Advertising & Sales Management


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Advertising & Sales Management

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  • Video on Advertising-introductionThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from McGill university –SameerMathur
  • Video on Integrated Marketing CommunicationThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from McGill university –SameerMathur
  • Video on Management of Sales ForceThis video is not for any commercial purpose & has been put for educating MBA students. Copyrights & reserved from Michael S ConKlin
  • Advertising & Sales Management

    1. 1. Advertising & Sales ManagementPrepared By Prof. Pratiksha Patil 1
    2. 2. CONTENTSr no. Chapter Pg no1. An Introduction to Advertising 4-122. Advertising as a Communication process 13-183. Advertising Campaign 19-304. Advertising Media 31-395. Creative Strategy 40-516. Evaluation of Advertisement 52-587. Advertising Agencies 59-66 2
    3. 3. Sr no. Chapter8. Introduction to Sales Management 67-789. Sales Organization Structure 79-8910. Managing Distribution Channels 90-10411. Managing Sales Personnel 105-145 3
    4. 4. 4
    5. 5. AdvertisingMeaning :“ The non-personal communication of information usually paid for & usually persuasive in nature, about products (goods & services) or ideas by identified sponsor through various media.” The purpose of advertising may also be to reassure employees or shareholders that a company is viable or successful. Advertising messages are usually paid for by sponsors and viewed via various traditional media; including mass media such as newspaper, magazines, television commercial, radio advertisement, outdoor advertising or direct mail; or new media such as websites and text messages. 5
    6. 6. ‹#›
    7. 7. Functions of advertising Stimulates demand Strengthens other promotion mix elements Develops brand preference Cuts costs Lowers price Competitive weapon 7
    8. 8. Sales PromotionMeaning: Sales promotion is one of the seven aspects of the promotional mix. Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, point of purchase displays, premiums, prizes, product samples, and rebates. Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. 8
    9. 9.  Objectives of Sales Promotion:To introduce new productsTo attract new customers and retain the existing ones To maintain sales of seasonal productsTo meet the challenge of competition 9
    10. 10. Integrated marketing communication IMC is the coordination and integration of all marketing communication tools, avenues, functions and sources within a company into a seamless program that maximizes the impact on consumers and other end users at a minimal cost. This management concept is designed to make all aspects of marketing communication such as advertising, sales promotion, public relations, and direct marketing work together as a unified force, rather than permitting each to work in isolation. 10
    11. 11. 11
    12. 12. ‹#›
    13. 13. Advertising as a communication model 13
    14. 14. Advertising as a communication model AIDA model (Attention-Interest-Desire-Action) Lavidge-steiner model (Awareness-knowledge-liking- preference-conviction-purchase) Roger’s innovation adoption model: (Awareness- interest-evaluation-trial-adoption) 14
    15. 15. Role of advertising in Marketing MixAdvertising and Product: A product is normally a set of physical elements, such as quality, shape, size, colour and other features. The product may be of very high quality . At times, the product is so designed that it requires careful handling and operations. Buyers must be informed and educated on the various aspects of the product. This can be effectively done through advertising. Thus, advertising plays the role of information and education. 15
    16. 16. Advertising and Price: The price is the exchange value of the product. A marketer may bring out a very high quality product with additional features as compared to competitors. In such a case, price would be definitely high. But buyers may not be willing to pay a high price would be definitely high. But buyers may not be willing to pay a high price. Here comes advertising. Advertising can convince buyers regarding the superiority of the brand and thus its value for money. This can be done by associating the product with prestigious people, situations, or events. Alternatively when a firm offers a low price products the job of advertising needs to stress the price advantage by using hard hitting copy. It is not just enough to convince, but it is desirable to persuade the buyer. Thus advertising plays the role of conviction and persuasion. 16
    17. 17. Advertising and Place: Place refers to physical distribution and the stores where the goods are available Marketer should see to it that the goods are available at the convenient place and that too at the right time when the buyers need it. To facilitate effective distribution and expansion of market, advertising is of great significance. Thus advertising do help in effective distribution and market expansion. 17
    18. 18. Advertising and Promotion: Promotion consists of advertising, publicity, personal selling and sales promotion technique. Businessmen today have to face a lot of competition Every seller needs effective promotion to survive and succeed in this competitive business world. Advertising can play a significant role to put forward the claim of seller, and to counter the claims of competitor. Through effective advertising, sellers can face competition and also help to develop brand image and brand loyalty. 18
