IMTS Marketing Management (Sales & distribution management) by IMTS INSTITUTE

I ns t i t ut eofManage me nt & Te c hni c alSt udi e s SALES& DI STRI BUTI ON

MANAGEMENT

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IMTS (ISO 9001-2008 Internationally Certified) SALES & DISTRIBUTION MANAGEMENT

SALES & DISTRIBUTION MANAGEMENT

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SALES & DISTRIBUTION MANAGEMENT CONTENTS:

UNIT – I

01-25

Evolution of sales management, meaning – scope – objectives. Relationship between sales and other disciplines – functions of sales management : Sales forcecasting, sales planning, organizing, selection of sales force and controlling. UNIT – II

26-47

Personal selling – nature – scope – merits – sales jobs – distinction – changing patterns in personal selling. Qualities of sales personnel – personal selling process. UNIT – III

48-91

Organizing the sales effort – types of sales organization – sales department and its co-ordination with other departments – external relationship of sales department – setting sales objectives, policies and strategies. UNIT – IV

92-125

Sales force management – recruitment, selection, training, motivation, incentive schemes, compensation – performance appraisal. UNIT –V

126-151

Controlling the sales efforts – sales quotas – types – territory management – sales audit and sales control.

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UNIT - I Today's sales executives are professionals. They plan, build, and maintain effective organizations and design and utilize efficient control procedures. The professional approach requires thorough analysis, market-efficient qualitative and quantitative personal-selling objectives, appropriate sales policies, and personal-selling strategy. It calls for skillful application of organizational principles to the conduct of sales operations. In addition, the professional approach demands the ability to install, operate, and use control procedures appropriate to the firm's situation and its objectives. Executives capable of applying the professional approach to sales management are in high demand today.

Sales executives have responsibilities to their organizations, the customers, and society. Top management holds them responsible for obtaining sales volume, providing profit contributions, and continuing business growth. The customers (most often, wholesalers, retailers, or industrial users) expect them to supply-easily resalable products and services, backed up by supporting activities (e.g., training dealers' sales personnel, help in preparing local advertising, and the provision of credit) and assurance that the products and services are wise investments in the competitive marketplace. Society looks to them to assure the delivery of goods and services that final buyers want at prices that final buyers are willing to pay andâ&#x20AC;&#x201D;of increasing importanceâ&#x20AC;&#x201D;to develop and market products whose potentials for damaging the environment are minimal. If the goods and services made and sold are needed and accepted by the buying public, and if these products are "socially responsible," then it is likely that management's objectives will have been achieved. Ultimately, a business's earnings depend upon how well, or how poorly, the interests of the firm, the final buyers and society are blended. To the extent that these interests are in harmony, the firm experiences sales volume, net profits, and business growth.

EVOLUTION OF THE SALES DEPARTMENT Prior to the Industrial Revolution, small-scale enterprises dominated the economic scene, and selling was no problem. The chief problem was to produce enough goods for nearby customers. Orders were obtained with minimum effort, and they were on hand before goods were produced. In most firms a single individual supervised all phases of the business, including both manufacturing and selling. Manufacturing problems received the most attention. Selling and other marketing problems were handled on a part-time basis.

With the Industrial Revolution, which began about 1760 in England and shortly after the American Revolution in the United States, it became increasingly necessary to find and sell new markets. Newly built factories were turning out huge quantities of goods of every description. Their continued operation demanded great expansions in the area of sales coverage, as adjacent markets could not absorb the increased quantities being manufactured. But even under these circumstances other business problems

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took precedence over selling. These were problems associated with hiring large numbers of workers, and acquiring land, buildings, and machinery. To solve them, large amounts of capital had to be raised. The result was that more and more businesses adopted the corporate form of organizationâ&#x20AC;&#x201D;the day of largescale manufacturing enterprises had arrived. Firsthand administration of all phases of the operation being beyond the capabilities of most individuals, authority was increasingly delegated to others. Separate functional departments were established, but sales departments were set up only after the activation of manufacturing and financial departments.

The advent of specialized sales departments helped to solve the organizational problems of market expansion, but another problem remainedâ&#x20AC;&#x201D;communicating with customers. Little by little, manufacturers shifted portions of the marketing function to middlemen. At the start, goods were sold to retailers, who resold them directly to consumers. Eventually, some larger retailers began to purchase for resale to other retailers, and, as time passed, many of these evolved into wholesale institutions. Other wholesalers developed out of the import-export business. The manufacturer's sales department was becoming more remote from consumers, and it was increasingly difficult to maintain contact with final buyers and users of the product and to control the conditions under which wholesalers and retailers made their sales. Thus, in some respects, the addition of middlemen to the channel of distribution complicated the problem of market expansion.

Meanwhile, marketing activities conducted by the manufacturer's sales department grew in importance. Many tasks, such as advertising and sales promotion, became increasingly complex. One solution was to split the marketing function, a trend that is still continuing. New departments were and are being organized for the performance of specialized marketing tasks. Marketing activities today are carried on not only by the sales department, but by such departments as advertising, marketing research, export, sales promotion, merchandising, traffic and shipping, and credits and collections. In spite of this growing fragmentation of marketing operations, the sales department still occupies a strategically important position. The underlying responsibility for the making of sales has not shifted elsewhere. Businesses continue to rely upon their sales departments for the inward flow of income. It has been aptly said that the sales department is the income-producing division of business.

SALES MANAGEMENT "Sales management" originally referred exclusively to the direction of sales force personnel. Later, the term took on broader significanceâ&#x20AC;&#x201D;in addition to the management of personal selling, "sales management" meant management of all marketing activities, including advertising, sales promotion, marketing research, physical distribution, pricing, and product merchandising. In time, business, adopting academic practice, came to use the term "marketing management" rather than "sales management" to describe the broader concept. Then, the Definitions Committee of the American Marketing Association

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agreed that sales management meant "the planning, direction, and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying, and motivating as these tasks apply to the personal salesforce."

The American Marketing Association's definition made sales management synonymous with management of the sales force, but modern sales managers have considerably broader responsibilities. Sales managers are in charge of personal-selling activity, and their primary assignment is management of the personal sales force. However, personnel-related tasks do not comprise their total responsibility, so we call their personnel-related responsibilities "sales force management."

Sales managers are responsible for organizing the sales effort, both within and outside their companies. Within the company, the sales manager builds formal and informal organizational structures that ensure effective communication not only inside the sales department but in its relations with other organizational units. Outside the company, the sales manager serves as a key contact with customers and other external publics and is responsible for building and maintaining an effective distribution network.

Sales managers have still other responsibilities. They are responsible for participating in the preparation of information critical to the making of key marketing decisions, such as those on budgeting, quotas, and territories. They participateâ&#x20AC;&#x201D;to an extent that varies with the companyâ&#x20AC;&#x201D;in decisions on products, marketing channels and distribution policies, advertising and other promotion, and pricing. Thus, the sales manager is both an administrator in charge of personal-selling activity and a member of the executive group that makes marketing decisions of all types.

Sales management is a key function in many kinds of enterprises. Manufacturing and wholesaling enterprises encounter a wide range of problems in sales management. Retail institutions, small and large, have sales management problems, even though the differences (when compared to the problems of manufacturers and wholesalers) are so great that retailing problems (at least in the academic world) are ordinarily considered separately. But some retailers have sales management problems more akin to those of manufacturers and wholesalers than to those of other retailersâ&#x20AC;&#x201D;the automobile dealer, the realestate broker, and the direct-to-consumer marketer all are in this category. Firms selling intangibles, such as the insurance company, the stockbroker, the mutual fund, and the airline, have problems in sales management. Sales management problems exist even in companies not employing sales personnel as, for example, in the company that uses manufacturers' agents (rather than its own sales personnel) to reach its markets; indeed, the problems of managing a sales force of "independent outsiders" often are more complex than when sales personnel are on the company payroll.

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OBJECTIVES OF SALES MANAGEMENT From the company viewpoint, there are three general objectives of sales management: sales volume, contribution to profits, and continuing growth. Sales executives, of course, do not carry the full burden in the effort to reach these objectives, but they make major contributions. Top management has the final responsibility, because it is accountable for the success or failure of the entire enterprise. Ultimately, too, top management is accountable for supplying an ever-increasing volume of "socially responsible" products that final buyers want at satisfactory prices.

Top management delegates to marketing management, which then delegates to sales management, sufficient authority to achieve the three general objectives. In the process, objectives are translated into more specific goalsâ&#x20AC;&#x201D;they are broken down and restated as definite goals that the company has a reasonable chance of reaching. During the planning that precedes goal setting, sales executives provide estimates on market and sales potentials, the capabilities of the sales force and the middlemen, and the like. Once these goals are finalized, it is up to sales executives to guide and lead the sales personnel and middlemen who play critical roles in implementing the selling plans.

Sales management, then, is influential in charting the course of future operations. It provides higher management with informed estimates and facts for making marketing decisions and for setting sales and profit goals. Largely on sales management's appraisal of market opportunities, targets are set for sales volume, gross margin, and net profit in units of product and in dollars, with benchmarks of growth projected for sales and profits at specific future dates. Whether or not these targets are reached depends upon the performance of sales and other marketing personnel.

Scope of salesmanship There was a time the scope of business was limited, i.e., the business was transacted within the local limits only. Whatever was produced was consumed locally. Means of transportation and communication were also limited. Thereby the scope of salesmanship was also limited, i.e. confined to local limits only. However, the scope of business developed, i.e. from local to regional and from regional to national and finally from national to international level. In order to fulfill the increasing demand the size and area of production also developed from cottage to small scale and finally from small scale to large scale. A number of large-scale industries were established which were responsible for the overproduction problem. Now to sell the increasing production there arose the problem of finding new markets. In order to solve this vital problem the scope of salesmanship developed from local to regional, regional to national and finally from

national to international level. Now we talk of international salesmanship.

Modern salesman is required to find customers on international level.

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Earlier, the work of the salesman was to persuade or induce an unwilling buyer to buy. But who does not persuade ? The baby cries and persuades his mother to give milk ; a young man offers his "proposal of marriage to the girl of his choice; a leader who is contesting an election persuades the voters to cast their votes in his favour. In this way if salesmanship is interpreted in the sense of persuasion or inducement, it loses much of its significance. Due to the rapid development of the market from local to international, the modern salesman not only tries to get an order from the prospective customers but is also required to render various kinds of services to his customers. He gives them a detailed knowledge of the goods and services which he is selling. If need be, he demonstrates the uses and benefits derived from them, and so on. Selling is a three-way relationship. It consists, in the first place, in benefiting the customer; secondly, in benefiting the owner, and finally in benefiting the salesman himself. If this is not the case, continuous long-term relationship cannot possibly exist. In this way the modern salesman is required to render various kinds of activities such as publicity, supply of goods and services and a host of other things that go with it. In this in way, we conclude, the scope of salesmanship is as wide as an ocean.

Salesmanship is closely related with production, distribution, appointment of consumption, exchange and public finance. For instance, first a customer and then a producer. In order to start ;

production he needs a number of articles such as raw material, manpower, machinery and power etc. In order to acquire these articles he has to become a Customer first. All these articles are provided to him by salesmanship. However, when the production is ready for sale, he again is required to seek the services of salesmanship so that they may reach the hands of the consumers. In this way, the knowledge of salesmanship is also required in the field of production. Similar is the case with the distribution, consumption, exchange and public finance.

From the above discussions it is evident that the scope of salesmanship is not limited to the selling of goods and services only. It is a concept which is applicable in all fields.

RELATIONSHIP BETWEEN SALES AND OTHER DISCIPLINES Sales executives spend most of their time on sales force management; they also are concerned with other marketing activities. The degree of responsibility over these activities, and the amount of time allocated to them, vary with the particular job, but sales executives are almost always concerned with products, promotion, pricing, and distribution. They may also have a role in achieving control over these activities and coordination among them.

Relation with Product Management Product planning and the formulation of product policies requires numerous decisions. Periodically each product needs appraising in terms of its profitability and its ability to fullfill buyers' wants.

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Decisions are made on whether each should be retained, changed or improved, or dropped from the line. Other decisions are made on adding new products and on changes in product design an other features. Still other decisions concern product quality, services rendered connection with sales, and packaging.

Product decisions are often the shared responsibility of marketing, production, research and development, and financial executives, operating as a product committee. Sales executives provide inputs for these decisions. Their contact with the market through subordinates arid sales personnel provide-them with feedback about product performance and acceptance generally not available from other sources.

Relations with Promotion Management Chief marketing executives are responsible for setting promotional policies, but sales executives participate in their formulation. Their knowledge of the market and their control over personal-selling activity make sales executives a key source of information, and they occupy a strategic position in implementing promotional plans. Sales personnel are responsible not only for transmitting sales messages to prospects but for securing the use of point of purchase displays and for coordinating dealer efforts with advertising programs. Sales executives, because of their key roles in making and implementing promotional policies, must coordinate closely with other executives in the formulation and implementation of the promotional program.

Almost every product relies on personal selling as a promotional method at one or more points in the marketing channel. Personal selling's effectiveness traces to the use of personal contact in conveying the sales message to prospective buyers. But personal selling is the most expensive promotional method in terms of cost per sales message transmitted. The proportion of personal selling in the promotional mix generally must be limited, and it is the sales executive's responsibility to keep selling costs down.

The sales executive makes certain that salespeople keep abreast of current advertising compaigns. Sales personnel need briefing on specific advertising appeals, enabling them to adapt their selling approaches in ways that enhance the total promotional impact. The sales force should know which media are scheduled to carry advertisements for which products and the timing of each ad's appearance. Advertising personnel need access to the sales executive, since this executive is an important source of information about customers, their needs, behavior, and motives.

Sales executives play similar roles with respect to other promotional methods. Decisions regarding the usage of these methods in the promotional mix are normally made by the chief marketing executive or by other specialists. Besides serving as an important source of information, the sales

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executive secures coordinative efforts by the sales force to ensure that each promotional activity obtains optimum results. Relations with Pricing Management When major decisions on pricing policy are required, both the chief marketing executive and the sales executive occupy influential positions in top management councils. Relative to other executives, they generally have much clearer ideas of the prices final buyers are willing to pay, the sales executive because of close and continuing contacts with the market and the marketing executive because of access to pricing information gathered and interpreted by the marketing research staff. In spite of the fact that these two executives are well qualified to speak with authority on pricing matters, price policies should be formulated and prices should be set by a group of executives. Each department affected should be represented, for pricing policymaking is, by nature, an interdepartmental activity, Included in the policymaking group should be representatives not only of the marketing department but also of such departments as production, cost accounting, credit, advertising, legal, and public relations. Pricing policies should result from the cooperative action of the group rather than from compromises among its members.

Once pricing policy is established, its implementation is the responsibility of the sales executive. For example, the pricing committee might adopt suggested list prices, but the sales executive is the one responsible for informing distributors and dealers and obtaining their conformance. Responsibility for administering prices should be assigned to the sales executive, because the sales department has the closest relationship with the market.

Relation with Distribution Management Distribution policies are major determinants of the breadth and complexity of the sales department's organization and functions. Selection of a marketing channel, or channels, sets the pattern for sales force operations, both geographically and as to the classes of customers. It is also necessary to determine the number of outlets for the product at each distribution level, and this affects the size and nature of the manufacturer's sales organization and the scope of its activities. Furthermore, marketing management determines policies on the amount and extent of cooperation it desires with members of the distributive network also influencing the size of the sales force, the nature of the salesperson's job, the need for sales supervision, and the like. Because of the impact of distribution policies upon the sales organization and its activities, sales executives play key roles in providing information needed for their formulation, since they are responsible for implementation of these policies.

FUNCTIONS OF THE SALES EXECUTIVES AND SALES MANAGEMENT Many sales executives get promoted into their positions because of their previous performances as salespersons. In some companies, outstanding salespersons have an inside track when sales

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executives 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.

Basically, the sales executive has two sets of functions: 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 vicepresident). In addition, in some companies and fairly commonly in lower-level sales executive positions, the sales executive sells some accounts personally (to keep a "hand in" and to keep abreast of current selling problems and conditions).

The sales executive's planning functions include those connected with the sales 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 sales 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 sales executive is responsible for these and related control activities.

The relative emphasis that sales executives give to the operating and planning functions varies with (1) the type of products, (2) the size of company, and (3) the 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 functions: development of sales programs, coordination of personal selling with advertising, 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 functions managing and directing the sales force, making calls with salespeople, and selling personal accounts. Consumer-goods sales managers, in

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general, spend more time on planning and less on operating than do their counterparts in industrial-goods companies.

The amount of the sales executive's time devoted to planning and operating functions is influenced by the 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 functions. When the sales executive supervises the field sales force through subordinate sales executives, more attention is devoted 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 more time left for planning. SELF EVALUATION QUESTIONS Questions : 1. Sales management means ____________________ 2. Function of sales managements are ____________ 3. Job description means _______________________ Answers : 1. The planning, direction and control of the personal selling activities. 2. Recruiting, selection and training of salesmen. 3. It is a brief statement describing the job.

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SALES FORECASTING Future is uncertain. Man thinks about future. He may be a businessman, a broker, a manufacturer, a commission agent etc. All guess about the future in their respective field of interest. We try to know, through a clear imagination, what will be happening in the near future-after a weak, month or year. It can be called forecast or prediction. The process of forecasting is based on reliable data of past and present. Forecasting is not new, as it has been practised from time immemorial.

Forecasting is one of the important aspects of administration. The comer-stone of successful marketing planning is the measurement and forecasting to market demand. According to American Marketing Association, "Sales forecast is an estimate of Sales, in monetary or physical units, for a specified future period under a proposed business plan or programme and under an assumed set of economic and other forces outside the unit for which the forecast is made." A sales forecast is an estimation of sales volume that a company can expect to attain within the plan period. A sales forecast is not just a sales predicting. It is the act of matching opportunities with the marketing efforts. Sales forecasting is the determination of a firm's share in the market under a reified future. Thus sales forecasting shows the probable volume of sales.

Factors Influencing a Sales Forecasting A sales manager should consider all the factors affective the sales, while predicting the firm's sales in the market. An accurate sales forecast can be made, if the following factors are considered carefully.

1. General Economic Condition : It is essential to consider all economic conditions relating to the firm and the consumers. The forecaster must see the general economic trend-inflation or deflation, which affect the business favourably or adversely. A thorough knowledge of the economic, political and the general trend of the business facilitates to build a forecast more accurately. Past behaviour of market, national income, disposable personal income, consuming habits of the customers etc., affect the estimation to a great extent.

2. Consumers : Products like, wearing apparel, luxurious goods, furniture, vehicles; the size lot population by its composition-customers by age, sex, type, economic condition etc., have an important role. And trend of fashions, religious habits, social group influences etc., also carry 'weights.

3. Industrial Behaviours : Markets are full of similar products manufactured by different firms, which compete among themselves to increase the sales. As such, the pricing policy, design, advanced technological improvements, promotional activities etc., of similar industries must be carefully observed. A new firm may come up with products to the markets and naturally ; affect the market share of the existing

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firms. Unstable conditions-industrial unrest, government control through rules and regulations, improper availability of raw materials etc., directly affect I the production, sales and profits.

4. Changes Within Firm : Future sales are greatly affected by the changes in pricing, advertising policy, quality of products etc. A careful study in relation to the changes on the sales volume may be studied carefully. Sales can be increased by price cut, enhancing advertising policies, increased sales promotions, concessions to customers etc.

5. Period : The required information must be collected on the basis of period-short run, medium run or long run forecasts (explained separately in this chapter). Importance of Sales Forecasting 1. Supply and demand for the products can easily be adjusted, by overcoming temporal demand, in the light of the anticipated estimate; and regular supply is facilitated. 2. A good inventory control is advantageously benefited by avoiding the weakness of understocking and overstocking. 3. Allocation and reallocation of sales territories are facilitated. 4. It is a forward planner as all other requirements of raw materials, labour plant lay out financial needs, warehousing, transport facility etc., depend in accordance with the sales volume expected in advance. 5. Sales opportunities are searched out on the basis of forecast, and thus discovery of selling success is made. 6. It is a gear, by which all other activities are controlled as a basis of forecasting. 7. Advertisement programmes are beneficially adjusted with full advantage to the firm 8. It is an indicator to the department of finance as to how much and when finance is' needed; and it helps to overcome difficult situations. 9. It is a measuring rod by which the efficiency of the sales personnel or the sales department, as a whole, can be measured. 10. Sales personnel and sales quotas are also regularised-increasing or decreasing by knowing the sales volume, in advance. 11. It regularises productions through the vision of sales forecast and avoids overtime a high premium rates. It also reduces idle time in manufacturing. 12. As is the sales forecast, so is the progress of the firm. The master plan or budget of a fin is based on forecasts. "The act of forecasting is of great benefit to all who take part in the process, and is the best means of ensuring adaptability to changing circumstances. The collaboration of all concerned leads to a unified front, an understanding of the reasons for decisions, and a broadened outlook.''

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Methods of Sales Forecasting Approaches to forecasting techniques and procedures vary from firm to firm. There are many methods. A firm may manufacture the products or distribute the products. Forecasting cannot be done on mere guessing, but on the basis of reliable statistical data collected for this purpose. A dealer or a manufacturer must anticipate the future need and provide necessities to fulfil the needs. The following are the various methods of sales forecasting: 1. Jury of Executive Opinion. 2. Sales Force Opinion. 3. Test Marketing Result. 4. Consumer's Buying Plan. 5. Market Factor Analysis. 6. Expert Opinion. 7. Econometric Model Building 8. Past Sales (Historical Method). 9. Other Factors.

1 Jury of Executive Opinion This method of sales forecasting is the oldest. One or more of the executives, who are experienced and have good knowledge of the market factors make out the expected sales. The executives arc responsible while forecasting sales figures through estimates and experiences. All the factors-internal and external-are taken into account. This is a type of committee approach. This method is simple as experiences and judgement are pooled together in taking a sales forecast figure. If there are many executives, their estimates are averaged in drawing the sales forecast. Merits (a) This method is simple and quick. (b) Detailed data are not needed. (c) There is economy.

Demerits (a) It is not based on factual data. (b) It is difficult to draw a final decision. (c) More or less, the method rests on guess-work, and may lead to wrong forecasts. (d) It is difficult to break down the forecasts into products, markets, etc.

2. Sales Force Opinion Under this method, salesmen, or intermediaries are required to make out an estimate sales in their respective territories for a given period. Salesmen are in close touch with the consumers and possess good knowledge about the future demand trend. Thus all the sales force estimates are

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processed, integrated, modified, and a sales volume estimate formed for the whole market, for the given period.

Merits (a) Specialised knowledge is utilised. (b) Salesmen are confident and responsible to meet the quota fixed. c) This method facilitates to break down in terms of products, territories, customers, salesmen etc.

Demerits (a) Success depends upon the competency of salesmen. I (b) A broad outlook is absent. (c) The estimation may be unattainable or may to too low for the forecasts as the salesmen may be optimistic or pessimistic. 3. Test Marketing Result Under the market test method, products are introduced in a limited geographical area and the result is studied. Taking this result as a base, sales forecast is made. This test is conducted as a sample on pre-test basis in order to understand the market response.

Merits (a) The system is reliable as forecast is based on actual result. (b) Management can understand the defects and take steps to rectify. (c) It is good for introducing new products, in a new territory etc.

Demerits (a) All the markets are not homogeneous. But study is made on the basis of a part of a market. (b) It is a time-consuming process. (c) It is costly.

4. Consumers' Buying Plan Consumers, as a source of information, are approached to know their likely purchases during, the period under a given set of conditions. This method is suitable when there are few customers. This type of forecasting is generally adopted for industrial goods. It is suitable for industries which produce costly goods to a limited number of buyers-wholesalers, retailers, potential consumers etc. A survey is conducted on face to face basis or survey method. It is because change are constant while buyer behaviour and buying decisions change frequently.

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Merits (a) First hand information is possible. (b) User's intention is known.

Demerits (a) Customer's expectation cannot be measured exactly. (b) It is difficult to identify actual buyers. (c) It is good when users are few, but not practicable when consumers are many. (d) Long run forecasting is not possible. (e) The system is costly. (f) Buyers may change their buying decisions.

5. Market Factor Analysis A company's sales may depend on the behaviour of certain market factors. The principal factors which affect the sales may be determined. By studying the behaviours of the factors, forecasting should be made. Correlation is the statistical analysis which analyses the degree d extent to which two variables fluctuate with reference to each other. The word 'relationship' is of importance and indicates that there is some connection between the variables under observation In the same way, regression analysis, is a statistical device, which helps us to estimate or predict the unknown values of one variable from the known values of another variable. For instance, you publish a text book on "Banking", affiliated to different universities. The permitted intake capacity of each and the medium through which the students are taught are known. Is it a; compulsory or an optional subject? By getting all these details and also by considering the said activities of promotional work, you may be able to declare the probable copies to be printed. The key to the successful use of this method lies in the selection of the appropriate market factors, Minimising the number of market factors is also important. Thus the demand decision makers have to consider price, competitions, advertising, disposal income, buying habits, consumption habits, consumer price index, change in population etc. Merits (a) It is a sound method. (b) Market factor is analysed in detail. Demerits (a) It is costly. (b) It is time-consuming. (c) It is a short run process.

6. Expert Opinion Many types of consultancy agencies have entered into the field of sales. The consultant agency has specialised experts in the respective field. This includes dealers, trade associations etc. They may

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conduct market researches and possess ready-made statistical data. Firms may make use of the opinions of such experts. These opinions may be carefully analysed by the company and a sound forecasting is made.

Merits (a) Forecasting is quick and inexpensive. (b) It will be more accurate. (c) Specialised knowledge is utilised.

Demerits (a) It may not be reliable. (b) The success of forecasting depends upon the competency of experts. (c) A broad outlook may be lacking.

7. Econometric Model Building This is a mathematical approach of study and is an ideal way to forecast sales. This method is more useful for marketing durable goods. It is in the form of equations, which represent a set of relationships among different demand determining market factors. By analysing the market factors (independent variable) and sales (dependent variable), sales are forecast. This system does not entirely depend upon correlation analysis. It has great scope, but adoption of this method depends upon availability of complete information. The market factors which are more accurate, quick and less costly may be selected for a sound forecasting.

8. Past Sales (Historical method) Personal judgement of sales forecasting can be beneficially supplemented by the use of statistical and quantitative methods. Past sales are a good basis and on this basis future sales can lie formulated and forecast. According to Kirkpatrick, today's sales activity flows into tomorrow's sales activities; that is last year's sales extend into this year's sales. This approach is adding or I deducting a set of percentage to the sales of previous year(s). For new industries and for new products, this method is not suitable.

(a) Simple Sales Percentage : Under this method, sales forecast is made by adding simply a flat percentage of sales so as to forecast sales as given below:

This year sales Next year sales = Present year sales + ———————— Last year sales or

= Present year sales + 10 or 5% of present sale

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(b) Time Series Analysis : A time series analysis is a statistical method of studying historical data It involves the isolation of long time trend, cyclical changes, seasonal variations and irregular fluctuations. Past sales figures are taken as a base, analysed and adjusted to future tends The past records and reports enable us to interpret the information and forecast future trends and trade cycle too. Merits (a) No guess-work creeps in. (b) The method is simple and inexpensive. (c) This is an objective method. Demerits (a) 'Market is dynamic' is not considered. (b) No provision is made for upswings and downswings in sales activities. 9. Other Factors Apart from the above, the following factors may also be considered: 1. Availability of raw materials 2. Plant capacity 3. Government policies 4. Buying habits of consumers 5. Fashion changes 6. Distribution system 7. Financial capacity 1. Market competition 2. National income movement 3. Sales promotions

SELF EVALUATION QUESTIONS Questions : 4. Sales forecasting shows the probable volume of sales. 5. What is sales fore casting? 6. What is test market? Answers : 4. True 5. It is the process of predicting the future sales. 6. It is one of the sales forecasting techniques.

DETERMINING THE SIZE OF THE SALES FORCE

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Management makes its second key decision on personal-selling strategy when it decides the size of the sales force. Having determined the kind of salesperson that best fits the company's needs, management now determines how many are required to meet the sales volume and profit objectives. If the company has too few salespersons, opportunities for sales and profits go unexploited, and if it has too many, excessive expenditures for personal-selling (even though they may bring in additional sales dollars) reduce net profits. It is difficult, perhaps impossible, to determine the exact number of salespersons that a particular company should have. Three basic approaches are used in approximating this number: (1) the work-load method, (2) the sales potential method, and (3) the incremental method. Each provides needed insights on the "right size" of sales force, although none produces a definitive answer.

Work Load Method In the work load method the basic assumption is that all sales personnel should shoulder equal work loads. Management first estimates the total work load involved in covering the company's entire market and then divides by the work load that an individual salesperson should be able to handle, thus determining the total number of salespeople required. Companies applying this approach generally assume that the interactions of three major factorsâ&#x20AC;&#x201D;customer size, sales volume potential, and travel loadâ&#x20AC;&#x201D;determine the total work load involved in covering the entire market.

The six steps in applying the work load approach are shown in the following example: 1. Classify customers, both present and prospective, into sales volume potential categories. (Classification criteria, other than sales volume or sales volume potential, can be used as long as it is possible to distinguish the differences in selling effort required for each class.) Assume that there are 880 present and prospective customers, classified by sales volume potential as

Class A, large 150 accounts Class B, medium Class C, small

220 510

2. Decide on the length of time per sales call and desired call frequencies on each class. (Several inputs are used in making these two decisions, for example, personal judgment, the opinions of sales personnel, and actual time | studies). Assume that both present and prospective customers require | the same amounts of time per sales call and the same call frequencies I per year as follows: Class A: 60 minutes/call x 52 calls/year = 52 hours/year Class B: 30 minutes/call x 24 calls/year = 12 hours/year Class C: 15 minutes/call x 12 calls/year = 3 hours/year

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3. Calculate the total work load involved in covering the entire market. In our example, this calculation is Class A: 150 accounts x 52 hours/year =

7,800 hours

Class B: 220 accounts x 12 hours/year =

2,640 hours

Class C: 510 accounts x 3 hours/year

1,530 hours

Total

11,970 hours

4. Determine the total work time available per salesperson. Suppose that management decides that salespeople should work 40 hours per week, 48 weeks per year (allowing 4 weeks for vacations, holidays, sickness, etc.), then each salesperson has available 40 hours/week x 48 weeks = 1,920 hours/year 5. Divide the total work time available per salesperson by task. Assume that management specifies that sales personnel should apportion their time as follows: Selling tasks

45%

864 hours

Nonselling tasks

30%

576 hours

Traveling

25%

480 hours

100%

1,920 hours

6. Calculate the total number of salespeople needed. This is a matter of dividing the total market work load by the total selling time available per salesperson:

11,970 hours = 14 salespeople needed 864 hours The work load approach is attractive to practicing sales executives. It is easy to understand and easy to apply. Such large firms as Celanese, IBM, and AT&T have used this approach.

A basic flaw in the work load approach is that, as usually applied, it disregards profit as an explicit consideration. However, of course, management can take profit criteria into consideration in determining lengths and frequencies of sales calls. But the optimum length and frequency of any particular sales call depends upon many factors other than account size (in terms of sales volume or sales volume potential). Such factors as the gross margin on the product mix purchased by an account, the expenses incurred in servicing an account, and an account's likely responses to changed levels of selling effort all influence profitability.

Still another shortcoming traces to the inherent assumption that not only should all sales personnel have the same work load but that they all can and will utilize their time with equal efficiency. Although a relation exists between the amount of time spent on calling on an account and the size of the

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order received, some salespeople accomplish more in a shorter time than others can. The "quality of time invested in a sales call" is at least as important as the "quantity of time spent on a sales call."

Sales Potential Method The sales potential method is based on the assumption that performance of the set of activities contained in the job description represents one sales personnel unit. A particular salesperson may represent either more or less than one sales personnel unit. If the individual's performance is excellent, that individual may do the job of more than one unit; if the individual's performance is below par, he or she may do less. If management expects ad company sales personnel perform as specified in the job description, then the number of salespersons required equals the number of units of sales personnel required. Generally, it must be noted, sales job descriptions are constructed on management's assumption that they describe what the average salesperson with average performance will accomplish. With that assumption, then, one can estimate the number of dollars of sales volume that each salesperson (that is, each sales personnel unit) should produce. Dividing this amount into forecasted sales volumeâ&#x20AC;&#x201D;the company's sales volume objectiveâ&#x20AC;&#x201D;and allowing for sales force turnover results in an estimate of the number of salespeople needed. These relationships are summarized in the equation S N=

S +T

This reduces to S N=

(1+T) P

where N

number of sales personnel units

forecasted sales volume

estimated sales productivity of one safes personnel unit

allowance for rate of sales force turnover

Consider a firm with forecasted sales of $ l million, estimated sales productivity per sales personnel unit of $ 100,000, and an estimated annual rate of sales force turnover of 10 percent. Inserting these figures in the equation, we have $1,000,000 N=

x110 $100,000

N = 11 sales personnel units.

