SALES MANAGMENT

SALES CONTROL SALES ANALYSIS COST ANALYSIS MARKETING AUDIT

SUBMITTED TO :PROF. PUSHP LAMBA

SUBMITTED BY :VAIBHAV KAPOOR 101 FA-3

SALES MANAGMENT
Sales management is a business discipline which is focused on the practical application of sales techniques and the management of a firm's sales operations. It is an important business function asnet sales through the sale of products and services and resulting profit drive most commercial business. These are also typically the goals and performance indicators of sales management.

Sales Management was originally meant for sales personnel i.e it had a narrow perspective of directing the sales personnel of an organization. However over time Sales Management has gained a broader perspective, which includes management and execution of all marketing activities viz advertising, personal selling, sales promotions, distribution, pricing and others. According to American marketing association Sales Management includes the Planning, direction and control of personnel selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personnel sales force Objectives of Sales Management Sales management entails numerous objectives which are executed by sales managers. There are mainly three such objectives 1. Sales Volume 2. Contribution to profits 3. Continuous Growth The sales executives in this case are the ones who help implement these objectives. However it is the top management who has to outline the strategies to achieve these objectives of sales management. The top management should provide products which are socially responsible and are marketed in a manner which meets customers expectations and does not break it. Thus sales management involves a strong interaction between Sales, marketing and Top management.

SALES MANAGMENT | 4/29/2012

PROCESS OF SALES MANAGEMENT :1.Sales Planning Marketers must plan things well in advance for the best results. It is essential to have concrete plans. Mere guess works do not help in business. Know your product well. Sales professionals must know the USPs and benefits of the product for the consumers to believe them. Identify your target market. Sales Planning makes the products available to the end users at the right time and at the right place. Sales Planning helps the marketers to analyze the customer demands and respond efficiently to fluctuations in the market. Devise appropriate strategies to increase the sales of the products.

2.Sales Reporting
Sales strategies are implemented in this stage. Check the effectiveness of the various strategies. Find out whether they are bringing the desired results or not. The sales representatives should be aware of their roles and responsibilities in the organization. It is essential for the organization to evaluate the outcome of proposed strategies for any particular department. Organizations depend on KPI also called Key Performance Indicator or simply Performance Indicator to measure the effectiveness of implemented strategies. Ask the sales team to submit reports of what all they have done throughout the week. The management must sit with the sales team frequently to assess their performance and chalk out future course of actions. Mapping individual performance over time is essential.

3.Sales Process
Sales representatives should work as a single unit for maximum productivity. A systematic approach results in error free work. The management must make sure sales managers follow a proper channel to reach out to the customers. It pays to adopt a step by step approach.

SALES MANAGMENT | 4/29/2012

SALES CONTROL

Control is one of the most critical functions performed by a sales manager as it measures the performance of the system and helps the manager take corrective action if the performance of the system is not in agreement with the formulated plans. The present day dynamic marketplace has forced sales managers to shift their focus in sales control from sales volume alone and to lay equal emphasis on costs incurred in implementing the sales effort.

OBJECTIVES :The objective of sales control is to ensure that the company's sales efforts are in tune with its sales plan by taking necessary measures in case of deviations. The sales control function measures the performance of the sales force and identifies the problems and opportunities that the firm is exposed to. The process of sales control involves setting goals, comparing actuals with the targets, and taking up corrective action if necessary. The sales efforts of a company can be studied through a sales analysis that involves gathering, classifying, comparing, and studying the sales data of the company. PROCESS :Sales analysis involves analyzing the sales volume or the total sales of the company. It includes the total sales of the company by territory, customer, and product category. A sales audit is periodically taken up by the sales management to examine the entire selling operations of the firm. The audit involves an audit of the sales organization, the sales environment, planning systems, and sales management functions. While a sales analysis measures the sales volume achieved, the marketing cost analysis looks into the costs and expenses incurred to achieve the sales volume and their justification. DIFFICULTIES :A typical sales analysis involves deciding on the purpose of evaluation, comparing the sales figures with some standards and processing the data to generate reports. A sales analysis can be most informative when the sales data is broken down hierarchically. An analysis of volume of sales by categories is very helpful in identifying the root causes of the problems in the sales activities of the firm. Though a sales analysis helps identify the problems associated with the sales activities of the firm, it is also bound by a few limitations like dependency on accounting records, inability to reflect the profitability of sales, etc.