    19. 19. Advertising Campaign 19
    20. 20. Advertising Campaign An advertising campaign is a series of advertisement messages that share asingle idea and theme which make up an integrated marketing communication(IMC). Advertising campaigns appear in different media across a specific timeframe.In simple words advertising campaigns is a series of advertisements with anidentical or similar message, placed in one or more of advertising media over aparticular period of time.The ad campaign must be co-ordinate with other marketing efforts andactivities which maybe a part of the marketing mix. Before going ahead withthe advertising campaign one must consider factors like the 5 M’s 20
    21. 21.  The campaign theme is the central message that will be communicated in the promotional activities. The campaign themes are usually developed with the intention of being used for a substantial period but many of them are short lived due to factors such as being ineffective or market conditions and/or competition in the marketplace and marketing mix. 21
    22. 22. Planning & managing advertisingAppraisal of advertising opportunity Presence of positive primary demand Good chances of product differentiation Products have hidden or not readily noticeable qualities Presence of powerful emotional buying motives Availability of sufficient funds 22
    23. 23. Market research/market analysis: Before you even start thinking about where you might want to place an ad or even what it could look like, it’s important to do at least some basic research. Even if you aren’t in a position to bring in an expensive research firm, you can ask your current customers questions about why they come back to you, as well as taking a close look at your target needs and interests. 23
    24. 24. Setting goals/advertising objectives: The aims you have in mind for a particular advertising project need to be written down ahead of time. While it’s good to be ambitious, it’s also important to decide what constitutes a successful advertising campaign for your business. Sales can be the simplest metric: if you’re advertising a particular product, how many units will you need to sell to pay for that campaign? 24
    25. 25. Budgeting: Your business probably has a set advertising budget for the year — but how do you divvy it up between your various advertising projects? For each project you’re planning, you need to be clear on just how much money you’re willing to spend. You’ll almost certainly change exactly how you divide it between costs like copy writing and design, but you can treat the overall amount as set in stone. Write it down and put it in your project folder 25
    26. 26. Approaches to budgeting: Affordable method Arbitrary allocation method Percentage of sales method Competitive parity method Objective & task method Payout planning Quantitative models Experimental approach 26
    27. 27. Advertising venue/media: The website, TV, newspaper, radio station, magazine or other advertising venue you place your ad with is a crucial decision. You’ll need to look at not only the cost of your preferred venues but also whether they reach your target demographic. Ad buys can make up a significant portion of your budget. Deciding on where you will place your ads first tells you how much money you’ll have left over for actually creating your ad 27
    28. 28. Choosing creatives: Unless you’re planning to write, shoot and design every part of your ad, you’ll probably need to bring in some help. Finding the right freelancers for each aspect requires checking through portfolios and rates — if you can find a business or freelancer who can handle all aspects of creating your ad, even if that means subcontracting, it can save you a lot of time. You’ll also want to make sure that you find any talent you’ll need for your ad (voice actors for radio, models for photography and so on). 28
    29. 29. Design and wording: While you may not have a lot of actual writing and designing to do for your ad, during the creation process you will need to review and sign off on different stages of the project. When starting with a new designer or other creative, make sure that you both know any expectations for timelines and progress checksPlacing the ad: Once you have a finished ad in hand, it’s time to actually place it with your preferred advertising venue. You may have a few contracts to sign and a check to hand over. You’ll also want to make sure you actually see your ad once it’s run — from a newspaper. 29
    30. 30. Evaluation: Depending on your ad, how you evaluate it can vary. If it included a coupon, for instance, you can simply count how many customers brought in the coupon. For other ads, you may be simply comparing sales before, during and after your advertising campaign. Spend as much time on analyzing how your advertising campaign worked as you can. That information can point you to more effective uses of advertising in the future. 30
    31. 31. Advertising Media 31
    32. 32. Types of media Print media- Newspapers & magazines Direct media- Direct mail & advertising specialties (free gifts like diaries, key rings, purses, paperweights, pens, calender etc..) directory advertising & sponsored magazines. Outdoor media: Pamphlets, posters, hoardings, neon signs etc Electronic media Interactive media E-mail 32
    33. 33. The most innovative and highly creative advertising in theworld can fail if it’s presented to the wrong audience, or ifit’s presented at the wrong time, or if it’s presented in thewrong place.The media department is responsible for placing advertisingwhere it will reach the right people at the right time and inthe place...and do so in a cost-effective way. 33
