1 – Introduction to Sales Management

Introduction

Before the Industrial Revolution, marketing was a relatively straightforward activity because small-scale businesses dominated the economy. The only issue was producing goods for consumers, which were quickly sold out. It was simple to sell the things. A single employee frequently had control over all aspects of business operations, including sales and production, and manufacturing issues received more attention than marketing ones.

The significance of marketing issues was realised only after the Industrial Revolution, which began in England in 1760 and rapidly followed in the United States. Because the neighbouring markets could not absorb the growing amounts of manufactured goods, the American Revolution forced the discovery of untapped markets. This emphasised the necessity of marketing initiatives. With increased output, more land, labour, and capital were necessary, giving rise to the corporation form of organisation. Larger organisations necessitated greater delegation of authority in manufacturing and administration. As a result, the sales department was elevated to a separate functional department.

Because of changes in business operations, the phrase “sales management” altered as business activity became more complicated and dynamic. Previously, sales management was only concerned with managing sales force personnel. However, “sales management” now has a broader meaning, encompassing all marketing activities such as advertising, sales promotion, marketing research, physical distribution, pricing, and product merchandising.

1.1 Marketing Sales Management

Marketing, sales management, and marketing management are all intertwined. In general, marketing refers to transferring goods or services to customers for monetary consideration. The conduct of business activities directs the flow of commodities from the producer to the consumer, viewed from the customer’s perspective. Every effort is made in marketing to give optimum client pleasure. It begins with the consumer’s wants and concludes with their satisfaction.

On the other hand, businesspeople use the phrase “sales management” to refer to the direction or supervision of salespeople. However, today’s business environment has also covered other management parts, such as planning, direction, and control of personnel sales, including recruiting, selecting, equipping, supervising, paying, and motivating, among others, because they directly apply to the sales force.

Marketing management is a bigger idea, and sales management is a subset. Whereas marketing is concerned with the product, price, promotion, distribution, target market, planning, implementation, and control of these activities, sales management is a sub-function of marketing management primarily concerned with the planning, direction, and control of the sales force.

Salesforce can be found in both for-profit and non-profit organisations. Everyone makes a living by selling something. One of the oldest vocations is selling. Today’s sales leaders are experts in their fields. They create and implement efficient control methods and organise, build, and maintain effective organisations. This necessitates a thorough examination of quantitative and qualitative personal selling objectives and the development of sales policies and a sales strategy. Top management holds them accountable for the following:

1. Achieving an adequate volume of sales.
2. Providing the maximum contribution to profit.
3. Experiencing continuing growth.

Although these goals are part of sales management, sales managers cannot be held entirely responsible for fulfilling them. Despite their significant contributions, top management has ultimate responsibility because it is accountable for the enterprise’s success or failure. It is the job of senior management to ensure that goods and services are supplied to ultimate buyers at reasonable rates.

Adhering to a predetermined sales plan will help you achieve the objectives above. Top management delegated the necessary authority to marketing management to implement these initiatives, which in turn delegated it to sales management. During this step, the objectives are subdivided into more precise targets. These objectives are finalised during planning, and then the sales manager is given adequate power and autonomy to guide and lead the sales staff and middlemen, who play an important part in achieving the sales plans.

In terms of profit contribution, the following two basic formulas are commonly followed:

Gross margin = Sales – Cost of Sales

Net Profit = Gross Margin – Expenses

Sales management is in charge of ensuring this formula’s success. The sales department’s efficiency determines cost or expense reduction and increased sales or gross margin. The corporation cannot maximise its revenues unless its performance is satisfactory regarding efficiency and talent.

The third goal is to experience continuous growth. This is critical from the perspective of top management since it develops plans and strategies. Because sales management remains in direct contact with consumers and markets, it maintains a finger on the market pulse. It can sense the growth rate and notify top management, allowing top management to take remedial action if necessary.

For example, in the North American vehicle industry, Volvo has traditionally positioned its products to be viewed as the leader in “safety.” In contrast, BMW has generally positioned its brand to be perceived as the leader in “performance.”

Different Structures for Sales Management

The organisational structure for sales management varies depending on the size and strategy of the company. Field sales management comprises the unit manager, district manager, regional manager, general manager, and vice president of sales. With engagement at the customer level, the unit manager is often referred to as the manager-in-training. The unit manager’s primary responsibilities include training new salespeople, recruiting, selling to small accounts, and holding district meetings. District managers, who are a step up from unit managers, often have five to 10 years of management experience and oversee eight to ten salespeople. District managers often report to the regional manager, who oversees numerous districts in a specific geographic area. The general manager is also the vice president of sales and marketing. The VP of Marketing and Sales is generally at the top of the sales organisational hierarchy, leading the firm’s sales strategy.

