Sales management

Course Facilitator M. Tariq Yousafzai

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Territorization

Territories are not rigid geographical boundaries rather it is grouping of actual and potential accounts In other words Territorization is the process of breaking up of a firms actual and potential accounts

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Reasons for Establishing Territories Companies can have intensive market coverage Helps in providing better customer service Provides motivation to salespersons (compete) Performance evaluation Salespersons are controlled via targets or quotas Helps avoid duplication of work
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Reasons for revising territories Inadequate information: (existing information might

be incorrect when formulating territories)  Accounts potential might be under or overestimated leading to creation of less or more territories  Changes in customer demand (up and down in economy, in favor or out of favor cycle)  Increased competition  Decreased stamina of salespersons  Company policy (transferring seasoned salespersons to an area with low sales thus revising territory)  New Product Launching

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Procedure for Developing Territories

 Drawing territories is one amongst most important responsibilities of sales managers  Results may be measured by sales volume, relative market share, or profits.  Consequently, the primary objective for the sales manager is to determine both the optimum number of territories to be formed, and their configurations (an arrangement of parts or elements in a particular form, figure or combination)

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Continued.. If an insufficient number of territories are formed, the sales potential of the firm will not be realized for lack of coverage. If too many territories are created, the account base of the business will become fragmented (a small part broken off or separated from something).

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Continued.. In such a case high turnover may result since salespeople will perceive little opportunity for personal growth in such a situation. This leads to another major objective: the equalization of territory potentials. To be fair to all members of the sales force, all territories should possess equal potentials. Theoretically, this can be done by redistributing accounts until the optimum point is reached.

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Continued.. However, it may be desirable doe sales management to have different territories with different potentials. Limited-potential territories can be used as training grounds for new members of sales force, or less demanding settings for senior member. Salespeople can be assigned to more challenging territories in accordance with their performance.

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Continued A more appropriate objective in many cases may be adequately challenging territories, formed by taking into consideration coverage difficulty, salespersons varying abilities and territorial sales potentials.

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Bases for territories

 The bases for used for creating sales territories are mainly (a) geography, (b) potential, servicing requirements and (d) workload

Geography:  The most common approach which uses existing geopolitical boundaries such as states, provinces, counties or cities.  The major advantage of geographic approach is the ready availability of secondary data from such sources such as bureau of statistics or Sarhad chamber of commerce and industry

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Bases Continued Potential The potential approach refers to splitting up a firms customer base according to sales potential. It would seem to provide equal opportunity and thus bring out the best in salespeople. First, management has to estimate the sales potential for the entire company, typically by applying an expected market share percentage to the projected market potential. Next, it has to determine which sales potential will be appropriate for the average salesperson.
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Continued.. this approach ignores the differences in coverage difficulty. Topography (the arrangement of the natural and artificial physical features of an area), customer density, and competitive intensity are among the factors that require modification of the equal-potential principle.

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Servicing requirements
Assume that Bonanza Pakistan has estimated its total sales potential at 10 million for the year 2011 in Peshawar. Sales management has further determined that each salesperson can handle a personal sales potential of PKR 500,000. This would mean that twenty territories would be formed, all of which would have identical sales potential of PKR 500,000 each.

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Continued.. However, the customer base constituting these potentials could differ from one territory to another. To contrast two possible extremes, one salesperson might have a single customer worth PKR 500,000 a year, whereas, another might be asked to work with 500 accounts doing 1000 PKR worth of business annually.

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Continued..
 A refinement of this approach classifies all accounts according to their potentials  The best known of these classifications distinguishes between A B and C accounts based on their annual volumes and established call frequencies.  A accounts are cultivated aggressively and may receive weekly or even more frequent calls; they represent the mainstay of the business, but are also most vulnerable (exposed) to competitive efforts.