SALES MANAGMENT | 4/29/2012

SALES ANALYSIS
Sales analysis is the process of comparing your actual sales to previously stated company objectives. It is a measurement process used by organizations to evaluate sales effectiveness and consider improvements .

STEPS :Identification

Sales analysis is used to analyze various aspects of a company's sales. It can be used to compare sales force performance against quotas, evaluate sales by product type and make determinations for bonuses and incentives.

Trend Analysis

Trend analysis is a closely related concept to sales analysis. Firms monitor trends for costs and revenues. Monitoring trends in sales force performance and sales of product types helps companies make adjustments, or eliminate under-performing staff or products.

Benefits

Benefits of sales analysis are most connected to the bottom line. Monitoring under-performing staff and products helps companies avoid wasteful spending and replace poor revenue drivers with better performing people and products.

SALES MANAGMENT | 4/29/2012

PROBLEMS IN SALES ANALYSIS :1.Growth rates slower than the competition

Sale forces must optimize the deployment of their resources to consistently beat the competition. If some reps are sitting on too much opportunity to work, while others are having to look hard for their few sales opportunities, a suboptimal Sales Analysis is working against the success of the sales force. The reps with too much opportunity are leaving easy share for the competition to capture. The reps with too little opportunity are wasted investments for the organization. A balanced approach would maximize the return on sales while ensuring all sales reps have the same opportunity for success and have to work equally hard to capture market share.

2.Poor sales rep quota attainment

When some sales reps are far exceeding quota while others are struggling to have success, the assigned quotas may not be tied to the market opportunity. Regardless how quotas are set, Sales Analysis can show that the underlying potential of each territory is not sufficient to support the quota. For example a sales rep that has had significant success and may have a higher quota than others may now be in a position where he/she has achieved saturation of penetration. Or if the same quota is assigned to all sales reps, some may have significantly more opportunity within their territory than others.

3.Consistently high sales rep turnover in given territories

Sales reps will not remain in a role where they cannot be successful. When it is clear that the opportunity within an assigned territory is not sufficient to achieve their objectives and get paid, sales reps will leave. In addition, when sales reps do not achieve their objectives, they will be let go. If this continues to occur in a territory, the cause is likely to be the territory and the Sales Analysis approach to define it. Before making the mistake of looking to fix the talent, the compensation plans, the sales process or the quantity/quality of leads when growth rates, quota attainment and turnover are issues for the sales force, take a hard look at Sales Analysis. A new Sales Analysis approach may be the critical fix.
SALES MANAGMENT | 4/29/2012

SALES AUDIT :A sales audit is an examination of the entire sales process, from the systems it uses to the people who use them. Businesses perform sales audits to assess the structure and strategy of their sales efforts and to provide answers to important questions. These answers form the basis for decisions sales managers make regarding policies, procedures, and training. While some prefer to conduct this audit internally, others bring in a third party for a more objective review.

Focus

A sales audit normally has a three-fold focus. A thorough evaluation and analysis is essential, as sales make money and the sales staff makes the sales. Areas to evaluate include hiring, training, procedures and expectations. The second area of focus is the customer. Correct identification of a company's target market and the ability to adapt to changes within that market are crucial. Establishing a correct customer profile enables the sales staff to apply established criteria in qualifying potential sales opportunities. Areas to evaluate include customer profile, identifying customers' motivations to buy, factors affecting the economy of buying, and current buying trends. The third area focuses on the sales plan. Effective sales plans incorporate quality, quantity, and direction. Areas to evaluate include order and inventory management, research and development, market competition, and the integration of the sales plan to the company's goals and vision.

Types

Audits can be internal, external, or a combination of both. Some companies choose to combine technology with the audit process and install audit software on sales staff computers as a means to "audit on demand" using information from daily or weekly reports. This can be especially useful in a highly competitive market. An external or third party auditor normally looks at how the on-paper sales process meshes with what is actually happening. The objectivity supplied by an annual external audit can help discover opportunities for improvements that may otherwise remain unseen.
SALES MANAGMENT | 4/29/2012

Process

Auditing the people factor involves meetings with both management and the sales staff. Meetings with management assess the organization of the structure, department divisions, and support staff. Meetings with sales staff members focus on depth of product knowledge, skills assessment, determination of factors that differentiate the successful from the mediocre, identify areas requiring further training. Auditing the customer factor involves asking questions to determine how well the company and sales staff know their prospects. Surveys sent to randomly chosen customers can reveal a great deal, individual or group meetings with members of the sales staff can help identify just how the sales staff perceives the customer, their wants and needs, their motivation to buy. Taken altogether, members of the sales management team have the information they need to ensure an accurate and complete customer profile. Auditing the sales plan involves taking a look back and a look forward. Sales plan audits track progress toward long-term strategies, sales tactics put in place to help achieve these goals, and the progress toward, or overall success of short-term goals. Reports and historical data from numerous departments such as finance, product development, and human resources give sales managers information they need for comparison. Information gathered in the first two phases of the sales audit combine to reveal opportunities for change to help ensure the realization of company goals.

