SALES MANAGEMENTEvery module consists of three to five units.Structure of a unit is as under:-1) Introduction & objectives2) 2-5 sections3) Short answer questions(SAQ)4) Summary5) Keywords6) References7) Suggested readingsModule I- Sales Process and its Management1) Introduction to sales management 1 - 172) Sales Process 18 - 323) Personal selling 33 - 474) Computer applications in sales management 48 - 63Module II- Selling Skills5) Communication skills 64 - 806) Sales Presentation 81 - 1097) Negotiation Skills 110 - 1238) Retail communication 124 - 140Module III-People Issues in Sales management9) Job analysis, recruitment & selection 141 - 15910) Training the sales force 160 - 17411) Compensation and motivation of sales force 175 - 18712) Monitoring and performance evaluation 188 - 204Module IV- Sales Organization and Planning13) Sales Planning 205 - 21814) Sales Organization 219 - 23515) Sales forecasting and sales quotas 236 - 24916) Sales Budgeting and control 250 - 261

UNIT 1 INTRODUCTION TO SALES MANAGEMENTStructure1.1 IntroductionObjectives1.2 Marketing Approaches1.2.1 Production Concept1.2.2 Product concept1.2.3 Selling Concept1.2.4 Marketing Concept1.3 Marketing and Sales1.3.1 Good Selling Process1.3.2 Sales approaches1.3.2.1 Direct Sales1.3.2.2 In-direct sales1.3.3 Types of personal sales1.4 Evolution of sales department1.5 Components of the Marketing Mix1.5.1 Personal Selling and Other Promotional Tools

1.6 Functions of the sales manager1.7 Sales Management Model1.8 Summary1.9 Glossary/ Keywords1.10 References1.11 Suggested Readings1.1 Introduction“Sales management” as the term implies means management of sales. Often it isconsidered synonymous with the management of personal sales. It involves anunderstanding of the effort that goes into the management of the sales force and thevarious processes of sales.Sales management initially was meant to be the direction of sales force personnel. Laterthe term took on a broader significance apart from personal selling and the term “salesmanagement” included managing of all the sales related activities including below theline advertising, sales promotion, physical distribution, pricing and productmerchandising.The Definitions Committee of the American marketing association defined salesmanagement as “ the planning , direction and control of personal selling, includingrecruiting, selecting, equipping, assigning, routing, supervising, paying and motivatingas these tasks apply to the personal sales force”. However, we shall also include indirectsales through channels within the ambit of sales management.ObjectivesAfter studying this chapter you will be able to:-1) Identify clearly the differences between the functions of marketing and sales2) Describe various marketing and sales approaches3) Describe the marketing mix and the sales management model4) Identify the various functions of a sales manager and his/her objectives1.2 Marketing ApproachesMarketing is defined by the American Marketing Association [AMA] as "the activity, setof institutions, and processes for creating, communicating, delivering, and exchangingofferings that have value for customers, clients, partners, and society at large."Marketing deals with the company orientation towards the market place. It deals withmainly four concept’s namely the production concept', product concept, marketingconcept and the selling concept.1.2.1 Production conceptThe production concept founded on the belief that the customers favor those productsthat are highly available and affordable to them. So the concept assumes that the cheapproducts are sold well and relies on the improved production and distribution activities.

Companies try to attain profits by exploiting economies of scale. Improved productionand distribution are emphasized rather than the quality or features of theproduct/service. This concept is also known as the manufacturing concept. This type ofstrategy for a business works well in the developing countries where the demand ismore than the supply.Important questions the firm has to address in this process are:-1) Can the product be produced?MarketingConceptsProductionConceptProductConceptSellingconceptMarketingConcept2) If the product can be produced, can it be done in required quantities?China has oft practiced the production concept in making the goods/services availableat all times at very low prices and increased efforts to compete in international markets.This concept is perfectly suitable when the company distributes the products/servicesfor the masses and not to a specific target group. This concept works well when thedemand for the product is high and the customer preference doesn’t change for a longperiod of time.Production concept works perfectly fine for some companies especially in the fastmoving consumer goods (FMCG) sector. However it was found later that some productsdid not sell adequately irrespective of all the measures taken by the production concept.Then this situation demanded another concept known as the product concept.1.2.2 Product conceptProduct concept relies on the assumption that the customers buy those products thatoffer the most quality, performance, and innovative features. This concept suggests thatthe quality of the product is an important factor in the customer buying process andcustomers would always prefer to buy products of superior quality.Computer industry is a good example where the production concept worked earlier butlater on product concept took over. Customers required more and more features andquality while choosing a computer/ laptop. As more and more companies joined thisbusiness and the foreign brands came in the local players had to adopt the productconcept.

Quality however needs to be defined. Attributes of quality may differ from customer tocustomer. To some customers quality means faster processing technologies and tosome it may be some other features in the product. So companies must take enoughcare in designing a product which would be in accordance with the quality parameters ofthe target group. Timing of the product in the market also plays a vital part in thesuccess of a product. Sometimes technological or innovational products fail when theyare introduced in the markets and the customers are unaware of the benefits. Soeducating the customers before introducing a product is important.For instance the Golden Eye technology in televisions was introduced by Videocon butthe customers were clueless about what benefit it provides. After some time, when thecustomers understood about that technology, it was introduced by LG and it became amarketing success for its products.In some industries the customer would not be able to understand the product benefits ormay be lacking a little motivation to buy the product even if they know it’s necessary. Insuch cases product concept might fail to make the customer buy the product.Hence the “Selling Concept” was adopted by some companies.1.2.3 Selling ConceptThis concept relies on the assumption that “We need to compel the customer to buy theproduct”, so the customer will buy the product only if the company aggressivelypromotes/sells their products/ services. This concept believes that customer is usuallyinert and would not buy the product/service if the choice is left to them. So the companywould push its products/services towards the customers and push them to buy. Hence astrong network of sales force is created for this purpose and they convince thecustomers to buy the products/services through advertising and personal selling. Thiskind of approach worked well with products/ services like insurance, vacuum cleaners,water purifiers, and various other household items etc.Important questions the firm has to address in this process are:-1) Can the product be sold?2) How much can we charge for the product or what can be the maximum discountthat can be given and still have a decent profit?This concept would work well for the first time sale to a customer who might take theproduct/service when persuaded by the sales representative. After buying theproduct/service if the customer is not satisfied then he/she might not be interested inentertaining the sales person for the next time.It was later realized that most of the customers will buy the products which they needand want. Hence the marketing concept has come into the picture.

1.2.4 Marketing conceptThe marketing concept underlines the following principles:-1) Identify the needs and wants of the customer2) Design the products and services to fulfill the same3) Use various promotion techniques to communicate the benefits of the product4) Realizing the profit by satisfying customer needs over a long termThe marketing concept then is the management belief that customers will long thoseproducts that they need and what and that the key task of the management is to identifycustomer needs and wants and design products accordingly.SAQ 11) Identify any two products for which you would prefer to follow the productionconcept?2) Explain which concept would work well in selling a cell phone to a CEO of thecompany and to a small farmer?3) Identify which model does Dell follow in selling the computer products andexplain how it has benefited them?1.3 Marketing Vs salesSales as a process implies exchanging the products or services in exchange for moneyin such a manner that what you get from it is more than what you put into it. In otherwords, the difference between the realized sales price and the cost of manufacturing isthe profit for the organization from sales.Marketing on the other hand includes understanding the value proposition in the mindsof the customer and designing the products and services accordingly.1.3.1 Good Selling ProcessGood Marketing makes sales easy. However, even when the marketing process isgood, the sales process needs to be handled carefully.Good selling implies:-1) Identifying the right customer2) Communicating the product benefits to the customers and3) Exchange of goods/ services for moneySales are the culmination of all the marketing efforts and in a nut shell, it is theexchange of good and services, for money. It may be said that marketing is all theactivities conducted to prepare for sales. Sales are all the activities required to close thedeal.Clearly customers will buy those products which they need and also where theperceived value of the product is greater than the selling price of the product. The taskof marketing is to enhance the value proposition in the minds of the customer andincrease the perceived value.It would be ideal if the customers came and demanded the product/ service. Howeverthe customers may not do so because of several reasons such as:-1) He/ She doesn’t know that the product is available2) May not know where the product is available3) And have no idea of whom to contact

4) Have no clear idea of the value proposition and the benefits5) May not be clear of the utility of the product in solving his / her problemThe sales force then plays an important role such as:-1) To reach out to the customer and inform him/ her about the product benefits2) Make the product easily available to the customerThe product can be made easily available by the following methods:-1) Meeting the customer on a one-one basis and delivering the product at the doorstep. This is referred to as personal sales.2) Make the product available at place which is easily approachable by thecustomer. This is refereed to Indirect or channel sales.Sales management then begins with identifying the process of sales. The sales strategydetermines the route the sales would take.1.3.2 Sales ApproachesTwo possible approaches by which the sales would take place can be classified asfollows:-Depending upon the product and the approachability, needs and a affordability of thecustomer one of the above approaches would be followed by sales personnel1.3.2.1 Direct sales approach may be:-1) Selling to offices- (for examples, Office Automation Products)SalesApproachesDirect salesApproachIn-Direct salesApproach2) Selling to Industries- (business to business –B2B)3) Door-to-door selling1.3.2.2 In-Direct sales approach1) Company to retailer to customer2) Company to wholesaler and then to retailer to customer3) Company to wholesaler to distributor and then to retailer to customerAn attempt is made to introduce these various sales approaches, but the following textis primarily focused on personal selling.The issues of channel management/ indirect sales approaches are also covered in thecourse work of “Distribution& Logistics” and “Supply Chain Management”.1.3.3 Types of Personal SalesPersonal sales can be classified into broad areas like:-1) Office sales2) Industrial/ Institutional sales(In some countries like India there is significant difference in the approaches tobe followed for Industrial/ Institutional sales and the government sales)3) Door-to-door salesThe kind of sales strategy to be adopted is the function of the product / service, themarket, buying process, and the competition.SAQ 21) If you were a sales person for agricultural products like fertilizers, quality seedsetc., which sales approach would best fit in and why?

2) In the above question, what steps would you follow if the customer has noknowledge about the benefits of your product?1.4 Evolution of the sales departmentAs described by Richard (2001), before the Industrial revolution the small scaleindustries were the leaders of the market and selling the products / services was notmuch of a problem. More emphasis was given on manufacturing activities. The orderswere in hand before the actual manufacturing process of those orders had started.Meeting the demand was a major problem.In many firms a small team used to supervise all the business activities. There was noneed of seperate teams for different functions like selling, marketing and manufacturing.All the tasks were performed by the team or sometimes, by a couple of individuals.Most of the time was spend on manufacturing. It was an ideal situation for most of thefirms not to bother about the marketing and selling activities until the Industrialrevolution began.With the Industrial revolution, which began in 1760 in England and shortly after theAmerican Revolution, in United States, the companies had started to focus on theexpansion of their territory by finding new market places.Factories were producing huge quantities of goods with the improved technology andmachinery. The production process had become simple and now the main problem waswhat to do with excess surplus after meeting the domestic demand in nearby markets.The situation demanded for the expansion of their presence in new markets, crossingthe boundaries of the cities, countries & continents.With increasing presence in many countries, it became difficult to manage all thedepartments by a single individual as was the case before the industrial revolution. Thesize and volume of business had increased to such an extent that it became necessaryto delegate the authority to others. This process encouraged in establishment of variousfunctional units like manufacturing, finance, marketing etc. Each and every departmentwas to function independently and be supervised by a separate authority.The creation of the marketing department has solved the problem of understanding themarket place & helped in performing all activities to improve the market dominance ofthe products. With increasing markets and customers various sales divisions weresetup. However a major issue of how to communicate with customer has to beperfected. This is where the roles of marketing mix and personal selling as a functioncame into the picture.Let us understand what marketing mix is and the importance of its various components.1.5 Components of the Marketing Mix

As you have already studied in marketing, marketing mix involves several componentswhich can be understood by the following diagram.(Sales management)MarketingMixProduct Price Promotion PlaceAdvertising PublicRelationsPersonalSellingSalesPromotionInternet BasedpromotionsThe marketing mix consisting of various components plays an important role inestablishing the market place/ dominance of a product.According to the market needs the type of product, the pricing of product, the variouspromotion mechanisms to be used and the type of distribution network followed (place)should be decided.Various tools of promoting a product include advertising, public relations, personalselling, sales promotion and Internet based promotions.Personal selling can be understood as the one to one oral communication between thesales personnel and the target group in such a way that both the parties benefit fromeach other. The oral communication could be a personal meeting, a telephoneconversation or by using latest trends in technology such video conferencing.The benefits for a sale personnel would be in terms of financial reward for closing thesale successfully & the customer would be benefitted by the product/ service received.Often the objective of personal selling may not be to close a sale. Most of the time,objective may be to pass on the information about the products/ services to the targetgroup. Maintaining a good relationship with the customer is often treated as one of theimportant objectives of the sales team.1.5.1 Personal selling Vs Other Promotional toolsLet us now understand how the personal communication differs from other tools such asadvertising, public relations, sales promotion and internet based promotion. We shallalso understand the situations in which the personal selling would be preferred overother promotion tools and finally we shall discuss the disadvantages of the personalselling.Personal selling is preferred in cases where the customer cannot be reached orcommunicated easily about the company product / services by other means, such asthe rural areas where the television or internet is not available. Secondly in the caseswhere the target group might be a CEO of a company or a head of the institution, such

customers cannot be communicated easily with other tools as compared to personalselling.1.6 Functions of the sales managerAny organization that has the sales people demands a sales manager. What does everysales manager have in common? They accomplish the tasks through their people andorganizations. The sales manager is responsible for generating sales, profits & meetingthe customer satisfaction levels as per the company objectives.One manager, John Rozurat of W.W.Grainger, described management as “the art ofgetting things done through people”.Charles Futrell(1998) describes the functions of the sales manager as follows:-1) Planning :- Building a profitable customer oriented team2) Staffing:- Hiring the right people to sell and lead3) Training:- Educating sales personnel according to companyobjectives4) Leading:- Guiding average people to perform at above average levels5) Controlling:- Evaluating the past to guide the futureThe outcome of these several functions would be the attainment of objectives such as:-1) Achieving defined goals2) Product sales and profits3) Better Customer satisfaction levels4) Efficiency and5) EffectivenessSales management has several functions like planning, budgeting, recruiting andselection, training, motivating, compensation, designing territories & evaluatingperformance.1.7 Sales Management ModelThe 1st step “describing the personal selling function” deals with understanding the jobactivities and the sales process involved in personal sellingThe 2nd step “Defining the strategic role of sales function” will deal with the corporate,business and marketing level strategic decisions which typically provide guidelineswithin which the sales manager and salespeople must operate.Source: Thomas N. Ingram (1989)The 3rd step “Designing the sales organization” deals with the importance of designingan effective sales organization which is necessary to implement the strategiessuccessfully.The 4th step “Developing the sales force” highlights the importance of right recruitmentand selection methods and the need for proper training of the sales force personnelThe 5th step “Directing the sales force” presents that hiring the best people for sales isone thing and directing their efforts to meet the sales organization goals and objectivesis another. Sales managers spend a great deal of time in motivating, supervising andleading members of the sales force.

Describingthe personalsellingfunctionDefining thestrategic roleof the salesfunctionDesigningthe salesorganizationDevelopingthe salesforceDirectingthe salesforceDeterminingsales forceeffectivenessandperformanceThe 6th step “Determining sales force effectiveness and performance” deals withmonitoring the progress of sales force to determine the effectiveness and performance.Developing forecasts, assigning quotas and budgets provides necessary information forthe performance evaluation.1.8 SummaryIn this unit we understood the definition of sales management and the differencesbetween marketing and sales. We highlighted various marketing approaches startingwith the production concept, product concept, selling concept and finally the marketingconcept and their role in sales generation. A good selling process is essential in makingthe sales easier by identifying the customer, communicating the benefits andexchanging the goods/services for money. For the sales process to be effective thesales force plays an important role in identifying the right approach to reach out tocustomers and make the sale. Later in this chapter we have studied the importance ofthe components of the marketing mix in establishing the market place and the criticalrole of personal selling played for the same. This unit also helped in understanding therole of the sales manager in planning, staffing, leading, training and controlling the sales

force personnel. Finally in this unit we understood the sales management model whichhelps in managing the sales.1.9 Glossary/ Keywords1) Sales Promotion Activities, techniques and incentives that aredirected towards customers with an intention tocreate consumer demand.2) AMA American Marketing Association is aprofessional association for marketers.3) FMCG Fast moving Consumer Goods are theproducts used by individuals or householdswhich are used or replaced very fast by thecustomers over a period of weeks, months ofwithin a year. Some examples would be softdrinks, toiletries etc.1.10 References1. Tyagi C.L., Arun kumar (2004), “Sales Management”, Atlantic Publishers andDistributors, New Delhi, India.2. Charles Futrell. (1998), “Sales Management: Teamwork, Leadership, andTechnology (6th Ed.)”, The Dryden Press, Florida, USA.3. Richard R. Still, Edward W. Cundiff, Norman A. P. Govoni (1998), “Salesmanagement: decisions, strategies, and cases (5th Ed.)” Prentice-HallInternational, New Jersey, USA.4. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysisand decision making”, The Dryden Press, New York, USA.1.11 Suggested Readings1. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “SalesManagement”, John Wiley & Sons, New Jersey, USA.2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,Prentice Hall, New Jersey, USA.

UNIT 2 SALES PROCESSStructure2.1 IntroductionObjectives2.2 Marketing Strategy2.2.1 Segmentation and Target Marketing2.2.2 Determining Potential buyer and buyer group2.3 Sales Approach2.3.1 Typical Purchasing Process2.3.2 Essential activities of Sales Process2.3.2.1 Interest creation activities2.3.2.2 Pre-purchase activities2.3.2.3 Purchase activities2.3.2.4 Post-purchase activities2.4 Summary2.5 Keywords2.6 References2.7 Suggested Readings2.1 Introduction

The previous unit dealt with the introduction to “Sales management”. It highlighted thefunctions of marketing and sales, described various sales approaches and presentedfunctions of the sales manager.We will begin the unit by understanding various steps in marketing strategy and thendeal with the sales personnel skills set and the various steps in the sales process. Inthis unit we will discuss about the sales process activities. We shall discuss someessential activities which need to be performed by the sales personnel in the salesprocess. The sales personnel help in creating customer value and competitiveadvantage to the product/service.Irrespective of the nature of sale and the type of customer, the sales personnel shouldfollow certain basic activities for successful closing of a sale. We will discuss theessential activities of the sales personnel in general and later on find out in depth howthe sales process changes for different types of sales like direct and indirect sales.ObjectivesAfter studying this unit you will be able to:-1) Define segmentation, potential buyer and buyer group for the product/ service2) Understand the typical purchasing process of the customer3) Identify essential activities involved in a sales process4) Explain the critical role played by the sales person in handling the sales process2.2 Marketing StrategyMarketing strategy can be thought of as all the activities performed to use thecompany‟s limited resources to achieve the objectives marketing and sales and attaincompetitive advantage.The first step includes identifying the product/ service. The product/ service isdeveloped as per the company goals and the market needs. After identifying theproduct/ service, the next step is analyzing the market. This is where we begin toidentify the customer for the product/service.2.2.1 Segmentation and Target MarketingMarket segmentation is defined as “the process of dividing the heterogeneous marketinto homogeneous sub-units”. If we take the population of a country say India, it wouldbe around 113 crores. For a consumer product let‟s say the tooth paste, the market ishuge. However, the entire population would not be looking for the same type of featuresin the toothpaste. So we need to convert this heterogeneous group into homogeneoussub groups. Let us say, we can divide the entire population into two categories, with onecategory preferring ayurvedic/herbal toothpaste and the other category preferring nonayurvedictoothpaste. This categorization will give an idea of the market segment whichprefers your toothpaste. The need for segmentation is that the marketer is clear aboutwhere to compete and place the product/ service.

