Sales Management

BBA- IV Semester BBA N 404

Unit I
Sales Management : - Evolution of sales function
- Objectives of sales management positions
- Functions of Sales executives
- Relation with other executives
Unit II
Sales Organisation and relationship :
- Purpose of sales organization
- Types of sales organization structures
- Sales department external relations
- Distributive network relations.
Unit III
Salesmanship :
- Theories of personal selling
- Types of Sales executives
- Qualities of sales executives
- Prospecting, pre-approach and post-approach
- Organising display, showroom & exhibition
Unit IV
Distribution network Management
- Types of Marketing Channels
- Factors affecting the choice of channel
- Types of middleman and their characteristics
- Concept of physical distribution system
Unit V
Sales Force Management
- Recruitment and Selection
- Sales Training
- Sales Compensation.
 Unit I

Evolution of Sales Management, Scope and

Importance
When it comes to sales management, you’re likely to come across two kinds of managers. The
first one notices the market declining and decides to manage that over everything else. In this
scenario, the only result you can possibly expect is a decline in sales as well.

The second type of manager is the kind who decides to leverage the decline and increase the
brand’s market share. This is a bold manager with vision who knows how the game is played.
Managers of this kind have no problems achieving results even in the most challenging scenario.

But, if you were to dig deeper, you would find that these managers follow a pattern; a pattern
that is broken down into 4 stages, with the 4th one being the most evolved stage. In this blog, we
are going to explore these 4 stages even further.

Stage: One
This is the stage at which most companies begin their journey and it can be best described as
being chaotic or without rules. There is no structure in place and the sales team is simply
commanded to go make a sale. Needless to say, such a scenario can lead to all kinds of problems
and conflicts.

That’s when the person running the business decides to introduce some sense of a structure by
hiring a sales manager.

Stage: Two
In stage 2, we start to see a system in place or something that’s close enough to an actual system.
The sales manager, at this stage, functions as though he/she were conducting a survey. He/she
tries to make the sales team feel valued and comfortable.

The sales team is provided with everything they need, which is fine as long as the sales team can
continue contributing to the brand’s growth.

However, all good things come to an end and the cracks start to appear. A common problem that
plagues stage 2 is self-interest. When all their needs are met easily, salespeople, especially the
ones higher on the success ladder, tend to develop an attitude of “I’m only supposed to sell.
That’s my job”.

In other words, stage 2 becomes toxic. The manager is forced to deal with complaints of
unfairness and other issues such as low productivity.

This is when a stronger sales manager is called in; someone who won’t hesitate to fire
salespeople who aren’t contributing and someone who can restore order. That brings us to stage
3.

Stage: Three

The stage 3 managers begin to standardize the system and show the door to non-performers. The
profits go up and prices are raised. The stage 3 manager functions as a CFO cum owner. This
person is invested in expanding the business and doing what’s best for it.

However, this is the trickiest stage as many companies tend to fall into a false sense of comfort
assuming that there isn’t much else to do. In other words, they don’t strive for stage 4. That
brings us to the question of what stage 4 looks like.

Stage: Four
Stage 4 is when the hired manager is a proper businessman capable of transforming the team.
He/she can identify the non-performers and work towards motivating them. A stage 3 manager
only hires and fires; a stage 4 manager transforms. They can play with the cards that they’ve
been dealt.

There are 3 key changes that the stage 4 manager does. He/she establishes a do or die culture
while celebrating the entire sales team, establishes a selling process, and provides the tools
needed for the team to do what’s necessary.

The scope of sales management is very important and drives the whole sales system. In nutshell
the 3 key factors of sales management are:

1. Sales Operation: This will include identification and allocation of territory to

the sales team. Measuring and monitoring their performance. Motivating and
leading by example to help them close deals and hit their targets and put
incentives in their pocket.
2. Sales Strategies: This has got all to do with product positioning, price
decisions and running promotions. Knowing when to discontinue a product and
also know the activities of the competitors.
3. Sales Analysis: Evaluating and understand product movement, which product
is bringing in the most revenue and which is unmoving. Also measuring
forecast versus actual will help a sales personnel to understand and take
corrective measures. To know who is the top 3 sales performing personnels can
 give us an judgement of the manouvers we need to make in the team to reach
our fixed targets.

Importance
Sales management facilitates the directions of activities and functions which are involved in the
distribution of goods and services. According to Philip Kotler, “Marketing management is the
analysis, planning implementation and control of programmes designed to bring about desired
exchanges with target markets for the purpose of achieving organisational objectives.

It relies heavily on designing the organisations’ offering in terms of the target markets needs and
desires and using effective pricing, communication and distribution to inform, motivate and
service the market.”