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This is a simplified model for determining the size of a sales force. It does not, for instance, include the lead times required for seeking out, hiring, and training salespeople to the desired level of sales productivity. Actual planning models have built-in lead and lag relations to allow for such requirements. If two months of full-time training are required to bring a new salesperson up to the desired productivity, recruiting must lead actual need for the new salesperson by two months. Another assumption implicit in this simple model is that sales potentials are identical in all territories, which is similar to the assumption that the number of sales personnel units required is the same as the number of salespersons needed; where this assumption does not hold, the model should be adjusted accordingly. Difficulties in making estimates for this model vary with the factor being estimated (N, S, P, or 7) and the company. The crucial estimate of the sales productivity of one unit of sales strength relies heavily on the accuracy and completeness of the sales job description; it depends also on management's appraisal of what reasonably may be expected of those who fill the position. Estimating the sales force turnover rate is a matter of reviewing previous experience and anticipating such changes as retirements and promotions. In addition, both the estimates for unit sales productivity and the sales force turnover rate require management to have some means of evaluating the efficiency of individual salespersons and of determining the probabilities that individuals will remain with or leave the sales force during the planning period. The estimate for forecasted sales volume deserves special comment. In many situations, the magnitude of the sales forecast is itself influenced by the planned size of the sales force. Indeed, since it takes time to add significant numbers to the sales force, a realistic sales forecast must take into account the number of salespersons (or sales personnel units) expected to be at management's disposal during the planning period. In a new and rapidly growing company, potential sales volume often depends chiefly on the number and ability of its sales staff. Management, actually, may derive the sales forecast by multiplying the estimated sales productivity of its average salesperson by the number it has, can expect to keep, and can recruit and train during the planning period. As a company expands distribution geographically and its growth rate slows down, the procedure reverses itself. Under these circumstances, the number of sales personnel units required is determined by making the sales forecast first, and dividing it by the expected sales productivity of an individual salesperson, making adjustments for anticipated sales force turnover, lead times for recruiting and training, and other relevant factors. Incremental Method Conceptually, the incremental method is the best approach to determining sales force size. It is based on one proposition: net profits will increase when additional sales personnel are added if the incremental sales revenues exceed the incremental costs incurred. Thus, to apply this method, one needs .two important items of information: incremental revenue and incremental costs.

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To illustrate, assume the following situation. A certain company has found that its total sales volume varies directly and significantly with the number of salespeople it has in the field. Its cost of goods sold does not vary significantly with increases in sales, but holds steady at 65 percent of sales. All company sales personnel receive a straight salary ($20,000 annually per person) and in addition are paid commissions of 5 percent on the sales volume they generate. In addition, each salesperson receives a travel and expense allowance of $12,000 per year, that is, $1,000 per month. The company now has fifteen people on its sales force and wants to determine whether it should add additional staff. Its sales executives estimate the following increases in sales volume, cost of goods sold, and gross margin that would result from the addition of the sixteenth, seventeenth, eighteenth, and nineteenth salespersons.

Next, they calculate the net profit contribution resulting from the addition of each salesperson. Adding the eighteenth salesperson brings in an additional net profit contribution of $13,000, but adding the nineteenth salesperson produces a negative net profit contribution of $2,000. Thus, the optimal size of sales force here is eighteen people. Although this method is the most conceptually correct, it is also the most difficult to apply. It requires, first, that the company develop a sales response function to use in approximating (in terms of sales volume) the market's behavior in relation to alternative levels of personal-selling effort. (A sales response function is a quantitative expression that describes the relationship between the amount of personal-selling effort and the resulting sales volume.) For the response function to be useful in setting the size of the sales force, sales volume must be sensitive to changes in the number of sales personnel. Not many companies have the research sophistication required for development of sales response functions, but some apply the basic concept. It is doubtful that the incremental method is appropriate where personal-selling is not the primary means of making sales, that is, in cases where other forms of promotion, such as advertising, have stronger influences on sales volume than does personal-selling effort. Two additional problems in applying this approach are noted by T. R. Wotruba: "It fails to account for possible competitive reactions as well as for the long-term 'investment' effect of personal-selling effort." Sales Planning and Coordination The sales executive, having specialized knowledge of the market and of the capabilities of the sales force, is involved in achieving coordination in marketing objectives and drafts plans that achieve desired results at optimum cost, Sales executives determine the elements (personal selling, advertising, and so forth) that make up the marketing program, apportioning the relative amounts of each so asâ&#x20AC;&#x201D;at least theoreticallyâ&#x20AC;&#x201D;to equate its marginal effectiveness with that of other elements. Coordination among the marketing planners is essential if they are to lay out specific programs for achieving predetermined sales, profit, and growth objectives. The sales executive, as a member of the planning group, seeks to

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secure a marketing program that is both appropriate for market conditions and reflects the probable contribution of the sales force. Sales Organization and Coordination Coordination of the different order-getting methods (personal selling, advertising, and so forth) is achieved through a single responsible, top-ranking executive. Generally, this is the marketing vicepresident, director of marketing, or marketing manager. This executive is responsible for minimizing the possibility that the different order-getting departments will work at cross-purposes or work toward sales goals independently (with little knowledge of what others are doing). Inside the sales department, from the department head on down, all sales executives are responsible for coordinating the organizational units under their control. In sales departments that function smoothly, generally democratic administration is the rule. All subordinates affected by a decision are consulted in advance and are allowed to participate in making itâ&#x20AC;&#x201D;thus reducing the tendency to resist directives issued by superiors. Not only are there minimum opportunities for misunderstandings to occur, but subordinates as well as superiors are able to visualize the circumstances giving rise to decisions. SALES MANAGEMENT AND CONTROL Sales executives control the personal-selling effort of the organizational units they head. The purpose is to ensure that sales department objectives are reached. Control is part of management, as are planning, organizing, and coordinating. The several phases of control are presented in the following discussion in the normal sequence, but in the "real world," several phases can occur simultaneously or overlap in time. Sizing up the situation.

Sales executives start by reviewing the personal-selling objectives of the

firm. They analyze these objectives with respect to the present, the past, and the future, in an attempt to answer four questions: 1. Where are we now? 2. How did we get here? 3. Where are we going? 4.

How do we get there? After satisfying themselves that the company's personal-selling objectives, long range are short

range, are reconcilable, sales executives appraise them relative to the plans, policies, and procedures that have been used, are being used, or are intended for use in the effort to reach personal-selling objectives. In the course of sizing up the situation, sales executives find and correct weaknesses or imperfections in the sales plans and the policies and procedures used in their implementation.

Setting quantitative performance standards.

After ironing out planning weaknesses, sales

executives set quantitative standards against which to measure performance. Standard setting requires

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continual experimentation, and most standards are far from precise. The ultimate test of a particular standard's appropriateness is whether it contributes more to personal-selling efficiency than it costs.

Intelligent standard setting requires identification of the individuals who are responsible for the activity or group of activities being put under control. No two salespersons or executives perform exactly alike, even though they may operate in circumstances identical in every other respect. Thus, standards are often expressed as ranges of acceptable performance. Although it is convenient to think of a standard as a fixed value, there should be an upper and lower limit within which human variation may take place. When the performance of an organizational unit passes either of these control limits, the danger flag is up, signaling that the situation is out of control.

Gathering and processing data on actual performance.

The type and amount of information

needed for controlling sales depend upon the standards selected. But, regardless of the nature of this information, it should not be in excess of sales management's real needs, nor should its cost of collection and processing be more than its worth. Consequently, sales management determinesâ&#x20AC;&#x201D;at regular intervalsâ&#x20AC;&#x201D;whether the information being reported is sufficiently important and being used often enough to justify its costs. Sales executives also keep in mind that changes in executives, basic policies, or other matters may alter the usefulness of information. Occasionally, too, they look for cases where the same or similar information is being obtained from more than one source, representing opportunities for savings through eliminating duplications in reporting. Sometimes, also, saving are realized through reducing or lengthening the intervals at which information is gathered and processed. For standards to be of maximum value, sales executives must have information on actual performances soon enough to permit timely corrective action. An efficient system of sales control not only furnishes information necessary to managerial evaluation of performance but also promptly relays it, together with suggestions for actions, to the appropriate organizational unit. But information on actual sales performance is often slow in arriving on the sales executive's desk, considerably delaying performance evaluations. For example, many companies, perhaps even most, require sales personnel to make weekly sales reports; in such cases, a week or more may pass before the sales executive acts on the report. But progress is being made in improving the timeliness of sales control information. Utilization of electronic data-processing systems for handling sales control data has sped up information evaluation and feedback. Evaluating performance.

Evaluation of performance means comparing actual results with

standards. Because of differences in territorial and other conditions, it is difficult to compare individual performances. However, it is possible to explain each individual salesperson's variations from standard. Departures from standard are classified into uncontrollable and controllable variations. Variations outside the control of the person being appraised include those caused by rapid and unexpected changes in economic conditions; changes in governmental activities; and wars, strikes, Hoods, droughts, and other

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natural disasters. Variations over which the person held responsible has responsibility include obtaining proper sales coverage, following up leads, selling a balanced line, securing adequate credit information, and the like. The principle is that subordinates should not be held responsible for conditions outside their control. In appraising performance, it is important to exclude uncontrollable variations. Action to correct controllable variation.

Management corrects the variation explained by factors

within the control of the person being evaluated. Management, in other words, takes steps to move the individual's performance in the direction of the standards. The specific actions taken differ with the nature of the variation. But management's actions assume one or more of three forms: (1) direction, or pointing out more effective ways to perform certain tasks; (2) guidance, or providing additional instructions or training; and (3) restraint, or the installation of procedures and practices aimed at keeping results within desired bounds. Adjusting for uncontrollable variation.

The amount of uncontrollable variation in the comparison

indicates the relative need for adjusting sales plans and policies. If uncontrollable variation suggests that present sales objectives are unrealistic or not in line with current expectations, basic revisions in the objectives are made. Thus, if a comparison of results with standards reveals substantial uncontrollable variation, adjustment of standards to attainable levels is in order.

SELF EVALUATION QUESTIONS

Questions : 7. What is sales planning? 8. What is sales organizing? 9. Sales force selection means ______________ Answers : 7. Determining the sales activities. 8. Determining the sales activities and sales force and grouping them. 9. Process of determining the sales force size and selection of them.

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SALES & DISTRIBUTION MANAGEMENT Important Questions Section A: 1. What is sales management? 2. Define sales forecasting. 3. What is sales planning? 4. What is sales organizing? 5. What is sales force size? 6. Define sales control. Section B: 7. Explain evolution of sales management. 8. What are the scope of sales management? 9. Write short notes on sales planning. 10. What are the functions of sales management? Section C: 11. Explain the relationship between sales with other disciplines 12. Explain different methods of sales forecasting.

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UNIT - II PERSONAL SELLING Everyone lives by selling something." The people who do selling are called salesmen, sales representatives, sales persons, account executives, sales consultants, sales engineers, field representatives, agents, service representatives, marketing representatives etc. Personal selling and salesmanship are used without distinction. But there are some differences between the two. Personal selling is a broader concept. Philip Kotler is of the opinion that personal selling involves oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales. Personal selling is a greatly distinctive form o promotion. Like advertising and sales promotion, personal selling is also a method of communication. It is a two-way form of communication. It involves individual and social behaviour. Each person is contacted by face to face conversation. Personal selling influences the buyers to buy; a product. Personal selling reaches the goal of marketing effort i.e., to increase profitable sales' The purpose of personal selling is to bring the right products into contact with the right customers, and to make certain that ownership transfers take place. Personal selling creates product awareness, stimulates interest, develops brand preferences, negotiates price etc.

Advertising, sales promotion and personal selling ensure the process of selling. Of the three personal selling is more important. It contacts the concerned persons in person and hence it the more effective.

Objectives of Personal Selling Personal selling has two types of objectives-long-term and short-term. The long-term objectives, which are more or less permanent, are broader. These are also known as qualitative objectives. The objectives under this head are :

1. To do the entire job. 2. To serve the existing customers. 3. To search out and obtain new customers. 4. To secure and maintain customers' co-operation in stocking and promoting the prod line. 5. To keep customers informed of changes in the product line. 6. To assist customers in selling the product line. 7. To provide technical advice and assistance to customers. 8. To handle the sales personnel of middlemen. 9. To provide advice and assistance to middlemen whenever needed. 10. To collect and report market information on interested matters to company management

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Apart from these qualitative objectives mentioned above, certain quantitative objectives are, also assigned, known as short-term objectives, to personal selling, and they are :

1. To obtain a specified sales volume. 2. To obtain sales volume in ways that contribute to profit objectives, by selling proper mix of products. 3. To keep the personal selling expenses within specified limits. 4. To secure and retain a specified share of the market. The following are also important Personal Selling-Objectives : (Qualitative) 1. To do the entire selling job (as when there are no other elements in the promotional mix). 2. To "serve" existing accounts (i.e., to maintain contacts with present customers, take orders etc.) 3. To search out and obtain new customers. 4. To secure and maintain customer's cooperation in stocking and promoting the product line. 5. To keep customers informed of changes in the product line and other aspects of marketing strategy. 6. To assist customers in selling the product line (as through "missionary selling"). 7. To provide technical advice and assistance to customers (as with complicated products and where products are specially designed to fit buyers' specifications). 8. To assist with (or hand) the training of middlemen's sales personnel. 9. To provide advice and assistance to middlemen on various management problems. 10. To collect and report market information of interest and use to company management Objectives (Quantitative) 1. To obtain sales volume in ways that contribute to profit objectives. 2. To keep personal-selling expenses within certain limits. 3. To secure and retain a certain share of the market. 4. To obtain some number of new accounts of given types. 5. To secure a given percentage of certain accounts' business. Natures (or) Features of Personal Selling 1. He must maintain lasting relations between the firm and its customers. 2. It is a creative art. He creates wants in customers. A human need may change into human want but because of salesmanship. He should possess the ability to convert needs into wants. 3. He must talk in the point of view of customers and engage their mind to his point of view. That is, the ability of the salesman must influence the customers' mind. 4. He must satisfy the consumers not only by selling products but also provides knowledge and assistance to satisfy the needs of consumers. 5. The new type of salesman has to play an important role in the total marketing process. Thus he must have the ability to learn and ability to communicate expert knowledge, in which he deals.

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Apart, typically, considerable weight has been put upon the importance of the art of persuation a necessary characteristic of good selling.

Duties of a Salesman 1. The principal duty is to make sales of products or services. 2. He has to do the assigned duty (travelling). 3. He has to make collection of bills relating to sale. 4. He has to make report-Sales made, Calls made. Services rendered, customers lost, competition and any other matters, relating to firm. 5. All complainants must be satisfied peacefully. 6. He has to attend sales meetings. 7. A salesman with his experience must supply information in order to solve problems relating to product or the firm. 8. He must maintain a good relation with the customers. 9. He must assist the customers to make good selection. 10. He must develop a goodwill for the firm and the products. 11. He must have cooperative habits. 12. He lakes periodic inventories of the stocks.

SELF EVALUATION QUESTIONS

Questions : 1. Personal selling means ______________________ 2. Salesmanship means ________________________ 3. Personal selling and salesmanship both are same Answers : 1. It is a process of informing customers and persuade them to purchase products. 2. It is the ability to influence the customers to buy the products. 3. No, salesmanship is a part of personal selling.

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Types of salesmen Salesmen may be classified on the basis of function, customer, product, employer, remuneration and function etc. Salesmen have been classified by different experts in different ways. Really speaking, roper salesmen are of different types according to the nature of the job performed by them. They are generally divided into six categories as under (1) Manufacturer's Salesman. (2) Wholesaler's Salesman. (3)Retailer's Salesman. (4) Speciality Salesman. (5) Industrial Salesman. (6) Exporter's Salesman.

Now we will discuss each of them : (1) Manufacturer's Salesman : There are three major types of manufacturerâ&#x20AC;&#x2122;s salesman. (i) The Pioneer or Missionary Salesman : who introduces the new product to the. market. He contacts the wholesalers, retailers and other dealers and convinces them of the product qualities. Such a salesman should be aggressive in nature and possess qualities of imagination and self-confidence. He should be capable of persuading the customers to accept his ideas resulting in the sale of a new product. This type of work requires a high form of salesmanship, skill, shrewdness, diplomacy, initiative and social pose. (ii) Re-sale or Service Salesman : is also known as delivery salesman or dealer service salesman. This type of salesman calls on established trades at regular intervals and his chief task is to assure his employer of never ending flow of re-orders for the firm's merchandise product. He distributes to wholesalers and retailers the product established in the market. He displays the material supplied by the manufacturer to dealers and also creates 'impulse buying' by displays in show-windows of the dealers.

(iii) Merchandising Salesman : collects information and gives sound and sincere advice on a variety of problems. He performs task of promoting sales and building up of goodwill of the business. The advice given by him covers all displays, advertising, credit policies.

The advice given by him covers all

displays, advertising, credit policies, store, layout and service facilities etc. this type of salesman is to a larger extent found in trades involving sale of medicines, drugs, tobacco and groceries. (2) Wholesaler's Salesman : Before an article reaches the hands of the consumer it goes through a number of channels of distribution; the main channel being wholesalers and the retailers. The wholesaler sells the goods to the retailer or the store from which the consumer makes his purchases. This type of salesman is employed by the wholesaler for the purpose of distributing or selling the products the retailers according to their requirements. His main job is to see that the retailers are promptly, regularly and accurately supplied with their requirements. He may also be asked to act as a collection agent for the manufacturers. He is expected to give a fair, friendly and equitable treatment to his customers.

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(3) Retailerâ&#x20AC;&#x2122;s Salesman : A retailer's salesman is of two types i.e. indoor or counter salesman and outdoor salesman. The indoor or counter salesman sits on the counter and sells the products as industry and from the customers. With pleasing manners and courtesy he attracts the customers and provides his services. He works inside the store. An outdoor salesman is a travelling salesman. He is the man who comes to your home or your office and tries to sell the products, he caries samples with him. (4) Speciality Salesman : A speciality salesman is one who is concerned with the promotion and sale of special goods only. A special article is generally of high price, irregular from the point of view of time of purchase and involves personal selection on the part of the purchaser. This of salesmanship is highly creative and require special skill on the part of salesman.

(5) Industrial Salesman : An industrial salesman is one who sells technical products to industries or manufacturers or business houses. Technical service is generally required in case of the sale of technical knowledge. That is way he is also called sales engineer. His style of functioning requires technical competence and good personality. he identifies the customerâ&#x20AC;&#x2122;s problems, analyses them and finds solution for the same. (6) Exporterâ&#x20AC;&#x2122;s Salesman : Exporter's salesman is a salesman who is appointed to sell the products to distributors located in foreign countries. He has to supply the needs of foregin markets and has, therefore, to select very carefully the distributors for the product. The distributors must be given adequate and complete information about the product. such a salesman is expected to know the language of the countries in which he is appointed. He must also know about the procedure of the foreign trade.

Importance or Advantages of Personal Selling Personal selling is the most important ingredient in the promotion mix. It renders valuable services to consumers, producers and the society. It is an effective form of sales promotion. Unlike advertising personal selling is present in all the three phases of buying, namely, pre-transactional, transactional and post-transactional. Being a two-way form of communication, it cultivates the market, negotiates the transaction and reduces post-purchase dissonance. Personal selling is an effective medium of selling. It is the largest single cost accounting say for 20% of net sales in several business enterprises. Besides this, there are other advantages of personal selling also. The main advantages are as follows :

(1) Personal selling is more flexible and adaptable to the varying purchasing situations. Under personal selling, it is possible for the salesman to adapt himself to the needs, motives, impulses and other behavioural traits of the prospective buyers so as to communicate the message and clinch the deal.

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(2) In personal selling, there is minimum waste of effort and expenditure because the whole effort is focussed on a qualified target (consumer/consumers). Also, there is minimum possibility of message diffusion and distortion. (3) Personal selling, is the best means of two-way communication continuously between the company and its customers. Top sales management can be fully informed about many vital matters, such as, customerâ&#x20AC;&#x2122;s reaction, market trend, competition, dealer's demand etc. (4) In personal selling, it is possible for the salesman to carry the qualified target consumer through a logical and persuasive reasoning process as to consummate sale. (5) in personal selling, it is possible for the salesman to detect loss of consumer's attention and interest and regenerate them by frequent repetitions and reinforcements. (6) In personal selling, it is possible to develop durable relationship between salesman and the consumer or consumers which make future sale exploration much more effective. (7) Personal selling is a powerful means of convincing the prospective buyer by presenting actual demonstration of the product or its use. Salesman is in the position to remove every possible doubt from the mind of the prospective buyers and convince them about the quality of goods and transfer of title. (8) Personal selling helps in increasing the volume of sales. It results in large-scale production and thereby reduction in cost and price. In this way, the society may get better quality goods at a comparatively cheaper rate. Thus "personal selling is as basic to our society as metabolism is to life."

Limitations of Personal Selling Personal selling is not without its share of limitations. The main limitations of personal selling are as follows : (1) Personal selling is very expensive because the cost of, developing and maintaining efficient sales force is quite high. (2) It is difficult to recruit the right kind of salesmen who have the potential and ability to sell and be loyal to the business enterprises good and competent salesmen are scarce. (3) Consumer loyalty built up around a good salesman of long standing is usually lost as soon as he retires or leaves the job.

Difference Between Personal Selling and Salesmanship Most of us think that these two terms, i.e. personal selling and salesmanship are synonymous with each other and are used without any distinction. But this conception is wrong. There is vital differences between these two terms. Personal selling is a broader concept and involves oral presentation in conversation with one or more prospective buyers for making sales. The main purpose of personal selling is to bring the product and the company in the knowledge of the prospective buyers and to convince them about the quality of the product or products and make certain that ownership transfer

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will take place. It is an effective form of sales promotion. On the contrary Salesman is in salesmanship is an art of selling goods or services to the prospective goods. Personal skill of the salesman is used in salesmanship. Salesmanship may be employed both in personal selling and impersonal selling (such as advertising).

The importance of personal selling in India India is a vast developing country, densely populated with low national and per capita income, low purchasing power due to poverty and illiteracy of the masses etc. Under these circumstances may be selling occupies an important position in India. The importance of personal selling occupies an important position in India. The importance of personal selling in the communication mix of Indian companies may be attributed to many factors. Some of the major factors are given below. 1. Barring certain exceptions, companies in India are not big enough and financially competent to apportion consistent big outlays for advertising, hence they are forced to adopt personal selling. 2. The illiteracy of consumers, particularly in rural markets makes many companies dependent on the word-of-mouth communication through personal selling. 3. Advertising media in India have not grown national, most of them are confined to big cities and big towns, hence companies have no alternative except to seek the shelter of personal selling. 4. The availability of efficient, trained and economical distribution system in India encourages personal selling. 5. The technology-based, sophisticated, complex and high unit value industrial products require personal selling. 6. Low purchasing power of the masses in India due to poverty requires sales persuasion and hence necessitates personal selling. 7. Lack of knowledge as to quality of the product or products on the part of consumers in India the companies to adopt personal selling.

SALESMANSHIP "The personal selling" and "salesmanship" are often used interchangeably, but there is an important difference. Personal selling is the broader concept. Salesmanship may or may not be an important part of personal selling and it is never all of it. Along with other key marketing elements, such as pricing, advertising, product development and research, marketing channels, and physical distribution, the personal selling is a means through which marketing programmes are implemented. The broad purpose of marketing is to bring a firmâ&#x20AC;&#x2122;s products into contact with markets and to effect profitable exchanges of products for money. The purpose of personal selling is to bring the right products into contact with the right customers, and make ownership transfer. Salesmanship is one of the skills used in personal selling, as defined by Stroh, "it is a direct, face-to-face, seller-to-buyer influence which can communicate the facts necessary for marketing a buying decision; or it can utilize the psychology of persuation to encourage the

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formation of a buying decision". Salesmanship is seller-initiated effort that provides prospective buyers with information and motivates or persuades them to make favourable buying decisions concerning

the

seller's products or service. The salesman of today has to react and interact in many different ways to many different people. Apart from the knowledge of the product, a salesperson has to be a psychologist with one prospect, a human computer with another, an adviser with another, and at the same time a friend with some buyers. Salespersons must adjust their personalities on every call. Salesmanship may be implemented not only through personal selling but through adverting. Thus, advertising has been described as "salesmanship in print."

Some definitions emphasise that salesmanship is the art of influencing or persuading people to do what sales representative wants them to do. For instance, contractors, teachers, ministers, authors, politicians, industrial engineers etc. practice the art of influencing others to do what they want them to do. Every man is a salesman in his own walks of life.

"He who works with his hands is a labourer." He who works with his hands and his head is a craftman. "He who works with his hands, head and heart is an artist. "He who works with hands, his head, his heart and his feet is a salesman."

Salesmanship is the ability to persuade people to want the things which they already need. Salesmanship is the ability to convert human needs into wants. The work of salesman is a service i.e., helping the consumer. The salesman gives a solution to the customer's problems. Salesman-is the ability to handle the people to handle the products.

Definition According to W.G. Carter, "Salesmanship is an attempt to induce people to buy goods." According to the National Association of Marketing Teachers of America, "It is the ability persuade people to buy goods or services at a profit to the seller and benefit to the buyer." According to Knox, "Salesmanship is the power or ability to influence people to buy at a mutual profit, that which we have to sell, but which they may not have thought of buying until call their attention to it. Salesmanship is the ability to persuade people to want they already need.

According to Prof. Stephenson, '' Salesmanship refers to conscious efforts on the part of the seller to induce a prospective buyer to purchase something that he had not really decided to buy even if he had thought of it favourably It consists of persuading people to buy what you have for sale in making them want it, in helping to make up their minds."

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According to J.C. Jagasia, "It is an ability to remove ignorance, doubt, suspicion and emotional objection concerning the usefulness of a product."

According to Holtzclaw, "Salesmanship is the power to persuade plenty of people to pleasurably and permanently purchase your product at a profit."

According to Carfield Blake, "Salesmanship consists of winning the buyers' confidence for the sellers' house and goods, thereby winning regular and permanent customers."

According to Sefred Gross, "Salesmanship is the art of increasing satisfaction by persuading those people who should do so to buy specific goods or service."

Thus, salesmanship is the process of persuading a person to buy goods or services. It does not mean that salesmanship is applied only to personal selling; it can also be applied to advertising printed salesmanship. Salesmanship in its broader meaning, includes all types of persuasion means, by a seller, viz.. advertising, personal selling and other methods.

Modern Concept of Salesmanship In olden days, a salesman lakes an order. He shows the goods. He waits for an order. Then he receives the payment. He never attempts to guide, or help or persuade the consumers.

But the modern concept of salesmanship is entirely different from the old concept of salesmanship. Modern concept is creative in approach. He creates needs and converts them into wants. Customer satisfaction is the main problem of salesman. Mutual profit is essential both for the buyer and the seller. Salesman guides the customer to buy things which satisfy his want. Salesman motivates the feelings of the customers to act.

Is Salesmanship a Science or an Art ? What is Science? Science is a body of systematised knowledge. When calling anything as a science, it must be able to build up a body of laws or principles. The characteristics and behaviour of facts are analysed systematically and laws are formulated. Science is a system of facts and principles concerning a subject. Science is defined as an accepted knowledge that has been systematised and formulated with reference to the discovery or operation of general law. The principles or the set of generalisation, universally accepted, are called laws of that science. It is the knowledge of research, discovery and experience and the principles are universally accepted.

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Salesmanship is a systematically arranged and specialised knowledge. It has its own rules and principles. Salesmanship is a science based on human psychology. A salesman has to study the psychology of the consumers. He must have knowledge about their behaviour. He must have knowledge about the different characteristics of goods which he has to sell As such, he requires a systematic knowledge of those goods. As a science, salesmanship tries to follow certain basic principles, approach, demonstration and concluding a sale etc. All these have to be followed systematically. Thus we may say that salesmanship is a science.

What is an Art? On the other hand, art is making of the knowledge more efficient by applying skill. Art is skill Art is a practical science. Art is a knack for doing something which is acquired by study, practice and special experience. If science is knowledge, then art is action. By science we know a thing; by art we do that thing. An art is skill in performance acquired by study, observation and experience.

Art is the practical side of skill. It is a knack for doing something which is acquired by study and practice. Science makes a man perfect and arts makes a man exact. Art is difficult to learn. It can be studied easily by the person who has the skill. A salesman must possess the skill and it can be acquired and developed. Every customer is an individual, but individuals are different. And a salesman has to diagnose the customer by efficient dealings, of course by using his skills. A

salesman must have

necessary knowledge and skill to face the various types of customers. Exact human behaviour is unpredictable, uncontrollable and un-understandable. Therefore, we can say that salesmanship is an art.

Salesmanship, 'the ship' signifies skill or art, that is sales-art or sales-skill. The salesman must thoroughly master the science and the technique of skill. Salesmanship is neither a science nor an art, but the combination of both. A salesman must have inborn talents and must possess real interest in his profession. The art requires patient practice and application of correct methods. Therefore, salesmanship is art-science based.

Is salesmanship a Profession ? A certain degree of skill or specialisation is required for a profession. Professional people such as lawyers, doctors, writers and actors get along with their clients. Some people say, â&#x20AC;&#x153;Salesman are born, but not made." Others feel, "Salesmen are mostly made than born." Still other assert, "Salesmen are born and made." There are certain qualities-emotional, physical development etc., that are born qualities. With pleasing personality and through convincing approach, prospects can be made attractive. But for a good salesman, personality alone is not enough. There are specialised institutions imparting training in salesmanship. A professional usually considers 'service' as its aim. He offers his service to his employer, whose profit is increased. Again the profession requires skill. The skill is present in the salesmanship. A professional man secures the best regards for the mastery of his subject. In the era of stiff competition,

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personality alone will not make a sale. Training makes one a good salesman. Thus, salesman is nothing but a skilful dealer with the public and he converts them into customers. The knowledge of four fundamentals-prospect, product, personality and organisation together with mastery over sales process makes salesmanship a profession. Importance of Salesmanship In the present day, salesmanship plays an important part. Salesman is the connecting link between sellers and buyers at every step., i.e., from the collection of raw materials to the finished products. Of all, customers are the most benefited by salesmen. Present era is of large-scale production, which is in anticipation of demand. The market expands along with competition, This makes distribution a difficult and a complex factor in the face of still competition. The expansion of the market, growing competition etc., invite a better salesmanship.

1. Important to Producers : Salesmanship is important to producers and manufacturers. For pushing products into the competitive market, salesmanship is necessary. To capture new markets also salesmanship is very important. Salesmen increase the sales volume. It brings larger profits to the manufacturers. Salesmen work as the "eye and ear" for the manufacturers. They improve their products according to the taste of the consumers. They improve their sales policies by keeping in mind the suggestions, impressions and complaints of the consumers. He is the creator of demand. Hence it leads to increased production and increased business activity. As such it increases employment opportunity as well as personal incomes.

2 Important to Consumers : Salesman educates and guides the consumers. He gives them more satisfaction. 'Consumers are right' in the marketing. As such, he gives more importance to them. Salesman helps the consumers in making the right decision and proper selection of the products which they want to buy.

Salesmanship increases the rate of turnover, and hence reduces unsold stock. As such it minimises the economic stagnation. Consumers can select the best products according to their requirements, taste and money. Sales Jobs Differences in marketing factors cause each company to have individualized requirements as to the kind of salesperson it employs. These differences cause each company to expect its own sales staff to play somewhat unique roles (in some respects) even relative to companies employing "similar" kinds of sales personnel. Nevertheless, sales job roles can be grouped into four basic styles that cut, to a large degree, across industry and company boundaries: trade selling, missionary selling, technical selling, and new-business selling.

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Trade selling : The trade salesperson develops and maintains long-term relations with a stable group of customers. For the most part, this is low-key selling, with little or no pressure, and the job is dull and routine. This selling style, which predominates in marketing food and apparel and in wholesaling, applies primarily to products that have well-established markets. Advertising and over forms of promotion are more vital to overall marketing strategy than is personal selling. One important responsibility of the trade salesperson is to help customers build up their volume through providing promotional assistance. For example, the salesperson for a line of breakfast cereals devotes much time to promotional work with retailers and wholesalersâ&#x20AC;&#x201D;taking inventory, refilling shelves, suggesting reorders, setting up displays, and the like.

Missionary selling :

The missionary salesperson's main job objective is to increase the

company's sales volume by assisting customers with their selling efforts. The missionary salesperson is concerned only incidentally with securing orders, since orders result from the missionary's primary public relations and promotional efforts with customers of the customers (indirect customers). The missionary salesperson's job is to persuade indirect customers to buy from the company's direct customers. For example, the salesperson for a pharmaceutical manufacturer calls on the retail druggist to acquaint him or her with a new product and to urge the druggist to stock it. Thus, the missionary seeks to persuade pharmacists to buy from drug wholesalers, who are the direct customers. In some situations, missionary sales staff members call on individuals and institutions who do not buy the product themselves but who influence its purchase. The medical "detailer" who calls on doctors and hospitals to acquaint them with new drugs is an example. Missionary selling, like trade selling, is low key and does not require high-level technical training or ability.

Technical selling : The technical salesperson deals primarily with the company's established accounts, and the main job objective is to increase their volume of purchase by providing technical advice and assistance. The technical salesperson performs advisory functions similar to those of the missionary salesperson but, in addition, sells direct to industrial users and other buyers. The technical salesperson devotes considerable time to acquainting industrial users with technical product characteristics and applications and to helping them design installations or processes that incorporate the company's products. In this selling style, the ability to identify, analyze, and solve customers' problems is important.

Technical salespeople often specialize, either by products or markets. In selling large made-toorder installations, such as steam turbines and electric generators, different technical salespersons work with different items in the product line. Other technical salespeople specialize in servicing either industrial accounts or government procurement agencies.

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SALES & DISTRIBUTION MANAGEMENT New-business selling :

The new-business salesperson's main job is to find and obtain new

customers, that is, to convert prospects into customers. The salesperson specializing in new-business selling should be unusually creative and ingenious and possess a high degree of resourcefulness. Few companies, however, have sales personnel who do nothing but new-business selling; most firms expect their regular sales staff, who primarily do trade selling, to do new-business selling also. However, since it is rare for the same individual to possess both needed sets of talents and because there is a tendency for salespeople to neglect new-business selling in favor of servicing established accounts, some experts advocate the specialization of sales personnel into two separate groups, one to concentrate on retaining existing accounts and the other to focus on converting prospects into customers.

