An Introduction to Sales Management


Published on

Sales Management is the process of current exchanges of goods - and thus sales management forms an integral part of Marketing Management. A significantly broader meaning is assigned to sales management as it also encompasses managing the sales functions and the sales force.

To know more about Welingkar School’s Distance Learning Program and courses offered, visit:

This Slideshare is the sole Property of the Welingkar School of Distance Learning – Reproduction of this material , without prior consent, either wholly or partially will be treated as a violation of copyright.

Published in: Business, Technology
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

An Introduction to Sales Management

  1. 1. Sales Management & Business NATURE AND SCOPE Sales Management form part of Marketing Management and not the other way round. A significantly broader meaning is assigned to Sales Management recently to the extent it encompasses following two broader areas. 1. Managing the Sales Functions 2. Managing the Sales ForceSales Management & Sales Force Management 1Business - Chapter 1 Chapter 1
  2. 2. RESPONSIBILITIES To the firm: Responsible to organise sales efforts within the organisation as well as outside To the sales force: To be selected, organised and deployed with attractive compensation and freedom of action To the customer: Sales persons are the ultimate direct contact link of the organisation and customers. To the society: Sales persons are in a better position to reflect the feelings, attitudes and sentiments of customers and community to the management.Sales Management & Sales Force Management 2Business - Chapter 1 Chapter 1
  3. 3. Functions of Sales Management Managerial functions 1. Planning: This involves, forecasting demand, sales territory planning, personal selling, and promotional efforts. 2. Organising: This involves, structure, resource allocation, responsibility assignment and delegation of authority etc. 3. Direction: This involves, leadership motivation, communication, and promotional steps including personal selling.Sales Management & Sales Force Management 3Business - Chapter 1 Chapter 1
  4. 4. Functions of Sales Management Managerial functions 4. Control: This involves, delegation, quota fixing, performance evaluation, incentives and budgets. 5. Co-ordination: This involves, liaison, integration of various elements, internally, P.R. and goodwill by contact with customer/general publicSales Management & Sales Force Management 4Business - Chapter 1 Chapter 1
  5. 5. Functions of Sales Management Staff functions: This is related to staff functions of sales force such as the following: Recruitment and selection. Deployment and evaluation of performance Training and development. Career development. Compensation and incentives. Motivation and empowerment.Sales Management & Sales Force Management 5Business - Chapter 1 Chapter 1
  6. 6. Functions of Sales ManagementAdvisory functions : Product attributes/quality aspects. Pricing policies. Promotional steps and personal selling aspects. Distribution policies and channel selection criteria. Advertisement policies such as media selection and target audience. Transportation and warehousing aspects.Sales Management & Sales Force Management 6Business - Chapter 1 Chapter 1
  7. 7. Functions of Sales Management Liaison Functions: Liaison with departments such as the following: Production department. Finance department. Marketing department. R & D department. Distribution network and After Sales Service departmentSales Management & Sales Force Management 7Business - Chapter 1 Chapter 1
  8. 8. PHASES OF EVOLUTION OF SALES MANAGEMENT Broadly speaking evolution of Sales Management developed under the following four phases:1. Pre-industrial revolution period.2. Production oriented period.3. Sales oriented period.4. Customer oriented period.Sales Management & Sales Force Management 8Business - Chapter 1 Chapter 1
  9. 9. Pre-Industrial Revolution Period Small-scale industries/crafts existed prior to Industrial Revolution period. The owner/craftsman turned entrepreneur, looked after all areas and functions of management. These areas are production, finance and design and development. Sales and marketing was never a serious problem in those days since demand far exceeded supplies. Selling was only a part-time job for these entrepreneurs. This job is mostly confined to demonstration or display of their craftsmanship.Sales Management & Sales Force Management 9Business - Chapter 1 Chapter 1