Sales or marketing management is concerned with the chalking out of a definite programme,
after careful analysis and forecasting of the market situations and the ultimate execution of these
plans to achieve the objectives of the organisation. Further their sales plans to a greater extent
rest upon the requirements and motives of the consumers in the market aimed at.

To achieve this objective the organisation has to give heed to the right pricing, effective
advertising and sales promotion, discerning distribution and stimulating the consumer’s through
the best services. To sum up, marketing management may be defined as the process of
management of marketing programmes for accomplishing organisational goals and objectives. It
involves planning, implementation and control of marketing programmes or campaigns.

Functions:
(i) Sales research and planning.

(ii) Demand creation.

(iii) Sales costs and budget.

(iv) Price fixations.

(v) Development of products.

(vi) Establishing sales territories.

(vii) Co-ordination of sales.

These functions differ from company to company according to their size and the nature of their
products.

Importance of Sales Management:

Sales management has gained importance to meet increasing competition and the need for
improved methods of distribution to reduce cost and to increase profits. Sales management today
is the most important function in a commercial and business enterprise.

The following are the other factors showing importance of the sales management:

(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Export market.

(v) Development in the means and communication of transportation within and outside the
country.

(vi) Rise in per capita income and demand for more goods by the consumers.

Objectives of Sales Management Positions

Sales refers to the exchange of goods/ commodities against money or service. It is the only
revenue generating function in an organization. It has formed an important part in business
throughout history. Even prior to the introduction of money, people used to exchange goods in
order to fulfill the needs, which is known as the barter system.

Sales management is very crucial for any organization to achieve its targets. In order to increase
customer demand for a particular product, we need management of sales.

The following points need to be considered for sales management in an organization:

 The first and foremost importance of sales management is that it facilitates the sale of a
product at a price, which realizes profits and helps in generating revenue to the company.
 It helps to achieve organizational goals and objectives by focusing on the aim and
planning a strategy regarding achievement of the goal within a timeframe.
 Sales team monitors the customer preference, government policy, competitor situation,
etc., to make the required changes accordingly and manage sales.
 By monitoring the customer preference, the salesperson develops a positive relationship
with the customer, which helps to retain the customer for a long period of time.
 Both the buyers and sellers have the same type of relationship, which is based on
exchange of goods, services and money. This helps in attaining customer satisfaction.

Sales Management may differ from one organization to the other, but overall, we can conclude
that sales management is very important for an organization for achieving its short-and long-term
goals.
Sales management entails numerous objectives which are executed by sales managers.

There are mainly three such objectives.

 Sales Volume
 Contribution to profits
 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.

Objectives of sales management

1) Achieving Sales volume

Achieving sales volume is the first objective of Sales. The word “volume” is critical because
whenever a product sales start, the market is supposed to be a virgin market. Thus there needs to
be optimum penetration so that the product reaches all corners of the region targeted. Ultimately,
penetration levels can be decided on the basis of sales volume achieved.

2) Contribution to profit

Sales brings turnover for the company and this turnover results in profits. Naturally, sales has a
major contribution to profit and it is categorized as a profit function in several organizations. But
there is one more aspect to the contribution of profit by sales.

The objective of sales management is to sell the product at the optimum price. Some companies
might target a premium pricing for a product to make it premium in the market. But if the sales
team drops the price, then the objectives are not being met and the profit is dropping. This has to
be kept in check by seniors as price drops directly affect the margin of the product.

3) Continuous growth

A company cannot remain stagnant. There are salaries to be paid, costs have been incurred and
there are shareholders to be answered. So a company cannot survive without continuous growth.
If there is no innovation at the product level or at the company level, then the company has to be
blamed. But if the products are good, and still the penetration is not happening, then it is the fault
of sales manager and sales executives.

It is the job of marketing to take feedback and bring new products in the market. But if the sales
team does not provide the appropriate feedback of “Why the product is not selling”, then growth
becomes impossible. This is why, more penetration and more growth is in the hand of sales
people.

4) Sales Management and financial results

Financial Results are another objective of sales management and are closely related and therefore
sales management has financial implications as well.

Sales – Cost of Sales = Gross Profit

Gross Margin – Expenses = Net profit

Thus the variation in Sales will directly affect the Net profit of a company. Hence maintaining
and managing sales is important to keep the product / service / organization financially viable.

The Objectives of sales are therefore decided on the basis of where the organization stands and
where it wants to reach. It is a collaborated effort from the top management along with the
marketing managers and sales managers to provide with a targeted estimate.

