All the details regarding the QUOTAS, along with case study.

1. Quotas
Name: Nikhil D. Chaudhari
Course: M.Pharm.+ MBA(1st year.)
Roll no. - MP02
Guided by: Dr. Deepak R. Gupta.
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2. 2

3. Index
Tittle Slide number
1.What are Quotas? 4-6
2.Objectives 7-9
3.Quotas, sales forecast, and sales
budget.
10
Types of sales quotas- 11-26
A.Sales volume Quota 12-21
B.Budget Quotas 22-24
C.Activity quotas 25
D.Combination quotas 26
4. Administering the Quotas 27-33
5. Limitations 34 3

4. Tittle Slide number
6. Conclusion 35
7. Case study 36-41
8. Multiple choice questions 42-46
Index

5. What are Quotas?
 Are quantitative objectives assigned
to sales organizational units or
individual sales personals.
Quotas specify desired performance
for sales volume.
Sales management sets Quotas for
organizational units like districts.
5

6. In some companies, sales management
sets quotas for middlemen viz, agents,
wholesalers , retailers.
All Quotas have time dimension.
6
What are Quotas?..

7. According to Philip Kotlar :-
“A sales quota is the sales goal set
for a product line, company
diivision or sales representative. It
is primary a managerial device for
defining and stimulating sales
effort.”
7

8. OBJECTIVES
• To provide Quantitative performance
standards.
• To obtain tighter sales and expense
control.
8

9. • To motivate desired performance.
• To use in connection with sales
contests.
9
OBJECTIVES ...

10. • To control sales efforts.
• They provide a standard to measure
the performance.
10
OBJECTIVES ...

11. QUOTAS, SALES FORECAST, AND THE SALES
BUDGET:
• Relationships among quotas, the sales budget,
and the sales budget vary from company to
company.
• Planning a company sales effort begins with a
sales forecast and evolves naturally into sales
budget.
• Based on the sales forecast, the sales budget is
estimated, which sets objective for net profit,
and depending on these two, the quotas are
assigned.
11

12. TYPES OF QUOTAS
1- Sales volume Quota
2- Budget Quota
3- Activity Quota
4- Combinations of above
12

13. 1- Sales volume Quota
• Old and most common method.
• Important standard for appraising the
performances of individual sales personnel or
organization.
• Sales volume quotas communicate managements'
expectationsaas to “how much for what time”
• Sales volume quotas sees extensive use. Sales
executive set them and the sales objective
dominates other objectives.
TYPES OF QUOTAS..
13

14. Types of sales volume quotas:
A- Dollar sales volume quotas
• Companies selling broad product lines
set sales volume quotas in dollars rather
than in units of the product.
• A key advantage of the dollar
terminology is that the dollar sales quotas
rellate easilyy to other performance data,
such as sellinng expenses through ratios
or percentages.
14

15. B- Unit sales volume quotas:
Sales volume quotas in units of
products are used in two situations,
A- prices fluctuate considerably,
better than dollar sales volume quotas.
B- this occurs with narrow product
lines sold at stable prices.
15
TYPES OF QUOTAS...

16. C- Point sales volume quotas:
Sales volume quotas expressed in
POINTS.
A company using point volume quotas
might consider each 100$ sales as worth
1 point,
It might value unit sales of product A at
5 points and product B at one point OR ,
It might convert into dollar or unit sales
into points.
16
TYPES OF QUOTAS...

17. Procedures for setting sales volume quota:
A. Sales volume quotas derived from
teritorial sales potential.
B. Sales volume quota derived from
total market estimates.
C. Sales volume quotas derived from
past sales experience alone.
D. Sales volume quotas based on
executive judgement alone.
E. Sales volume quotas related only to
compansation.
F. Letting the sales personnel set their
own sales volume quotas.
17

18. Procedures for setting sales volume quota:
A- Sales volume quotas derived from
teritorial sales potential:
Many managements derive sales volume
quotas from sales potential. This approach is
apropriate when;
1- Teritorrial sales potentials are
determined in conjunction with territorial
design.
2- Bottom-up planning and forecasing
procedures are used in obtaining the sales
estimate in sales forecast.
18

19. B- Sales volume quota derived from total
market estimates:
In some companies, managements has neither
statistics on nor sales force estimatesof
territorial sales potentials.
Hence companies use top-down panning.
Management may neither,
1- Break down the total company sales
estimates using various indexes of relative
sales opportunities in each territory, and then
make adjustments to arrive at territorial sales
volume quotas.
2- Convert the company sales estimates into
companywide sales quota and then breakdown
the company volume quota. 19
Procedures for setting sales volume quota...