    34. 34. Commonly Available Media Vehicles  Broadcast TV  Broadcast TV, Cable TV, Pay  Cable TV (Limited) TV, VOD  Movies/Cinema Adv.  Satellite TV and Radio  AM/FM radio  Movies/Cinema Adv.  Reel to Reel tape  AM/FM radio  Telephone  Telephone and Mobile phone  Postal Mail  Postal Mail  Newspapers  Newspapers, Magazines  Magazines  CD, cassette, MP3, VCR, DVD  Books  Internet and web, including email, web browsing, PC gaming, Music downloading 34
    35. 35. Media planning Target Market. Whom are you going to sell ? Where is product or service distributed? What is Budget? Media Mix? What is Competition Doing? Where should we advertise? Which media vehicles? When during the year? How often should it run? 35
    36. 36. MP process Deciding about target market for advertising/situation analysis Marketing strategy Advertising strategy Media objectives Develop & implement media strategies Matching media with target group Selection of media- Media habits of target group- Nature & feature of product- Cost of media- Legal & ethical consideration- Media vehicles used by competitors 36
    37. 37.  Selection of specific media vehicles:- Target audience media habits- Product characteristics- Message characteristics- Media costs Selection of media schedule Allocating funds to media & vehicle 37
    38. 38.  Multi media strategy 38
    39. 39. Measuring Advertising effectiveness Reach: it is the number of different homes or persons exposed at least once to an advertising over a specific period of time. Frequency refers to the number of times an advertising message is delivered to the audience, within given period of time. 39
    40. 40. Creative strategy 40
    41. 41.  Creative process- Orientation- Preparation- Analysis- Ideation- Incubation- Synthesis- Evaluation 41
    42. 42.  Several techniques in generating new ideas- Adapt- Put to other users- Modify- Imagine- Reverse- Connect- Eliminate- Creative strategy development- Copy platform 42
    43. 43. Copywriting Copywriters (as writers of copy are called) are used to help create taglines, jingle lyrics, web page content , online ads, e-mail and other Internet content, television or radio commercial scripts, press releases, white papers, catalogs, billboards, brochures, postcards, sales letters, and other marketing communications media. It includes- Main headline- Sub-headlines- Body copy- Slogan- Logotype/signature- Closing idea 43
    44. 44.  Features- Brief- Clean- Interesting- Sincere- Personal- Convincing 44
    45. 45. Guidelines for copywriting Let your personality shine through Have sound structure( and a purpose) Know your audience Hit on emotions, needs & desire Be consistent Use calls to action Be persuasive Accent your strengths 45
    46. 46. Copywriting for print 46
    47. 47. Newspapers Copy does not have to work as hard to catch audience’s attention Straightforward and informative Writing is brief Magazines Better quality ad production Ads can be more informative and carry longer copy 47
    48. 48. Posters and Outdoor Primarily visual Words try to catch the consumer’s attention and lock in ideas An effective poster marries words with visuals 48
    49. 49. How to Write Radio Copy Voice Radio Guidelines Music  Keep it personal Sound effects  Speak to listener’s interests  Wake up the inattentive  Make it memorable  Include call to action  Create image transfer 13 - 49
    50. 50.  Copywriting for TV commercial- Audio element- Planning & production of TV commercialStage involved in production of TV commercial- pre-production phase- Production- Post- production phase 50
    51. 51.  Advertising layout- Illustration- Headline- Copy- Logo- Direct the viewer’s eye- Emphasis- Proportional use of space- White space- Bleed & border 51
    52. 52. Evaluation of advertisement 52
    53. 53. Evaluation of advertisement Pre-testing- PACT (positioning advertising copy testing) principle- Methods pf pre-testing advertisingPrint advertising- Direct questioning- Focus group- Portfolio test- Paired comparison test- Order-of-merit test- Mock magazine test- Direct mail test 53
    54. 54.  TV & radio advertising- Central location test- Clutter test- Trailer- Theatre test- Live telecast test- Sales experiment Psychological testing- Pupillometries device- Eye-movement camera- Galvanic skin response- Voice-pitch analysis- Brain-pattern analysis- Hemispheric lateralisation 54
    55. 55.  Post-testing methods- Recall test- Recognition test- Inquiry test 55
    56. 56.  Essential of effective testing- Establish communications objectives- Use a consumer response model- Use both pre-tests & post-tests- Understand & implement proper research. 56
    57. 57.  Concurrent testing methodsIt is a research that evaluates the promotion efforts while it is running in a market place.- Qualitative research- Brand preference testing- Split-run techniques-tests 2 forms of the ad in the marketplace to determine which one is most effective 57
    58. 58. Steps in consumer purchasing decisions Unaware of the existence of the product Aware of the product Aware of the product’s features Having a favorable attitude towards the product Having a preference for the product Desiring to buy the product Purchasing the product Making post-purchase evaluation 58
    59. 59. Advertising Agencies 59