There are significant disparities between bottom-level and top-level managers. The key distinction is how much time they devote to each task. Lower-level managers spend most of their time hiring, training, and supervising salespeople. Top-level managers typically concentrate on planning, organising, and connecting their sales approach with overall corporate goals. They also anticipate sales, define goals, create plans and procedures, and create budgets.

Sales management jobs can be found in both the consumer and commercial industries, ranging from district manager to vice president of marketing and sales to the firm’s top sales management. The competition for sales management positions can be fierce. Sales managers often begin as salesmen and work their way up through the ranks with outstanding leadership and organisational skills. Salespeople advance to management positions gradually, with representatives rising into executive positions as they take on more responsibility with larger national clients. A sales representative will likely spend some of their career as a district or regional sales trainer before progressing into a senior sales management post. The advancement of salespeople into management positions varies according to the organization’s size and organisational structure.

1.2 Objectives of Sales Management

 A. Quantitative Objectives (Short-term)

-To maintain and expand market share.

-To calculate sales volume in a way that leads to profitability.

-Obtaining new accounts for specific categories.

-To keep personal costs within predetermined limitations.

-To secure a specific percentage of specific corporate accounts.

B.  Qualitative Objectives (Long-term)

-To complete the entire selling task.

-To maintain existing accounts (customers).

-Seek and maintain customer collaboration.

-To aid the dealer in selling the product range.

-To offer technical assistance as needed.

-Assist with the training of middlemen sales employees.

-To offer advice and assistance to intermediaries.

-Gather and report market information of interest and utility to firm management.

1.3 Exchange Process

The most significant aspect of marketing management is sales and distribution management. Exchange is at the heart of marketing and sales, and distribution management makes it possible. Sales management is the management of the firm’s selling functions, whereas distribution management is managing the firm’s indirect selling effort or selling through non-corporate organisations. Analysis, planning, organising, directing, and controlling a company’s sales efforts are all examples of sales management tasks.

Exchange can occur directly (through its sales force), indirectly (by middlemen, merchants, and wholesalers), or jointly.

The nature of the exchange process will be determined by the product type, target market, customer density and dispersion, and the other companies’ competitive strategies. Personal selling, for example, cannot be used if the customer density is low in a given location. Mail-order companies like Reader’s Digest rely solely on this idea. However, because the commodities they deal in are of high value, enterprises dealing in industrial equipment, computers, and machine tools (such as lathes and presses) utilise personal selling.

Personal selling involves two-way contact. We also strive to explain how to use the device and dispel any doubts the buyer may have. We can see that the client has provided feedback. We are just exchanging when we sell.

a. Contacting: Locating and communicating with potential buyers.

b. Prospecting: Bringing together the market’s and the customer’s offerings.

c. Price Negotiation and Transaction: Prices can be negotiated, such as lump cash, instalments, and so forth. Transactions also imply the transfer of ownership.

d. Promotion: This is used to raise client awareness of the product. The promotion must demonstrate that the goods can deliver the client happiness, i.e., he will get good value for his money. Proper promotion should have the ability to generate customers.

e. Physical Distribution and Collection: Physical distribution refers to the actual transfer of ownership. Transportation, warehousing, and inventory control are all part of it. It also comes with installation. For example, the food must arrive on schedule and in good condition. The exchange is never complete without the collection of money, i.e., revenue. Money is the lifeblood of any organisation, and prompt collection of funds is another critical criterion. Delayed payments result in a lack of finances, which hurts the organisation. During this activity, the consumer is also given a lot of information.

Most businesses conduct exchanges using a combination of their own sales staff and distribution network. Tasks are assigned to members of the sales force and the channel. The following elements are considered when deciding whether to use the distribution network or the company’s sales force: competitive practices, product and market requirements, customer preference, and management attitude regarding control.

1.4 Interdependence of Sales and Distribution

Sales and distribution are inextricably linked. Although sales can be realised through direct marketing or channel members, the two go hand in hand. The following concepts must be grasped:

1. The sales manager is in charge of both sales management and distribution. Most businesses use their own sales team to reach customers. The sales force also reaches out to retailers via wholesalers. Brooke Bond is one company that sells at the retail level. Sales organisations’ activities are coordinated with channel operations to achieve sales goals efficiently.

2. The type of training provided will be determined by the responsibility assigned to the sales force and channel members.