There are different bases for segmentation, namely:-a) Customer-based Segmentationb) Product-based segmentation andc) Competition based segmentationGenerally there are two important factors before selecting the target segment. Theyare:-a) Attractiveness of a market segment andb) The strategic fit between the segment and the firm‟s objectives, resources, andcapabilities.Market Research will play an important role in finding the answers to the above twofactors.You can learn more about this in the module on marketing management.Once the segmentation has been carried out for the product/service, we can define thestrategy using one or a combination of the following approaches:-a) Standardization: - In this strategy, the firm maintains the same product, sameprice and same communication medium to all the segments.e.g.:- Cold drinks will be priced same to either the rich people or the poor people.b) Differentiation: - In this strategy the firm differentiates the product to cater theneeds of different segment. The pricing would be different in this case.E.g.:- The Indian Railways differentiates its service into several categories likeAC 2-tier, 3-tier, Sleeper and general coaches depending upon the varioussegment needs.c) Focus: - This is the combination of the above two strategies. In this the basicproduct remains the same with additional features for various segments to beadded at an extra cost.E.g.:- A given model of laptop will be priced same for all segments, but if thesegment needs an up-gradation of features it would be done at an added cost.So using the above approaches, we market the product/ service.2.2.2 Determining Potential Buyer and Buyer groupDetermining potential buyer is more a marketing task than the function of a salesprocess. The potential buyers for a product/service can be arrived by marketsegmentation.The buyer group may be different for the product category and a brand. For example, ifwe take the cell phone. Every person in the segment is a potential buyer of the cellphone. But the buyers are different for high end mobiles and low end mobiles within thesegment. Another example can be thought of as a photo copier. Every office is apotential buyer of a photocopier but when it comes to brand the offices might go for acheaper brand an expensive brand.This is where the sales team comes into the picture in determining who the potentialbuyers for the brand are and the products associated with it.The marketing group or the brand management should identify the potential buyers.They ought to give certain marketing inputs in the form of promotions. It helps increating the awareness of the supplier and the brand to the potential buyer before thesales person contacts the buyer. All these activities are a part of marketing policies andapproaches of the firm. The firm also has to provide the support material to the sales

people in terms of brochures, literature etcThis is where the sales team begins its activities. When the sales team takes theirresponsibilities the first task is to find the customer, a process which we generally referas “Suspect to Prospect through MAN approach”. MAN stands for Money, authority andNeed respectively.Every potential buyer may not be an actual buyer of the product. The potential buyercannot purchase the product if he doesn‟t have the money, authority and the need. It iswritten in this order because it is easier to identify whether the person is having themoney followed by whether he has the authority to buy and finally whether he has theneed to buy, it.Sales team needs to know how to assess whether the potential buyer has the money,authority and need. One cannot just ask the potential buyer whether he/she has themoney. So, some parameters such as education, occupation, family status etc. needs tobe analyzed to arrive at a conclusion whether the potential customer has the money tobuy the product.Similarly, the salesperson has to assess whether the potential buyer has the authority tobuy the product/ service and does he/she have the need for the same.Marketing would do this job at a macro level and sales would do this job at the microlevel. Marketing identifies the target segment or potential buyers of the product/ servicebut at the level of individual potential buyers it the task of sales person to identify theneeds and wants of the individual potential buyer.SAQ 11) If you are the sales manager in your city for a firm selling laptops, what methodwould you follow in identifying the segments for your product and why?2) Explain the importance of MAN approach in identifying the actual buyer forselling a high priced product like a luxury car.2.3 Sales ApproachOnce the sales team identifies the prospect, it‟s time to decide on the sales approach.The first step in the sales process is the pre-approach. Pre-approach would include theattire, presentation material, fixing an appointment and deciding what to do in theappointment like opening remarks etc. The objective of the pre-approach is the oftendata collection, knowing more about your prospect, the team involved in buying theproduct, the customer history and so on.The sales team will always be able to sell better if they talk customer needs and not thefeatures of the product/ service. This is referred to as term “FABing” which meansconverting features to attributes and attributes to benefits.If you are selling the photocopier it would be advisable to talk about the customer

benefits. You may start your discussion by saying “Last year the expense on photocopyis „X‟ amount, if you install the machine you would end up saving „Y‟ amount perannum”.Now let us understand the typical purchasing process.2.3.1 Typical Purchasing processEvery purchase has a process which can be understood by the following diagram.Recognitionof needsEvaluationof optionsPurchasedecisionImplementationand evaluationMost of the customers do not buy a product unless there is a need for it. The problem isthat the customer often does not know what he/she needs. So in the first step ofpurchasing process one has to identify what the problem or need is.In the second step “Evaluation of options” the customer would look for variouscompetitive products or solutions for his problem. There might be a different criteriaused by different customers. Some of them might be:-a) Price: - Many customers use price as the differentiation criteria. Customersmight go for a cheaper product rather than a costly one. This is seen more oftenin developing countries and less in developed countries. In this the sales personmay be actively negotiating for a better price or give some discounts. Discountsplay a major role in the successful closing of sale. But the sales person shouldhave a clear idea of what could be the maximum discount allowed by thecompany for the product/service.Some customers go on with the higher price products or some may buy themedium priced products. The choice would depend on the customer mindset.b) Quality: - Here the customer would be preferring the best quality product anddoes not mind paying a little more. Quality might be different for differentcustomers. For the customer, Quality may be associated with long life of theproduct, more features, best designs, better after sales service, and so on. Mostof the customers associate quality with the brand. It is the role of the salesperson to know what the customer means by a quality product and carry on withthe sales process.In the third step the purchasing decision will be taken by the customer. The role of asales person is to make the purchasing process hassle free and convenient.And the final step “Implementation and Evaluation” deals with the installation of theproduct and evaluating the value. If the customer evaluation is positive it would lead toanother sale in the future.These are the four steps in a typical purchasing process for every sale. The level ofactivities involved in each step differs for different types of sales like direct and indirectsales. For instance more activities might be involved in the first step (recognition of

needs) for an industrial sale while compared to door-to-door sale. It is very important toknow the kinds of activities involved in each of the steps for different types of sales.2.3.2 Essential Activities of Sales ProcessThe sales process can be categorized into four main activities. Interest creationactivities, pre –purchase activities, purchase activities and post activities. To convert thesuspect to a prospect, each and every activity is important and needs to be performedsuccessfully. These activities aim at serving customer better. The process is calledsales process cycle.Every sale has some essential activities to be performed by the sales team. Let usunderstand those activities with the help of the following chart.Interest CreationActivitiesPost Purchase Pre-PurchaseActivities ActivitiesPurchaseActivitiesSource: Sales Management, by Andris A. Zoltner , Prabhakant Sinha, Greggor A.Zoltners, page no: 412.3.2.1 Interest Creation ActivitiesThe first activity is interest creation. Once a potential customer is identified, he/sheneeds to be educated about the product/service you are offering. It is the job of thesales person to be prepared with the necessary literature, brochures and orpresentations. If the product is a technical in nature, the aim of the sales person shouldbe in explaining the benefits of the product to the customer and not its technicalfeatures. In this activity, creating awareness about the brand or product should be themain aim than pushing for sales. The sales person needs to understand the customer inthis phase and identify his/her problem and provide the necessary informationdocuments which the customer may request. Various promotional techniques can beused for interest creation. Some of the ways in which companies create interest in theproduct/service would be:-Giving full access to the software features and capabilities for a limited timeperiod like 1 month. During this time the customer can evaluate the product andthen buy it. This is usually prevalent in firms selling software products.Distributing fee trial packs are along with other products. This is the case withfirms selling products like soaps, shampoo, toothpaste etc.Offering free test drive option to the customer, so he/she can purchase only ifthey are satisfied in case of high – value product like automobiles.Coining motivational quotes. “Why should boys have all the fun” (Hero Honda‟s“Pleasure”) implies that girls are entitled to same freedom as men and driving thescooter is symbol of freedom and liberty.2.3.2.2 Pre-purchase ActivitiesHaving created interest in the brand/ product in the first activity, it is time for moving on

to the next activity by the sales person. In this process we assume that the customer isactively considering various product offerings and comparing them. This activity aims atdescribing the product or service features to the extent possible. Much emphasis is laidon demonstrating the capabilities of the company and or the product. Here, the salesperson takes on an active role in assessing the customer needs and helping them inproblem solving.2.3.2.3 Purchase ActivitiesHaving presented a solution to the customer problems, it is time for the sales person topush for closing. Here a lot of activities happen both, from the sales person‟s end andthe customer‟s end. Sales person‟s role lies in negotiating, bidding, finalizing the termsand condition of the sale. The customer evaluates various proposals, negotiates andfinalizes the payment. It is not necessarily required that the same person or companywho initiated the pre-purchase activities would be involved in purchase activities. Someof the processes may be outsourced to other agents.Source: The complete guide to accelerating sales force performance, by Andris A.Zoltner , Prabhakant Sinha, Greggor A. Zoltners, page no: 31This table explains how the different stages in sales process are handled by thecompany sales force and the selling partner. To sell an IBM product, an IBM salesrepresentative is involved in interest creation and pre-purchase activities like explainingthe features, capabilities and benefits of the product and how the product would be anadvantage to the customer in solving his problems. In the later stages like purchaseactivity, the IBM sales person would handover the lead to a reseller business partner tocomplete the purchase and post-purchase activities and technical support may beprovided by IBM team when required.Companies may also decide to handle all the activities from interest creation to postpurchase.Most of the companies who adopt the outsourced model that have severaladvantages and disadvantages.Interest Creation Pre-purchase Purchase Post-purchaseIBMIBM directsales personBusiness Partner(reseller)Business partner doesdelivery and installationIBM may provide technicalsupportAdvantages of Outsourced selling (Partner, reseller & distributor)Customer relationships: If the reseller or partner has good communication and

negotiating skills, the chance of closing a sale is high.Financial Costs: If the partner charges a percentage of sales made, the financial andselling risk of the firm is reduced.Product variety: A distributor can acts as a one-stop solution for all customerrequirements. If your company is good in manufacturing microphones/headsets only,then you can take the help of the distributor who would be dealing with the computerproducts. The chance of your product sale is higher when the customer comes forpurchasing a computer/laptop and buys your key board as an accessory.Variable capacities: If demand of a product/service increase, company can‟tincrease the sales force to sell the products and fire them when demand decreases. So,in peak demand season the distributors can help in selling your products/service to thecustomers.Disadvantages of Outsourced selling (Partner, reseller & distributor)Conflicts: Conflicts can arise when deciding which customers to be served andwhich territories should be assigned. The company may not be able to force the resellerto follow its sales strategies.Control: Outsourced selling cannot be controlled like personal sales team of thecompany. Companies may not be able to keep track of the reseller performance inselling the goods/services. Reseller may be interested in his own profit and mayencourage the customer to buy other products as he/she may receives moreshare/profit/commission by selling other products.2.3.2.4 Post-purchase ActivitiesThe post purchase activity begins after successful closure of the sale. This phaseincludes delivery of the product/ service, installation (if required), providing moreinformation about the features and finally collecting the payment. This phase can alsoinclude after-sales service. The primary objective of this phase is to win customerloyalty so that he/she would be a regular customer of the brand/product.As discussed earlier, some functions in this stage like providing information, delivery ofproduct and installation can be done by the company itself or with the help of a reseller.After sales service plays an important role in creating the customer loyalty. It can be assimple as addressing the customer problem on the telephone line or may be apersonally visiting the customer premises to resolve an issue. In B2B deals, postpurchaseactivities can include installing the product or service and then providingtraining for the uses of the product/service of the company until they understand thenew product/service.Understanding the post-purchase behaviour by the sales team is an important task if thecompany looks for repeated business for a long term relationship with customer..Source: Small business management: an entrepreneurial emphasis By Justin Gooderl

Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich, page no: 298This model explains that activities like post purchase dissonance is a type of cognitivedissonance which would arise after the purchase decision is made and customer hasUsage“I found anotherfor use…”Post-purchaseDissonance“Did I buy the right one?”Purchase“This is the oneI want”Product disposal“Can I trade this in?”ConsumerComplaints“I’m calling thestore.”No PurchaseRepurchasePositive Evaluation“It works well”Negative Evaluation“It doesn’t work well”thoughts of other products as an alternative. This can create a negative effect on theevaluation and satisfaction level with the product/ service. So, sales people should try tofind ways of maintaining this cognitive dissonance among customers.SAQ 21) If you are in need of an anti-virus product, identify the typical purchasing processyou would follow.2) If you are a sales representative for kitchen chimney products, what sort ofinterest creation activities would you employ if the customer is not interested?2.4 SummaryIn the previous unit, we discussed various marketing and sale approaches followed bythe companies. In this unit we have understood the importance of segmenting andtargeting in identifying the customers. We have understood how the customer wouldpurchase the product/service starting with the recognition of needs, evaluating options,making the purchase decision and finally implementation and evaluation of the productafter it is delivered by the sales representative. It is the job of the sales person to helpthe customer in handling the purchasing process of the customer. We studied theessential activities of the sales person in handling the customer and making a deal.We understood how interest can be created in the product/service in various ways. Afterthe interest is created it is time for the sales representative to handle the pre-purchase

activities like giving sufficient information about the product/service and describing thebenefits. The next stage would be purchase activities where the sales representativewould be aiming at closing the deal successfully by negotiating and finalizing thepayment terms. Finally the post purchase activities would include delivering theproduct/service, collecting the payment as per the terms and providing after salesservice. Finally, we discussed that for repeated business with customers, it has becomeextremely important to handle the post-purchase behaviour of the customer as moreand more alternative products/services are available for customer.2.5 Keywords1) Reseller Company or an individual who purchases theproducts/ service with an intention of sellingthem to other customers on behalf of thecompany.2) Potential Buyer Buyer who is interested in buying yourproduct/service, but may not necessarily buy it.2.6 References1. Andris A. Zoltners, Prabhakant Sinha, Greggor A. Zoltners (2001), “The completeguide to accelerating sales force performance”, Amacon, New York, USA.2. Justin Gooderl Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich(2006), “Small business management: an entrepreneurial emphasis (13th Ed.)”,South Western, USA.3. Rajan saxena (2006), “Marketing Management (3th Ed.)”, Tata Mcgraw-Hill, NewDelhi, India.4. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management(9th Ed.)”, John wiley & Sons, New Delhi, India.2.7 Suggested Readings1. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,Prentice Hall, New Jersey, USA.

UNIT 3 PERSONAL SELLINGStructure3.1 IntroductionObjectives3.2 Personal selling as a marketing communication tool3.2.1 Personal selling and other communication tools3.2.2 Advantages and Disadvantages of personal selling3.3 Personal selling activities3.3.1 Pre-approach activities3.3.2 Approach activities3.3.3 Presentation activities3.3.4 Objection Handling3.3.5 Closing the sale3.3.6 Follow up activities3.4 Summary3.5 Keywords3.6 References3.7 Suggested Readings3.1 Introduction

In the previous unit, we examined a typical purchasing process of the customer and theessential activities of a sales process. In this unit we will study about the steps involvedin handling the personal sales. We first define personal selling and understand how it isdiffers from the other marketing communication activities like advertising, publicrelations, sales promotions and direct marketing.Personal selling is one of the oldest communication techniques practiced by companies.Personal communication involves a person-to-person communication and is consideredto be one of the best marketing tools due to the involvement of human element whichhelps to build up a long-term relationship with the customer understand the variousactivities involved and understand the importance of customer relationship managementfor future sales potential. Not every marketing communication tool is the best at alltimes. In this unit we shall understand the advantages and disadvantages of personalselling. Personal selling would achieve success easily when it is supported by othermarketing tools like advertising or Public Relations.ObjectivesAfter studying this unit you will be able to:-1) Define personal selling and how it differs from other marketing communicationtools2) Explain the advantages and disadvantages of personal selling3) Understand various activities involved in handling personal sales.4) Understand the importance of customer relationship management, in obtainingfuture sales opportunities.3.2 Personal Selling as a marketing communication toolDefinition: Personal selling can be viewed as a marketing communication tool thatinvolves a one-to-one communication, which can happen in the form of face-to-facecommunication, over the telephone line, through video conferencing or by an email.3.2.1 Personal selling vs. other communication toolsPersonal selling is different from other marketing tools such as advertising, salespromotions etc. Advertising is a communication tool which targets many consumerssimultaneously. Unlike advertising, personal selling is targeted at an individual prospectand develops the relationship. Advertising aims at a group and is non personal wherethe communication primarily relies on the media.AMA defines sales promotion as “Media and non-media marketing communicationemployed for a pre-determined, limited time to increase consumer demand, stimulatemarket demand or improves product availability”. The major difference between salespromotion and personal selling is that the latter is a non-personal way of communicatingwith the customer.3.2.2 Advantages and disadvantages of personal selling

Every communication tool serves the purpose of the company’s objective to increase itssales. However, in doing so, some communication tools work better than others for thebusiness. Each and every tool like personal selling, advertising, sales promotions etchave their advantages and disadvantages.Advantages of Personal Sellinga) Flexibility in delivering the messageIf the customer doesn’t understand the message conveyed by the salesrepresentative, then the message can be modifies and conveyed to the customeragain. Since a sales representative interacts with one potential customer at atime the messages can be tailored and delivered as per the customer needs.This flexibility is not available in advertising which happens through thetelevision, newspapers, magazines, window displays etc.b) Efficient way of communicationPersonal sales is a two way communication process which allows for the efficientdialogue between the customer and the sales representative. It would be easy toknow whether the customer has really understood the communicated messageabout the product/ service. The feedback would be immediate by the customer inpersonal selling, which would helps the sales representative to know whether thesales approach is working or not change the approach accordingly. In otherpromotional tools like advertising which rely on one way communication, wouldnot guarantee that the customers have understood the communicated message.c) Building long term relationshipsBeing a two-way & one-to-one communication, personal selling certainly has anadded advantage over other communication tools in building long lastingrelationships of customer.d) Better access to various target segmentsNot all the target groups can be reached with advertising, sales promotions, andpublic relations. In such cases personal selling would help to reach out to thecustomer and inform about the product/ service. For instance if the companydeals with B2B markets or with the CEO of a company, personal selling wouldbe a better communication tool than advertising or sales promotion. In B2Bmarkets, the sales process involves a lot of communication time and hence ahigh level of two way interaction is required making the personal sales a practicalcommunication tool.e) Complex information deliveryIn personal selling, greater amount of complex information like technical featuresof the product can be conveyed easily in comparison to other communicationtools. Since numerous meetings can happen between the customer and thesales representative, there is ample time available to explaining all the featuresof the product.Disadvantages of Personal Sellinga) High costs per salePersonal selling can’t be applied to all the products even though it might beefficient in building the long lasting relationship with the customer. Cost per saleplays an important role in deciding the personal selling as a communication toolby the companies. Personal selling would be applied if the cost per sale isjustified like Insurance products, loan products, credit card sales, personalbanking products, high value kitchen appliances like dish washers, water

purifiers, chimneys etc., in which the benefits from the customer to the companyare more than the costs that are incurred for the sale to happen. Low valueproducts can not be dependent on personal selling unless it is a repeat purchaseby the customer and long-term profit is justified for the cost incurred.b) Misunderstanding by the customerMany people prefer to buy the product/service from a store rather than buying itfrom a sales representative who visits home. These customers might haveexperienced the aggressive behaviour of sales people in the past and may bedetermined not to buy any product from them. Customer might lose trust on thesales people due to this aggressive behaviour, Hence, it is the responsibility ofthe sales people to focus in making the customer happy rather than pushingaggressively for the sale.SAQ 11) Explain the benefits of using personal selling as a communication tool for sellingloan products.2) If you are the sales manager for a FMCG product like tooth paste, which onewould you prefer among personal selling or advertising to increase the sales?Explain the reason for your preference.3.3 Personal Selling process activitiesSales representatives of a company would have to follow a sales method, which help indealing better with the customer. Various stages are involved in conducting a prospectto a buyer of the product/ service.Personal selling generally involves six steps as described below:-a) Pre-approach activitiesb) Approach activitiesc) Presentationd) Objection handlinge) Closing the dealf) Follow upThe above mentioned steps are just a general way of understanding and the number ofsteps may vary from company to company. Let’s understand these in detail.3.3.1 Pre-approach activitiesThis includes all the activities a sales representative would perform before actuallymeeting the prospect. These activities may include the following:-Knowing the details about the product/ service which is to be soldKnowing about the company which the product/ service representsKnowing the details of the prospect like name, family background, income status,employment, credit history etcKnowing the right place and time to meet the customerKnowing the right approach in getting an appointment with the prospectIdentifying which products/ services are to be presented to the prospect andkeeping sufficient manuals/ technical documentsThe level of activity depends upon the type of customer or market. If the sales are forthe B2B market, then sales representative needs to have all the necessary documentswhich clearly explain all the technical details or benefits about the product/ service. Ifthe sales are for the high value products like loan products, then knowing the credit