    60. 60. Advertising agency is: An independent business organisation. Composed of creative and business people. Who develop, prepare and place advertising on advertising media. For sellers seeking to find customers for their goods and services. Functions of an Advertising Agency: 1. Media Department: - Develop a media plan to reach the target audience effectively in a cost effective manner - The staff analyses, selects and contracts for media time or space that will be used to deliver the ad message. This is one of the most important decisions since a significantly large part of the client’s money is spent on the media time and/or space. 60
    61. 61.  Accounts department:- It is the link between the ad agency and its clients.- The account executive is mainly responsible to gain knowledge about the client’s business, profit goals, marketing problems and advertising objectives.- Account executive is responsible for getting approved the media schedules, budgets and rough ads or story boards from the client.- The next task is to make sure that the agency personnel produce the advertising to the client’s satisfaction.- The biggest role of the account executive is keeping the agency ahead of the client through follow-up and communications. 61
    62. 62.  Client Servicing:- Client servicing is the process of creating and maintaining a strong working rapport with each customer. Often referred to as customer care, client servicing is about understanding the needs and desires of the customer, and moving to meet those needs in a proactive manner. Production Department:- After the completion and approval of the copy and the illustrations the ad is sent to the production department.- Generally agencies do not actually produce the finished ads; instead they hire printers, photographers, engravers, typographers and others to complete the finished ad.- For the production of the approved TV commercial, the production department may supervise the casting of actors to appear in the ad, the setting for scenes and selecting an independent production studio.- The production department sometimes hires an outside director to transform the creative concept to a commercial. 62
    63. 63. Creative department: To a large extent, the success of an ad agency depends upon the creative department responsible for the creation and execution of the advertisements. The creative specialists are known as copywriters. They are the ones who conceive ideas for the ads and write the headlines, subheads and the body copy. They are also involved in deciding the basic theme of the advertising campaign, and often they do prepare the rough layout of the print ad or the commercial story board. Creation of an ad is the responsibility of the copywriters and the art department decides how the ad should look. 63
    64. 64.  Types of agencies- Media buying services- Creative boutiques Agency compensation- Commission- Negotiated fees- Percent charges 64
    65. 65.  Agency evaluation- Reasons of losing clients Clients dissatisfaction Poor communication Personality clashes Unrealistic clients demands 65
    66. 66.  How agencies acquire new clients- Referrals- Solicitations- Presentations Client-agency relationship 66
    67. 67. Sales Management 67
    68. 68. Objectives of sales management Sales volume Gain additional market share/revenue Expand target market Add extra value to the product Develop brand franchise Contribution to profit Continuous growth 68
    69. 69. Functions of SM Setting the sales objectives Deciding the sales policies Organizing the sales force Fixing the sales target / quota- Advantages of SQ1. Easier to locate untapped market2. Serve as a control measure3. Compensation plan could be made more effective4. Useful in conducting sales contests 69
    70. 70.  Selection & recruitment Induction & training Development of sales force Sales communication & report Sales control & supervision 70
    71. 71.  3 major factor of salesman- Personality- Product knowledge- Psychology of people 71
    72. 72. Personal selling Objective of PS : Consumers mind go through following phases:AIDAS (action-interest-demand-action-satisfaction) model Building Product Awareness Creating Interest Providing Information Stimulating Demand Reinforcing the Brand 72
    73. 73.  Managing sales force- Recruitment of sales staff- Training the sales staff- Directing the operation of the sales staff- Motivating- Evaluation 73
    74. 74.  Personal selling tasks- Provider stage- Persuader stage- Prospector stage- Problem solving stage- Procreator stage 74
    75. 75. Selling process Prospecting & qualifying Pre approach Presentation and demonstration Overcoming objections Closing Follow-up & maintenance 75
    76. 76. Sales related marketing policies Type of promotion to use:- Consumer promotion- Trade promotion- Sales force promotionApproaches for consumer & trade promotions1. Same for less2. More for the same- Immediate value offer Vs Delayed value offer- Price-cut Vs extra value offer 76
    77. 77.  Which product to promote- Customer demand for product is unpredictable- Inventory holding cost are high- Product is seasonal- Product is likely to go out of fashion 77
    78. 78.  Choice of market areas Promotion timing, duration & frequency Rate of discount, terms & conditions Protection from competition Promotion evaluation- Pre testing- Concurrent testing- Post-testing 78
    79. 79. Sales organization structure 79
    80. 80.  Principles of structuring a sales organisation- Specialization- Departmentalization- Standardization- Centralization- Evaluation- Structure 80
    81. 81.  Important factor in structuring sales- Objectives & goals of firm- Nature of product & line of activity- Areas of operation- Nature of industry- Level of computerization & upgradation of information system- External environment & government interventions 81
