with one or more prospective purchasers for the purpose of making sale; it is the
ability to persuade the people to buy goods and services at a profit to the seller and benefit to
the buyer”.
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 equipment etc. depend more heavily on
personal selling than do grocery or toiletry products manufacturers. You can find such
salespersons in jewelry stores, consumer goods stores, sari houses, etc.
The terms personal selling and salesmanship have different meanings. Salesmanship is a seller
initiated effort that provides prospective buyers with information and motivates them to make
favorable decisions concerning the seller's product or services. Personal selling on the other
hand is a two-way communication involving individual and social behavior. It aims at bringing
the right product to the right customer. It is used for creating product awareness, stimulating
interest, developing brand preference, negotiating price, etc.
Personal Selling Objectives

The qualitative personal selling objectives are long term and concern the contribution
management expects personal selling to make in achieving long-term company objectives.
These objectives generally are carried over from one period’s promotional program to the next.
Depending upon company objectives and the promotional mix, personal selling may be
assigned such qualitative objectives as:
1. To do the entire selling job (as when there are no other elements in the promotional mix).
2. To “service” existing accounts (that is, to maintain contacts with present customers, take
orders, and so forth).
3. To search out and obtain new customers.
4. To secure and maintain customers’ cooperation in stocking and promoting the product
line.
5. To keep customers informed on changes in the product line1 and other aspects of
marketing strategy.
6. To assist customers in selling the product line (as through “missionary selling”).
7. To provide technical advice and assistance to customers (as with complicated products
and where products are especially designed to fit buyers’ specializations).
8. To assist (or handle) the training of middlemen’s sales personnel.
9. To provide advice and assistance to middlemen on management problems.
10. To collect and report market information of interest and use to company management.
The basic considerations in setting qualitative personal selling objectives are decisions on sales
policies and personal selling strategies and their role in the total promotional program. After
this role is defined, qualitative long-term personal selling objectives are set. In turn, the
qualitative personal selling objectives become the major determinants of the quantitative
personal selling objectives.
Importance of Personal Selling

Personal selling is extremely important as it helps in increasing sales. But there are other features
as well which make it important.
From manufacturer point of view:
i. It creates demand for products both new as well as existing ones.
ii. It creates new customers and, thus help in expanding the market for the product.
iii. It leads to product improvement. While selling personally the seller gets acquainted
with the choice and demands of customers and makes suggestions accordingly to
the manufacturer.
From customer’s point of view:

i. Personal selling provides an opportunity to the consumers to know about new
products introduced in the market. Thus, it informs and educates the consumers
about new products.
ii. It is because of personal selling that customers come to know about the use of new
products in the market. The sellers demonstrate the product before the prospective
buyers and explain the use and utility of the products.
iii. Personal selling also guides customers in selecting goods best suited to their
requirements and tastes as it involves face-to-face communication.
1A product line is a group of products that are closely related because they function in a similar manner,
are sold to the same customer groups, are marketed through the same types of outlets, or fall within given
price ranges. For example, Nike produces several lines of athletic shoes and apparel.
iv. Personal selling gives an opportunity to the customers to put forward their
complaints and difficulties in using the product and get the solution immediately.
Essential elements of Personal Selling

Personal selling consists of the following elements:
i. Face-to-Face interaction: Personal selling involves a salesmen having face-to-face
interaction with the prospective buyers.
ii. Persuasion: Personal selling requires persuasion on the part of the seller to the
prospective customers to buy the product. So a salesman must have the ability to
convince the customers so that an interest may be created in the mind of the
customers to use that product.
iii. Flexibility: The approach of personal selling is always flexible. Sometimes salesman
may explain the features and benefits of the product, sometimes give demonstration
of the use of product and also faces number of queries from the customers. Looking
into the situation and interest of the customers, the approach of the salesman is
decided instantly.
iv. Promotion of sales: The ultimate objective of personal selling is to promote sales by
convincing more and more customers to use the product.
v. Supply of Information: Personal selling provides various information to the
customers regarding availability of the product, special features, uses and utility of
the products. So it is an educative process.
vi. Mutual Benefit: It is a two-way process. Both seller and buyer derive benefit from
it. While customers feel satisfied with the goods, the seller enjoys the profits.
Qualities of salesperson engaged in Personal Selling:

There are certain common qualities, which every salesperson should possess in order to become
successful in their life. These listed below.
i. Physical Quality: A salesperson should have a good appearance and an impressive
personality. He should also have a sound health he might be required to travel a lot.
ii. Mental Quality: A good salesperson should possess certain mental qualities like
imagination, initiative, self-confidence, sharp memory; alertness, etc. He should be
able to understand the need and preferences of the customer.
iii. Integrity of Character: He should possess the qualities of honesty and integrity. He
is to gain the confidence of the customer. He should be loyal to the employer as well
as to the customer. As he is face-off of the company so he should hold a strong
character.
iv. Knowledge of the product and the company: He should be able to explain each and
every aspect of the product i.e. its qualities, how to use it, what precautions to be
taken, etc. and the company he is representing.
v. Good behavior: A salesman should be cooperative and courteous. Good behavior
enables one to win the confidence of the customers.
vi. Ability to Persuade: A good salesperson should be good in conversation so that he
can engage the person he is attending. He should be able to convince him and create
the desire in mind to possess the commodity. Very few products of any type actually
sell themselves. They must be sold. Sales persons must have the ability to get people
to agree. There are situations when persuasiveness may vary keeping in view the
consumer’s response.
vii. Flexibility: A salesperson has to be flexible in many ways. There is no fixed way of
convincing the customer, a sales person has to be flexible. A good salesperson is able
to adapt himself or herself to a variety of customers. Each contact may require
adapting the sales talk, speech habits and even appearance. The timings need to be
flexible as per the requirement of customer.
viii. Ability to estimate customer’s needs and desires: He or she is alert and quickly
determines what the customer wants and the best way to sell.
Principles of Personal Selling

Personal selling is more of an art. Often effective sales persons have an instinct. Yet, it is realized
that proper training can enhance the skills of good salesmen. In present times, personal selling
is becoming more and more customer oriented because no more do are have a buyer’s market.
Three major aspects of personal selling are:
i) Professionalism
ii) Negotiations
iii) Relationship marketing
Professionalism
The belief that good sales are born is giving way to professional approach to the sales activity.
The sales managers realize the importance of training of the sales force and spend huge sums
of money each year for the same.
We find the market flooded with training aids comprising of books, video and audiocassettes,
CD’s and many more. The aim at sharpening the skills of a salesman to make him more and
more effective.
All sales training approaches try to convert a sales person from a passive order taker into an
order setter. An order taker is passive and is dominated by the situation. An order getter molds
the situation in his favor and takes charge in order to achieve his objectives.
The modern professional approach to salesmanship is customer oriented. The act of selling is
projected as aimed at solving the problems of the customers. Such an approach is satisfying the
customers more there by making sales activity more and more effective. The sales personal are
trained to understand the situation and them formulate their reaction because no single
approach works in all situations.
Negotiation
Negotiation skills are one of the most important skills of a salesman. The two parties need to
reach agreement on price and other terms of sales. A good salesman wins the order without
making deep concessions that will hurt his profitability. Also, he must not unduly extract the
customer because such as approach will be detrimental in long run. This process of exchange
by way of negotiation is more of an art. Learnt by salesman over time.
The professional approach to negotiation identifies the zone of agreement between the seller’s
surplus and buyer’s surplus. Such an understanding helps in reaching at the agreement point
where both the parties feel satisfied. Negotiation involves communication that is focused and
planned. A good salesman understands his customer well and then formulates a negotiation
strategy.
Relationship marketing:
As the salesman becomes close to the customers, the transactional nature of the selling approach
gives way to the relationship approach. The transactional approach is deal to deal approach
centered on short-term gains. The relationship approach is long term and establishes a
relationship between the buyer and the seller. Both understand each other and support each
other.
Sales managers have realized that it is far easier to get sales from an old customer as compared
to getting the same from a new customer. So, it is important to retain the existing customers.
Personal selling is the most effective method of building relationships. No other means can
establish relationships as effectively as personal selling does. So modern salesmen work with
long-term prospective, establishing close customer associations. Such a practice is most evident
in banking, airlines, insurance and investment industries.
Major steps in effective selling

Major steps in effective selling can be identified as under:
1. Prospecting and qualifying Pre approach
2. Pre approach
3. Approach
4. Presentation & Demonstration
5. Overcoming objections
6. Closing
7. Follow up and maintenance
1) Prospecting and qualifying Pre approach

The first step of selling is to identify and qualify prospects. Traditionally, the task of identifying
the prospect rests with the salesman. Nowadays, with the advances in information technology
and software like CRM, companies can establish direct relationships with the customers. Thus,
the task of identifying prospect is shared and it makes the job of salespersons more focused. The
prospective customers are contacted and then sorted according to the level of interest and
financial capability. The salesman can personally visit those customers where the chances of
success are more.
Four main steps in prospecting are:
i) Formulating prospect definitions: This means defining the prospects according their
financial capacity and the interest to purchase. This helps in segmenting the
prospects into the categories where chances of selling are more. This makes the
selling activity more targeted.
ii) Searching potential accounts: After segmentation, the prospects are analyzed with
respect to probability of selling. This may involve an exploratory visit to the
prospects or contacting them over phone, man or Internet.
iii) Qualifying prospects and determining probable requirements: After having identified
must probable prospects, their requirements are studied so that salesman can
actually design a negotiation strategy that fulfils the prospect’s needs. This increases
the probability of the success of a sales call.
iv) Relating company products to each prospect’s requirements: The final step is to integrate
both the customers and sales representative so that higher success is achieved with
fewer efforts.
2) Pre approach :
Pre approach is the activity of sales persons to learn as much as possible about the prospect.
This play an important role in buying decisions making process of prospects.
Once a sales person is familiar with the factors that are important from the point of view of a
customer, he can design his approach strategy accordingly. This activity helps in saving
resources and increases the chances of success.
3) Approach :
The success of a sales call depends on the manner, how a sales person approaches to the
prospects.
As it is said, first impression is the last impression, the sales person should know how too great
the buyer to get the relationship off to a good start.
The dressing, manner and etiquette, language, politeness and persuasiveness have a lot of effect
on the success of a sales call. The right approach comes from the degree of proximity with the
customer.
Proximity in terms of knowing the customers is very important and nowadays more and more
companies are doing the same.
4) Presentation & demonstration:

After approaching a customer, the sales person narrates the story of his product. The objective
of the presentation is to explain how the product meets the special needs of the consumer. Here
sales person can use AIDA model i.e. gaining attention, generating interest, acrossing desire and
obtaining action.
Different styles of sales presentation are used, as described herein.
(i) Canned approach: This the oldest approach wherein a sales, person memorizes, the
sales talk covering the main points. It is based on stimulus-response thinking i.e. the
buyer is passive and can be moved to purchase by the use of the right stimulus wards,
pictures, terms and actions.
(ii) Formulated approach: It is also based as stimulus-response thinking but first identifies
the buyer’s needs and buying style and then uses a formulated approach to this type
of buyer.
(iii) Need Satisfaction approach: It starts with a search for the customer’s real needs by
encouraging the customer to do must of the talking. The sales person takes on the role
of a knowledgeable business consultant hoping to help the customer save money or
make money.
5) Overcoming objections
The objections may arise to all the presentations because of psychological resistance. It is very
important to resolve them at beginning.
In fact, objections are the starting point of communication that might transform to negotiation
and finally disclose by positive and negative action.
So, they must be encouraged as they can have a positive effect on the sales call if they are
resolved.
6) Closing
After having answered and overcome objections, it is the stage for sales person to ask for the
order from the prospects. The entire effort is wasted unless the sales person can get the prospect
to agree to buy the product.
There are several closing techniques which are being used by sales person. Sales person should
select among these technique one that fits the specific prospect and selling situation.
 Action Close: In action close technique the sales person take an action that will complete the
sale e.g. in case of high priced products like Motorcar, photocopier or industrial product the
sales person may negotiate with the financial institution for financial assistance for the
prospects.
 Gift Close: The gift close technique provides the prospect with an added incentive for taking
immediate buying action.
 Benefit Close: Here the sales person restates the benefits of the product in order to elicit a
positive response from the prospect.
 Direct Close: It is a simple technique and is most appropriate if the buyer is showing strong
positive buying motives. The sales person gives a summary of the major points of the
presentation and directly asks for the order.
The manner of closing a sales call is as important as approach. Closing leaves behind an
impression, which has a long term, carryover effect. Unconfident sales persons fail to ask for
order rendering the entire sales call fruitless. So, the process of winding up of a sales call must
incorporate persuasive phrases and actions that not only effect purchase but also help in
carrying a long term effect in the mind of the customer.
7) Follow up and maintenance
In order to ensure repeat business, follow up and maintenance are very important.
After closing a sales call, the sales person should not break contact with the customer.
Sustained contact helps in getting business next time.
It also helps enhancing customer satisfaction and reducing cognitive dissonance.
It also provides the feedback to the company for improving the quality of products and service
in future.
Relevant Situation for Personal Selling

Let us 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:
1. When a product is of high unit value, e.g., refrigerator, TV, etc.
2. When a product is in the introductory state of its life cycle and require creation of core
demand.
3. When a product requires personal attention to match specific consumer needs e.g.
insurance policy.
4. When product requires demonstration, e.g., industrial products.
5. When product requires after sales service.
6. Product has no brand loyalty or very poor brand loyalty.
Marketing Situation
1. When a company is selling to a small number of buyers who are buying a product of
high value.
2. When a company sells in small local markets or government or institutional markets.
3. When desired middlemen or agents are not available.
4. When an indirect channel of distribution is used for selling to merchant middleman.
Company Situation
Personal selling is more effective and economical when:
1. The company is not in a position to identify and make use of any communication media.
2. A company cannot afford to have a large and regular advertising outlay.
Consumer Behavior Situation

Personal selling is more effective when:
1. Goods purchased are of high value and less frequently purchased.
2. Consumer needs instant answers to his questions.
3. Persuasion and follow up is required in the case of competition.
Diversity of Selling Situations
There are a variety of selling situations. Each selling job requires the sales person to perform a
variety of different tasks and activities under different circumstances. For example, Job of selling
a soft drink is different from selling a computer.
Delivery Sales Person

The primary job of a delivery sales person is to deliver the goods to the customers. The selling
responsibilities are secondary. Good service, pleasant personality and good behavior adds to
the service, e.g., Milkman, paper vendor.
Inside order taker:

The retail sales person standing behind a counter is an inside order taker. e.g., the sales clerk
behind the neckwear counter in a men's store. 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 seller of consumable products calling on the retailer is an outside order taker. He books
the orders and gets them supplied to the shop. They do little creative selling.
Missionary sales people:

These sales persons are 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.
Consultative sales person:

Consultative sales are characterized by the product or service that is sold at the higher level of
an organization 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 organization 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 personnel:

The most distinctive characteristic of technical sales is the product knowledge required by its
sales person, unlike the consultative sales, where sophistication in organization relationship and
persuasive ability are 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 people
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 utilize the rational approach, by going into details of
product utility and features.
Commercial sales person:

This field generally includes nontechnical sales to business, industry, government and non-
profit organization e.g. office equipment, wholesale goods, building products, business services
and others. Commercial sales person makes the sales on first or second call. The process stresses
approach to right person (decision maker), making a smooth presentation and closing the sales.
Direct sales people:

Direct sales are primarily concerned with the sales of products and services to ultimate
consumers e.g. restaurants, door to door sales, insurance, encyclopedias, magazines etc. There
is normally some emotional appeal associated with this type of selling, thus sales persons are
required to possess strong persuasive ability.
Unit-III
Sales Promotion
Define Sales Promotion

Stimulation of sales achieved through contests, demonstrations, discounts, exhibitions or trade
shows, games, giveaways, point-of-sale displays and merchandising, special offers, and similar
activities. All these measures normally motivate the customers to buy more and thus, it
increases sales of the product. This approach of selling goods is known as “Sales Promotion.”
American Marketing Association Defined: “Sales promotion, in a specific sense refers to those
sales activities that supplement both personal selling and advertising and coordinate them and
help to make them effective, such as displays, shows and expositions, demonstrations, and other
non- recurrent selling efforts not in the ordinary routine.”
For example, “win a tour to Singapore”,“30% extra in a pack of one kg”, “scratch the card and
win a prize” , “buy one get one”, “a glass is free for buying 1 kg powder milk, or a boil for 1.00
kg of detergent powder etc.
Objectives of Sales Promotion

Sales promotion is a vital bridge or a connecting link between personal selling and advertising.
Sales promotion activities are undertaken to achieve the following objectives:
1. To increase sales by publicity through the media which are complementary to press and
poster advertising.
2. To disseminate information through salesmen, dealers etc., so as to ensure the product
getting into satisfactory use by the ultimate consumers.
3. To stimulate customers to make purchases at the point of purchase.
4. To prompt existing customers to buy more.
5. To introduce new products.
6. To attract new customers.
7. To meet competition from others effectively.
8. To check seasonal decline in the volume of sales.
Importance of Sales Promotion

The business world today is a world of competition. A business cannot survive if its products
do not sell in the market. Thus, all marketing activities are undertaken to increase sales.
Let us discuss the importance of sales promotion from the point of view of manufacturers and
consumers.
From the point of view of manufacturers
Sales promotion is important for manufacturers because
i. it helps to increase sales in a competitive market and thus, increases profits;
ii. it helps to introduce new products in the market by drawing the attention of potential
customers;
iii. when a new product is introduced or there is a change of fashion or taste of consumers,
existing stocks can be quickly disposed of;
iv. it stabilizes sales volume by keeping its customers with them. In the age of competition
it is quite much possible that a customer may change his/her mind and try other brands.
Various incentives under sales promotion schemes help to retain the customers.
From the point of view of consumers

i. the consumer gets the product at a cheaper rate;
ii. it gives financial benefit to the customers by way of providing prizes and sending them
to visit different places;
iii. the consumer gets all information about the quality, features and uses of different
products;
iv. certain schemes like money back offer creates confidence in the mind of customers about
the quality of goods; and
v. it helps to raise the standard of living of people. By exchanging their old items they can
use latest items available in the market. Use of such goods improves their image in
society.
Tools of Sales Promotion

To increase the sale of any product manufactures or producers adopt different measures like
sample, gift, bonus, and many more. These are known as tools or techniques or methods of sales
promotion.
1. Free samples: You might have received free samples of shampoo, washing powder, coffee
powder, etc. while purchasing various items from the market. Sometimes these free
samples are also distributed by the shopkeeper even without purchasing any item from his
shop. These are distributed to attract consumers to try out a new product and thereby create
new customers. Some businessmen distribute samples among selected persons in order to
popularize the product. For example, in the case of medicine free samples are distributed
among physicians, in the case of textbooks, specimen copies are distributed among
teachers.
2. Premium or Bonus offer: A milk shaker along with Nescafe, mug with Bournvita,
toothbrush with 500 grams of toothpaste, 30% extra in a pack of one kg. are the examples
of premium or bonus given free with the purchase of a product. They are effective in
inducing consumers to buy a particular product.
3. Exchange schemes: It refers to offering exchange of old product for a new product at a
price less than the original price of the product. This is useful for drawing attention to
product improvement. ‘Exchange your black and white television with a colour television’
are various popular examples of exchange scheme.
4. Price-off offer: Under this offer, products are sold at a price lower than the original price.
‘Tk. 2 off on purchase of a lifebouy soap, Tk. 15 off on a pack of 250 grams of Ispahani tea,
Tk. 1000 off on cooler’ etc. are some of the common schemes. This type of scheme is
designed to boost up sales in off-season and sometimes while introducing a new product
in the market.
5. Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a
product or through an advertisement printed in the newspaper or magazine or through
mail. These coupons can be presented to the retailer while buying the product. The holder
of the coupon gets the product at a discount.
6. Fairs and Exhibitions: Fairs and exhibitions may be organized at local, regional, national
or international level to introduce new products, demonstrate the products and to explain
special features and usefulness of the products. Goods are displayed and demonstrated
and their sale is also conducted at a reasonable discount. ‘International Trade Fair’ in
Dhaka, is a well-known example of Fairs and Exhibitions as a tool of sales promotion.
7. Trading stamps: In case of some specific products trading stamps are distributed among
the customers according to the value of their purchase. The customers are required to
collect these stamps of sufficient value within a particular period in order to avail of some
benefits.
8. Scratch and win offer: To induce the customer to buy a particular product ‘scratch and
win’ scheme is also offered. Under this scheme a customer scratch a specific marked area
on the package of the product and gets the benefit according to the message written there.
In this way customers may get some item free as mentioned on the marked area or may
avail of price-off, or sometimes visit different places on special tour arranged by the
manufacturers.
9. Money Back offer: Under this scheme customers are given assurance that full value of the
product will be returned to them if they are not satisfied after using the product. This
creates confidence among the customers with regard to the quality of the product. This
technique is particularly useful while introducing new products in the market.
Unit-IV
Planning For Selling Effort: Demand Measurement, Sales Forecasting,

Measuring Market and Sales Potential and Market Share
Potential Market
The potential market is the set of customers who profess some level of interest in a defined
market offer.
For example, a company wants to measure the potential market for its product say motorcycles,
it will try to estimate the number of people who have even the slightest interest in purchasing
the motorcycles. The number thus arrived at will give an idea about the maximum possible
units that call be sold in a defined market. This is available to all the manufacturers or service
providers.
Available market
Available market may be defined as the set of customers who have interest, income and access to a
particular market offer.
However, the number of people having an interest to purchase a product may not imply the
sales volume that the company will be able to achieve. The number of customer who not only
have an interest to buy a product but also have the ability to buy the product is more important.
For example, there might be students who have lot of interest to buy motorcycle but do not have
the money to buy the same. While they will be counted in potential market estimate, they are of
no use to the company. The desire and interest must be backed by the ability to buy a product.
Also, customers’ accessibility to a product is important because even the customers having
interest and availability to buy may not be able to make purchases if the product is not accessible
to them. For example, there might be many people who are interested to have internet
connection, they also have the money to buy the same; but the internet service providers cannot
access them because no telephone lines are available. So, these set of customers are not of any
use to the company. Consider another case, many people would be interested to buy books from
www.amazon.com (bookshop on Internet) but they do not have the credit cards to make the
payment.
Thus, to become available market, it needs to have following attributes:

 Interest
 Income, i.e., ability to buy.
 Customers’ accessibility of the product
Qualified available market
In certain markets, some of the customers might be restricted to the sales of particular product.
So, they need to be deducted from the available market.
For example some countries may ban sale of motorcycle to people less than 18 years of age. So,
they need to be excluded from the estimates of available market. The number of customers who are
actually qualified to make purchase are known as qualified available market. They have interest,
income, access and qualifications for a particular market offer.
Served market
The company might not plan to serve the entire qualified available market and might like to
concentrate on only a few market segments. The part of qualified potential market is known as
served market.
For example Internet service provider like EurotelBD do not serve the markets of Khulna. So, for
them the served market constitutes only the qualified market of Barishal where they provide-
their services.
Penetrated market
The penetrated market is a set of customers who have already purchased the product.
In a market, there might not be only one company operating. The competitors also operate in a
market and they might have sold their product to some of the customers that form the
penetrated market.
For example, when internet service provider Smile is planning to enter Barishal, the customers
who already have the Internet connection from EurotelBD. or Modhumoti constitute penetrated
market i.e. the market that has already been penetrated.
Market Demand
Market demand for a product is the total volume that would be bought
 by a defined customer group
 in a given/defined geographical area
 in a defined time period
 in a defined marketing environment
 under a defined marketing programme.
There are eight elements of this definition as described here in:

 Product. Market demand measurement requires defining the scope of the product class.
A tin-can manufacturer has to define whether its market is all metal-can users or all
container users. It depends on how the manufacturer views its opportunities for
penetrating adjacent markets.
 Total volume. Market demand can be measured in terms of physical volume, dollar
volume, or re1ative volume. The Bangladeshi market demand for automobiles may be
described as 1 million cars or Tk. 1000 cores. The market demand for automobiles in the
Dhaka area can be expressed as say 10 percent of the nation’s total demand.
 Bought. In measuring market demand, it is important to define whether “bought” means
the volume ordered, shipped, paid for, received, or consumed. For example, a forecast
of new housing for the next year usually means the number of units that will be ordered,
not the number that will be completed (called housing starts).
 Consumer group. Market demand may be measured for the whole market or for any
segment(s). Thus a, steel producer may make separate estimates of the volume to be
bought by the construction industry and by the transportation industry.
 Geographical area. Market demand should be measured with reference to well-defined
geographical boundaries. A forecast of next year’s passenger automobile sales in
Barishal will vary depending on whether the boundaries are limited to Barishal.
 Time period. Market demand should be measured with reference to a stated period of
time. One can talk about the market demand for the next calendar year, for the coming
five years, or for the years 2019. The longer the forecasting interval, the more tenuous
the forecast. Every forecast is based on a set of assumptions about environmental and
marketing conditions and the chance that some of these assumptions will not be fulfilled
increases with the length of the forecast period.
 Marketing environment. Market demand is affected by a host of uncontrollable factors.
Every forecast of demand should explicitly list the assumptions made about the
demographic, economic technological, political, and cultural environment.
Demographic and economic forecasting are well developed. Technological forecasting
is coming into its own, but political and cultural forecasting are still in their infancy.
Much interest in the whole subject of predicting future environments is being stimulated
by futurists.
 Marketing program. Market demand is also affected by controllable factors, particularly
marketing programs developed by the sellers. Demand in most markets will show some
elasticity with respect to industry price, promotion, product improvements, and
distribution effort. Thus a market demand forecast requires assumptions about future
industry prices, product features and marketing expenditures.
Sales potential
Some authors use the term sales potential as a subset of market potential representing the
maximum number of sales opportunities open to a specified company selling a good or service during a
stated future period.
Market Potential – it is the highest possible expected industry sales of a good or service in a
specified market segment for a given time period.
For example the sales potential for Nokia to the cellular phone industry in the Barishal
Metropolitan area in 2018 would be 5000 unite or ¢100.000
Sales potential is generally a percentage of the total market potential. In a way, market potential
can be said to be the estimated market size for a product category and sales potential is the
prospective market share.
Sales quota
The sales quota is the sales goal set for a product line, company division or sales representative.
It is a primary managerial devise for defining and simulating sales effort. The management sets
sales quotas on the basis of company forecast and psychology of stimulating its achievement.
Generally, sales quotas are set higher than estimated sales to stretch the sales force’s effort.
Analyzing the Market Potential
The market potential can be analyzed by following three steps :

1. Market identification
2. Market motivation
3. Analysis of market potential
Market identification
Before the market potential can be estimated, it is important to identify the markets. The sales
professionals need to answer the following questions:
1. Who buys the products?
2. Who uses it?
3. Who are the prospective buyers and/or users?
The answers to these questions can be sought from the company’s internal records or by the
help of marketing research.
The identification of market helps in knowing the differentiating characteristics of the

company’s products and the variables that affect consumer behavior. The analysis of data thus
collected helps in estimating the market potential.
Market motivation
The next step for analyzing market potential is to detect the reasons why customers buy the
product and reasons why the potential customers might buy it. The process of market
motivation answers the following questions:
1. Why do people buy?
2. Why don’t people buy?
The answer to these questions gives an additional information about the likely success or failure
of marketing inputs and promotional schemes.
Market potential analysis

After the market identification and market motivation, market potential is analysed. Often
direct estimate of market potential is very difficult because it is practically not possible to count
the number of customers and prospects in a given market. So, often the use of indirect market
factors is made. A market factor is a key feature or characteristic related to the product’s demand.
For example, the demand for automobiles in a given market may not be directly proportional
to the number of people; their income level, education and nature of profession may be the key
variables that decide whether the people purchase cars or not. The marketers have to identify
and study these variables in order to arrive at market potential.
The process of analyzing market potential is a two-step process as under:
1. Selection of market factors that are associated to the demand of a product
2. Elimination of those market segments that do not contain prospective buyers of the
product.
Demand Estimation
Demand Estimation attempts to quantify the links between the level of demand and the variables
which determine it.
The process of demand estimation can be divided into two parts namely:
1. Estimation of current demand
2. Estimation of future demand (Sales forecasting)
The sales professionals have to know both-the types of demand because the current demand
helps in planning for short term and the future plans are based on the sales forecasting. Even
the current sales serves as a basis for planning for the company.
Estimation of current demand

While estimating current demand, the following are estimated :
1. Total market potential
2. Area market potential
3. Total industry sales
4. Market shares
Total market potential

Total market potential is the maximum amount of sales (in units or in value terms i.e. Tk.) that
might be available to all the firms in an industry during a given period under given level of
industry marketing effort and given environmental conditions.
This is estimated commonly by the formula:
Q  nqp
Where Q = total market potential

n = number of buyers in a given market under given conditions
q = quantity purchased by an average buyer
p = price of an average unit
The most difficult component to estimate is the number of buyers for the specific product or
market.
Area market potential

The companies often have to identify the sales territories that will give them more returns for
the efforts and other inputs. In that case, they have to estimate area market potential, which is
measured by the following methods:
a) Market buildup method
b) Multiple factor index method
Market buildup method

This method attempts to identify all potential buyers in each market and estimates their potential
purchases.
The problem with this method is that practically, the information of potential buyers and their
likely sales is not available. So, often companies use indirect methods by estimating the market
potential by studying the variables that affect the same.
Multiple factor index method

This method uses the indirect variables, called as indices, which can be used to estimate the
level of total market potential.
The method is based on a statistical index calculated from the number of potential buyers that
form part of a specific market and should be used as a relative measure.
In practice, multiple variables are chosen, their significance is estimated, and the weights are
assigned in order to arrive at meaningful estimates.
The method most commonly used in consumer markets.
Suppose that National Bank finds that level of deposits in a territory (say Barishal) are related
to two variables i.e. population and income and income has double the effect than population,
then the total market potential will be estimated by the formula
Q=P+2I
Where P = population of Barishal

I = Average income level of population of Barishal
Unit-V
Sales Territories
Define Sales territory

A sales territory comprises a group of customers or a geographical area assigned to a
salesperson.
The territory may or may not have geographical boundaries.
The territory can be defined in terms of the size of the area in which the sales representatives
operate as well in terms of the number of customers.
Reasons for Establishing Territories

The primary reason for establishing sales territories is to facilitate the planning and controlling
of the selling function. Well-designed sales territories, however, may result in increased
motivation, morale, and interest of the sales force, improving the total sales performance. But
sales managers typically have more specific reasons for establishing territories.
(i) To obtain thorough coverage of the market: Sales territories help in proper market
coverage. Coverage is likely to be more thorough when each sales person is assigned to
a properly designed sales territory rather than when all sales personnel are allowed to
sell anywhere. With proper coverage of the territories, the company can more closely
reach the sales potential of its markets.
(ii) To Establish Salesperson’s Job and Responsibilities: Sales territories help in setting the
tasks and responsibilities for the sales force. Salespeople have to act as business
managers for their territories. They have the responsibility of maintaining and
generating sales volume in their territories. Once all call frequencies are calculated and
assigned, it is easier to determine the total wor1doad and then to break it down into
equal assignments among salesmen. When an equitable workload is assigned on the
basis of call frequencies, better results are obtained. An equitable workload assignment
creates greater interest and enthusiasm among the salesmen.
(iii) To evaluate sales performance: Sales territories help in the evaluation of sales
performance of a company. Actual performance data can be collected, analyzed, and
compared with expected performance goals. Even present sales figures can be
compared with past figures to judge the performance over the years. Individual
territory performance can also be compared to district performance, district
performance compared to regional performance; and regional performance compared
to the performance of the entire sales force.
(iv) To Improve Customer Relations: Properly designed sales territories allow sales people
to spend more time with present and potential customers and less time on the road.
Customer goodwill and increased sales can be expected when customers receive
regular calls.
(v) To Reduce Sales Expenses: Sales territories are designed to avoid duplication of effort
so that two or more salespersons are not travelling in the same geographical area. This
lowers selling cost and increases company profits. Sales territories also result in such
benefits as fewer travel miles and fewer overnight trips.
(vi) To improve control of the sales forces: When customer calls frequencies, routes and
schedules are determined, the performance of salesmen can be measured. It, then,
becomes difficult for a salesman to neglect a “hard” territory and only go ahead with
the easiest-to- sell accounts. Over and above this, no salesman can devote more time
and get himself “lost” in one territory when he is supposed to follow a pre-established
schedules and route.
(vii) To co-ordinate selling with other marketing, functions: A well-designed sales territory
can aid management in performing other marketing functions. Sales and cost analyses
can be done more easily on a territory basis than for the entire market. Marketing
research on a territory basis can be used more effectively for setting quotas and
establishing sales and expense budgets. If salespeople are to aid customers in launching
advertising campaigns, distributing point of purchase displays, or performing work
related to sales promotions, the results are usually more satisfactory when the work is
assigned and managed on a territory-by-territory basis rather than for the market as a
whole.
Bases for Territory Development

The objectives & criteria for sales territory formation are directly related to the bases used in
creating the territories. The three important bases are- geography, potential and servicing
requirements, & work load.
a) Geography:
For the establishment of territories, geographical considerations are the most frequently
used base. This base is simple, as it tends to adopt existing geopolitical boundaries such
as states, countries, or cities. The major advantage of the geographic approach is the
ready availability of secondary data from different sources.
b) Potential and servicing requirements:
The potential approach refers to splitting up a firm’s customer base according to sales
potential. It would seem to provide equality of opportunity and thus bring out the best
in sales people.
The procedure is relatively simple. First management has to estimate the sales potential
for the entire company and then try to divide this potential equally among salespersons.
Assume that a firm has estimated its total sales potential at Tk. 10 million for a given
year. Sales manager has further determined that each sales person can handle a personal
sales potential of Tk. 500,000. This would mean that twenty territories would be formed,
all of which would have identical sales potential of Tk. 500,000 each.
c) Workload:
The third sales territory base, workload, goes one step further. It not only considers
individual account potential & servicing requirements in creating territories, but also
reflects differences in coverage difficulty caused by topographical features, account
locations, competitive activity & so forth. Some companies try to attain equity by
assigning finite number of accounts and establishing average call frequencies. For
instance, a firm may give every territory manager two hundred accounts to service and
prescribe an average frequency often calls per day; This would mean that all accounts
visited once during a month’s twenty working days.
Approaches of Designing Territories