history of the prospect is an important task. Knowing the right time, place and approachwill be important if he/she is selling to top-level corporate like CEO of a company. Oftenpeople encounter sales representatives who come to sell the product/ services withouteven knowing the complete benefits or technical details. It is the job of the salesrepresentative to clearly know the benefits or details of the product and also the aboutthe company which they work for.We already studied in the previous unit that the actual closing of the sale may not benecessarily handled by company’s sales representative. The sales process may beoutsourced where the reseller will sell you the product/ service. In such cases thereseller must have a clear idea about the company for which he/she is selling theproduct/ service.3.3.2 Approach activitiesAfter identifying the prospect and gathering necessary information, it is time to interact.It is said that the first impression would last longer and is critical for any future meetings.The aim of the sales representative should be in gaining attention of the customer andstimulate his interest in the product/ service. Opening remarks would play a major roleinterest creation. Sales representative start introducing his/her name and the companywhich they represent. Later on, they proceed with the product/ service which the salesrepresentative have in to offer. Interest can be created by citing product benefits, givingreferrals, repeated calling etc. In B2B markets, if you are the sales representative sellinga workstation to the IT firm, a single meeting wouldn’t be enough in getting to thepresentation stage, so repeated calling would be required. It is the aim of the salesrepresentative to create enough interest to transit to the presentation stage. In brief thetask of a sales representative in this stage can be summed up as following:-Gaining prospect attentionInterest creation in the product/ serviceGathering more information about the prospectSuccessful transition to the presentation stage3.3.3 Presentation activitiesThis is the stage where the sales representative will work to his level best to convert theprospect to a customer. The desire for the product/ service needs to be created byhandling the presentation carefully. So this is a critical stage and if the presentation isnot done effectively, the prospect might not be interested in listening to the presentation.We need to set the environment in the first few minutes of the presentation and get a

positive impression. Often when we walk into an office for presentation, the prospectwould be busy in middle of some work, so it’s very important to get his attention in thefirst few minutes. Just as people often judge the book by its cover, in the same waylooking at the sales representative people decide sometimes whether to entertain thepresentation or not. Attire and grooming of the sales representative like clothing andgrooming are very important.It is important to deal with a positive attitude while making the presentations. Ifyou are dealing with PowerPoint slides, then there are some general guidelines whichyou have to follow in making the slides. We shall discuss more about this stage insubsequent units. Finally, to sum up, the important activities that you as a salesrepresentative would perform in the presentation stage are as follows:-Introduce yourself and the company by giving a business cardCreate an atmosphere for gaining the attention of the prospectDeal ethically with a positive attitude and never give any negative comments likethose who didn’t buy this product/ service are suffering and so onIf you require more information about the prospect company then state thereason for the same. For instance, if you want to know the number of staff or thetype of customers handled by the prospect, then provide a reason for the same.Ask some interesting questions in between just to check whether the prospect isreally listening to what you say in the presentationIn most of the cases, presentation stage would is not said to be successfully completedif the objections that arise from the prospect side are not handled properly. So in thenext stage we understand about the objection handling.3.3.4 Objection HandlingHandling sales objections is as important as making a good presentation for theprospect. Objection handling is about handling the objections of the prospect whenhe/she says no the product/ service stating a reason. The prospect may say no, due tosome of the following reasons:-The product/ service which is offered is more expensive than other similarproducts in the industryProspect may not interested in particular feature of the product/ serviceProspect may not have fully understood the benefitsProspect might not be interested in making a decision in buying a product in thefirst meeting itselfProspect might be willing to test you or need more information on the product/service to be satisfiedIt is the job of the sales representative to know the exact reason for the objection andhandle it carefully. “Prevention is better than cure”, it makes sense in this context as itis better to handle the presentation well, before discussions lead to the abovementioned objections by the prospect. So it is important that the sales representativehave a check-list of the possible objections which can arise during the presentation. It isalso important that the companies provide the checklist and train its sales persons inhandling situations when the objections arise.

Sometimes even a well trained sales person might go wrong in handling the objectionsas he/she might lose temper or may be for some other reason. So it is very important toknow the ways in which the objections can be handled.Darryl Davis in his book “How to be a power agent in real estate” describes TenCommandments of handling objections. Some of them are as follows:-Objections shouldn’t be taken personallyObjections should be looked as an opportunity to increase your skill set inhandling them. As Warren Buffet who is the greatest investor and one of therichest persons in this world says in his autobiography, “ success is a terribleteacher, because you only learn from your failures”Take your time when handling objections and do not rush into giving an answerfor the objection.The better you present, the less number of objections arise in the later stage ofyour presentation.So objections should be thought of as an opportunity in gaining more attention of theprospect and should be handled carefully. After the objections are handled properlythere should a smooth transition into the next stage “closing the deal”3.3.5 Closing the dealAfter successful presentation and effective objection handling it is time for the salesrepresentative to close the deal by obtaining a purchase commitment from thecustomer. Various closing techniques can be employed by the sales representative inrequesting an order for the product/ service. Sales representative must know the righttime for closing the deal during the presentation. If closing technique is used at anappropriate time during the presentation, an objection may arise from the prospect.Sales representative can know the right time by observing the prospect carefully andlooking for some buying signals from prospect such as:-Positive statements about the product/ serviceEnquiry about other customers who are using the product/ serviceWillingness to test the product/ serviceDiscussion with finance team about the productEnquiry about the warrant period, price, installation time, after sale service etcPlaying with the company order form and a penEnquiry about the discount ratesEnquiry about the terms, mode of payment and any installments provided.Enquiry about any loan facility is available with the productThe list can include many more items and it is the job of the sales representative toknow the right time for closing the deal. After identifying the right time, we can applysome of the closing techniques as described by Ralph W Jackson and Robert D Hisrichin their book “sales and sales management". Some of them are as follows:-Trial close: This technique can be used at any stage during the presentation.Once some buying signals are identified, the sales representative should attempta trial close and see if a positive response is received from the prospect. If apositive response is received then he can go for closing the deal. If he is selling acar to the customer, the trial close can be “Would you be interested in buying aMaruti Alto or Zen”. If the prospect says any one of them, you can proceed with

the actual closing and discussing the terms and payment methods of the product.Asking for an order: This includes directly or indirectly requesting the prospectto make the purchase.Assumption close: In this the sales representative assumes that the decision tobuy is already made by the customer and proceeds to close the deal. Forexample he can say “Having found the product/ service to be beneficial, whenwould you like it to be delivered?”Summary-of-benefits close: Here the sales representative summarize thebenefits of the product/ service and then go for the sale.T-account close: This includes describing the advantages and disadvantages ofthe product/ service by putting them side by side in a T-table format. This formcan help the prospect easily understand about the product/ service.Special deal close: Here the prospect would be given a one-time special offeron the product/ service such as “We would like to offer a 15 percent discount ifyou place an order for the product/ service today”.If you are interested in various other closing techniques, you may refer to the bookslisted in references and suggested readings. Various problems might arise duringclosing, such as the sales representative having no idea of how many times doeshe/she have to attempt a closing technique. Another problematic situation would be a“No” from the customer after using a closing technique. After using a trial close, if youfind the prospect is not giving enough response or says no, then try to use another trialclose. There isn’t any fixed number but another two to three times can be reasonableafter the first trail close. This wouldn’t offend the prospect if it is done professionally.Most of the sales wouldn’t happen in the first closing, especially if it is for B2B markets.So, maintaining a calm and positive attitude would work for the sales representative inclosing the deal.After closing the deal, the next activity in the personal sale would be follow-upafter the sale.3.3.6 Follow-up activitiesIf you are a sales representative, your duty doesn’t finish once the deal is closed andthe order is received by the customer. It is your job to ensure that the customer is fullysatisfied with the product/ service. If there are any problems faced by the customer, ithas to be resolved by identifying it and referring to the right team in the company. Weface such problems a lot when we deal with technical products. You might havepromised certain features of the products and those features might be interpreteddifferently by the technical team in the company. As a result, some of the featureswouldn’t be made as per the customer requirement, resulting in low customersatisfaction levels. It is your duty as a sales representative to ensure that theseproblems are resolved and make sure the customer is satisfied. It is very important tounderstand that customer satisfaction is very important, because it has direct effect on

loyalty and trust. Low customer satisfaction levels may make it difficult for you to havefuture sales possibilities and repeated business.Companies do know the value of a customer when he/she is lost. In most of thebusinesses, making a sale to a new customer is a costly affair when compared tomaking the sale for an existing customer. So the follow up techniques plays animportant role in maintaining the relationship between the customer and the company.Repeated calling to know how the products/ services have benefited the customerwould work in keeping up the relationship. During these calls, you can describe the newproducts/ services launched by your company and try to get a sales opportunity.Let’s understand with an example, some of the important follow-up activities that can beassociated after closing the sale. If you are selling a software product to the telecomcompany, like a billing management software which would help in managing the bills ofthe subscribers, various follow up activities may include as follows:-Checking the date of delivery and ensuring the product is delivered.Ensuring that the product is installed properly in the required number of systemsMaking a call to find out how comfortable are the employees with the productIdentifying if any training is required for the employees in handling the productProviding necessary information on who to contact if any technical problemsarise in futureRepeated calling after some period as per the company guidelines, to know forany problems and try to describe about any new products/ services launchedSAQ 21) Explain various pre-approach activities you would perform, in selling a post paidmobile connection to a corporate employer.2) If a customer says that he/she would consider buying the product/ service, if theprice is decreased, then as a sales representative what type of closingtechniques would you use?3) If customer appreciates the product and has some problem with the high price ofthe product, then what type of closing techniques would you use as a salesrepresentative?4) Having successfully closed the deal for a washing machine with the customer,what type of follow-up activities would you perform?3.4 SummaryIn this unit, we have understood the importance of personal selling as a communicationtool for the company. We have understood how advantageous it would be in improvingthe customer relationships with personal selling. As every communication tool hascertain disadvantages, we have looked into various disadvantages of the personalselling. It is essential that every sales person would follow certain steps in making asale, so as to create standardization in the sales method. Hence, we have understoodstep by step, the various activities that involve in a personal selling.We studied how pre-approach and approach activities would help in getting anappointment for presentation. During the presentation, it is important to grab the

attention of the prospect in the first few minutes and handle objections carefully. Wehave discussed various objecting handling techniques and then discussed about closingtechniques which help in closing the deal. Getting an order doesn’t end the job as followup is very important to gain the customer trust and loyalty which would help a repeatbusiness. We have finally understood the importance of existing customer to thecompany, as it would be difficult and costly to sell the product to the new customerrather than selling to an existing customer.3.5 Keywords1) Prospect A prospective buyer in short a prospect, is anindividual or a company who has the potentialto become your potential customer if handledproperly by the sales representative.2) Public Relations (PR) Activities that are performed by the company tomaintain relationship with its employees,investors, customers and general public.3.6 References1. Darryl Davis (2003), “How to be a power agent in real estate”, Tata McGraw-Hill,USA.2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,Prentice Hall, New Jersey, USA.3.7 Suggested Readings1. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management(9th Ed.)”, John wiley & Sons, New Delhi, India.2. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo (2004), “SalesManagement”, John Wiley & Sons, New Jersey, USA.

UNIT 4 COMPUTER APPLICATIONS IN SALESMANAGEMENTStructure4.1 IntroductionObjectives4.2 Customer Information Management4.2.1 Traditional ways of maintaining information4.2.2 Contact management softwares4.2.3 Sales Force Automation4.3 Customer Relationship Management4.3.1 Microsoft Dynamics CRM4.3.2 Open Source CRM Applications4.4 Summary4.5 Keywords4.6 References4.7 Suggested Readings4.1 IntroductionIn the previous unit, we understood the advantages of personal selling and its variousactivities involved in making a sale. We understood the importance of knowing thecustomer before approaching him for a presentation. We also discussed about the

various steps which can ensure a successful closing of a sale. In this unit we examinehow computer applications can improve the effectiveness of the sales method andgenerate more leads to the business.Due to continuously expanding nature of business, it is very important to keep track ofcustomers, an activity which used to be performed with pen and paper. With increasingsize of business and the competitors, it is advantageous to speed up the activities in thesales process, so that more leads can be generated to the company. This is wherecomputer technology comes in, to make the processes effective and also to help inincreasing the efficiency of sales representatives in generating leads. Varioustechnologies have been discussed in this chapter to give you an idea of what are thecurrent practices followed up in using technology as an important tool in sales process.We shall also discuss what type of computer applications are used by the salesrepresentatives in the field, while interacting with the customers and types ofapplications that are used by the sales managers in monitoring their sales team andmeasuring the goals.It is identified in many companies that sales representatives spend only 20-30percent of their time in selling activities. Most of the time ends up in performingadministrative functions like coordinating the day to day meetings, checking the statusof product that needs to be delivered, travelling, training etc. So it is very important forthe companies to use the computer applications in reducing wastage of the resources innon productive functions. Another major problem which companies face in today’sworld is attrition. We shall discuss how computer applications can help in resolving ofthe problems which arise when a sales representative leaves the company. Finally weshall identify if there are any disadvantages associated in with use of these computerapplications that to help sales activities.ObjectivesAfter studying this unit you will be able to:-1) Identify the importance in maintaining the updated database of the customer2) Understand the role played by contact management software in improvingcustomer relationships.3) Explain the role of SFA in managing sales activities4) Explain the benefits of the CRM software with the help of Microsoft Dynamicsand Sugar CRM.4.2 Customer Information ManagementMaintaining customer information is an important task to every business. Customerinformation may include some of the details like:-Name of the customerAddress of the customerMobile/ landline/ fax numbers, e-mail, website address etcLast date of meetingMinutes of meeting

Future meeting schedules or follow up activitiesProducts/ services usedProducts interested in futurePreferred time of callingAny problems faced in the pastCustomer rating about your company products/ services if providedThe list can be much more depending upon the customer, so maintaining such list is animportant task of the sales representatives. Let us understand some of thedisadvantages and preventive measures to be taken in the case of impropermanagement of customer information. Some of them include:-Address of the customer: If the address is not properly updated time to time,the sales representative might find difficult in locating the customer when neededto send some promotional offers or information about the new products/ serviceslaunched by the company. So he should try to get both the residential and officeaddresses.Mobile/ landline/ fax numbers, email: This information helps us in giving choiceto the customer for contacting him the customer. The sales representativeshould try to get as many contact details as possible, so if mobile numbers ischanged then we can use landline as an alternative in contacting the customer.Minutes of meeting: Improper entry or no entry about the minutes of meetingcan create many problems such as frequently asking the same questions forcustomers which you have already discussed in previous meetings or you maytry to sell the same product/ service which the customer refused earlier. Somaintaining proper minutes of meeting can resolve such problems.Preferred mode and time of contact: Nowadays customers are too busy andprefer to interact in a particular time on a particular number. Some of thecustomers prefer only emails. It is your job to maintain such information to avoidany contact during their inconvenient times and places. These mistakes can bevery serious which can make you lose the customer permanently.4.2.1 Traditional ways of maintaining informationThe way how customer information is maintained may vary from business to business.The traditional way of maintaining customer information is by noting it down on a paper.This way of recording the information worked well when the business were small,having few customers and few competitors. But today as the business grows with bothcustomers and competitors increased in the market, companies can’t just rely on thetraditional way of maintaining information. Some of the problems which can arise by thismethod are:-If you are having the data of customers, it would take lot of time in converting thatdata into information such as who is my potential buyer? By the time you identifythem, customers might be using your competitor’s products/ services.There is every chance of misplacing the papers containing customer informationand to add for this problem, if your sales representative quits, then the contactinformation would be difficult to retrieveMore and more sales force would be required to maintain the database as thecustomers increase. Hence it’s important to find an alternative way to for

maintain the data.Customers expect faster processing of their requirements. So, it would be better to usethe computer applications that are available to speed up the sales process and maintainthe customer information effectively.4.2.2 Contact Management SoftwareTo decrease the workload in maintaining customer information, various contactmanagement softwares are available in the market. These softwares help the salesrepresentatives in getting a complete picture about the customer with a single touch.You get access to all the critical data of the sale such as customer contact information,minutes of meeting, relevant technical documents if any, partners associated with thesale, future meeting schedules, important deadlines etc. in a single screen.These softwares provide easy updating and avoid any discrepancies in data such asmultiple entries. These softwares can help in minimizing the mistakes that can happenduring the customer interaction and help in building stronger, long-lasting relationships.If you are interacting with customer on the phone, you may use simple contactmanagement software in your computer, such as the address book provided bywindows. Sometimes it wouldn’t be practical to carry your computer especially whenyou are at customer premises. Keeping this in mind, many software vendors providingsoftware applications which can be used in your mobile or PDA. Contact managementsoftware can be used by the off-site sales representatives who are in the company andalso who are on-site at the customer premises. Most of the times companies buycontact management software which would suit for their requirements. Some featureswhich you must check while buying such software products are:-User friendly screensFaster access to customer informationEasy-to-understand the functions by sales representatives i.e. less trainingrequirement for adoptionHaving multiple views of the data, such as the total customer list, elite or platinumcustomers, prospect list, recent customers list etc.In today’s world every customer is having an email facility, so it is important thatthe software would support email, fax, and call facility as per the scheduled timewith customer, group mailing when new products/ services launched etc.Required information access in a single touchThe picture below helps us in understanding how a contact management applicationlooks like. This is Microsoft outlook new contact entry screen when you can entercustomer information like name, phone numbers, mailing address and much more.You can see the call facility provided where you can call the customer, business cardand pictures can also be updated, you can add up reminders and schedules with thecustomer in the follow up tab, you can locate the customer address suing the “map”

button and so on. This interface provides you a clear picture how contact managementsoftware looks like. There are also many custom made contact management softwareswhere you can approach the software vendors and create one for you.4.2.3 Sales Force AutomationIn today’s competitive world, managing the sales representatives is as difficult asmanaging the customers. Contact management softwares can be very useful if thecustomer is handled by the same sales representatives all the time. In reality this is notthe case, as companies face high attrition rate due to more opportunities for salesrepresentatives in the industry. Some companies have 100% attrition within a year.What would happen with the customer if the sales representative leaves the companyand the customer is handled by other sales representatives? The problem can besevere if the sales representative leaves the company without notifying and companyhas no idea with the latest customer information the sales representative was handling.Many problems may arise when the customer faces a new sales team. Customerswould have to state all the requirements, budgets, features, payment details to the newsales team, a process which can be time consuming and creates dissatisfaction amongcustomers.This scenario demands a computer application which will not just maintain the customerinformation in the sales representative computer, but can also report the latestinformation to the sales manager in the company. This is where the implementation ofsales force automation (SFA) software is required.SFA connects all the sales representatives contact management software with a centraldatabase for reporting. Various advantages of SFA include:-Centralized data base for retrieval and updating customer informationInformation sharing is the biggest advantageCompany has access to all the latest information about the customersSales team can be more responsible in entering right data, as company can trackwhen the data was updated and by whomData can be accessed anywhere irrespective of the location either using wirednetworks like LAN, WAN or wireless networks like Wi-Fi.Sales team can work from home whenever required as data can be accessedanywhereSince all the customers data stored at one place, it would be easy to know theefficiency of the sales teams, status of the targets and less duplication of the dataDue to centralized data, many departments can access the customer data somultiple sales to the same customer by different teams can be avoided therebyusing the time more efficiently.Matching the new products/ services to the entire customers can be done easilyas the data is centralizedHaving discussed with many of the advantages, let’s look at some disadvantages