    82. 82.  Departments of sales organization1. Physical distribution department2. Publicity & sales promotion3. Public relation4. Personnel department5. Statistics & record department6. Credit & collection department 82
    83. 83. Types of sales organization structure Organizing by functions Organizing by products Organizing by customer groups Organizing by regions 83
    84. 84. Functional Sales Organization National Sales Manager Field Sales Manager Telemarketing Sales Manager Regional Sales Managers District Sales Managers District Sales Managers Salespeople Salespeople
    85. 85. Product Sales Organization Sales Manager Assistant sales manager Assistant sales manager Product A Product B Salespeople (100) Salespeople (100)
    86. 86. Customer group Sales Head Sales mgr Sales mgr Sales mgr Sales mgr industry I industry II industry III industry IV
    87. 87. Geographic Sales Organization National Sales Manager Eastern Region Sales Manager Western Region Sales Manager Zone Sales Managers Zone Sales Managers District Sales Managers (20) District Sales Managers (20) Salespeople (100) Salespeople (100)
    88. 88. Comparison of Sales Organization StructuresOrganizational Structure Advantages Disadvantages • No geographic duplication • Lack of managementGeographic • No customer duplication control over product or • Fewer management levels customer emphasis • Salespeople become experts • High cost in product attr. & applicationsProduct • Geographic duplication • Management control over • Customer duplication selling effort 88
    89. 89. Comparison of Sales Organization StructuresOrganizational Structure Advantages Disadvantages • Efficiency in performing • Geographic duplication Functional • Customer duplication selling activities • Need for coordination 89
    90. 90. Managing distribution channel 90
    91. 91. Nature & Importance of Distribution Channels Marketing channel  Set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. Channel choices affect other decisions in the marketing mix  Pricing, marketing communications A strong distribution system can be a competitive advantage Channel decisions involve long-term commitments to other firms 91
    92. 92.  How Channel Members Add Value  Fewer contacts.  Match product assortment demand with supply.  Bridge, time, place, and possession gaps that separate products from users. Number of Channel Levels  The number of intermediary levels indicates the length of a marketing channel.  Direct Channels  Indirect Channels  Producers lose more control and face greater channel complexity as additional channel levels are added. 92
    93. 93.  It is the delivery of goods at the right time & at the right place to the consumers The means by which products and services get from producer to consumer and where they can be accessed by the consumer The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) Channel selected should be convenient, economical & suitable for the distribution of specific product. 93
    95. 95. Functions of channel intermediaries Reconciling the needs of producers & consumers Improve efficiency by reducing the number of transactions & creating bulk for transportation. Improved accessibility Providing specialist services 95
    96. 96. Channel design1. Channel selection:- Marketing factors- Manufacturer factors- Product factors- Competitive factors2. Distribution intensity- Intensive distribution- Selective distribution- Exclusive distribution 96
    97. 97.  Channel integration- Conventional marketing channel- Franchising- Channel ownership 97
    98. 98. Channel Behaviour and Organization Conventional Distribution Channels  Consist of one or more independent channel members  Each seeking to maximize its own profits  Often result in poor performance Vertical Marketing Systems  planned channel system designed to improve distribution efficiency and cost effectiveness by integrating  Producers, wholesalers, and retailers act as a unified system  One channel member owns, has contracts with, or has so much power that they all cooperate  Benefits should include greater control, less conflict, and economies of scale due to the size of the system 98
    99. 99. Channel Behaviour and Organization  Vertical Market System  Integrates successive stages (VMS) of production and  Corporate VMS distribution under single  Contractual VMS ownership – channel  Administered VMS ownership is established through common ownership  Coordination and conflict through regular organizational channels12-99
    100. 100. Channel Behaviour and Organization  Vertical Market System  Individual firms who join (VMS) through contracts  Corporate VMS  Franchise organizations  Contractual VMS  Manufacturer-sponsored  Administered VMS retailer franchise system  Manufacturer-sponsored wholesaler franchise system  Service-firm-sponsored retailer franchise system12-100
    101. 101. Channel Behaviour and Organization  Vertical Market System  Leadership through the (VMS) size and power of  Corporate VMS dominant channel  Contractual VMS members  Administered VMS  Leadership could be manufacturer or retailer12-101
    102. 102. Selecting channel members Which characteristics are important?  Years in business  Lines carried  Growth and profit record  Cooperativeness and reputation  Type of customer  Location 102
    103. 103. Channel management Selection- Identifying sources Developing selection criteria- Motivation(understanding the needs)- Training(knowledge about product)- Evaluation- Managing conflictSources of channel conflict- Differences in goals- Role & rights ambiguity- Differing perceptions- Differences in desired product lines- Multiple distribution channels- Inadequacies in performances of channel members & manufacturer 103