QUALITIES OF A GOOD SALESMAN

I. Physical Qualities

II. Mental Qualities

1. Good appearance

1. Quick-actioned

2. Sound health

2. Imagination

3. A good posture

3. Self-confidence

4. Pleasing voice

4. Enthusiasm 5. Creative talk 6. Initiative 7. Observation

III. Social Qualities

1. Good manners 2. Courtesy

IV. Character or Moral Qualities

1. Determination 2. Sincerity

3. Tactfulness

3. Integrity

4. Helpfulness

4. Loyalty

5. Politeness

5. Courage

6. Co-operation

6. Industry

7. Friendly

7. Self-management

8. Dependability

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I. Physical Qualities The physical qualities are (1) A good appearance, (2) Sound health (3) A good posture (4) Pleasing voice.

1 Good Appearance : The outward appearance makes some impression on the customers. A good-looking salesman in a neat dress with pleasing appearance will succeed in capturing the minds of the consumers. People may not like to deal with or make purchases from a salesman who is dressed clumsily, spreading bad odour with unclean hands. Cleanliness is important for a better look. He must have well brushed his hair. He must have a cheerful smiling face, which is considered as a mirror of the mind. If he looks serious, then he must learn how to smile. A weeping face is not welcome.

2- Sound Health : Sound health and good physique are very essential for a business salesman. Travelling salesman needs good health as he has to travel to many places, eating different varieties of food, face different kinds of wheather conditions. Health is wealth. A salesman who lacks a healthy body, is unable to give a good appearance and fails to carry out his duties. A sound mind occupies sound body.

3. A Good Posture : The way or the style of holding the body is another controllable factor. A salesman must have a good posture when he meets his prospects. A defective posture makes his appearance unwanted. He must display a good posture while standing or sitting and while walking his head must be kept erect.

4. Pleasing Voice : The voice is very important for a salesman. It must be attractive. The voice is the index of one's own feelings. It should not irritate the customers. The voice should not be like that of a horse or donkey; it should not be a closed nasal sound. The words uttered by him must be clear, pleasant and sweet.

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II. Psychological Qualities or Mental Qualities The mental qualities are :

1. Quick Action : A salesman must be alert and quick in action. He has to face many prospects of different temperament. He must have the mentality to face any situations and be ready to answer any questions. He should not be an absent-minded man. He must have quick thought of answering-what to say, how to tell, how to tackle the situation etc., without throwing away the customers.

2 Imagination : Imagination is a key to success in selling. If one possesses a rich imagination, it is of great help in solving problems. He must have a creative mind. For example, take the case of an insurance agent. He gives the picture of the retirement period of life. When the agent gives view, through the eyes of the customers, the latter is impressed much i.e., salesman has to imagine things from the point of view of the consumers. He becomes consumer-oriented and tackles the difficulties and problems of the consumers. He must put himself in the buyer's position.

3 Self-Confidence : A confident man never fails. He has the confidence in his work, capacity and power. Confidence makes him optimistic and enthusiastic. He can meet any situation in the product line. He engages or talks with a customer, makes him believe and the customer acts on his suggestions. Confidence makes him to meet any situation with courage. Expericnce and knowledge are the base for confidence.

4. Enthusiasm : It makes the work of a seller pleasant. Enthusiastic talk is always listened to by prospects. It gains interest and confidence of buyers and in turn more sales, thereby profit enhances, apart from satisfaction of the firm and buyers. 5. Creative Talk : A good businessman will never be defeated by his prospects. Generally a salesman never gives 'no' replies. He should try himself to satisfy a customer and at the same time push his stocks, which may be different from those asked for by a customer. For example, a customer asks the seller to show "wooden chairs." The shop possesses no wooden chairs, but has steel chairs. The resourceful salesman replies, "We have exhausted the stock and ordered for wooden chairs." "By the way, sir, we have steel chairs, which are more durable but at the same price. Shall I show you ?" The customer cannot lake leave of the shop. The salesman's reply and suggestions must create an interest in the mind of the buyers. 6. Initiative : A salesman must be initiative. He must learn the tricks of his trade and must have knowledge of the product line. An active initiative is a self-starter. His job can be successfully carried out. He must have skill and be able to face and tackle situations intelligently. He can also the confidence even of the buyers.

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7. Observation : A salesman should have a keen observation. He must have up-to-date knowledge of his products, and changes in style and fashions, attitude of competitors and government etc.. to make him a clever salesman. With all these latest informations he can easily suggest customers and help them in their purchases. When a customer enters into a shop, an experienced salesman can imagine the possibility of a sale by a look at his face, talk and dealings. III. Social Qualities 1. Good Manners : A salesman must cultivate good manners. Good manners are charming, while bad manners are irritative. Annoyed replies or irritated actions will sweep away the diamonds. Certain nervous habits will do more harm apart from losing a presentable. People get annoyed or develop a dislike towards the careless replies and actions of an approaching sales-ten, such as, playing with rings, rubbing shoes, rubbing the hair and moustache, biting the nail, adjusting dresses, making sounds on the table with fingers or pencils, coughing continuously, opening and closing of match box orderers or pen, standing on one leg, swinging the chair while sitting, clearing the nose picking the teeth etc. All these bad manners should be avoided, good manners be cultivated. 2. Courtesy : Using polite and courteous words, a salesman can turn prospects into customers. Courtesy in dealing with customer, by using pleasing words like 'thank you', 'please', 'excuse me' etc will win the hearts of customers. It costs nothing to a salesman , but it is profit to him.

3. Tactfulness : When a delicate situation is faced, a tactful salesman deals with it in a proper way, in time and in an appropriate manner. He always tries to avoid unwarranted happenings. Through tactfulness, one can avoid obstacles, troubles, calamities etc. 4. Helpfulness : He must have a helping attitude whenever customers are in need of information. The salesman must expose the merits and demerits of the topic relating to the product.

5. Politeness : A salesman's decent behaviours, courtesy, attentive attitude etc., are the base for politeness. Customers feel satisfaction through the polite dealings of salesmen. When one enters into a shop and has dealing with a salesman, who shows politeness, will be preferred.

6. Co-operation : Co-operative attitude is essential for the success of a salesman. He must cooperate with the customers. In the firm itself, among the workers, there must be co-operation; otherwise aimed result cannot be attained. Progress of firms depends on the mutual co-operation of employees.

7.Friendliness : Customers vary in opinions, age, economic status, ideals, temperament etc. A salesman must be able to give a grand welcome to all those, who happen to visit the shop, with friendly conversation. His dealings must be that of a friend-adviser. He must enjoy the arrivals of customers and must associate with them easily.

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8. Dependability : The statement revealed by a salesman should be correct. The customers may test the statement. Therefore giving false idea will spoil the dependability of the salesman, example, a pen dealer says that a particular pen is leak-proof and when the pen is really so, the buyer will have a blind belief on him and thereby he earns a good name from the customers.

IV. CHARACTER OR MORAL QUALITIES

1. Determination : A salesman must have constant effort and patience in his profession to improve further. It is the will to succeed. He must stick to his profession. Practice makes the man perfect. Ceaseless practice, as a game, a player or a professional wrestler, makes salesman to come up to the top.

2. Sincerity : It is an added quality. He must be sincere towards his assigned duties. By sincerity, one can win friends, enroll new customers, retain old ones and win similar other favours. Dependability is

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increased through sincerity. He must make true statements with full information of products and assist the customer in taking a decision. 3. Integrity : It denotes honesty, trust and purity. The talks and behaviour of a salesman must be believed, trusted, honoured and agreed by others; thus customers are satisfied. A good-ill must be created for him and also the firm through honest dealings. This is more essential for the progress of the firm and for keeping a good relation with customers.

4. Loyalty : A salesman must have a full desire to work in co-operation with the firm by adopting the policies laid down by the firm. He must speak in favour of the firm. Otherwise the situation becomes worse. Co-workers are to be respected to develop a team spirit. The success or failure of sales depends upon the salesmen. The team spirit through co-operation brings success he firm. They must be loyal towards the firm as well as the customers.

5. Courage : This is the quality that enables one to meet danger without giving way to fear. One must have enough bravery or boldness. In business, there arise various situations, such as, Happening of tactless deals, unfulfilled promises, errors committed, carelessness shown etc. In all these situations, a salesman should not fear but must face them courageously and frankly.

6. Industry : Hard work brings home success. Everyone works to achieve an aimed target of business Without pain or trouble, profit cannot be earned. People must possess an industrious attitude. One must be able to work hard even in unpleasant atmosphere. Industrious habits are intangible asset for a salesman.

7. Self-Management : We must have a plan to construct a building, with an aimed idea. A self governed salesman can meet any number of customers. This is because he plans his work in advance and works according to the plan. Such a salesman find enough time and has a feeling of self-assurance.

It is difficult to find a salesman with all qualities. Some of the qualities mentioned above are inborn and others are developed through experience. He must recount his own qualities, recognise which is good and which is bad, and make up his mind to root out bad qualities and at the same time allow to grow good qualities. It is not possible to have all qualities. If any desired quality is absent in a salesman, the deficiency may be compensated by some other qualities. For instance, if a salesman lacks personality this can be compensated by giving more respect, politeness and help to the customers. So customers may overlook the personality in the merits of other qualities. To sum up the qualities of a successful salesman in a nutshell, his dealings with the customers must bring goodwill and not ill-will to the firm. Argumentative attitude drives away the customers. A salesman through the positive qualities in him, finds a top position in the business world.

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Requisite knowledge of salesmen When one possesses only the sales personality but lacks the knowledge, it is like a banker without cash or hospital without medicine. It is fundamental that a salesman should possess thorough knowledge about the product, in which he deals. If so, along with his sales personality, one can shine. A thorough knowledge of the goods provides many advantages. Mainly an enquirer can be turned into a buyer. This is generally known as a selling point. When the selling points are used in sales talk, it is referred to as talking points. Let us know, first why one needs product knowledge. In brief, they are : 1. Sales, a Pleasant Task : A salesman should have up-to-date information relating to the products he deals with the customers. When one possesses thorough knowledge, he feels joy to explain to others. Complete and useful knowledge of goods is fundamental requisite of a salesman. These will increase the sales and render better service to buyers. Correct ideas, not guess work. create selfconfidence, which generate potential buyers through satisfactory dealings. Knowledge makes the salesman's job a happy one.

2. Technical Knowledge : There are certain products, which needs complete information regarding their function. Generally customers ask questions to clarify doubts or some may have thirst for increasing their knowledge. In such cases, the salesman will be in trouble to face such prospects who feel that a particular salesman adopts deceitful attitude. To overcome all these, salesman should have complete information of the products, which he deals with.

3 Product Knowledge Coupled with Personality : Product knowledge is a background 01 which salesman's personality acts as a scooter-plug. Customers are highly interested to sec howl salesman explains the products and how he offers a helping hand for a proper purchase. Salt personality, without the knowledge of product is like a dry water reservoir. 4.Deep Self-confidence : If a salesman lacks full knowledge of the products, it is a shame. The confidence grows when he can explain the products's capacities, performance, merits and limitations to the perspectives. His perfect knowledge of the product will naturally increase till confidence in himself. All types of queries can be satisfactorily met by such a salesman. If a single question is unanswered or wrongly answered, there arises a doubt in the mind of the consumers. 5. Winning Customers from Competitors : At present, the products arc of various types and the market increases. Competition is the order of the day. The success in selling solely depends upon the ability of the salesman. The merits and demerits of the rival products must be understood by the buyers, possibly with facts and figures. All these aid to win the customers from the field of competitors.

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6. Selling Points : A proper understanding of a product has many advantages or selling points. Customers are highly concerned with the selling points, such as, durability, attractiveness of product, its package , discount sales, selling terms, designs, price reduction, comfortableness easy operation etc. All these favour a sale and are related to buying motives. A salesman must know all these to boost the sale at the counter. How does a salesman get knowledge of the products ? He can get product knowledge from Personal experience

Meetings

Trade journals

Conferences

Discussion with co-workers

Visit to factories

Going through advertisements

Training schemes

Sales bulletin

Sales manuals

Professional magazines

Demonstrations

Training programmes

Audio-visual aids

SELF EVALUATION QUESTIONS Questions : 4. Creative salesmen is called pioneering salesmen. 5. Outdoor salesmenâ&#x20AC;&#x2122;s job is limited with in the four walls of the shop. 6. What are the knowledges of a good salesman should posses? Answers : 4. True 5. False 6. Knowledge about company, products, competition, customers, selling skill.

Process of Personal Selling The approach of selling method is different from salesman to salesman. Personal selling aims at oral presentation by talk or conversation between a salesman and a prospect. The salesman endeavours to convert (lie prospect into a buyer. Generally, the following are the processes involved in selling method and we discuss them in brief:

1. Prospecting 2. Pre-approaching 3. Approaching and Attention

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4. Demonstration 5. Handling Objections 6. Closing 7. Follow up

1.Prospecting : A prospect means a probable buyer. Prospecting means searching for person, to whom sales can be affected. Prospect is a person, who has wants to be satisfied and has ability and willingness to buy. Therefore this is a first step in identifying and locating of prospects, either from company's past records or customers or advertisements A list of such prospects is prepared, and this helps in planning the whole selling efforts so as to avoid waste call.

2. Pre-approaching : It involves developing an understanding about the prospective buyers or qualified buyers as to their needs, problems, buying motives, preferences, personal character etc. This pre-approach is effective for making a ground for approach.

3. Approaching and Attention : This is a sales interview This is a seed, with which sales tree grows up. This stage is important and vital. The first impression of the salesman may bring a long-runbenefitâ&#x20AC;&#x201D;repeated sales. This step is based on AIDAS formula. The salesman adopts all other selling points relating to the products.

4. Demonstration : The need-satisfying characteristics of the product are to be presented or demonstrated. The prospect may be made to understand the benefits of the product. He may also be informed of the special features, merits, benefits etc. of the products. The salesman can also show the survey reports, relevant data, free gifts, referring to specific problems in other products, telling examples etc. The prospects must be convinced and an interest in processing the product must be aroused. "You and not I" attitude must be followed.

5. Handling Objections : When one shows interest in buying the products, generally, every salesman faces objections from the prospective buyers. There is no wonder, when a buyer purchases products at a price, buyer asks questions and explanations. The salesman must face the buyer by giving satisfactory answers, sincerely and unhurriedly.

6. Closing the Sales : It aims at taking an order for the products from the prospective buyer, The salesman also asks questions as to the productsâ&#x20AC;&#x201D;choice of colour, periodicity of delivery, quantity, terms etc. At the climax stage, the prospects place orders with the salesman.

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7. Follow Up : Satisfaction of the buyer is important as a source of publicity. This stage is important to have information from buyers regarding the product-use-problems, if any. The salesman keeps contact to know the problems. If any. After-sale service should be followed strictly i.e., punctuality, personal attention etc. SELF EVALUATION QUESTIONS

Questions : 7. Prospecting means ________________________ 8. Approaching means ______________________ 9. Who is said to be a prospect? Answers : 7. It is the process of identifying the prospects. 8. It is the process of contacting with the prospect. 9. Prospect is the process who has the ability and willingness to buy the product.

Important Questions Section A: 1. Define personal selling. 2. Define salesmanship. 3. Who is said to be a creative salesman? 4. Who is said to be a prospect? 5. What is prospecting? Section B: 6. Enumerate the difference between personal selling & salesmanship. 7. Explain the importance of personal selling. 8. Write short notes on sales jobs. Section C: 9. What are the qualities of a good salesman? Explain. 10. Explain the personal selling process in detail.

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UNIT â&#x20AC;&#x201C; III SALES ORGANIZATION As a sales organization grows and specialization increases, it is increasing important to perform all necessary activities. What is "necessary" changes over time. When jobs are highly specialized, danger exists that the organizational plan will not provide for supervision of all activities. Essential tasks may not be performed, simply because they are not assigned to specific individuals.

When a company is small, for instance, its executives are in close contact with users of the product. As a company grows, as marketing channels lengthen, and as the marketing area expands geographically, top executives become far' ther and farther removed from the customers. As soon as executives begin lose their informal contacts with customers, an individual should be assigned sponsibility for maintaining such relationships. If these contacts are highly important, responsibility for maintaining them should be assigned to an executive specializing in customer relations.

To Achieve Coordination or Balance Good organization achieves coordination or balance. Individuals vary in competence, potential, and effectiveness. Particularly forceful executives may a basically sound organization from functioning smoothly. Their personalities may be such that through assumption of authority, failure to delegate it, or both their positions are magnified out of all proportion to their importance. Worse yet, total accomplishments of the organization are less than they could have been if, so to speak, greater advantage had been taken of the synergistic effect when the sum of a combination effort exceeds the efforts of the same individuals working alone. By getting people to pull together as a team rather than as an assortment of individuals, the organization accomplishes more collectively till its members could independently.

Motivating individuals to work together toward common objectives is, did important in achieving coordination. Individual goals are subordinated to, or reconciled with, organizational goals. Some of the means for accomplishing this are indoctrination and training programs, group meetings, supervision and guidance, and two-way communications. Throughout the sales organization different activities are kept in proper relation to one another in order that the greatest organizational effectiveness is realized.

As specialists emerge in a growing sales organization, management must guard against a tendency of each to search for ways to justify his or her own existence. One form of justification is to devise technical nomenclatures that nonspecialists in other areas have difficulty understanding. This, in turn, leads to increasing communications difficulties with other specialists and a reduction in overall organizational effectiveness. These instances of uncoordinated proliferation suggest that top sales

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executives should concern themselves continually with orchestration of effort. Modern organizational theory suggests that sales departments should be divided into small, freely communicating, face-to-face groups to decrease the possibility of uncoordinated proliferation.

To Define Authority Sales executives should know whether their authority is line, staff, or functional. Line authority carries the power to require execution of orders by those lower in the organizational hierarchy. Staff authority is the power to suggest to those holding line authority the method for implementation of an order. Functional authority enables specialists in particular areas, such as in technical product service, to enforce their directives within a specific and limited field. Line executives make decisions on the need, place, and time of action over a wide range of matters. Staff executives advise line executives about methods but have no formal power to require or enforce the execution of their recommendations. Functional executives are specialists experts in some aspect of the business who assist executives holding general line authority. For example, such specialists advise on new product introduction. They do this by issuing orders, mainly on routine technical problems, directly to lower organizational levels. All executives should understand the nature of their authority with respect to each aspect of the operation; otherwise, friction develops. When, for instance, staff executives attempt to exercise line authority, they are headed for trouble with the line executives whose authority is usurped.

A sales organization receives directions from several sources. A salesperson, for instance, may get instructions on merchandising the advertising from an advertising specialist, directions for administering a questionnaire to customers from a marketing research technician, and general supervision and direction from the district sales manager. This conflicts with traditional organizational theory, which, in general, has said: No person should have more than one boss. The supporting argument is that, if individuals receive instructions from multiple sources, they may get conflicting and confusing directions. The argument is a good one, but the "one-boss" rule does not necessarily follow. Modern organizational theory points out, and rightly so, that the real problem is one not of avoiding the multiple-boss situation but harmonizing orders and directives from different sources. A smoothly operating sales organization has built-in ways of achieving harmony. Two important ways are continuing coordination of the work of different executives and free-flowing communications systems.

To Economize on Executive Time As a sales department's operations and activities increase in complexity and number, additional subordinates are added. This permits higher-ranking sales executives to delegate more authority. It also allows for the more effective use of specialization, while higher executives devote less time to operations and more to planning. One purpose, then, of organizationâ&#x20AC;&#x201D;and one often overlooked is achieving economies in the use of executive time. Top sales executives need not concern them selves personally

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with all the sales department's problems and activities, particularly routine or technical ones, when they have capable and well-trained subordinates.

However, as sales executives gain subordinates, they must devote more attention, and probably more time, to coordinating their efforts. Unless the executive is an effective coordinator, subordinates may not work in harmony or discharge assignments in line with expectations.

In building the sales organization, then, the need for effective coordination limits the number of subordinates who report directly to certain executives. This limit is the "span of control." It is not possible to specify the proper number of subordinates. But the greater the abilities of the coordinator and of those reporting to him or her, the larger the number that can be effectively coordinated. Lower-level sales executives, however, those with salespeople reporting directly to them, have a wider span of control than higher executives devoting much time to planning and policy formulation and little to administrative and operating details. One must consider not only relative abilities of the coordinator and the subordinates, but the nature and importance of the coordinator's other duties. Furthermore, in deciding optimum span of control for a particular position, other factors are taken into account. The span of control is widened: (1) with improvements in the efficiency, speed, and reliability of the communications system; (2) when subordinates perform routine, similar, or repetitive tasks; and (3) when subordinates are concentrated at the same location as the executive.

SETTING UP A SALES ORGANIZATION Not often is a sales organization built entirely from scratch, as some structure usually exists. Most problems of sales organization, in other words, are problems of reorganizationâ&#x20AC;&#x201D;the sales organization exists and the goal is to make it more effective. It is appropriate, nevertheless, for the sales executive to approach the organizational problem, each time it arises, as though a completely new organization were being built. There are five major steps in setting up a sales organization:

1. Defining the objectives. 2. Delineating the necessary activities. 3. Grouping activities into "jobs" or "positions." 4. Assigning personnel to positions. 5. Providing for coordination and control.

DEFINING OBJECTIVES The initial step is to define the sales department's objectives. Top management, of course, defines the long-run objectives for the company, and from these, the general, or long-run, objectives for the sales department are derived. Considered collectively, general objectives constitute top

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management's vision of the company at some future time. Top management, for instance, may want the firm not only to survive but to achieve industry leadership, develop a reputation for outstanding technical research, diversify its product lines, provide excellent service to customers, furnish investors with a generous return, establish an image of public responsibility, and so on. From such composites, sales management determines the implications for the sales department and articulates a set of qualitative personal-selling objectives. Quantitative personal-selling objectives, in turn, are set with an eye on the qualitative objectives. Survival, for instance, is the most basic qualitative objective of any enterprise as well as its sales department, and this requires, among other things, a continuing How of sales revenue; so, securing a given level of sales volume is an important sales department quantitative objective.

Survival also requires profits. Hence, a second qualitative personal-selling objective is to produce profits, not only by making profitable sales but by controlling departmental costs and expenses. Furthermore, survival requires growth in both sales and profits; otherwise, in a growing economy the company is destined to fall behind competitors or even risk being forced out of business. It follows that a third qualitative personal-selling objective is to realize long-term growth in sales and profits. Therefore, three of the sales department's general objectives all traceable to management's desire for survival of the firmâ&#x20AC;&#x201D;may be summed up in three words: sales, profits, and growth.

Qualitative personal-selling objectives are indispensable for long-range planning and must be kept in mind in short-range planning. Quantitative personal-selling objectives are required as operating guideposts. Thus, the qualitative personal-selling objective of producing profits may be translated into specific quantitative personal-selling objectives such as "to increase our market share of the hand-held calculator business to 20 percent by the end of the current year" and "to secure four wholesalers in Australia and one in New Zealand to introduce our vest-pocket calculators in those markets next year." People in the sales department, as those elsewhere, work more effectively, with less wasted time, effort, and money, when assigned definite goals. The sales department as a whole, similarly, operates more smoothly, and its activities are more purposeful, when it has specific quantitative objectives.

The qualitative objectives set for the sales department form the basis for the genera policies governing its long-term performance. The quantitative objectives set are the foundations from which to develop day-to-day operating sales policies and programs. A thorough examination perhaps even a restatement of the qualitative and quantitative goals of the sales department is the logical place to begin the task of reorganization.

DETERMINATION OF ACTIVITIES AND THEIR VOLUME OF PERFORMANCE Fundamental to sound organizational design is recognition that activities are being organized. Only after determining all necessary activities and estimating their volume of performance is it possible to

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answer such questions as: What executive positions are required? What should be their relationships to other positions? What should be the duties and responsibilities of persons who fill these positions?

Determining the necessary activities and their volume of performance is a matter of analyzing the sales department's qualitative and quantitative objectives. Thorough examination discloses which activities must be performed in what volume. The activities involved in modern sales management are similar from firm to firm, and although individual sales executives think that their operations are different, most differences are more apparent than real. Almost every sales department carries on the same general activities; differences among departments are those of detail, of relative emphasis placed upon individual activity and in volume of performance.

Grouping Activities into Positions Next, the activities identified as necessary are allocated to different positions. The planner must keep in mind that activities are aimed at achieving certain objectivesâ&#x20AC;&#x201D;ultimately the composite provides the raw material from which job descriptions are compiled (in terms of reporting relationships, job objectives, duties and responsibilities, and performance measures).

Activities are classified and grouped so that closely related tasks are assigned to the same position. Each position should contain not only a sufficient number of tasks but sufficient variation to provide for job challenge, interest, and involvement. Only in very large organizations, where extreme specialization is practiced, should a position comprise only a single activity, and even here the, burden of proof should be on those proposing such a move. Pressures of administrative economy are generally strong enough that most position holders are responsible for a number of diversified, although related, activities.

Certain activities are of crucial importance to success of the sales department, and this has implications for organizational design. For example, in a highly competitive field, product merchandising and pricing are assigned to positions high up in the organizational structure. Activities of lesser importance are assigned to lower-level jobs.

When a large number of positions is being set up, groups of related jobs are brought together to form departmental subdivisions. In most cases, a number of intermediate-level positions would, in turn, have to be coordinated by the top sales executive. Nevertheless, the planner should guard against building too many levels into the department. The smallest number of administrative levels that permits the organization both to perform its activities and to operate smoothly is best.

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Assignment of Personnel to Positions The next step is to assign personnel to the positions. This brings up the question of whether to recruit special individuals to fill the positions or to modify the positions to fit the capabilities of available personnel. This is a question that has long been controversial. Compromises are frequent. On the one hand, some position requirements are sufficiently general that many individuals possess the necessary qualifications, or can acquire them through training. On the other hand, some individuals possess such unique talents and abilities that it is prudent and profitable to modify the job specifications to fit them. Nevertheless, planners prefer, whenever the situation permits, to have individuals grow into particular jobs rather than to have jobs grow up around individuals.

Provision for Coordination and Control Sales executives who have others reporting to them (that is, those with line authority) require means to control their subordinates and to coordinate their efforts. They should not be so overburdened with detailed and undelegated responsibilities that they have insufficient time for coordination. Nor should they have too many subordinates reporting directly to them this weakens the quality of control and prevents the discharge of other duties. Thus, in providing for coordination and control, consideration must be given the span of executive control.

Control and coordination is obtainable through both informal and formal means. Strong leaders control and coordinate the efforts of their subordinates largely on an informal basis. Through sheer force of personality coupled with unusual abilities to attract and hold the loyalty of followers, the strong leader tends to make minimal use of formal instruments of control and coordination. But all sales executives, whether strong leaders or not, can improve their effectiveness through formal instruments of control.

The most important formal instrument of organizational control is the written job description. This instrument sets forth for each job: reporting relationships, job objectives, duties and responsibilities, and performance measurements. The most critical section is that of setting forth the job objectives many planners argue that the job objective section should be the part emphasized and, to the extent possible, the person who holds the job should be allowed to determine how to achieve these objectives. This not only encourages position holders to use their own initiative but makes it clear that they are to achieve stated job objectives even if that requires performing duties and responsibilities beyond those contained in job descriptions. Few sales executives will dispute this argument, but most are also convinced that there is merit in detailing duties and responsibilities and in defining the measures for evaluating the position holder's performance.

Good job descriptions provide clear pictures of the roles job holders are to play in the sales organization, and are also useful in other situations. Written job descriptions find use in employee

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selection processes. They are used, too, in matching job specifications with applicants' qualificationsâ&#x20AC;&#x201D; where recruits cannot be found with all desired qualifications, job specifications form the basis for training. Position holders, in addition, can use their job descriptions as yardsticks against which to appraise their own performances.

An organizational chart, another control instrument, shows formal relations among different positions. A chart reduces confusion about the individual's role. An organizational chart delineates formal relations and, because of this, rarely provides a true picture of how the organization actually works. Nevertheless, availability of an organizational chart enables members of a sales department to learn the nature of their formal relations with others, to know with whom they are expected to cooperate, and to clarify their formal roles.

An instrument of organizational control used increasingly is the organizational manual. It is an extension of the organizational chart. Typically, it contains charts for both the company and the departments, write-ups of job descriptions and specifications, and summaries of major company and departmental objectives and policies. The organizational manual brings together a great deal of information and helps its users to learn and understand the nature of their responsibilities, authorities, and relations with others.

BASIC TYPES OF SALES ORGANIZATIONAL STRUCTURES If sound practices are followed in setting up the sales department, the resulting structure takes on features of one or more of four basic types; line, line and staff functional, and committee. The grouping of activities into positions and the charting of relationships of positions causes the organization to take on structural form. The first two types (line and line and staff) are the most common, Functional and committee organizations are rare. Most sales departments have hybrid organizational structures, with variations to adjust for personalities and to fit specific operating conditions.

The sales department's structure evolves from the needs of the business No two companies have identical sales organizations, because no two have identical needs. The customers, the marketing channels, the company size, the product or product line the. Practices of competitors, and the personalities and abilities of the personnel are but a few of the factors affecting the organizational structure of the sales department. So numerous are the factors influencing the structure of individual sales departments that it is impractical to draw generalizations about the many possible "mixed" types; the discussion that follows is an analysis of the four basic types. Organizational planners should know the chief features of each type, and its respective merits and limitations. If they have this background and understand the other factors influencing the structure of the sales department, they are equipped to evaluate its appropriateness.

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Line Sales Organization The line organization is the oldest and simplest sales organizational structure. It is widely used in smaller firms and in firms with small numbers of selling personnelâ&#x20AC;&#x201D;for instance, in companies that cover a limited geographic area or sell a narrow product line. The chain of command runs from the top sales executives down through subordinates. All executives exercise line authority, and each subordinate is responsible only to one person on the next higher level. Responsibility is definitely fixed, and those charged with it also make decisions and take action. Lines of authority run vertically through the structure, and all persons on any one organizational level are independent of all others on that level.

The line sales organization sees its greatest use in companies where all sales personnel report directly to the chief sales executive. In these companies this executive often is preoccupied with active supervision and seldom has mulch time to devote to planning or to work with other top executives. Occasionally, however, the line sales organization is used where more than two levels of authority are present.

Figure shows a fairly large sales department organized on the line basis. The sales manager reports to the general manager, assistant sales managers report to the sales manager, and salespeople report to assistant managers. Theoretically, there is no cross-communication between persons on the same level. Contacts between persons on the same level are indirect and are effected through the next higher level. For example, the assistant sales manager of Division 1 arranges to confer with the assistant sales manager of Division 2 through the sales manager. Similarly, contacts by sales personnel with the office staff flow up through the organization to the sales manager and back down through the assistant sales manager in charge of the office to the office staff.

Line sales department organization

General Manager Sales Manager

Assistant Sales Manager Division 1 Salespeople

Assistant Sales Manager Division 2 Salespeople

Assistant Sales Manager Division 3

Assistant Sales Manager Office

Salespeople

Office Staff

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The basic simplicity of line organization is the main reason for its use. Because each department member reports to only one superior, problems of discipline and control are small. Lines of authority and responsibility are clear and logical, and it is difficult for individuals to shift or evade responsibilities. Definite placement of authority and responsibility saves time in making policy changes, in deciding new plans, and in converting plans into action. The simplicity makes it easy for executives to develop close relations with salespersons. With this working atmosphere, it is not surprising that executives who come up through a line organization are frequently strong leaders. As the typical line sales department has few organizational levels, administrative expenses are low.

The greatest weakness of the line sales organization is that so much depends upon the department head. The head needs outstanding ability and rare qualifications, and should be well versed in all phases of sales management, for there are no subordinates with specialized skills and knowledge. Even if the head is an all-around expert, there is insufficient time for policymaking and planning, since rigidity of the line structure requires that a great deal of attention be given to direction of sales operations. The head often must make decisions and take action without benefit of planning. Under such conditions, results are often disappointing.

For rapidly growing concerns and for those with large sales staffs, the line organizational structure is inappropriate. As the department grows, new layers of executives must be added to retain control. Orders and directions must be passed down through a growing series of administrative levels. Managerial effectiveness becomes impaired and results are less predictable, as directions become more and more distorted and garbled at each succeeding organizational level. Moreover, as growth proceeds, earlier advantages of close relations among executives and salespeople are sacrificed, and maintaining morale becomes a greater challenge.

Not many executives have the talents needed to manage a large-scale line sales department effectively, and line organization offers little opportunity for subordinates to acquire these skills. Ordinarily, the stakes are too high, except perhaps in the smallest companies, for management to gamble on the availability of a replacement at the time needed. Sound organizational practice dictates that trained understudies be ready to step into the shoes of their superiors. But more often than not, chief sales executives in line sales organizations fail to groom their own replacements.

Line and Staff Sales Organization The line and staff sales department is often found in large and medium-sized firms, employing substantial numbers of sales personnel, and selling diversified product lines over wide geographic areas. In contrast to the line organization, the line and staff organization provides the top sales executive with a

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group of specialistsâ&#x20AC;&#x201D;experts in dealer and distributor relations, sales analysis, sales organization, sales personnel, sales planning, sales promotion, sales training, service, traffic and warehousing, and similar fields. This staff helps to conserve the top sales executives' time and frees them from excessively detailed work. They make it possible for their chiefs to concentrate their efforts where they have the most skill. If the top sales executive is not equipped, through prior training or experience, to handle certain problems, staff specialists assist in increasing overall effectiveness of the department. Similarly, by delegating problems involving considerable study or detailed analysis to staff executives the top sales executive has more time for planning and for dealing with higher-priority matters.