mentioned below:-Complex screen may not be user-friendly for all the sales representatives andthey may find it difficult to workRequire continuous management and back-up facilities if the data crashes.SFA applications may be costly for the company where the investments need tobe justified implementing one.May be difficult to integrate with other legacy systems in the companySFA applications are integrated and became a part of another system namely customerrelation management system which aims to be the ultimate solution to manage theentire sales process.SAQ 11) Explain the benefits of using contact management software over traditional waysof maintaining information.2) Explain how SFA car help your company if attrition rate is high4.3 Customer Relationship Management (CRM)SFA can be thought as a subset of CRM. SFA deals with data of the customer duringsale interaction where as CRM deals with automating all the customer related datarelated to the sales, marketing, customer care, technical, finance, human resourcedepartments. CRM systems highlight the importance of integrating sales with otherbusiness functions.“Sales force management” written by Johnston and Marshall (2009) provides moreinsights into the use of CRM systems for an organization. In their book CRM is definedas “ any application or initiative designed to help your company optimize interactionswith customers, suppliers, or prospects via one or more touchpoints such as callcenter, sales person, distributor, store, branch office, web or e-mail for the purpose ofacquiring, retaining, or cross-selling”.Sales and marketing have goals in common, yet marketing blames sales for notperforming duties effectively, in turn sales blames marketing for their poor strategiesand lack of knowledge about the situations in real world or it may blame HR departmentfor not providing sufficient man power. So, it is time to stop this blame game and workcollectively to deliver growth by focusing on the customers. CRM aims at putting thecustomer at the center of the business process. In a client meeting you see not only thesales representative but also may see members from marketing, finance, technicaldepartments participating. A system is required to be in place where all these businessoperations need to be aligned. This is where the CRM applications come into picture.Let’s now look at some of the CRM applications which are used by the companies.4.3.1 Microsoft Dynamics CRMSource: http://en.wikipedia.org/wiki/File:Microsoft_Dynamics_CRM.gifMicrosoft Dynamics CRM provides applications which focuses on sales, customerservice and marketing departments. Let’s understand the benefits of these applicationsin brief as stated in their website http://crm.dynamics.com:-a) Sales Department: The CRM application for sales department is the SFA which

provides the following benefits:-Improved sales planning and managementAutomating the lead systemManaging sales opportunities effectivelyStreamlining account managementBoosting sales productivityEnhancing sales pipeline managementSimplifying workflow processesMobility in accessing customer data in real-timeAnalytics for improved decision makingb) Customer care: The CRM benefits provided for customer service include thefollowing:-Improved account handlingManaging or resolving customer cases efficientlySimplifying contract managementKnowledge management to store the staff experiences as a repositoryStreamlining the schedulesAutomating workflowsMobility features for dataAnalytics for customer servicec) Marketing Department: Some of the CRM benefits provided for marketingdepartment include the following:-Streamlining campaign planningManaging events efficientlyImproved response managementAutomating workflowsAnalytics for marketingPinpointing the marketing efforts by instantly segmenting customers or prospectsManaging data effectivelyUser - friendlyRequire continuous management and back-up facilities if the data crashes.For more information you may refer the website. We have discussed this MicrosoftDynamics CRM to give you a clear idea of benefits of the CRM in general.Disadvantages of CRM would be in similar with SFA systems as SFA is the heart forCRM of sales. Some disadvantages include:-CRM applications may be too costly for an organization to implementIt might take time to implement the systemDifficult to integrate with legacy systemsSince cost can be a major factor for most companies in implementing CRM, let’s nowlook at some open source softwares which are there in the market.4.3.2 Open Source CRM applicationsOpen source is defined by Cambridge dictionary as “software that is free to use, and theoriginal program can be changed by anyone”. Many opensource applications floodedthe market promising better CRM applications than the proprietary softwares. Accordingto David Hakala (2008), Top 10 CRM applications designed in opensource platform areas follows:-i) Sugar CRM Inc

ii) SplendidCRM software Inciii) CentricCRMiv) Hipergatev) Compiere Incvi) Vtiger CRMvii) CentraView Incviii)XRMS CRMix) Cream CRMx) Tustena CRMMore details about these products can be refereed from their respective websites.Let us now understand about various uses of Sugar CRM for the organizations:-a) Sales Force AutomationSugar CRM applications helps the sales manager in handling various functions such ascontact management, forecasting the revenues, managing accounts etc. The followingdiagram is a snap shot of how the contact information such as name of the employee,his/her designation or title, the account name handled and the contact information aboutthe account.Source: http://www.sugarcrm.com/crm/products/capabilities/sales/contacts.htmlThis is just one of the view in which the data is represented and there would be multipleviews such as arranging the list by the account name which displays the list ofemployees who are handling the account. The information can be viewed by the regionor area wise which would display the list of customers according to the region and soon.b) Marketing AutomationSugar CRM provides several functions to handle the various marketing activities likecampaign management, email marketing, lead management, marketing analytics etc.The following picture would help us in understanding how the leads are managed. In thefigure we can see that the entire leads the organization generated is categorized intodifferent categories by the lead source like cold calling, purchases from existingcustomer, public relations, direct mail etc. This sort of representation would gives us anidea of which lead source is more profitable and identify the lead source which isgenerating lowest revenue and plan according to improve the operations at that leadsource. Opportunities by lead source by outcome would help the manager inunderstanding what part of the revenue is in qualification stage, proposal stage, closedor won stage, negotiation stage etc. Such a view will help us in understanding theperformance of the lead source better.Source: http://www.sugarcrm.com/crm/images/content_images/screens/marketing.jpgApart from sales and marketing automation sugar CRM also helps in providing and

developing the customer support, reporting, platform and collaboration capabilities. Formore information you may refer to the Sugar CRM website.SAQ 21) Explain the importance of CRM in creating a customer centric organization.2) Which one would you prefer among proprietary or opensource if you have asmall organization and explain the reasons for the preference4.4 SummaryIn this chapter we have understood the traditional ways of maintaining customer data.This way of recording worked perfectly fine when there were few customers and thebusiness is small. With growing customer base, companies looked for computerapplication which can manage the customer information and present it back in a singletouch. As the job opportunities improved, attrition became the major problem with somecompanies having 100 percent attrition rate within a year. In order to maintain customerinformation more effectively, companies started using sales force automationapplications which as contact management software at its heart. In SFA the customerinformation is maintained at a central database rather than just in the computer of thesales representatives. This increases accountability as any wrong entry of data can betraced. We have discussed several advantages of SFA over just using contactmanagement applications. Later on, the need for integrating all the business operationsstarted with the use of CRM applications, which transformed the way how we used tosee various departments like sales, marketing, human resource, finance, customer careand technical separately. Customer has become the center for all the businessoperations and we see today that in a sales meeting with customer, we find employeesnot only from sales teams but also from technical, finance, customer care, andmarketing whenever necessary. We have finally understood clearly the benefits aMicrosoft Dynamics CRM and opensource software Sugar CRM for the organizations.4.5 Keywords1) Analytics It is the science of analyzing the data to arriveat meaningful decisions with the existing data.2) Legacy systems It is old or traditional methods, technology orcomputer softwares continued to be in use andare outdated as per today’s standards.3) Proprietary Software According to Cambridge dictionary proprietarymeans “relating to ownership, or relating to orlike an owner. So, proprietary softwares arethose made by the company and are soldunder the legal rights of the owner.

4.6 References1. David Hakala (2008), “The top 10 Open-Source CRM Solutions”,http://www.insidecrm.com/features/top-open-source-solutions-121307/2. Haag, Stephen; Maeve Cummings, Donald J. McCubbrey, Alain Pinsonneault,Richard Donovan (2006), “ Management Information Systems for the InformationAge (3rd Ed.), McGraw-Hill Ryerson, Canada3. http://crm.dynamics.com4. http://dictionary.cambridge.org/dictionary/british/open-source5. http://en.wikipedia.org/wiki/File:Microsoft_Dynamics_CRM.gif6. http://www.insidecrm.com/features/top-open-source-solutions-121307/7. http://www.sugarcrm.com/crm/products/capabilities/sales/contacts.html8. http://www.sugarcrm.com/crm/images/content_images/screens/marketing.jpg9. Mark W Johnston, Greg W Marshall (2009), “Sales force management (9th Ed.)”,Tata McGraw-Hill, New Delhi, India.4.7 Suggested Readings1. Bryan P. Berg(2002), “Essentials of CRM: a guide to customer relationshipmanagement”, John Wiley & Sons Inc, New York, USA2. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “SalesManagement”, John Wiley & Sons, New Jersey, USA.

UNIT 5 COMMUNICATION SKILLSStructure5.1 IntroductionObjectives5.2 Communication Defined5.2.1 Definitions of Communication5.2.2 Forms of Communication5.3 Communication Process Models5.3.1 Aristotle communication model5.3.2 Lasswell’s Communication model5.3.3 Shannon and Weaver communication model5.3.4 Schramm’s Interactive communication model5.3.5 Transaction communication model5.4 Effective Communication Process5.4.1 Identifying the sender5.4.2 Identifying the receiver5.4.3 Identifying the right messages5.4.4 Identifying the right channels5.5 Summary5.6 Keywords5.7 References5.8 Suggested Readings5.1 IntroductionIn the previous four units, we have understood functions of the sales manager, activitiesthat are performed by a sales person in handling the sale, comparison between varioustypes of sales and the computer applications which assist the sales person in handling

sales effectively. An important factor which can improve the efficiency of the sales teamand increase the chances of successful closing of the sale is the “Communication Skills”of the sales person. Good communication also helps in faster relationship building withthe customers. We all know how important communication plays in making thecustomer knowledgeable about the products/services. We ourselves end up many-atimesbuying the products/services when felt satisfied with the communication of thesales people without even looking for all the advantages and disadvantages about theproducts/services. A lot of excellent products/services end up with not many customerswhen the sales people lack the required communication skills. Hence, for the salesmanager it is advisable to know the good communication skills that are required by thesales people for selling the product/services and provide necessary training. Howeversmall or big the product/service is, in terms of cost or features, communication skills ofthe sales people will play a major role for success in the market place.In this unit, we shall identify different forms of communication that are used in today’sworld by the sales representatives. We shall do a study on advantages anddisadvantages of using various forms of communications. We shall examine whatconstitutes an effective communication process. We shall also discuss variouscommunication models described by various scholars.ObjectivesAfter studying this unit you will be able to:-1) Understand the definition of communication2) Understand the advantages and disadvantages of verbal and nonverbal forms ofcommunication.3) Explain various communication models4) Identify various issues in selecting the right sender and receiver5) Identify various issues while creating the right message for the receiver/customer6) Explain the importance of selecting the right channel during the communicationprocess5.2 Communication ProcessCommunication is the process in which the sender tries to convey a message to thereceiver. Let’s see some of the definitions of communication from oxford dictionary andby various scholars as mentioned by Sri Jin Kushal (2009).5.2.1 Definitions of Communication1) Communication as explained by “Oxford dictionary” is the imparting orexchanging of information by speaking, writing, or using some other medium.2) According to Louis A. Allen, “Communication is the sum of all the things which aperson does when he wants to create understanding in the mind of another. Itinvolves a systematic and continuous process of telling, listening andunderstanding.”3) According to Newman and Summer, “ Communication is an exchange of facts,

ideas, opinions or emotions by two or more persons”4) According to Theo Haimann, “ Communication is the process of passinginformation and understanding from one person to another….It is the process ofimparting ideas and making oneself understood by others”What we understand by the above definitions is that the communication is a process ofexchange of the information between sender and the receiver. In sales thecommunication would be between the sales representative and the customer.5.2.2 Forms of CommunicationSri Jin Kushal (2009) explains that there are two main basic forms of communication,namely Verbal communication and the non-verbal communication.a) Oral Communication & written communicationThere can be many forms of oral communication as mentioned by the author, namely:-face-to-face conversation, lecturers, meeting and conferences, interviews, telephonetalks, grapevine, social and cultural affairs, seminars, radio and television. In sales callwe mostly make use of meetings and conferences, face-to-face conversation,telephone, seminars etc.On the other hand written communication deals with sending letters, emails, faxes, smson phone etc. Each form of verbal communication has its advantages anddisadvantages and so it is advisable to use the right mix of both oral and writtencommunication during the communication process for the sale.Basic forms of communicationNon-VerbalCommunicationVerbalCommunicationOral Writtenb) Advantages and disadvantages of verbal communications (Oral and Written)Some of the advantages of verbal communications include:-The ideas can be conveyed easily with oral and written communicationThe ideas can be expressed without any misunderstanding between the senderand receiver using oral and written communicationLengthy messages can be stated out accurately with the help of writtencommunicationThe feedback can be very quick while compared with non-verbal communicationsIt works well for technical presentations which involve lot of communicationbetween the sender and the receiverc) Disadvantages of verbal communications (Oral and written)Some of the disadvantages include:-Oral communication will not be suitable for lengthy messages, in such cases wehave to make use of written communicationOral communication may take long period of timeOral communication may involve a lot of expensesOral communication cannot be performed when the sender and receiver are notavailable personallyWritten communication cannot be deemed fit for visually challenged people anduneducated people

Feedback would take a lot of time in written communicationd) Types of Non Verbal CommunicationAs mentioned in the book by Sadhana Gupta (2008), G.W.Porter divides non-verbalcommunication into four broad categories as shown below:-Physical category includes facial expressions, voice tone, sense of touch, senseof smell and body motionsAesthetic includes conveying message through creative art like painting, music,dance movements, dramatics, sculptureSigns include the sign language which is used for disabled people.Symbolic implies making use of religious or status symbolse) Advantages of Non verbal communicationThere are various advantages and disadvantages of using the non verbal form ofcommunication. Some of the advantages include:-This form of communication works well with the hearing disabled peopleThe communication process can be done in brief and in shorter timeThis form of communication will be useful if there are any language barriersDuring this communication process, we can easily judge the personality of the??This communication process helps to convey emotions easily by facialexpressionsNon-VerbalCommunicationPhysicalAestheticSignsSymbolicIf performed well using this communication process, there is a high chance ofbuilding a long-lasting relationship with customerf) Disadvantages of Non verbal communicationNow let us look at some of the disadvantages of this non-verbal form ofcommunication:-If the sale is a technical product or service which involves lot of explanation, youmay not do it just with the non-verbal communication processThe customer may misinterpret your communication process in non-verbalcommunicationThis type of communication cannot be used everywhereCustomers might not be interested to communicate with you in the non-verbalcommunication processIt would be difficult to follow when there are cultural differences between thesender and the receiverThis form of communication can only be done when both the sender and receiverare engaged in personal communication. It would be possible on the phone ormailFor more information on forms of communication you can refer to the books mentionedin reference section at the end of this unit.5.3 Communication Process ModelsVarious models have been designed to understand the communication process and toidentify any areas of improvement by reducing the errors that occur in the process. Let

us understand some of the models:-5.3.1 Aristotle Communication modelThis can be considered as the basic and simplest communication model which has onlythree components as show below:-This model mainly considers communication as a one way process from the speakerwho tries to convey the message to the target audience.5.3.2 Lasswell’s Communication modelLasswell introduce two concepts namely channel and effect into the model whencompared with Aristotle model. This model is same as Aristotle which is delivered to themultiple audiences. This communication model has five major components as shownbelow:-In the model Lasswell included other channels apart from speech as the communicationchannel. Another new term is added “Effect” which acts like a feedback mechanism inwhich the receiver reacts to the message sent by the sender.5.3.3 Shannon and Weaver communication modelThis communication model helps us to study the communication scientifically. It has fivecomponents as shown below:-Speaker MessageAudienceWho SaysWhatIn whatchannelTo whom With whateffectNoisesourceInformationSourceTransmitterReceiverDestinationSignalReceivedSignal

This is a one way transmission and reception of messages. This model explains thatduring the process of sending the message from the sender to the receiver somedistortions may takes place in the message, which is referred to as Noise. This modelaims at knowing the source of such distortions and tries to minimize them for effectivecommunication.5.3.4 Schramm’s Interactive communication modelIn this model the communication process is described as an interactive process where

the feedback from the receiver helps in altering the message accordingly by the senderand this process is endless. This model defines communication process as a circularprocess.Source: Julia. T Wood (2010)Even though this model is an improvement over linear models, it still assumes that thesender and the receiver are different persons from each other.5.3.5 Transaction communication modelThis model states that both the participants during communication process can be thesender and the receiver. It also explains that the level of communication varies overtime when participants face new experiences and changing relationships during thecommunication process. It can be understood further with the following diagram:-Source: Julia T. Wood (2010)For more information on various other communication models you may refer to thebooks mentioned in the further reading section. Let’s now understand the variouscomponents of the communication process in detail.SAQ 11) Define Communication2) Write short notes on non verbal communication explaining its advantages anddisadvantages.3) Explain what are the advantages of verbal communications over non verbalcommunications4) Explain Lasswell’s Communication model and its drawbacks5.4 Effective Communication ProcessWe have already studied various communication models and understood variouscomponents described in those models. Let’s now understand them in detail with thehelp of following communication process diagram:-Fig: Communication model incorporating feedbackSource: Chris Rose (2005)Here we must understand that the message and the feedback message are sent bysome appropriate channel.5.4.1 Identifying the SenderIn business scenarios, sender can be an individual, group or the company who want toconvey some message to the receiver. In a communication process, the first step wouldbe to identify the sender. It appears that a sender will be sales representatives for theSenderMessage ReceiverSenderreceivesMessagefeedbackBecomesSenderMessageMessage

feedbackChannelsales process, but identifying the right sales persons for the customer is a difficult task.Depending upon the nature of sale, the sender will vary as follows:-If the sale is for an individual customer and low priced product like FMCG goodlike shampoos, cooking items etc., then the company may appoint individualsales representatives as the sender in the communication process.If the sale is for high priced products like washing machines, laptops, LCD TV’setc, then the sender can be a single or team of sales representatives.If the sale is for a high net worth individual like CEO of the company, then thesender will be a highly qualified person or team who can handle all sorts ofobjection handling during the communication processIf the sale involves an IT product for the company which may run into millions ofrupees, then the sender will be mostly a team of members from variousdepartments like technical, marketing, sales, finance, HR etc.Hence it is understood that the sender can be a single person or a team dependingupon the complexity and value of the sale.5.4.2 Identifying the receiverThe receiver in business is audience which the company would be targeting to make thesales. In sales management, identifying the right audience is a complex task. Severalsteps will be followed by the company in identifying the receiver for the communicationprocess.The first step is to identify the market place i.e. the state or country or continentin which the company wants to do business.After identifying the market, the next step would be to segment them into variouscategories appropriate to the product/service.Customers or target audience are identified from the preferred segment and areinvolved in the communication process.Often, companies end up giving promotional offers, advertising, sales calls to the wrongtarget audience/receiver in the communication process and end up with poor salesresults. So identifying the right customer will be a challenging task. Once the rightcustomer is identified he/she can be involved in the communication process forsuccessful closing of the sale.5.4.3 Identifying the right MessageMessage is the information which will deliver your idea to the receiver/customer.Message is what you communicate to the customer which will be explained during thecommunication process. The right message should be able to address the needs andwants of the customer. Various issues have to be addressed in creating the rightmessage. Some of the issues include:-Identifying the needs of the customer/receiverPlanning for the ideas which can resolve the customer/receiver issues. Forexample, if the customer problem is increasing printing costs in the company dueto inkjet printer in use, then the idea would be why not upgrade the printer to a

