The Strategic Role of Information in Sales Management

Sales & Distribution Management Marketing 3345

Information Drives Management Decision Making and Planning

Sales

forecasts Territory estimates Quotas Sales force size Sales territory design

Market Opportunity Analysis

Market potential estimate of possible sales of a commodity, a group of commodities, or a service for an entire industry in a market during a stated period under ideal conditions Sales potential the portion of the market potential that the firm can expect to reasonably achieve Sales forecast an estimate of the dollar or unit sales for a specified future period Sales quotas sales goals assigned to a marketing unit for use in managing sales efforts

Sales forecasts

Sales budget

Production budget Revenue budget Sales and administrative expense budget

Direct labor materials and overhead budgets

Cost of goods sold budget

Budgeted profit and loss statement

Impact of Sales Forecasts on Budgeting

Utilization of Sales Forecasting Methods of 134 Firms Percentage of Firms that Use Regularly Percentage of Firms That Use Occasionally Percentage of Firms No Longer Used

Methods Subjective Sales force composite Jury of executive opinion Intention to buy survey Extrapolation Nave Moving Average Percent rate of change Leading indicators Unit rate of change Exponential smoothing Line extension Quantitative Multiple regressing Econometric Simple regression Box-Jenkins

44.8% 37.3 16.4 30.6 20.9 19.4 18.7 15.7 11.2 6.0 12.7 11.9 6.0 3.7

17.2% 22.4 10.4 20.1 10.4 13.4 17.2 9.7 11.9 13.4 9.0 9.0 13.4 5.2
S&MM, February 2008

13.4% 8.2 18.7 9.0 15.7 14.2 11.2 18.7 19.4 20.9 20.9 19.4 20.1 26.9

Choosing a Forecasting Method

Which forecasting method should be used and how accurate is the forecast likely to be? In general, the various forecast comparisons suggest that no method remains superior under all conditions. Good forecasters apply multiple forecasting methods to the problem Scenario planning prepares a series of what-if questions and produces possible outcomes

Developing Territory Estimates

Territory

estimates effect:

The design of sales territories Procedures for identifying potential customers The establishment of sales quotas Compensation and its subcomponents The evaluation of salesperson performance

Planning Tools

North American Industry Classification System (NAICS)

Developed by the US Bureau of the Census, organizes the reporting of business information Each industry in the US is assigned a two-digit number Generated and published by Sales Marketing Management Magazine, considers income, population and retail sales Most useful with low-priced convenience goods

Buying Power Index (BPI)

Sales Quotas

Goals assigned to salespeople

Apply to specific periods and may be expressed in dollars or physical units

Tool for sales managers planning and controlling field selling activities and results Benchmark for evaluating sales effectiveness Motivate sales people

Characteristics of a Good Quota

Attainable

Easy

to understand Complete Timely

Types of Quotas
Sales

based quotas

Sales

activities quotas
based quotas

Financially

Determining Sales Force Size

Salespeople

are among the most productive assets of a company, and they are also among the most expensive! How can an optimal sales force be established? Breakdown method:
Number of sales personnel needed
Sales Volume

Productivity

Determining Sales Force Size

Workload

method uses the buildup method to estimate the work required to serve the entire market method suggests that sales representatives should be added as long as the incremental profit produce by their addition exceeds the incremental cost

Incremental

Territory design The Build Up Approach