  10. 10. Production Oriented PeriodIndustrial Revolution in 1760s heralded this period.Mass production technique introduced during thisperiod, increased the production level manifold.Following were the characteristics of this period: Prevailed in developed nations in the West till 1930s. Focus was on manufacturer and production capacity. Emphasis was laid on production process which yielded volumes. Marketing meant "sell what is produced". Environment was that of a "sellers market".Sales Management & Sales Force Management 10Business - Chapter 1 Chapter 1
  11. 11. Sales Oriented PeriodEconomic recession of 1930s was the starting pointwhere demand declined.Following are the characteristics of this period: Prevalent in developed nations in the past. However still prevalent in developing nations. Focus is on sales and sales promotion with emphasis on sales volume. Marketing means "product does not sell by self-it has to be pushed. Customers are to be manipulated." Environment is highly competitive where "supplies are in excess and production capacity is more."Sales Management & Sales Force Management 11Business - Chapter 1 Chapter 1
  12. 12. Customer Oriented Period Globalisation and liberalisation have further increased the competition manifold. Following are the characteristics of this period: Prevalent in developed nations after 1960s. Developing nations are also following this approach by 1980s. Focus is on "customer satisfaction." Emphasis is on "problem solving" on customer "needs" and "wants“ to achieve customer loyalty. . Marketing means customer satisfaction before, during and after sales. Environment is that of “buyers market” having severe competition.Sales Management & Sales Force Management 12Business - Chapter 1 Chapter 1
  13. 13. OBJECTIVES OF SALES MANAGEMENT Following are the three general objectives of sales management: 1. Generate sufficient sales volume. 2. Contribute towards current profit. 3. Ensure continuous growth of the organisation. Top management has ultimate responsibility for the above objectives. However, this task by authority delegation, is entrusted to sales department who are the ultimate operational level managers.Sales Management & Sales Force Management 13Business - Chapter 1 Chapter 1
  14. 14. Sales Volume Objective This is the sum of sales of all salesmen, put together. By proper planning, sales territories are assigned to salesmen based on sales potential and sales forecast made in the planning stage. Sales volume depends on a number of sales persons. Techniques used by sales department are many; like personal selling and promotional steps etc. Sales persons are motivated by various methods so that targets are achieved such as quotas, incentives like commissions and sales management by objectives. By proper O.R. techniques, optimum sales force is fixed.Sales Management & Sales Force Management 14Business - Chapter 1 Chapter 1
  15. 15. Current Profit ObjectiveSales Management and financial results are closelylinked to each other as evident from the following Sales - Cost of Sales Gross Margin - - - (1.1) Gross Margin - Sales Expenses = Net Profit- - (1.2) Cost of Production + Cost of Distribution = Cost of Sales - - - (1.3)Sales revenue has been directly linked to theperformance efficiency of the sales force.All expenses are budgeted and controlled.Sales Management & Sales Force Management 15Business - Chapter 1 Chapter 1
  16. 16. Continued Growth Objective Survival and success is the basic objectives of any organisation. A number of growth strategies are available such as the following: Diversification - Concentric or conglomerate Integration - Vertical or horizontal External Growth - JV, merger or acquisition In all such cases, performance of sales force and quality of their information feedback is vital to know the "needs" and "wants" of customer.Sales Management & Sales Force Management 16Business - Chapter 1 Chapter 1
  17. 17. SALES ORGANISATION- CHARACTERISTICS Organisation forms the foundation of effective implementation of sales strategy, policies and plans. The characteristics of an effective organisation : Defines lines of authority, responsibility and accountability. Effective lines of communication. Control activities of sales : Sales management functions Sales force management functions. Bridging the gap between market demand and productive capacity of the firm.Sales Management & Sales Force Management 17Business - Chapter 1 Chapter 1
  18. 18. SALES ORGANISATION- STRUCTURE & CLASSIFICATION Types of Organisation Structures: Line type organisation – Most common type of organisation structure with parity between authority and responsibility Line and Staff organisation –As the organisation grows in size, specialists are appointed as staff managers Functional type organisation - sales functions are grouped and placed under the direct control of managers who are specialists Field Force type organisation – Geographic, Product type, Customer TypeSales Management & Sales Force Management 18Business - Chapter 1 Chapter 1