LaserJet which save time and cost per page.After the idea generation, it is time to fabricate the idea into messages. In theabove example, once you have identified installing LaserJet as an idea, you needto create appropriate presentations or any documents proving that it is the rightsolution for the problem of the company. This would be the message creationpart of the communication process.Now in some models you identify encoding as a part of message sent by thesender. Here encoding involves identifying the right amount of slides and text forthe presentations, using the right amount words in the slides, appropriate numberof slides in presentation, avoiding any words which can create misunderstandingdue to any language and cultural gaps etc. We shall learn more about this in thenext unit “Presentation Skills”.Try to design the message in such a way that you will make use of both theverbal and nonverbal communications.While creating the message, it is important to understand the decoding part atthe receiver end. When you convey the message to the receiver, they use theirown style of decoding the message. It will be better to anticipate and know thethinking process of customer and move according while creating the message.For example, if you come to know that customer is looking more into thereliability and multi-functional capability in the printer like scan, automatic dualprinting etc, then when you create the presentation or documents on thecapabilities of your LaserJet printer it would be better to incorporate such detailswhich the customer is interested and will be looking for.5.4.4 Identifying the right channelYou will come across two terms namely medium and channel in some communicationmodels. The medium and channel in the communication process refers to the methodand means by which the message will be communicated between the sender and thereceiver. For example, if the message is to be conveyed by a written document, thenthe letter becomes the medium and the fax or postal service becomes the channel. Ingeneral channels can be fax, email, postal service, PowerPoint presentation, telephoneetc.Identifying the right channel is very important as improper selection might lead to thecomplete failure of the communication process. Some of the issues that need to beaddressed include:-Before selecting the channel, try to find out whether the customer/receiver hasthe necessary facilities to use that channel. For example, if you plan to send aletter by email, check out whether the customer is having internet facility inhis/her premises.The right channel selection should depend upon the type of message you want toconvey. For example, if you want to convey a very detailed technical documentwhich runs for more than hundred pages then the PowerPoint presentationswould be a very bad choice. So in such cases it is advisable to use the writtendocuments and send them through appropriate channels like email or postalserviceNowadays, many sales representatives rely heavily on PowerPoint presentations

during the communication process. If this channel is appropriate for the messagethen make sure that you use not only the verbal codes but also the visual andvocal codes. Verbal code means the right text in the slide and vocal code meansthe right language you use while speaking and visual code includes anydiagrams, animations or videos in the slides.According to Cheryl Hamilton( 2000) , while interpreting the message thereceiver/customer will rely more heavily on visual and vocal codes rather than theverbal code as illustrated in the below diagram:-Source: Cheryl Hamilton (2008)SAQ21) Explain various issues which need to be addressed while selecting the sender foreffective communication process.2) Explain various issues which need to be addressed while creating the messagefor effective communication process.3) Explain various issues which need to be addressed while selecting the channelfor effective communication process.5.5 SummaryIn this unit, we understood the various definitions of the communication as stated bydifferent scholars. We identified various basic forms of communication namely verbaland nonverbal communications. We have also studied the advantages anddisadvantages of these forms of communication. Hence it is advisable to use the rightmix of appropriate verbal and nonverbal forms during the communication process. Laterwe have studied how the communication process models have evolved from a linearway into an interactive process to take care of the changing level of relationships andcommunications over time.Later in this unit we have examined how an effective communication process can beimplemented. We have understood the critical nature in selecting the right sender totake part in the communication process. We also studied how the rightreceiver/customer will be identified by the company. We understood the role themessage creation plays in the communication process and various issues that need tobe addressed in his stage. We also understood that the comfort level of thereceiver/customer should be kept in mind while designing the message. Finally in thisunit we have identified how an improper channel can make the entire communicationprocess a failure and identified various factors that need to be taken into account whileselecting the communication channel.5.6 Keywords1) Channel It is the means by which the message will betransmitted from the sender to the receiver andvice-versa.2) Grapevine Grapevine means “Gossip”. It is an informalway of communication which exists in everyorganization in almost all the departments.3) Noise Noise in communication is any wronginterpretation of the words and phrases usedduring the communication process by the

receiver or sender. Noise distracts the actualmeaning of the messages during thecommunication process5.7 References1. Cheryl Hamilton (2008), “Communicating for results: A guide for business and theprofessions”, Thomson Wadsworth, USA.2. Chris Rose (2005), “How to win campaigns: 100 steps to success”, Earthscan,USA.3. Julia T. Wood (2010), “Interpersonal Communication: everyday encounters (6th

Ed.)”, Wadsworth, USA.4. http://www.oxforddictionaries.com/definition/communication5. Sadhana Gupta (2008), “Communication skills and functional grammar”,University Science Press, New Delhi, India.6. Sri Jin Kushal, Sunitti Ahuja (2009), “Business Communication”, V.K. Enterprises,New Delhi, India.5.8 Suggested Readings1. Uma Narula (2006), “Communication models”, Atlantic publishers, New Delhi,India.2. Lesikar, Flatley (2005), “Basic business communication: Skills for empoweringthe internet generation (10th Ed.)”, Tata McGraw-Hill, New York, USA.

UNIT 6 SALES PRESENTATIONStructure6.1 IntroductionObjectives6.2 Pre-presentation activities6.2.1 Knowing about your company6.2.2 Knowing about your customer6.2.3 Knowing your competitors6.2.4 Defining the presentation objectives6.2.5 Other essentials activities for presentation6.3 Presentation design Guidelines6.3.1 Guidelines for preparing your PowerPoint presentation or paper slides6.3.2 Guidelines for preparing a word document6.4 The sales presentation process6.4.1 Sales presentation methods6.4.2 Objection handling and closing the sale6.5 Summary6.6 Keywords6.7 References6.8 Suggested Readings6.1 IntroductionIn the previous unit we have understood various definitions of communication and thecommunication models. We have also analyzed the issues that need to be addressedfor effective communication. We saw that presentation skills are one of the importantfactors which determine the success of the sale. In this unit we shall understand aboutwhat are the issues that need to be addressed in making a successful sales

presentation which helps in building a long lasting relationship with the customer. Thequality of presentation is an important factor which will determine how well the prospectwill understand your product/service. Presentation should be motivating enough to theprospects to make them participate in the process. In this unit we shall understand thatbefore going for the presentation there are some pre-presentation activities that onemust follow. One has to keep in mind that his/her presentation should be better that thecompetitors and therefore, some background work needs to be done in deciding whatgoes into the presentation to make it look better than the competitors.In this unit, we shall understand that knowing your company should be the first taskbefore knowing your customers. Many-a-times prospect may not know what theproblem is and so identifying the problem is the first task for the sales representative.Once the sales representative and the prospects understand the right problem, it wouldbe easy to concentrate on the solution part of the presentation.This unit also highlights the basic concepts on how to make a better lookingpresentation in terms of presentation of content. Finally in this unit, we shall understandthat the presentation wouldn’t be complete if the objections aren’t handled well. Weshall also look at about some of the objection handling techniques where you canhandle the objections effectively.ObjectivesAfter studying this unit you will be able to:-1) Importance of Knowing your customer, company and competitors2) Various functions of sales team and pre-sales team in preparing an effective andefficient presentation3) Define the presentation objectives4) Enumerate various guidelines for preparing slides and documents5) Explain various presentation methods and scenarios where they can be applied.6) Address various objections and use appropriate objection handling techniques6.2 Pre-presentation activitiesPre-presentation activities include all the activities that are performed to ensure asuccessful presentation design. The list of pre-presentation activities would generallyinclude the following:-Pre-presentationactivitiesKnowing aboutyour companyKnowing aboutyour customerKnowing yourcompetitorsDefining thepresentationobjectives

Other essentialsactivitiesSeveral issues have to be addressed such as the objective of the presentation, contentthat goes into presentation, gathering information about the customer, your companyand the competitors and so on.6.2.1 Knowing about your companyKnowing about your company is vital because during the presentation customer mayask you anytime about your company and the products/services. Anytime if thecustomer is interested to know about your company, you should be able to explainabout your company in not more than 30 sec to 1 min during the presentation. So it isimportant for you to write a brief summary about your company which includes thefollowing:-Company’s objectivemission and vision statementList of product/servicesAreas of expertisePrevious and present customers of your companyNumber of employees workingCompany turnover and growthYour seniors and heads in your departmentKnowing your company’s employees or various domains of expertise would be veryimportant when you are responding to the customer requirement. In situations like whenthe customer sends the problem and request you for the solution, you should be able toknow whether your company will be able to handle that problem. For example, if thecustomer is in a telecom company and the problem is low network connection speed,then the solution would be to upgrade the entire network to a faster platform whichrequires huge amount of investment. As a part of your sales team it’s important for youto know the following before making the presentation for such customer:-whether your company has such expertise in handling big projectsIf yes, are there any customers in the past where such projects have beenimplementedWhat should be the profit margin in such projectsWhat could be the time-limit for project completionHow many number of employees would be required to work in such projectsWhat are the other resources required by your employees (travel tickets, internetbandwidth, laptops, living expenses in other countries etc).In many companies, there would be a sales team and a pre-sales team to handle hugevolumes of customers. The main function of the sales team would be to meet thecustomer, take the requirements of the customer and make the necessary salespresentation. Most of the times, the sales team will be on-site i.e. at the customer place.The pre-sales team will be mainly at the company’s office which may not necessarily beat customer premises. The pre-sales team would be responsible to address all the

questions which we have discussed earlier and make the presentation. It is the job ofpre-sales team to correctly optimize the profit margins and the number of employeesrequired to implement the solution for customer.If you are a part of the presales team it is very important to know that the customersolution may not be handled by a single technical team. For example, if there is atelecom problem of low network speed, the solution team may involve thenetworks/hardware team, software team, testing team etc. It is important to know thatevery team will try to put as many employees as possible in the projects so that theiremployees will have maximum work and profits. As a part of pre-sales team it is yourjob to keep optimizing the number of employees such that not too many or too lessemployees are involved. Coming to the cost part, it is always advisable to check thenumber of days employees need to stay at on-site with the customer and try to optimizethese days so as to reduce some of the living expenses in other countries.The important objective apart from developing a long-lasting relationship with customeris to have a decent profit margin in the project. It is the job of the sales team to get aclear picture of the profit margin and then decide to go on with the presentation or not.You cannot make the presentation for the solution which brings loss instead of profit forthe company. Most of the time sales team may have to get approval from the financeteam who monitors the financial status of the company before going ahead with thepresentation with the customer. Even in door-to-door sales, most of the times the salesrepresentatives will be instructed by the sales manager about the maximum discounthe/she can give to the customer in order to close the deal effectively.Now let’s look at the information that is necessary to known about the customer beforethe presentation process.6.2.2 Knowing about your CustomerCustomer is the key to any business, hence knowing the customer will be an importanttask for any business. Your customer may be a multi-national company or a governmentinstitution or even a single customer in door-to-door sales. A due diligence would berequired to know your customer well. If it’s a door-to-door sale, some of the parametersyou should be willing to look are:-Income level of the family or head of the familyGender and age of the family membersEducational level of the family membersOccupation of the family membersMost of the parameter can be known easily except the income level. One can never askthe customer what his income is esp. when selling some door-to-door products likechimneys, water purifiers and some other household items. If it is a loan product orinsurance products you may ask the customer directly to fill the income in the required

column in the application. Age can be known approximately when you look at thecustomer. The important thing to know is who is the decision making authority in thehome, is it the male head or the female head or the children.If the customer is the Government or Institutional organization some of the parameteryou should be looking at include:-When was the organization establishedHow many employees or departments there in the organizationWho is the decision making authority or individual in the organizationWhat are the areas which the organization serveHow good is the organization in clearing the payments in timeWhat can be the future sales opportunities with the organizationIn Government and institutional sales the important task for sales people would be toget timely payments. Since the organization deals with many other responsibilities yourpayments may get late, so knowing the credibility of the organization for timelypayments is important task. One way of finding this is by looking at the previouscustomers and any problems they have faced. You cannot go and ask directly yourcompetitors about the organization but what you can do is to take a look at the growth ofthe organization over time.Finally if your customer is a big multinational, then the list of parameters you must havea look are:-Time of establishmentNumber of employees and departmentsTurnover and the profit margin of the companyYear-on-year growth of the companyRank of the company in the market placePrevious experiences with the company if anyThe biggest problem with big multinationals is to know whether the customer will beable to fund the project successfully in time. If necessary funds are not released in timethen the time period will increase and so do the costs. So it’s very important to look atthe financial health of the customer and then proceed for sales presentation.6.2.3 Knowing your CompetitorsCustomer prefers the company who serves them according to his needs. However, ifthere is more than one company which is able to serve the customer according to hisneeds and expectations, then the customer will choose the best one according tohis/her criteria. This leads to the competition between the companies to provethemselves that they are the best according to the customer criteria.Hence it is an important task for any company or you as the sales representative tocorrectly analyze the competitor movements towards the customer. Your presentationmay fail if the analysis of your competitors is not done well. We have already discussedthat there exists two functions in sales namely sales and pre-sales in the company. Thecompetitor analysis is primary function for sales rather than pre-sales. It is the duty of

the sales team who is on-site to know who the competitors are and what are theirstrength and weakness? Once the information is known it can be passed on to the presalesteam who will prepare the presentation accordingly to reflect that they are muchbetter than the competitors.No matter how well the presentation is prepared, it won’t close the deal unless the salesteams have a clear idea about their competitors. For example, let’s assume that youhave prepared a wonderful presentation which clearly highlights the benefits of yourproducts/services to the customer. But if you have quoted the price much higher thanyour competitors, your solution may not be preferred by the customer. You mustunderstand that in today’s competitive world there is a pressure on profit margins andgrowth of every company and so your customers too.You customers always look for the company which provides best or reasonably goodsolution at the least cost for the solution. So as a sales representative it is veryimportant to know approximately how much cost the competitors would quote for thesolution. This cannot be known easily as every company maintains the bid amountsecretly and will be given strict instructions to the employees not to disclose it. But youshould be able to get an approximate idea by looking into their past project costs. Sothe important parameters which you should be looking in knowing the competitorsinclude the following:-Domain of expertise and the number of employeesYears of expertise i.e. is the competitor a new entrant or an established player inthe market placeType of solution offered to the customer i.e. the product/servicesAmount quoted for the solution in the bidding process for the customerCompetitors advantage areas over your company’s products/servicesHaving discussed much about knowing your company, customer and the competitor, it’stime for us to look at some of the other pre-presentation activities in subsequentsections.6.2.4 Defining the presentation objectivesMany sales presentation ends up without any results due to improper planning of thepresentation and no measurable results. It is always better to have the list of objectivesthat you want to achieve by the sales presentation. One must remember that theobjective of the first sales presentation with the customer shouldn’t always be thesuccessful closing of the sale. Initiating a dialogue to involve the customer in thepresentation and help in decision making should be the first objective. We see lot ofpresentations where the customer doesn’t take part much or remains to be a silentparticipant. So, one should plan the presentation such that necessary dialogues wouldhappen between the customer and the sales representative which will help in buildingthe rapport. Some of the general objectives one would look for the presentation wouldbe as follows:-Developing a good rapport with the customers

Explaining about your company expertiseBuilding trust in the customerCreating enough interest to make the customer participate in the presentationprocessIdentifying problems of the customerIdentifying the right products/services for the customerSuccessfully handling objectionsSetting the stage for next meetingsMaintaining the time allotted for the presentationClosing the deal effectively whenever it’s appropriateMost of the sales presentation starts with the introduction of the company. You shouldbe able to clearly highlight the strengths of your company like a strong workforce,various domains of expertise, level of employees i.e. the educational and experiencelevels of the employees and so on. Once you have created a positive image about yourcompany, the next objective would be to develop a good rapport where the presentationprocess would become a two way communication between the customer and the salesrepresentative rather than a one way communication with only sales representativeinvolvement. A two way communication process will always helps in quickly identifyingthe problem and then identifying the right solution for the problem. Following the timelimit is very important as the customers will be busy with their daily work and may notshow enough interest if presentation takes too long. The final objective before endingthe presentation should be to set the stage for the next presentation. You should beable to get another appointment where you can carry on with your further presentationactivities which can help in closing the deal effectively.It is very important to have a check-list of the objectives such that they will be followedby all the sales representatives during presentation. It is important to measure theobjectives in terms of their level of achievement and should plan better in futurepresentations. For e.g. if the objective of maintaining the time limit is not achieved asthe time for presentation overshoots, then it’s important for you to ensure that at leastfrom now onwards in next meetings you will take care of that objective with utmostimportance.6.2.5 Other essential activities for presentationTill now we have discussed about a lot of pre-presentation activities like maintaining anobjective check-list for every presentation and important parameters in knowing yourcompany, customer and the competitors. Now let’s look at some other issues whichmust be addressed before going for the presentation. Some of them include as follows:-Having sufficient number of hard copies of your presentation, preferably with thename of the customer on it.Dress appropriatelyHave your own tools for presentation

Ensure your tools are working perfectly fineChoose appropriate team for presentationEnsure every team member is present for the presentationHave the necessary check-listsYou may never know how many people from the customer side will participate in thepresentation. So an important requirement in any sale, it door-to-door or institutional orindustrial sale, it is advisable to have adequate number of hard copies of yourpresentation and any other supplements like company brochures, previous customer listetc. It is always better to have individual copies in decent folders with the names of thecustomers.The next issue is about the dressing for the presentation. It is better to have a formaldressing in any sales presentation with or without a tie depending upon thecircumstances. Make sure you have a tie with you if you see everybody wearing a tie inthe presentation. For door-to-door sales tie may not be an important requirement.Dressing should be in such a way that you are not over dressed or neither underdressed.In absence of any clue a plain blue shirt and black trousers are recommendedfor use.The next issue would be having tools for your presentation. Make sure that you havenecessary tools which make the presentation process easier without any interruption. Ifit is a PowerPoint presentation, the tools may be your own laptop with the necessarysoftware to run the presentation, your own project and your own audio system. You willnever know whether the customer premises will be having all these facilities. So it isbetter to carry one yourself. Nowadays you get projectors with audio system embeddedin them.The next task is about choosing the appropriate team for presentation. If it’s a door-todoorsale of some FMCG products or consumer care products, then there would be noteam as it will be handled by one sales representative most of the times. But in case ofinstitutional or industrial sales, generally a group of sales team goes for thepresentation. In such cases it is important for you to choose the appropriate team whichhas the technical, financial, HR and sales persons whoever is required for thepresentation. Most of the times, the presentation may happen over the videoconferencingor over the phone where the sales person will be with the customer andrest of the team members on the call. So it’s an important task to ensure that everyteam member is committed and be present in the required time, keeping their regulardaily duties of their departments aside. In companies lot of time it happens that one ofthe team members will be busy in his/her department activities and may not be able to

participate in the presentation. So, it is very important for you as the part of the salesteam to keep reminding the other team members about the sales presentation. Again inmany companies this work of engaging all the team members in right time is the duty ofthe pre-sales team in the organization.The final task is to have necessary check-lists for every activity that leads to asuccessful presentation in time. For example, preparing the presentation itself is abiggest task that needs regular monitoring and feedbacks. For example, we havediscussed the problem faced by the customer in Telecom Company due to low networkconnection speed, and then the solution team involves various departments like thenetworks/hardware team, software team, testing team etc. So getting the appropriatesolution slides from these teams and checking for the compatibility between thesesolutions is a time taking process. The solution given by the software team may not becompatible according to the networks or hardware team. Hence such complicationshave to be resolved and the presentation should be prepared with involvement of all theteam members. So maintain the check-list and monitoring the progress is important forpresentation preparation. Any other required check-lists must be in place before thepresentation process.SAQ 11) Explain various issues you have address to know your competitors better in anindustrial sale2) Explain the important objectives you will layout for your sales presentation3) If you are in door-to-door sales selling a vacuum cleaner, then what informationyou would like to gather from the customer6.3 Presentation Design GuidelinesIn the earlier times, sales representatives had presented their products/services on apaper slides which were either printed or hand written. But now with advances incomputer technology and print media, many of the companies prefer the PowerPointpresentations in industrial and institutional sales and printed slides in case of door-todoorsales. PowerPoint slide are considered as an excellent way of communicationsince you can easily incorporate the graphics, pictures, videos in it and make thepresentation interesting enough. But there are some limitations to it in terms of content.A lot of content in terms of text make the presentation cumbersome, hence any textmatter it is advisable to give the customers in a printed word document format, so thatthey can refer to it whenever needed.We often wonder what makes the presentation to be presentable to the audience, (i.e.customers). Are there any steps which we can follow so that the presentation would beappealing enough to draw the attention of the audience? Even in case of worddocument the audience should be willing to read it rather than preserving it for later use

or just misplacing it. So in this section, we shall understand some basic guidelineswhich will help you in preparing effective presentations and word documents which arepresentable enough to the audience. Remember these are general guidelines whichcan not only be used to the sales presentation but most of the guidelines can also beused for your project presentations in your class.Let’s look at the guidelines proposed by Krieger (2007) and some other guidelines aswell for the PowerPoint or paper slides and as well as word document.6.3.1 Guidelines for preparing your PowerPoint presentation or paper slidesThe main objective in preparing a PowerPoint slides or paper slides presentation is tograb the viewer’s attention. The challenging task is to decide the appropriate number ofslides you will be presenting in the given time limit by the customers. The presentationshould be in such as way that it doesn’t complete too early or too late that theprescribed time by the customers. We often find that presentations may be prolongedup to 50 percent of the time limit of even finish when 50 percent of the time is still left.So how to decide how many slides to present in the given time? A simple rule can bethat “the number of slides <= the number of minutes”. If you have been given the 30 mintime to present in the class or the company, then the ideal number of slides will be 30 orless. This rule can be applied to PowerPoint or paper slides. Having discussed aboutthe number, it’s time for us to decide how that number of slides will be designed.Remember the guidelines apply to both the PowerPoint slide and the paper slides aswell. So let’s take a look at some of the guidelines as stated below:-a) Select or create your own themeThemes refer to the design template of your slide. It includes the background colour andthe design of each slide. Themes in PowerPoint mainly consist of a master slide and layout slides. Master slide is the starting slide where you enter the presentation topic andthe name of the presenters. The layout slides follow the master slide where you designthe material to be presented. Some of the guidelines here include:-Select carefully the theme which has the appropriate background which suits toyour topicAlways try to follow the theme which your company recommendsShow the company logo on each slideOn each slide with the company logo it is better to include the catch phrase of thecompany. For example, on Wipro Logo you will find “Applying Thought” and onInfosys you will find “Powered By Intellect Driven By Values”Make use of slide layouts to save time in formattingb) Use video and audio to convey your message more effectivelyUsing video and audio will be possible in a PowerPoint slide and not in a paper slide,

but you can show some images and messages from the video and audio in the paperslides to convey the message. Again you must ensure that the number of slides doesn’tovershoot than the required number. Some guidelines you should follow are:-Use video and audio only when requiredUse video and audio when you want to convey a very important message suchas company values or the statements of the previous satisfied customers etc.Don’t use more than a couple of video and audio in the presentationExcessive use of video and audio might dilute the presentation effect and alsoeat up much of your presentation timePlay a video when you feel that the audience shows signs of losing attentivenesstowards the presentationThe best time for video would be in the middle or at the end of your presentationc) Use graphics to emphasize key pointsGraphics here refers to using images, tables, textboxes, and flow charts in yourpresentation. Some of the guidelines are:-Use images instead of text when you want to convey a lot of informationThe expertise in your company and the list of employees who works and theirhierarchy can be shown in the form of a flow chart rather than textBetter to use bullet point wherever necessaryKeep changing the graphics every three to four slide so that the presentationdoesn’t look monotonousBe cautious to use appropriate graphics and don’t over burden the presentation.For e.g. don’t keep on showing images or flow charts or tables on every slide.Use them wisely whenever required.d) Use animations and transitions wiselyThere are lot custom animations and transition of slide you can learn in PowerPointslides. Unfortunately you may not be able to show them in paper slides. Some of theguidelines to be followed are:-Use animations only when required.Don’t use multiple animations in one slide i.e. the animations in any given slideshould be uniform. For e.g. If the animation for the first text in the presentation is“Blinds”, then the following text or pictures or any graphics should use the sameanimation.Try to use the same slide transition thought out your presentation. Avoid usingmultiple transitionsRemember the animations and transitions are used only to grab the viewer’sattention. Use them only if they are required.In serious topics, such as budget presentations or some high level technicalpresentations avoid using many animations as it would distract the attention andthe audience might feel uncomfortable.e) Consider difference between print and on-screen presentationsThe presentations that appear excellent on screen may not necessarily look good onthe printed slides. The backgrounds or the themes may be printed dark when comparedto the actual text in the slide. This makes the printed slide difficult to read. Someguidelines to be followed include:-Make sure that the presentation design and the text looks good both on computerscreen and on a printed paper