SALES MANAGMENT | 4/29/2012

COST ANALYSIS :WHAT IS COST ANALYSIS? Cost analysis (also called economic evaluation, cost allocation, efficiency assessment, costbenefit analysis, or cost-effectiveness analysis by different authors) is currently a somewhat controversial set of methods in program evaluation. One reason for the controversy is that these terms cover a wide range of methods, but are often used interchangeably. At the most basic level, cost allocation is simply part of good program budgeting and accounting practices, which allow managers to determine the true cost of providing a given unit of service (Kettner, Moroney, & Martin, 1990). At the most ambitious level, well-publicized costbenefit studies of early intervention programs have claimed to show substantial long-term social gains for participants and cost savings for the public (Berreuta-Clement, Schweinhart, Barnett, et al., 1984). Because these studies have been widely cited and credited with convincing legislators to increase their support for early childhood programs, some practitioners advocate making more use of cost-benefit analysis in evaluating social programs (Barnett, 1988, 1993). Others have cautioned that good cost-benefit or cost-effectiveness studies are complex, require very sophisticated technical skills and training in methodology and in principles of economics, and should not be undertaken lightly (White, 1988). Whatever position you take in this controversy, it is a good idea for program evaluators to have some understanding of the concepts involved, because the cost and effort involved in producing change is a concern in most impact evaluations (Rossi & Freeman, 1993). THREE TYPES OF COST ANALYSIS IN EVALUATION: *Cost allocation, cost-effectiveness analysis, and cost-benefit analysis represent a continuum of types of cost analysis which can have a place in program evaluation. They range from fairly simple program-level methods to highly technical and specialized methods. However, all have specialized and technical aspects. If you are not already familiar with these methods and the language used, you should plan to work with a consultant or read some more in-depth texts (see some suggested references at the end of this discussion) before deciding to attempt them. COST ALLOCATION: Cost allocation is a simpler concept than either cost-benefit analysis or cost-effectiveness analysis. At the program or agency level, it basically means setting up budgeting and accounting systems in a way that allows program managers to determine a unit cost or cost per unit of service. This information is primarily a management tool. However, if the units measured are also outcomes of interest to evaluators, cost allocation provides some of the basic information needed to conduct more ambitious cost analyses such as cost-benefit analysis or cost-effectiveness analysis. For example, for evaluation purposes, you might want to know the average cost per child of providing an after-school tutoring program, including the costs of staff salaries, snacks, and other overhead costs. Besides budget information, being able to determine unit costs means that you need to be collecting the right kind of information about clients and outcomes. In many agencies, the

SALES MANAGMENT | 4/29/2012

information recorded in service records is based on reporting requirements, which are not always in a form that is useful for evaluation. If staff in a prenatal clinic simply report the number of clients served by gender, for example, you might know only that 157 females were served in March. For an evaluation, however, you might want to be able to break down that number in different ways. For example, do young first-time mothers usually require more visits than older women? Do single mothers or women with several children miss more appointments? Is transportation to appointments more of a problem for women who live in rural areas? Are any client characteristics commonly related to important outcomes such as birth weight of the the baby? Deciding how to collect enough client and service data to give useful information, without overburdening staff with unnecessary paperwork requirements, requires a lot of planning. Larger agencies often hire experts to design data systems, which are called MIS or management-andinformation-systems. If you are working for an existing agency, your ability to separate out unit costs for services or outcomes may depend on the systems that are already in place for budgeting, accounting, and collecting service data. However, if you are in a position to influence these functions, or need to supplement an existing system, there are a number of texts that discuss the pros and cons of different ways of budgeting, accounting, and designing MIS or management-and-informationsystems (see Kettner, Moroney & Martin, 1990). *COST-EFFECTIVENESS AND COST-BENEFIT STUDIES Most often, cost-effectiveness and cost-benefit studies are conducted at a level that involves more than just a local program (such as an individual State Strengthening project). Sometimes they also involve following up over a long period of time, to look at the long-term impact of interventions. They are often used by policy analysts and legislators to make broad policy decisions, so they might look at a large federal program, or compare several smaller pilot programs that take different approaches to solving the same social problem. People often use the terms interchangeably, but there are important differences between them. COST-EFFECTIVENESS ANALYSIS: Cost-effectiveness analysis assumes that a certain benefit or outcome is desired, and that there are several alternative ways to achieve it. The basic question asked is, "Which of these alternatives is the cheapest or most efficient way to get this benefit?" By definition, cost-effectiveness analysis is comparative, while cost-benefit analysis usually considers only one program at a time. Another important difference is that while cost-benefit analysis always compares the monetary costs and benefits of a program, costeffectiveness studies often compare programs on the basis of some other common scale for measuring outcomes (eg., number of students who graduate from high school, infant mortality rate, test scores that meet a certain level, reports of child abuse). They address whether the unit cost is greater for one program or approach than another, which is often much easier to do, and more informative, than assigning a dollar value to the outcome (White, 1988). *COST-BENEFIT ANALYSIS: The basic questions asked in a cost-benefit analysis are, "Do the economic benefits of providing this service outweigh the economic costs" and "Is it worth doing at all"? One important tool of cost-benefit analysis is the benefit-to-costs ratio, which is the total monetary cost of the benefits or outcomes divided by the total monetary costs

