M Com 2nd Year Advertising Sales Management Study Material Notes

MAIN ASPECTS OF CONTROL PROCESS 

It has the following three aspects : 

(i) Salesman’s performance must fit into planned standards of efficiency and salesman’s achievements must help to achieve the desired reduced ratio of selling expenses to sales. 

(ii) Salesman’s efforts must click with the marketing plan and the promotion-mix of the firm. 

(iii) Provision of supervision and guidance to individual salesman, if needed. Methods of Control

(1) Correspondence with salesman, (2) Salesman’s reports, (3) Personal contact and face to face communication between the salesman and the sales manager. Personal contact and personal supervision can help and inspire salesman. Correspondence and reports should not involve excessive clerical work,

Control of the sales force and sales operations have five important dimensions :

1. Sales Territories. Realistic sales planing is based on sale territories rather than on the total market. A sales territory is particular grouping of customers and prospects assigned to a sale person. A sales territory becomes a manageable unit of planning an control. A salesman is expected to produce maximum sales turnover from his area with the minimum amount of time and efforts.

The principle reason for establishing sales territories is to facilitate planning and control of selling operations. The sales territories designed to assist sales management in its attempts to improve coverage and customer service, secure more effective co-ordination of person:

selling and finally to improve the evaluation of sales performance. It also avoid duplication of sales efforts and provide more effective routing and scheduling of sales people. The commonly used control units in sales territories are states, districts, cities and trading areas. Sales territories enable sales organisation to manage personal selling efforts more economically. A morale of sales force is much better when salesmen are assigned to specific sales territories. In the allocation of sales territories, we must consider the density of potential customers in the area, the frequency of product bought, the facilities of transport available in the area, degree of competition and number of calls required to complete a sale.

2. Sales Quotas. Sales quotas are closely related to sales forecasting and sales budget. Sales forecast in a sense is the company’s decision on the total sales volume objective. Sales quota is a quantitative objective assigned to a sales person. Planners integrate balls forecasting, sales budgeting and sales quota setting. Quotas, are also used to motivate sales people to achieve certain performance level. It enables management to secure more effective budgetary control. Sales quotas finally assigned to sales people should be accurate, fair and attainable. It should not be too small nor too big. The quota-setting method should be simple and readily explainable to sales personnel. Sales quotas facilitate evaluation of sales performance. A sales quota may be expressed in absolute terms and assigned to a territory

3. Salesman’s Authority. Sales manager should lay down clearcut policy regarding the authority responsibility of salesmen. Usually salesmen are not authorised to alter price quotations given in the price list. Some liberty is given to change discounts and allowances granted by buyers. This will give some flexibility to capture business. Salesman is not expected to violate his prescribed powers.

4. Routing and Scheduling Sales Personnel. It is one aspect of the establishment of sales territories. The routing and scheduling plan help management to secure closer control over sales people’s movements, the route plan gives adequate information and locations of customers, call frequency rates, means of transport available, etc. The route should permit the sales person to return to home base at least on weekends. The scheduling plan points out the customers to be called upon each day and other relevant details regarding daily sales calls. Their call reports can be compared with the planned routes and schedules to find out whether or not plans are being followed.

5. Evaluation of Sales Performance. It is based on belief in human resource development. There are three reasons to evaluate or appraise the performance of sales people:

(i) To distribute rewards for performance.

(1) To guide the development of sales force. 

(ii) To measure performance against planned sales and marketing objective. 

Targets of sales performance are set and they act as criteria comparison with actual accomplishment. It is essential that evaluation should be forward-looking and aim at future. Sales manager should not give emphasis on finding faults and placing blames on sale people for past performance. Performance evaluation should be done periodically and promotion, rewards should be offered to the deserving sales people. Management by objectives (MBO) can be used in the management of sales people as far as possible.

MANAGEMENT OF SALES EXPENSES 

There are two approaches to the management of the sales expenseallow sales people to spend their own money to meet sales expenses or reimburse their expenses in part or full when there are re-imbursable expenses, management exercises sufficient power on activities of the sales persons. Reimbursement and control policies plays a vital role of importance and they need special attention of the company. Sales expenses have the relationship with the selling style. Mostly the customers called are technical experts, who allow a very short interaction with sales people. If the new products are to be sold in the new markets, then the selling expenses tend to be high. Expenses must be kept under control by-Liberal approach and control policies. Some organisation set a part of a particular sum in their budget for sales expenses. In other, organisations, sales expenses are controlled in a general manner there is expense reimburseinent policy and verification of expense reports. Some organisations like insurance companies in India put sales persons on straight commission plans. They follow ‘pay-your-ownexpenses’ policy. They tend to save on experises by putting up in inferior hotels, taking frugal meals, curtailing travel expenses ar expenses on laundry and avoiding entertainment expenses as far as nossible, these persons also resist management and also plan their own itineraries. They neglect non-selling services and plan their own call and do not chase customers. Instead of pay-your-own-expense policy, most of the companies adopt reimbursement policies, which becomes a debit entry on the profit and loss account of the company. Reimbursement should cover the expenses fully for those activities which are part of sales person’s duties.

While reimbursing the prevailing economic environment must be considered, the living standards of both sales persuns and the customers, he attends to must be considered. A person who meets top consultants must be given expenses commensurate to keep up same life-style. In

one and same company, there can be payment differentials, considering the class of customers attended. Policies are thus made reasonable, though the enforcement do require a sense of responsibility, honesty and integrity on part of the players involved. 

Methods of Reimbursing

It includes the following method under it: 

(i) Flat Expense Account 

(ii) Flexible Expense Account 

(iii) Honour system 

(iv) Expense Quota

(v) Reimbursement of vehicle expense 

(vi) Fixed mileage rate 

(vii) Graduated mileage rate 

(viii) Fixed periodic vehicle allowance 

(ix) Combination of fixed periodic vehicle allowance and mileage rate.

SALES ANALYSIS 

In this we examine sales volume by : 

(1) Territory 

(2) SR (Sales Representative) 

(3) Customer 

(4) Product Line

The underlying principle is that the trends of aggregate sales volume ide more than they reveal the ground realities.

Mostly, the pareto’s principles 80-20 operate. 20% sales generated y 80% orders. Conversely 20% of the selling units account for 80% of volume.

The volume is like an ice-berg-it reveals 10% of market but hides 0% of it thus, sales analysis is a must.

1. Sales Analysis by Territory. In it, sales are scanned territory ise. The assumption is that quota allocation to each SR was based on ve each territories potential.

2. Sales Analysis by SR. Let us take North. All performing SR’s re considered. May be 8 SR’s are working. Some 4 have either achieved heir quota of exceeded it. Others might have missed.

3. Sales Analysis by Customer. One important segment i.e., retail chemists account for his poor performance. May be, the competition has affected a price but and promoting their brands has become lucrative.

4. Sales Analysis by Product Line. May be an SR is a poor performer. Even then his performance should first be analysed in terms f product line.

Cost Analysis. Marketing cost analysis involves a detailed examination of the costs and their impact on sales volume. The following merit attention:

(i) Sales/Call ration

(ii) Sales volume and turnover of receivables

(ii) Enquiries generat4ed /call or direct mail

(iv) PC (Profit contribution)

(v) Profit/segment, channel, territory, product pack, SR etc.

(vi) Stock Turnover

(vii) Average Cost/orders

(viii) Profit/rupee of sales

(ix) Expense/sales ratio

(x) Total operating/functional cost, product wise, regionwise etc.

(xi) Cost of goods/rupee of sales

(xii) Profitability related to turnover.

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