Three approaches may be used to design the sales territories.
(i) Building up approach:
The building up approach of designing territories involves combining enough pieces of a
company’s overall market to create units presenting sufficient sales challenges. To use this
approach, actual & potential customers have to be identified and their individual sales
volumes assessed.
This method is favored by many consumer goods manufacturers looking for intensive
distribution.
(ii) Breakdown approach:

The breakdown approach proceeds in the opposite direction. It starts with the overall sales
forecast for the entire company, which is in turn derived from a projection of the total market
potential and an estimate of the company’s likely share of it. The method then sets an
average sales figure per salesperson to reach at the number of territories to be formed using
this as divisor to total market potential.
Such an approach may prove satisfactory for industrial goods producer that desire selective
distribution.
(iii)Incremental approach
The incremental approach is conceptually the most appealing. With this approach,
additional territories are created as long as the marginal profit generated exceeds the cost of
servicing them.
Administrative difficulties, however, hamper the method’s applicability since it requires a
cost accounting system capable of determining sales, costs, and profits associated with
various levels of input.
If a company can determine this kind of information, profits can be maximized by increasing
the number of territories up to the point of negative returns.
Procedure for Setting up Sales Territories

A sales territory should not be so large that the sales person either spends an extreme amount
of time travelling or has time to call on only a few of the scattered customers. On the other hand,
a sales territory should not be so small that a sales person is calling on customers too often. The
sales territory should be big enough to represent a reasonable workload for the sales force but
small enough to ensure that all potential customers can be visited as often as needed.
Whether a company is setting up sales territories for the first time or revising ones that are already
in existence, the same general procedure applies:
(1) Select a basic geographic control unit:
(2) Make an account analysis:
(3) develop a salesperson workload analysis,
(4) combine geographic control units in to territories, and
(5) Assign sales personnel to territories.
Selecting a basic geographical control unit

The starting point in territorial planning is the selection of a basic geographical control unit.
The most commonly used control units are districts, pin code numbers, trading areas, cities, and
states. Sales territories are put together as consolidations of basic geographical control units.
Making an Account Analysis

After a company selects the geographic control unit, the next step is to conduct an audit of each
geographic unit. The purpose of this audit is to identify customers and prospects and determine
how much sales potential exists for each account.
After potential accounts are identified, the next step is to estimate the total sales potential for all
accounts in each geographic control unit. The sales manager estimates the total market potential
and then determine how much of this total the company can expect to get.
The estimated sales potential for a company in a particular territory is often a judgmental
decision. It is based on the company’s existing sales in that territory, the level of competition,
any differential advantages enjoyed by the company and the relationships with the existing
accounts.
Developing a Salesperson Workload Analysis
A salesperson workload analysis is an estimate of the time and effort required to cover each
geographic control unit.
This estimate is based on an analysis of the number of accounts to be called on, the frequency of
the calls, the length of each call, the travel time required, and the non-setting time.
The result of the workload analysis estimate is the establishment of a sales call pattern for each
geographic control unit.
Combining Geographical Control Units into Sales Territories

In the first three steps, the sales manager works on the geographical control units; now he has
to combine the control units into territories of roughly equal sales potential.
In the past, the sales manager used to establish a provisional list of territories by manually
combining adjacent control units. However, it was a long process which, in most cases, resulted
in the units and areas with potential for uneven split control sale. Today computers handle this
task in a much shorter period of time.
Assigning Sales Personnel to Territories

When an optimal territory alignment has been devised the sales manager is ready to assign
salespeople to territories.
Salespeople vary in physical condition, as well as ability, initiative and effectiveness.
A reasonable and desirable workload for one salesperson may overload another and cause
frustration.
In assigning sales personnel to territories, the sales manager must first rank the salespeople
according to relative ability. When assessing a salesperson relative ability, the sales manager
should look at such factors as:
 product and industry knowledge,
 persuasiveness and
 Verbal ability.
In order to judge a salesperson’s effectiveness within a territory, the sales manager must look
at the salesperson’s physical, social and cultural characteristics and compare them to those of
the territory. For instance, the salesperson born and brought up in a village is likely to be more
effective with rural clients than with urban customers because he or she speaks the same
language and shares the same value as the rural clients.
The goal of the sales manager in matching salespeople to territories in this manner is to
maximize the territory’s sales potential by making the salesperson comfortable with the territory
and the customer comfortable with the salesperson.
Why Sales Territories May Not Be Developed
In spite of the stated advantages, there are disadvantages to developing sales territories:
 Sales people may be more motivated if they are not restricted by a particular territory
and can develop customers wherever and whenever they find them. For example, in the
case of industrial products, organizations/customers are scattered geographically and
not concentrated at one place, sales people, therefore, may be allowed to sell to any
potential customer.
 The company may be too small to be concerned with segmenting the market into sales
areas.
 Management may not want to take the time, or may not have the know-how for territory
development.
 Personal friendship may be the basis for attracting customers. For Example, Life
insurance salespeople may first sell policies to their family and friends and then use their
contacts.
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Unit-VI
Sales Organization
Define Sales Organization
Sales organization is a group of individuals striving jointly to reach both qualitative and
quantitative personal selling objectives, and bearing informal and formal relations to one
another.
Sales organization is a group of people working together to achieve the objective of sales-which
is to capture a certain share of market while satisfying the customers.
The sales organization is not an end in itself but rather the vehicle by which individuals achieve
given ends. It focuses on the types of organization structures, their respective strengths and
weaknesses, and their application areas.
Purpose of Sales Organization

The major purposes of sales organization are:
1) Elimination of waste movements and duplication of effort;
2) Minimization of friction between individuals;
3) Maximization of co-operation;
4) Assignment of responsibility, and delegation of authority;
5) Development of specialists like product and brand managers;
6) Facilitation of communication and smooth flow of information;
7) To assure that all necessary activities are performed; and
8) Economization of executive time.
Setting up Sales organization

It is easy to set up a sales organization in a smaller and new company where one can start from
scratch but in large companies, sales organization is not built entirely from scratch, as some
structure already exists. Therefore, bigger organizations face problem of reorganization rather
than setting up of a sales organization.
There are five major steps in setting up a sales organization:
(i) Defining the objectives
Every organization set the short, medium, and long term corporate objectives and sales
objectives may be derived from them. These objectives may be based on the survival,
growth and leadership orientation of the top management.
Sales objectives are both qualitative as well as quantitative in nature. They are usually
set in terms of sales volume, profits and growth to be achieved in some future time
period.
Some companies also fix qualitative objectives like number of sales calls per day, new
customers created, new dealers made, and displays and demonstrations to be done by
the sales force.
(ii) Delineating the necessary activities –
The top management conducts the job analysis to find out the necessary activities to be
performed by the sales persons. These activities are usually needed to achieve the sales
objectives already defined.
(iii)Grouping activities to create positions
Activities are grouped and closely related tasks are linked to create proper positions in
the organization. Each position should contain not only a sufficient number of tasks but
sufficient variation also to provide for job challenge, interest, and involvement.
Important activities are assigned to higher posts like sales manager and sales executives
while less important activities are assigned to lower level posts like sales coordinator or
sales clerk.
(iv) Assigning Personnel to positions
Here the controversial questions is whether to recruit special individuals to fit the
positions or to modify the positions to fit the capabilities of available personnel.
Generally the former is preferred.
(v) Provision for co-ordination and control
While organizing, a firm takes into account the principle of ‘span of control’, i.e. number
of persons reporting to the manager or executive.
Organizational chart is one instrument which takes care of this principle as it depicts
the formal relationships among different positions.
Written job description also help in the control process.
Various Sales Organization Structure

1. Geographic Specialization:
Probably the most widely used method of organizing sales activities is on the basis of
geographic specialization. In this type of arrangement, each sales person is assigned a
specific geographic area, called territory, in which to sell.
Advantage:
 A geographical organization usually ensures better implementation of sales
strategies in each local market and better control over the sales force.
 Local problems of dealers, retailers, and customers may be handled speedily.
 More customers can be added and wider area may be tapped.
 Local sales representatives can respond better to competitors’ actions in a given
territory.
Drawbacks: The major weakness of this structure, however, is that size of sales
personnel increase enormously which adds to the costs and co-ordination problems.
President
VP Production VP Marketing VP Finance VP Personnel
Manager Manager Sales Marketing

Advertising Research Manager
Regional Sales Regional Sales Regional Sales Regional Sales

Manager North Manager South Manager East Manager West
Sales Executive Sales Executive Sales Executive

Barishal Khulna Jessore
Sales Sales Sales Sales

Representative Representative Representative Representative
Jhalakathi Bhola Patuakhali Pirojpur
2. Product Specialization
Another basis for organizing a sales force is product specialization. In this kind of
structure company may divide its products into separate sales manager and his sales
force.
President

Research Manager
Advertising
Sales Manager Sales Manager Sales Manager

Product A Product B Product C
Sales Force Sales Force Sales Force

Product Line A Product Line A Product Line C
The main advantage of product-specialized sales organization is the attention that each
product line can get from the sales force.
A drawback is that more than one sales representative from the same company may call
on the same customer.
3. Customer specialization
Many companies divide their sales departments on the basis of customer specialization.
Customers may be grouped by type of industry or channel of distribution.
Many companies are adopting this structure as a better way to deal with large, important
customers.
Disadvantage: A large administrative staff is needed to integrate activities of various
departments.
President

Research Manager
Advertising
Sales Manager Sales Manager Sales Manager

Industry A Industry B Industry C
Line Sales Organization
 It is the oldest and the simplest structure.