SALES MANAGMENT | 4/29/2012

of obtaining them. Another tool for comparison in cost-benefit analysis is the net rate of return, which is basically total costs minus the total value of benefits. The idea behind cost-benefit analysis is simple: if all inputs and outcomes of a proposed alternative can be reduced to a common unit of impact (namely dollars), they can be aggregated and compared. If people would be willing to pay dollars to have something, presumably it is a benefit; if they would pay to avoid it, it is a cost. In practice, however, assigning monetary values to inputs and outcomes in social programs is rarely so simple, and it is not always appropriate to do so .

PROCEDURE OF BUILDING COST ANALYSIS :

1 Determine and define your objectives. A cost-benefit analysis must include project
objectives and background information so the reviewer can understand the information even if not intimately familiar with the industry.

2 Document the product or service's current process. All reviewers involved in the costbenefit analysis need to understand the details of the current work processes so they can make the best decision regarding an alternative. Include information about customer service, current system capabilities and the makeup of the current system.

3 Estimate future requirements and upgrades. Talk with those inside your company or
professionals outside your company to find the most realistic estimate.

4 Collect as much detailed cost data for each alternative considered as possible. 5 Choose at least three alternatives. Document and justify your assumptions for each of the
alternatives.
SALES MANAGMENT | 4/29/2012

6 Estimate the costs involved and determine a total cost. 7 Identify and estimate the value of the benefits. 8 Discount the costs and benefits. Convert the estimates into a common measurement.
Calculate the present value, or the discounted value, of a future amount with the following formula: P = F (1/(1+I)n), where P = Present Value, F = Future Value, I = Interest Rate and n = number of years.

10

9 Evaluate the alternatives by comparing and ranking the discounted value of each
alternative.

10 Perform a sensibility analysis to ensure that the results of your cost-benefit analysis are
reliable.

11

SALES MANAGMENT | 4/29/2012

MARKETING AUDIT :The marketing audit has certain similarities to a financial audit in that it is a review or appraisal of your existing marketing activities. Carrying out the marketing audit provides the opportunity to review and appraise your whole marketing activity, enabling you to assess past and present performance as well as to provide the basis for evaluating possible future courses of action. Because the business environment is constantly changing, the marketing audit should be used as a reference tool, with constant updates reflecting changes in the external environment and your own internal business experiences.

1. External Audit
External factors can be split broadly into three groups, the economic environment, the competitive environment and your own market environment. Consider these areas from your own business's point of view - will any changes have an impact on your business, will they affect your competitors, will they allow you to compete where you could not, or inhibit your ability to compete. If the answer is yes, then the factors should be included in the audit. 1.1 The Economic Environment Political Government actions, tax levels, privatisation, schools policy etc

Economic

Income levels, employment levels, rate of inflation, rate of economic growth

Social and Cultural

Demographics (population growth/distribution, age), lifestyles and cultural values (changing beliefs, skills, family values)

Technological

IT, internet, home shopping

Legal

UK Law (health & safety, employment law, store opening etc), EU Law

Environmental

Affect of your business on environment, 'green' credentials

12

SALES MANAGMENT | 4/29/2012

1.2 Competitive Environment

How competitive is your market? What are your competitors doing, likely to be doing? Evaluate the following:

The threat of new entrants to your industry The threat of substitute products The bargaining power of customers The bargaining power of suppliers The rivalry amongst current competitors Who are your competitors? Who are your major competitors, how big are they, what is their market share? What reputation do they have? How do they distribute their products, what are their production capabilities? What is their marketing like - do they diversify? What are their key strengths and weaknesses?