    104. 104.  Types of conflict- Vertical channel conflict- Horizontal channel conflict- Multichannel conflict Avoiding & resolving conflict- Developing a partnership approach- Regular communication- Forming dealer council- Co-option- Training in conflict handling- Improved performance- Channel ownership 104
    105. 105. Managing sales personnel 105
    106. 106. Recruitment & selection of SP Managing sales force- Recruitment of sales staff- Training the sales staff- Compensating SP- Motivating (sales budget, sales territories, sales quota, sales contest)- Controlling sales force 106
    107. 107.  Designing sales force- Setting sales goals- Sales strategy- Sales force composition- Sales force size- Compensation / rewards 107
    108. 108. Compensation andMotivation of Sales Force 108
    109. 109. Compensation PlansCompensation plans for the sales force are designed to achieve several objectives.Some of these are:i. To assist the company in meeting its sales projections,ii. To bring the earnings of the sales force to desired levels,iii. To reward individual salespersons in direct proportion to their efforts and performance. 109
    110. 110. Formal Compensation Process Determine Determine Establish Sales Compensation Compensation Force Objectives Objectives, Strategies Factors and Tactics Implement Long and Appraisal and Short-term Range Recycling ProgrammesMeasure Individual, Group Relate Rewards Communicateand Organisational to Performance Compensation Policy Performance 110
    111. 111. Various Modes of Compensating the Sales ForceSalaryA straight salary payroll is by far the easiest for employers to handle.Deductions for provident fund, income taxes and other fringe benefits are fixedIn many industries, this method of compensation is generally used. Cont…. 111
    112. 112. Strengths of the Salary Compensation Plan1. For the sales force  Simple to calculate  Fixed income  Job security2. For the company  Reduces turnover in sales force  Increases authority of sales manager in controlling sales force  An effective tool in case • Group efforts are required • Hiring new staff Cont…. 112
    113. 113. The following are the weaknesses of the Salary Compensation Plan1. For the sales force  Lack of incentive to excel  Old sales force/under achievers tend to be overpaid2. For the company  Fixed expenses, difficult to cut down expenses  Frequent adjustments in salary necessary, yet too many changes are as bad as too few  Requires excellent supervision which is not always available. Cont…. 113
    114. 114. Straight CommissionPaying a commission is a variable expense rather than a fixed one.If sales are made, a commission is paid — no sales, no commission.This keeps sales expenses strictly in line.A straight commission pay plan has many advantages.It is desirable for a company suffering from a severe cash shortage since thecommission need not be paid until proceeds are received from a sale.Flexible commission rates can be a strong incentive and many organizations aresuccessful because the sales force enjoys a liberal commission schedule. Cont…. 114
    115. 115. Target CommissionA straight commission is paid on sales volume. On a fixed commission base, a fixed percentage of sales volume is paid to the salesforce. A fixed rate commission is easy to figure and administer.If the rate is 2 per cent, it stays at that percentage whether the salesperson sellsgoods worth Rs 40,000 or Rs 4,00,000. A progressive commission rate accomplishesa major objective of most companies: it provides a constant incentive to the salesforce to do better. The following example explains this: Sales (Rs) Commission Rate Up to 40,000 2% From 40,000 to 1,00,000 3% Above 1,00,000 4% If a salesperson’s quota is Rs 80,000, he would earn Rs 2,000 if he achieved thattarget exactly — a composite rate of 2.5 per cent. For example: Smith Kline Beechamis using this method in their worldwide selling. Cont…. 115
    116. 116. Bonus, Profit Sharing, Fringe BenefitsPaying bonus is a method that a company adopts to reward special contribution andas an incentive to superior performance.Profit SharingFringe BenefitsFringe benefits have become a fascinating subject and an item of considerableexpense to organizations. The costs of fringes can be as high as 30 per cent of directcompensation expense depending on what benefits are offered and whether aportion of the expense is shared with the employee. Cont…. 116
    117. 117. Reimbursement of Expenses Travel — usually by car or scooter Meals Lodging Entertainment MiscellaneousProper Sales Compensation Plan Provide a living wage Have performance Based pay levels Be adjustable to meet companys’ goals and individual aspirations. Such a plan not only helps in normal times but also takes care of special needs of a company. 117
    118. 118. Motivating sales personnel 118
    119. 119. ‹#›
    120. 120. Motivation to the Sales Force Motivation is the force within us that directs our behaviour. A sales manager can use the question guidelines suggested by Ginger Trumfiofor motivating his salespersons. Are you an Effective Motivator?Keeping your sales force motivated is vital to execute ongoing sales. How effectively do youmotivate your salespeople? Answer the following questions and you be the judge.1. What are the three most effective techniques you use for motivating your entire sales force?2. Do you know what motivates each person who reports to you?3. Do you know what role compensation plays in the motivation of each salesperson?4. Do you know what role recognition plays in the motivation of each salesperson?5. Do you know what role “opportunity for growth” plays in the motivation of each salesperson?6. Have you customised a motivational programme for each person who reports to you? Cont…. 120