Better to have two different designs of your presentation so that one suits foryour computer screen and one for the printMake the necessary adjustments in the theme and make sure that print looks fineby taking the actual printout.Most of the times sales representative might be give black and white copies, somake sure that the presentation is designed to look good in gray scale prints toof) Other general guidelinesSome of the other general guideline which we haven’t covered earlier include:-Don’t use more than 5-8 lines of text in any slideMake use of any note pages in the slide so it can be used as a reference in caseyou forget some concepts during the presentationMake sure you have a printed copy of the slides with you during the presentation.You may have handouts which have 4 or 6 slides per page.Always make sure that you don’t deviate from the topic of your presentation orthe objective of your presentation in any slideAvoid using colours which are too dull or too brightAlways choose the colours so that they are visible from a appropriate distancesay from the member in the last row of your roomDon’t keep changing the font on every slide. Make sure you follow the same fonton every slide. Size of the font may vary from text to text, but make changesappropriately.Make sure that the picture or the text doesn’t over shoot the boundaries of theslide. This may result in breaking of the picture or text during the presentation.Make sure that the text in the pictures, flow charts, tables etc are readable fromthe appropriate distanceTry to use the same theme for all the presentations you present in the meetingMake sure the company logo is visible in all the slide clearly enoughMake sure that the important points are highlighted in the presentation so that theaudience can easily see them. For example, important points can be the cost ofthe project, number of employees, domain expertise etc.Be careful that you don’t over highlight every other text which is not veryimportantAt the end make sure you give appropriate references and a thank you noteLet’s now look at some of the guidelines that have to be follow in a word documentpreparation for the customers.6.3.2 Guidelines for preparing your word document fileMost of the times we see that presentation wouldn’t be complete without giving the worddocument containing detailed information of various topics or issues discussed in thepresentation. Due to the time factor or the limitations of a slide presentation, we may notbe able to convey detailed information about the product/ services. In such case all theinformation related to the product/ service including the Service level agreements(SLA’s) will be provided to the customer for review. Documents should be created insuch a way that it grabs the viewer’s attention. Documents would be big and run into alot number of pages, hence we need to follow some guidelines so as to make themmore appealing. So let’s take a look at common guidelines which should be followedwhile creating a word document.

a) Choose your content carefullySince the documents has a lot of information per page and may run into 20-25 lines perpage, there is every chance that the viewer will get lost while reading it. In order tomake the document easy to understand it is very important that you choose only thatcontent which is very important. Some of the guidelines are:-Choose the content carefullyTry to put a concise summary point in the first page such that it gives necessaryimpetus for the viewers to read the entire document.You may highlight some of the problems the customer is facing in the first coupleof pages. Like you may say most of the companies are facing the problem of lownetwork speeds and are not able to carry out daily transactions effectively withincreasing number of customers day-to-day. So what is the solution for thisproblem? Then you can keep on continuing with your company solutions in thesubsequent pages.Always give some information about your company and its key strengths in thefirst page.Give a suitable heading such that it reflects your objective of the word documentTry to use a picture or table or a chart every couple of pages so that thedocument will be interesting enough to readb) Select or create a document themeA document theme will describe how the background of every page in the documentlooks like. It also deals with the style of border, header text and footer text in thedocument. Many a times the company will be having its own theme with its logo watermarked at the center or top of every page. Some of the guidelines includes:-Choose the theme which suits your companyYou may have the same theme which you used for your PowerPoint slides sothat the uniformity is maintained in terms of font selection, colours and graphicsC) Maintain uniformity in the textIn the document if you have used the font size 16 and bold for the heading in the 1st

page. Then in any other pages if you want to keep a heading use the same font as usedearlier in 1st page. Some of the guidelines here include:-Make sure the all the main headings, sub headings, inner sections maintain theuniform font style and size within them as explained earlier. You may use fontsize 16 for main headings, 14 for sub headings, and 12 for the text in thesections and so on.Make sure the font used in the text of all the tables are sameMake sure that font in all the flow charts are samed) Use graphics to illustrate key pointsGraphics are a great way of creating interest while reading the document. Some of theguidelines include:-Avoid using blurred images; always use clear images in the documentsIf you are taking the picture from some other source, clearly give the referencebelow itThe text in the picture should be readable enoughAvoid using bright colours in the chart, especially in a pie-chart - it would makethe text difficult to read

Make sure the size and the colour formats looks similar for most of the charts inthe documente) Other general guidelinesSome of the other general guideline which we would follow for creating a documentinclude:-Make use of an appendix if you have any supporting information to your contentwhich can be put at the end of the document.Make use of a footer and header in the documentMake sure the header will include the company name and logo and footerincludes the page number.When the document is ready make sure that you see the print preview to get tohow it look when printedAvoid breaking of tables and flow charts into multiple pages, always try to keepthem in a single page unless they are very lengthyIf you are copying some text or table or a chart from other document and the fontis changing, try “past special” instead of paste in the document. This commandwill preserve the text style and font while coping.Finally when the document is ready make sure that you run the spelling checkand clear all the language and spelling errors.Give the document for review to you team members and your manager and gettheir approvalGet a copy printed and make sure the colours in the pictures, charts and anyother graphics are readableThe list of guidelines is not exhaustive and you may follow some others whichmay help you in creating an effective and efficient documents and PowerPoint orpaper slides.SAQ 21) Explain various presentation design issues while using animations andtransitions in the slides.2) Explain the guidelines which you will follow while selecting the content for yourword document3) Explain the uses of video and audio in your presentation6.4 The sales presentation processHaving prepared your presentation slides and documents, it’s time for you tounderstand how to carry on with the presentation process. Let’s us now look at some ofthe presentation methods as suggested by Koekemoer (2004) in the following section.6.4.1 Presentation methodsThere are many ways in making a presentation which can be understood by thefollowing:-a) Stimulus-response approachStimulus refers to any statement which will create a response from the customer. Weknow that the ultimate objective of all the presentations is to develop a long-lastingrelationship with the customer and to close the deal successfully. The sales person inthis method makes some statements that will act as a stimulus to the customer and inresponse, the customer will like to make a purchase. Most of the times in this method,

the presentation will be as brief as possible and the sales representative will try to closethe deal. The sales representative may offer discounts or lowest price in the market orextra add on benefits as a stimulus and then in response they will make the customer toclose the deal. This type of method will be useful for new sales representative who areinexperienced to handle longer periods in presentation. This method would beappropriate and work well in case of door-to-door sales or sales which include smallrevenue per product such as FMCG goods. Normally in industrial and institutional saleswhen the product/service value is much higher such type of presentation method maynot work well.PresentationMethodsStimulusresponseapproachThe formulasellingpresentationThe needsatisfactionpresentationThe problemsolutionapproachb) The formula selling presentationThis method can be used for similar customers and situations where you have a singlepresentation for all the customers. This method follows AIDA approach (attention,interest, desire and action). Initially you try to get the attention by stating the problem ofthe customer and about your company’s capabilities, next you provide the solution tocreate interest, then you provide some documents backing up your solution to retain theinterest, then you ask few question to know the desire level of the customer and finallyyou attempt few closing techniques to close the deal.This method will give reasonably time for presentation and will provide more flexibility inhandling the presentation according to customer feedback. A less customizedpresentation will be used so that it can be applied to all the customers. This method willbe useful in consumer goods where the sales representative will be handling manycustomers per day.c) The need-satisfaction presentationThis method varies from other two which we discussed earlier which focuses mainly on

the sales representative presentation point of view. In this method we assume that thesale will happen only when the need of the customer is satisfied. This method focuseson sales interaction from the customer point of view. This method is approached inthree different phases namely need development phase, need awareness phase andneed fulfillment phase.Need-development phase: In this phase, the customer need will be identified. Many atimes the customer may not know what does he require for solving his problem. So thesales representative asks a series of questions to identify the customer needsNeed-awareness phase: In this phase, once the need is established by the salesrepresentative, it’s time to confirm it by explaining the needs to the customer and checkwhether the customer is satisfied or not. During this discussion the customer maydiscover other needs which he/she may not have thought of earlier.Need fulfillment: In this phase the sales representative will identify the rightproducts/services for the customer needs and present necessary presentationsexplaining the features and benefits and tries to close the deal.This method is especially suited for industrial and technical sales.d) The problem-solution approachThis method will be used for high value products/service which can bring a significantchange in the company’s working environment. For example, implementing a CRMsystem can be approached by this method.To implement a CRM system the sales representative have to understand theorganization fully so that to estimate what changes will be made in the organizationprocesses and system. Sales representative may not be able to do this big task all byhimself, so he will be requiring a team to identify various problem areas and give theappropriate solutions. For the sales presentation the sales team may require not onlythe presentation but also the catalogues, brochures, sample booklets, testimonials,various order forms etc. The sales process may into weeks or even months beforefinalizing a solution. You may require multiple approvals from various departments inthe organization to effectively implement the CRM system across the organization. Thisprocess also involves handling the written proposal for the presentation in getting thepermission to do the sales presentation. So whenever the sale includes a lot ofactivities, it is appropriate to follow the problem-solution approach.Having discussed enough on the presentation methods, it’s time to look at some of theobjection handling techniques during the sales presentation.6.4.2 Objection Handling and closing the saleWhen the entire presentation goes well and it’s time for closing and the salesrepresentative uses the closing technique, then the customers may respond positivelyor negatively by raising objections. So it is very important know how to handleobjections you may prefer to address as and when an objection is raised. If there are

many objections you may inform that they will be taken after the presentation. Most ofthe times customer raises objections to show his/her intelligence or to test the behaviourof the sales representative or to get more benefits from the product. It’s yourresponsibility as a sales representative to handle the objections without any negativeeffects on the sale. We have discussed some of the ways how to handle objection inunit 3 “Personal Selling”. In this section let’s find out some of the objection handlingtechniques as described by Claudyne (1994):-a) Ask an open question: When you are not sure how to handle an objection it is betterto ask an open question so that you can get some views from the customer which willhelp you in handling the objection. For e.g. If the customer says the budget for theproject is too much, then you may ask an open question like “How come do you feel thebudget is too much?”b) Ask a closed question: Closed questions can be answered with just a yes or no. If thecustomer objects that the funds cannot be cleared in such a short period of time, andthen you may respond by saying “Do you want us to start the project in a quarter or acouple of quarters later?”c) Clarify the benefits: If the objection is because the customers haven’t understood thebenefits clearly then try explaining them again. For e.g. If the customer says “I don’t findany extra value creation to the company by your product/service” then you may startexplaining again how your product will create extra value for the organization.d) Admit when you are wrong: Customer will be more intelligent than you many of thetimes. If customer pinpoints any wrong statement by you, and if it true then simply admityour mistake. For e.g. if customer says that “Industry growth for VOIP service is not12.5% but its 15%”, then if it’s true then admit that “You are correct, this slide needs tobe updated”.e) End eye contact: Whenever you feel like one of the viewers is giving many objectionstry to avoid eye contact during the presentation so that the viewer will be discouraged toraise another objection.f) Ask for help: Whenever you feel that you are not the right person to take an objection,it will be better to suggest the customer that his/her objection will be addressed by otherperson in next meeting. For e.g. if the customer says “Can you explain the variousfunctions or code used in the software for your product”, then if you happen to be a nontechnicalsales representative and have no idea of the code you may inform the

customer that “a technical manager will be able to contact the next day and explain thefunctions”.g) Discourage the objection: This is like a last step for rescue when you don’t have anychoice of using any other technique. For e.g. if the customer says “your company hasposted less revenues when compared to last year and losing out some of the previouscustomers” then the better will be not to explain why the company has lost thecustomers and the revenue and simply answer that “It is the job of the higher authoritiesand they are working on that issue”.The next process after handling the objections successfully would be using someclosing techniques to close the sale. We have already understood some of the closingtechniques in Unit 3 “Personal Selling”. The sale wouldn’t be completed unless somenegotiations happen between the customer and the sales representatives. We shalllearn about the negotiation skills in the next unit.SAQ 31) Which presentation method you will use in selling a chimney product for thecustomers in door-to-door sales? Explain the reason for the same.2) Explain how will handle the objection when the customers says “Your company isperformance is deteriorating day-to-day in the market place”.3) Explain the way you handle the objection when customers say “Your productfeatures are good and will be very useful for our company, but the price factorseems to be a little heavy for our pockets”6.5 SummaryIn this unit we have discussed the importance of knowing about you company, customerand the competition for any sale. Without knowing your competitor well and hisstrategies used, it would be difficult for you to impress the customer and get the dealand the various objectives of the presentation. We have also discussed the role of salesand pre-sales team in making the presentation. We have understood that thepresentation may require multiple teams or departments in the organization and socoordinating them to ensure the presentation is prepared on time is a critical task for thepre-sales team. Later we have understood various guidelines we have to follow tocreate a good presentation that is appealing enough to the customers. We haveidentified separately the guidelines for PowerPoint or paper slides and the documents.We have understood various presentation methods and the scenarios where they areapplicable. We have recognized the importance of objection handling in closing thedeal. Finally, we have learnt various closing techniques with situations where it can beapplied.6.6 Keywords1) Due diligence Due diligence involves investing or auditing. In

this unit it is used in a sense to know thefinancial, legal, environment and marketsituation of the company.2) Check-list A list of things which are required us to do toensure the process is completed. Having acheck-list reduces the number of errors thatmay occur in future due to a neglected issue inthe process.6.7 References1. Claudyne wilder (1994), “The presentations kit: 10 steps for selling your ideas”,John Wiley & Sons, New York, USA.2. Ludi Koekemoer (2004), “Marketing Communications”, Juta and co. Ltd, SouthAfrica.3. Stephanie Krieger (2007), “12 tips for creating better documents”,http://www.microsoft.com/atwork/skills/documents.aspx6.8 Suggested Readings1. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “SalesManagement”, John Wiley & Sons, New Jersey, USA.2. Darryl Davis (2003), “How to be a power agent in real estate”, Tata McGraw-Hill,USA.

UNIT 7 NEGOTIATION PROCESSStructure7.1 IntroductionObjectives7.2 Negotiation Defined7.2.1 Definitions of Negotiation7.2.2 Principles of Negotiation7.3 Effective Negotiation Process7.3.1 Pre-negotiation process7.3.2 Negotiation Process7.3.2 Post-negotiation Process7.4 Closing techniques7.5 Summary7.6 Keywords7.7 References7.8 Suggested Readings7.1 IntroductionIn the previous unit we have understood activities that are performed to ensure asuccessful presentation. We have discussed the pre-presentation activities, variousguidelines for making presentation and the process of effective presentation. Havingachieved the objective of presentation and successfully handling the objections, it istime for the sales representative to negotiate and close the deal effectively. Once thecustomers are satisfied they would like to negotiate the price and other features likewarranty period, after sales services, discount on add-on products and so on. So,negotiations are the part and parcel of the sales process before getting an order.During the negotiation process the customer will like to have the best price for theproduct/ service. The customers are always intelligent enough to know that the pricequoted by the sales representative can always be negotiable. Negotiations will happen

until both the customer and the sales representative negotiations comes to anequilibrium point. It is always important to understand that the customer will try tonegotiate the price to such an extent that there would be no profit left for theproduct/service sold. It is the skill of the sales representative to successfully negotiatethe deal such that a profitable relationship can be built both for the company and thecustomer. So, let us now understand the negotiation skills a sales representative mustpossess to successfully handle the deal. After negotiations, sales representative will useclosing techniques to close the deal and make an agreement of the sale.ObjectivesAfter studying this unit you will be able to:-1) Define negotiation and its objectives2) Identify the underlying principles of negotiation3) Explain the pre-negotiation, negotiation and the post-negotiation processes inhandling the deal effectively4) Understand the objective of closing techniques5) Use appropriate closing techniques according to various situations in the salesprocess7.2 Negotiation definedAfter the sales representative knows that the customer is willing to make the purchasebut has some concern related to price or features then he/she will enter into anegotiation process.7.2.1 Definitions of negotiationLet‟s start this section by identifying by defining the term “Negotiation”. Negotiation canbe thought of as “a process between two or more parties to arrive at a mutuallybeneficial agreement or relationship”. Various other definitions given by some of thescholars include as follows:-Steven Cohen (2002) describes negotiation as “the process of two or moreparties working together to arrive at a mutually acceptable resolution of one ormore issues, such as a commercial transaction, a contract, or a deal of any sort”.Fowler (1996) describes negotiation as “a process of interaction by which two ormore parties who consider they need to be jointly involved in an outcome, butwho initially have different objectives, seek by the use of argument andpersuasion to resolve their differences in order to achieve a mutually acceptablesolution”.7.2.2 Principles of negotiationFlower (1996) describes that there are seven principles to any form of negotiation. Let‟slook at them in detail:-a) Negotiation is the process which will require both the parties to reach to a desiredoutcome. Both the parties show some common interests in either the subject matter orin the negotiation context, which shall hold them in the negotiation process. For e.g. Ifyou are selling a technical software such as anti-virus to the company, then yourobjective might be to sell as many copies as possible with a reasonable profit margin

