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MCom 2nd Year Advertising Sales Management Study Material Notes

MCom 2nd Year Advertising Sales Management Study Material Notes

MAIN ASPECTS OF THE CONTROL PROCESS 

It has the following three aspects: 

(i) Salesman’s performance must fit into planned standards of efficiency and the 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 the individual salesman, if needed. Methods of Control

(1) Correspondence with the 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 a 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 planning is based on sale territories rather than on the total market. A sales territory is the particular grouping of customers and prospects assigned to a salesperson. A sales territory becomes a manageable unit of planning and control. A salesman is expected to produce maximum sales turnover from his area with the minimum amount of time and effort.

The principal reason for establishing sales territories is to facilitate planning and control of selling operations. The sales territories are designed to assist sales management in its attempts to improve coverage and customer service, secure more effective coordination of people, selling, and finally improve the evaluation of sales performance. It also avoids duplication of sales efforts and provides more effective routing and scheduling of salespeople.

The commonly used control units in sales territories are states, districts, cities, and trading areas. Sales territories enable sales organizations to manage personal selling efforts more economically.

The morale of the 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 products bought, the facilities of transport available in the area, the degree of competition, and the 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. A sales quota is a quantitative objective assigned to a salesperson. Planners integrate ball forecasting, sales budgeting, and sales quota setting. Quotas are also used to motivate salespeople to achieve certain performance levels. It enables management to secure more effective budgetary control.

Sales quotas finally assigned to salespeople should be accurate, fair, and attainable. It should not be too small or too big. The quota-setting method should be simple and readily explainable to sales personnel. Sales quotas facilitate the evaluation of sales performance. A sales quota may be expressed in absolute terms and assigned to a territory

3. Salesman’s Authority. The sales manager should lay down a clear-cut policy regarding the authority and responsibility of salesmen. Usually, salesmen are not authorized 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. The salesman is not expected to violate his prescribed powers. (MCom 2nd Year Advertising Sales Management Study Material Notes)

4. Routing and Scheduling Sales Personnel. It is one aspect of the establishment of sales territories. The routing and scheduling plan helps management to secure closer control over salespeople’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 salesperson to return to home base at least on weekends. (MCom 2nd Year Advertising Sales Management Study Material Notes)

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 the belief in human resource development. There are three reasons to evaluate or appraise the performance of salespeople:

(i) To distribute rewards for performance.

(ii) To guide the development of the sales force. 

(iii) To measure performance against planned sales and marketing objectives. 

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

MANAGEMENT OF SALES EXPENSES 

There are two approaches to the management of the sales expense allow salespeople to spend their own money to meet sales expenses or reimburse their expenses in part or full when there are reimbursable expenses, management exercises sufficient power over the activities of the salespersons. Reimbursement and control policies play a vital role of importance and they need special attention of the company. Sales expenses have a relationship with the selling style.

Mostly the customers called are technical experts, who allow a very short interaction with salespeople. 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 organizations set a part of a particular sum in their budget for sales expenses.

In other, organizations, sales expenses are controlled in a general manner there is an expense reimbursement policy and verification of expense reports. Some organizations like insurance companies in India put salespersons on straight commission plans.

They follow the ‘pay-your-own expenses policy. They tend to save on experiences by putting up in inferior hotels, taking frugal meals, curtailing travel expenses ar expenses on laundry, and avoiding entertainment expenses as far as possible, these persons also resist management and also plan their own itineraries. (MCom 2nd Year Advertising Sales Management Study Material Notes)

They neglect non-selling services and plan their own call and do not chase customers. Instead of a pay-your-own-expense policy, most companies adopt reimbursement policies, which become 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 the salesperson’s duties.

While reimbursing the prevailing economic environment must be considered, the living standards of both sales persons and the customers, he attends to must be considered. A person who meets top consultants must be given expenses commensurate to keep up the same lifestyle. In one and same company, there can be payment differentials, considering the class of customers attended. Policies are thus made reasonable, though the enforcement does require a sense of responsibility, honesty, and integrity on part of the players involved. (MCom 2nd Year Advertising Sales Management Study Material Notes)

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. (MCom 2nd Year Advertising Sales Management Study Material Notes)

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

1. Sales Analysis by Territory. In it, sales are scanned territory. The assumption is that quota allocation to each SR was based on ve each territories potential. (MCom 2nd Year Advertising Sales Management Study Material Notes)

2. Sales Analysis by SR. Let us take North. All performing SR’s reconsidered. Maybe 8 SR’s are working. Some 4 have either achieved their quota or exceeded it. Others might have missed it.

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

4. Sales Analysis by Product Line. Maybe an SR is a poor performer. Even then his performance should first be analyzed in terms of the product line. (MCom 2nd Year Advertising Sales Management Study Material Notes)

5. 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 generated/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, region wise, etc.

(xi) Cost of goods/rupee of sales

(xii) Profitability related to turnover.

 

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