    121. 121. 7. What have you done in the past week with the deliberate intention of motivating a salesperson?8. Did you praise someone today?9. Do you show your commitment to developing each salesperson by actively (at least once a month) coaching him on skills and techniques?10. When a salesperson seems to be feeling stressed, do you ask questions and spend time listening to his concerns?11. Do you ask your representatives, “What can I do personally to help your sales efforts?”12. Do you review their monthly performance with them in a timely manner?13. Have you done anything recently to “demotivate” your salespeople? For example: failed to give recognition; embraced a salesperson in front of peers or clients; taken over a sales call?14. Do you treat your salespeople with respect?15. Do you show your salespeople trust? Cont…. 121
    122. 122. Low-Cost Ways to Motivate A pat on the back. A smile. A simple, sincere, thank you. A personal letter to the employee, with copies sent to your immediate supervisor and to the employee’s supervisor. Public recognition in front of peers. Public recognition in front of one’s boss. A letter of praise from a customer or vendor praising an employee, posted on the company’s bulletin board. Listening to an employee who has an idea for improving efficiency and then acting affirmatively on that suggestion. Arranging employee discounts from your vendors or customers. Allowing the employee to work on an especially exciting project that he or she would not usually work on. Asking employees what non-monetary rewards they would like to have and, if possible, providing them. Issuing a “You Were Mentioned” certificate to employees whenever you hear something nice about them, whether from a customer, co-worker, or superior. Cont…. 122
    123. 123.  Electing a high-achieving employee to a quality circle or to a company wide task force. Providing free lunch for employees caught in the act of victory by an appointed group of company wide “catchers” Rotating the “company flag” or other symbols of excellence from one deserving unit to another on a quarterly basis. 123
    124. 124. Sales Career Stages and Motivation Are salespersons motivated by different rewards at different stages of their career? Do salespeople have different career and personal concerns based on career stages? The basic answer to both these questions is ‘Yes’. Cont…. 124
    125. 125. Dimensions of Motivation INTENSITYMotivation has mainly three dimensions PERSISTENCE DIRECTION1. Intensity: It is the magnitude of mental and physical effort put in by a salesperson for his or her activity or goal.2. Persistence: It is the extension of effort over time.3. Direction: It implies that the individual can choose how his or her efforts will be spent. Cont…. 125
    126. 126. Motivation Can Also be Intrinsic or Extrinsic Intrinsic motivation means that individuals are motivated internally by a desire to please themselves or merely by the satisfaction of performing a job. Extrinsic motivation means that someone else provides the motivation through methods such as pay, promotion or recognition. 126
    127. 127. Model of the Motivation ProcessThe motivation process consists of six steps :1. Recognise need deficiency2. Search for ways to satisfy needs3. Establish goal-directed behaviour4. Performance5. Provide rewards or punishment Cont…. 127
    128. 128. The Six Step Motivation Process Recognise need Process begins deficiency Search for ways toNeeds reassessment satisfy needs SALESPERSONProvide punishment Establish goal or rewards directed behaviour Performance 128
    129. 129. Other Factors of MotivationJob Related Factors The Job Itself  Skill variety  Task identity  Job feedback Leadership Job Organisational and Involvement Commitment  Job involvement  Organisational commitment  Institutional stars  Corporate citizens Cont…. 129
    130. 130. Individual Related Factors Career Plateauing  Performing deficiencies  Selection and training  Redesigning job to increase intrinsic motivation  Reducing stress and burnout  Increasing growth opportunities  Acceptance of growth opportunities 130
    131. 131. Non-financial Factors and their Impact on Sales ForceMotivation Meetings between Manager and Sales Force Clarity of Job Sales Contests Sales Conferences and Conventions Positive Feedback Reward and Recognition Observations and Future Directions 131
    132. 132. Sales Contests Sales contests are short-term incentive programs implemented to motivate salespersons to achieve specific goals or activities. For sales contests to be successful:  Objectives must be specific and clearly defined  Contest theme must be exciting and clearly communicated  Each salespersons must believe they can win  Awards must be attractive to participants  Contest must be promoted and managed properly 132
    133. 133. Sales Contest Elements  Contest Objectives  To increase total and product sales most common  Sales force must be given sufficient time  All contest information and rules must be clear  Theme  Contests receive a theme to create excitement  Chance of winning  Compete against self, others, or as a team? 133
    134. 134. Types of Rewards Sales contests can offer many types of reward in the form of:  Cash, prizes, or travel Promotion of contest important  Launched as a special event with handouts  Large scorecards to communicate progress  Newsletter articles or interim prizes can keep motivation up 134
