Introduction to Sales Management – The Sales Organization – Determining Sales Related Marketing Policies – Sales Functions and Policies – International Sales Management – Personal Selling. Sales Planning – Sales Budgets – Estimating Market Potential and Forecasting Sales – Sales Quotes – Sales & Cost Analysis, Sales Force Management: Hiring and Training Sales Personnel – Time and Territory Management –Compensating Sales Personnel – Motivating the Sales Force – Leading the Sales Force – Evaluating Sales Force Performance. Marketing Logistics - Distribution as Marketing Mix Element – Distribution Resource Planning – Marketing Channel Integration – Channel Management – Nature of Marketing Channels – Evaluating Channel Performance- Specialized Techniques in selling – Tele Marketing – Web Marketing Distribution Cost Analysis: Managing Channel Conflicts – Channel Information Systems – Wholesaling – Retailing – Ethical And Social Issues in Sales and Distribution Management.

1. DEPARTMENT OF BUSINESS ADMINISTRATION & RESEARCH
Shri Sant Gajanan Maharaj College of Engg., Shegaon
Sales and Distribution Management
Unit-2

2. WHAT IS A QUOTA?
A quota refers to an expected performance
objective.
Quotas are tactical in nature and thus derived
from the sales force’s strategic objectives.

3. WHY ARE QUOTAS IMPORTANT?
• Quotas provide performance targets.
• Quotas provide standards.
• Quotas provide control.
• Quotas provide change of direction.
• Quotas are motivational.

4. TYPES OF QUOTAS
• Sales volume quotas.

5. Sales volume quotas includes dollar or
product unit objectives for a specific
period of time.

6. TYPES OF QUOTAS
• Sales volume quotas.
• Break down total sales volume.

7. • Individual established and new products.
• Geographic areas based on how the sales
organization is designed, which would
include:
• Sales division.
• Sales regions.
• Sales districts.
• Individual sales territories.
• Product lines.

8. TYPES OF QUOTAS
• Sales volume quotas.
• Break down total sales volume.
• Profit quotas.

9. • Gross margin quota determined by
subtracting cost of goods sold from sales
volume.
• Net profit quota determined by subtracting
cost of goods sold and salespeople’s direct
selling expense from sales volume.
The two types of profit quotas:

10. TYPES OF QUOTAS
• Sales volume quotas.
• Break down total sales volume.
• Profit quotas.
• Expense quotas.

11. Expense quotas are aimed at controlling costs of
sales units. Often expenses are related to sales
volume or to the compensation plan.

12. TYPES OF QUOTAS
• Sales volume quotas.
• Break down total sales volume.
• Profit quotas.
• Expense quotas.
• Activity quotas.

13. Activity quotas set objectives for job-related
duties useful toward reaching salespeople’s
performance targets.

14. Customer satisfaction refers to feelings about any
differences between what is expected and actual
experiences with the purchase.

15. TYPES OF QUOTAS
• Sales volume quotas.
• Breakdown total sales volume.
• Profit quotas.
• Expense quotas.
• Activity quotas.
• Quota combinations.

16. METHODS FOR SETTING SALES QUOTAS
• Quotas based on forecasts and potentials.
• Quotas based on forecasts only.
• Quotas based on past experience.
• Quotas based on executive judgments.
• Quotas salespeople set.
• Quotas related to compensation.

17. TABLE 7.4 LEVELS OF ORGANIZATIONAL SALES PLANNING
LEVEL PURPOSE: WHAT IS
PLANNED
WHO (USUALLY) IS
INVOLVED
1. Marketing •Organizational goals
(increase in market share or
penetration, increase in
customers, increase in sales
dollars and units sold)
Upper management and
sales and marketing
executives
2. Regional plan •Priorities (which regions,
markets, and products to
emphasize)
Regional and district sales
managers (which input
from sales reps)
3. District plan •Dollar allotment (for
promotion, advertising,
new employees, sales
incentives, and so on)
District managers and sales
representatives
4. Territorial plan •Goals for number of new
customers and for increased
business with old
customers in each region
and territory
Sales representatives

18. SELLING BY OBJECTIVES SETS FUTURE TARGETS
Two basic steps to implementing sales
strategies:
Step 1: Organize the jobs.
Step 2: Define annual objectives in
important areas.

