UNIT-4

Sales forecasting:
Sales forecasts are common and essential tools used for business planning, marketing,
and general management decision making. A sales forecast is a projection of the expected
customer demand for products or services at a specific company, for a specific time horizon,
and with certain underlying assumptions.

Types of forecast :
1. Market Potential: The best possible level of industry sales ina a given geographic area for
specific period.
2.Market Forecast: The expected level of industry sales given a specific industry strtegy in a
given geographic area for a specific period.
3. Sales Potential: The best possible level of firm sales in a given geographic area for
specific period.
4. Slaes Forecast: The expected level of firm sales given a specific strtegy in a given
geographic area for a specific period.

SALES QUOTAS
 A Sales Quota refers to an expected routine assignment to sales units, such as
territory, districts or branches etc.
 Sales Quotas can be set for individuals
 Used to Plan, Control and evaluate the selling activities of a company.

TYPES OF QUOTAS:
1. Sales Volume Quotas
2. Financial Quotas
3. Activity Quotas
4. Quota Combinations

1.SALES VOLUME QUOTAS:

• Sales Volume Quotas include Sales in Rupees or Product Unit objectives for a
Specific period of time,
 • Eg Bajaj calculates sales as number of vehicles sold.
• It can be set in following areas

 Product Line
 Product range
 Sales Divisions
 Sales Territories
 Sales Districts
 Branch Offices
 Sales Force (individuals)

2. Financial Quota:
These quotas are set gain a desired NP (Net Profit) and to control sales expenditure.
SRs have to spend their time on profitable products to improve NP. Expenses quotas
make the SRs conscious of keeping their expenditure within reasonable limits. Expense
quotas may demoralise the SRs and so are usedonly as supplementary quotas. The inputs
of SRs differ from territory to territory.

3.Activity Quota:
SRs have not only to generate sales, but develop the market too buy doing certain
activities for which quotas are set;

 No of sales presentation made

 No of service calls made
 No of dealers visited
 No of calls made for recovery
 No of new accounts opened

4.Quota Combinations:
Many companies use a combination of these quotas. The two most commonly
combined are sales volume and activity quotas. These quotas influence selling and non-
selling activities.
TERRITORY MANAGEMENT
 A Sales Territory Comprises a group of customers or a Geographical area
assigned to a sales unit.
 It many or may not have a geographical boundary.
 It includes
 Market potential
 No of customer Accounts
 Firms Experience
 Market Share
 Capability of sales person and frequency of calls made

ACTIVITIES IN TERRITORY MANAGEMENT:

• Trade relations
• Potential business
• Coverage
• Reports
• Territory Size
• Selling Technique
• Customer Satisfaction
• Selling Abilities

Why Establish Sales Territories:

 Entire Coverage
 Assign Sales Persons responsibilities
 Evaluate Performance
 Improve Customer relation
 Reduce Sales Expences

Designing Teritories:
 Select a basic geographical Unit
 Determining the Sales potential in control units
  Combining the Control units into tentative territories
 Adjusting for coverage Difficulty and relocating tentative territories
Territory Shape:
Territorial shape affects both its coverage and the selling expenses. It facilitates time
management and simulates sales force morale. There are three widely prevalent shapes the
Wedge, the circle and the cloverleaf.

1.Wedge-shaped territorie :
Wedge – shapeed territories are suitable for urban as well as non-urban areas. It starts
form a thickly populated urban centre. Many size of the wages are possible. Two
neighbouring wages can help equalize the travel plan by balancing urban and non-urban
types of calls.

2.Circle- shapped territory:

The salesman remains at the centre of the circle or near to it. It makes possible
optimisation in frequency of calls. He is far more in the vicinity of customers than a salesman
in a wedge-shapped territrory.

3. Clover-leaf territory:
Randomly located accounts call for cloverleaf type of arrangement. Each cloverleaf
represents a week’s work. A salesman is at home every weekend. Such arrangement is
common in industrail marketing. It is alsosuitable for extensive marketing.
SALES TERRITORY PERFORMANCE:

A number of factors are considered to assess the performance of a sales

territory. The major determinant is, of course, the market potential. There are other factors
too. The analysis should be standardized, so that the different territories could be compared.
Each sales territory requires a sales man who completes a task there. A sales territory is a
geographical area or a specified group of customers, or products/products lines or any
combination of these.
Sales territory performance

Accounts Market
(customers) potential

Geography Territory
worklod Sales
Experienc
e territory
Salesmen performance
Effort
Company
Experienc
e
Other
Effort influences

The company effort consists of promotions, feedback, quality of supervision and

distribution the contribution different factors will vary in each company as the selling
situations are different.