20. C- Sales volume quotas derived from
past sales experience alone:
Its a crude process.
some companies take last years' sales for
each territory.
Some consider the past sales for each
territory over several years.
Companies making them perpetuate past
errors
Procedures for setting sales volume quota...

21. D- Sales volume quotas based on
executive judgement alone:
Sometimes sales volume quotas are
solely based on executive judgement.
Implimented whewn there is little
information to set quotas
21
Procedures for setting sales volume quota...

22. E- Sales volume quotas related only to
compansation :
 Sales volume quotas are projected
solely upon compansation.
 As a financial incentives to
performance.
22
Procedures for setting sales volume quota...

23. 2- Budget quotas :
Budget quotas set for various units in
the sales organization.
Reflect the financial goals of the firm:
Sales volume
Gross margin
Intended profit margin
Additional sales potential
Cost of support and service
To make a profit
23

24. Procedures for setting budget quotas :
A- Expense quota:
The amount budgeted for a salesperson
for expenses associated with making
sales in a territory; used as a cost control
measure by sales managers.
These are linked to selling costs with a
realistic time frame.
The sales team may be given an expense
budget which is a percentage of a
particular region's sales volume.
24

25. B- Gross margin or net profit quotas:
• A common form of sales assignment, goal
or target used to measure a salesperson's
performance.
• A gross margin quota is used to urge a
salesperson to sell a healthy portion of
higher-profit items which are usually
higher in price and often harder to sell.
• A gross profit quota is calculated by
subtracting selling expenses and the cost
of goods sold from sales revenue.
25
Procedures for setting budget quotas...

26. 3-Activity quotas:
 It reflects territorial conditions.
 Require a detailed analysis of the work
required for effective territorial
coverage
 Customers influence activity quotas
through:
Account and order size
Purchasing patterns
Support required for satisfaction
26

27. In a growing number of firms, managers
are designing new types of sales quotas
called combination quotas.
That combine two or more activity- or
behavior-based goals.
Many sales teams operate with some
combination of sales quotas in place.
Combined quotas often involve an
aspect of both sales volume and rep
activity.
4-Combination quotas
27

28. Administering the quota system:
To secure the staff cooperation in
making the system work.
Most critical is securing and maitaining
acceptance of the quotas by those to
whom they are assigned.
28

29. Quota systems:
1. Accurate Fair and Attainable Quotas:
2. Securing and Maintaining the sales
personnel's acceptance of quotas:
3. Participation by sales personnel in
quota setting-
4. Keeping sales personnel informed
5. Need for continuous managerial
control.
29

30. A. Accurate Fair and Attainable Quotas:
 More the related to territorial potentials
 Whether quotas are fair and attainable
depends upon the capabilities and
motivations of the sales force.
 Subjective evaluations of the sales
personnel according to qualitative
performance criiteria are rewuired to
ascertain whether quotas are fair.
30
Administering the quota system..

31. B. Securing and Maintaining the sales
personnel's acceptance of quotas:
 Management must make cartain that
sales personnels understand quotas
anaad quota-setting procedure.
 Its a critical step.
 Quota setting pocess should be simple
and easy to understand to sales
personnel.
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Administering the quota system..

32. C.Participation by sales personnel in
quota setting-
 With sales personnel helping to set
their own quotas, management has
more assurance that procedure will be
understood.
 Sales personnel have some
information about the sales territories,
this contibutes to quota accuracy.
32
Administering the quota system..

33. :D. Keeping sales personnel informed
• Better for effective sales.
• Sales personnel receive frequent
reports detailing their performance to
date.
• To analyze them their own strong and
weak points
33
Administering the quota system..