    135. 135. Controlling sales force Essential- To ensure the achieved of selling objectives- To ensure co-ordination in efforts- To have sound public relationsControl methods are- Sales targets- Sales reports- Sales expenditure reports- Travel plans & reports- Information gathered through meeting & contacts- Number of sales meeting attended/number of calls- Analysis of complaints- Average cost per call- Non-selling activities 135
    136. 136.  Non-quantitative standards- Product & customer knowledge- Customer & trade relations- Quality of sales presentation- Communication skills- Punctuality- Market intelligence- Job attitude- Cooperation 136
    137. 137. Evaluating & Controlling Performance of Salespeople  Purposes / objectives / importance of performance evaluation of salespeople are:  Mainly to find how salespeople have performed  This information is used for other purposes, such as: • Improving salespersons’ performance, by identifying causes of unsatisfactory performance • Deciding salary increments and incentive payments • Identifying salespeople for promotion • Determining training needs • Motivating salespeople through recognition and reward • Understanding strengths and weaknesses of salespeople 137
    138. 138. Procedure for Evaluating and Controlling Salesforce PerformanceThe steps involved in the procedure are: Set policies on performance evaluation and control Decide bases of salespersons’ performance evaluation Establish performance standards Compare actual performance with the standards Review performance evaluation with salespeople Decide sales management actions and control 138
    139. 139. Set Policies on Performance Evaluation & Control Most companies establish basic policies. Examples are: • Frequency of evaluation. Mostly once a year. • Who conducts evaluation? Mainly immediate supervisor • Assessment techniques, 360-degree feedback • Sources of information. Sales analysis, new business reports, lost business reports, call plans, etc • Bases of salesforce evaluation. • Conducting performance review sessions with salespeople 139
    140. 140. Decide Bases for Salespersons’ Performance Evaluation  A firm should decide which of the following bases / criteria it would use: (1) result / outcome based, (2) efforts / behavioural based, or (3) both results & efforts based  A company selects performance bases or criteria from a list of alternatives, some of them shown below: Quantitative results / Quantitative efforts / Qualitative efforts / outcome bases / criteria behavioural bases / criteria behavioural bases / criteria• Sales volume • Customer calls • Personal skills• Accounts / customers  No. of calls per day  Selling skills  New accounts nos.  No. of calls per  Planning ability  Lost accounts nos. customer  Team player • Non-selling activities • Personality & Attitudes  No. of reports sent  Cooperation  Enthusiasm
    141. 141. Establish Performance Standards Performance standards are also called sales goals, targets, sales quotas, sales objectives Performance standards for quantitative results are related to the company’s sales volume or market share goals Performance standards for efforts / behavioural criteria are difficult to set • For this, companies do “time and duty analysis” or use executive judgement Performance standards should not be too high or too low After establishing standards, salespeople must be informed 141
    142. 142. Compare Actual Performance with Standards Salesperson’s actual performance is measured and compared with the performance standards For this, sales managers use different methods or forms: • Graphic rating scales • Ranking • Behaviourally anchored rating scale (BARS) • Management by Objectives (MBO) • Descriptive statements Companies combine some of the above methods for an effective evaluation system 142
    143. 143. Review Performance Evaluation with Salespeople Performance review / appraisal session is conducted, after evaluation of the salesperson’s performance Sales manager should first review high / good ratings, and then review other ratings Both should decide objectives / goals and action plan for future period After the review, sales manager should write about performance evaluation & objectives for the future Guidelines for reviewing performance of salespersons • First discuss performance standards / criteria / bases • Ask the salesperson to review his performance • Sales manager presents his views • Establish mutual agreement on the performance 143
    144. 144. Decide Sales Management Actions and Control Many companies combine this step with the previous step – i.e. performance review During performance review meeting with salesperson, sales manager does the following: • Identifies the problem areas. E.G. Sales quotas not achieved • Finds causes. E.G. less sales calls, poor market coverage, or superior performance of competitors • Decides sales management actions E.G. train salesperson, redesign territories, or review company’s sales / marketing strategies If a salesperson’s performance is good, he / she should be rewarded and recognised 144
    145. 145. Business Ethics and Sales Management Sales managers and salespeople have ethical responsibilities Some of the ethical situations are: • Relations with the company. EGs. Expense statements, credit for damaged merchandise • Relations with customers. EGs. Gifts, false information to get business, customer entertainment Ethical guidelines • A code of ethics developed by the company would be effective if it is enforced by top management 145
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