  19. 19. SALES ORGANISATION- IMPORTANCE Sales management with proper planning, organising, direction, delivers the goods in right quantity at the right place at the right time. This is called merchandising. Todays salesmen need intrinsic motivation by autonomy, dignity and recognition. Sales organisation is the "ear" and "eyes" of the firm. Right feedback from customers views are very important for the very survival and success.Sales Management & Sales Force Management 19Business - Chapter 1 Chapter 1
  20. 20. Merchandising Defined as "the planning to offer the right products in the right time with right quality and quantity at the right place with the right price." The areas of co-ordination on the part of sales persons given below. This highlights Field Sales Manager as coordinator of marketing mix Strategies Choice Planning Marketing Programme Sales Force Distribution Network Manufacturing DivisionsSales Management & Sales Force Management 20Business - Chapter 1 Chapter 1
  21. 21. Co-ordination in Strategy In globalisation, competition is severe, environment changes fast, opportunities and threats appear and disappear very frequently. Top managers/strategists engage, almost continuously to scan the environment and suitably amend and modify existing strategies. Salespersons have first information about the market conditions, competitors strategy and consumers reaction.Sales Management & Sales Force Management 21Business - Chapter 1 Chapter 1
  22. 22. Co-ordination in Planning Various activities are listed in terms of "time frame" and "cost frame" Their milestones are prepared along with PERT so that proper sequencing of such activities, along with quantification of resources are determined. Information obtained based on sales forecast, assists Market Segmentation, Territory Planning, Outlay on other marketing efforts like Advertisement, Personal Selling and Promotional steps.Sales Management & Sales Force Management 22Business - Chapter 1 Chapter 1
  23. 23. Co-ordination in Marketing Programme Many sales activities are required to be coordinated with other activities of marketing such as advertisement and sales promotion. Personal Selling efforts are supplemented by Advertisement Promotional Displays Appointments of Distributors Setting up of after-sales-service stations Timing of advertisement and personal selling efforts are also very important.Sales Management & Sales Force Management 23Business - Chapter 1 Chapter 1
  24. 24. Co-ordination of Sales Force Efforts Efforts of sales force must be properly coordinated to: Avoid overlapping Duplication Gap between their areas of responsibility and tasks. Depending on the market conditions, competitors actions and individual performance, it may be necessary to: Shuttle around salesmen Re-organise territories & regions Supplement the salesmenSales Management & Sales Force Management 24Business - Chapter 1 Chapter 1
  25. 25. Co-ordination of Distribution Network Liaison and co-ordination between distributors and retailers becomes very important tasks. This will enhance timely availability and attending to after sales service by customers. Complaints of transit damages, non-settlement of warranty/guaranty claims by customers etc. needs extensive co-ordination. Sharing advertisement/promotion expenses is another area requiring co-ordination between organisation and distribution.Sales Management & Sales Force Management 25Business - Chapter 1 Chapter 1
  26. 26. Co-ordination of Manufacturing Very often customers complain against quality, reliability, maintenance and operational problems. Such matters requires prompt action by manufacturing divisions. They in turn solicit the services of R & D engineers, if need be, for incorporating modification or re-drafting "Operating and Maintenance Instructions." Many times, distributors complain on non-availability of spares or replacement of item returned for repair. Salesmen efforts with manufacturing divisions to solve many such problems will yield customer satisfaction and goodwill.Sales Management & Sales Force Management 26Business - Chapter 1 Chapter 1
  27. 27. SALES MANAGEMENT CYCLE AND CONTROL The Objective: Control is one of the managerial functions of sales management. Imaginative control is necessary to cut down costs without demoralising the sales force. Following are the several phases of control: Planning phase & Setting up standards Data collection, Analysis & Performance evaluation Correcting controllable variables &Tackling uncontrolled variables Pro-active MIS.Sales Management & Sales Force Management 27Business - Chapter 1 Chapter 1