A general relationship of these composite variables can be stated as:

T= f (P, W, S, C, O)
T = Territory performance
F = function
P = Territory potential
W = workload
S = salesmen characteristics
C = company standing in the territory
O = other influences.

The states of each component will us to sales performance in the territory. However, the
exact relationship cannot be specified. Performance is partially determined by the salesmen.
Research findings support this premise.

MANAGEMENT OF SALES EXPENSES:

 There are two approaches of the management of the sales expense. Allow
salespeople to spend their own money to meet sales expenses or reimburse their expenses
either in part or on full. Both these approaches have their own implications. A salesperson
who spends his own money for expenses is not under strict management control. But when
there are reimbursable expenses, management exercises sufficient power on the activities of
the salespersons. In other functional areas of business, there are expenses of marginal nature.
But in sales, there are considerable expenses. Reimbursement and control policies therefore
are vitally important, and they need special attention of the company. Sales expenses differ
from industry to industry as a percentage of the total compensation plan.

1.FLAT EXPENSE ACCOUNT:

A particular periodic sum is handed over to the salesperson to meet his expenses.
How to allocate this sum to different items of expenditure is left to the discretion of the
salesperson. A flat sum saves the company the hassle of account keeping, and verification of
these accounts.
As flat sums are predetermined, they can be easily budgeted. Salespersons have
autonomy to spend as they please out the flat sum. Thus, there are no heartburns on
individual expense items. It gives sales person a sense of direction they get self-directed. All
they need are some guidance from the management about routing and scheduling.

Flat expense accounts are suitable where, exact amounts of expense are not required
to be changed frequently or where management keeps on reviewing the expense allowance.
Flat expenses must have an element of flexibility; imagine a situation where a salesman loses
sales opportunities just because his flat expense is not enough to top them.

2.FLEXIBLE EXPENSE ACCOUNT:

Most widely used method of reimbursement, it reimburses all allowable expenses

incurred and reported to management. Here management estimates the probable expenses and
puts them into allowable and non-allowable categories. Salespersons are educated about these
categories. A reporting system is installed for reporting expenses periodically. These reports
are checked, and verified before reimbursement.

3.HONOUR SYSTEM:

This is a liberal system where all sales expenses are reimbursed in full against report
of the total expenses. Without asking for a detailed breakup of these expenses. It reflects the
faith management reposes in its salespersons. As this system is easy to administer, it
simplifies procedural aspects when used alone or in combination with any other method. It
provides sufficient funds to develop the territory, provided the salespersons use the amount
judiciously. This system does not allow management to control the sales force tightly. The
judicious use of money cannot be guaranteed. Some tend to over spend. Some use the amount
in non-productive activities and some misappropriate the funds.

4.EXPENSE QUOTA:

This plan controls the total expenses of the salespersons, but allows variations in
periodic reimbursements. The management sets up an expense quota considering the needs of
the sales territory and the sales potential. Sales quota gives an upper limit or ceiling on the
total expenses in a particular time period. This plan enables quick reimbursement of periodic
claims, despite the variations from period to period. The ceilings restrain the salespersons,
and they keep within the limits set.

In this scheme, the salespersons are allowed to control the expenses. This is major
weakness. The success of this scheme depends on how good the forecasts are. Salespersons
are likely to restrict their activities at the end of the budget period, considering the meagre
balance left in quota account.

SALES BUDGET

A budget is a financial plan. In the sales budget, resources are allocated to achieve the sales
forecast. It spells out what each one will sell, and how much. It also spells out what and what
and how much will be sold to the different classes of customers. A budget is an estimate of
sales either in units or value and the selling expenses likely to be incurred while selling. It,
thus, enables a net profit forecast on the basis of the selling operations.