Staff sales executives do not have authority to issue orders or directives. Staff recommendations are submitted to the top sales executives, who if they approve, transmit, necessary instructions to the line organization. Departures from this procedure are occasionally made. For example, staff members may be authorized to deal directly with line executives regarding execution of plans and implementation of policies developed by the staff and approved by management. Although staff members act on behalf of line sales executives in these instances, they assume joint responsibility for results. This departure from the normal procedure is justified if it speeds the translation of staff plans into line action.

Figure illustrates the line and staff sales organization. The general sales manager reports to the vice-president in charge of marketing as does the advertising manager and the manager of marketing research. Six subordinates report to the general sales manager, but only one, the assistant general sales manager, is a line executive. Four of the five staff executives have responsibilities in specialized fields; the fifth, the assistant to the general sales manager, is given more general assignments.

Note the difference between the assistant to and assistant. The assistant to is a staff executive who is given a broader operating area than those staff specialists with more descriptive titles. In contrast, the assistant has general line authority delegated by the superior. The assistant general sales manager is an understudy of the general sales manager who performs assignments of a line nature in the name of the superior. The assistant to the general sales manager carries part of the general administrative load that would otherwise be borne by the general sales manager.

The advantages of the line and staff organization are mainly those of specialization. The chief sales executive, being relieved from much detail work, can take a broader view of the department. Problems can be seen in clearer perspective, and connections between apparently unrelated problems are brought into focus. A pool of experts provides advice and assistance in specialized fields. Planning activities are subdivided and apportioned to staff members, and decisions and policies rests on a sounder base than in the line organization.

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Meanwhile, the top sales executive can concentrate on control and coordination of subordinates. Staff members assume much of the burden of solving problems in their areas. Thus, the top sales executive can devote more attention to the human aspects of administration, The specialization made possible by line and staff organization is also the TK source of its weaknesses. Work of the staff specialists must be coordinated, and this is costly. Other administrative expenses may also increase, unless the number of staff executives is kept in line with departmental needs. The staff should be expanded only when it can be shown that the contributions of new staff members will equal or exceed the costs of maintaining them.

Line and Staff Sales Department Organization

President

Vice-President in charge of marketing

General sales Manager

Advertising Manager

Director of sales Training

Sales Personnel Director

Assistant General sales Manager

Assistant to general sales manager

Manager of Marketing Research

Sales Promotion Manager

Director of dealer and distributor relations

District Sales Managers (6)

Branch Sales Managers(32)

Sales Personnel (450)

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Close control over staff-line relations is essential. If staff people issue instructions directly to line executives, it is difficult to prevent some persons from evading unwanted responsibilities. All areas in which line and staff executives share authority and responsibility should be noted in written job descriptions and in the organizational manual. All other areas of responsibility and authority should be delineated and assigned to specific individuals.

When the line and staff sales organization is used, the time between problem recognition and corrective action tends to widen. This results from giving staff executives time to study problems before making recommendations to the decision makers. This interval is reduced by permitting staff planners to assist in expediting the implementation of the plan. But, as already indicated, this may play into the hands of those wanting to evade responsibility. When time is important, though, it is wise to use staff people in this capacity. However, when salespeople take instructions from several sources, confusion may result, especially if experts overstep their authority. Then, too, problems in maintaining contact with individual salespersons are multiplied.

Functional Sales Organization Some few sales departments use functional organization.' This type, derived from the management theory developed by Frederick W. Taylor, is based upon the premise that each individual in an organization, executive and employee, should have as few distinct duties as possible. The principle of specialization is utilized to the fullest extent. Duty assignments and delegations of authority are made according to function.

No matter where a particular function appears in the organization, it is in the jurisdiction of the same executive. In the functional sales department, salespeople receive instructions from several executives but on different aspects of their work. Provision for coordinating the functional executives is made only at the top of the structure; executives at lower levels do not have coordinating responsibilities. In contrast to the line and staff organization, all specialists in a functional organization have line authority of a sortâ&#x20AC;&#x201D;or, more properly, they have functional authority. Instructions, and even policies, can be put into effect with or without prior approval of the top-level coordinating executive. A functional sales organizational structure is shown in Figure 7.3. The coordinating executive is the director of sales administration; all executives on the next level are specialists. As indicated, sales personnel receive instructions from six different executives.

The outstanding advantage claimed for the functional sales department is improved performance. Specialized activities are assigned to experts, whose guidance should help in increasing the effectiveness of the sales force. The sheer size of the sales force in many large firms makes the highly centralized sales operations of a functional organization impractical. This limitation is traced to the requirement in the

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functional model for a lone official to coordinate the specialists. Most large firms need more administrative levels when the marketing area is extensive, when the product line is wide, or when large numbers of selling personnel are required. It is possible to use modified versions of the functional model versions providing for a modicum of decentralization and for more administrative levels but in its pure form, at least, functional organization for the sales department is inappropriate.

The practicality of functional organization for the sales department is open to question. Small and medium-sized firms do not find it feasible, or financially possible, to utilize the high degree of division of labor. It is sometimes contended that functional organization is suitable for large firms with stable operations and with opportunity for considerable division of labor; however, certain characteristics of functional organization cause it to be rejected even by most large firms, Large companies with stable selling operations are the exception rather than the rule.

FUNCTIONAL TYPE OF SALES ORGANIZATION

Director of sales administration

Installation & service manager

Manager of sales Training

Manager of Sales Supervision

Manager of sales Promotion

Manager of Dealer and Distributor Relations

Manager of sales Personnel

"In practice the number of executives on this level would be much larger, and their areas of functional responsibility would be broken down in much greater detail than is shown here. **A sales department using the functional type of organization would undoubtedly employ more than six salespeople. Only six are shown in this example; because of the difficulties encountered in depicting lines of authority for larger numbers.

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SELF EVALUATION QUESTIONS Questions : 1. Sales organization means ___________________________________________ 2. Line type and scalar type organization both are same_____________________ 3. What is functional type organization? Answers : 1. Organizing the sales force. 2. True 3. In this type sales department is organized on the basis of function.

Committee Sales Organization The committee is never the sole basis for organizing a sales department. It is a method of organizing the executive group for planning and policy formulation while leaving actual operations, including implementation of plans and policies, to individual executives. Thus, many firms have a sales training committee comprised of the general sales manager, his or her assistants, the sales training manager, and perhaps representative divisional or regional sales managers) that meets periodically to draft training plans and formulate sales training policies, Implementation of these plans and policies, however, is the responsibility of the sales training manager, if the company has one, or of the line and/or staff executives responsible for sales training in their own jurisdictions. Other committees found in sales organizations include customer relations, operations, personnel, merchandising, and new products.

The use of committees in the sales department has advantages. Before policies are made and action is taken, important problems are deliberated by committee members and are measured against varied viewpoints. Committee meetings, where ideas are interchanged and diverse opinions are present, promote coordination among members of the executive team. When problems are aired in the give and take of committee meetings, cooperation is likely to be better than under any other organization plan. However, unless decision making and policy formulation are left to specific individuals, it is impossible to fix responsibility. Committees render their most important service in providing focal points for discussion and for the making of suggestions, so many companies prohibit committees from making decisions or formulating policies. No committee should develop into a vehicle for the evasion of responsibility.

For committees to operate effectively, other precautions are necessary. The agenda must be planned and controlled to avoid wasting time of executives not directly interested in the topics considered.

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The tendency for committees to consume large amounts of time is counteracted if the chairperson keeps the discussion focused upon the subject at hand. But the chairperson should not dominate. Chairpersons should guide discussions within specified bounds, but they should not force their opinions on others.

FIELD ORGANIZATION OF THE SALES DEPARTMENT Every growing company faces, sooner or later, the necessity for establishing a field sales organization. The sales manager can personally supervise field selling operations when a company is young, when only a few salespeople are employed, when the sales force travels out of the home office, and when the marketing area is small. As more salespersons are added, it is increasingly difficult to supervise and control them. If growth in sales volume is to parallel additions to the sales force, either the same marketing area must be worked more intensively or new areas must be penetrated. Both alternatives call for closer supervision and control of field sales personnel.

The field organization consists of all employees of the sales department who work away from the home office. All outside salespeople are included, as are traveling sales supervisors, branch and district managers, and clerical employees in branch and district offices. Also included are service, repair, and sales promotion personnel. Although not all are concerned directly with increasing the effectiveness of field selling operations, each makes contributions to that end.

The two main purposes of a field organization are to facilitate the selling task and to improve the chances that salespeople will achieve their goals. Sales personnel count on the field organization for assistance and support. Their jobs should be made easier because of it.

The makeup of the field organization is influenced by the organizational philosophy of the management. Companies that consider centralization desirable have complex supervisory organizations. Each salesperson is subjected to close supervisionâ&#x20AC;&#x201D;hence the need for a considerable force of supervisors. Firms that believe in decentralization, in contrast, permit individuals in the field to operate more on their own.

Numerous factors influence the size of the field organization. The larger the firm, assuming similar sales-related marketing policies, the greater the required number of salespeople, supervisors, and regional, branch, and district managers. The relative emphasis placed on personal selling in the marketing program affects the size of the field organization. For example, the firm selling directly to retailers, ultimate consumers, or industrial users commits itself to the performance of a sizable personal selling task, and it requires a field organization of commensurate size. In contrast, companies using wholesalers find that their field organizations can be correspondingly smaller, since parts of the personal selling and other tasks are transferred to these middlemen. Other factors affecting the size of the field

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organization include desired frequency of sales calls, number of customers and prospects, and geographical spread of sales accounts.

CENTRALIZATION VERSUS DECENTRALIZATION IN SALES FORCE MANAGEMENT In the centralized sales organization almost all activities, including sales force management, are administered from a central headquarters. The central sales office has full responsibility for recruiting, selecting, training, compensating, supervising, motivating, controlling, and evaluating the sales force. In the decentralized organization, in theory at least, all these activities are handled by field sales executives.

A decentralized sales organization is one in which there is decentralization in management of various selling tasks and in performance of certain important personnel management activities. For example, branch or district sales offices may do the recruiting, selecting, motivating, and supervising; the central headquarters may handle training, compensating, and evaluating; and the branches and the central headquarters may share responsibility, in proportions varying with the marketing situation and management philosophy, for other aspects of sales force management. It is rare, in other words, for sales force management to be either 100 percent centralized or 100 percent decentralized. Management's appraisal of relative costs and effectiveness results in some aspects being centralized and others decentralized.

Centralization in sales force management varies. Smaller companies that have few salespeople and confine their operations to a small geographical area, keeping the unit of sales high, the sales call frequency low, and the caliber of salespersons relatively high, incline toward centralized sales force management. Manufacturing firms relying almost entirely upon specialized wholesale middlemen for marketing of their products need only minimum sales forces and, therefore, tend toward centralization. Local wholesalers with restricted sales areas also have small sales forces and, by the nature of their operations, are highly centralized. The principal factor determining centralization, then, is a small size of sales force, but other marketing factors, such as those illustrated, also move a company in this direction.

High decentralization in sales force management is found mainly among companies with large sales forces. Likely to have considerable decentralization, for instance, is a manufacturing firm distributing a wide line of consumer products over a vast market area and selling directly to varied retailers all conditions indicating the need for a large number of salespeople. Wherever marketing conditions require large sales forces,-the economies and effectiveness of decentralization are more attractive than are those of centralization.

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Other things being equal, there is a strong pull in the direction of sales force decentralization as a company grows. This is true even though decentralization requires at least one more level of sales management, and the maintenance of branch and district offices (or both) causes additions to other fixed operating costs. With growth, the advantages of decentralized sales force management increasingly outweigh the higher costs. Among these advantages are: 1. More intensive cultivation of the market and, consequently, a higher sales volume to absorb the higher fixed costs. 2. More effective control, improved supervision, and increased sales productivity resulting from the addition of at least one intermediate level of sales executives, and from reduction of geographical separation of executives and sales personnel. 3. Improved customer service stemming from more effective control of sales personnel. 4. Reduced need for and costs of territorial "break-in" time, since more sales persons are recruited from the areas to which they are assigned. 5. Improved sales force morale there are more frequent contacts with executives, reductions in travel time, and fewer nights away from home. 6. Lower travel expenses salespeople are dispatched from decentralized points, and fewer field trips by home office sales executives are required. 7. A "built-in" management development program branch and district offices not only provide realistic training but serve as proving grounds for future high-level sales executives.

SCHEMES FOR DIVIDING LINE AUTHORITY OF THE SALES ORGANIZATION As marketing operations expand, line authority and responsibility eventually become excessively burdensome for the top sales executive. There is an increasing number of people to supervise. Ordinarily, the first remedial step taken is to add a general line assistant, for example, an assistant general sales manager. As the burden of line administrative work continues to grow, it is necessary to provide additional assistants. These new subordinates are given line responsibilities narrower than those of the assistant general sales manager. Although they work with a variety of matters, their assignments cover a limited area of operations. Tasks of line administration are subdivided among these new assistants in one of three ways: (1) by geographic area, (2) by products, or (3) by customers or marketing channels.

Geographic Division of Line Authority The large firm with far-flung selling operations is likely to subdivide line authority geographically (see Figure). This is particularly so if the characteristics of large numbers of customers vary by geographic location, if different selling problems are encountered in different areas, or if certain products are more strongly demanded in some regions than in others. But there is an even more compelling reason for dividing line authority geographically as more customers are added and as a wider area is cultivated, the size of the sales task increases enormously. Setting up geographic divisions is a way of

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cutting the sales task down to manageable proportions. When centralized administration becomes too great a burden for the top sales executives, secondary line executives are delegated authority to conduct sales operations within smaller areas. Geographic division is usually made first into regions or divisions. These may or may not be broken down further into districts or branches.

When line authority is divided geographically, local problems are handled speedily. It is not necessary to wait for decisions from the home office; many questions of importance to customers can be answered by executives personally acquainted with local conditions. Shortening the lines of communication makes possible closer supervision of salespeople, which, in turn, helps in improving customer service. Local markets can be cultivated intensively, and tactics of local competitors can be met and countered in the field.

SALES DEPARTMENT WITH LINE AUTHORITY SUBDIVIDED GEOGRAPHYCALLY

General Sales Manager

Sales Personal Director

Eastern Division Sales manager

Director of sales Training

Branch Sales Managers

Central Division sales manager

Branch Sales Managers

Director of sales Promotion

Western Division sales manager

Branch Sales Managers

Director of Sales Analysis

However, this system calls for multiple offices, so administrative expenses increase. Then, too,

SalesPersonal

the top sales executive faces coordinating several regional operations. Unless this coordination is effective, conflicting policies may develop in different regions.

Product Division of Line Authority A second scheme for dividing line authority is to split the sales task among subordinate line executives, each of whom directs sales operations for part of the product line. When authority is so divided, more than one sales force may be required. Some companies' product lines are too wide to be distributed economically by a single sales force. Others sell both highly technical and non technical products; thus some salespeople need specialized training and some do not. In still others, economies of

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a single sales force are reduced or eliminated because different products are marketed to different types of customers. Figures and illustrate two schemes for dividing line authority by products. In Figure the customary line and staff organization has been retained; in Figure, the primary division is on the basis of products, and each product sales manager has his own staff of specialists. The use of separate staffs, shown in Figure, is unusual. Often this is an intermediate stage resulting from a merger. Because of the expenses incurred in maintaining duplicate staffs, most companies, after mergers, gradually change the organization to its basic line and staff form shown in Figure. Unless there are strong reasons for retaining separate sales managers and sales forces, as will shortly be explained, line authority should be divided on some basis other than products.

SALES DEPARTMENT WITH LINE AUTHORITY SUBDIVIDED BY PRODUCTS, BUR RETAINING BASIC LINE AND STAFF FORM

General Sales Manager

Sales Manager Product

Sales Personal Director

Director of sales Promotion

Director of Sales Analysis

Sales Manager Product

Sales Department with Line Authority Subdivided by

Sales Manager Product

Director of sales Training

Products Utilizing Duplicate Staffs

General Sales Manager

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The decision to use the product type of sales organization should rest on whether the benefits of product specialization outweigh the additional expenses. If they do not, it is wiser to organize the sales force on some other basis. Gains associated with specialized salespersons, who concentrate on selling specific products, must be outweighed against increased expenses. Maintaining more than one sales force results in higher administrative and travel expenses. There are almost certain to be times when two company sales personnel selling different products make calls on the same customers. Although specialized salespeople may give more "push" to individual products, many customers object to multiple calls from the same company. The benefits of specialized sales forces are greatest for companies selling broadly diversified lines, reaching different markets with different products, and encountering unique selling problems for the various products. Customer (or Marketing Channel) Division of Line Authority The third scheme for subdividing line authority is by type of customer or marketing channel. This is appropriate when nearly identical products are marketed to several types of customers and the problems of selling to each type are different. When the same, or similar, products are sold to a number of industries, they often find different applications in each industry, The company in sells its products to the lumber, construction, and mining industries. In each industry, the products are used for different purposes. Customers not only have different needs, they are influenced by different buying motives. Thus, special sales forces sell to each major type of customer, SALES DEPARTMENT WITH LINE AUTHORITY SUBDIVIDED BY TYPE OF CUSTOMER

General Sales Manager

Director, product research & Develpment

Manager, Lumber industry sales

Director of sales Planing

Managerâ&#x20AC;&#x2122;s construction industry sales

Director of sales Training

Manager mining industry sales

Branch Sales Managers

SalesPersonal

Director of Sales Promotion & advertising

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Other companies, especially in the consumer-goods field, pattern their sales organizations after the marketing channels. Although ultimate consumers may be substantially alike, they frequently must be reached in different ways (that is, they may buy the product in different types of outlets). Problems of distributing to chain stores are often unlike those of selling to independent Figure Sales Department with Line Authority Subdivided by Marketing Channel wholesalers and retailers, and specialized sales training programs are often it required. In cases of this kind, the problems of selling vary more with the marketing channel than they do with the product or geographical location; consequently, line authority is subdivided according to marketing channels.

Dividing Line Authority on More than One Basis Few companies use a sing-le basis for subdividing' line authority. Most combination, subdividing the selling task more than once, to permit greater specialization. Nearly every large sales department subdivides authority on the geo graphic basis at some level of organization, but this is done usually in combination with either the product or type-of-customer system. If geographical differences are more important than those of product or type of customer, the primary subdivision is geographical, and the next is at a lower organizational echelon according to one of the other bases. If geographical differences are of lesser importance, the procedure is reversed. The factor most important to the marketing success of the company should form the basis for the first subdivision, and less important factors should determine subsequent breakdowns at lower organizational echelons. Sales organisation/department is the organ of overall organisation/department. It is the entity divided into a number of segments or departments that are held together by the fabric of working

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relations. Any sales organisation headed by the general sales manager ramifies into departments, subdepartments, sections, subsection, finally touching an individual at the last point. The number of departments/sub-departments that constitute a sales Organisation/Sales department depends upon the seal of productive and distributive operations and the type of goods for sales where the article manufactured is a speciality item requiring various types of advertising and publicity on a large scale more departments may be necessary so that each can specialise in discharging a special type of work. There can be a Market Research Department for GENERAL SALES MANAGER

Physical

Personal

Public

Statistics &

Marketing

Distribution

Department

Relations

Record

Research

Department

Advertising & Department

Sales promotion Collection

Sales

Credit & Publicity

Department

studying the sales possibilities of the goods and making suggestions, an advertising department for promoting sales, a credit department for studying creditworthiness of dealers and consumers, a training department for training salesmen in the efficient discharge of their duties and a sales department for carrying on the routine work. Each a sales department may have its small organisation. On the basis of functions a sales organisation/sales department may have the following departments/sub-departments or sections :

(1) Physical Distribution Department : The main task of physical distribution department is to discharge the functions of storage, packaging, despatching and transportation. The person incharge of this department is duly assisted by the subordinates responsible for handling these specialised activities. For example, transportation section shoulders the responsibility of moving the products from factories to warehouses and from warehouses to the branches and from branches to the consumers in some cases. Similarly, storage section cares for designing better ways and means for storage of goods and to care for the goods from the time, they check in and till they check out. (2) Advertising and Publicity Department : It is the most important department of the sales department. The function of this department is to plan advertising and publicity programme, select media of advertising and publicity and implement the programme strategies. Generally, the advertising and publicity is assigned to specialised service houses, namely advertising and publicity agencies. Very few companies have their own such full-fledged advertising and publicity departments.

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(3) Personnel Department : The actual success of Sales department depends on sales force. The function of this department is to recruit and select salesmen, train them, place them, equip them, direct them, coordinate their energies and efforts, motivate them to the best of their abilities and control them. Just as there cannot be circus without good artists, similarly sales cannot be maximised without trained, meritorious, efficient and skilled sales force.

(4) Sales Promotion Department : The main function of this department is to increase the sales volume by focussing the attention of the consumers at the actual points of sales. This is done in various ways, such as, supplying sales literature and display materials to the Dealers, inviting them to sales conferences and conventions, granting favourable terms of trade, writing personal letters, giving inducements, holding dealers' and consumers' contests etc.

(5) Public Relations Department : It is also an important section/department of the sales department. The main function of this department is to maintain good and sound contacts with the public such as customers, dealers, government officials, employees, other organisations, both competiting and non-competiting ones. Good and sound public relations are to be maintained even at high cost as survival, flourishing of business is conditioned by public relations.

(6) Sales Department : Sales department is considered to be heart of sales organisation. It is the controlling nerve-centre. It is headed by sales manager who is assisted by sales supervisors, salesmen, sales clerks to discharge those duties that are indispensable to execute the work of selling. The manager of this department plans traveling programmes of salesmen, appoints agents, issues instructions to salesmen as to sale etc., receives orders and despatches goods, prepares bill and invoices, receives payments, writes accounts, looks look after branches and performs several other duties. (7) Statistics and Record Department : Statistical department plays a constructive role as to collect, and analyse the data collected regarding the quality of goods liked by consumers, quantity demand and the time when such goods are demanded by the consumers. Sales statistics are vital in the decision-making process that gives all-round study and factual information about product, people and policies. The record section does the work of preserving the necessary documents territories and papers for future reference through scientific filing. (8) Credit and Collection Department : Credit is the breath of modern business and soul of selling efforts. Credit transactions for accounting for a lion's share of total business transacted during a given period. It is the sales manager that decides the credit and collection policies and strategies.

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(9) Market Research Department : The main task of the department is in making research in consumers' requirements. relevant information is gathered on a number of matters that have to do with the extension of sales. The department collects information about the nature of demand competition, features of goods, effectiveness of advertising, channels of distribution and so on. The department collects data by various methods. The sales department occupies a strategic position. It spearheads the organization's effort to supply customers with ever-increasing quantities of products at profitable prices. To the extent that this is achieved, the company's reputation rests upon a sound foundation. Good products at competitive prices are not enough. Company success is affected by the dealings and associations of the sales department with customers and other publics. Sales department relations with other departments influences the company's reputation with many publics. Individual sales personnel, as well as the entire department, are in a position to add to or detract from the company reputation. It is important to assure that all are alert to their responsibilities for maintaining good relations. In companies without separate public relations departments, sales executives frequently have additional responsibility for public relations. The main reason is that they have close relations with external publics. Even sales executives not assigned primary responsibility for public relations handle the public relations program as it pertains to the sales department. Under either arrangement sales executives consider the probable public relations impact when planning and administering department programs. They are responsible for maintaining satisfactory relations with all those with whom they or their subordinates come into contact.

Sales Department And Its Co-Ordination With Other Departments Coordinating the activities of all departments so that maximum progress is made toward overall company objectives is top management's responsibility. Department heads, in addition to implementing top management's directives, harmonize their activities so that the tasks of all departments are accomplished effectively. Each understands the functions of other departments, and each is responsible for coordinating his or her department's activities to contribute to company success.

Although the primary responsibility of top sales executives is to manage the sales department, they know the operations of other departments. Sales executives understand how other departments influence and are influenced by the sales department. These are dynamic relationships, so a change in one department often has repercussions in others.

Formal Coordinating Methods Formal coordination among departments is achieved by one or more of three methods. The first is to build coordination into the organization through grouping allied activities under a high-ranking

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executive. In most companies, chief marketing executives have reporting directly to them the heads of departments performing marketing activities, such as sales, advertising, marketing research, and service. Under this arrangement, marketing executives coordinate the operations of departments under them.

The second method is to achieve coordination through the general administrative officersâ&#x20AC;&#x201D;the president, executive vice-president, or general manager. Here the coordinating executive coordinates the operations of all company departments, not just those performing closely related tasks. This explains why the second method is most widely used in companies having only a small number of departments.

The third method is to use policy, planning, and coordinating committees made up of representatives of concerned departments. On the surface, this appears the weakest method, as no one executive has responsibility for coordination. But this arrangement often works out quite satisfactorily in practice.

Informal Coordination Informal coordination is generally more important than formal coordination Department heads may solve an interdepartmental problem informally while it is still being thrashed out through formal mechanisms. Informal coordination procedures are preferred in most companies, and solutions so developed mayor may not be formally adopted later by a coordinating body. One thing is certainunexpected problems with important interdepartmental implications should be handled with minimum delay, for to prolong their solution is to risk costly friction. Sometimes informal solutions are accepted as tentative and are subject to modification after review by the formal coordinating mechanism. To arrive informally at workable solutions to problems affecting the sales department, the top sales executive maintains satisfactory relations with heads of other departments; all think of themselves as members of the same team, cooperating in the effort to reach company objectives.

Sales executives report that informal coordinating procedures are more important than formal methods, particularly where frequent communication is required. A study of four companies revealed that a large amount of communication took place informally among executives responsible for marketingrelated activities. Informal coordination was partly through voluntary exchange of informational copies of correspondence, but largely through informal, nonperiodic exchanges of information occurring when executives met, by chance or arrangement, in their offices, or over coffee or meals. The same study revealed that one individual, or occasionally more than one, served as a communication center for exchanges of information on each important decision area. These executives were either receivers or senders in almost every exchange of information that took place with respect to their interest area. All executives, acting as "centers," assumed the responsibility for providing a continuous flow of information regarding their areas to everyone in the company who they felt might need

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or could use the information. The top sales and advertising executives served jointly as communication centers for all activities that create demand, including personal selling, advertising, merchandising, sales promotion, and packaging.

The informal communication network is important in coordinating marketing activities, but its existence poses several problems: 1. Marketing personnel must be made aware of the need for coordination. The traditional lack of close coordination among marketing-related activities makes this a difficult challenge. 2. Marketing personnel must be given the opportunity to understand the role and responsibilities of other marketing jobs and to know the people holding these jobs. This is especially important when personnel responsible for marketing decision areas report to different superiors. 3. Marketing management must establish a climate that encourages a continuous and free exchange of ideas and information.

Sales department operations influence and are influenced by the operations of departments performing related marketing activities and of others, such as production, personnel, finance, and data processing, where influences are indirect. The following discussion focuses upon instances where cooperation and coordination are essential and communications desirable for the top sales executive. It covers the main points of interdepartmental contact, but the dynamics and organizational peculiarities of an individual firm may require cooperation and coordination in other situations.

SELF EVALUATION QUESTIONS Questions : 4. What is product organization? 5. What is geographical organization? 6. What are the other departments related with sales department? Answers : 4. In this type sales department is organized on the basis of products. 5. In this type sales department is organized on the basis of geographical area. 6. production, marketing, finance, personnel and etc.

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SALES DEPARTMENT WITH OTHER MARKETING ACTIVITIES Sales and Advertising The sales and advertising departments work toward the same objectiveâ&#x20AC;&#x201D;the stimulation of demandâ&#x20AC;&#x201D;but they use different approaches. Personal selling techniques are the province of the sales department and nonpersonal selling techniques that of the advertising department. The two types of selling effort need skillful blending to achieve an "optimum promotional mix." This requires coordination of plans and efforts. The activities of the sales force are planned and directed along lines that increase advertising's impact, and advertising is geared to help salespeople where and when they need it most. The sales department assists the advertising department in selecting themes and media, in preparing schedules, and in securing dealers' support for cooperative advertising programs. The advertising department helps the sales department in such ways as furnishing sales aids for the sales force and for dealers and by providing sales leads. Advertising conserves the sales force's time, for prospects presold through advertising are easier to convert into customers. Proper timing and coordination of advertising and personal selling are essential, and promotional programs need skillful administration by executives who understand both types of selling effort.

Both departments work toward the same goals, so formal coordination is best achieved by having both department heads report to the same high-ranking executive, for example, the marketing vicepresident. However, because so many matters are of joint interest and so many require frequent communication, most coordination between these two departments are on an informal day-today basis, with frequent interactions of department heads and subordinates.

Sales and Marketing Information To obtain maximum returns per dollar spent for marketing information, the sales department works in close harmony with the department or departments producing marketing information. In some instances, this information is pro vided by marketing research, but in companies with sophisticated marketing information systems, marketing research is only one of the subsystems providing information inputs. Marketing information systems assist the sales department by gathering data needed for analyzing sales problems, assisting in determining sales potentials and setting quotas, measuring the effectiveness of the sales effort, assisting with sales tests, and in other ways. The sales department provides the information system with many of the raw statistics and other information needed for sales and market analysis and forecasting. Fairly often, although the practice is controversial, salespeople are made available to marketing research to do field interviewing.

As marketing information systems and marketing research become more sophisticated, the sales department works ever more closely with information personnel. Surprisingly little systematic research has been done in evaluating the relative effectiveness of alternative personal-selling appeals and

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methods of making sales presentations. When sales and information personnel address themselves jointly to these and related important topics, close cooperation becomes even more critical.

Coordination of the sales department with the information system and its data-processing capacity is important. The sales department provides the marketing information system with definitions both of its information needs (desired "outputs") and the information it has available (the "inputs"). The data-processing unit may or may not combine the sales department's own information inputs with inputs from elsewhere. Both in designing and operating a management information system, continuing formal and informal cooperation and communications are of the highest importance.

Improvements in data-handling activities have been significant. From the sales department's standpoint, for example, it has always been important to bill customers correctly and promptly. Automation of order processing not only has resulted in improvements in customer service but has produced as by-products data needed for making rapid changes in sales and production plans, and for inventory control. The role of the sales in gathering research data

Use sales force

All respondents

Division size Large

Medium

Small

A great deal

36%

59%

43%

Moderately

Not at all

Total

100%

Base

(256)

100% (50)

100% (119)

100% (87)

Source : Survey, school of business, state university of new york at Albany, 1974.

Traditionally, sales volume and profit reports are used to measure the performance of the sales force. Computers turn out these reports quickly, frequently, and in great detail. The computer's capabilities are so great that sales executives call for "exception reports" to avoid being buried in mountains of (if tail. These reports highlight things requiring attention; details are available but are held in reserve until the executive requests them. Among the exception re ports are sales personnel failing to achieve quotas; sales activities exceeding budgeted expenses; territories in which the company is losing competitive position customers with declining purchases; and product lines having slow sales movement, declining profit margins, or both.

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The distribution systems of many companies provide customers with automatic ordering procedures. Many apparel makers, for instance, have set-ups allowing store buyers to punch out their orders on in-store console teleprocessing stations linked to a central computer at the seller's plant or warehouse, which, 11 seconds, scans the customer's account for a credit okay, examines inventory records to see whether the styles, sizes, and colors can be supplied, discerns the age of the account, types out a shipping order, and stores the new inventory information in memory. This makes it convenient for customers to reorder and speeds up order processing, both improving relations with customers. The continuing need for developmental selling and for keeping in close touch with customers' problems means that the salesperson's role has been changed, not eliminated. Automatic reordering procedures are spreading and sales executive work with data-processing specialists both in setting them up and in monitoring their operations, adjusting them as required to meet changing customer requirements.

Sales executives have continuing need to maintain close relations with Information and computer specialists. There is room for improved coordination and cooperation between the sales department and the information function Probably the greatest opportunity lies in the development of closer information relationships among personnel at all levels. Insofar as formal coordination is concerned, both marketing information and sales department heads generally report to the same superior.

Sales and Service In companies manufacturing technical products or products requiring installtion and repair services, cooperation and close contact of the sales and service departments are essential. Availability of service, such as technical advice on the installation of a new product, is a powerful selling argument, and there are implications for the service department in a salesperson's promises to buyers' Moreover, in many industries (commerical refrigeration, for example), them recommendations of service personnel often influence buyers' decisions, and in selling vacuum sweepers and other household appliances, service personnel act in sales-making capacity.

Where service is important in sales strategy, provisions for formal coordination are built into the organizational structure. When both sales and service departments are decentralized, the organization should provide for bridging the gap between the home office and the field. Sales and service should relateâ&#x20AC;&#x201D;usually by locating sales and service personnel in the same field offices, with regional managers responsible for both activities. Under both centralized and decentralized organizational plans, sales and service functions are coordinated at the department head level, most often by having both these heads report to the chief marketing executive. Under all organizational arrangements, the need for continuous cooperation between sales and service means that the great bulk of coordinating is informal, and between personnel on lower organizational levels.

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Sales and Physical Distribution Achieving effective coordination of selling and physical distribution operations is important. Most firms accept the notion that all business operations should be geared toward serving customers at a profit. This requires the maintenance of favorable relations between sales volume and costs of various kinds, including physical distribution costs.