34. E. Need for continuous managerial
control.
 Gather and analyse performance
statistics with minimum delay.
 Provide each person information o his
or her performance.
 Flexibility in administering the system
is important, should be adjustable.
34

35. LIMITATIONS OF QUOTAS :
Some companies do not use quotas due
to,
 It is difficult to obtain accurate sales
estimates.
 No quotas should cost more than it is
worth.
 Sometimes the sales personnel will not
accept the hard-to-explain techniques.
35

36. Are quantitative objectives assigned to
sales organizational units or individual
sales personals.
Intended to stimulate performance and
to evaluate it.
Quota setting procedures are are the
most painfull.
Continuous managerial review and
appraisal and balanced flexibility
characterise successful quota system.
36
Conclusion:

37. Case Study
Driskil Manufacturing Company.
-Maintainance equipment manufacturer.
Case study on-
USE OF QUOTAS.
37

38. Jack Dixon (sales manager).
Henry Grangor (direcotor of marketing
research)
Both were in complete disagreement
about the current method of prepareing
the sales quotas.
Driskil Manufacturing Company marketed
a line maintainance equipment used all
over the country, had attained prestige
accross the country.
38
Case Study..

39. • Once management decided to
scrutinize the sales staff, its motivation
and compensation methods.
• They hired a firm
• Firm discovered that driskil's current
compensation and motivation practices
were on emergency basis rather than
result of long term planning.
39
Case Study..

40. • Driskil knew that there was some
dissatifaction among the feild sales
force with its current practices.
• Driskil involved the sales force team in
preparation .
• Sales force welcomed, indicated
approval.
• Commissions were satisfactorary.
40
Case Study..

41. • Approximately one-third of the sales
force was paid on straight commission
basis
• Jack dixon, believed that, basis for
determining quotas was a satisfactory
one.
• Henry grangor, was less satisfied with
exising quotas.
41x41
Case Study..

42. • Existing system based on the past sales
was not okay, he claimed.
• He suggested, future quotas could be
based on division of annual forecast.
• But dixon supported existing one.
42
Case Study..

43. Multiple choice questions
1. Why quotas are used in sales management?
1)To entertain sales personnels.
2)To evaluate sales personnels.
3)To make them free
4)none of above.
2. Which of the following is not objetive of-
1)To provide Quantitative performance standards.
2)To obtain tighter sales and expense control.
3)To motivate desired performance.
4)All of above
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44. 3. Which of the folllowing is not type of quotas?
1)Sales volume Quot
2) Budget Quota
3) Activity Quota
4) Marketing quota
4. Which of the folllowing is not type of sales volume quotas?
1)Dollar sales volume quotas
2)Unit sales volume quotas
3)Rupee sales volume quotas
4)Point sales volume quotas
*
Multiple choice questions..

45. 5. Which of the following is not procedure of setting of sales volume quota?
1)Sales volume quotas based on executive judgement alone.
2)Sales volume quotas related only to compansation
3) Letting the sales personnel set their own sales volume quotas.
4) Based on the cunsumer's survey.
6. Which of the folllowing is quota system?
1)Accurate Fair and Attainable Quotas
2)Securing and Maintaining the sales personnel's acceptance of quotas
3)Participation by sales personnel in quota setting
4) All of above
*
Multiple choice questions..

46. 7. Which one of the following is reason for not applying the quota?
1)It is difficult to obtain accurate sales estimates
2)No quotas should cost more than it is worth
3)Sometimes the sales personnel will not accept the hard-to-explain techniques.
4) All of the above
8. Quotas are:
1)Are quantitative objectives
2) Intended to stimulate lazyness
3)Inteded to demotivate
4)Not used in management
46
Multiple choice questions..

47. 9. which is not responsible for failure of quotas?
1)It is difficult to obtain accurate sales estimates
2)No quotas should cost more than it is worth
3)Sometimes the sales personnel will not accept the hard-to-explain techniques.
4) Are able to ootivate the sales personnel.
10. Odd one out
1)Are quantitative objectives
2) Intended to stimulate lazyness
3)Inteded to motivate sales personnel.
4)Used to evaluate sales personnel.
47
Multiple choice questions..

48. thank you
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