Budget in overall promotional contest

Promotion

Other promotional
Advertising Personal selling method

Personal selling
objectives

Sales-related policies

Strategies

Sales budget

Sales force management

Evluation

SALES PROMOTION BUDGET AND EVOLUTION:

DEFINITION OF SALES PROMOTION:

“Sales promotion includes incentive-offering and interest-creating activities which are

generally short-term marketing events other than advertising, personal selling, publicity and
direct marketing. The purpose of sales promotion is to stimulate, motivate and influence the
purchase and other desired behavioral responses of the firm’s customers.”

Types of Sales promotion:

1.Consumer sales promotion:
Samples:

 Most effective but most expensive way to introduce a new product

 Offers a trial amount of a product
 Some samples are free or with small charge to offset cost
 May be delivered door to door, sent by mail, handed out in-house, attached to another
product, featured in an ad

Coupons:
 Certificates giving buyers a saving when purchase specified product
 Can be mailed, in ads or included with other products
 Can stimulate sales of a mature brand or early trial of a new brand

Price packs:
 Reduced prices offering savings off regular price of product
 Reduced prices directly on label or pack (e.g. two for one)
 Two related products banded together
 Are very effective in stimulating short-term sales

Premiums:
 Goods offered either free or at low cost as an incentive to buy a product
 May come inside the package (in-pack) or outside the package (on-pack)
 If reusable, the package itself may serve as a premium (e.g. a decorative tin)
 Sometimes mailed to consumers who have sent proof of purchase (e.g. a box top)
 Self-liquidating premium - sold below normal retail price to consumers who request it

Testing the Sales Promotion

Pre-testing:
 How sales promotion is to be communicated and what would be communicated to
the target groups is important and can be pre-tested.
 To test consumer’s behavioural response, such as trial purchase, or repeat purchase,
etc., pre-testing consists of experimenting in certain markets or individual stores
in a market. All other factors remain the same; only the sales promotion device
being tested in the variable is manipulated.
 It is often quite helpful to evaluate the response of re-sellers before implementing the
promotions programme. The simplest way is to visit several important retailers and
wholesalers and discuss the programme and seek their opinion and suggestions. This
may prove to be quite favourable in case promotion results.
Concurrent Testing:
This testing is done when the sales promotion is in progress. Concurrent testing may
permit the promotion manager to modify the sales promotion, if needed. This type of testing
is conducted in terms of sales data, which can be obtained on a weekly or monthly basis.

Post-testing:

 Post-testing is done after the promotion period is over. To assess the change in
consumer awareness and attitude, telephone calls, questionnaires mailed to
consumers and personal interviews can be used.
 To measure the sales effect, sales figures before the promotion period can be
compared with figures at the end of the promotion, and one month after the
promotion ends.

International Sales Management:

Introduction:
Sales management has increasingly taken on international dimensions. The
multinationals and other companies with foreign production and marketing operations look to
sales management to implement sales related marketing policies in each national market. In
companies with sophisticated exporting operations, sales management obtains international
distributors and dealers, maintains relationships with their distributors and dealers, maintains
relationships with their distributive networks and monitors continuing changes in marketing
conditions and needs in national markets.

Challenges Faced by International Sales Managers:

1.Economic Factors

Not all of the world’s economies operate at the same level of efficiency; it is
necessary to form a clear idea of the economic situation of a particular host country in order
to develop an appropriate marketing strategy.

2.Cultural Factors
 The cultural traits of a country have a profound effect on people’s lifestyle and
behaviour patterns, and the same are reflected in the market place.

3.Political Factors

An international marketer needs to examine carefully the political environment of a

country before making major commitments in that country.

4.Legal Factors

International marketers must be aware of treaties and international conventions.By

and large, the relevant laws of the host country would be those concerning tariffs, dumping,
export/import licencing, foreign investment incentives (provided by the government to attract
foreign business) and restrictions on trading activities.

Other Important Factors Include:

 Qualities of the International Sales Force

 Cultural Adaptability
 Physical Fitness
 Knowledge
 Decision Making Ability
 Language
Formulating Sales Strategies at the National Level:

1.Sales Job Description

Different types of job descriptions should be developed for different countries. Duties
and responsibilities are different for different countries.

2.Recruitment and Selection

 A company should use a multi-step selection system for different international
markets.

3.Sales Training

Training of the salesperson can never become absolute. As long as technology

changes, new people enter the work force, businesses strive to improve, and organizations
will need training.