Proper packing, accurate freight-rate quotations, and promptness in delivery all physical distribution activities are important in securing sales volume. Unless costs of performing these activities are kept under control, sales volume yields less profit than it should. Sales policies, such as those on delivery schedules, are coordinated with the capabilities of the physical distribution operation and its costs.

The benefits of effective coordination with physical distribution are significant. These benefits, all of which can help to generate additional sales volume and profit include the following.

1. Minimize out-of-stock occurrences (helps to reduce sales lost because of "outs" and helps raise the level of customer satisfaction). 2. Reduce customers' inventory requirements. (If a company develops a more responsive distribution system than competitors, its customers obtain an economic advantage by doing business with it. This is a strong selling point.) 3. Solidify relations with customers (through integrating company delivery facilities with customers' receiving facilities, consignment of stocks to customers, and similar devices). 4. Allow greater concentration on demand creation. /Development of a well organized physical distribution activity, in which a separate administrative group is set up to plan and operate the distribution system, can free marketing and sales personnel, allowing them to concentrate more on their basic responsibilityâ&#x20AC;&#x201D;demand creation. In many companies this has led to an increased number of warehouses, and a consequent reduction in total distribution costs.)

The most effective formal coordination of sales and physical distribution results from having the heads of both operations report to a common superior, such as the marketing vice-president. Even more important is the informal coordination of sales and physical distribution personnel, at all levels, on a dayto-day basis. Salespeople and their counterparts in the physical distribution department, for example, communicate directly and frequently, thus helping lo ensure efficient processing of customers' orders.

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COORDINATION OF SALES DEPARTMENT WITH OTHER DEPARTMENTS

Sales and Production Coordination of sales and production activities is essential. Whereas at one time production was started only after orders were on hand, today most production is in anticipation of future sales. Similarly, although some products, such as defense materials for the armed forces, are manufactured to specifications established by buyers, most products today are manufactured according to specifications set within the company itself.

Coordination is important both in planning and operations. In planning, joint consultation is required when deciding the products to manufacture, the quantities to produce, the production schedule, inventories, and packaging. But even carefully made plans rarely work out as originally visualized. On the sales side, the sales estimate (on which production schedules are based) may prove in error, or the sales department may accept rush orders, necessitating reshuffling of production schedules, addition of extra shifts, or payment of overtime wages, On the production side, output may not conform to planned quantities because of labor difficulties, material shortages, adverse weather conditions, and the like, These and other operating situations require changes in plans that must be worked out jointly by sales and production personnel.

There is a natural tendency for the two departments to work at cross-purposes, and this makes coordination more difficult. Much has been written about the conflicting philosophies of "productionminded" and "sales-minded" executives. It is sufficient to say here that production executives are naturally concerned with such matters as product line standardization and simplification, and achieving manufacturing economies through long and continuous production runs. Sales executives are naturally concerned over "having something for everybody." Thus, their inclination is to argue for wide selections of products and models, adapted as nearly as possible to the preferences of individual customers. The marketing concept, however, rejects these extreme positions, and top management works to integrate both departments' interests into unified company policies.

The cooperation of the sales department helps the production department. Sales estimates, prepared by or with the assistance of sales executives, are needed for efficient planning of production and purchase schedules. The sales department has a reservoir of market knowledge that is invaluable to production executives seeking more efficient utilization of plant facilities. Sales executives keep production executives informed of changes in market demand for different products, and this increases the chances of attaining optimum production levels-Sales executives recommend elimination of slow sellers, addition of promising new products, and changes in product specifications. For all products, present and proposed, the sales department gives its appraisals from the standpoints of price and

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potential volume. Moreover, when inventories of raw materials, goods in process, or finished products are excessive, the sales department assists by pushing sales of the products affected.

The production department helps the sales department. It provides selling ammunition in the form of detailed technical information on products and assists in training salespersons in product information. When drafting promotional plans, sales executives draw upon production executives' know-how on such matters as manufacturing costs at different output levels, limitations of production facilities, and the practicality of building given characteristics into products. By relaying information on unused plant capacity and work-in-process to the sales department, the production department helps in stimulating sales personnel to greater efforts. The same information is useful for detecting the need to change the sales emphasis given different products.

Methods for achieving interdepartmental coordination vary, but, because sales and production are both of critical importance, top management generally retains the primary responsibility. If the company has a separate merchandising department, top management delegates to it the authority to coordinate many sales and production activities through staff channels. In other companies, merchandising committees with representatives from both sales and production obtain formal coordination. Formal coordinating mechanisms are valuable, but close informal contacts between personnel at many levels are important in handling many complex problems arising in the course of operations with minimum expenditure of executive time.

In large firms and in most firms oriented toward product innovation, research and development (R&D) is organized as a separate staff department. In smaller and more conservative firms, responsibility for R&D may be placed in the marketing or production department. Research and development work consists of scientific and engineering efforts to develop new products and to improve established products. It is related to merchandising, that is, structuring the product line and adjusting product features to fit customers' wants, which is of prime concern to the sales department as well as to the production department. Because engineering and design characteristics affect the salability of products, synchronization is required of research and development, sales, and production departments all of which are involved in product innovation. Among that means of achieving this synchronization are

1. New Product Departments charged with responsibility for developing new products through coordination of R&D, production, and sales and marketing personnel. 2. New Product Managers one-person units responsible for developing new products through coordinating R&D, production, and sales and marketing personnel. 3. New Product Project Management Teamâ&#x20AC;&#x201D;composed of persons home based in other departments brought together to work on a new product

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4. Product Development Committeeâ&#x20AC;&#x201D;similar to (3), but with a permanent existence and dealing with continuing problems of innovation relating to a given product group.

Whether main reliance is placed upon formal or informal mechanisms, coordination should take place at lower organizational levels. Department heads find it difficult to keep abreast of the multitude of rapidly changing factors that must be considered in the day-to-day process of developing new products. Specialists have the detailed knowledge of markets and technologies that enables them to make the frequent decisions innovation requires.

Because of the unique problems in managing employees located away from company offices and facilities, most personnel departments are ill-equipped to service sales personnel. Sales departments ordinarily handle nearly all their own personnel problems, and the personnel department acts mainly in an advisor) capacity. Personnel department specialists in job analysis, recruiting, selecting training, and motivation often are consulted by sales executives. Some routine personnel work, such as maintaining records or personal data, is performed by the personnel department. The two departments cooperate in formulating policies on pensions, vacations, sick leaves, safety, health checks, and similar matters, Formal coordination is through top management, and there is significant in formal coordination.

Sales and Finance The sales department assists the finance department by furnishing sales estimates for the company budget, by developing the sales department's budget and by assisting in control of selling cost. The finance department assists the sales department by providing rapid credit checks on prospective accounts, keeping sales people informed of customers' credit standings, helping prospective accounts, and providing credit information on candidates for sales positions. In some firms, salespersons represent the financial department in making collections and securing credit information. These interdepartmental activities require good communications, consistent policies, and close working relationships. Most organizational plans provide for formal coordination through budget and executive committees.

Coordination of sales and finance takes place informally by personal contact, in a mutual effort to overcome the natural conflict of interest in credit policy. Credit terms are significant factors in obtaining orders. Length of the credit period, size and nature of discounts, relative liberality in granting credit all can be instrumental in persuading prospects to buy.

Good reasons exist for keeping control over credit policy and its implementation away from the sales department. Some sales executives, and far too many salespeople, are more interested in obtaining orders than in collecting amounts due, resulting in a tendency to grant credit to below-average risks.

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Furthermore, salespeople shy away from making collections, especially from slow-paying accounts, for fear of antagonizing customers.

But credit terms should be set to permit their use as selling points. And there is a need for tact in credit negotiations, both by salespeople and by credit personnel. When a customer's credit must be shut off, a situation arises requiring not only tact but coordination to avoid buck-passing and resultant loss of goodwill. Generally, the sales department, wanting to increase sales, favors liberalizing credit policies, whereas the credit department, wanting to control credit losses, favors tightening them. Close coordination and communication strike a balance between these inclinations to serve the best interests of the whole company.

Traditionally the sales department relied upon the accounting department to bill customers, handle the department's payroll computation and disbursement problems, and provide data for sales analysis and marketing cost analysis. With development of company wide management information systems, performance of these functions shifted away from the accounting department. That department, however, may retain primary responsibility or even, organizationally speaking, have the centralized dataprocessing unit under its jurisdiction. More and more companies have set up such units, sometimes called "computer centers," to handle data-processing and analysis functions for all, or nearly all, departments.

Sales and Purchasing The sales' and purchasing departments cooperate in three main ways. First, the sales department provides purchasing with sales estimates so that adequate stocks of raw materials, fabricating parts, and other items can be procured in advance of scheduled production runs. Sometimes these data are furnished through an intermediary such as the production department or data-processing unit. Second, the purchasing department informs the sales department, again sometimes through an intermediary, of material surpluses and shortages, so sales emphasis can be changed with regard to products made from these materials. Third, data on sales department needs (for example, office supplies am fixtures, and company cars) are furnished the purchasing department so that purchases can be made on advantageous terms.

A fourth point of cooperation exists in companies where reciprocity is approved policy. The two departments coordinate their efforts, buying as much as possible from customers and selling as much as possible to suppliers. Coordination is achieved formally through top management and informally through personal contacts.

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Sales and Public Relations The sales department works closely with the public relations department. Public relations is consulted on any contemplated moves that might have public relations repercussions, and the sales department assists public relations personnel by relaying information, secured through its contacts with various publics, that has public relations significance. Relations between the two departments are normally informal and with frequent personal contacts, with formal coordination] being the responsibility of top management.

Sales and Legal Legislation regulating and affecting marketing activities makes effective coordination of the sales and legal departments imperative. Every sales department activity has, or can have, legal implications. Sales executives require legal advice on contracts with sales personnel, pricing, relations with competitors and trade associations, salesperson recruiting policy and practice, and disputes with customers. Sales executives and legal officers are in continuing communication to avoid j costly litigation and unfavorable publicity. Formal coordination of the sales and legal departments is achieved through top management, but interdepartmental I coordination on legal matters is informal.

SALES DEPARTMENTS EXTERNAL RELATIONS The sales department has important contact with six main external publics. In the remainder of this chapter, relations with five of these publics are analyzed; final buyers, industry and trade associations, governmental agencies, educational institutions, and the press. Because of the uniqueness of the sales department's relations with middlemen, discussion of distributive network relations is deferred to Chapter 9.

Final Buyer Relations Final buyers, whether ultimate consumers or industrial users, are the most important public that any marketer strives to please. The competitive free enterprise system is based on the premise that customers' wants must be satisfied; individual companies prosper when their products contribute to this end. An analogous situation exists in politics. If candidates satisfy voters' requirements and win their confidence, they are elected; if politicians tail to maintain this support, they meet defeat at the polls. Manufacturers and their products are on trial with the final buyer public, but in business, the trial goes on each and every day窶馬ot, as in politics, just on election day. Satisfaction, or the lack of it, is recorded daily in sales order books and at the nation's checkout counters.

Buyer attitudes and behavior patterns, formed over time and crystalized by experience, are not easily changed. Manufacturers have a competitive edge when they are aware of attitudes and prejudices attaching to their products and organization, and know the reasons for them. Research among final buyer

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groups gathers the information required for planning ways to alter final buyer attitudes and behavior. Research also measures progress toward overcoming prejudices, determines prejudices against competitors and their products, detects the need for product improvement, and evaluates middlemen's prestige.

Responsibility for good final buyer relations is not the sales department's alone. If the production department, for example, makes products that fail to meet final buyers' expectations, unsatisfactory final buyer relations result. In consumer goods fields, personnel policies are part of the consumer relations program, since employees are often customers and have contact with other customers. Dividend and other financial policies affect consumer relations, since stockholders and their friends may be customers. When suppliers of industrial products are also customers, final buyer relations are influenced by the seller's purchasing policies and procedures. Middlemen at all distribution levels mold final buyer attitudes toward manufacturers and their products. The effort of all departments need skillful blending with those of middlemen; in this effort, the sales department plays a key role.

Sales department personnel play major roles in formulating basic product service policies and in implementing them. These policies affect not only final buyer attitudes but the ease with which initial sales are made. For example, guarantees and service obligations should be honored promptly and cheerfully. If products fail to perform in the manner that final buyers have a right to expect, then adjustments, refunds, repairs, or replacements should follow. Instruction booklets should be clear and complete, not cluttered with technical jargon. Final buyers' requests for service or information should be answered without needless delay. Above everything else, all employees in contact with final buyers should be courteous, friendly, and competent in their jobs.

Industry Relations Although trade associations have different objectives, two are of special interest to sales executives: (1) to interpret the industry and its problems to outside publics and (2) to encourage member companies to act in the public interest. Activities directed toward the first objective include trade association advertising, furnishing expert witnesses for legislative hearings, and disseminating industry news. Activities directed toward the second objective include studies of attitudes and opinions of final buyers toward the industry and counseling on public relations problems.

Trade associations have other functions meriting the attention of sales executives. Some serve as clearinghouses for industry production and sales statistics useful to individual companies for planning and controlling their activities. Others sponsor employee training programs; conduct management development programs; arrange for or conduct cooperative research; serve as vehicles for reaching the educational, governmental, and press publics; and provide consulting services. Where industry products

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are in strong competition, with those of other industries, it is not unusual for an association to coordinate advertising and other promotion aimed to stimulate primary demand. Finally, some associations plan, organize, and direct industry wide trade conventions attended by manufacturers, middlemen, and sometimes even final buyers.

The sales executive has additional contacts with competitors and other business executives through professional and service organizations. Chambers of commerce, manufacturers' associations, the American Marketing Association, and the American Management Association all furnish sales executives with excellent opportunities to exchange ideas. Participation in local business clubs and service groups is worthwhile. It is not essential to be a joiner, but most sales executives find it advantageous, professionally and personally, to maintain as many contacts as time permits.

Proper competitive conduct is difficult to describe, but the rules of common courtesy are good guides. Sales executives, as well as sales personnel, for example, should refrain from making disparaging remarks about competitors and their products. It makes better sense to play up the strengths of one's own company and its products.

The border line between what is right or wrong, good or bad, moral or immoral, is not clear-cut. Ethical criteria are qualitative and relative, not quantitative and absolute. Many practices are controversialâ&#x20AC;&#x201D;considered ethical by some, unethical by others. Among these are hiring sales personnel away from competitors, persuading suppliers not to sell to competitors, cutting prices in the hope of driving competitors out of business, and paying distributors' or dealers' employees to push the company brand.

Government lays down the rules and regulations under which businesses operate. Rules and regulations affecting the sales department are continuously modified with shifts in judicial and administrative interpretations. Effective sales executives are familiar with such basic pieces of legislations as the Robinson Patman Act; the Civil Rights Act; the Age Discrimination Act; the Wool Products Labeling Act; and the Food, Drug, and Cosmetic Act. And they keep abreast of judicial and administrative interpretations of such laws. Proposed regulatory legislation is also of concern. To protect company and industry interests, they cooperate with, and appear as witnesses before, legislative committees investigating or holding hearings on industry problems and practices.

Many business executives think of government primarily as a source of regulation; for sales executives other aspects of governmental influence are more important. Federal and state governments affect the size of the market for many products through changing tax laws and rates. Over the past halfcentury, the effect has been to change the shape of the income distribution curve relatively speaking,

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lower economic groups have had their disposable personal incomes raised, and higher groups have had theirs lowered. Most consumer incomes have been rising, and fewer people are in the extremely high, and low, income groups. The average consumer has more disposable income, and this has made possible significant expansions in the markets for many products.

Government influences sales department operations by controlling credit. Through the Federal Reserve System and the Treasury Department, the federal government has powers to expand or contract credit and thus to affect business conditions and the ease with which sales are made. Changes in the relative availability of credit expand or contract the market for such "big-ticket items" a & automobiles, consumer durables, and housing. Credit policy of the federal government, therefore, is of considerable interest to sales executives in many fields.

Government affects the market for many products in still other ways. Governmental units are large buyers. During wars and other periods of national emergency, governmental purchases swell the sales of a long list of items. During peacetime, governmental purchases account for important shares of total sales for paper, office equipment and furnishings, automotive equipment and supplies, laboratory equipment and supplies, and computers and data-processing equipment. The armed forces are important customers for foodstuffs, optical goods, photographic equipment and supplies, clothing, chemicals, arms and munitions, aircraft, aerospace items, and communications equipment. Government Contracts often lie behind the purchases made by contractors working for federal, state, and local governmental units. Government business is so important to many companies that specialized staffs are formed to negotiate and administer government contracts, and although these staffs may not be wholly under the sales department's jurisdiction, sales executives have a stake in their performance.

Effective sales executives recognize that the government provides income 221 for millions of consumersâ&#x20AC;&#x201D;government employees and other millions who receive income from governmental sources, including retired government employees, social security recipients, holders of government securities, and disabled war veterans. The Medicare and Medicaid programs have brought additional widespread benefits and a major impact on sales of drugs, pharmaceuticals, and other health care products.

Many governmental agencies provide services or engage in activities that affect the sales executive. Federal and state governments compile and distribute statistical and other information useful for sales planning. Federal agencies help in promoting standardization of product characteristics. The Federal Trade Commission encourages the development of voluntary trade and competitive practice regulations. The federal government has taken up the cause of small companies, helping them through the Small Business Administration. Other governmental agencies protect legitimate business enterprises from commercial shysters and racketeers such as smugglers and bootleggers. From time to time, too,

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domestic firms find relief and protection from overseas competitors through tariff laws and other import regulations.

Sales executives assist in implementing government relations programs. They expedite the gathering of data needed by governmental statistical agencies. They see to it that the communication lines from the sales department to governmental agencies are open and clear. They lend their support to governmental units seeking appropriations for purposes of gathering information of interest and use to business, such as the U.S. censuses of business.

Educational Relations The sales department has a sizable stake in educational relations. Future members of significant publics, including the final buyer public, receive their first, and usually most lasting, impressions of the business system and individual companies during their years in school. Schools serve as training grounds for future dealers, distributors, sales personnel, and sales executives. The schools are important customers for many products. There are both future and present payoffs in having good relations with educational institutions.

The educational world provides many services to sales executives. Collegiate schools of business, research bureaus and institutes, and individual instructors conduct studies on relevant problems and make the results available. The expertise of scholars often is brought to bear on problems of direct interest to sales executives, such as application of computer techniques to the design of sales territories and analysis of sales performance. Evening schools and extension divisions provide opportunities for developing sales department personnel, Many universities offer management development programs, providing occasions for sales executives to blend their own experiential knowledge with the thinking of scholars.

Sales executives often further the educational relations program. They assist in collecting and preparing teaching materials, and they help educators and students doing research. They recommend that their companies award scholarships, fellowships, and grants-in-aid to educators. They serve as guest speakers in such courses as marketing, sales management, and consumer behavior. Some companies provide summer internships for educators; others work with educational specialists in developing case materials and new research techniques. Company publicity generally is welcomed by the educational public, but the company preparing it should guard against making it overly commercial. Last, effective sales executives accept their responsibilities as public-spirited citizens. They take an active interest in the welfare of the schools and lend support to those seeking to improve the educational system.

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One educational relations problem of special concern to sales executives is the widespread lack of student interest in selling as a career. Many students and teachers have unsavory stereotypes of selling positions, and certain selling jobs (e.g., the used-car salesperson) are definitely not role models. Few students and public schools teachers are aware of the nonmonetary, let alone the financial, rewards of selling careers. Sales executives concerned with building career interest in personal selling should do their homework. In contacts with students and teachers, they should determine the reasons for negative attitudes toward selling, decide what can be done about them, and act accordingly.

Press Relations The press public consists of writers and editors of newspapers, magazines, trade journals, news services, radio and television stations, and other media. Unfavorable media comments about a company, its policies, products, or personnel not only damage a company's reputation but impede its selling efforts. Bad publicity makes it difficult to make sales and increases the cost of those made. Good publicity makes it possible to obtain sales at less expense.

Good press relations help in obtaining good publicity but will not alone ensure it. Press publicity should be planned as part of the promotional program; planned press releases complement or supplement other elements, such as personal selling and advertising. Skill in handling press relations and basic appropriateness of the publicity plan are the factors causing publicity to be good, bad, or indifferent.

Effective sales executives observe a few simple rules in managing press relations. One is that all stories given to the press have news valueâ&#x20AC;&#x201D;a story has news value if it has human interest, or concerns a subject of interest to the audience reached. Newsworthy stories originating in the sales department relate to the introduction of new products and improvements, new models, promotional plans, additions to the sales staff, promotions of sales personnel, and retirements. A second rule is that press publicity is not unpaid advertising. Presenting the press with copy that amounts to advertising, which the press calls space grabbing, is a sure road to poor relations.

Pressure, influence, or threats to discontinue advertising if publicity is not obtained are avoided. If a news story is likely to present the company or its product in an unfavorable light, it is better to provide reporters the pertinent details than to ask that the story be suppressed. If interviews are on controversial subjects, or involve material that might be misunderstood, reporters are handed statements covering the situation; in other circumstances, prepared press releases are avoided.

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Effective sales executives maintain an open-door policy with press representatives all are treated fairly and courteously. Favorable publicity generated by preferential treatment to some is offset by bad relations incurred with others. The effective sales executive compliments reporters and editors responsible to well-written stories. Building and maintaining good press relations, in other words, is a matter of the sales executive's exercise of good judgment.

SALES OBJECTIVES Top management, of course, defines the long-run objectives for the company, and from these, the general, or long-run, objectives for the sales department are derived. Considered collectively, general objectives constitute top management's vision of the company at some future time. Top management, for instance, may want the firm not only to survive but to achieve industry leadership, develop a reputation for outstanding technical research, diversify its product lines, provide excellent service to customers, furnish investors with a generous return, establish an image of public responsibility, and so on. From such composites, sales management determines the implications for the sales department and articulates a set of qualitative personal-selling objectives. Quantitative personal-selling objectives, in turn, are set with an eye on the qualitative objectives. Survival, for instance, is the most basic qualitative objective of any enterprise as well as its sales department, and this requires, among other things, a continuing How of sales revenue; so, securing a given level of sales volume is an important sales department quantitative objective.

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SALES POLICIES AND STRATEGIES The success of sales organisation in any business enterprise depends on its sales policy. Hence the business enterprise should formulate its sales policy before starting sales. A sales policy is a settled on long-term course of procedure affecting sales. The establishment, direction and control of sales organisation is done on the basis of sales policy. Some of the main definitions of sales policy are as follows : (i) According to Harold Whitehead, "A sales policy is laid down is the basis and for the guidance of the selling operations of a business. (ii) According to J. S. K. Patel, "A sales policy is a settled or definite long-term course of procedure affecting sales." (iii) According to Still and Cundiff etc., "Sales policies are the guidelines set up by management within which the company is to seek to reach its personal selling objectives."

Generally the sales policy is not permanent. It has to be changed time to time according to circumstances. A sales manager formulates different sales plans and controls different sales efforts on the basis of sales policy. Although the sales policy is formulated by the top management but the responsibility of implementing the same virtually lies on the sales manager. In some business enterprises sales policy is formulated by the sales manager but is sent for approval to the top management.

Need for Formulating Sales Policy It enables the sales manager to act promptly along well considered line of action. It enables the sales force to take decision in time. Further uniformity of action is ensured in all fields. Sales policy is essential for directing and controlling the activities of the sales force. Sales policies are in respect of changing business conditions and hence ensure adoption of sound methods to secure sales and profits. Sales policy is essential for the future development business. All the future sales plans are based on sales policy. According to Harold Whitehead, "the sales policy regular the relationship between the business and distributors and the public.

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Sales policy is needed for providing necessary information the dealers, distributors, salesmen, consumers and sales managers etc. to as, terms and conditions of sale, terms of providing credit and policy as to price discounts etc. Sales policy is needed for providing satisfaction to buyers and consumers, such as after-sales service, sale on approval and money refund guarantee etc.

Discuss what factors should be kept in mind while formulation sales policy. Like other policies, sales policy should also be based on some principles. The main principles of the formulation of sales policy are as follows :

Principle of Competition : Competition in the same line of trade has a direct impact on the sales policy. Hence the sales police should be formulated on the basis of the competition that exists in the trade. Unless the product has something plus as against the competitive product, it cannot be sold easily. Consumer's goodwill is the soul of the sales policy and it can be established only when the product is in a position lo face the competition effectively. For creating consumer goodwill, it is essential that the product should be standardised and suitable consumer's services are also provided, such as, after-sale service, repair service, exchange facility and sale on return etc. For instance, Hindustan Levers Limited, Mumbai pays much attention on providing consumer's services besides manufacturing standardised products and thus occupy key position in the market.

Principle of Pricing : Principle of pricing plays an important role in formulating sales policy. While fixing the price of the product the manufacturer or the producer should not be concerned only with protecting his own interest but also that of the consumers. He should see that the price policy adopted by the company helps to expand his business. The price should be fairâ&#x20AC;&#x201D; neither too low nor too high.

Principle of Extent of the Market : The extent of the market of the product is also an important principle which should be kept in mind while formulating the sales policy. If the area of the market is small, then the sales organisation will adopt intensive sales policy. On the contrary, if the area of the market is large, then the organisation will adopt extensive sales policy.

Nature of the Product : Nature of the product is an important factor or principle which should be kept in mind while formulating sales policy of a company. The market may consist of different types of customers belonging to the higher class, the higher-middle class, the middle class and the lower class. If the product is meant for lower-class people then it can command a wide market provided it is quite cheaper as compared to competitor's product. The policy will be formulated accordingly.

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Scale of Product : The scale of production may be small or large. If the scale of production is large then the cost of production per unit will be quite low and thus the sales force may cover wide market. The company will also earn handsome profits. On the contrary, if the scale of production is small then the cost of product per unit will be quite high and hence the sales force can cover small or limited market only. The overall profit will also be quite low. Hence, this factor should also be kept in mind while formulating sales policy. SELF EVALUATION QUESTIONS Questions : 7. List out any three objectives of sales. 8. What is sales policy? 9. Define sales strategy. Answers : 7. To serve the existing customers, to obtain new customers, to assist the customer. 8. Sales policy is a guide line for making decision regarding sales. 9. It is a game plan to achieve success in the face of difficulties in sales.

Important Questions

Section A: 1. What is sales organization? 2. What is line type organization? 3. What is functional organization? 4. What is product organization? 5. What is geographical organization? 6. Define sales policy. 7. Define sales strategy. Section B: 8. Write short notes on sales department and its co-ordination with other departments. 9. Enumerate the external relationship of sales department. Section C: 10. What is line type sales organization? Explain with its merits and demerits. 11. What is functional type sales organization? Explain with its merits and demerits. 12. What is product type sales organization? Explain with its merits and demerits.

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UNIT â&#x20AC;&#x201C; IV SALES FORCE MANAGEMENT Personal selling effort is important in pushing the product manufactured. There are many ways, by which the goods can be pushed into the hands of consumers-personal selling, advertising sales promotions, promotional tools etc. Of these, personal selling has many advantages in reaching the aimed goal. Personal selling is regarded as a key-man. It is an active striking power Development, profitability and prosperity of a company greatly depend upon the salesmen's function. The word 'salesmen' applies to all persons who are engaged in the field of selling 1-oi-meriy the job of salesman was confined only to selling of products; but from the modern point of view, a salesman has to carry out the following duties : 1. He must acquire the knowledge of the basic needs to be satisfied through products 2. 2. Prospecting i.e., searching for customers is one of his duties. 3. He provides information to the producer and consumersâ&#x20AC;&#x201D;co-ordination. 4. He must hold enough stocks to resell. 5. He must arrange for the display of products. 6. He has to maintain the purchase and sales account. 7. He must prepare sales slips, 8. He takes periodic stock inventories. 9. He assists customers in the selection of products. 10. He handles complaints.

In modern marketing, a new type of salesman has come up. He reflects the market trendy providing feedback to the producer about the customer's choice; and to the customers, about the product or changes made in the product, in accordance with their need, or the suitability of the product. Thus, it is the main job of the sales management to recruit effective and efficient personnel to serve the customers and the firm i.e., he must be prospect minded and also sale minded. A successful salesman can satisfy both the customers and sales management. Moreova a salesman cannot be taken as 'born' but he is made.

It has been said, "Salesman is born, but not made." It is true to a certain extent. There an some qualities which are inherent. A born salesman may not possess all the qualities, which are required and found in the salesman of today. There are doctors, engineers, actors, musicians etc who are qualified for their expert field work only after getting trained. In the same way born salesman can be improved through training. That is both recruits and born men, will improve Further their performance through appropriate training. For instance, when we visit shops, we may come across sign boards, such as 'welcome', 'please visit again', 'thank you' etc. Salesman may think he has done his duty by displaying the sign

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boards or telling the same words. These words become effective only when they are expressed in the appropriate time and tone a Otherwise the meaning will be different. When a buyer leaves the firm, if the salesman welcome', it is meaningless. The same is the case when a buyer enters into the firm, if the salesman says, "Please come again", it is more foolish. Therefore, the sales management must choose proper person to attain the objectives-generating sales volume and developing salesman power. Thus, it is a task to select the sales force, which is the active striking power of the sales department, and this is a task before the sales management. As the sales management is defined, the planning, direction and control of the personal selling activities of a business unit, including recanting, selecting, training equipping, assigning, routing, supervising, paying and motivating are tasks that apply to the personal sales-force. Thus, a carelessness in the process of selection ; will invite failure.

Importance of Right Selection A sound recruitment policy and procedures are essential for a greater selling efficiency. A selected salesman must have all the qualities through which a firm can attain all fortunesâ&#x20AC;&#x201D;more turnover and more profit and the firm progress. Otherwise, the firm invites misfortune by unsound recruitment policyâ&#x20AC;&#x201D;selecting incompetent, uncared or disinterested sales army. A minor mistake, on the part of sales management, will doom the future of the firm entirely.

Therefore, the management of sales force is concerned with the following decisions : 1. Sales Force Decision 2. Sales Force Size 3. Recruitment and Selection 4. Training 5. Controlling 6. Compensation 7. Fixing Sales Territories 8. Evaluation

1. Sales Force Decision : Sales objectives have to be fixed by the sales manager in respect of total sales force and for each sales-man, in terms of volume, market share or profit for the firm. If the objectives are once decided, then the size of sales force has to be determined and this necessitates the following studies.

Job Analysis : Job analysis is a detailed study of a given job and reveals the job details, duties, abilities, responsibilities, working conditions, skill and knowledge needed to perform the firm. This will help the sales manager to recruit the right man for the right job. This is further divided into :

Job Description : It is a brief statement describing the job and not worker. It includes :

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1. Name of the job. 2. Nature of the job 3. Brief summary of the job 4. Duties to be performed 5. Relation to and with other jobs 6. Job responsibility 7. Working conditions for the jobs 8. Machines and tools to be handled 9. Criteria for each job 10. Evaluation standard aimed

Job Specification (Man Specification): The job description is followed by specification. The job or man specification indicates the exact requirements in performing a job. In brief they are : 1. Educational qualification needed. 2. Experience needed, 3. Physical qualities expected 4. Skill needed to perform the job 5. Attitude needed for the job 6. Self-decision ability 7. Responsibility to firm and customers 8. Emotional characters.

2.Sales Force Size : After having fixed the sales force decision, the sales force size has to be taken into account. More salesmen do not mean more sales. An existing firm possesses a sales force and the question is whether lo increase the number of salesmen. It is only the sales and profit objectives, both derived from sales forecast, that should establish the optimum size of the sales force.

3.Recruitment and Selection : Recruitment is a process of finding out candidates, who are by encouraged to apply. Selection is process of choosing some out of many candidates. Therefore, we can say that selection is recruitment, but recruitment is not selection. Selection is a process of rejection of unfits. Recruitment precedes the selection process. After deciding the number of salesmen and the objectives, the sales manager must select personnel The usual sources of recruitment may be either internal or external.

RECRUITMENT Internal Sources : Many firms feel that the best policy to fill the vacancies of salesmen is from out of the existing employees of the same organisation. It may also be termed as promotion This can well

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be adopted by analysing the ability and promising character of the staff and on the basis of seniority i.e.. length of services. Merits 1. Much co-operation can be expected. 2. They are loyal 3.

Since it is a promotion, sincere and honest performance can be expected.

4. They may not need training as there exists a familiarity. 5. They may not need high salary.

Demerits 1. There is limited scope for selection. 2. Favouritism plays its role 3. New post may be unadjustable as the nature of work is changed.

Apart from the internal selection, ex-employees of the company can also be appointed if they are willing to accept a job. This policy is better and can profitably be adopted.

External Sources : We have the following sources : 1. Employment Exchange. 2. Competitors' organisation 3. Salesmen of non-competing firms 4. Educational Institutions 5. Recommended cases 6. Advertisement 7. Unsolicited applications etc.

(1) Employment Exchange : Private and public employment exchanges are the best sourest -of personnel. They maintain proper registers with names and other full details of persons, such as job referred by those who seek jobs. The sales manager can call persons from exchange, by giving job specification to the officer concerned. In almost all cases the candidates may be untrained; and inexperienced hands requiring further training.

(2) Competitors' Organisation : The salesmen employed in other competing firms can be chosen. But this method is not morally accepted. He may be trained and may be developing his firm. Such a person can be drawn by temptation by giving more facilities and a higher salary. But it must be verified how far he is able to meet the sales objectives, considering his sincerity, loyalty, habits etc. Such

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a man, when he gets some additional benefits from some other firms, will follow the same tactics i.e., leave the firm.

(3) Salesmen of Non-competing Firms : Salesmen can also be chosen from non-competing firms. Such persons may have experience in the line, if not touch with the particular product. They may need training to come up to the level of aimed sales objectives.