  28. 28. Planning Phase Sales executive finds answers to the following aspects: 1. The current state of business. 2. The past experience to reach the current state. 3. The targets set for a given future period. 4. The methods to meet the targets set forth. Head of the sales executives identifies the strengths and weaknesses of existing plans, policies and procedures.Sales Management & Sales Force Management 28Business - Chapter 1 Chapter 1
  29. 29. Performance Standard The chief of sales force, sets up quantitative standards to measure the performance. Eliminates inherent weaknesses to the existing standards. Ultimate test is to set up a standard to suit each individual salesman/situation Should contribute "more to personal selling efficiency than it costs." The standards are specified within a range of performance (a minimum and maximum)Sales Management & Sales Force Management 29Business - Chapter 1 Chapter 1
  30. 30. Data Collection and Analysis The performance is evaluated at periodic intervals. There is an optimum frequency of such evaluation period. Too frequent evaluation increases costs prohibitively high compared to its benefit. By and large, annual performance assessment is a popular method. In the beginning stages performance of sales personnel are evaluated at higher frequencies like quarterly or half yearly etc.Sales Management & Sales Force Management 30Business - Chapter 1 Chapter 1
  31. 31. Performance Evaluation Following are essential features of a good control system: Timely availability of information. Advice on actions necessary to correct poor performance. Allowances must be made for situations beyond the control of individuals. Only deviations which are beyond the accepted limits must be reported to higher levels for intervention based on the "principles of management by exceptions."Sales Management & Sales Force Management 31Business - Chapter 1 Chapter 1
  32. 32. Pro-active MIS Control Mechanism is primarily intended to ensure performance to meet desired standards. Corrective actions need time. Hence, the higher management levels must get the feedback in time so that they have the opportunity to initiate corrective actions. This is called proactive Management Information System (MIS). The first step of control is to identify factors responsible for performance. These factors come under two categories viz.: Controllable variables Uncontrollable variablesSales Management & Sales Force Management 32Business - Chapter 1 Chapter 1
  33. 33. Corrective Action for Controllable Variables Performance evaluation depends on the criteria of measurement. Corrective action for poor performance comes under following controllable variables : Direction for better methods of management. Better guidance, training and development. Issuing amendment to existing procedure, practices and criteria of measurement to keep performance within desired limits.Sales Management & Sales Force Management 33Business - Chapter 1 Chapter 1
  34. 34. Corrective Action for Uncontrollable Variables The shortfall of production can be due to any of the reasons: Existing sales objective is unrealistic. Existing standard is too high to achieve. Defective Plans and Policies. In all such cases, management must take the responsibility to amend editing sales objectives, plans, policies and performance standard to suit practical conditions.Sales Management & Sales Force Management 34Business - Chapter 1 Chapter 1
  35. 35. GENERAL SALES MANAGER General Sales Manager (GSM) or G.M. (Sales), is the functionary at corporate headquarters. GSM usually reports to the Director or Vice President, Marketing. GSM is responsible for the following: Secure maximum sales volume. Develop and implement effective sales policies plans and programme for all products at all territories.Sales Management & Sales Force Management 35Business - Chapter 1 Chapter 1
  36. 36. DUTIES AND RESPONSIBILITIES of GSM Sales Programme: Lay down long-term and short-term sales objectives in terms of sales, profits, growth, market share etc. Design detailed sales programme to improve competitive position to reach laid down sales volume objective and reduce cost of sales and distribution. Reviews and approves sales policies, strategies and pricing policies to ensure short-term operations are in accordance with long-term plans.Sales Management & Sales Force Management 36Business - Chapter 1 Chapter 1
  37. 37. DUTIES AND RESPONSIBILITIES of GSM Organisation: Set up and control effective organisation structure, to carry out departmental responsibilities. Provide leadership to sales force to motivate them by developing appropriate reward and compensation plan which meet the organisational objectives as well as individual aspirations.Sales Management & Sales Force Management 37Business - Chapter 1 Chapter 1