19. FIGURE 7.2 THE FOUR MAJOR AREAS TO ESTABLISH OBJECTIVES WITH EACH
SALESPERSON
Step 1: Organizing the Job
Step 2: Defining Annual Objectives
SALES
MANAGEMENT
Salesperson
Account Management Call Management Self-ManagementTerritorial Management
1. Regular
2. Problem Solving
3. Innovative
• Portfolio of
Accounts
• Potentials
• Coverage
• Records
• Order Size
• Penetration
• Reports
• Customer
Satisfaction
• Preparation
• Selling Technique
• Training
• Communication
• Buyer Behavior
• Impact
• Handling Resistance
• Appearance
• Manner
• Communication
Skills
• Abilities
• Attitudes
• Selling Abilities
• Limits
• Potential Business
• Size
• Customer Base
• Prospects
• Leads
• Market Share
• Growth
• Trade Relations
• Dealer Relations

20. • Treating the territory as a business.
• Managing each account.
SELLING BY OBJECTIVES SETS FUTURE TARGETS

21. • Treating the territory as a business
• Managing each account
• Managing each call
SELLING BY OBJECTIVES SETS FUTURE TARGETS

22. • Is the sales rep properly armed with
information, leads, and materials before the
call occurs?
• Is the sales rep applying the major
principles of selling technique during the
presentation? Or is the sales rep inventing
his or her own and perhaps making
every mistake every salesperson in
history has made?
• Has the salesperson planned some
coherent attack for the sales presentation,
and is it working well?
Questions about the content of calls:

23. • Does the sales rep have enough training in
communication, in meeting sales
resistance, in understanding buyer behavior,
in improving call impact, in gaining greater
account penetration, in follow-through
methods to do the job?
• Does the sales rep have enough knowledge
of the product and its applications,
service and system backup, and technical
problems to handle the toughest calling
situation?
Questions about the content of calls: continued

24. • Treating the territory as a business.
• Managing each account.
• Managing each call.
• Managing oneself.
SELLING BY OBJECTIVES SETS FUTURE TARGETS

25. • Since selling involves making contact with
strangers, dress, style, demeanor, and personal
decorum are part of the salesperson’s tool kit.
• Communication skills, memory, logical speaking
habits, and writing competence are vested in the
person.
• Attitudes and outlook toward the job, the product,
the company, and the customers all have an
important bearing in the results to be achieved.
• The knowledge of selling techniques, what the
various kinds are and how and when to use them,
are personally vested in the sales rep and can be
produced and polished by training.
Self-management in selling includes the following:

26. BASIC LEVELS OF INDIVIDUAL OBJECTIVES
1. Regular, ongoing, and recurring objectives.
2. Problem-solving objectives.
3. Innovative or creative objectives.
The highest level of excellence is reserved for
people who are attaining all three.

27. THE PROCEDURES FOR SETTING OBJECTIVES AND QUOTAS WITH
SALESPEOPLE
• Prepare the way.
• Schedule conferences with each
salesperson.
• Prepare a written summary of goals agreed
upon.
• Optional group meeting to share objectives.

28. Name
For Year
List Your Responsibility Area
Results Expected
PessimisticOutput
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Other
$ Volume/month
$ Expense/month
Gross margin/month
OptimisticRealistic Results
Instruction: List the regular, ongoing, recurring objectives. Cover the ten major respon-
sibilities of your job next year to manage territory, accounts, calls, and yourself.
FIGURE 7.3 SELLING BY OBJECTIVES FORM

29. AGOOD OBJECTIVE AND QUOTA PLAN IS SMART
Specific
Measurable
Attainable
Realistic
Time specific

30. Test 1: Does this quota state exactly
what the intended result is?
Test 2: Does this quota specify when
the intended result is to be
accomplished?
Test 3: Can the intended result be
measured?
A simple three-way test to judge how well quotas
and objectives are written:

31. SELLING-BY-OBJECTIVES MANAGEMENT
Selling by objectives (SBO) is the process
elaborated on earlier whereby the manager and
salesperson jointly identify common goals, define
major areas of responsibility, and agree on the
results expected.

32. FIGURE 7.4 SETTING OBJECTIVES AND QUOTAS IS A TWO-WAY PROCESS BETWEEN
MANAGER AND SALESPERSON
Mutually Set
Objectives and
Quotas
Measure
Performance
Evaluate
Performance
Reward
or Penalty
Publicize
Performance
Results

33. THE SALES TERRITORY IS WHERE QUOTAS ARE MADE
The sales territory is “where the action is!”

34. THE BOTTOM LINE
Quotas are important to a company because they establish the
“end state” sought, and they change according to external and
internal forces.
Many different types of quotas exist.
Methods for setting quotas may vary.
Setting a sales quota can be an involved process.
Selling by objectives (SBO) is a common concept and is widely
used by sales organizations.

35. Define a sales territory
• Sales territory- comprises a group of customers or a geographic area
assigned to a salesperson
(Source: Futrell)
Why establish a Sales Territory?