(4) Educational Institutions : Advanced countries like America, England etc., select students directly from specialised institutions, where theoretical and practical knowledge is gained by them. The institutional heads maintain complete records of students but as far as India is atoned, the chances are rare. It has been neglected with the feeling, 'just from egg' i.e. inexperienced.

(5) Recommended Cases : The employees of the firm-managers, superintendents, section tads etc., may recommend candidates from their friend circles. They may have a moral responsibility when such persons are recruited. The employee who recommends personnel will be blamed, ithe person is to be found unfit.

(6) Advertisement : This is a system generally accepted by firms in recruiting salesmen. Advertisements are displayed in newspapers, trade journals specifying the job and the required qualifications, experience and skill. There is the possibility of a wider scope of selection, as the news spreads over a wide geographical area. SELF EVALUATION QUESTIONS Questions : 1. Recruitment means _______________________________________ 2. Internal source of recruitment mean s _________________________ 3. External source of recruitment means _________________________ Answers : 1. It is the process of finding out candidates. 2. Fill the vacancies from in side of the organization. 3. Fill the vacancies from out side of the organization.

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SELECTION PROCESS ; Selection procedure is different from firm to firm. Each firm has got its own method in choosing men for employment. The requirement of quality in men depends on the job description. Similarly the selection method also depends upon the sales management. Generally, the Awing steps are followed: 1. Application blank 2. Screening 3. Reference 4. Personal interview 5. Test 6. Medical examination 7. Final interview (appointment).

(a) Application Blank : Necessary information about the applicant is required to consider for appointment. Generally the candidates are asked to apply on company's application form, sent directly to applicants against a requisition or an application form, known as application the blank given in the advertisement itself. This is with a view to gather only the necessary details of the applicants. It contains a number of questions, when filled in, gives a clear idea about the candidate. Generally, it may contain the name, sex, qualification, age, experience, health, social activities, references etc.

(b) Screening : All applications will not be considered. Screening is a process by which applications are to be screened out (rejected) from further consideration, on the basis of unsuitability. The remaining applications are formally considered by appointment, subject to further formalities. By rejecting the applications of unqualified applicants, much time and energy can be saved in further processing.

(c) Reference : Generally, it is a common practice to ask the applicant to mention the names of two references or referees, to whom the sales manager can make enquiries about the integrity, general character and ability of the applicant concerned. The qualities are checked with care and caution of the sales manager by contacting the referees. If the opinions are favourable, the applications pass to the next stage; and in case the referee gives unfavourable comment, the application is rejected at this stage.

Personal contact is necessary and it is better, because people are straightforward in tongue better than in pen. This is one-sided, but the effectiveness of such opinion is doubted, as then may be chances of telling only the good qualities of applicants. Moreover only the names of such favourable persons are mentioned in reference, with pre-intimation. To overcome this, personal interview is essential.

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(d) Personal Interview : This is an important step in the process of selection. Only tilt screened applications are considered for selection and the firm sends out interview letters. Personal interview is a must. By this interview, the sales manager can understand the positive and negative qualities of the applicant, with reference to the job duties. A good interviewer must be unbiased, able to discover facts, a keen observer of the interviewee etc.

Interviews are also of two types : (a) Patterned and non-patterned. Under patterned interview, questions are designed and the same questions are asked to all, which is easy for company son purposes, (b) In non-patterned interview no standardised questions are asked. The applicant is allowed to talk freely. A few direct questions are asked. By this type of interview, the applicant gets a chance of speaking about his attitude and interest freely. The interviewer must be able to make an easy evaluation of the interview.

(c) Tests : Test is an additional tool, with which the applicants are further tested to determine their suitability to the job. Generally following are the important types of psychological tests conducted:

(i) Ability Test : This test is devised to ascertain the capacity to grasp things, and is a measure to know how well a person performs a particular task with motivation. This can also be called as mental ability or intelligence test. Such tests determine the suitability of a candidate for a particular job.

(ii) Habitual Characteristic Test : A man may be intelligent but may hesitate to take a decision. This test is aimed to know one's aptitude and interest on normal, daily work, irrespective of the best behaviour occasionally.

(iii) Achievement Test : This test is designed to know as to what knowledge a man has gained from his education or training. By all these psychological tests, the ability and suitability of a candidate can be verified. One can aim to evaluate the honesty, cheerfulness, leadership quality, assertiveness, co-operation, supervision capacity, emotional stability, determination, ability etc., of the personnel. The effectiveness and reliability of these tests are questionable, as the qualities cannot be measured exactly and the circumstances to be faced by salesmen are also different.

(f) Medical Examination : The important thing about any person, apart from all qualities and eligibility, is that he must be physically fit for the job. Diseases and physical deficiencies of the salesmen will affect the business. As such, selected applicants have to undergo medial examination.

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(g) Final Interview and Appointment: The selected applicant is probably, called for a final interview and his suitability is measured from the different tests, physical reports etc. The job must be explained to him along with all relevant details, which are required in performing the duties efficiently.

If everything is in favour of the applicant, an agreement must be executed by him. Generally, the agreement contains duties and authorities, sales quota, sales territory allotted, salary and conditions of resigning. It is followed by an appointment order, which contains designation, jobs to be performed, salary and other financial benefits etc.

TRAINING : Training is a continuation of selection. Having selected the salesmen, there are two options. They can be sent to the field directly with samples, order books etc., (bom salesman) .and/or they can be sent for training programme. Some people think that salesmanship is born in man, but there are only born salesmen, like born doctors, lawyer, engineers, teachers etc. How-lever ail these people need training to call them as qualified, and so also is the case with salesman. A man may have interest in the profession. The interest can be fully developed, through proper training. One attains perfection, self-development etc., through training. Meaning Training programme are organised procedure or methods through which knowledge as well as skill, for a definite purpose, is acquired. By training, one can increase knowledge in a particular field. The salesmanship is not born but can be made effective through training.

Significance of Training The present era of marketing world is full of stiff and cut-throat competition. The world is dynamic and not static. Customers are more benefit-oriented. Producers, to meet the ever-changing demand of consumers, produce new products, new devices, products with multiple uses, new working methods, etc. Thus, training or repeated training is essential to keep the salesman, with â&#x20AC;&#x201C;up-to-date knowledge, in respect of new or developed goods. Training gives scope for improvement

Objectives of Training The summarised objectives are given below: 1. To facilitate the salesman to acquire the technique and principles of salesmanship, process of sales, canvassing etc. 2. To bring down the labour turnover in the sales force. 3. To facilitate better sales performance. 4. To improve the relations with the customers. 5. To increase the efficiency of sales personnel. 6. To keep the salesman informed of the knowledge of products, market, competitors etc., to face all situations.

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7. To lower the selling expense so as to increase the profits. 8. To maintain sound relation between employer and employee. 9. To develop better knowledge, and the ways and means to resist all situations. 10. To motivate the consumers more effectively.

Advantages of Training to Salesman 1. A trained salesman always wins customers by systematic approach. 2. Salesman acquires better understanding of the firm, as to its past history, policies and procedures and this helps the salesman for effective dealings. 3. A trained salesman takes less time in concluding a sale-early selling maturity. 4. A trained salesman brings increased volume of sales, in turn, more profit to the firm and himself. 5. A trained salesman is able to meet consumer's demand and help in solving problems. 6. Increased volume of sales facilitates reduction in cost of production i.e., sales rise faster than expected. The cost per unit of order or per prospect can be minimised. 7. A better relation is created among the customers through reducing customer's complaint, increasing brand loyalty etc. Customer's satisfaction is gained. 8. The ability of the salesman is increased by expert knowledge. 9. Controlling of salesman becomes easy. 10. Training facilitates better demonstrations, selling the products which have high profit margin, better methods of canvassing etc. Sales training helps to increase the sales volume. Supervision cost is reduced as trained salesman needs less supervision.

Training Methods For imparting training to the salesmen, different methods are being used. Broadly, these methods may be divided into two:

1 Group Training

(a) Lecture Method : An expert or a lecturer speaks to trainee-salesmen about the various aspects of selling. It consists of oral talk in a classroom. This system is widely used. The trainees listen to the lectures. The instructor invites questions and answers from them. To make the lecture more interesting, visual aids, demonstration, suitable examples have been added. This system is more economical, and is the easiest and quickest in imparting theoretical training to a group of salesmen. But it is difficult to evaluate the effectiveness of lecture method. This method can be used more effectively in continuing sales training programme to provide new information or changes in the policies of the firm. This may include seminars, demonstrations etc., by expert salesmen.

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(b) Audio-Visual Method : In order to supplement the lecturing (telling) method, training programmes include the use of visual aids, such as films, slides, posters etc., and are capable of making them more interesting.

(c) Discussion Method : This is a good method. Here an actual case or an imaginary case is given as a problem to be solved, to the different groups. The case or the problem may be typed or printed. Each group is asked to understand the problem and draw a conclusion. After this, the different conclusions or suggestions are analysed collectively, under the leadership of the instructor, in drawing generalisations from each case or problem. This type of training enables the salesmen in correcting their own views. It is suitable for a small group. It is slow and costly.

(d) Conference Method : Sales conferences and sales meetings are get together of concerned staff, either weekly, fortnightly or monthly. The thoughts of various persons are pooled in the conference. Meetings or conferences have motivating effects as the participants are given chances for creative thinking and to express their views. To make the conference more interest-dramas, demonstrations etc., are included. Topics like, sales policies, facing competition, icily ideas, dealings with complaints etc., are dealt with. And these will facilitate the participants in broadening their outlook and ideas. But this type of meetings or conferences is not suitable for new recruits.

(e) Role Playing Method : Role playing is a newly developed method. The sales trainees are made to act out roles in contrived problems. The trainer explains the situation of the problem and assigns the role of salesman and customers of different characters to the sales trainees. Each one has to act the assigned role. The trainer watches the role played by each and discusses their weakness and strong points. A few may be selected to act the play, while others may watch it. Thus, the salesmen have chance to see and understand the ideas in different situations. It is not suitable for new recruits.

(f) Panel Method : Members in the panel group may be permanent. The members, who are experts in the panel, discuss the problems, and solutions are passed to the sales-trainee groups, who may have further discussion. This system is ineffective. (g) Round Table Method : It is similar to the discussion method. It consists of few members. The salesmen sit around a table along with a good discussion leader. They deal with the problems of actual cases. Every participant takes part freely in discussing the problems and solutions. Exchanges of new ideas take place advantageously.

(h) Brain Storming Method : Under this method, more or less, similar to round table conference, persons sit around the table. The leader tables the problems for discussion. The sales trainees have to

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understand the problems and find the solutions. The solutions are analysed by the leader or tested by the panel of experts. This method practically fetches no value.

2. Individual Training

1. Individual Training Method : The individual training methods include : on the job training, training through correspondence internship training, training through study courses, training through individual coaching, training through special assignments, observation posts etc. as given below: 3. Training Through Correspondence : Under this methods training is provided to the trainees through correspondence. The s pecial study courses are supplied to the trainees through post by a recognised institution regularly at the residence of the trainees. On the basis of the study courses the trainee is required to answer questions. These answers are duly examined by the panel of the institution regularly. The trainees are intimated about the mistakes committed by them. After a certain period the trainees are required to appear Id the trainees are required to appear in formal examination. As soon as they pass the prescribed examination, degrees or certificates to the trainees are awarded.

(4) Training Through Study Courses : Under this method of training study courses are prepared under the direct supervision and guidance of the experts. Necessary illustration is done through photos and pictures. These study courses are supplied to the trainees who are required to have a detailed study of the same. These Study courses are supplied on different intervals. The idea behind this method of training

is to refresh the trainee with latest and up-to-date techniques

and methods of

salesmanship.

(5) Training Through Individual Coaching ; Under this method of training coaching is provided by the supervisor to the trainees on a continuous and regularly scheduled basis. It is essential that the supervisor should consider the training of the trainee placed under Slim, as part of this job.

(6) Training Through Special Assignments : Under this method of training the trainees are provided special assignments with complete freedom to handle the affairs as they please. This method of training aims to create confidence in the trainee to do the task to the best of his ability.

(7) Observation Posts : This method stresses learning by observation. 窶連ssistant to positions make good observation posts in development of the trainee. Trainees holding assistant posts are likely to grasp and assimilate problems pertaining to a particular post most effectively.

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(a) On-the-job Training : Under this method, a new salesman is placed under an experienced or senior salesman who trains him. First the coach explains the sales techniques under different situations. He also takes the trainee along with him on his rounds and gives him chances to observe the dealings with the customers. Doubts of the trainee arc also clarified. Then the coach along with the trainee calls on customers, the sales trainee is allowed to deal with the customer and the coach observes the performance. If any weak point or short-coming is found in the sales trainee, they discuss how to overcome them. After some time, the sales trainee becomes a trained and independent salesman. This system is good for travelling salesman.

(b) Sales Manual : It is a compiled textbook. It contains details of the firm and products, job description, sales policies, opinions or reports required for reference purposes etc. Generally, it contains many problems with suggestive solutions. A copy of the book is given to a salesman to go through it and understand the ideas. It works as a ready-reckoner.

(c) Initial or Break-in Training : New recruits are given an orientation training so as to know about the company and its products. He may be allowed to work for some lime in the firm itself to gain sufficient information about the products. After that he is sent to work in his field.

Apart from the above, salesman can also be sent to specialised educational institutions. The training cost is borne by the firm. There are many institutions in India which impart theoretical training along with practical work. Doors are open and firms can send their new recruits for training. Correspondence courses are also available for initial training. In certain cases, one can undergo training while one is fully employed. This is suitable for salesmen who are widely scattered. There are many firms which have permanent training departments like colleges.

It is important to note that even the trained or experienced salesmen need periodic training, called refresher training or follow up training. This is because of the changes in products, sales policies, changes in consumers and market, government policies, new developments, new ideas etc.

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SELF EVALUATION QUESTIONS Questions : 4. Selection means _________________________________ 5. What is screening? 6. Name any three training methods. Answers : 4. Process of choosing some from many candidates. 5. It is a process by which applications are critically examined. 6. Lecture, conference, role playing.

MOTIVATION OF SALESMAN Salesmen are the backbone of a sales organisation. A good salesman make a poor selling house into a progressive one. And a bad salesman can make a sound selling house into a starving position. It is because the success or failure of a firm depends upon the ability and initiation of a salesman. It has been said, "You can buy man's time, his physical presence, but not his will, loyalty and initiative." The selling firm can purchase the time of salesman or his physical presence for a job. His willingness to work or his loyalty cannot be purchased and these have to be earned. The will or willingness to work is an important matter as it is a motivation factor.

What is Motivation ? Motivation means stimulus to achieve goals set out for salesmen by the management. Motivation is directly linked with the will-will to work. It is the psychological encouragement or a process of hard work or work better feeling in the mind of the salesmen. To attain a good result through their activities, they have been trained. And compensation is paid for the services rendered by the sales personnel. Apart from this financial incentive, further encouragement in the motivation is needed-respect his personal ego, praise him, keep him in touch with the latest information, promotions, recognition of his merits etc., at the right place. These are non-financial incentives.

Need for Motivation All the sales personnel like to have their efforts recognised. They like to feel that they are part and parcel of the firm. Some salesmen require no encouragement from the management and are able, ambitious and self-starters. Yet, most of the salesmen need encouragement and stimulation to work at their best. This is because of the following reasons:

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1. Nature of the Job : Salesmen's job is to tell and to sell. He has a chain of incidents of happy and unhappy results from the customers. He has to face the customers of different attitudes-rude, shrewd, argumentative, impatient etc., as well as nice, friendly, good natured etc. He may successfully meet a few and end in orders, while a few may offer only arguments with no result. As such salesman will be in mental tension and will have no peace of mind. And his sales may be lost to competitors. This type of feelings will upset his mind, and he may lose his stamina, resulting in boredom apart from tiresomeness. Therefore, a strong stimulation keeps him to the desired level of performance.

2. Human Nature : A satisfied salesman will do better for the firm, but an unsatisfied salesman will do more harm than good. The financial incentive is not enough to keep him happy. Stimulation in the form of promotion, extra-financial benefit etc., are needed to keep him at the level of performance. His mind must be happy.

3. Personal Problems : A salesman passes most of his time away from his family. He is unable to attend to his family affairs. He may have sick or old persons at home or debts to be returned etc. His peace of mind greatly depends upon the condition of his family. His condition is correlated with condition of his family. Thus, he needs a good encouragement.

4. The Loners : By profession he is working in the assigned territory. He may feel lonely and monotonous. He must be kept in with the feeling of group identity.

Methods of Motivation : In addition to the remuneration, certain types of encouragement are needed. A few of them are:

1. Sales Contests : By sales contests, we mean a competition among the salesmen, by maximising their effort to boost up the sales, to earn the name of superior salesman. The aim of this contest is to increase the sales, to develop a team spirit, boosting the morale, encouraging to work hard, fast moving or slow moving items, to overcome the depression period etc. The successful salesman at the contests bags the prizes-cash, incentive, merit certificate or free travel etc.

2. Conventions and Meetings : This is a group motivation. All employees meet at a place. Everyone meets and contacts fellow workers. Exchange of ideas and opinions takes place. Salesmen have a close touch with the fellow workers and executives. Problems are solved and new policies are developed.

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3. Recognition and Honour : Recognition and honour-title such as, "Superman for the year," medal or trophy, congratulatory greetings, appreciation letters etc., greatly encourage the salesman to do more hard work. These recognitions and honours satisfy a salesman greatly.

4. Personal Meet : The performance of the salesmen can be known from their reports. Further, to have more effect on the sales, salesmen may be facilitated to meet the sales manager in finding solutions to their typical problems. The sales manager gives satisfactory solutions to one's problems or discusses them to arrive at a satisfactory solution. This type of personal meet is a good encouragement.

5. Promotions : By considering abilities and experience, as a stimulation policy, the salesmen are promoted to a higher post on a higher salary. Thereby status increases, self-respect increases, remuneration increases; and naturally, it is the best motivation of salesmen. Further promotion is aimed at through further and more hard work.

6. Personal Communication : It is always good for the sales manager to write personal letters to the salesman, solving the problems of the salesman, who is performing his work. The two-way flow of ideas, facts, opinions, feelings is good in shaping a goodwill and developing a high morale apart from confidence and co-operation.

7. Freedom : In performing his job, he should not be controlled at a high degree. It is necessary that salesman be given a reasonable degree of freedom in doing his assigned job. The salesman should be permitted to do his job in his own pattern. Frequent calling for reports should be avoided. Such things create a good stimulus and generate a feeling that the salesman's job ii important in the firm. When the sales manager gives more responsibility to the salesman, the better is the result.

8. Timely Information : Whenever any new product is introduced, a policy is changed, a new technique is adopted etc., the salesman must be informed, so that he can possess the latest news of his concern, which is a matter of pride for him. Some of the big firms, publish magazines, and bulletins which are meant for sales personnels and contain all the latest information When the salesman is kept informed of all the changes-changes in product, policies, colours, prices, promotions, quality, guarantee, salesafter-services etc., he can act as a latest salesman.

Incentive means that which incites or has a tendency to incite action. A sales incentive can be defined as anything that incites the salesman's action. Sales incentives induce the salesman to work to his all capacity or in some cases higher than that. Sales incentives influence the 'will to work' of the sales force so as to achieve the desired goal. It is the function of the sales management to provide incentives to

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the salesmen which induces them to increase sales at mimimum costs. It also raises the morale of the sales force.

Difference between Incentive and Motivation Often people are confused about the meaning of incentive and motivation. Incentive is something which incites or tends to incite awards some determination. Thus incentive is an external stimulus that activates need. On the other hand, motivation refers to an activated need, an active desire or wish. Thus, conceptual difference between motivation and incentive is that incentive is the means to motivation.

Methods of Providing Incentives to Salesmen Different methods are used by the companies for providing incentives to the salesmen. They may be classified under the following two major heads: (1) Financial Incentives. (2) Non financial Incentives.

(1) Financial Incentives : Financial incentives induce the sales force work hard by offering them reward for better performance in terms of money. The normal trend is to pay more attention to financial incentives to the sales personnel. Financial incentives may be given in two forms. It may be in the form of direct monetary payments, much adequate salaries and wages, commission on sales, bonus for additional, sales, expense allowance etc. Financial incentives may also be in the form of indirect monetary rewards, commonly known as fringes benefits. This consists of pension, Provident fund schemes, health insurance, paid vacations etc.

(2) Non financial Incentives : It is not always correct that money alone provides incentive. We must remember that money is a mean influences, planned or unplanned, which stimulate the salesman is work hard. Non financial incentives play a significant role in raising the morale of the sales force to do greater and better work Non-financial incentives include sales conventions and meetings, sales contests, bulletins and handbooks, sales quotas, honours and reward recognition emotional security, fair and sympathetic treatment authority and responsibility, participation in management, promotion effective personal relations, personal letters, training programmes freedom to express himself etc.

INCENTIVE PLANS Bonus is different from commission. The payment of commission is based on the value of the Bonus is a financial incentive to the salesman. It is paid to the salesman in addition to the remuneration. The basis for the bonus is different from firm to firm. The basis may be: (a) the profit earned in a particular territory, (b) When the sales quota is exceeded,

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(c) for any special services offered, (d) for performing a certain promotional work, (e) for creating a certain number of new customers, (f) reducing the selling expenses.

The bonus amount is in addition to the normal remuneration. The bonus plan must be drawn carefully such that: 1. The conditions laid down in the plan must be clear. 2. Misunderstanding or disputes should not arise. 3. Proper maintenance of relevant records is essential.

Merits (a) It is an additional income to the salesman. (b) Salesman becomes more loyal to the organisation. (c) It reduces the turnover ratio in the organisation. (d) A good understanding and co-operation are cultivated in the minds of the salesmen. (e) The idea or aim of the firm can be germinated through the salesman.

V. Profit Sharing This is a system by which a firm apportions a part of the divisible profit; and his part is shared by the salesmen in terms of their contribution to it. The bonus sharing plan is in addition to the regular remuneration. The profit or the loss depends upon the policies of the firm. The amount of divisible profit can be reduced by making reserves, increasing the rate of depreciation undervaluation of stocks, secret reserve etc., to thin the profit to be exposed.

Fringe Benefits This benefit is non-cash incentive, given to salesmen as a compensation, in addition to salary. This includes provision for meeting medical expenses, free medical facilities, accommodation, provident fund schemes, pension benefit, getting company's product at price, children's education expenses etc.

Travelling Expenses Salesmen, in finding the prospective customers, have to travel extensively. An amount may be spent by them to meet the customers, and this must be reimbursed. The trip must be unavoidable and essential for the business. The amount may be paid in the following manner.

(a) On receiving a detailed report of the actual expenses from the salesmen, after verification the claimed amount may be paid immediately.

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or (b) The amount incurred may be intimated to the company, and without demanding the detailed report, the full amount may be paid in good faith. or (c) The company may fix an amount to be spent in sales territory, considering boarding and lodging etc. The fixed amount is paid. or (d) The firm may fix a flat rate at which the amount is paid. or (e) An amount may be fixed by the company for travelling purposes, generally monthly. The expenses reported by the salesman are paid, but not beyond the limit fixed.

COMPENSATION OR REMUNERATION

Every firm has to formulate a good compensation plan while recruiting salesmen. The salesmen's compensation plan or remuneration plan means the monetary payment reward by a firm to its salesmen, in consideration of the performance or service rendered by them. A good remunerative plan is a good tonic, with which employees put forth efforts in attaining the goals of the organisation and motivate more effectively. The salesmen play a significant role and are important, because they create income for the firm through sales. Moreover salesmen's role also decides the success or failure of the firm. Therefore, it is an important matter for the management to formulate a good and sound remunerative plan.

Reasons For A Good Remunerative Plan 1. A good remuneration plan, which makes suitable reward for the service, attracts the best sales personnel because they, through their efforts, bring revenues to the firm. 2. A salesman is happy when he is paid amply, which correlates his efforts and their result, I When he is satisfied with the payment, naturally he takes maximum interest in his duties. 3. Sales forces are not directly supervised. Labour turnover can be reduced. The selected salesmen serve for the whole life. All these bring economy and prosperity to the firm. 4. Handsomely paid salesmen create higher productivity to the firm, apart from a good relation between employer and employee.

Objectives of Remunerative Plan 1. It must facilitate the firm to attract and retain the sales force and make them efficient and loyal. 2. It should aim to motivate them so as to attain the sales volume of quota. 3. It should aim at a direct relation between salesmen's performance and firm's profitability. 4. It must eliminate the unwanted sales force. 5. It must have the capacity of controlling the sales force. 6. It should not be changed often. 7. It must provide extra benefit for sincere and hard working salesmen.

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Essentials of a Good Remunerative Plan 1. It should be simple to understand. 2. It must be fair to salesmen and the firm. 3. It should be flexible enough to provide scope for adjustment of changes in business. 4. It should be reviewed periodically in order to keep it up-to-date. 5. It should provide adequate incentive to ensure living wages. 6. It should motivate the salesmen to boost performance. 7. It should ensure a minimum earning to a salesman. 8. Its monetary benefit should be in proportion to the objectives to be attained. 9. It should be easy and inexpensive to administer. 10. It should be competitive with the remunerative plan of rivals. 11. It must have provisions to reward a salesman whose performance is above average. 12. It should have provision for periodic increment or promotion from the lower to the higher grade.

Developing a Remunerative Plan 1. Development of a job description is the first job. 2. Then, through job evaluation, comparing other jobs facilitates to have a remunerative plan. 3. A reasonable earning should be levelled. 4. Decide the total amount payable to a salesman. 5. The type of goods, slow moving items, small order, encouraging sales promotions etc., are to be considered. Then decide the method of payment. Test the plan, by applying it on salesmen and watch the reactions.

Methods of Compensation Basically, the compensation is based on two factors-the time spent on the job and the mount of sales made. Based on these factors, the following methods are generally employed: 1. Straight Salary Method. 2. Straight Commission Method. 3 Combination of Salary and Commission Method. 4. Bonus. 5. Profit-sharing

1. Straight Salary Method It is the earliest of all remuneration plans and is the most common method. Under this system, salesmen are paid a predetermined amount, as a salary, generally at the end of every month. That is, a fixed amount of salary is payable to the salesman, regardless of his sales volume. The amount is fixed and does not vary. There is a fixed time-scale, with annual increments, for a continued service. Generally,

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the amount consists of basic salary, dearness allowance, and any other allowances. Other amounts to meet the business expenses will also be This plan is suitable at the following places: 1. Where a new market is to be explored, 2. Where several salesmen have to co-operate for a sale, 3. Where job needs missionary or educational effort, 4. Where new salesmen are employed, 5. Where the job needs pre-sale and post-sale service or the case of complex products, 6. Where the sales cannot be measured satisfactorily, 7. Where the salesman's job is just routine order-taking, 8. Where the salesman works at the sales counter, 9. Where the market, for the products, is seasonal. Merits 1. The scheme is simple to understand. 2. It assures a definite guaranteed income to the salesman. 3. It exposes security and stability of income to salesman. 4. It helps to develop satisfied and loyal sales force. 5. It lowers labour turnover. 6. It is a good system when sales are uncertain. 7. When new salesmen are appointed, it is an effective scheme 8. Consumers' needs and desire are better served. 9. The army of salesmen can be controlled easily.

Demerits 1. It makes no difference between the idle salesman and active salesman, as all get equal salary. 2. It does not stimulate the salesmen to work harder because salary is paid irrespective of sales volume. 3. Reward is unrelated to effort or effort is unrelated to reward, as under this system, there arises no relation between effort and reward. 4. It overcompensates the inefficient and undercompensates the efficient. 5. The selling cost is not related to the sales volume.

II. Straight Commission Method This method is based on the result, and not on the basis of time. The productivity i.e., volume of sales made by a salesman is a basis for remuneration. The commission is calculated usually as a percentage on total orders secured i.e., total value of sales. The rate of commission may be flat or

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differential. Differential rates aim at lower commission up to a standard performance and a higher rate over and above the standard performance. This plan is suitable in the following cases: 1. When high incentive is required to achieve sufficient sales, 2. When the financial position is not strong to meet the fixed cost of straight salary 3. When the firm cannot control the activities of the salesmen. Merits 1. There is a direct relationship between selling costs and sales revenues. 2. There is a clear distinction between efficient and inefficient salesmen. 3. Cost of administration is low. 4. It provides maximum monetary incentive to salesmen. 5. Salesmen are free birds. 6. The scheme works as a great incentive to efficient salesmen. 7. The plan is simple to understand and easy to operate. 8. It attracts salesmen of better ability and calibre. 9. An effective cost control system can be formulated, as there is a direct relation between selling cost and sales amount i.e., both will move hand in hand. 10. Personnel management problem is the least. Demerits 1. There is always uncertainty about the income and his position is insecure. 2. Fast moving goods are sold faster, but slow moving goods are sold still slower. 3. Salesman cannot be controlled as there arises a nominal relation, and he may quit in job at any time. 4. Salesman may use undesirable methods to boost sales. 5. The plan is unsuitable during depression or war periods. 6. Non-selling tasks are ignored and attention is focussed only on selling aspect.

III. Combination of Salary and Commission The above two methods discussed, have merits and demerits. The combination of salary and commission plan takes the advantages of both the methods-Straight salary method and straight commission method. This plan is the popular method of remuneration. Almost all the salesmen are satisfied with a regular fixed salary, because people want economic security. In this method, a salesman gets a salary (fixed component) and a commission (variable component) on the basis of sales made. The system works in the following two patterns:

(A) Salary Plus Commission on Total Sales : Under this system, a salesman is paid a salary, (pre-determined) and also a commission on total sales made by him.

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(B) Salary Plus Commission over Certain Quota : Under this method, a salesman is paid a predetermined fixed amount as salary and a commission, which is calculated on the amount of sales over and above the sales quota. In case, the salesman cannot sell even the quota fixed, he is entitled only for the salary and there is a no question of commission.

Illustration : A salesman who is appointed on a monthly salary of Rs. 1,000 plus a commission, is entitled It (a) 1.5% commission on all sales, (or) (b) 4% commission over the sales of Rs. 25,000.

Total sales made by him was Rs. 40,000. His total earning would be:

(a) Salary

Rs. 1,000

(b)

Commission 1.5% on Rs. 40,000

Salary

Rs, 1,000

Commission 4% 600

upto above

Rs.25,000

Nil

Rs. 25,000 i.e., 4% on 15,000 600 600

1,600

1,600/Merits

1. There is a minimum guaranteed income. 2. Salesmen take more initiative to sell, as they know that more effort means more reward. 3. Efforts and rewards are well-balanced. 4. The plan is acceptable and is more suitable and appropriate to salesmen. 5. There is control over the salesman's activity. Demerits 1. There is an increase in the office cost-administration cost. 2. More records have to be maintained.

STANDARDS OF PERFORMANCE APPRAISAL Setting standards of performance requires consideration of the nature of the selling job. In other words, sales job analysis is necessary to determine job objectives, duties and responsibilities, and the like. These, in turn, depend upon selling strategy. In some companies, for example, the key problem is to obtain new customers. New-business selling requires skills different from those needed in companies whose main problem is that of servicing established accounts (that is, trade selling). Setting performance standards for new-business sales personnel requires different measures from those for trade-selling sales

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personnel. In companies relying upon dealer sales effort to push the product through the marketing channel, selling strategy calls for the manufacturer's sales personnel to devote major segments of their time to training dealers' sales personnel, assisting in the planning and preparation of dealer advertising, and securing "preferred" display space in dealers' showrooms. Performance standards are designed to measure the performance of activities that the company considers most important.

Some unique sales jobs exist. The mainframe computer "salesperson," for example, is both a management consultant and a system analyst窶馬eeding to know the decision-making approach appropriate to the particular industry or establishment buying the computer. Evaluating the job performance of a computer salesperson requires standards that measure not only skill in new-business selling but, even more basically, effectiveness as a management consultant and skill as a system analyst. It is important to recognize the nature of the selling job before selecting standards of performance.

Setting sales performance standards requires considerable market knowledge. It is important to know the total sales potential and the portion that each sales territory is capable of producing. Management needs evaluations of customers and prospects from the standpoint of potential profitability for each class and size of account. Marketing intelligence must provide evaluations of competitors' strengths, weaknesses, practices, and policies. Management must know the selling expenses in different territories. These items all bear on the setting of performance standards, especially quantitative standards.

Sales management takes still other factors into account in setting performance standards. Sales planning is reappraised to assure that it is the best possible under the circumstances. The policies and procedures being used to carry the personal-selling portion of the marketing program into effect are reviewed for appropriateness. Adjustments are made for the strengths and weaknesses of the individual sales personnel and for the differences in their working environments. Sales management puts together a combination of sales performance standards to fit the company's needs, its marketing situation, its selling strategy, and its sales organization.

RELATION OF PERFORMANCE STANDARDS TO PERSONAL SELLING OBJECTIVES Standards of sales performance facilitate the measurement of progress made toward departmental objectives. Specific objectives vary with changes in the company's marketing situation, but are reconcilable with the general objectives of volume, profit, and growth. For instance, a general objective might be to add (10 million to sales volume, a figure in itself of little assistance for operating purposes. But using this objective as a point of departure, management drafts plans to expand sales volume by $10 million. Through analysis of market factors, management may conclude that $10 million in

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additional sales can be made if two hundred new accounts are secured. Experience may indicate that 1,000 calls on prospects must be made to add 200 new accounts. Thus, in successive steps, the general sales volume objective is broken down into specific operating objectives. Performance standards are then established for the business as a whole and, ultimately, for each salesperson. These standards are used to gauge the extent of achievement of general and related specific objectives.