 It is widely used in smaller firms with narrow geographical spread and product lines.
 In this structure, the chain of command, runs from top to bottom and each subordinate is
responsible towards only one person on higher level.
Advantage:
 In this form of organization responsibilities are fixed and authority can be delegated.
 It also allows quick decisions and efficient coordination.
 It promotes the unity of command.
Drawbacks:
 The major weakness of the structure is that much depend on the superior than subordinate.
 Lack of expertise/specialization
 Such organizations usually suffer from a lack of expert advice.
 A line organization is usually rigid and inflexible.
General Manager
Sales Manager
Assistant Sales Assistant Sales Assistant Sales

Manager Manager Manager
Division-1 Division-2 Division-3
Salesman Salesman Salesman
Figure-Line sales organization
Line and staff sales organization

 This type of structure is often used in the large or medium sized organizations having
diversified products that are sold over a wide geographical area.
 It not only provides the sales executive his or her subordinates but also a group of specialists
like experts in dealer and distribution relations, sales training etc.
 In this structure, some sales personnel have line relationship and some have staff
relationship with their superiors. Staff sales personnel do not have the authority to issue
orders but their recommendations are submitted to top sales managers. If these
recommendations are approved, these are communicated to the line people in terms of
instructions.
President

Research Manager
Advertising
Manager Sales Regional Sales Manager Sales Manager Sales

Training Manager Promotion Analyst
Area Sales
Manager Line Authority
Staff authority
Salesman
Advantages
 The major advantage of this type of structure is that the organization creates a pool of
experts which helps in the imprinting the quality, of decisions.
 It helps in reduction of added burden on the executive time.
Drawbacks
 It is expensive
 Co-ordination and control over staff is difficult.
 It difficult to maintain both line and staff relationship.
 There is a lack of responsibility for staff officials.
 Time between problem-recognition and corrective action, also widens.
Unit-VI
Recruitment and Selection of Sales-Force
Importance of effective sales-force selection

There are a number of facts which emphasize the importance of effective sales-force selection:
 There is wide variability in the sales effectiveness of sales people. Many managers agree
that top sales people earn much more than average sales person for the company.
 Sales people are very costly. If the company decides to employ extra sale personnel, the
cost will be very high.
 Other important determinants of success, like training and motivation, are heavily
dependent on the intrinsic qualities of the recruit. Although sales effectiveness can be
improved by training, it is limited by innate ability.
Major tasks in recruitment and selection

Sales force selection includes three major tasks:
 Determining the type of people wanted, by preparing a written job description.
 Recruitment of an adequate number of applicants.
 Selection of the most suitable persons from among the applicants.
Recruitment and Selection - Conceptual Framework

Recruitment is the process of encouraging people to apply for jobs in the organization and
selection is choosing the best possible for the organization. Recruitment creates a pool of
potential incumbents and selection picks the best and rejects the rest.
According to Edwin B. Flippo, “Recruitment is the process of searching for prospective employees and
stimulating and encouraging them to apply for jobs in an organization.”
According to Dale Yoder, “Selection is the process in which candidates for employment are
divided into two classes – those who are to be offered employment and those who are not.”
Sources for Recruitment

The sources for recruitment and selection may be divided into two categories:
(i) Sources within the company or internal sources.
(ii) Sources outside the company or external sources.
Internal Sources
The existing employees working in the same or other departments of the company form the
internal source of recruitment. Some of the employees may be upgraded, transferred, and/or
promoted to take up sales jobs.
There are some advantages and disadvantages of using this source which are as under:
Advantages:
 Less risk is involved as the employer already knows the candidate
 Job security and loyalty employees also increases by using this method.
 Less training effort is required as the employee doesn’t require information about the
company and its policies.
Disadvantages
 It discourages new blood and fresh ideas.
 Likes and dislikes of management may generate frustrations among those employees
who are not given a fair chance.
External sources
This category calls for hiring the candidates from outside the company. The following sources
comprise of external sources:
(i) Campus placements - Various organizations visit professional colleges, institutions,
and universities for the recruitment of suitable candidates. Engineering colleges and
Management departments are most suitable for technical and managerial staff.
(ii) Employment agencies - Private agencies and placement consultants are sometime
given contract to recruit sales staff for the organization. These agencies maintain the
database of prospective candidates and supply the list of suitable candidates to the
organization from these databases.
(iii) Advertisements in Media - Companies may place advertisements in newspapers,
television, magazines, and trade journals for sales jobs. Newspapers are mostly used
for walk-in interviews for sales jobs.
(iv) Computerized data base - Many young persons regularly send their resume’ to good
organizations. Companies may create a database of these aspiring candidates that
may be utilized at the time of vacancies.
(v) Employees’ recommendations - The employees of the organization may also
recommend the names of friends and relatives as suitable candidates. Retired
employees often suggest names of prospective candidates based on their
experiences.
(vi) Salespeople calling on the company - Company managers, specially purchase
managers, are directly in touch with sales personnel of other companies. These
managers are in a position to evaluate their on-the job performances. The managers
may thus pass on the names of those high caliber sales persons of other company
who are willing to switch over.
(vii) Executive club - Many senior managers are members of various types of formal and
community clubs. They meet young people in these clubs in parties and on other
occasions. If a manager comes across good candidates, he may encourage them to
apply for sales positions in his company.
(viii) Placement brochures - Many educational institutions send placement brochures to
different organizations. These brochures contain information about the students
who would like to take up suitable jobs in the organizations. These brochures thus
serve as a source of recruitment.
(ix) Trade unions - Trade unions may also recommend the names of its members of their
relatives and friends.
(x) Dot coms - In this era of information technology, various dot com companies have
websites that display information about prospective candidates. These portals may
also be used as a recruitment source.
(xi) Trade associations/Alumni associations - Many trade associations and alumni
association also recommend the names of suitable persons for sales jobs in various
organizations.
Advantages:
 The major advantage of recruitment through external sources is that the organization
can get a person with required skills and experience.
 New ideas and concept may generated which is beneficial for the organization.
Disadvantage
 It is a long process, which is time consuming.
 It is expensive
 Internal dispute among the officials of the company.
 Less understanding of the company and need training for the recruited candidates.
Pre-Requisite of a Successful Recruitment Effort

The following are the pre-requisites of a successful recruitment effort:
(i) It should be in conformity with the general personnel policies.
(ii) It should be flexible.
(iii) It should match the qualities of employees (job specification) with the requirements
of work (job description) for which they are being employed.
Pre-Requisite of a Successful Selection Effort

The following are the pre-requisites of a successful selection effort:
(i) There should be sufficient number (quantitatively as well as qualitatively) of
applicants from which the selection can be made.
(ii) Organization must have some standards against which the candidates may be
compared.
(iii) Job description and job specification must be known in advance.
(iv) One should have authority to hire.
THE SELECTION PROCESS

The objective of selection is to secure an appropriate candidate for vacant position. The
procedure adopted for getting such candidate is termed as selection process. It involves a
number of steps which act as filter screen that helps in getting rid off undesirable candidates.
The steps of selection process are as follows:
1. Job analysis- The job must be studied and analyzed with a view to ascertain the
knowledge, experience, skills and attitudes required to perform it effectively. Job analysis
is a systematized procedure for collecting and recording information about jobs within an
organization. It includes Job Description and Job Specification.
2. Recruitment sources-the recruitment sources include both internal and external sources.
3. Application blank- An application blank is a traditional, widely accepted device for getting
information from a prospective applicant which will enable the management to make a
proper selection.
4. Preliminary screening- Preliminary screening serves the job of eliminating the totally
unsuitable candidates. For example, applicants are notified about the qualification,
experience and other important requirements in advertisement itself, candidates who don’t
fulfill these requirements are not called to appear in the selection process.
5. Written test- The use of written tests, as part of selection process, is gaining popularity
specially when hundreds of candidates are applying for sales jobs.
6. Interview and/or group discussion
7. Reference checking
8. Medical examination
9. Selection and placement
10. Induction- This gives him an understanding of the conditions within which, and human
brings with who he has to work.
Unit-VII
Sales Training Program
Meaning and Definition of Training of Salesman
According to Edwin B. Flippo, “Training is the art of in-creasing knowledge and skill of an employee
for doing a particular job”.
According to Michael J. Jucious, “The term training is used to indicate only process by which the
attitudes, skills and abilities of employees to perform specific jobs are increased”.
From the above definitions, we conclude that sales training is a technique or method by which
efforts are made to increase the knowledge, skills and efficiency of a salesman so that he may
be in a position to solve the problems of sales and provide active contribution in increasing sales
of the enterprise.
Sales training is a mean to increase the knowledge of the salesman about the firm, product,
market and customers so that he may sell the firm’s product in an efficient manner.
Objectives of Sales Training

The main objectives of Sales training are:
(i) Acquainting the newly appointed salesmen with the principles of salesmanship and
techniques of selling.
(ii) Imparting knowledge of sales canvassing.
(iii) Making salesmen familiar with the firm’s policies and practices in the field of selling
and also to make them familiar with the products of the company.
(iv) Giving information about the dealers, middlemen, and the end users of company’s
products.
(v) Keeping the salesmen well informed about the laws governing sales of firm’s products.
(vi) Salesmen should also be made aware of the position of competitors in the market and
to show and also and the ways of combating such competition.
(vii) Weeding out inefficient and unsuitable appointees or promotees.
(viii) Reducing sales force turnover.
(ix) Keeping ready a group of trained salesmen to take place of those salesmen who resign
or retire.
(x) Increasing efficiency.
THE NEED OF TRAINING

Training is needed in all organizations big or small. There are three basic reasons for this.
To develop the right work-habits: Training the salesmen is necessary to develop proper work
culture. By training they learn how to cover their territories, to approach customers, in what
style to live while travelling, what sort of records to keep, and how to plan and execute their
sales calls. Thus, they learn the best way of doing the things at the lowest cost. If sales people
are trained properly, they learn the right habits and patterns, at the right time and from the right
learning source.
To offset the effects of Detraining: The second important point why salesmen need training is
that they develop something wrong in their field experience and thereby they are constantly
being detained. They adopt undesirable shortcuts, gravitate towards ineffective ways of selling
and often become discouraged and dispirited from the constant buffeting of the competitive
market place. It, therefore, becomes necessary to train both new and experienced salespeople to
offset the negative effects of their field sales experience.
Complexity of Personal Selling: Another factor contributing to the need for effective sales
training is the increased complexity and sophistication of personal selling. New technology is
changing the way we used to sell earlier. The sales people, therefore, should be in constant touch
with such technologies through training.
Importance of Training to Salespeople and companies

The major benefits of training for Salesmen are as follows:
1. Lower Turnover of the Salespeople: Proper training makes the salesmen well prepared for
the field work, resulting in the lower rate of turnover of sales force. If they know their work
and are remunerated and motivated properly, they will not be leaving the organization.
The lower rate of turnover results in reducing high cost of training, recruitment and
selection and also reduces a tag of never stays with one firm’ which ultimately helps the
salesman in long run.
2. Greater Sales Volume: A scientifically designed training programme develops the right
work habits & culture and offsets the negative effects of the field sales experience. Salesmen
learn much about the product, the selling techniques and also how to behave with
company’s customers. This will naturally increase the sales volume of the company and
salesmen get rewards for selling more.
3. Better Customer Relations: A well trained Salesman knows how to deal with the customers
in a particular market situation. Training makes the salespeople more flexible and
innovative in meeting changing competitive market situations. Training also helps in
maintaining good relations with present and potential customers.
4. Lower Super vision Costs: Well-trained salespersons require less supervisory attention
from their managers. They know what to do and how to do it.
5. Reduces Selling Cost: Training reduces the selling costs per unit because of more territory
coverage, higher sales volume, better use of company supplied sales tools and correct
application of company’s selling policy or operating procedures, etc.
CONTENTS OF A TRAINING PROGRAMME
The subject matter to be covered in a training program vary from organization to organization
due to the nature and the size of the organization. But, in general, an effective training program
should cover the following aspects:
1. Basic Principles of Salesmanship: A salesman should be well acquainted with the