and the customer objective might be to get the copies at the least cost possible. Hereboth the customer and the sales representative objective are to get best value from thedeal. This holds them in the negotiation process.b) The discussion in negotiation process will normally start off with different objectiveswhich will initially prevent the achievement of the outcome. For example, in the previousexample, the customer who is buying the anti-virus product might say he will beinterested to take 50 copies if the discount is 30 percent. But the sales representativemight say the maximum discount he will consider giving is 15 percent. So, here both theparties started off with different objectives which don‟t allow them to come to aconclusion easily.c) At least initially, both the parties will opt for negotiation as a satisfactory way ofresolving the differences rather than forcing to them to abide by the agreements. Forexample, when the sales representative says the maximum discount he can give is 15percent and the customer is expecting a 30 percent. Then both the parties will proceedto negotiate further rather than the sales representatives forcing themselves to give the30 percent discount or the customer buying the product for a 15 percent discount.d) There is a belief in negotiation that each party can persuade the other to changehis/her stand on the original position. As stated in the previous principle, both the partiesinitially look for the negotiations. As per this principle, the customer will believe that hecan get more discount than 15 percent from the sales representative and the salesrepresentation will proceed with a belief that he can persuade the customer to buy theproduct at reasonable profit margin to the company.e) The next principle states “both the parties feels that there is still some hope left evenif there ideal outcomes are unattainable”. For example, if the sales person feels that thecustomer is not going to place the order at 15 percent discount at any cost, then therecan still be some hope left that the customer will buy the product at 15 percent if thebenefits of the product are explained once again to the customer.f) The next principle states that there is no point to participate in the negotiationprocess if one party is having influence or power which is real or assumed over theother party which is completely powerless. For example, if the customer whom you areselling the antivirus product is your elite or No.1 profitable customer in the past for yourcompany, then there is no point in arguing much and sticking to your 15 percent. It

would be better to increase your discount rate may be to 20-25 percent and proceed thenegotiations. On the other way, if your antivirus product is the No.1 in the market and isthe only antivirus which can cater to the needs of the customer, then you shall have thepower or influence during the negotiation process. In this case, you can just stick to your15 percent or may just give a little consideration and increase the discount to 17 or 18percent.g) The final principle states that the negation process is carried mostly by humanelement with verbal interactions. Hence, the negotiation is strongly influenced by theemotions and attitudes rather than the facts in the each party‟s arguments. This iswhere the negotiation skills come into play a lot. The sales representative mustunderstand that he can still win a better deal even if the customer is adamant by usinghis/her negotiation skills.SAQ 11) Define negotiation in your own words2) Explain the principles of negotiation7.3 Negotiation processNegotiation is all about give and take with the aim of both the parties getting satisfied. Inthis process various issues are to be handled well. Negotiation process can be thoughtof as a three step process as shown below:-Let‟s now discuss then in detail.7.3.1 Pre-negotiation processBefore entering into the negotiation it is always advisable to be prepared for thenegotiation. You should remember that if the negotiations are not handled properly youmay lose the customer and also his referrals. Hence some of the steps which you needto follow in the pre-negotiation process involve the following:-Identify the customer groupCollection as much customer data as possibleIdentify whom to involve in negotiation processMake a check-list of possible scenarios that may arise during the negotiationprocessPrepare for the scenarios and alternate ways to handleMake sure you and your team members are fully aware of the objectives of thenegotiation processDepending upon the type of sale, the team for the sales negotiation can be a singlesales representative or many. Normally, in door-to-door sales like FMCG and consumercare products, only a single sales representative is involved. In such case, he/she mustbe fully aware about the customer details and preferences. The sales representativeSteps in

negotiationPre-negotiationProcessNegotiationProcessPost-negotiationProcessshould be prepared for scenarios where the customer might ask for a more discount orany add on benefits along with the product/service.In Institutional and Industrial sales, there will be a team of members who will participatein the negotiation process. Once the presentation process is completed and thecustomer is willing to give an order but express is some concerns and want anegotiation to be done, it‟s time for the sales team to be prepared for the negotiationprocess. Company expects that nothing wrong would happen during the negotiationprocess in such big deals with the industrial or institutional sales. So, the first importantstep is to choose a team that is capable of handling the negotiation process effectively.The sales representative team can involve not only the people from the sales team butmay also include members from other departments like technical, testing, hardware,finance and HR. The team depends mainly on the type of product/service being sold inthe negotiation process.For example, if the sale is about a multi-million dollar CRM product is being sold, thenthe team for negotiations may include the technical, finance, testing and the sales team.Every team member is associated in the creation of the CRM product. Hence his/herapproval may be required when giving the discounts. One must understand that thecustomer may ask discount on some features of the CRM products like the cost fortesting services, then it is important that the testing team member approval has to betaken to give such a discount.Knowing about your customer is very important before entering the negotiation process.This process can be very tedious in big industrial or institutional deals. If it‟s theprevious customer, you may look into the existing past data of the customer and judgehis buying behaviour and interests. Other ways of knowing more about the customerinterests include looking at the financial status, knowing details from some referrals,browsing the past and present business activities of the customer etc. With the help ofsuch information you can know whether the customer would be adamant about the priceor choose the best features and cost is a secondary importance.During the negotiation process, various scenarios may arise from the customer sidesuch as the customer requesting to increase the warranty periods, decrease the cost,

free add on products/services, and decrease the cost of extra warranty periods and soon. So it is always better to know about the possible situations that may arise in thenegotiation process by looking at the previous experiences with the same or othercustomers in the similar deals. If the deal is new deal, it will be always better to preparefor all the situations that may arise during the negotiation process. Expert advises canbe taken who may be the industry leaders for knowing the possible scenarios.Finally, before going to the negotiation process, your objectives must be clear about theoffer or agreement you do in the negotiation process. Let us now look at the negotiationprocess.7.3.2 Negotiation processLet us understand in this how the negotiation process will proceed in general. Flower(1996) described the pattern which is followed by most of the effective negotiations.Let‟s understand the pattern in detail:-a) Both the parties lay down their issues and decide what they are willing to negotiate inthe process.b) After the issues are set out then one of the party will set the claim which will beresponded by the other party. Here both the parties will define their initial positions.c) Then there would be the discussion in order to test the initial positions of both theparties.d) During this discussion both the parties try to explore all other possible outcomes.e) After analyzing all the possible alternatives, formal proposals are made which will bediscussed and modifiedf) After several modifications, the proposal will be treated as final and then anagreement will be made. This agreement phase can be thought of as the postnegotiationprocess7.3.3 Post-Negotiation processAfter the negotiation process the sales representative will use the closing technique toclose the deal and prepare the agreement between the parties. It is always better tohave the final proposal which is agreed by both the parties to be presented in a writtenformat. This printed document is also known as service-level-agreements (SLA‟s).Some of the issues have to be taken care of so that the agreement may not lead to animplementation failure. Those issues or concerns include:-Be clear on what is going to be written in an agreementTake approval from both the partiesCross check that any higher authority hasn‟t been missed out for informing aboutthe agreementEnsure that the method of implementation and the level of service are clearlystated in the agreement i.e. ETA (Estimated time of arrival), number ofemployees working on the project, type of resources used, etc.

Cross check the details in the agreement with all the members before signing thecontractSAQ 21) Describe various objectives of the negotiation process.2) Explain the need of a well documented SLA after the negotiation process3) Explain the need for understanding the customer group before starting thenegotiation process4) Explain the pattern which is generally followed during the negotiation process7.4 Closing TechniquesA close refers to end the process and in sale it means to end the selling process afterthe negotiations are completed. The main objective of the closing technique is tosuccessfully close effectively and get an agreement signed between the parties. Most ofthe times customer might show some resistance to make the decisions fast enough,hence closing technique serve the purpose of helping or assisting the customer to makethe decision quickly and close the sale. It is the skill set of the sales representative toknow when and what closing techniques are to be used. There are many closingtechniques which can be applied depending upon the situation in the presentationprocess. A sales representative may use a single or multiple closing techniques toeffectively close the deal.We have already learnt about some of the closing techniques in the 3rd unit „PersonalSelling”, let‟s now look at some more closing techniques which are given in the websitechangingminds.org:-a) 1-2-3 close: In this closing technique the sales representative will try to summarizethe benefits of the product in a sentence with three items. For example “This product ishassle-free, faster and efficient in removing viruses from your computer” or “this serviceis the cheaper, reliable and has a plenty of features than the competitors”. In this closingtechnique the main aim is to give a great impetus to the customer to feel that theproduct/service is the best in the market. This type of closing technique is used widely inthe sale of low value products where the sales process may take place within a day. Forlarger sales where the discussions run over weeks, this might not be the only techniqueused.b) Adjournment close: This type of closing technique assumes that the customer willnot be able to make the decision right away and will require some time. So here you willask the customer to take his/her own time in making the decision and you will adjournthe meeting to follow up on some other day. This closing technique is ideal when:-The deal involves a lot of issues and value where the customer has to discuss

with his/her higher authoritiesWhen the deal is done during the budgetary period or when the funds are lowYou have a feeling that customer will definitely come back and make morepurchase. During the time given to customer he/she may do an analysis of othercompetitor‟s product/services and will return to youYou are the market leader and provide the best servicec) Affordable close: This type of closing technique is used when you know that theprice of the product is way too high for the customer pocket and you need to dosomething to reduce the price or offer some other alternatives. This type of closingtechnique is used very common in both the door-to-door sale and the institutional orindustrial sale. Some of the situations in which you may use this technique are:-When you feel that the customer doesn‟t have budget to buy the software orhardware, then you may give an option to the customer that the software neednot be purchased fully but can be taken as a service, paying rent for every monthor quarter while using. This is a wide trend which is used now a days and theconcept is known as software-as-a-service.If you are selling the car or a house to the customer, then you may help thecustomer in making the payment through some loans or in easy-monthlyinstallments.Always try to find out the best installments or loan facility whichdoesn‟t make the customer to go in debt and will not be able to make the timelypayments.If the customer feels that your product cost is very high, you may inform him thatthe price is justified because the maintenance cost is very low. Try to make thecustomer feel that the price is affordable for long term usaged) Alternative close: This type of closing technique is used when you have a feelingthat the customer is willing to make the purchase and then you may present somealternatives which the customer can choose according to his preference. For example, ifyou are selling the laptops then you may ask the customer “would you like the laptop tohave a 2 GB Ram or 3GB RAM?” or “Would you like to have the Intel i3 processor or i5processor?” and so on. This can make the customer to make the decision faster andclose the deal.e) Assumptive close: In this closing technique the sales representative will assumethat the customer has already made the decision and the next step is to take the order.For example, the customer may be asked “Where do you want the product to bedelivered to the head office or at your branch office?” or “Will one year license beenough for your product?” and so on. This technique is closely related to the alternativeclose and often used along with it during the sale.f) Best time close: In this closing technique the sales representative will explain thecustomer how this is the best time to make the purchase. Some of the statements usedin this technique are:-We have this stock only in this festival seasonThis is the first time the product/service is sold at 20 percent concessionThis is a limited offer where you get extra one year free onsite serviceHaving the summer approaching it would be the best time to have an AC

Having got recently married, it is the best time to think about having your ownapartmentThese are some of the closing techniques which might help you in different situations inthe sales process. For more closing techniques you may look at the website addressgiven in the reference section. Many-a-times negotiations and closing techniques gohand in hand to close the deal effectively. If the closing technique is not working thenthe sales representative might negotiate the price or other features and will try again forclosing the sale using an appropriate technique.SAQ 31) Explain any two scenarios where you would use assumptive close2) If the customer says that they are having tight budgets in this quarter, then whichtype of closing technique would you apply? Justify your answer.3) If the customer is not sure which laptop model to select, then which closingtechnique would you find appropriate to use?7.5 SummaryIn this unit we have understood the various closing techniques which can be applied toknow the willingness of the customer to close the deal. We have also understood thatmost of the sales process wouldn‟t be completed without the negotiation phase. Wehave defined negotiation and understood the several principles of negotiation. We haveidentified the entire negotiation process would be completed in three process namelypre-negotiation process, negotiation process and the post-negotiation process. Beforeany negotiation process it‟s important to be prepared and so we have understood thevarious activities that need to be done to ensure an effective negotiation process. Wehave understood the six key steps which are followed in most of the effectivenegotiation processes. Finally in this unit we have learnt the important issues that needto be taken care of so that the negotiation agreement of the sale may not lead to animplementation failure in future.7.6 Keywords1) SLA Service Level Agreement is a document whichstates the terms and conditions that define thelevel of service being provided by theproduct/service to the customer.2) ETA Estimated time of arrival is the time at whichthe product/service will be available for delivery7.7 References1. Steven Cohen (2002), “Negotiation skills for managers”, Tata McGraw-Hill, USA.2. Alan Flower (1996), “Negotiation skills and strategies”, Universities PressLimited, India.3. http://changingminds.org/disciplines/sales/closing/closing_techniques.htm7.8 Suggested Readings

1. Lisa J Downs (2008), “Negotiation skills training”, ASTD Press, USA.2. Chris Newby (2004), “Sales strategies: negotiating and winning corporate deals”,Kogan Page Limited, UK.

UNIT 8 RETAIL COMMUNICATIONStructure8.1 IntroductionObjectives8.2 Importance of Retailing8.2.1 Necessity of retailing8.2.2 Advantages and disadvantages of retailing8.3 Communication Skills in Retailing8.3.1 Understanding the retailer8.3.2 Selecting a retailer8.3.3 Communicating with the retailer8.4 Retailing in Modern times8.4.1 Modern retail formats8.4.2 Role of merchandising8.4.3 Internet Retailing or E-retailing format8.5 Summary8.6 Keywords8.7 References8.8 Suggested Readings8.1 IntroductionIn the previous unit we have understood negotiation process and the closing techniquesin the sales process. In this unit, we shall look at the retailing mode of selling and thevarious issues that need to be addressed to build a strong relationship between thecompany and the retailer. Unlike personal selling, where the sales representative willvisit the customer, in retail mode of selling the customer will visit the retail outlet to makethe purchase. Retailing has two major entities who work for the benefit of the customer.One is the retailer and other is the sales representative of the product. Relationshipbetween these two entities is crucial for the successful selling and make profits of thebusiness. The retailer will be benefited from the sales representative by timely supply ofgoods whenever there is a need and the sales representative will benefit from theretailer in reaching out to the customers who visit the retail outlet. So there is anecessity to build a profitable relationship between these two entities.So, in this unit we shall understand the communication mechanisms between theretailer and the sales representatives which help to improve and build a profitablerelationship. We shall also understand about the information that the salesrepresentative and the retailer needs to communicate with each other. We shallexamine the necessity of retailing for the company to survive in the market place. Later,we shall understand the role of merchandising in increasing the sales of the product inretail outlets. We look at the modern retail formats like shopping malls and super

markets and discuss the reasons for changing customer preference some kirana storeto these modern retail formats. Finally, we shall understand the benefits of E-retailingand various issues faced by the customer that need to be addressed by the salesrepresentative.ObjectivesAfter studying this unit you will be able to:-1) Define retailing2) Understand the necessity of retailing for the company in the market place3) Explain the advantages and disadvantages of retailing4) Identify various issues that need to be addressed in understanding, selecting andcommunicating with the retailer5) Examine various modern retail formats like shopping malls, supermarkets and Eretailing6) Understand the critical role played by merchandising to increase the sales inretail outlets8.2 Importance of RetailingLet‟s start the unit by defining retailing. Retail is defined by oxford dictionary as “the saleof goods to the public in relatively small quantities for the use or consumption ratherthan for resale”. The origin of this word is from the French word “retaillier” meaning “apiece cut off”.8.2.1 Necessity of retailingThe objective of any business is to reach out to the customer and sell the goods orservices effectively. There are three main challenges for the company in making thesale:-Locate the customer groupReaching the customer groupSelling the products/services effectivelyThe first challenge is to locate the customer group. After creating the product andservice it‟s time to find the customers for it. The customers may depend upon severalfactors like the economy, age, sex, culture, location etc. For example:-Children will be the customers for toy productsRural people would be the customers for Agricultural products like pesticides andfertilizersThe people who have the desktops or laptops would be the ideal customers forsoftware productsCustomers for a medicinal product would be everywhere such as in rural andurban areasAfter locating the customer, the company needs to select a method to reach them. Onemethod would be personal selling where the sales representative will contact thecustomer on a one-one basis. But this wouldn‟t be ideal when there is a larger customergroup. Companies can‟t just rely on personal selling for the product which requiresrepeated purchasing. So other channels like retailing should be used in complement topersonal selling. After identifying the channel for reaching out to the customer,

companies have to monitor the selling process so that the sales would be doneeffectively. Each and every method like personal selling or retailing has their ownadvantages and disadvantages. Let‟s look at them in following section.8.2.2 Advantages and disadvantages of retailingRetailing has many advantages when compared to other sales methods. Some ofadvantages of retailing to the company include:-Better reach to customersDecreased costs to acquire the customerEasy implementation of promotional schemesEasy branding of new products/servicesEnsuring the availability of products for customers at all the timesReduced costs for warehousingRetailing also has some disadvantages. Some of them include:-No control over the selling process in the retail outletCustomers may be misinformed about the product benefitsLow quality sales force in retail outlets with poor communication skillsA lot of competing products exist in the retail outletCustomer will be having lot of choices when deciding to buy your productDifficulty in keeping constant touch with the retailers on a day-to-day basisSAQ 11) Define Retailing2) Explain the need of retailing for the company3) Explain the advantages and disadvantages of retailing8.3 Communication skills in RetailingIn India, both the organized and unorganized retailing plays a very important role. Mostof retail outlets in India are unorganized i.e. which do not have the license and whodon‟t pay the taxes. For the company to sell its products/services it‟s important tounderstand the behaviour of both these sectors. Companies have to analyze the factorsthat a retailer looks at in running his business. Retail formats in India can be many andincludes the mobile store on vehicles, grocery shop, Kirana store, departmental store,super markets, shopping malls etc. Understanding various needs of the differentretailers is very important to develop a good relationship.Relationship building with retailer involves three major steps as shown below:-Let us now understand these steps in detail.8.3.1 Understanding the RetailerYou will generally find many products of the same category with the retailer. It isimportant to understand the influential factors that prompt the retailer to select theproducts for keeping in the outlet. Four main factors are observed to be influential viz:-a) Location: - Location refers to the place where the retail outlet is situated. If theretail outlet is in a village, you may not expect to get high value products.Sachets are preferred over big tubes or bottles and the retailer would not keep astock of high value items.b) Community: - Community refers to the group of people who may be categorizedon the basis of their preferences. Retailer may prefer to keep those productswhich the community prefers. For example, people at a place may prefer

sunflower or groundnut oil and may not prefer olive oil, hence the retailer may notprefer to have olive oil in his outlet.c) Commission: - Retailer may prefer those products which offer him/her the bestcommission for a sale. For example if company „X‟ offers a 5% commission andcompany „Y‟ offers a 7% commission then retailer might prefer to have moreproducts of company „Y‟ in outlet than company „X‟ products.Relationshipbuilding withretailerUnderstandingthe RetailerSelecting theRetailerCommunicatingwith the Retailerd) Relationship: - Retailer might prefer those products from the company whichhas understood the retailer needs well and has helped the retailer in the past forinstance like extending the credit time in difficult situations, ensuring the timelyavailability of stock whenever needed and so on.8.3.2 Selecting a RetailerHaving understood the factors that favour the retailer in choosing a particular product forhis outlet, it‟s important to understand whether the retailer will be useful for the companyor not. Sales representatives have to look at certain issues before selecting the retailersuch as:-Understanding the universe of retailerExamining the retailer profileAnalyzing the benefit of the retailer to the companyAt the end of the retailing, the relationship between the company and the retailer shouldbe a profitable one. So it is very important for the sales representative to choose thoseretailers for the company who do not create loss and difficulties in handing the salesprocess. So, the first step is to understand the universe of retailer for the companyproducts. For example, if the product is software related then the retailer would includemainly the shopping malls or markets where the technical items, laptops and computersare sold. Every city has such markets which are exclusive for selling technical products.On the other hand, if the product of your company is a tobacco related one likecigarettes then the retail outlet would be a pan shop which can run into thousands innumber for any city in India.After understanding the universe of retailers and having the list, it‟s time to examinetheir profiles and analyze the benefits. Some of the basics things you should be lookingat are:-Time of establishment of the retail outlet