The first quantitative standard that any firm should select is one that permits comparisons of sales volume performance with sales volume potential. From the sales department's standpoint, the volume objective is the most crucial and takes precedence over the profit and growth objectives. Before profits can be earned and growth achieved, it is necessary to reach a certain sales volume level. It is entirely logical for sales management first to develop a standard to gauge sales volume performance.

Quantitative performance standards also measure success in achieving profit objectives. Profits result from complex interactions of many factors, so the modicum of control over profits provided through the standard for sales volume is not enough. Standards to bring some or all factors affecting profit under sales management's control should be set. Performance standards, then, are needed for such factors as selling expense, the sales mixture, the call frequency rate, the cost per call, and the size of order.

Setting quantitative performance standards to gauge progress made toward growth objectives is even more complex. Growth objectives are met to some extent through the natural momentum picked up as a company approaches maturity, but performances by sales personnel impact upon growth. In an expanding economy, where the gross national product each year is larger than that in the year before, it is reasonable to expect individual sales personnel to show annual sales increases. However, this assumes that marketing management keeps products, prices, promotion, and other marketing policies in tune with market demand and that sales management's efficiency is continuously improved. If these are logical assumptions, then the standards needed for individual sales personnel (besides successively higher sales volume and profit quotas each year) relate to such factors as increased sales to old accounts, sales to new accounts, calls on new prospects, sales of new products, and improvements in sales coverage effectiveness.

Quantitative Performance Standards Most companies use quantitative performance standards. The particular combination of standards chosen varies with the company and its marketing situation. Quantitative standards, in effect, define both the nature and desired levels of performance. Indeed, quantitative standards are used for stimulating good performance as well as for measuring it.

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Quantitative standards provide descriptions of what management expects. Each person on the sales force should have definitions of the performance aspects being measured and the measurement units. These definitions help sales personnel make their activities more purposeful. Sales personnel with well-defined objectives waste little time or effort in pursuing activities that do not contribute to reaching those objectives.

A single quantitative standard, such as one for sales volume attainment, provides an inadequate basis for appraising an individual's total performance. In the past the performances of individual sales personnel were measured solely in terms of sales volume. Today's sales managers realize that it is possible to make unprofitable sales, and to make sales at the expense of future sales. In some fieldsâ&#x20AC;&#x201D;for example, industrial goods of high unit priceâ&#x20AC;&#x201D;sales result only after extended periods of preliminary work, and it is not only unfair but misleading to appraise performance over short intervals solely on the basis of sales volume.

Sales personnel have little control over many factors affecting sales volume, They should not be held accountable for "uncontrollables" such as differences in the strength of competition, the amount of promotional support given the sales force, the potential territorial sales volume, the relative importance of sales to national or "house" accounts, and the amount of "windfall" business secured, Ample reason exists for setting other quantitative performance standards besides that for sales volume.

Each company selects that combination of quantitative performance standards that fits its marketing situation and selling objectives. If necessary, it develops its own unique standards designed best to serve those objectives. The standards discussed here are representative of the many types in use.

Quotas.

A quota is a quantitative objective expressed in absolute terms and assigned to a

specific marketing unit. The terms may be dollars, or units of product; the marketing unit may be a salesperson or a territory. As the most widely used quantitative standards, quotas specify desired levels of accomplishment for sales volume, gross margin, net profit, expenses, performance of non selling activities, or a combination of these and similar items. When sales personnel are assigned quotas, management is answering the important question: How much for what period? The assumption is that management knows which objectives, both general and specific, are realistic and attainable. The validity of this assumption depends upon the market knowledge management has and utilizes in setting quotas. For instance, the first step in setting sales volume quotas is to estimate future demand for the company's products in each sales territoryâ&#x20AC;&#x201D;hence, sales volume quotas can be no better than the sales forecast underlying them. When sales volume quotas are based upon sound sales forecasts, in which the probable strength of demand has been fully considered, they are valuable performance standards. But

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when sales volume -quotas represent little more than guesses, or when they have been chosen chiefly for inspirational effect, their value as control devices is dissipated.

Selling expense ratio.

Sales managers use this standard to control the relation of selling

expenses to sales volume. Many factors, some controllable by sales personnel and some not, cause selling expenses to vary with the territory, so target selling expense ratios should be set individually for each person on the sales force. Selling expense ratios are determined after analysis of expense conditions and sales volume potentials in each territory. An attractive feature of the selling expense ratio is that the salesperson can affect it both by controlling expenses and by making sales.

The selling expense ratio has several shortcomings. It does not take into account variations in the profitability of different productsâ&#x20AC;&#x201D;so a salesperson who has a favorable selling expense ratio may be responsible for disproportionately low profits. Then, too, this performance standard may cause the salesperson to overeconomize on selling expenses to the point where sales volume suffers. Finally, in times of declining general business, selling expense ratios inhibit sales personnel from exerting efforts to bolster sales volume.

Practice differs as to what is counted as selling expenses. If national advertising, home office sales department expense, a:'-d branch managers' and supervisors' salaries and other indirect expenses are included and allocated to each territory, sales personnel are accountable for expenses over which they have no control. But some sales executives argue that sales personnel influence the relation of indirect expenses to sales simply by putting forth some level of selling effort. In most companies, only expenses incurred directly by sales personnel, and controllable by them, are considered selling expenses. About one half of all companies using this standard include the salesperson's salary and/or incentive compensation in the computation; the rest consider only selling expenses incurred directly by sales personnel in performing their jobs. In firms in which sales personnel pay their own traveling expenses, the selling expense ratio is calculated by simply dividing the salesperson's compensation by sales volume.

Selling expense ratio standards are used more by industrial-product companies than by consumer-product companies. The explanation traces to differences in the selling job. Industrial-product firms place the greater emphasis on personal selling and entertainment of customers; consequently, their sales personnel incur higher costs for travel and subsistence.

Territorial net profit or gross margin ratio.

Target ratios of net profit or gross margin to sales

for each territory focus sales personnel's attention on the needs for selling a balanced line and for considering relative profitability (of different products, individual customers, and the like). Managements

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using either ratio as a quantitative performance standard, in effect, regard each sales territory as a separate organizational unit that should make a profit contribution. Sales personnel influence the net profit ratios by selling more volume and, by reducing selling expenses. They may emphasize more profitable products and devote more time and effort to the accounts and prospects that are potentially the most profitable. The net profit ratio controls sales volume and expenses as well as net profit. The gross margin ratio controls sales volume and the relative profitability of the sales mixture (that is, sales of different products and to different customers), but it does not control the expenses of obtaining and filling orders.

Net profit and gross margin ratios have shortcomings. When either is a performance standard, sales personnel may "high-spot" their territories, neglect the solicitation of new accounts, and overemphasize sales of high-profit or high margin products while underemphasizing new products that may be more profitable in the long run. Both ratios are influenced by factors beyond the salesperson's control. For instance, pricing policy affects both net profit and gross margin, and delivery costs, which also affect both net profit and gross margin, and delivery costs, which also affect both net profit and gross margin, not only vary in different territories but are beyond the salesperson's control. Neither ratio should be used without recognition of its shortcomings.

The net ratio profit presents computational problems. Since allocations of indirect selling expenses to territories are arbitrary, the practice is to use contribution to profit, which takes into account only direct selling expenses identifiable with particular territories. Similarly, questions arise as to whether sales salaries and commissions should be included in calculating territorial net profit.

Territorial market share.

This standard controls market share on a territory-by-territory basis.

Management sets target market share percentages for each territory. Management later compares company sales to industry sales in each territory and measures the effectiveness of sales personnel in obtaining market share. Closer control over the individual salesperson's sales mixture is obtained by setting target market share percentages for each product and each class of customer or even for individual customers.

Sales coverage effectiveness index.

This standard controls the thoroughness with which a

salesperson works the assigned territory. The index consists of the ratio of the number of customers to the total prospects in a territory. To apportion the salesperson's efforts more among different classifications of prospects, individual standards for sales coverage effectiveness are set up for each class and size of customer.

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119

A call-frequency ratio is calculated by dividing the number of sales calls

on a particular class of customers by the number of customers in that class. By establishing different callfrequency ratios for different classes of customers, management directs selling effort to those accounts most likely to produce profitable orders. Management should assure that the interval between calls is properâ&#x20AC;&#x201D;neither so short that unprofitably small orders are secured nor so long that sales are lost to competitors. Sales personnel who plan their own route and call schedules find target call frequencies helpful, inasmuch as these standards provide information essential to this type of planning. Calls per day.

In consumer-product fields, where sales personnel contact large numbers of

customers, it is desirable to set a standard for the number of calls per day. Otherwise, some sales personnel make too few calls per day and need help in planning their routes, in setting up appointments before making calls (in order to reduce waiting time or the number of cases where buyers are ("unavailable"), or simply in starting their calls early enough in the morning and staying on the job late enough in the day. Other sales personnel make too many calls per day and need training in how to service accounts. Standards for calls per day are set individually for different territories, taking into account territorial differences as to customer density, road and traffic conditions, and competitors' practices.

Order call ratio.

This ratio measures the effectiveness of sales personnel in securing orders.

Sometimes called a "batting average," it is calculated by dividing the number of orders secured by the number of calls made. Order call ratio standards are set for each class of account. When a salesperson's order call ratio for a particular class of account varies from the standard, the salesperson needs help in working with the class of account. It is common for sales personnel to vary in their effectiveness in selling to different kinds of accountsâ&#x20AC;&#x201D;one person may be effective in selling to small buyers and poor in selling to large buyers, another may have just the opposite performance pattern.

Average cost per call.

To emphasize the importance of making profitable calls, a target for

average cost per call is set. When considerable variation exists in cost of calling on different sizes or classes of accounts, standards are set for each category of account. Target average cost per call standards also are used to reduce the call frequency on accounts responsible for small orders.

Average order size.

Average order size standards control the frequency of calls on different

accounts. The usual practice is to set different standards for different sizes and classes of customers. Using average order size standards along with average cost per call standards, management controls the salesperson's allocation of effort among different accounts and increases order size obtained. Accomplishing this objective may require sales personnel to reduce the frequency of calls on some accounts.

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Nonselling activities. Some companies establish quantitative performance standards for such nonselling activities as obtaining dealer displays and cooperative advertising contracts, training distributors' personnel, and goodwill calls on distributors' customers. Whenever nonselling activities are critical features of the sales job, appropriate standards should be set. Since quantitative standards for nonselling activities are expressed in absolute terms, they are, in reality, quotas.

Multiple quantitative performance standards.

It is widespread practice to assign multiple

quantitative performance standards. Figure 19.1 shows a form used by a company whose sales personnel are assigned nine different quantitative standards per operating period.

Qualitative Performance Criteria Certain aspects of job performance, such as personal effectiveness in handling customer relations problems, do not lend themselves to precise measurement, so the use of some qualitative criteria is unavoidable. Qualitative criteria are used for appraising performance characteristics that affect sales results, especially

FIGURE shows Form Used for Assigning Quantitative Performance Standards To Sales Personnel ASSIGNED STANDARDS OF PERFORMANCE SALESPERSON: ...................... OPERATING PERIOD: .......... 1. Sales during period: .................... (Quota: $.......) STANDARD: Meet or exceed quota. 2. New accounts obtained during period: ......... STANDARD: 5 per period. 3. Sales to new accounts during period: $........... STANDARD: 10% of total sales. 4. Total calls during period: ................Average calls per day: ......... STANDARD: 6 calls per day. 5. Percent of accounts called on one or more times during period:.........%. STANDARD: 100% 6. Total contacts during period: ............ Average number of contacts per call: ......... STANDARD: 2 contacts per call. 7. Proportion of calls on retail (R) accounts: .........%, wholesale (W) accounts: .........%. STANDARDS 70%,W30%. 8. Total sales meetings held: ............... Attended: .......... STANDARD: Attend all. 9. Customers entertained during period: ............. Average per week: STANDARD: 1 or more per week. over the long run, but whose degree of excellence can be evaluated only subjectively. Qualitative criteria defy exact definition. Many sales executives, perhaps most, do not define the desired qualitative

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characteristics with any exactitude; instead, they arrive at informal conclusions regarding the extent to which each salesperson possesses them. Other executives consider the qualitative factors

Figure shows Form Used for Qualitative Analysis of Salesperson Performance SALESPERSON PERFORMANCE ANALYSIS NAME……………………………………………… DATE…………………. PROBLEM FAIR AVER GOOD JOB FACTORS PRODUCT KNOWLEDGE AWARENESS OF CUSTOMER NEEDS RELATIONSHIP WITH CUSTOMERS NUMBER OF SALES CALLS QUOTA PERFORMANCE SERVICE FOLLOWUP Personal FACTORS PUNCTUALITY GENERAL ATTITUDE DRESS & APPEARANCE DILIGENCE COOPERATION ACCURACY ADAPTABILITY RELIABILITY Strongest point ……………………………………………………………………

SUPERIOR

……………………………………………………………………………………. Weakest point …………………………………………………………………… ……………………………………………………………………………………. Comments …...…………………………………………………………………… …………………………………………………………………………………….

SIGNATURE formally, one method being to rate sales personnel against a entailed checklist of subjective factors such as that shown in Figure.

Companies with merit-rating systems differ on the desirability of using numerical ratings. Most numerical scoring systems are in companies that rate sales personnel primarily for detecting needed

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adjustments in compensation. Companies that use merit rating primarily to improve and develop individual sales | persons usually do not use numerical scoring systems.

Executive judgment plays the major role in the qualitative performance appraisal. Written job descriptions, up to date and accurate, are the logical points of departure. Each firm develops its own set of qualitative criteria, based upon the job descriptions; the manner in which these criteria are applied depends upon the needs of management.

RECORDING ACTUAL PERFORMANCE Sales management's next task is to measure actual performance. Emphasis in this phase of control, in other words, shifts to gathering performance information. It is necessary to define information needs, determine the information sources, and collect the information.

The choice of performance standards dictates the information needed However, with increasingly sophisticated management information systems, the choice of performance standards is based as much on information availability as on the desire to use certain standards. It is good practice to review periodically the sales performance standards in use and the availability of other information that might permit use of different or additional standards.

There are two basic sources of performance information: sales and expense records and reports of various sorts. Almost every company has a wealth of data in its internal sales and expense records, but this information frequently requires reworking, or reprocessing, before it is useful for sales control purposes. Reclassified according to sales management's information needs, sales and expense data contribute to the determination and measurement of actual performances.

Among the reports sales management has available are those from sales personnel and the lower echelons of sales management; these are discussed in the following section. In addition, companies using such quantitative performance standards as sales volume quotas and target share-ofthe-market percentages require information contained in sales forecasts, which, of course, are prepared not only for sales management's use but for managerial planning throughout the enterprise.

The methods of obtaining needed information depend upon the source. Internally generated information, such as that from the data-processing installation, is provided on a routine basis, or in response to requests for special tabulations. Information obtainable only from sales personnel or field sales management personnel is gathered through formal reports; such information is also obtained through personal observationâ&#x20AC;&#x201D;by trips to the field or through field sales supervisors.

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System of Field Sales Reports The fundamental purpose of field sales reports is to provide control information. Good communications require interaction between those preparing and those receiving reports. A good field sales reporting system provides both for communication from the field to headquarters and from the headquarters to the field.

Field sales reports provide sales management with a basis for discussion with sales personnel. They indicate the matters on which salespeople need assistance. The sales executive uses field sales reports to determine whether sales personnel are calling on and selling to the right people, and whether they are making the proper number of calls. Similarly, field sales reports assist in determining how to secure more and larger orders. Field sales reports provide the raw materials that sales management processes to gain insights on giving needed direction to field sales personnel.

A good field sales reporting system assists sales personnel in their self improvement programs. Recording accomplishments in written form forces individuals to check their own work. They become their own critics, and self criticism often is more valuable and more effective than that from headquarters. If this motivates sales personnel to improve coordination of their efforts with sales management's plans, the managerial process functions more smoothly.

Purposes of field sales reports.

The purpose a report is to serve determines the nature of the

information it contains and the frequency of its transmittal. The general purpose of all field sales reports is to provide information for measuring performance; many reports, however, provide additional information. Consider the following list of purposes served by field sales reports:

1. To provide data for evaluating performanceâ&#x20AC;&#x201D;for example, details concerning accounts and prospects called upon, number of calls made, orders obtained, days worked, miles traveled, selling expenses, displays erected, cooperative advertising arrangements made, training of distributors' personnel, missionary work, and calls made with distributors' sales personnel. 2. To help the salesperson plan the workâ&#x20AC;&#x201D;for example, planning itineraries, sales approaches to use with specific accounts and prospects. 3. To record customers' suggestions and complaints and their reactions to new products, service policies, price changes, advertising campaigns, and so forth. 4. To gather information on competitors' activitiesâ&#x20AC;&#x201D;for example, new products, market tests, changes in promotion, and changes in pricing and credit policy. 5. To report changes in local business and economic conditions. 6. To log important items of territorial information for use in case sales personnel leave the company or are reassigned.

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7. To keep the mailing list updated for promotional and catalogue materials. 8. To provide information requested by marketing researchâ&#x20AC;&#x201D;for exam pie, data on dealers' sales and inventories of company and competitor products.

Types of sales force reports.

Reports from sales personnel fall into six principal groups.

1. Progress or call report. Most companies have a progress or call report. It is prepared individually for each call (see Figure 19.3) or cumulatively, covering all calls made daily or weekly. Progress reports keep management informed of the salesperson's activities, provide source data on the company's relative standing with individual accounts and in different territories, and record information that assists the salesperson on revisits. Usually the call report form records not only calls and sales, bill more detailed data, such as the class of customer or prospect, competitive brands handled, the strength and activities of competitors, best time

to call, and "future

promises." 2. Expense report. Because most sales personnel are reimbursed for expenses and itemized expense records are required for income tax purposes, most companies have an expense report. From sales management's standpoint, the purpose is to control the nature and amount of salespersons' expenses. This report also helps the salesperson exercise Self-control over expenses. The expense report reminds salespersons that they are under moral obligation to keep expenses in line with re ported salesâ&#x20AC;&#x201D;some expense report forms require salespersons to "correlate" expenses with sales. The details of the report form vary with the plan for reimbursing expenses. A Weekly Expense Form is shown in Figure 19.4.' 3. Sales work plan. The salesperson submits a work plan (giving such details as accounts and prospects to be called upon, products and other matters to be discussed, routes to be traveled, and hotels or motels) for a future period, usually a week or a month (see Figure 19.5). The purposes are to assist the salesperson in planning and scheduling activities and to inform management of the salesperson's whereabouts. The work plan provides a basis for evaluating the salesperson's ability "to plan the work and to work the plan.'

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SALES & DISTRIBUTION MANAGEMENT SELF EVALUATION QUESTIONS

Questions : 7. Remuneration means _____________________________ 8. Mention any three essentials of a good remunerative plan. 9. What is straight salary method? Answers : 7. The monetary payment reward by a firm to its salesmen. 8. Simple, fair, flexible. 9. Under this system, salesman are paid a predetermined amount.

Important Questions Section A: 1. What is recruitment? 2. What is selection? 3. Why training is necessary? 4. What is compensation plan? 5. What is performance appraisal?

Section B: 6. What are the different types of tests? Explain . 7. Write short notes on the interview techniques. 8. Briefly explain the objectives of training. 9. What are the essentials of a good remunerative plan? 10. Why performance appraisal is needed? Explain.

Section C: 11. Explain the sources of recruitment. 12. What are the steps involved in selection process? Explain. 13. Enumerate the different types of training methods. 14. What is remunerative plan? Explain its different types.

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UNIT â&#x20AC;&#x201C; V SALES CONTROL The last but not the least significant phase is control of sales force operations. In any sphere of activity, supervision and control of salesmen is essential with a view to achieve the maximum success. The sales operations are to be materialised as per plans laid down, followed by scientific control of efforts and resources. A plan is necessary when you construct a building. In the same way, in business also a chalked out plan is a sine-qua-non and the plan to be under a successful control is essential.

Elements Involved in Control

The following steps are involved in the process of control:

1.Analysis of Performance : All controls involve the setting of a standard and the measurement of performance against their standard. The performances are analysed and compared with reference to the objectives, budgets and standards. This will reveal the variances between the performance and the standard.

2 Analysis of Variance ; After finding out the variance, the first question is whether this variance is significant. If the variance is significant, the next question is usually, "What went wrong with the performance?" and possibly a better question will be "What is wrong with the standard?â&#x20AC;? Effective sales control should reveal poor execution of sales policies or indicate when sales policies need changing. Sales Control may not, however, disclose the reasons for poor execution. For instance, poor execution may be due to ignorance of sales policies, inability to perform the tasks, resentment, discontent etc. The significant variances are considered carefully to enable the authority to take corrective steps.

3. Measures to Deal with Unfavourable Variance : The function of control is to identify the weakness and errors in the sales efforts. Reasons and causes are found out and their remedial measures are formulated in order to correct the weakness and errors in a speedy manner. These enable the sales manager to guide the individual salesman when necessary. All these are done in order to improve the sales programme performance.

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Methods of Control Control is essential in order to secure optimum performance from salesmen. Sales managers effect controls, by common methods, through personal contacts, correspondence and report. 1.Personal Contact : Personal contacts are more effective than other methods. Sales manager himself or through branch managers or field supervisors, exercises controls over the salesmen. Salesmen can be assisted and inspired, and corrective steps can be taken. 2. Correspondcnce : This method is commonly accepted and is economical. Through correspondence, instructions are passed on to the salesmen and replies received from the salesmen. The salesmen are supervised or controlled through letters. 3. Reports : They are not in the form of letters. Printed report forms are used by the salesmen to make reports to the sales manager. In certain cases, the report may be oral. Bases of Control The control of salesman is based on : (1) Reports and Records (2) Sales Territories and Sales Quotas (3) Determination of salesman's authority (4) Field Supervision and (5) Remuneration 1. Reports and Records Report : Every sales manager needs accurate and up-to-date information, on the basis of which he formulates policies for future business. Formulation of policies may not be practical in the absence of information. For the growing needs of the organisation, expanding the professions, widening activities of the business etc., it has become essential to look for the information. AJ report is a presentation of facts on the basis of activities. Salesmen's reports-daily, weekly, monthly, provide valuable information relating to the salesmen's activities for a sales organisation Salesmen, who are the primary source of information, being the eyes and ears of the selling firms, are asked to send reports periodically. The report will reveal the following information. 1. Number of calls made on customers 2. Number of sales related to number of calls 3. Amount of sales made-volume and value 4. Details of sales made to regular customers 5. Details of sales made to new customers 6. Details of sales lost to old customers 7. Reasons for customers lost 8. Sales by product line 9. Outstanding accounts (a) Collections made (b) Bad debts due to bankruptcy 10. Credit worthiness of customers 11. Degree of competition existing 12. Number of complaints received 13. Number of complaints attended 14. Selling expenses total and per order 15. Impact of advertising and activities relating to sales promotion.

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Report must be brief and in condensed form. It gives the needed information. Unnecessary unwanted information is avoided, as many companies use standard forms for salesmen's report Therefore, it is easy for the sales manager to understand the weak activities and suggest corrective measures to the concerned salesman.

Advantages of Reports 1. Salesman's report is a good guide and indicator for building future plan-a barometer. 2. Competitors' attitude can be known. 3. Sales manager does not waste time in formulating the policies for future, because of brevity in reports. 4. Salesmen takes little time in writing the reports. 5. The report is a good form of control as it reveals the weakness and strong points of salesmen. 6. The changes in demand and attitude of the consumers can be known. 7. It is a tool by which the activities of the salesmen can be sharpened. 8. Sales manager is able to divert his attention to the situation warranted on the basil importance. 9. Salesman himself develops the habit of self-activity analysis. 10. The two-way communication assures employee morale.

Records : Reports are the basis, on which the records of each salesman are prepared. They will reveal the following condensed idea relating to salesmen, based on actual performance: 1. Sales by product lines 2. Sales to regular customers 3 Sales to new accounts 4. Minimum, maximum and average size of orders 5. Account lost 6. Selling expenses for each order 7 Movements of products-slow or fast.

2. Sales Territories and Sales Quotas Sales manager must try to know the sales field well in advance, before the production starts. He must know (he area of demand for the products and for this he should know the habits and economic position of the customers; and the type of demand and quality of products usually in demand. In short, a detailed study of consumers is important. The sources of information are year books. census reports, publications, professional organisations etc. Sales Territory Almost all the firms, divide their markets, after the sales field is located into different territories. Sales territory is a particular grouping of customers and prospects assigned to a salesman. A sales territory is a geographical area which contains present and potential customers, who can be served

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effectively and economically by a single salesman. Its aim is to facilitate management's task in matching sales efforts with the sales opportunities. An efficient salesman workable and successfully discharge his duties and responsibilities if the territory allotted to him is of workable and suitable and -suitable size. A good sales planning is based on sales territory, rather than taking the whole market area. That is, the market of a firm's product is divided into small segments or territories or areas, so that each territory can be allotted to each salesman. When allotting perfect sales territories, which have been planned carefully, the following objectives are aimed for the reasons thereof: 1. Sales effort can be fruited more effectively in the assigned territory. 2. It is possible to have increased market coverage, not losing the orders to competitors. He meets the competition wisely as it is pre-planned, because he knows the local condition. 3. It prevents the duplication or overlapping sales efforts. 4. Headquarters of each sales territory can be located in a place, where greater number of customers are located. 5. Work load for each salesman can equitably be distributed, in terms of sales volume.

other aims : 6. A good territorial allocation brings higher sales volume at lower sales expenses. 7. It allows salesman to spend more time on calling customers rather than in journey, to serve the customers, to whom the products have to be sold. Customers can be served I, advantageously. 8. The activities of salesman can easily be controlled, more effectively, by the sales manager through comparisons of selling opportunities. 9. The interest and morale of each salesman can be improved in the respective territories. 10. A control of selling expenses is possible and at the same time it increases the sales volume. 11. It is a good basis to evaluate the salesman's performance. 12. Disparities in the work load can be known and be rectified easily. 13. A salesman can gain good knowledge over his territory, in respect of local problems and the existing competition. 14. The duties and responsibilities of each salesman can easily be defined, and thus salesman becomes more duty-conscious. 15. To bring co-ordination of personal selling and advertising efforts more beneficially, territorial assignment to each salesman is a must.

When allocation of sales territories takes place, the following factors may be looked into: 1. Equal earnings should be facilitated among all the salesmen. 2. Sales territory planning should aim in reducing the expenses i.e., cost of travelling. 3. Work load must be justifiable to all, more or less equal work load. 4. It should be flexible, by giving room to the day to day changes.

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5. A new salesman should not be given independent territory. Apart from these, before the allocation .of sales territories, the sales manager has to consider 1. Density of potential customers 2. Distribution method 3. Degree of competition 4. Nature and type of product 5. Nature of demand-seasonal or regular 6. Administration facility 7. Equal work load 8. Frequency of contact with the customers 9. Knowledge of Government regulations 10. Facilities of transport available 11. Abilities of salesmen 12. Number of salesmen available 13. Facilities of communication means 14. Time needed to make a sale 15. Present volume of sales. The territory allocation must aim at performing the activities in the most effective and economical way for mutual benefits of salesman and the firm. A salesman is expected to produce the best result from the area allotted, by concentrating his activities within the area.

Sales Quota Apart from the allocation of sales territories, salesmen are further controlled by fixing sales quota. Almost all the companies use quota system of defining and evaluating the task expected of the salesmen. Sales quota, may be defined as the estimated volume of sales that a company expects to secure within a definite period of time. Quota is the amount of business, in terms of value or in terms of units of sales, which is fixed for every salesman. It may be fixed for a geographical area to be achieved within a definite period of time, a month or a year. Shorter the period, the better it is. It is a target or a standard of performance, that the salesman has to attain. The quota is fixed on the basis of sales forecast. For an effective control, smaller area and shorter period are preferred. A sales quota, to be effective, practical 5

and successful, should satisfy the following: 1. Sales quota must be attainable and fair. 2. It must be scientifically calculated. It should not be too small or too big 3. It must provide definite incentive to salesman. 4. It must be flexible. 5. It must be simple and must be fixed in consultation with the salesman.

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Sales quota brings the following benefits : 1. The sales quota can be used as yardstick to assess the performance of the salesmen. 2. It is a measuring rod with which the sales operations are directed and controlled to more profitable channels. 3. It is possible and easier to locate strong markets and weak markets. 4. It is a device to adopt more effective compensation plans. 5. It fixes the responsibility on each salesman and so they work hard to attain the goal. The salesmen never allow the sales to fall below the quota. 6. It facilitates sales contests and is a base. Weaknesses 1. In many cases the sales quota is fixed arbitrarily. 2. If situations are changed, the quota fixed may become ineffective. 3. If the quota is too small, the salesman will relax and if the quota fixed is too large or unattainable, the salesman loses initiative. 4. It is difficult to set an accurate quota.

Bases Necessary for Fixing Quota 1. Purchasing power of the prospects. 2. Past sales figures compared by analysis. 3. Demand trend for the products. 4. Position and degree of competition prevailing.

At the end of the quota period, it is a must to measure the effectiveness of quota by comparing the performance of salesman, in relation to the quota. To keep salesmen's effort on the right path, quotas can be used as a control mechanism. Departure of sales activities from the projected quota is a main problem to the sales management. If sales volume is not satisfactory, the fault may lie with quota plans. Quota, as a diagnostic aid, cautions the authority to take corrective steps and especially, when the sales volume takes a negative departure from the pa sales,

In all fairness, quota should be aimed at equitable distribution. It should be equal for all salesmen. Should all the salesmen have the same quotas? The answer depends upon the territories, which are not the same in respect of competition, extent, customers etc. the ability of the salesman is also different. The 'better' salesman with 'better' territory exceeds the quota and â&#x20AC;&#x2DC;poorâ&#x20AC;&#x2122; salesman with 'poor' salesman with 'poor' territory fails to achieve even the quota. By considering all these fairness of the quota decision takes place.

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Types of Quotas 1. Sales volume, in value or units by product line, consumer type etc. 2. Salesmen activity, such as calls, new accounts, demonstrations, display arranged etc. 3. Expenses quota, either in value or percentage of sales obtained. 4. Gross Margin from sales obtained etc. Quota can be used as a management tool, if it is set scientifically.

3) Salesmen's Authority If the sales manager goes for doing all the works of a firm, it is very difficult to conduct business. Moreover, he lacks time. Therefore, the job is divided and entrusted to the salesmen. When the authority is passed on to the salesmen, there is transfer of power to the salesmen i.e., delegation of power. Delegation is the required authority to the salesmen to discharge assigned job. When one is delegated the authority, it means permission is given to do the duties. When authority is conferred on salesmen, they know their responsibilities. Customers may not be willing to deal with a salesman having no authority. There are no hard and fast rules as to how, much authority be given to a salesman. In modern time, the degree of authority is reduced. The authority and freedom of salesmen varies from firm to firm. To what extent the authority is given to a salesman depends upon the size and nature of the firm.

Since the salesmen are representing the firm and deal with customers, who have no direct, contact with the firm, the salesmen's authority be well-defined. Generally, catalogue, price lists, advertisements etc., reveal the prices, guarantees, quality and other details of the products. And the salesmen are being relieved of these botherations. However, salesmen may be conferred with certain measure of authority in dealing with the matters, such as special concessions, discount rates, granting credit, settlement of claims, settlement of damages, defective, unsaleable items etc. But it is important that salesmen are watched in their acts which must be in accordance with the instructions by the sales manager and their activities are subject to the approval of the sales manager.

4. Field Supervision Performance of a function or service by an individual is called duty; activities that an individual is required to perform are a duty on him. Authority is a right or power required to perform a job on the basis of duty assigned to one. An authorised person is empowered to do the assigned job. Responsibility must always be followed by corresponding authority or power. Authority and responsibility move in opposite directions. Authority always moves from the to downward, whereas responsibility moves upwards. Authority is derived from sales manager to par whom the salesmen are responsible for proper performance of their activities. The individual are responsibility and freedom of the sales personnel vary from firm to firm. A good degree of control is essential over the activities of the salesmen. Generally the

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sales manager or any senior sales personnel or field supervisors are appointed to check the activities of the salesmen so as to: 4. Know whether the salesman is doing his job in best way 5. Find out deficiencies if any 6. Make suggestions for further improvement 7. Check the procedure of orders taking 8. Evaluate the performance of salesman 9. Provide spot motivation to salesman 10. Secure maximum coverage of the market

Control aims at appraisal of salesman's performance. It must be done periodically and on continuing basis as to determine the compliance of policies and attainment of targeted quota in respect of job. Supervision and control are different. Supervision aims at direction for working and control includes supervision and evaluation of past performance.

Meaning and definition of quota In addition to allocating sales territories to obtain adequate control, it is essential for the sales manager to fix adequate sales quota for the individual salesman to be achieved during a given period. Sales quota may be defined as "Sales goal assigned to a marketing unit to be used for managing the sales effort." According to Paul H. Nystrom, â&#x20AC;&#x153;A sales quota is a part of a company's total estimated sales assigned to a salesman, a territory, a branch, a distributor or dealer or to some other selling unit, as a goal to be attained in a designated future period of time. According to Still, Cundiff and Govoni, "Quotas are quantitive objectives to sales personnel and other units of the selling organisation."