principles of salesmanship viz. how to approach and motivate the customers to buy
company’s products and to know how he is to satisfy customers’ needs and solve their
problems. Salesmanship is an art, yet it is a science too. The salesmen must know the
basic principles of salesmanship.
2. Information about the Firm: The Sales representative must know about the company’s
sales policies and procedures, organizational set-up, company’s past history, reputation
and goodwill earned. It enables the salesman to do his work well.
3. Information about the Product: A good tinning programme should impart knowledge
to the salesman about the characteristics of the product, its quality, usefulness and
method of using it. It will enable him to persuade the potential customers and if
necessary to demonstrate its use. Thus, a trained salesman can help in increasing the
company’s sales volume.
4. Information about the Customers: The Salesman must be trained in different types of
approaches to reach the customers and must also be told about different motives which
prompt them to make purchases. There are different types of customers viz. silent,
talkative, ill-tempered, suspicious, nervous, hesitant, argumentative etc. The Salesman
must know how to deal with each one of them and satisfy them to get the product sold.
There are different motives of different customers. They include considerations of
health, convenience, the sense of fear, pride, fashion, recreation, affection etc. The
salesmen must also know how to cash on these motives.
5. Information about market Conditions : The sales representative should be well
informed about the market conditions, i.e., policies and procedures followed by the
competing firms regarding pricing, discount and commissions allowed to customers,
premium schemes, quality of the product etc. Such knowledge will help him in
convincing the customers about the company’s products and policies.
6. Matters pertaining to day-to-day work : Salesmen should also be given proper training
to know the following :
(i) Drafting of periodical reports.
(ii) Receiving of and replying to letters.
(iii) Preparation of orders, cash memo and credit bills.
(iv) Maintenance of their own Sales accounts.
(v) Arrangement of display and demonstration of company’s products.
Thus, a training programme, should cover all the above matters so that the salesman should
possess ample knowledge about the firm, customers, products, and the market etc.
Methods of Sales Training
A number of methods to train salesmen are in use. The choice of any of the methods depends
upon several factors like cost of training, number of trainees, purpose of training, depth of
knowledge required, background of the trainee and so on. The Sales Manager may adopt one
or more of the following methods according to the needs of the organization:
(i) On the Job Training- Under this method the salesman is trained on the job itself, under
the supervision of a senior salesman. .
(ii) School and Colleges: Some concerns may have many training centers.
(iii) Training through Correspondence- The training materials are sent to the trainees by
post regularly. In case of any doubts, the trainee salesman can clarify his doubt by post.
(iv) Sales Meetings and Conferences- The members of the sales department may gather at
regular intervals say for example weekly, monthly or even half yearly for a meeting or
conference. These meetings or conferences of sales personnel are meant for educating
sales people about various aspects of sales.
(v) Sales Manuals- These sales manuals contain information about the history of the firm,
policies, particulars of products, advertising, sales promotion activities etc.
(vi) Visual Training-Visual training programmes are imparted with the help of slides,
strips, video recorders, etc.
(vii) Role Playing- It is a newly developed method of training. Under this method a play,
fully scripted and rehearsed, is presented on a stage so that the trainee salesman may
understand the real life situation.
(viii) Lecture Method- This method is very commonly used in Bangladesh. In cases where
depth of theoretical knowledge is required, formal lectures are arranged by the
organization. Such lectures are delivered by a person presumed to be a master of the
subject at hand.
(ix) Game or Simulation Method- It uses highly structured contrived situations based on
reality in which players assume decision making roles through successive rounds of
play.
(x) Demonstration- Demonstrating how a new product works and its uses. The method is
highly appropriate when a new product or selling technique is developed.
Unit-VIII
Motivating and Compensating Sales Personnel
Meaning of Motivation
 Motivation is the willingness to do something and is conditioned by this action’s ability to satisfy
some need for the individual.
 Motivation is the process that produces goal-directed behavior in an individual. It helps

to intimate desired behavior in an individual and direct it toward the attainment of
organizational goal.
 Motivation in the sales function refers to the amount of effort a salesperson is willing to
use in selling job. While some salesperson are self-motivated, there are others who need
to be motivated to perform.
Why most sales personnel require additional motivation to perform their jobs satisfactorily.
Most sales personnel require additional motivational “help” from management in order to
reach and maintain acceptable levels of job performance. The following discussion focuses on
these aspects. Each aspect is an important reason why most sales personnel require additional
motivation to perform their jobs satisfactorily.
1. Inherent Nature of the Sales Job:

Although sales jobs vary from company to company, sales jobs are alike in certain
respects. To a greater or lesser extent, each sales job involves a succession of ups and
downs, a series of experiences resulting in alternating feelings of exhilaration and
depression.
In the course of a day’s work, salespersons interact with many pleasant and courteous
people; but they also meet some who are unpleasant and rude, with whom it is difficult
to deal.
The inherent nature of the sales job, then, often is the reason that additional motivation
is required to assure acceptable job performance.
2. Tendency toward Apathy:
Many sales personnel have a natural tendency to become apathetic.
Those who, year after year, cover the same territory and virtually the same customers,
tend to lose interest and enthusiasm. Gradually their sales calls degenerate into routine
order taking.
Many salespeople require additional motivation to maintain continuing enthusiasm for
their work or to generate renewed interest in it.
3. Maintaining a Feeling of Group Identity
The salesperson, working alone for the most part, finds it difficult to develop and
maintain a feeling of group identity with other company salespeople. Team spirit if
present at all, tends to be weak. Thus, the contagious enthusiasm conducive to
improving the entire group’s performance-does not develop.
Designing a Sales-Compensation Plan

A good compensation plan is built on solid foundation and therefore it requires a systematic
approach to assure that no essential step is overlooked.
Defining a Sales Job

 The first step is to examine the nature of the sales job. Up-to-date written job descriptions
are the logical place to start.
 Analyze sales department objectives for their effect on the sales person's job.
 Consider the current and proposed advertising and sales promotional programmes as
they assist in clarifying the nature of the sales person's goals, duties and activities.
Consider the Company’s General Compensation Structure

Most companies use job evaluation systems to determine the relative value of individual jobs.
Its purpose is to arrive at fair compensation relationships among jobs.
Consider Compensation Patterns in Community and Industry

Because compensation levels for sales personnel are related to external supply and demand
factors, it is important to consider the prevailing compensation patterns in the community and
the industries. Management needs answers to four questions.
1. What compensation systems are being used?
2. What is the average compensation for similar positions?
3. How are other companies doing with their plans?
4. What are the pros and cons of departing from industries or community patterns?
Determining Compensation Level

Management must determine the amount of compensation a sales person should receive on the
average. The compensation level might be set through individual bargaining or on an arbitrary
judgement basis. Another consideration is the compensation amount the company can afford to
pay.
Provide For the Various Compensation Elements

A sales compensation plan has as many as four basic elements:
1. A fixed element, either a salary or a drawing account to provide some stability of income.
2. A variable element (for example, a commission, bonus, or profit sharing arrangement)
to serve as an incentive.
3. An element providing for reimbursement of expenses or payment of expense
allowances.
4. An element covering the fringe or plus factor such as paid vacations, sickness and
accident benefits, life insurance, pensions.
Management selects the combination of elements that best fits the selling situation. The
proportions that different elements bear to each other vary. However, most companies split the
fixed and variable elements on a 60:40 or to 80:20 basis.
Consult the Present Sales Force

Management should consult the present sales personnel, as many grievances have roots in the
compensation plan. Sales personnel should be asked for their likes and dislikes about the
current plan and suggest changes in it. Their criticism and suggestions should be appraised
relative to the plan or plans under consideration.
Reduce Tentative Plan to Writing and Pretest It

For clarification, and to eliminate inconsistencies that have crept in, the tentative plan should be
put in writing. Then it should be pretested. The amount of testing required depends upon the
extent to which the new plan differs from the one in use. The greater the differences, the more
thorough should be the testing.
The plan should be tested for the sales force as a group and for individuals) faced with unique
selling conditions.
Revise the Plan

After test results have been analyzed, the plan is revised to eliminate trouble spots or
deficiencies. If alterations are extensive the revised plan goes through further pretests and
perhaps another pilot test. But if changes have been only minor, further testing is not necessary.
Implement the Plan and Provide for Follow-Up

At the time the new plan is implemented, it should be thoroughly explained to sales personnel.
Management should convince them of its basic fairness and logic. The sales personnel should
understand what management hopes to accomplish through the new- plan and how this is to
be done.
Provisions for follow-up should be made, in order to ascertain how the plan is working, out in
practice.
Requirements of a Good Sales Compensation Plan

A carefully designed compensation plan must attract, motivate and retain capable salespeople
within the company’s budget.
The main characteristics of a sound compensation plan are as follows:
(i) Simplicity: An effective compensation plan should be, as simple as possible, easily
understandable, and simple to operate. The salespeople should be able to calculate
what they are to get without any difficulty. A plan which is not easily understood
loses its value as a motivator.
(ii) Fairness: The compensation plan must ensure equity. It must be fair both to company
and its sales force. The plan should not have any room for discrimination against or
for any individual salesman.
(iii) Incentive: A sound compensation plan should stimulate the salespeople to get what
the company wants from them to meet the company’s goals. In particular, it must
motivate the salespeople to achieve higher sales profits rather than higher sales
volume.
(iv) Flexibility: A sound compensation plan should be flexible enough to cope with the
changing conditions of the company, salesman and the market. Changes in the
supply of salespeople, products and customers as well as changes in the competitive
situation will require adjustments in the company’s compensation plan.
(v) Control: The salespeople are expected to do what the sales management pays them
to do. A sound compensation Plan should control and direct the salespeople’s
activities. The salesman should be penalized if he fails to achieve the sales goals.
(vi) Guaranteed Income: The plan must guarantee a minimum compensation so as the
salespeople can maintain a minimum living standard. A person worried about
money matters cannot do justice in performing his job.
(vii) Economical to Administer: The plan should be economical to administer otherwise it
will add to the selling cost.
(viii) Help to attain objectives: A sound plan should help to attain the objectives of the sales
organization and of the firm. The main objective of the sales organizations is to earn
higher profits with lower selling costs.
(ix) Competitiveness: The level of compensation must be competitive with that of other
competitive firms. Attractive pay is necessary to attract, keep and develop a good
sales force but it should, not be much lower because nothing leads to high sales
turnover faster than a noncompetitive sales compensation plan.
Thus, in designing new plans or modifying old ones, the management must consider the above
points into consideration.
Types of Compensation Plans

There are only three basic type of compensation plans-straight salary, straight commission and
a combination of salary and variable elements.
(i) Straight Salary Method
(ii) (Straight Commission Method
(iii) Combination of Salary and Other Variable Elements
Straight Salary Method

This method is the simplest one. Under this method, salespeople get a fixed sum of money at
regular intervals (say weekly, fortnightly or monthly) irrespective of the turnover he effected
during the period. Regular increments are given in the salary scale. The method is suitable in
the following cases:
 When a salesperson’s actual work function is not directly related to sales volume or to
other quantitative measures of productivity.
 when the firm introduces a product or develops a new market,
 When a person is under training, and when there are seasonal variations in sales.
Advantages: Straight salary method of compensation has several advantages over other
methods as follows:
 It provides strong financial control over sales personnel.
 There is flexibility in adjusting the work.
 Sales persons cooperate more if paid straight salary rather than commissions.
 This method is simple to understand and economical to administer
 More stability of income.
 Sales persons are relieved of much burden of planning their own activities.
 From salespeople stand point, the straight salary plan ensures stability of income and
makes them free from uncertainties. They are not feared of the cut in earnings even when
their efficiency is temporarily impaired by injury or sickness.
Disadvantages: The system has several weaknesses:

(i) There is no monetary incentive to do hard work. Generally salesmen do only an
average rather than an outstanding job.
(ii) The system does not distinguish between efficient and inefficient workers. All are
paid on time basis. It, therefore, under compensates a productive salesperson and
over compensates a poor performer. It leads to higher sales force turnover.
(iii) It requires a continuous and strict supervision so that a minimum can be obtained.
(iv) Due to higher sales force turnover, the cost of recruiting, selecting and training goes
up.
(v) From management point of view selling cost per unit vary with the variation in sales
volume because salary paid to salespeople is a fixed expense and has no relation to
sales.
Unit-IX
Sales Budgets and Quotas
Sales Budget
Budget is economic translation of a plan. A sales budget is simply a tool, a financial plan
that depict how resources should best be allocated to achieve forecast sales.
In other words, sales budget is a blueprint for making profitable sales. It details who is
going to sell ‘how much’ of ‘what’ during the operating period, and to which customers
or class of trade and the likely selling expenses.
Purpose of the Sales Budget

The purpose of sales budgeting is to plan for and control the expenditure of resources (money,
material, man and facilities) necessary to achieve the desired sales objectives.
A sales budget generally serves three important purposes.
01. Instrument of Planning: The budgeting process requires complex sequences of planning
decisions. In order to achieve goals and objectives of the sales department, the managers
must outline essential tasks to be performed and compute the estimated costs required
for their performance. Sales budgeting, hence, helps in profit planning and provides a
guideline for action towards achieving the organizational objectives.
02. Instrument of Coordination: Budget acts as an instrument of coordination. Selling is
one of the functions of marketing and needs support from the elements of marketing
mix. Budgets also help in integrating other functions of like sales, finance, production
and purchase. The sales budget enables sales executives to coordinate expenses with
sales and with the budgets of the other departments.
03. Mechanism of Control: Control is the prime orientation in sales budgeting. The budget,
which is a composite of sales, expense, and profit goals for various sales units, serves as
a yardstick against which progress is measured.
Methods of Sales Budgeting

Methods of sales budgeting differ from company to company. There are a variety of methods
ranging from the sales manager’s gut feelings to application of computer based management
science models for determining the sales budgets.
(i) Percentage of Sales: This method is also known as rules of thumb. In this method
manager multiplies the forecast sales by various percentages for each category of
expense.
(ii) What is affordable: This method is generally used by firms dealing in capital
industrial goods. Also, companies giving low emphasis on sales and marketing
function or having small size of operation make use of this judgemental method.
(iii) Competitive parity method: This method advocates determining sales budget
comparable to the competitors. The use of this method presumes knowledge of the
competitor’s activities and resource allocation. Large sized companies’ whose
products face tough competition and need effective marketing to maintain profits
use this method.
(iv) Objective and task method: In this method the manager starts with identifying the
objectives of sales department followed by determination of tasks that must be
accomplished in order to achieve the set objectives. Later, the cost of each activity or
task is calculated to arrive at the Total budget. The finalization of the budget may
require adjustment both in the objectives as well as in the way the task may be
performed.
(v) Zero-base budgeting: It is relatively 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 continuation of conventions and rules of
thumb. This method suffers from practical limitations which relate to a very
elaborate and time consuming process required by it.
Sales Budgetary Procedure

Sales budgetary procedure differ from company to company with most differences tracing to
difference in basic planning styles, i.e., top-down and bottom up. In top down planning, top
management sets the objectives and drafts the plans for all organizational units. By contrast, in
bottom-up planning different organizational units (generally departments) prepare their own
tentative objectives and plans and forward them to top management for consideration.
Preparation of sales budget is one of the most important elements of the sales planning process.
Mostly sales organizations have their own specified procedures, formats and time tables for
developing the sales budget. However, the general steps taken in systematic preparation of sales
budget can be identified in the sequence given below:
 Analysis of sales volume and expenses: The preparation of the sales budget normally
starts at the lowest level in the sales organization and works upward. Thus, each district
sales manager estimates district sales volume and expenses for the coming period. Some
of the common items each sales budget includes are salaries, travel, lodging, food,
entertainment, commissions on sales, office expenses, promotional material selling aids,
contest awards, product sample etc.
 Handing competition for available funds within the marketing division: 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 company should encourage participation of all supervisors and
managers in the budget process so that, as a part of its development, they will accept
responsibility for it and later enthusiastically implement it.
 Selling the sales budget to the top management: The top sales and marketing executives
must visualize that every budget proposal they are presenting to the top management
must remain in competition with proposal submitted by the heads of other divisions.
Each and every division usually demand for an increased allocation of funds. Unless
sale managers rationally justify each item in their budgets on the basis of profit
contribution, the item may not get due consideration of the top management.
Sales Quota
A sales quota is a quantitative goal assigned to a sales unit for a specific period of time. 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 firm.
As standards for appraising selling effectiveness, quotas specify desired performance levels for
sales volume, expenses, gross margin, net profit, selling and non-selling activities, for some
combination of these items.
Sales quotas 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.
Quotas are devices for directing and controlling sales operations. Their effectiveness depends
upon the kind, amount, and accuracy of marketing information used in setting them, and upon
management’s skills in administering the quota system.
Purpose of the Sales Quota
(i) To provide standards for evaluating performance : Quotas provide a means for
determining which sales personnel, territory, other units of sales organisation, or
distributive outlets are doing average, below average, or above average job. They are
yardsticks for measuring sales performance.
(ii) To furnish goals and incentives for the sales force : Quotas provide salespersons,
distributive outlets and others engaged in selling activities, goals and incentives to
achieve certain performance level. Many companies use quotas to provide their sales
force the incentives of increasing their compensation through commissions or bonus
if the quota is surpassed and/or recognized for superior performance.
(iii) To control salespeople’s activities: Quotas provide an opportunity to direct arid
control the selling activities of sales persons. Sales persons are responsible for certain
activities e.g. customer calls per day, calling on new accounts, giving a minimum
number of demonstrations and realization of firm’s account. If the sales people fail
to attain these quotas, the company can take corrective action to rectify the mistake.
(iv) To evaluate the productivity of sales people: Quotas provide a yardstick for
measuring the general effectiveness of sales representatives. By comparing
salespersons’ actual results with set quotas the areas of activities are determined
where the sales force need help for improving productivity.
(v) To control 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. Others tie expenses to the salesperson’s compensation in order to curb
wasteful expenditure. Expense quota helps companies to set profit quotas.
(vi) To make effective compensation plan: Quotas play an important role in the
company’s sales compensation plan. Some Indian companies follow the practice that
their salespersons 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 salesperson does not reach the minimum desired quota,
he will not be entitled for any bonus.
Types of Quotas
Differences in forecasting and budgeting procedures, management philosophy, selling
problems, and executive judgment, as well as variations in quota setting procedures, cause
each firm to have somewhat unique’ quota. Ignoring small differences, however quotas fall
into four categories
 Sales volume quota: 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 outlet or for only one or more of these in combination.
 Financial or budget quotas: Financial or budget quotas, are determined to attain
desired net profit as well as to control the sales expenses incurred. In other words, it is
set for various units in the sales organisation to control expenses, gross margin, or net
profit. The intention in setting financial quota is .to make it clear to sales personnel that
this jobs consist something more than obtaining sales volume. It makes personnel more
conscious that the company is in business to make a profit.
 Activity quotas: to be performed by them within a given period. Good performance in
competitive markets requires the sales force 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 quotas for the sales force in terms of various selling activities. Some of
the common type of activity quotas are as under :
1. Number of prospects called on..
2. Number of new accounts opened
3. Number of calls made for realising company’s account
4. Number of dealers called on
5. Number of service calls made
6. Number of demonstrations made
 Combination Quotas: Depending upon the nature of product and 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 Bangladesh.
Characteristics of a Good Quota System

(i) Realistic attainability: If a quota is to spur the sales force to maximum effort, the goal
must be realistically attainable. If it is to far out of reach, the salespeople will lose their
incentives.
(ii) Objective Accuracy: Regardless of what type of quota management uses, it should be
related to potentials”. Executive judgement is also required, but it should not be the
sole factor in the decision.
(iii) Ease of understanding and administering: A quota must be easy for both management
and the sales force to understand. Also, the system should be economical to
administer.
(iv) Flexibility: All quota systems need adequate flexibility. Particularly, if the quota
period is as long as a year, management may have to make adjustments because of
changes in market conditions.
(v) Fairness: A good quota system is perceived as fair to the people involved. The
workload imposed by quotas should be the same for all sales people. However, this
does not mean that quotas must be equal. Differences in potentials, competition, and
ability of the sales force do exist.
Unit-X
Controlling Sales Efforts
What is Sales Control?

Sales control is an integral part of the sales management process, providing the follow up to
planning. It involves procedure not only for review but also for the correction of a company’s
sales activities.
The term sales control denotes a comprehensive effort encompassing sales and cost analysis
and periodic projects such as sales audit.
Sales analysis is the examination of sales activities, improves sales forecasting accuracy and
directs future sales efforts. It is identifying weaknesses so that the operations may be correctly
directed towards achieving the sales objectives and ultimately organization objectives. This
point culminates at sales audit.
Another important component of sales control is cost analysis, examining in-depth the various
cost factors which influence the profitability of the company.
Objectives of Sales Control

The main purpose of sales control is to keep a firm’s activities on the correct line. It makes sales
planning a meaningful endeavor. Main objectives of sales control are:
 Measurement of Sales Performance: One important objective of sales control is the

measurement of sales performance. Effective control requires feedback that enables an
evaluation of sales results achieved in the marketplace from the standards already fixed.
In fact, anything which is measured is better performed. Accurate measurement of actual
results also form the basis for any reward system. This encourages the sales force to
supply timely feedback.
 Spotting out Negative Performance: The second objective of sales control is to spot out
negative features of the performance and detrimental developments early. The feedback
system must be so operated that smooth and timely reports may be collected on a
frequent basis. The tighter the control system is, the lesser impact, a threatening event
like competitive price drop, will have before it is discovered and counteracted.
Continuous feedback shall detect deterioration in salesperson’s performance, which
may enable the sales supervisor/manager to take corrective action timely.
 Identifying Opportunities: A well-functioning sales control system identify the
emerging opportunities before they are evident to competitors. The company then gets
an opportunity to enter the market with the new product before an industry-wise on
rush sets in. The identification of such an opportunity requires an entrepreneurial skill
and a knack to read the market. Sales managers are uniquely qualified to undertake this
dynamic aspect of sales control.
The Sales Control Process

Three major activities are involved in Sales Control Process:
1. Establishment of Performance Standards: The first step in the control process is the
establishment of quantitative and qualitative standards against which actual performance
can be compared.
A. Quantitative Performance Standards