3. An organization’s decision to have direct, indirect, or joint distribution depends on the degree of control, flexibility, cost, and financial requirements. Indirect distribution, for example, provides less control but is more cost-effective. In this type of distribution, less money is tied up, and the fixed and variable costs of administering the channel are low. On the other hand, personal selling provides greater control but is more expensive.

4. Manufacturers must collaborate with distribution channels, store displays, local advertising, and purchase promotions to complete the marketing strategy.

Sales management is responsible for structuring, maintaining, and organizing organizational relationships inside their departments and with interacting organizational entities to ensure the completion of sales tasks and coordination with overall marketing goals.

Sales managers organise, plan, and execute the sales effort to meet company goals such as market share, sales volume, and return on investment.

1.5 Key Decision Areas in Sales Management

Important areas of sales management decision-making include:

1. The type and quality of sales personnel:

This refers to whether the salesperson is a product specialist, a market specialist, or both. A product specialist is required for technical or pharmaceutical products. A market specialist must be familiar with market characteristics and numerous marketplaces.

2. The size of the sales force:

This is significant because having more sales employees means incurring more expenses. As a result, the number of salespeople should be optimal. There are three approaches for determining the appropriate size:

a. Work Load Method

b. Incremental Method, and

c. Sales Potential Method

3. The organisation and design of the sales department:

Organizations are classified into three types:

a. Functional Organization

b. Management Organization and

c. Territorial Organization

Our choice will determine which form of organisation we will follow.

4. Territory design:

A territory can be designed in a variety of ways.

a. Clover leaf design of territory: In this case, the territory is designed like a clover leaf.

b. Hop Scotch Method: The territory is created with spokes from the hub (residence).

5. The recruitment and training procedure:

This is concerned with the hiring and training of employees. The recruitment could take place either within or outside of the organisation. Similarly, training could take the form of on-the-job, off-the-job, or classroom training.

6. Task assignment:

Tasks are assigned based on the capabilities and capacities of the sales employees.

7. Compensation for salesforce:

Salary benefits, earnings, and perks are all forms of compensation. Demographic characteristics are considered in this. There are other ancillary benefits.

8. The performance appraisal and control system: 

It is critical to know how much work the sales employees are doing. Appraisal methods are designed to help with this.

9. The feedback mechanism to be adopted:

Product and sales feedback is gathered from sales staff, dealers, and customers. Planning is carried out in response to this feedback.

10. Managing channel relationships:

We not only choose which channels to use, but we also pick how to manage them.

11. Coordinating with other marketing departments:

A sales representative cannot function alone. He must enlist the assistance of the other departments.

1.6 Sales Management Cycle

A sales manager oversees and supervises a company’s personal selling functions. Sales management is responsible for analysing, planning, organising, directing, and controlling the company’s selling activities. This results in the cycle depicted below.

 

 

 

 

 

 

 

 

 

 

Analysis

This entails investigating the company’s sales records, analysing salespeople’s reports, researching marketing trends, and examining other environmental aspects.

Planning

It entails determining the goals of the firm’s sales operations and developing sales tactics and policies to attain those goals.

Organisation

It entails determining the structure of the sales force and delegating authority, both of which are important for meeting the organization’s goals.

Direction

It entails proper supervision and plan implementation through effective communication, motivation, and leadership.

Control

It entails comparing the actual to the planned results, determining the causes for the deviation, and implementing remedial steps as needed.

1.7 Sales Manager’s Responsibilities

Sales management entails a variety of responsibilities. It is a company’s revenue-generating segment. The sales manager is in charge of:

-Making a profit contribution

-Developing a professional image for the company and its products/services

-Meeting the organization’s sales targets

-Customer satisfaction and participation in marketing activities

-He is accountable to the client and society for the organization’s continued growth.

He is involved in various activities, such as defining and attaining goals and building and managing sales organisations. These several actions are exhaustively listed below:

1. Establishing a sales strategy.

2. Establishing the firm’s selling objectives.

3. Developing sales policies.

4. Choosing the type of sales force.

5. Choosing the size of the sales team.

6. Creating sales regions that effectively encompass the area.

7. Establishing a sales organisation.

8. Establishing sales quotas and targets.

9. Creating the sales force – that is, recruiting, selecting, and orienting the sales force

10. Managing the sales force:

(a) Compensation
(b) Motivation
(c) Supervision
(d) Monitoring and performance evaluation
(e) Training
(f) Development

11. Budgeting and reporting for sales.

12. Setting up sales displays.

13. Coordination and control:

(a) Coordinating external and internal activities
(b) Coordinating with distribution network
(c) Coordinating and implementing overall marketing strategy.