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Continued B accounts are solid, stead business. They are serviced regularly, perhaps at monthly intervals. C accounts are marginal and may warrant only quarterly visits. Depending upon the account mix, servicing requirements will differ from one territory to the next unless adjustments are made to achieve an equitable

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(4) Workload The fourth sales territory base, workload goes one step further. It only considers individual account potentials and servicing requirements in creating territories, but also reflects differences in coverage difficulty caused by topographical features, account locations, competitive activity and so forth.

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Continued.. A single urban area such as Peshawar is likely to represent several sales territories, whereas a rural area may not offer enough potential for even a single sales representative. A rural salesperson may only be able to carry out two or three calls a day; his or her urban counterpart may easily accomplish ten or even fifteen visits daily. This raises complex issues of equity in workload and compensation.

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Methods for designing territories BUILD UP METHOD: This involves designing territories by combining enough pieces of a company's overall market to create units that offer sufficient sales challenge Sales challenge refers to desirable call frequencies and number of salespeople This method is favored by many consumer goods manufacturers looking for intensive coverage

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BREAKDOWN METHOD This method proceeds in the opposite direction. In this method is a product of total market potential and an estimate of the company's likely share of it. The method then sets an average sales figure per sales figure per salesperson that is subsequently divided into the overall sales forecast Such an approach is useful for industrial goods producers that desire selective distribution For example distribution in industrial estates

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Continued.. Paradox Instead of viewing sales as a result of salesforce effort and then forecasting sales accordingly, the number of members in the sales organization are determined by expected overall sales. This leads to self-fulfilling prophecy

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Incremental Method Conceptually more appealing Under this approach, additional territories are created as long as marginal profit generated exceeds the costs of servicing tthem Routing Straight line method Cloverleaf pattern (made up of four or more adjoining circular sequences

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Role of Personal selling in Marketing Mix

As we know that sales people are known as eyes and ears of the organization because they have a say in the process of designing the marketing mix elements.

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Role of Personal Selling in Product Strategy

 In the past salespersons had limited input into product development decisions. But nowadays salespersons do have a say in the new product development process.  They also participate in test marketing.  Test marketing means offering your product in diversified areas such as Karachi on test basis so as to know the general response of public. In Pakistan normally TV and cable channels run their test transmission. Normally, they offer free viewer ship.

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continued Salespersons can also give their input in suggesting the right kind of packaging such as a convenient packaging for a product such as sweetener (low calorie) for diabetic and old age patients to facilitate easy handling of the product.

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Role of Personal Selling in Distribution Strategy A channel of distribution is the route that the title to a product takes from producer to the end user. It can be direct and indirect channel. Indirect distribution is mostly used for frequently purchased, low priced items where the expense of going directly would be too high in relation to the product value such as maintenance, repair, groceries (food items) and personal health care products such as mouth wash, shaving material, shampoos, face wash and so on

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Role of Personal Selling in Promotional Strategy It is commonly known that nothing happens until somebody sells something. This means that revenue is generated when salespersons see a product or service. This is why as a means of promotion advertisements are used which create awareness about the product. After the awareness has been created general public forms a favorable or unfavorable attitude about the product. Afterwards interest might be created in the consumer mind which leads to desire and action (AIDA)
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Role of Personal Selling in Price Strategy Salespersons are in position to see and sense market reaction to alternative price levels and advise senior management as they have a fairly good idea about other competitors price lists. The pricing can be competition oriented meaning giving a price which can compete with competitors parity products (parity products are those products which give almost same quality at a similar price such as Lipton and Tapal, Lucky, Cherat and Best Way Cement of Pakistan)
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Modern Selling Approaches:

 Companies are concerned with developing long lasting relationships with their customers therefore many approaches have developed.  Customer Relationship Lifecycle  According to Bained et al, (2009) the customer relationship lifecycle has four main stages as shown in the Figure (2-12) customer acquisition, development, retention and termination. These stages resemble the stages of product lifecycle stages where different strategies are used as per needs of the product and in this context as the relationship evolves.