Functions of Sales executives

Many sales executives get promoted into their positions because of their previous performances
as salespersons. In some companies, outstanding sales persons have in inside track when sales
executive’s jobs are being filled. The assumption is that outstanding salespersons will be
outstanding sales executives. Nothing could be farther from the truth. The sales executive’s job
demands administrative skills much beyond those required of salespeople. Personal selling
experience is not unimportant, as sales executives manage people who do personal selling. But
personal selling experience and outstanding personal selling performance are two different things
most companies can recount instances where an outstanding salesperson failed in a sales
executive’s job.

The sales executive’s planning function includes those connected with the sale program. The
sales organization and its control. The sales executive is responsible for setting personal selling
goals, for developing sales programs designed to achieve these goals, for formulating sales
policies and personal selling strategies, and for putting together plans for their implementation.
Sales programs are put into effect through the sale organization, and the sales executive is
responsible for designing and shaping the sales organization, for staffing it, for developing the
skills of those who are part of it, and for providing leadership to it. Achievement of sales
departmental goals requires controls over selling activities, sales volume, selling expenses, and
the like. The sale executive is responsible for these and related control activities.

Basically, the sales executive has two sets of function: operating and planning. The operating
functions include sales force management, handling relationships with personnel in other
company departments and with the trade (middlemen and /or customers), communicating and
coordinating with other marketing executives, and reporting to some superior executive (such as
the marketing vice president). In addition, in some companies and fairly commonly in lower
level sales executive sells some accounts personally (to keep a “hand in “ and to keep abreast of
current selling problems and conditions).

The amount of sales executive’s time devoted to planning and operating functions is influenced
by size of the sales organization. Sales executives in small companies spend less time on
planning and more on operating. As the size of the company increases, the sales executive
devotes more time to planning and less to operating. Exerting important influences on the way
sales executives distribute their time and effort, too, is the type of supervisory organization.
When the sales executive supervises the field sales force directly, he or she spends most of the
time on operating function. When the sales executive supervises the field sales force through
subordinate sales executives, more attention is devote to planning and less to operating. Sales
executives who have high caliber subordinates generally are more willing to delegate most of the
performance of the operating functions to them and, consequently, have time left for planning.

The relative emphasis that sales executives give to the operating and planning functions varies
with

(1) Type of products

(2) Size of company

(3) Type of supervisory organization.

Customarily, sales executives at all organizational levels devote more time and attention to sales
force management than they do to any other single activity. The significance attached to
operating and planning functions varies with the product. If the product is a consumer good,
sales executives attach the greatest importance to planning function: development of sales
programs, coordination of personal selling with advertisings, and building and maintaining
relationships with dealers and customers. If the product is an industrial good, sales executives
attach the greatest importance to the operating function managing and directing the sales force,
making calls with salespeople, and selling personal account. Consumer goods sales managers, in
general, spend more time on planning and less on operating than do their counterparts in
industrial goods companies.

Sales executives Relation with other executives

Sales management is a combination of two words- sales and management. Sales is the art of
planning in the mind of another a motive which will induce favourable action. The committee of
American Marketing Association has defined it as: “Selling is the personal or impersonal process
of assisting and or persuading a prospective customer to buy a commodity or a service or to act
favourably upon an idea that has commercial significance to the seller.”

Sales has to co-ordinate with the marketing department. Particularly promotional activities and
sales do need harmonization. Sales has to co-ordinate with market planning. Sales co-ordinate
with distribution channels on introduction of products and later on the buyers must be made
aware where the products are available. Sales has to balance the interests of the trade and those
of the manufacturer.

Sales has to motivate the trade for joint promotional efforts. It is necessary to have the co-
ordination of sales and overall marketing strategy. New product introduction rightly calls for a
high degree of co-ordination between sales and marketing. It is necessary to be careful about
inventory levels, sales plans, branch management, sales training and sales operations while a new
product is being introduced. It is also necessary to co-ordinate with publicity, sales promotion
and advertising of a new product.

Relationship

Sales & Advertising: Both stimulate demand. They need to be blended. Salespersons can
improve advertising effectiveness. Advertising needs to support sales where and when they need
it most.

Sales & Marketing information: Data is needed for analysis of sales problems, for determining
sales potential. Raw data is collected by sales people.

Sales and service: contributes to strategy success.

Sales and distribution: Minimizes stock out situation; improves inventory control; helps sales to
focus on demand generation.

Sales & Production: The amount of demand is assessed by the data provided by salesmen.

Sales and R&D: The R&D is based highly on the changing needs, taste and preferences of
people.

Sales & Finance: The higher is the sale, more is the revenue earned by the company.