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2 It includes estimates of sales volume and selling expenses
2 Sales volume budget is derived from the company sales
forecast ± generally slightly lower than the company sales
forecast, to avoid excessive risks
2 Selling expenses budget consists of personal selling
expenses budget and sales administration expenses budget
2 Sales budget gives a detailed break
break--down of estimates of
sales revenue and selling expenditure

    


2 lanning
2 Coordination
2 Control
Sales managers must be aware of
the types of expenses that are
incurred both before and after the
sale as well as the sales revenues
generated. Budgeting becomes a
key task of sales management. It is
also known as a blue print to making
profitable sales.
It estimates how much sales are to be
made and what expenses will be
incurred in the same. A proper
budget provides a projection into the
sales volume, selling expenses and
profits of the company.
 

 
è. Selling
a. Compensation (salary, commission, bonus
fringe benefits)
b. Travel and entertainment
c. Boarding and lodging
d. Discounts and allowances.
2. Administration
a. Office expenses and maintenance
b. Telephone and fax and postage and telegram
expenses.
 
r. romotion
a. Advertising
b. Catalogues, brochures, price lists
c. Sales contents
d. articipation in fairs, and exhibits
e. Selling aids audio visual equipment,
flipcharts, manuals and kits
f. Free samples, displays.
 
V. roviding facilities
a. Warranty provided
b. Credit money blocked
c. Billing expenses
d. Return of goods
 
. Expenses on personnel and service
a. Recruitments and selection
b. Training and developments
c. Customer service
d. Warehousing
e. Distribution and customer training
f. Technical counseling.
    

A sales budget is a financial plan depicting
how resources should best be allocated to
achieve the forecasted sales
sales.. The purpose
of sales budgeting is to plan for and
control the expenditure of resources
(money, material, people and facilities)
necessary to achieve the desired sales
objectives..
objectives
  

2 
 
 In order to achieve goals and
objectives sales managers plan by outlining
essential costs to be incurred
incurred.. This helps in profit
planning and act as a guide for achieving
objectives..
objectives
2 
  


 Budget acts as an
instrument of coordination
coordination.. Selling is one of
functions of marketing and needs supports from
the the elements of marketing mixmix.. Budgets also
help in integrating other functions of like sales,
finance, production and purchase
purchase..
 
2   
 Comparison between
budgeted and actual costs result in the
analysis of factors causing variations and
enables the sales manager to spot
problem areas or plan better for expected
outcomes..
outcomes
2



any firms preparation of
follow a process for
annual sales and company budgets
budgets.. It generally
includes::
includes
‡ Review past, current, and future situations
‡ Communicate information to all managers on
budget preparation ± guidelines, formats,
timetable
‡ Use build
build--up approach
approach,, starting with first
first--line
sales managers
‡ Get approval of sales budget from top
management
‡ repare budgets of other departments
 !"


2 The sales manager should review the past
performance, current and future (budget
period) marketing environment
environment.. The
review of past budget performance can
help the sales manager to understand the
deviations of actual performance against
the budget and the items or elements
where the company showed favorable or
unfavorable variances
variances..
 
2 Similarly, a review of current and future
factors of marketing environment such as
customers, competitors, economy,
technology, government polices or
regulations, would help the sales manager
and the marketing manager to understand
the changes taking place in the external
environment..
environment
 


2 The head of sales function should communicate in
writing to all the field sales managers (such as
area, branch, district, and regional managers)
about the budget preparation, including the
formats, guidelines, assumptions, and timetable
timetable..
Each first
first--line field sales manager estimates the
sales volume in units and value for each product
and service to be sold, along with estimated selling
expenses (consisting of salaries, commission, and
salesforce expenses like travel, lodging, food and
entertainment to customers), and administrative
budget (which includes salaries of sales managers,
supervisors, office staff
staff;; operating expenses like
rent, supplies, power, office equipment, and
general overhead)
overhead)..
 
#


2 The first
first--line field sales managers prepare the
sales budgets for their respective sales
territories and submit the same to the immediate
reporting managers (like regional or divisional
managers), who add and modify (if necessary)
the sales budgets received from the first first--line
managers..
managers The regional/divisional sales
managers submit their sales budgets to the
national sales managers, who prepares the
company¶s proposed sales budget by combining
the budgets received for regional or divisional
managers..
managers
 !
 