  38. 38. DUTIES AND RESPONSIBILITIES of GSMLiaison Function: Sales manager must develop effective liaison with superiors, colleagues and other heads of departments like Production, Finance, Personnel etc. To support the sales force efforts and customer satisfaction. This will ensure healthy internal and external relationsSales Management & Sales Force Management 38Business - Chapter 1 Chapter 1
  39. 39. DUTIES AND RESPONSIBILITIES of GSM Sales Force Management : Locate reliable sources of sales force and establish sound selection process. Organise effective T&D programme to improve their performance level. Identify competent sales personnel for promotion and other incentives to retain them and find continuous replacement for drop-outs. Organise effective compensation packages and leadership for motivation and better performance. Introduce control for meeting targets and weed out dead wood.Sales Management & Sales Force Management 39Business - Chapter 1 Chapter 1
  40. 40. DUTIES AND RESPONSIBILITIES of GSM Communication: Continuous and effective communication is established with Director (Marketing) and sales force Information is updated in regards to overall departmental performance on sales against objectives, problem areas, special achievements, competitors actions and customer expectations etc.Sales Management & Sales Force Management 40Business - Chapter 1 Chapter 1
  41. 41. DUTIES AND RESPONSIBILITIES of GSM Control: Ensures control to dovetail between production and sales, so as to minimise inventory level. Introduce strict control on expenditure to ensure expenses are within budgetary provisions. This will assist taking corrective action when deviations are beyond acceptable limits.Sales Management & Sales Force Management 41Business - Chapter 1 Chapter 1
  42. 42. FIELD SALES MANAGER (FSM) OR DISTRICT SALES MANAGER (DSM) Field or District Sales Manager (DSM) reports to General Sales Manager (GSM). The primary objective is to secure maximum sales in the Sales District (territory) in accordance with laid down sales budget.Sales Management & Sales Force Management 42Business - Chapter 1 Chapter 1
  43. 43. DUTIES AND RESPONSIBILITIES OF FSM OR DSM Supervision of Sales Personnel: Evaluate sales opportunities in the district and assign territories to sales persons based on equitable work load and minimum travel requirement. Supervise the work load of sales person by proper direction, guidance and assistance to achieve and sustain competitive advantage. Attend to sales persons important personal problems to keep them happy and contented, to devote full time to the sales work. Rate sales persons, in their performance, and discuss with them, at least once in a year, focusing their attention to areas of improvement.Sales Management & Sales Force Management 43Business - Chapter 1 Chapter 1
  44. 44. DUTIES AND RESPONSIBILITIES OF FSM OR DSM Control: Prepare short-term sales forecast of district by collecting similar forecasts of territories from sales persons to prepare accurate sales plans, fixing quotas and budgets. Prepare periodic progress review of sales against planned targets/objectives. Report to GSM any significant development and information on market intelligence received.Sales Management & Sales Force Management 44Business - Chapter 1 Chapter 1
  45. 45. DUTIES AND RESPONSIBILITIES OF FSM OR DSM Cost Accounting and Administration: Responsible for administration of direct sales office and warehouse and stock facilities as per laid down policies and procedures. Effective liaison with technical specialists, other DSMs and headquarters for team work to enhance sales turnover, reduce costs and implement faithfully the sales programme.Sales Management & Sales Force Management 45Business - Chapter 1 Chapter 1
  46. 46. DUTIES AND RESPONSIBILITIES OF FSM OR DSM Communication: Interpret sales plans, policies and programmes received from corporate headquarters and explain to sales force. Convey any relevant information received from market intelligence from customers, competitors and sales force which are of significant value to top management in corporate office. Promote better customer relations by participating in the activities of social and professional bodies in the district territories.Sales Management & Sales Force Management 46Business - Chapter 1 Chapter 1
  47. 47. Performance Evaluation DSMs performance is evaluated based on the following: Reaching or exceeding laid down sales targets. Limiting sales expenses within the budgeted figures. Maintain profit contribution of district office, warehouses and stock facilities in line with the plan targets. Maintain turnover rate of sales persons at satisfactory levels.Sales Management & Sales Force Management 47Business - Chapter 1 Chapter 1