1.3 The Market Environment

SALES MANAGMENT | 4/29/2012

Total market size growth and trends Market characteristics, growth and trends Products, prices Physical distribution channels Customers/consumers Industry practices

13

2. Internal Audit
This is your opportunity to put your own business under the microscope - do you know as much about your own situation as you should?

Sales (total, split by geography, industry, customer, product) Market shares Profit margins Costs Marketing information research Effectiveness of marketing mix

CONDUCTING MARKETING AUDIT :A marketing audit can be conducted by systematic

assessment of marketing plans, objectives, strategies, programs, activities, organizational structure, and personnel. Such a thorough study of a marketing operation requires an objective attitude. Thinking about bank auditors, whose cautious care makes them hard to fool, provides good insight into the marketing audit process. A good marketing audit, therefore, we are required to answer all the given below questions for a complete marketing audit .
SALES MANAGMENT | 4/29/2012

Environment How are environmental trends monitored? What population trends are expected to affect existing and planned strategy? What social and psychological patterns (attitudes, lifestyle, etc.) are expected to affect buyer behavior patterns? How are present and pending legal developments affecting your operation? What are the effects of competitors (their products, services, technologies) on your operation? Objectives Are the marketing objectives of your department consistent with overall company objectives?

14

Should these objectives be altered to fit changing environmental variables? Are objectives consistent with one another? How do objectives relate to marketing strengths and market opportunities? Strategy What is the relationship between objectives and strategies? Are resources sufficient to implement the strategies? What are the companys weaknesses? How do you compare your strategies with those of competitors? Product Decisions How are new products developed within your business unit? How are existing products evaluated? How are products phased out of the line? Pricing Decisions How are pricing decisions made? How do pricing decisions reflect the influences of competitors and the concerns of channel members? Distribution Decisions How are channel members selected, evaluated, and dropped if necessary? How are channel members motivated? How are decisions to modify channel structures reached? Promotion Decisions How are promotion mix decisions made? How are salespeople selected, monitored, and evaluated? How are payoffs associated with promotional efforts estimated? Market Information How is marketing research information transmitted to, and used within, the business unit? Is a global information system in place? Activities and Tasks How are tasks scheduled, described, and planned? How are the responsibilities of individuals determined? What spans of supervision, reporting relationships, and communication patterns exist? How are they evaluated?
SALES MANAGMENT | 4/29/2012

Personnel What level of competence has been attained by personnel in each position? Are remedies to problems, if necessary, being planned? What are they? What is the state of morale? Motivation? What are present plans in these areas? Describe career development paths. Are replacements for personnel in key positions being groomed?

15

CRITICAL COMPONENTS OF A MARKETING AUDIT

The marketing audit is to the marketing department what a financial audit is to the accounting department. A comprehensive review of a company's marketing environment, objectives, strategies, and activities compared to world class standards, the marketing audit identifies operational strengths and weaknesses and recommends changes to the company's marketing plans and programs. 1.Key factors that impacted the business for good or for bad during the past year. Including an evaluation of marketing "surprises"the unanticipated competitive actions or changes in the marketing climate that affected the performance of the marketing programs.

2.The extent to which each decision in the marketing plane.g. targeting, positioning, pricing, advertising, etc.was made after evaluating many alternatives in terms of profit-related criteria. 3.Marketing knowledge, attitudes, and satisfaction of all executives involved in the marketing function. 4.The extent to which the marketing program was marketed internally and bought into by top management and non-marketing executives. 5.Customer, distributor, vendor, and intermediary satisfaction based on research among key target groups. 6.The performance of advertising, promotion, sales force, and marketing research programs in terms of ROI. 7.The performance of non-traditional programs, particularly digital offerings, in terms of ROI. 8.Whether the marketing plan achieved its stated financial and non-financial goals and objectives. 9.Which aspects of the plan that failed to meet objectives with specific recommendations for improving next year's performance. 10.The current value of brand and customer equity for each brand in the product portfolio.
SALES MANAGMENT | 4/29/2012

16

17

SALES MANAGMENT | 4/29/2012

THANK YOU