36. Why establish a Sales Territory?
• 1) To obtain thorough coverage of the market
• 2) To establish a salesperson’s responsibility
• 3) To evaluate performance
• 4) To improve customer relations
• 5) To reduce sales expense
• 6) To allow better matching of salesperson to customer
• 7) To benefit salespeople and the company
(Source: Futrell)

37. Benefits of Time and territory Management
– Territory should be more efficiently and effectively covered
– Optimum time should be spent with each class of prospects
– Most important customers should receive the bulk of the service
– Sales costs should be reduced due to better time allocation
– Benchmarks will form
– Optimum results will be yielded
(Source: Hite and Johnston)

38. How to Design New Territories
• What is needed:
– Potential (large enough for a salesperson to make a living covering it)
– Salesperson should be able to work the territory efficiently and economically
– Salesperson should be able to maintain his standard of living
– Overnight travel should be held to a minimum
– The territory should have sufficient transportation facilities (reachable)
– Company can make an adequate return on investment
(Source: Hite and Johnston)

39. How to Design New Territories
• Steps
– 1) Analyze the territory with the objectives of determining the basic unit potentials
and/or the number and types of potential customers within each basic unit
– 2) make a customer analysis within the territory
– 3) Make a salesperson work load analysis
– 4) Determine the number of salespeople needed
– 5) Design the sales territories, including the actual routes
– 6) Evaluation and revision of sales territories

40. Sales Control and Cost Analysis
Companies need to have proper mechanisms in place so that
salespeople adhere to the top line and bottom line
objectives
Sales Audit is a systematic, critical & unbiased review and
appraisal of the basic objectives and policies of the selling
function and of the organisation, policies, methods,
principles and personnel employed to implement those
policies and achieve those objectives
Salespeople tend to lose sight of this core objective over time;
that is why this becomes critical

41. Sales Control and Cost Analysis
Key characteristics:
a) Objectives: Each sales function must have clearly stated
objectives. Like we want to achieve sales of 20 million
units this year without decreasing per unit profit by more
than 3%.
b) Company Policies: Are they in line with objectives or do
they need to be changed. E.g. the compensation
structure
c) Organization: Does the company have the resources to
achieve the objectives? E.g. overstaffed or understaffed
d) Methods: Are the strategies appropriate? Will
discounting, for instance dent the brand image?

42. Sales Control and Cost Analysis
e) Procedures: Implementation of methods systematically,
through allocation of responsibility that is clearly defined.
f) Personnel: Checking whether the individuals are
effective in achieving the stated objectives in line with the
defined policies.
Audits seek to answer 4 questions:
a) Who is buying what and how?
b) Who is selling what and how?
c) How is the competition doing?
d) How are we doing?

43. Sales Control and Cost Analysis
Sales analysis seeks to identify strengths and weaknesses in
the sales data like high turnover-low profit; good and bad
customers, high potential and low potential customers,
respective performance of sales territories etc.
Allocating sales effort: ‘Iceberg principle’ says that only a
small part of the total situation is visible; the rest has to be
gauged through sales analysis.
There are customers who account for a smaller percentage of
sales but time, money and effort to tap them is no less.
These situations must be analysed & corrective action
taken.
The desirable outcome is that allocation be done based on
sales potential and actual sales.

44. Sales Control and Cost Analysis
Illustration of sales analysis:
Quota Sales +/-
% age
achieved
New Delhi 5 3.78 -1.22 75.6%
Mumbai 7 8.35 +1.35 119.28%
Hyderabad 4 5.49 +1.49 137.25%
Chennai 3.5 3 -0.5 85.71%
Bangalore 2.5 2 -0.5 80%
Figures in Rs. Million unless otherwise
specified

45. Sales Control and Cost Analysis
The data must then be analysed in New Delhi, Chennai and
Bangalore to ascertain which salesperson (s) in these areas
missed the quotas. Then we can further analyse where he
missed the quota by factors like sales account type, or by
product line

46. Sales Control and Cost Analysis
Marketing cost analysis: This is done to judge the
profitability of various aspects of the sales operations. It
can be judged w.r.t. territories, sales personnel, product
types, accounts, etc.
Classifying sales expenses: They may be classified as
separable (direct) or common (indirect). Separable are
traceable to individual sales people, accounts, channels,
products, etc. Common expenses are for the entire
company
For instance, salary is a common expense and commission is a
separable expense; even transportation. You cannot
attribute administration related sales expenses.

47. Sales Control and Cost Analysis
In marketing cost analysis, expenses data is grouped by
activity; for instance, all expenses related to field sales are
kept separately.
Common expenses have to be assigned logically to different
aspects of the sales operations.
For instance, if the company has a fixed salary component,
how do you divide it among products?
The final formula regards contribution by any aspect of the
sales function:
Sales – cost of goods sold – (separable expenses + common
expenses attributable on a logical basis)

48. Questions

49. THE END