  48. 48. FUNCTIONS OF SALES MANAGER Planning Functions: Lays down sales objectives, policies and strategies. Prepare a sales plans and programme to implement sales strategies. Design and administer suitable sales organisation. Designing sales territories & Deciding the size of sales force. Formulation of personal selling objectives. Organising sales forces selection, recruitment socialising (orientation) and placement. Training and development, career planning, transfers and promotion.Sales Management & Sales Force Management 48Business - Chapter 1 Chapter 1
  49. 49. QUALITIES/ABILITIES/CHARACTERISTIC OF A SALES MANAGER There are two opinions on the success of sales managers. 1. Sales abilities are inborn qualities 2. Sales abilities are developed. Some of the sales abilities like gift of gap, pleasing manner, extrovert nature are inborn. However, others like analytical ability, negotiation skills, leadership, etc. are developed.Sales Management & Sales Force Management 49Business - Chapter 1 Chapter 1
  50. 50. QUALITIES/ABILITIES/CHARACTERISTICS OF A SALES MANAGER Following five abilities are identified: 1. Leadership and Supervision- 2. Planning and Conceptual Skill 3. Self direction and Self control 4. Organising abilities 5. Time-managementSales Management & Sales Force Management 50Business - Chapter 1 Chapter 1
  51. 51. Leadership and Supervision Motivating salesmen in competitive environment need, more than anything else, the leadership qualities. Leadership means the ability to influence subordinate willingly doing their work meticulously. This involves proper delegation of authority, effective supervision through direction and control, better communication skills etc. By effective supervision, work is distributed based on capabilities and aptitudes of each.Sales Management & Sales Force Management 51Business - Chapter 1 Chapter 1
  52. 52. Leadership and Supervision By proper training, individual skills and knowledge are improved. This will improve interest and competence in them. Better human relations skill and team spirit inculcate "espirit-de-corps" in them. All these enhance "empowerment" which is manifested by a sense of belongingness and commitment by developing positive attitude.Sales Management & Sales Force Management 52Business - Chapter 1 Chapter 1
  53. 53. Planning and Conceptual Skill Planning is a sine qua non for success in sales and the essential ability for a manager is his capability to foresee far in to the future which is called "conceptual skill". The rapid changes in life style, affect market conditions. Technological changes affect products. Effective communication improve abilities of competitors to bring in new products in market. Consumer force, and political patronage of consumers can make matters worse.Sales Management & Sales Force Management 53Business - Chapter 1 Chapter 1
  54. 54. Planning and Conceptual Skill Market manager must be able to foresee these changes in advance and alert his management to take corrective actions in time to attain and sustain competitive advantage in market. Further more, such changes must be incorporated in the planning by updating or amending plans.Sales Management & Sales Force Management 54Business - Chapter 1 Chapter 1
  55. 55. Self Direction and Self Control Sales executives are the "live wire" in an organisation and are the revenue earners. Being at the centre stage of activities, sales manager must know what company expect from him. Whether defined or not, he must assign his own duties and responsibilities and act accordingly. Being a specialist in his field, he does not look up to anyone in his organisation to guide and control him. As and when market conditions change, he rewrites his own agenda and assumes responsibility of new tasks, self-assigned by himself.Sales Management & Sales Force Management 55Business - Chapter 1 Chapter 1
  56. 56. Organising Ability Sales manager must be a good organiser and real “GO-GETTER". He must organise an effective team, make a structure suitable for a given situation, recruit and select proper salespersons to manage different territories & products, delegate authority, co-ordinate and control their activities, motivate and compensate their work, recognise their efforts and acknowledge good work. He is to develop his team giving them adequate monopoly and freedom of action and at the same time maintain strict control on their activities keeping in mind, that the organisational objectives are not lost sight of.Sales Management & Sales Force Management 56Business - Chapter 1 Chapter 1
  57. 57. Time-Management Time is the scarcest of all resources. One has to balance his time between planning functions, and operating functions properly. SM must also find time for meeting his salesmen, customers and distributors. Also find time to meet his superiors at corporate headquarters, as well as do liaison functions with other departments.Sales Management & Sales Force Management 57Business - Chapter 1 Chapter 1