#

2 In consultation with the marketing head,
the national sales managers prepares two
or three alternative proposals of the sales
budget, and makes a presentation to the
top management of the company
company.. After a
detailed discussion on the alternative
proposals, the sales budget finally gets
approved..
approved
  

2 The final sales budget is given to other
departments like production, finance, materials,
and human resource to prepare their budgetsbudgets..
The approved sales budget is also broken down
into each sales territory, as well as into quarterly
and monthly periods
periods.. Only the sales budget has
revenue and expenditure budgets, whereas all
the other departments in the company have
expenditure budgets
budgets..
 
2 Account/finance department prepare cash
budget and profit budget, based on the
sales revenue information given by the
sales department, and the expenditure
budgets given by all the departments or
functions..
functions
 $ 

2 
#  
 What is affordable? any
companies set promotion budget at what they
think the company can afford
afford.. This method is
used by firms dealing in capital industrial goods
goods..
Also companies having small size of operation
make use of this method
method..
2 
  
# % 
  
  & &
ost companies set their sales budget as a
specified percentage of sales (either current or
anticipated).. ass selling goods and companies
anticipated)
dominated by finance are major users of this
method..
method
 
2  
'    This method is
used by large size companies facing tough
competition.. It presumes knowledge of
competition
competitors¶ activities and resource allocation
allocation..
2 #( !
 
)    This method calls
upon marketers to develop their budgets by
identifying the objectives of sales function and
then ascertaining the selling and related tasks to
achieve objectives
objectives.. Later the cost of each task
activity is calculated to arrive at the total budget
budget..
Adjustment to task or budgets can be made made..
 
2 *



 A process in
which sales budget for each year is
initiated from zero base thus justifying all
expenditure and discarding all conventions
and rules of thumb
thumb.. Its limitation is that it is
very elaborate and time consuming
process..
process
 
'
A sales control system should be set up on the
following guidelines
guidelines::
o Setting detailed objectives (round key result
areas)..
areas)
o Establishing standards for appraising
performance..
performance
o Gathering information on actual sales activities
and results
results..
o Comparing actual with expected
expected..
o Taking remedial action (need based)
based)..
  

2 Sales analysis
2 arketing cost analysis
2 Sales management audit
 ›


2 It is a detailed examination of sales volume by
territory, sales person, customer, product line,
etc.. it works on the principle that the trends of
etc
the total sales volume conceal rather than reveal
the market reality
reality.. Researchers reveal that in
most organisations a large percentage of
customer order territories bring in a small
percentage of total sales sales.. This is known as 80
80--
20 principle
principle.. 80
80%
% of the orders contribute over
20%
20 % of sales and 20 20%
% selling units amount for
80%
80 % of sales
sales..
 
 

2 ere the cost incurred to achieve sales
are considered
considered.. It is not just sales but
sales with budgeted profits or expenses
that matter.
matter. It is a fact finding analysis
which relates cost to sales volume and
resultant profitability
profitability.. It relates cost and
financial discussion of each selling
transactions and activity
activity..
 ›
  
2 Sales management audit is a comprehensive,
systematic, independent and periodic audit of
sales policy, objectives, strategies, organisations
and procedure followed by the firm
firm.. The purpose
of sales management audit is to evaluate the
soundness of the sales management of firm firm.. It
examines the validity of the very basis and
assumption on which sales function is planned
and managed
managed..
 
  !







2 Appropriateness of selling functions and
objectives.
2 Role of selling function in promotional mix and
sales marketing integration.
2 Organisation and work norms of the sales force
ad its size.
2 Recruitment, selection, promotion policy,
compensation motivation of sales forces.
2 Basis of sales quota, sales budget, territory
allocation and their market need suitability.
 
2 åuality of sales force, appraisal criteria,
training and development of sales
personnel..
personnel
2 roductivity of sales function
function..
2 Sales planning and control system
system..
2 Commercial procedures and sales
promotion method
method..