Most companies use quantitative performance standards. The particular combination of
standards chosen varies with the company and its marketing situation. Quantitative
standards in effect, define both the nature and desired levels of performance. Indeed
quantitative standards are used for stimulating good performance as well as for
measuring it. Each company selects that combination of quantitative performance
standards that befits its marketing situation and selling objectives. If necessary, it may
develop its own unique standards designed to serve the objectives. The standards
discussed here are representatives of the many types in use.
(i) Quotas:
A quota is a quantitative objective expressed in absolute terms and assigned to a
specific marketing unit. They may be in Tk., or units of products.
As the most widely used quantitative standards, quotas specify desired levels of
accomplishment for sales volume, gross margin, net profit, expenses,
performance of non-selling activities and a combination of these and similar
items.
(ii) Selling Expense Ratio:
Sales managers use this standard to control the relation of selling expenses to
sales volume. Many factors, some controllable by sales personnel and some not,
cause selling expenses to vary with the territory, so target selling expenses ratio
should be set individually of each person on the sales force. Selling expense ratios
are determined after analysis of expense conditions and sales volume potentials
in each territory. An attractive feature of the selling expense ratio is that the sales
person can affect it both by controlling expenses and by making sales.
The selling-expense ratio has several shortcomings. It does not take into account
variations in the profitability of different products. So a sales person who has a
favorable selling expenses ratio may be responsible for disproportionately low
profits.
Selling-expense ratio standards are used more by industrial product companies
than by consumer product companies. Industrial product firms place the greater
emphasis on personal selling and entertainment of customers; consequently,
their sales personnel incur high costs of travel and subsistence.
(iii) Territorial Net Profit or Gross Margin Ratio :
Target ratios of net profit or gross margin to sales for each territory focus sales
personnel’s attention on the needs for selling a balanced line and for considering
relative profitability. Sales personnel influence the net profit ratios by selling
more volume and by reducing selling expenses. They may emphasize more
profitable products and devote more title and effort to the accounts and
prospects that are potentially the most profitable.
The net profit ratio controls sales volume and expenses as well as net profit. The
gross margin ratio controls sales volume and the relative profitability of the sales
mixture, but it does not control the expenses of obtaining and filling orders.
Net profit and gross margin ratios have shortcomings. When either is a
performance standard, sales personnel may ‘high spot’ their territories, neglect
the solicitation of new accounts and over-emphasize sales of high profit or high
margin ‘products while under-emphasizing new products that may be more
profitable in the long run.
(iv) Territorial Market Share :
This performance standard takes into account market share, on territory to
territory basis. Management sets target market share percentages for, each
territory. Management later compares company sales to industry sales in each
territory and measures the effectiveness of sales personnel in obtaining market
share. Closer control over the individual sales person’s sales efforts is obtained
by setting target market share percentages for each product and each class of
customer or even for individual customers.
(v) Sales Coverage Effectiveness Index :
This standard controls the thoroughness with which a sales person works in the
assigned territory.
The index consists of the ratio of the number of customers to the total prospects
in a territory. To appraise the sales person’s efforts among different classification
of prospects, individual standards for sales coverage effectiveness are set up for
each class of customers.
(vi) Call Frequency Ratio :
A call frequency ratio is calculated by dividing the number of sales calls on a
particular class of customers by the number of customers in that class. By
establishing different call frequency ratio for different classes of customers,
management directs selling efforts to those accounts most likely to produce
profitable orders. Management should assure that the interval between calls is
proper neither so short that unprofitably small orders are secured nor so long
that sales are lost to competitors.
Sales personnel’s who plan their own route and call schedules find target call
frequencies helpful in as much as these standards provide information essential
to this type of planning.
(vii) Calls Per Day :

In consumer product fields, where sales personnel contact large numbers of
customers, it is desirable to set a standard for the number of calls per day,
otherwise; some sales personnel make too few calls per day and need help in
planning their routes, in setting up appointments before making calls or simply
in starting their calls early enough in the morning and staying on the job late
enough in the day. Other sales personnel make too many calls per day and need
training in how to service accounts.
Standards for calls per day are set individually for different territories taking into
account territorial differences as to customer density, road and traffic conditions
and competitors practices.
(viii) Order Call Ratio :
This ratio measures the effectiveness of sales personnel in securing orders.
It is calculated by dividing the number of orders secured by the number of calls
made. Order call ratio standards are set for each class of account.
When a sales person’s order call ratio for a particular class of account varies from
the standard, the sales person needs help in working with the class of account.
(ix) Average Cost Per Call: To emphasize the importance of making profitable calls
a target for average cost per call is set. When considerable variation exist in cost
of calling on different size or classes of account, standards are set for each
category of account. Target average cost per call standards also are used to
reduce the call frequency on accounts responsible for small orders.
(x) Average Order Size :
The usual practice is to set different standards for different sizes and classes of
customers.
Using average order size standards along with average cost per call standards,
management controls the sales person’s allocation of effort among different
accounts and increases order size obtained. Accomplishing this objective may
require sales personnel to reduce the frequency of calls on some accounts.
(xi) Non-selling Activities: Some companies establish quantitative performance
standards for such non-selling activities as obtaining dealer displays and
cooperative advertising contracts, training distributor’s personnel, and goodwill
calls on distributor’s customers. Whenever non selling activities are expressed in
absolute terms, they are, in reality, quotas.
B. Qualitative Performance Criteria
Certain aspects of job performance, such as personal effectiveness in handling customer
relations problems, do not lend themselves to precise measurement. So the use of some
qualitative criteria is unavoidable.
Qualitative criteria are used for appraising performance characteristics that affect sales
result especially over the long run, but whose degree of excellence can be evaluated only
subsequently.
Qualitative criteria defy exact definition. Many sales executives do not define the desired
qualitative characteristics with any exactitude instead, they arrive at informal
conclusions regarding the extent to which each sales person possess them. Other
executives consider the qualitative factors formally, and use methods to rate sales
personnel against a detailed checklist of subjective factors.
Executive judgement plays the major role in the qualitative performance appraisal. Each
firm develops its own set of qualitative criteria, based upon the job descriptions; the
manner in which these criteria are applied depends upon the needs of management.
2. Comparison of Results with Standards :

In this step, actual sales and costs results are compared with the standards or budgeted
figures. Significant sustained differences indicate that something is wrong either with the
planning or with the operation. Consistent sales above quota or expenses below budgeted
figures indicate that something is wrong with the planning and budgeting processes.
On the other hand, if sales is below the quota set and the spending level is above the
budgeted allocations, it is, then, certain that the process is out of control.
The causes for divergences have to be identified so that the corrective action may be taken.
A detailed analysis is, therefore, necessary to reveal the true position.
There may be two types of reasons for deviations: Controllable and Non-controllable. If the
reason is controllable, it may be cured otherwise the management will have to revise the
standards of actions.
3. Corrective Actions:
Once sales manager is able to identify correct reason of over and under achievements, he
has to take corrective actions.
There are two options: modify the standards or alter the results. If, events are such that
rendered the plan or sales budget inadequate or in other words, factors responsible for
deviations are non-controllable, the sales management must revise the sales plan or sales
budget taking into account the changed market conditions. If, on the other hand, the factors
responsible for changes are controllable, alteration of results should be done by having
stricter control over sales activities.
Thus, Sales control efforts entail the evaluation of the actual performance vis-a-vis the standards
so that the necessary corrective actions can be taken immediately to improve the performance
level.
Unit-XI
DEMAND ESTIMATION
The process of demand estimation can be divided into two parts namely:
1. Estimation of current demand
2. Estimation of future demand (Sales forecasting)
The sales professionals have to know both-the types of demand because the current demand
helps in planning for short term and the future plans are based on the sales forecasting.
We already discuss current demand estimation. Now we discuss about future demand
estimation.
Estimation of Future Demand

The estimation of future demand is one of the important functions in a company. The planning
of the entire operations of the company are based on the accuracy of the forecasting of demand.
Correct demand forecast help in formulating production plans, procurement of raw material
and also the allocation of financial resources. Forecasting also helps in estimating the human
resource requirement of a company.
The commonly used methods for estimating the future demand are:
1. Buyers survey
2. Opinion survey of composite sales force.
3. Expert opinion (Delphi method)
4. Projection of past sales
The projections can be based on some advanced techniques as under:
a) Time series analysis
b) Exponential smoothing
c) Evaluation of past sales projection methods
5. Market test method
6. Statistical demand analysis
7. Econometric model building and simulation.
Estimating Future Demand through Regression Technique
Suppose we are working in a chain restaurant offering lunch, dinners and other snacks at
different times. The business want to estimate the demand equation of its dinner meals. The
business has collected information on prices and the average number of meals served per day
for a random sample of eight restaurants in the chain. These data are shown below. Using
regression analysis to estimate coefficients of demand function,
Qd  a  bP
Based on the estimated equation, predict the number of dinner demanded for price given.
City Meals per day (Q) Price (P)
1 100 15
2 90 18
3 85 19
4 110 14
5 120 13
6 90 19
7 105 16
8 100 14
The mean values of the variables
QM 
 Q  100  90  85  110  120  90  105  100  800  100
n 8 8
PM   
P 15  18  19  14  13  19  16  14 128
  16
n 8 8
Now we calculate coefficient of demand equation are shown below:
City Qi  QM Pi  PM ( Pi  PM ) 2 ( Qi  QM )( Pi  PM )
1 100-100=0 -1 1 0
2 90-100=-10 2 4 -20
3 -15 3 9 -45
4 10 -2 4 -20
5 20 -3 9 -60
6 -10 3 9 -30
7 5 0 0 0
8 0 -2 4 0
 (P  P
i M
)2 =-175
=40
b
 ( P  P )(Q  Q
i M i M )
 (P  P )
i M
2
 175

40
 4.375
From the equation we get,
 Q  na  b P
d

 Q  na  b  P
d
nn n
 QM  a  bPM
 100  a  (4.375)16
 a  100  70  170
Thus the estimated demand equation
Qd  a  bP
 Qd  170  4.375P
If the price of a meal becomes Tk.30, then what would be its demand?
Qd  170  4.375P  170  4.375(30)  38.75
Let, yˆ  a  bx be the least squares line of y on x, where, ŷ is the estimated average value of
dependent variable y. The line that minimize the sum of squares of the deviations of the observed
values of y from those predicted is the best fitting line.
We get normal equations like these,
 y  na  b x
 xy  a x  b x 2
From where, we get a and b.
Or, b 
 ( x  x)( y  y)
 ( x  x) 2

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Sales Management - Final

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Course Material

Selling and Sales Promotion

Evening MBA Program,

Definition of Sales Management

Objectives of Sales Management

Essential features of salesmanship:

Differentiate (i) selling, (ii) sales, and (iii) salesmanship.

Various roles of Sales force

Functions of Sales Organization

Designing the Sales Force/Steps to establish a sales structure

The operationalization of SMBO is a process, comprising of the following steps:

The importance of SMBO for a business firm is as follows:

Personal Selling and Sales Promotion

Define Personal Selling

According to American Marketing Association, “Personal selling is the oral presentation in a

Personal Selling Objectives

Importance of Personal Selling

From customer’s point of view:

Essential elements of Personal Selling

Qualities of salesperson engaged in Personal Selling:

Principles of Personal Selling

Major steps in effective selling

1) Prospecting and qualifying Pre approach

4) Presentation & demonstration:

Relevant Situation for Personal Selling

Consumer Behavior Situation

Delivery Sales Person

Inside order taker:

Outside Order Taker

Missionary sales people:

Consultative sales person:

Technical sales personnel:

Commercial sales person:

Direct sales people:

Define Sales Promotion

Objectives of Sales Promotion

Importance of Sales Promotion

From the point of view of consumers

Tools of Sales Promotion

Planning For Selling Effort: Demand Measurement, Sales Forecasting,

Thus, to become available market, it needs to have following attributes:

There are eight elements of this definition as described here in:

Analyzing the Market Potential

The market potential can be analyzed by following three steps :

The identification of market helps in knowing the differentiating characteristics of the

Market potential analysis

Estimation of current demand

Total market potential

Where Q = total market potential

Area market potential

Market buildup method

Multiple factor index method

The method most commonly used in consumer markets.

Where P = population of Barishal

Define Sales territory

Reasons for Establishing Territories

Bases for Territory Development

Approaches of Designing Territories

(ii) Breakdown approach:

Procedure for Setting up Sales Territories

Selecting a basic geographical control unit

Making an Account Analysis

Developing a Salesperson Workload Analysis

Combining Geographical Control Units into Sales Territories