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Customer relationship cycle

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Continued The customer relationship lifecycle reveals those consumers who keep on returning to the same business are loyal customers. Loyal customers occupy six steps on the ladder of loyalty as shown in table below

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Customer loyalty ladder

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continued
 Partner: A partner is a customer who enjoys a partnering relationship with your company Advocate: An advocate is a customer who does positive word of mouth to other customers  Supporter: A supporter is a passive fan of your organization  Client: A client is a customer who gives repeat business but neutral towards organization  Purchaser: A purchaser is one rung higher and is someone who has bought once from you  Prospects: A prospects who is normally a potential customer

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Partnering Relationships This refers to the transition from pure selling to mutually beneficial roles with clients. From the view point of sales manager a client can be seen as a prospect, purchaser, client, advocate and finally a partner.

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Relationship Selling:
 This means to develop associations with customers. It includes identifying and satisfying new needs and developing stronger contacts with customer.  For instance the Express Surf commercial tries to establish a strong sense of association where a lady says MAIN EXPRESS NAHI CHOR SAKTI. Similarly, some consumers have developed long lasting nostalgic associations with Dalda Banaspati Ghee. Even though vegetable oil is best for health still people recall their parents bringing home Dalda. In fact their unique slogan of Maan Ke Pyaar Ki Tarah khalis is still working for the company.

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Team Selling This refers in particular for salespersons working with larger clients with complex needs. In this type of selling approach salesperson not only provide the product or service but may extend their cooperation in installation as well as training the clients personnel in learning as how to actually operate the product or service

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continued For instance Microsoft is recognized is the largest donor to flood affected people of Pakistan along with General Electric, Proctor and Gamble and Coca Cola. Microsoft provide some part of donations in cash and others in the form of software (eagle disaster preparedness software). Afterwards Microsoft went on to train Pakistani workers for operating the software in an effective and efficient manner.

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Value added Selling In this approach salespersons are expected to exceed customers expectations. It is important to know that value added means going beyond merely selling products by providing services. This approach is carried our for more demanding customers. For example as part of their value laden/adding activities Zong and Ufone offer cheap cell phones along with a free sim for poor customers.

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Consultative Selling Here salespersons act as consultants or problem solvers. For example if you want to purchase a Dell computer then you go to their website and ask their representative online about the various options available and different price ranges. More than this they also provide free of cost trouble shooting at their web site of you have some problem in your computer or laptop.

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Sales Promotion Whereas Kotler et al. (2005), define sales promotion as short run incentive to induce buying of a product or service. Almost all consumer product companies confirm using some kind of sales promotions and it makes up to 75 % of their marketing spending (Schultz & et. al, 1998).

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(1)Consumer oriented sales promotions According to Kitchen and Pelsmacker (2004), consumer oriented sales promotions use pull strategy by encouraging consumers to pull the products from the manufacturers channel. These sales promotion tools which includes but not limited to samples, coupons, cash refunds, price packs, premiums, advertising specialties, patronage rewards, point-of-purchase (POP) displays, demonstrations, contests, and sweepstakes target the end-users (Armstrong et. al, 2009).
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(2) Trade oriented sales promotion

 Trade oriented sales promotion uses a push strategy by offering incentives (push money) to wholesalers and retailers to push the product through the marketing channel (Kitchen & Pelsmacker, 2004).  Boone and Kurtz (2008) further elaborated these tools and mentioned that these include but are not limited to trade allowances (buying allowance, off-invoice allowances, promotional allowances), point-of-purchase (POP) advertising, trade shows, scientific shows, dealer incentives, contests and training programs.

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(3) Business oriented sales promotions tools  These sales promotions tools are business oriented and used for generating business leads, increasing purchases, rewarding clients and motivating salespersons. For instance, conventions and sales contests (Kotler & Armstrong, 2008).  Tony Yeshin (2006) advocates that sales promotions are more beneficial for small firms as the costs of sales promotion can be trim tailored according to the needs of a specific business.  These help a small business to compete for shelf and mind space in competition with heavy weight brands with huge media spending.

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Lets do things in a better way

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