Sales quota can be expressed in terms of rupees or in physical units. The marketing unit for which the sales quota is set may be an individual salesman, a territory, a branch, a district, a region, state, a dealer or even a customer. Most often, sales quotas are fixed for each marketing unit for a fixed period, say for one year and then are divided on monthly basis or even weekly basis. A sales quota is very useful for the checking of the efficiency of an individual salesman or a group of salesman. Setting up of adequate sales quotas makes it easier to evaluate the performance of the salesman concerned against such specified standards. Actual performance is compared with the quota standards so set. Such comparison provides the management to control the sales force performance.

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Objectives of sales quota Sales quota is a device widely used to achieve the desired sales, objectives. The primary objective is to facilitate and improve control over sales activities and sales efforts so that the management can achieve desired goals through its available rates force in the desired direction. The main objectives of sales quotas are as follows :

(1) To Provide Quantitative Performance Standards : Really speaking, sales quotas are used as a yardstick to measure quantitative perrformance of each marketing unit. Sales quotas are fixed for each individual marketing unit, such as, a salesman, a sales territory, a sales district, a sales region or the state. The actual performance of each sales unit is compared with the standards (quotas) so fixed by the sales manager. On the basis of this comparison, it can be ascertained as to which unit is faring well and which unit is not faring well. In this way weak and strong points of each sales unit can be discovered. Steps can be taken to remove the bottlenecks, if any.

(2) To Motivate Desired Performance : Sales quotas are also used to motivate sales personnel, distributive outlets and other people engaged in sales activities for achieving desired performance levels fixing sales quotas inspire salesmen and other persons engaged in selling activities only when quotas are attainable goals. According to E.P.Sheehan, "A sales person's quota should be an attainable goal, which he can achieve within justifiable period." The salesman should feel that the sales quota is attainable. If so, he will positively make efforts so as to achieve his goal. The sales quotas should be based on subjective judgment of the management or on territorial sales potential.

3) To obtain Tighter Sales and Expense Control : Quota is a control device. Control over sales expenses and profitability of sales can be tightened through use of quotas. Some enterprises reimburse selling expenses in proportion to sales. Some enterprises link selling expenses with the volume of profits.

4) To use in Connection with Sales Contests : Enterprises organize sales contests on the basis of sales quotas. Sales contests are treated as good incentives. Prizes are awarded on the basis of fulfillment of sales quotas. Necessary adjustments are made for differences among sales territories (such as regional bottlenecks, competition, ability and experience of the salesman etc.). The object of organising sales contests is to achieve specific sales targets through extra special efforts.

(5) Other Objectives : Besides the above, the other objectives of setting sales quotas are as follows : (i) To estimate the future requirements of the enterprise. (ii) To establish territorial objectives.

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(iii) To obtain more effective budgetary control. (iv) To maximise sales in physical as well as in monetary terms. (v) To facilitate distribution of sales to various market segments and territories. (vi) To ensure a systematic and rational physical distribution of products. (vii) Tb make the best use of available sales force by fixing sales quotas in accordance with the efficiency and experience of the sales force,

The desired profits can be achieved only if the sales quotas are adequately fixed. For example, if unattainable sales quotas are fixed the salesman may become nervous and thus may give up making necessary effort. Hence before fixing the sales quotas, it is essential to study the factors which determine sales quotas. They are as follows :

(1) Past Sales : The sales quota for the next year may be fixed on the basis of sales done during the last year and after making necessary adjustments in view of changed circumstances, if any.

(2) Potentialities of the Market : Potentialities of the market is an important factor in determining sales quota. Consumer's taste nature, fashion, customer's purchasing power, extent of competition, climatic conditions and the policy of the government etc. are such factors which affect the amount of sales to a great extent. After analysing these factors marketing possibilities of the entire industry should be calculated. Afterwards the total sales target of the enterprise should be fixed. In the end, this sales target should be distributed amongst the different sales territories keeping in view their existing local prevailing conditions.

(3) Production Capacity : While determining the sales quota, the production capacity of the enterprise should also be kept in mind. If the enterprise intends to increase its production capacity then the sales quota will have to be increased to that extent.

(4) Advertising and Sales Promotion : Advertising and sales

promotion policy is also an

important factor which should also be kept in mind while determining the sales quota of an enterprise. If the enterprise adopts aggressive advertising and sales promotion policy in a particular sales region or sales territory then the enterprise may fix the high sales quota for that region or territory.

(5) Product Development : The policy of the enterprise towards product development also affects the sales quota. If the enterprise carrying on product development programme on a wide scale then the sales quota can be increased to that extent.

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(6) Level of Competition : Level of competition is also an important factor which affects the fixation of sales quota of an enterprise. If the enterprise is facing keen competition along with the entry of few fresh, new competitors in the market then the sales are bound to be affected and hence a lower sales quota may be fixed. On the contrary, if the enterprise is having a monopolistic position then a higher sales quota may be fixed.

(7) Living Standard of the Consumers : Living standard of the consumers of the region concerned is also an important factor which should be kept in mind while determining the sales quota of that region. If the standard of living of the consumers residing in a particular region is high then a higher sales quota may be fixed for that particular region.

(8) Sales Forecasting : Sales forecasting is also an important factor which should be kept in mind while fixing the sales quota of the region. If

the wholesalers, retailers and travelling agents are

forecasting that the future prospects of marketing are very bright in a particular region then the enterprise may fix a higher sales quota for that particular region.

(9) Sales Policy : Sales policy of the enterprise is also an important factor in determining the size of the sales quota. If the policy of the enterprise is to increase sales by adopting some new sales promotion techniques such as increase in discount rates, extension of credit policy, arranging sales contests, etc., then a higher sales quota pay be fixed.

(10) Government Policy : While determining the sales quota of an enterprise the policy of the government towards the industry should also be kept in mind. If the policy of the government is to provide encouragement to the industry by giving several concessions and exemptions etc., then a higher sales quota may be fixed.

Methods of determining sales quotas. The sales of an enterprise may be determined in many ways. however, the basic methods of determining sales quotas are as follows: 1. Executive Opinion Method. 2. Past Performance Method. 3. Sales Force Composite Method. (1) Executive Opinion Method

: Under this method the managers or executives of the

organisation combine their experience and judgment to establish the sales quotas. In this way several

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specialised viewpoints can be brought to bear on determining the sales quota. This is also called as the "guess work" quota method as it is entirely based on the executive's thinking or guesswork. (2) Fast Performance Method : Under this method the sales quota is based purely on the past sales of the enterprise. The past figure is taken as the base and keeping in view the prevailing conditions in the market, it is decided to increase or decrease the sales volume by a certain percentage so as to arrive at the total sales quota or the next year. Thereafter it is divided into different sales territories, products and salesmen. (3) Sales Force Composite Method : Under this method the responsibility of setting sales quota is fixed on the sales force including sole agents, dealers, distributors, branch/regional managers and the salesmen working in different sales territories. They provide their own forecasts on sales quotas on forms prescribed for this purpose or give their opinion in a conference with the executive such as sales manager. Both these methods attempt to look at past performance and future possibilities of the market. All the figures so collected are totalled and thus the sales quota of the enterprise for the next year is fixed accordingly. The total sales quota of the enterprise is generally broken down into sales territories and individual sales quotas. Whatever method is used in arriving at the sales quota, it is necessary to sell to the sales force the idea of the sales quota system and the quota itself for it to work efficiently. Further, salesmen should be informed by the sales manager from time to time regarding the actual performances and deviations, if any, from the sales quotas fixed for them. For the sales quota to be effective, it is necessary to allocated sales territories appropriately and also to provide for adequate routine so that the territories are covered effectively by the concerned salesman in the least possible time.

According to Still, Cundiff and Govoni, the sales quotas are of following four types: 1. Sales Volume_0uotas which can be classified as : (i) Sales volume quotas derived mainly from territorial sales potential estimates. (ii) Sales volume quotas, derived mainly from total market estimate. (iii) Sales volume quotas based on fast sales experience alone. (iv) Sales volume quotas based on executive's or sales managerâ&#x20AC;&#x2122;s judgment alone. (v) Sales volume quotas rated to salesmen compensation plan. (vi) Sales volume quotas set by sales personnel themselves. 2. Budge Quotas which can be classified as : (i) Sales expense quotas, (ii) Gross margin or net profit quotas. 3. activity Quotas 4. Combination and Other Point System Quotas.

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1. Sales Volume Quotas This is the oldest, easiest and most common type of setting sales quota system. Under this system the sales manager makes aware to the salesmen about their performances which he wants to be achieved on (i) geographical area basis, (ii) product basis, or (iii) on marketing channel basis or on one or more of these in combination with any unit of sales organization. Generally this system of setting sales quota is more easy and effective in case of small selling units. The following bases are used for setting sales volume quota : (1) Sales Volume Quotas Derived mainly from Territorial sales estimates : It seems logical that a sales volume quota should be derived from sales potential of a given territory. The sales potential a territory means the maximum sales opportunities available to the same selling unit. Thus the sales potential for a product or product line in a given sales territory is taken into consideration for setting the sales volume quotas. This approach may prove fruitful in two situations: (i) When total sales estimates are distributed proportionally in different sales regions or sales territories, (ii) when regional sales the estimates are based on such factors as fast sales, competition, changing market conditions, differences in personnel ability, changes in prices local and products and sales promotion techniques etc. (1) Sales Volume Quotas Derived from Total Market Estimates : In most of the cases sales territories are equal except with minor differences. While determining sales quotas on regional basis, information about (i) purchasing power index, and (ii) actual sales is utilised. The actual sales done during a given period are compared with the sales quota assigned for that particular period and the difference, if any, is calculated. Afterwards causes of difference are analysed and on this basis the new year's sales quota is assigned or fixed.

(3) Sales Volume Quotas Based on Past Sales Experience Alone : Setting sales volume quotas for the territories in question is based on the past sales performance and sales experience. One method of setting sales volume quota for each territory is to increase the last. Years sales quota with an arbitrary percentage or with an arbitrary amount. Another method may be to make use of the average sales of past several years as the base and then to increase them with an arbitrary percentage or an arbitrary amount of sales and thus set sales volume quotas. The latter is better because it uses the sales trend and assumes that past and future sales are related and past sales records are satisfactory. However, this method of using past sales as the basis for setting sales volume quotas is seldom used in modern days. (4) Sales Volume Quotas Based on Executive's or Sales managers Judgment Alone : In this system, executive's or sales manager's judgment is used insetting sales volume quotas. This system is justified only when there is little or no information with the executive or sales manager to use in setting sales quotas. It might be possible that the product or market or sales territory or salesman may be quite new. Under these or similar circumstances the executive or the sales manager has no choice except to

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take arbitrary judgment for setting sales volume quotas. The success of this system of setting sales volume quota is doubtful as it does not provide any incentive to the salesman. (5) Sales Volume Quotas Based on Compensation Plan : Under this system sales volume quotas are based totally on compensation Other factors like territorial sales potentials, total market potentials, past sales experience etc. are not considered at all in fixing the compensation of sales force. Sales volume quotas are tailored exclusively to fit the compensation plan. This system of setting sales volume quotas is not popular in modern age. (6) Sales Volume Quotas Set by Sales Personnel Themselves : Many enterprises turn the problem of setting sales volume quotas over to the sales personnel themselves who are supposed to have better knowledge of their own performance as they are in close touch with the respective sales territories and customers etc. Under this system each salesman is entrusted the work of fixing his own sales quota. The argument of the executive or the sales manager behind this plea is that customers, knows them best and thereby he can set the most realistic sales volume quotas. The sales volume quota set by the individual salesmen will be more realistic, fair and attainable. 2. Budget Quotas Budget quotas are set for various units in the sales organization for controlling selling expenses and gross margin or net profit. The intention behind setting budget quotas is to make the sales but also to increase the volume of sales personal know that their job is not only to increase the volume of sales but also to increase the gross margin or net profit. Budget quotas can be classified as under: (1) Sales Expenses Quotas : Under this system sales expenses are determined for each sales territory by the sales manager. Such determination is done either by allotting sales expenses in lump sum or in proportion of sales volume or in proportion of gross margin or net profit. The idea behind this system is to make the individual salesman more cost conscious and aware of his responsibility to control selling expenses. (2) Gross Margin or Net Profit Quotas : Gross Margin or net profit quotas are set when product line consists of high and low margin items can be easily sold and hence salesmen may concentrate on low margin items only. On the contrary, since it is difficult to sell more profitable items and hence salesman might give inadequate attention to the sale of more profitable items. Hence in order to face this vital problem gross margin and net profit quota system is adopted. In this case sales volume quotas for different products for each salesman are set, adjusting each quota to obtain the desired margin of profits. 3 Activity Quotas Some sales managers set sales quotas for the activities of their sales personnel in order of control and allocation of time of the sales personnel. A sales manager using such quota system defines the various activities which are commonly performed by the sales personal and also sets target performance frequencies. The activities for which sales quotas are fixed are total Sales calls, product demonstrations, placement of displays, number of new accounts, missionary calls, efforts to make collections and 'the like. The sales manager takes the assistance of 'time and duty studies' before setting

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activity quotas. However, activity quotas are appropriate only when the sales personal also perform nonselling activities.

Setting activities quotas involves large amount of clerical and record keeping work. The main danger of this system is that the sales personal may simply go through the motions only, i.e., showing that they are doing excessive activities or work whereas they are not actually performing even primary activities effectively. According to G. Risley, "Activity quotas alone can reward salesman for quantity of work, irrespective of quality, for a dangerously long time." SELF EVALUATION QUESTIONS

Questions : 1. Sales quota means _______________________________ 2. Sales volume quota means _________________________ 3. Expense quota means _____________________________ Answers : 1. It is a goal of sales accomplishment. 2. Quota based on the volume of sales. 3. It is related to keep down the selling costs.

4. Combination and other Point System Quotas When determination of sales quota is based on several points, it is called, 'combination and other point system quotas'. Combination quota system is prepared after giving due weightage to the volume of sales, having obtained new customers, contact or call to prospects and product demonstration etc. By this method it is possible to have combined percentage evaluation of all the efforts of the salesman. performances against combination quotas are computed as percentages. Such quotas are also known as point systems, the point sing percentage points.

The essentials or requisites of a successful quota system are as follows : (1) Accurate, Fair and Attainable Quotas : The first and the foremost requisite of a successful quota system is that the.. quota assigned to a salesman must be accurate, fair and attainable too. Setting unrealistic and non-attainable quota creates problems both to the salesman and the sales administration. Whether a particular quota is accurate, fair and attainable depends equally on the capabilities and motivation of sales force.

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(2) Securing and Maintaining the Sales Force Acceptance : Mere setting of quotas is meaningless unless they are clearly understood and acceptable to the salesman concerned who is expected to work on them. (3) Participating in Quota Setting : Quotas should not be set behind the curtain. In fixing and setting sales quotas, the sales-force should be taken into confidence. The sales quotas are rendered easier if the sales department allows salesmen's participation while setting quotas. (4) Keeping the Sales-force Informed of their Attainment :Simply setting quota is not enough. The management should keep the sales â&#x20AC;&#x201C; force informed of its progress actually achieved in realising the targets set from time to time. Each salesman should get his report as to what extent this progress is comparable to the quotas set-how much? in what time ? Such a comparison permits the investigation of the causes of success or failure so that corrective action can be taken well in time. (5) Continuous Managerial Control : Finally, there must be continuous managerial control about the actual performance of the sales-force and the achievement of sales quotas so set. Timely information regarding the actual performance and achievement of sales â&#x20AC;&#x201C; force is to be collected for thorough investigation and analysis. It may be weekly, fortnightly or monthly depending on the requirements of the system of control. As quotas setting conditions differ and abilities differ, necessary changes can be implemented by keeping the system flexible.

Advantages or Merits Sales quotas are an important tool in the hands of the executive or manager so as to have an effective control over the sales personnel and the selling costs. It is a control device on the basic of which sales personnel performance may be measured. The main advantages of determining sales quotas are as follows : (1) It is a useful device for evaluating the performance, effectiveness and productivity of the salesman. The sales quota system provides a yardstick against which such performance and effectiveness can be measured. The actual performance of the salesman is compared with the sales quota or expected performance. (2) It becomes easier to locate weak and underdeveloped market areas in terms of sales quotas for such territories. (3) It is a control device which may be used for controlling the management computes activities of a salesman. (4) Sales quotas are also useful in connection with the conduct of sales contests. Prizes to salesman etc. may be awarded on the basis of how far the particular sales quota was achieved rather than in term of mere sales volume. (5) A more effective compensation plan may be devised on the basis of sales quota system. (6) It may be used for controlling selling costs. (7) Sales quotas are the source of motivation to right type of salesman.

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Disadvantages or Demerits or Limitations of Sales Quota System (1) Most of the sales quotas are based on arbitrary estimate and past experiences and thus they prove misleading on several occasions. (2) If the salesmen feel that the sales quotas for them have been fixed in the ivory tower by persons at the head offices who are absolutely unaware of the salesmen's problems, the motivating aspect of sales quotas would be lost. 3) Setting sales quota requires a statistical technique which selling is harmful. It causes frustration to salesman who is like to give up making the necessary effort. 4) Unattainable or high sales quotas encourage high pressure selling which is harmful. It causes frustration to salesman who is like to give making the necessary effort. (5) In those enterprises in which the product is in short supply, it is useless to determine the sales quota because the product is automatically sold. There is absolutely no problem of selling the product. (6) The interest and the incentive of the salesman is lost if the sales quota is too low. (7) Some executives oppose sales quotas on the ground that too much emphasis is laid on making sales. Other fields remain untouched which is harmful from the point of view of the future growth of the enterprise. (8) Some executives feel that determining .fit sales quota is a wastage of time and money. It is an expensive device.

SELF EVALUATION QUESTIONS

Questions : 4. What is gross â&#x20AC;&#x201C; profit quota? 5. What is activity quota? 6. Sales quota sand sales territory are sales control techniques. Answers : 4. Profit is the important factor for deciding such a quota. 5. This quota determines the no of prospects are to be contacted. 6. True.

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Definitions of Sales Territory A sales territory is the economic unit which is used in the meaning and controlling of sales efforts. It is the division of the market of an enterprise into mall segments which is assigned to an individual salesman for performing sales activities. Many sales executives refer to sales territory as a geographical area which is assigned to an individual sales person for serving the customers and prospects residing in that sales. According to Still, Cundiff and Govoni, â&#x20AC;&#x153;Operationally a sales territory is a particular grouping of customers and prospects assigned of an individual sales person. According to Maynard and Dayâ&#x20AC;?, "Sales territory is a basic unit of sales planning and sales control." In short, a territory may be defined as "A sales territory is a grouping of customers and prospects assigned to an individual salesman."

Objectives or Reasons of Establishing or Revising Sales Territories The main objective or 'reason of establishing or revising a sales territory is to plan and control sales so as to maximize sales and profits by improving customer services and reducing selling expenses ratios. Distribution of work-load among sales, persons becomes easy and manageable. It is the key objective of an efficient distribution system. According to Still, Cundiff and Govoni, the following are the main objectives or reasons of establishing or revising sales territories : (1) To Improve Market Coverage : One of the main reasons of establishing sales territories is to improve market coverage. In the absence of proper market coverage the enterprise may lose its business to competitors who have wide coverage and are in a position to utilize sales opportunities effectively. If sales territories are designed intelligently and assigned to sales personnel carefully, it is possible to have wide and better market coverage. Thus in establishing sales territories the following considerations should be kept in mind (i)The market is being expanded, (ii) The maximum area is represented by the sales force, (iii) It should permit the sales force to cover the assigned sales territories conveniently, efficiently and economically.(iv) The territories should represent reasonable work-load to sales force to facilitate them to contact potential customers and prospects, (v) The allocation

of sales territories

amongst the sales force is done according to the capacity and capability of the individual salesman. (2) Reducing Selling Expense Ratios : The establishment of sales territories should assist in reducing selling expense ratios. The visit of sales force should be minimised by proper routing and scheduling. The proportional selling expenses should be reduced. For this purpose, if essential, the sales territories should be changed as and when required. The concern of the sales management should not be only to reduce total selling expenses but to maintain proper relationship between selling expenses and sales volume. For instance, in some cases it might be possible even to increase selling expenses so as to get large sales volume. (3) To Improve the Customer Service : The object of establishing sales territory is to improve the customer service. The sales territories should be designed in such a way that the salesman is in a position to provide efficient customer services and thereby providing maximum satisfaction to the customers within his assigned sales territory. The salesman should be in a position to establish regular

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contacts with his customers and prospects and to understand and get them solved Improved customer services establish improved business and also relations between the respective salesman and the customer and also raises the general reputation of the enterprise which the salesman represents.

(4) To Improve Sales Force Interest and Morale : The objective of establishing sales territories is also to improve sales force interest and morale. Good sales territorial design helps in stimulating the interest of the sales force in their respective jobs and in increasing their morale. Hence while designing sales territories the following factors should be kept conveniently in mind-(i) The salesman is in a position to achieve the desired target conveniently, (ii) The workload assigned to a salesman should be reasonable in view of his capacity and capability. (iii) The respective salesman should be aware of their responsibilities of achieving what management expects from them within their own territories. The above factors help in promoting sales force interest and morale that puts the individual salesman to hard work and also to make each salesman as productive as possible. It will also raise the self-confidence a satisfaction among the salesmen. (5) To Coordinate Personal Selling and Advertising Efforts: Another objective of establishing sales territories is to

establish

effective coordination between personal selling and advertising. A

coordination between personal selling efforts and advertising efforts is necessary for performing the selling task more efficiently, conveniently and economically. It also increases the reputation of the enterprise. For this purpose the size of the sales territories assigned to individual salesman should be changed from time to time. Prior to launching an Advertising campaign for a new consumer product the salesman may call upon dealers to outline the marketing plan's objectives and provide them display and other promotional materials. Thereafter he should organise his personal sales efforts in close coordination with advertising efforts. This may result in more satisfactory performance. (6) To Improve Sales Force Performance Evaluation : The objective of establishing sales territories is also to improve sales force performance evaluation. It is possible to have correct- information about sales force through organised sales territories. The problems of territory/region to territory/region differ and thereby the efforts of solving these problems too differ accordingly. In view of this factor evaluation of sales personnel is essential and which is possible through establishing effective and convenient sales territories in accordance with the capacity and capability of the individual salesman. Besides the above, the following are also the objectives/reasons for establishing/revising sales territories : (7) Meeting the Competition : By establishing sales territories the enterprise can face the competition from competitors more effectively. When the total market is divided into different territories, a deep study of the market may Tie carried out) The information gathered bough this study may be analysed by the market experts. On the basis of this analysis the management may adjust and revise the selling strategies and marketing plans accordingly to meet the competition in different territories.

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(8) To Increase Profitability of Sales : By establishing sales territories the area of the market along with volume of business is increased considerably. Further, the selling expense ratio is also reduced. All this leads to an increase in the profitability of sales. (9) To improve Sales Planning : By establishing sales territories there is an improvement in sales planning because of proper sales budgeting, market research, sales forecasting, sales profitability analysing implementation of sales strategies. (10) Improve Control on Sales Force : By establishing sales territories the control on sales force can be improved considerably. When the market is divided in different sales territories, the performance of each salesman can be measured and judged both by the salesman himself and the management. On this basis, the management is in a position to have better control on sales force.

The following factors affect or determine the establishment of sales territories: (1) Size of Business : Size of business is a major factor in establishing sales territories. In case of large size of business we will require a bigger sales force along with a large number of sales territories of smaller size. (2) Methods of Distribution : Methods of distribution also effects the establishment of sales territories. The enterprise may sell the products either directly to the consumers by establishing its own shops or through the chain of wholesalers and retailers. (3) Ability of the Salesmen : The ability of salesmen also effects the establishment of sales territories. If the enterprise is having a team of experienced and efficient salesmen, then the size of the sales territory would be comparatively large. On the contrary, if the salesmen are absolutely fresh without any experience on their credit then the size of the sales territory would be quite small. (4). Level of Competition : Level of competition also affects the establishment of sales territories. In case of keen and cut-throat competition, the salesmen are expected to remain more alert and perform their duties more carefully and effectively. At such places the size of the sales territory would be comparatively small. On the contrary, where no competition exists the salesman is in a position to cover larger area and thus the size of the sales territory would be large. (5) Means of Advertisement and Sales Promotion : Means of advertisement and sales promotion also affect the establishment of sales territories. When the enterprise is using various mean of advertisement and sales promotion on a wide scale, the size the sales territory would be large. On the contrary, if the enterprise is not using the various means of advertisement and sales promotion, the size of the sales territory would be quite small. (6) Density of Population : Density of population also affects the establishment of sales territories. If the area is thickly populated, people residing in that area have better chances of augmenting their income such as Delhi, Mumbai, Calcutta, Chennai, Punjab, Haryana and U.P. etc. In this case the size of sales territory would be small on the contrary, if the area is sparsely populated, the chancel of

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augmenting one's income are less such as Assam, Rajasthan and M.P. etc. In that case the size of sales territory would be large.

7.Market potentialities : Market Potentialities also affect the size of sales territory. If the market has vast sales potentialities (such as Calcutta, Chennai, Mumbai, Jaipur, Indore etc.) then it would have a small sales territory. On the contrary, if the market possesses less contrarysales potentialities then it would have a larger sales territory. 8.Demand of the Product : Demand of the product is also an important factor of determining the size of a sales territory. If the demand of the product is quite high (such as Tata Salt, Lux Soap, Hero Cycle, etc.), the size of the sales territory would be quite small. On the contrary if the demand of the product is quite low, the size of the sales territory would be comparatively quite large. (9) Tk-ansport Facilities : Transport facilities also affect the size of the sales territory. The areas which are served with good means of trade and communications have the better chances of expansion of trade and thus will have a small sales territory. On the contrary, transport bottlenecks are responsible for the stagnation of trade and thereby there will be a larger sales territory. (10) Cost of Sales Territory : Cost of sales territory also affects the size of the sales territory, (if the cost of sales territory is high, i.e. expenses of sales are high as compared to sales in a sales territory, it would have a large sales territory. On the contrary, if the cost of sales territory is low, i.e. the expenses of sales are low as compared to sales in a sales territory, it would have comparatively a small sales territory. (11) Policy of the Enterprise : Policy of the enterprise affects the size of the sales territory. If the policy of the enterprise is to have large scale production, less profit, low price level and maximum sales, the size of the sales territory would be a small one. On the contrary, if the policy of the enterprise is to have small production, high prices and maximisation of profits, the size of the sales territory would be comparatively quite large. The question of allocation of sales territories arises only after determining sales territories. The allocation of sales territories is an important function of the sales manager. It should be done after due thinking and in a planned way. The sales manager must also demonstrate that he is quite impartial to all the salesmen under his control and that he is equally humanitarian in his approach. According to Gauss, Whiteman and Bates, the sales manager must bear the following points in mind while allocating sales territories : (1) Every possible effort should be made to prevent duplication of efforts. Two salesmen may not be allotted the same sales territory. (2) While allocating sales territories it should be kept in mind that as far as possible sales opportunities are equally divided. There must be no discrimination in this respect.

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(3) The allocation of sales territories should be done in such a way that it may facilitate the effective control of the sales manager on the sales force and develop healthy competition amongst the salesmen. (4) Allocation of sales territories should facilitate comparison among the sales personnel. (5) Allocation of sales territories should provide for proper and efficient routing of salesman. Every salesman should be in a position to perform his daily routine efficiently. All the work to be attended to in one round must be planned in advance. (6) Allocation of sales territories should avoid wastage and facilitate economy. The selecting cost should suit the amount of sales. (7) Allocation of sales territories should provide flexibility so that the changes may be done conveniently without disturbing the structure etc. (8) Allocation of sales territory should be done in such a way that it may provide equality of income to salesmen. Allocation of sales territories should not be based on the basis of geographical areas alone because these may be vast areas without any scope of sales (Such as Assam) while many small areas (such as cities like Calcutta, Mumbai, Chennai, Jaipur etc.) may have a large scope of sales. Hence allocation of

territories should be made on the basis of sales. It would a equal earning

possibilities. (9) Allocation of sales territories should provide even coverage. The sales territory allocated to a salesman should be neither too small nor too big, it should be such that can be easily handled by a salesman. Besides the above, the sales manager should also keep the following points in mind while allocating safes territories. (10) Equitable assignment should be done. It should be based on the competence, skill, ability, experience and the knowledge of the salesmen. If the circumstances in a particular territory demand the presence of particular salesman of requisite ability or influence he should be given that territory inspite of the claims of other salesmen. (11) Allocation of sales territories should be done on the basis of demand of the product and the elasticity of demand so that the advantages of discriminating price policy can accrue. (12) New salesman should not be given independent charge of a sales territory at the first instance. He should be required to work under the direct supervision and control of an experienced salesman for some time. Methods of establishing sales territories There are different methods of establishing sales territories. For instance sales territories may be established on the basis of the size of business unit, nature of the product, the number of consumers to be reached extent of competition, services rendered toward the customers and their purchasing capacity and the structure of the organisation of the enterprise etc. If sales territories are establish on the basis of above factors they will be ideal and on scientific lines and it can help a lot in commanding good sales. In

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this age of keen competition different methods are used for establishing sales territories. The main methods of establishing sales territories are as follows : (1) On the Basis of Country Unit: When the sale of a product is done on international level (such as petrol, tea and coffee etc.) then the whole country is treated as one unit and thus only one sales territory is established for the whole country. Indian Tea Board had established one sales territory on country basis in foreign countries. (2) On the Basis of State Unit : Under this method sales territories are established on state or province basis. One sales territory is established for the entire state or province. The same sales territory, is responsible for selling the product of an enterprise in that particular state. Several Indian industries have established sales territories on state basis. (3) On the Basis of District Unit : Under this method sales territories are established on the basis of district. Under this method one sales territory is established for one district. For instance, Usha Sewing Machine, Asian Paints, Tata Soap, etc. have established sales territory on the basis of the district, i.e., one sales territory for each district. This method is adopted when there is a wide market for the product and the number of customers is quite large. 4) Other methods : Besides the above methods, sales territories can also be established on regional basis, size of production unit basis, Government policy basis and on the political basis etc. SALES AUDIT AND SALES CONTROL A sales audit is a systematic and comprehensive appraisal of the total selling operation. It appraises integration of the individual inputs to the personal selling effort and identifies and evaluates assumptions underlying the sales operation. More specifically, a sales audit is a systematic, critical, and unbiased review and appraisal of the basic objectives and policies of the selling function and of the organization, methods, procedures, and personnel employed to implement those policies and achieve those objectives.

Proponents of the sales audit stress the importance of focusing on overall selling strategy and methods for implementing it rather than examining individual components piecemeal. Sales executives, for example, may become so involved in programs to reduce sales personnel turnover or some new technique for motivating sales personnel that they lose sight of some key objective, which might be, for instance, to increase the profitability of small accounts. Existing sales personnel may do a poor job in working with small accounts, yet management focuses more on retaining these sales personnel than on making them more effective with small customers. Worse yet, the new motivational technique may be counterproductiveâ&#x20AC;&#x201D;it may be encouraging sales personnel to concentrate upon getting the "cream of the business from the largest customers." Sales audits detect situations of this type.

A sales audit uncovers opportunities for improving the effectiveness of the sales organization. An audit identifies strengths and weaknessesâ&#x20AC;&#x201D;strengths have potential for exploitation, weaknesses have

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potential for improvements. While "audit" implies an after-the-fact evaluation (a carry-over from financial usage), a sales audit provides information useful for planning sales strategy.

Sales audits have no standardized formats. Each company designs a sales audit to fit its needs. Every sales audit examines six main aspects of selling operations: 1. Objectives. Each selling input should have clearly stated objectives, related to desired outputs. For example, a firm might have the objective of raising its market share from 15 to 20 percent without reducing per unit profit. 2. Policies. Both explicit and implicit policies are appraised for their consistency in achieving the selling objectives. If, for example, a policy of promoting only from within prevents management from finding a district manager capable of bringing district A up to a 20 percent market share, the policy is reevaluated. 3. Organization. Does the organization possess the capabilities for achieving the objectives? Are planning and control systems appropriate? If an organization is understaffed, or staffed with incompetents, there is little likelihood of achieving ambitious objectives or ensuring proper control. 4. Methods. Individual strategies for carrying out policies must be appropriate. For example, it is futile to attempt upgrading quality and price if the company has already established a strong consumer image for low quality and price. 5. Procedures. The steps in implementing individual strategies should be logical, well designed, and chosen to fit the situation. The procedures should allocate responsibility for implementation to particular individuals and explain how the goals are to be achieved. 6. Personnel. All executives playing key roles in planning sales operations and strategy, as well as those responsible for implementation of sales programs, are evaluated as to their effectiveness relative to stated objectives, policies, and other aspects of sales operations. Too often an executive is evaluated in terms of ability to increase sales or profit rather than success in reaching predeterminded objectives, such as increased market share. In making a sales audit, too, a company examines both its markets and its products. Fundamentally, in examining markets, the sales audit seeks answers to four questions: 1. Who is buying what, and how? 2. Who is selling what, and how? 3. How is the competition doing? 4. How are we doing?

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SELF EVALUATION QUESTIONS

Questions : 7. Sales quota and sales territory both are same. 8. What is sales territory? 9. What is sales control. Answers : 7. False 8. It is a geographical area assigned to a salesman. 9. Watching and controlling the results of salesman.

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SALES & DISTRIBUTION MANAGEMENT Important Questions Section A: 1. What is sales control? 2. Define sales quota? 3. Define sales territory. 4. What is expense quota? 5. Define sales audit?

Section B: 6. Enumerate the advantages of controlling the sales force. 7. Write short notes on territory management. 8. Write short notes on sales audit.

Section C: 9. Explain the salesforce control methods 10. Explain the following in neatly a) Sales quota

b) Sales audit

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