Average number of customers visiting the outletSize of the retail outletNumber of employees in the retail outletType of products being sold in the outletType of strategies used by the retailerThese factors can help you in deciding to shortlist the retailers and then examine for thebenefits of building the relationship with them. It is very important for the company or thesales representatives to know the strategy used by the retailer and analyze it.Depending upon the type of strategy used by the retailer, Manfred (2010) describedvarious retailing techniques used by the retailer as shown by the diagram below. Thisdiagram states that the strategy played by the retailers is based upon the relative priceand the relative offerings.Fig 8.1 Retail LandscapeIn the above figure, if the relative price and offerings are low then the retailer will offeronly those products which are very cheap and will not keep many varieties of theproduct in the outlet. If the relative price and offerings are high, then the retailer willkeep all the high value products with many varieties for a product category. Here, theretailer will use the selling skills to sell the high value products to the customer. If therelative price and offering are neither too low or nor too high it means that the retailerkeeps a variety of products which are preferred by the middle class customer group andhas with a lot of varieties for a product category. Wal-Mart will fall into this category.Finally if the retailer is using high relative price with low relative offerings then the salesrepresentative should understand that in near future it would be time for the retailer toexit the business. So it is better to avoid such retailers. Hence depending upon thestrategy used by the retailer it is advisable to select those retailers who will fit to yourcompany‟s objectives.8.3.3 Communicating with the RetailerMost of the retailers in India belong to the unorganized sector where modern ways ofcommunication like email and fax wouldn‟t work. So it‟s very important to understandthe right way of communication with the retailer. Depending upon the retailer salesrepresentative may use many communication channels like email, fax, telephone, directmail and personal communication. For most of the times sales representative end upusing telephone and personal communication channels when other channels are noteffective in communication.Some of the objectives of communication would be to monitor the sales process on theretailer end, collecting timely payments, checking for the leftover stock etc. Thefrequency of communication depends upon the product and the number of retailers. Thesales representative may communicate daily or once in a month or once in a quarter. If

the retailers are larger in number, then the sales representative may communicate withthe distributor or wholesaler, who in turn communicates with the retailer. For someproducts like tobacco and ice creams which are sold by the retailers on vehicles orsmall outlets, communication would be on a daily basis. In such cases, where the salesrepresentative or the distributor will deliver the product in the day and collect the productin the night or the retailer will come in the day time to collect the product and returnthem in the night time at the distributor location. This may happen due to several factorssuch as lack of warehouse to keep the stock, risk of pilferage in the night etc.It is important to know that most of the retailer do not follow stringent accountingprocedures and the accounting period would be mostly on daily basis. It is important forthe sales representatives to ensure that the money is collected on the same day, monthor year depending upon the payment terms agreed earlier. For small businesses,payments are collected on a daily basis or weekly basis in most cases. There can bemany problems in getting the money later if the sales representative doesn‟t go andcollect the payment on time. Some of the reasons include:-No funds to payPersonal problems like retailer unavailability for a weekDisputes in payments i.e. disagreement on the amount to be paidSo it is always better to go in time and collect the payments. One of the importantobjectives in communicating with the retailer is to ensure that the retailer communicatespositively about your product to the customer. Various things that have to be discussedwith the retailer to ensure that the sales process will be effective are:-Availability of productsVisibility of productsAdequacy of stocksPayment terms and commissionsProduct benefits and USP‟sImportance of appropriate behaviour with customersFeedback processesSales representative has to ensure the timely availability of the products for the retailer.There can be several problems both for the retailer and the sales representative if theproduct is not available on time such as the retailer might lose the business and thesales representative loses the sale. Customer might prefer other products if the productis not available on time. This might lead to losing the customer permanently. So it isvery important to ensure that the sales representative delivers the products on time andthe retailer has adequate stock of it. Visibility of stock also places an important role inincreasing the sales and so the sales representative should see that the products arekept in the right place where the customer can easily view them.

Sales representative has to clearly communicate the payment terms and commissionson the products and if possible should make the agreement copy and get signed. Thiswould remove the discrepancies which may arise in future on the amount to be paid andtime period of payments. Importance of appropriate behaviour has to be explained whenselling your products to the customers. The sales people in the retail outlet should bewell informed about the product benefits and the USPs. This leads to a creation ofpositive image about the brand and increase the sales. A proper feedback should betaken from the retailer to know that the retailer is promoting your product and showinginterest in improving the relationship with the company.SAQ 21) Explain various factors in understanding a retailer2) Examine the universe of retailer if the product you are required to sell is a “pendrive”.3) Explain the importance of timely availability of product for the customer in theretail outlet.4) Explain the role of feedback process in developing the relationship between theretailer and the sales representative.8.4 Retailing in modern timesLet us understand various retail formats present in the 21st century.8.4.1 Modern Retail formatsWe have understood that in India most of the retail outlets are unorganized and surviveon a strong relationship with the customer. With the entry of international players likeWal-Mart and many other Indian retail chains the modern retail formats are on the rise.These modern retail formats include supermarkets, shopping malls which are facingtough competition with the unorganized sector of retailing. Customers in the urban andrural areas prefer to buy from the modern retail outlets due to many reasons such as:-Best prices in the market placeGood shopping experienceEasy payment methods apart from cash like credit and debit cardsParcel and delivery services to the door stepLarge variety of products to chooseThese retail formats depends upon some rules such as:-Self serviceAbsence of owner in the retail outletFixed prices and no negotiationsEven though the prices are fixed and cannot be decreased, the customers prefer to visitthem due to the discounts offered on bulk purchase or due to the availability of variousrange of products.8.4.2 Role of Merchandising

Merchandising is any activity that leads to the sale for the retail customer. It can bethought of as a practice which leads to the sale of products to the retail customer.Hiebing (2004) defines merchandising as “the method used to communicate productinformation, promotions, and special events and to reinforce advertising messagesthrough a non-media communication vehicle like brochures, sell sheets, productdisplays, video presentations, banners, posters, shelf takers etc. Nowadays we makeuse of video displays and interactive media too. Most of the purchase decisions aremade on point of purchase (POP) and hence merchandising plays a very important rolein increasing the sales.The most common way of merchandising is in shopping malls or super markets are bythe displays. Sales representative must work with the retailer to ensure that proper careis taken in setting up the display in the outlet. Some of the issues which need to beaddressed while using the display as a way of merchandizing includes:-Differentiating clearly between paid and unpaid displays in terms of the spaceand number of displays allowed being setup in the outlet.Acquiring the right place for displays i.e. getting the place for your posters wherethe customers are going to spend more amount of time. One of the best placeswould be at the purchase counter or at the entrance where the customer woulddefinitely notice the display.Sufficient posters and point of purchase material are available so that they canbe distributed when customers visit the countersEnsure that the retailer works for the display along with you in creating a positiveimage for the brandRetailer commitment is necessary for ensuring that the sign boards are clean andwell-lighten up, hence try to win that level of commitment from the retailerEnsure that the sales promotions are received to the customer. For example, iffree samples are given with the product, ensure that they are given for free andare not sold separately.The end result of merchandising is to create a favourable response image in thecustomer mind and the customer should be willing to recommend the product to hisfriends and family members. This can be measured with the help of feedback formsmaking available at the retail outlets.8.4.3 Internet Retailing or E-Retailing formatModern retail format would be incomplete without a discussion on the internet retailingformat which is on the rise in the 21st century. Internet retailing is also known as Eretailing.With the rise in e-commerce activities and increase security levels of onlinetransactions many customers prefer to shop on the net. Companies are using this as anopportunity and reaching out to internet retailers who provide shopping services on thenet.Some of the reasons for the internet retailing on the rise include:-Various payment methods with credit and debit cardsConvenient payment methods like EMI facilities

The database of products are large so that customer can compare variousproducts, look at the reviews and make purchasesMore secure payment technologies with increase level of protection from 64 to128 bit Secure SSL technologiesEasy and convenient way to shop, at least need not have to walk across thestore and find the product24/7 shopping experienceBetter discount rates than retail outlets since companies save cost on theemployees as E-retailing doesn‟t require many sales representatives to handlethe customersThere are various concerns which the customers face when shopping on internet.Hence it‟s the responsibility of the sales person to address such issues. Some of theminclude:-The shipping period of the product/service i.e. the time period mentioned duringpurchase should be followedOffline help whenever needed i.e. customers should be provided with necessarycontact information like email, phone numbers etc. about the retailer or thesupplier in case of any queriesPayment over the net using credit cards is not preferred by many customers,hence the sales representative should make sure that the retailer also providesthe option of debit cards or making the purchase on the phone using IVR systemSAQ 31) Explain why the customers prefer to shop in modern retail outlets like shoppingmalls rather than in kirana stores.2) Examine the role of merchandising in increasing the sales of the product3) Identify various issues which the customer face in E-retailing4) Explain the benefits of E-retailing over retail outlets8.5 SummaryIn this unit we have defined retailing and understood its necessity for the company‟ssurvival in the market place. We have also examined various advantages anddisadvantages of retailing for the company. Understanding the retailer and his businessis crucial for the sales representative to establish a profitable relationship with theretailer. Hence, we have examined various factors that determine the retailer to choosethe products for his outlet. We have understood various issues that need to be lookedinto such as universe, profile and benefits of the retailer before selecting for thecompany. We have seen the importance of discussing the payment terms andcommissions and the consequences for not collecting the payment on time. We laterexamined the various things that need to be communicated with the retailer on a daily orweekly or monthly basis to ensure a profitable relationship persists between the retailerand the company. In the final section of this unit, we have looked into the modernretailing formats such as super markets and shopping malls. We have examined thereasons for the customer changing preferences towards modern retail formats. We havelearnt about E-retailing and the increasing acceptance by the customers and the

companies. We have looked at merchandising as a practice which will increase thesales in the modern retail outlets. Finally we have discussed about the various issuesthat need to be taken care of while using the display as a way of merchandising for theproducts/services.8.6 Keywords1) USP Unique Selling Proposition can be a statementabout the product which highlights the benefitof the product or the unique propositioncreated for the customer. USP is considered tomake an impact to a lot of new customers2) IVR Interactive Voice Technology is a technologywhich allows automating the interaction overthe telephone with several keypad inputs onthe phone.3) POP Point of purchase is the place where the salesare made. In retailing it will be retail outletwhere the customer makes the purchase.8.7 References1. Manfred Krafft, Murali K. Mantrala (2010), “Retailing in the 21st century: Currentand future trends”, Springer, New York, USA2. Roman G. Hiebing Jr., Scott w. Cooper (2004), “The successful marketing plan:A discipline and comprehensive approach”, Tata McGraw-Hill, USA.8.8 Suggested Readings1. Margaret Bruce, Christopher Moore, Grete Birtwistle (2004), “International retailmarketing: a case study approach”, Elsevier Ltd, UK.2. Paul Stinson (2008), “Retail, marketing and sales”, Infobase Publishing, NewYork, USA.

UNIT 9 JOB ANALYSIS AND DESIGN, RECRUITMENTAND SELECTIONStructure9.1 IntroductionObjectives9.2 Job Characteristic Model9.3 Job Analysis Activities9.3.1 Understanding the nature of a sales job9.3.2 Identifying the skill set for a sales job9.4 Job Design Activities9.4.1 Steps for job design9.4.2 Job designing techniques9.5 Recruitment and Selection Process9.5.1 The Recruitment process9.5.2 The Selection process9.6 Summary9.7 Keywords9.8 References

9.9 Suggested Readings9.1 IntroductionIn the previous module, we have understood that selling skills are essential for the salesrepresentative to effectively close the sale, communication skills are an important trait ofan effective sales person and having representatives with better communication skillswould ensure success for an organization. However big or small the organization wouldbe, it’s performance and survival depends upon the employees skill set. Henceselecting the right candidates for the job is an important task. Identifying the skill set acandidate requires for doing the job is a part of job design. Knowing various issuesrelated to the job and the type and level of skill set required will be the first task beforestarting a recruitment process. In this unit we shall understand the characteristics of thejob with the help of a job characteristic model and then understand the nature of thesales job. We shall then understand the steps in job design and the techniques that canbe employed for job design in creating the jobs which would benefit both the companyand the employees.After performing the job design activity the organization would determine the way inwhich recruitment process will be held. Recruitment process should be efficient andeffective in ensuring that a wrong candidate is not selected. The number of stages inwhich the candidate will be tested differs from company to company. The method oftesting the candidate also differs from company to company and the nature of job.Companies would have to test the communication skills and the comfortable level of thecandidate in the sales job. The nature of sales job can make the sales representativeuncomfortable most of the times and hence he/she would require the ability to withstandthe pressure mentally both from the customer side and also from the company side inmeeting the targets. The recruitment process should be able to test clearly the mentalability and strength which the candidates possess. If this is not done properly and thewrong candidate is chosen, it would then lead to attrition in future. In this unit we shallunderstand about various parameters or qualities that the recruitment process shouldbe able to evaluate.ObjectivesAfter studying this unit you will be able to:-1) Explain the job characteristic model2) Explain the nature of the sales job3) Identify the skill set required for the sales job4) Understand the role of Job analysis and design in creating the jobs which benefit

both the company and the sales representatives5) Narrate the significance of a well executed recruitment and selection process onthe organization9.2 Job Characteristic ModelThe aim of any company is to optimize its resources and get the maximum out of them.Resources may include not only capital, office space, computers, softwares etc., but italso includes the employees of the organization. Employees are critical for anorganization survival. Taking care of employees is an important task for any company.The job of the employee must be promising for his/her career growth and if it is not theemployee might leave the company. Let us now look at the Job Characteristic Modeland then define Job analysis and design.This model aims at describing any job in terms of different dimensions which measurethe nature and requirements of the job. Stephan (1999) describes in his book about theHackman and Oldham’s Job Characteristic model which explains five important jobfactors which would explain about the job. Let us now discuss them in detail:-a) Skill varietySkill variety refers to the usage of different skills which the job requires. It might notalways be essential to use different skill set in every job. For example, if your jobinvolves fixing an automobile part in the assembly line, you would keep doing the sametype of fitting all the day and this job doesn’t require a variety of skills. In contrast, asales representative job demands the use of different skills based upon the nature ofthe sale. So the first step in defining or understanding the job would be identifying thevariety of skill set required for the job. Identification of greater variety of skill set isusually associated with the complete understanding about the nature of job. Therefore,it is advisable for the companies to prepare jobs which demand greater variety of skillset.b) Task identityTask identity refers to the completion of a whole and identifiable piece of work.Employees in a job would love to improve their skill set. The only way to improve theskill set practically is by performing the entire piece of work assigned to him/her. Forinstance, if you are the sales representative handling the personal sales, you would liketo complete the entire sales process until the deal has been done. You wouldn’t like tojust describe the product benefits and then handover the selling process to otherrepresentative. Even when you are handling any project in the company, you would liketo take part and work from the start to finish.It might not be always possible for the companies to assign the entire project from start

to finish to the employees but companies have to design and create jobs with significanttask identity and visible outcome for the employee and organization. In many ways, taskidentity is an important factor for job satisfaction of the employees and decreasedattrition rate.c) Task SignificanceTask significance is about understanding the impact of an employee work on the lives orwork of other employees or the organization. Understanding task significance canimmensely motivate the employees to perform their duties effectively and efficiently. Forexample, if you are involved in a software project which automates the working ofgovernment hospitals and helps the patients to know about the bed availability, bloodstock, medicines and doctor availability and if the employees working on the projectwere informed about the task significance of the project and their work, it woulddefinitely motivate them to work on the project more sincerely and on time.The sales representatives must understand that the organization will survive and beable to provide employment only if they perform their duties well and get more leads tothe company. The work timings for a sales representative would not be fixed many atimes and especially in industrial sales where the meetings would be held according tothe client’s availability. If you have to interact with the clients in other countries like UKand USA, then the timings to do a teleconferencing or a video chat would be in thenight. The sales representatives should be motivated enough to before his task withdedication in odd timings. Hence, the sales representative should be informed abouttheir task significance which can motivate them to work with dedication.d) AutonomyAutonomy in this unit refers to the freedom which an employee can have at the workplace. It is the degree to which the employee can schedule his tasks and procedures toperform according to his/her convenience. It is believed that jobs with higher autonomywould create a greater responsibility and job satisfaction for employees, although itmight not be true in all the cases. Greater job autonomy might encourage theemployees to bring the work to their home and just not restrict it to work place. Thisgives a benefit for the company as the employee will be able to work from homewhenever it is required.This is common practice nowadays among employees in managerial positions and thetrend of working from home is seen more among sales representatives in the company.In Industrial sales if the client availability to discuss about the sale is after the officehours then the sales representative would like to arrange the call from the home andeven the organizations are providing with all the facilities to do a teleconferencing fromthe home. Some of the disadvantages of increased autonomy are little control over the

employees work and monitoring their performance. It is the decision of the companyabout the degree of autonomy that should be provided to the employees. It alsodepends upon the nature and level of job assigned.e) FeedbackFeedback is the information that is conveyed to the employee about his/herperformance in the job. Feedback may come directly from the job assigned to them orverbally by his/her manager. A system for giving the feedback must be developed andbe well informed to the employee about the time and procedure to receive the feedback.Feedback shouldn’t come as a surprise to the employees. It might lower theirsatisfaction level when given at times the employees are not expecting. For example, inmany call centers the feedback will be given at the start of the day. All the employeeswill be assembled at a place where the previous day’s work will be reviewed and thelevel of error rates will be discussed. The employees will be informed about their errorrates and the ways to decrease it. If required the employees will be given some trainingbefore allowing them to work. Every employee knows that the feedback and thesuggestion will be given how to rectify the problems.In personal sales, feedback might be possible on a day-to-day business. But, inindustrial sales where the sales process can run into months for a single sale, itwouldn’t be possible to provide feedback daily. Hence the companies have to find outthe right time for feedback may be once in a month or quarter. It is always advisable notto judge the employee in the feedback but only give the recommendations on his/herwork. Companies take every care while giving the feedback so that it doesn’t become ade-motivating factor for the employees and their satisfaction levels.Let us now look at the job analysis of the sales representative and the nature of work heperforms.SAQ11) Explain the advantages and disadvantages of providing autonomy in work place2) Explain the importance of providing feedback to the employees of theorganization3) Explain the role of task identity in improving the skill set of the employees in theorganization.9.3 Job Analysis ActivitiesJob analysis deals with collection of detailed information about the job. The informationcollected would include the necessary skill set, duties and responsibilities a job requiresto be performed. Ram Nath (2004) in his book described various definitions of jobanalysis as stated by numerous scholars. Some of them include:-“Job analysis is the process of critically evaluating the operations, duties and

responsibilities of the job”,Scott clothier and Spriegal“Job analysis is the process of studying and collecting information relating to theoperations and responsibilities of a specific job”, Edwin B. Flippo“Job analysis is the procedure by which the facts with respect to each job aresystematically discovered and noted” ,Dale YederJob analysis activities include understanding the nature of the sales job and making thelist of skill set required. Let us look at the nature of sales job as described below:-9.3.1 Understanding the nature of the sales jobThere are many characteristics which determine the nature of the sales job. Some ofthem are:-a) Sales is a lonely jobYou would not have a very big team in most of the sales. You as the salesrepresentative will be alone with the customers most of the times explaining them aboutthe products/ services. In personal selling the sales representative has to visit thecustomers alone whereas a couple of team members may accompany him if it were anindustrial and institutional sale.b) High level of rejectionRejection is a part of the sales job most of the times whenever a sales representativetries to make a sale. It should be understood that high level of rejection doesn’t meanthat you are an incompetent for a sales job. In many companies especially in personalsales a success rate of 5-10 percent is termed as good job done i.e. 90 calls in 100have been rejected by the customers. So one shouldn’t take the rejections toopersonally and get de-motivated.c) Sales job require physical fitnessThe sales representative is expected to be personally fit to perform the sales job. Mostof the times you will be required to travel to many places and especially in personalsales you will be meeting a lot of customers in a day and have to travel greaterdistances. Hence, the nature of the sales job requires that the representatives arepersonally fit for the job.d) Willingness to work anytime and any dayMost of the times, the sales representative would work on weekends when thecustomers would be free and available at their residence. Hence most of the personalsales will take place during weekends. In industrial sales as discussed earlier in the unit,there will be instances where you need to take the sales call in the odd timing afteroffice hours. Hence, sales representatives should be willing to work at all the times andnot restrict themselves to working hours and weekdays only.9.3.2 Identifying the skill set for a sales jobThe degree and variety of skill set varies from one sales representative to anotherdepending upon the nature of the sales job and the type of product/service handled. Butin general there are some necessary skills which would be useful for most of the sales

representatives in making a sale. Let us now discuss some of such skills which thesales representative has to posses to perform the sales job effectively and efficiently.Some of the skills he/she requires are:-a) Self-motivation: Sales representative should be self motivated. It is a fact thatemployees lose their interest in the sales job if sufficient amount of leads are notgenerated. It is necessary that the motivation levels are kept high to overcomeany sort of discouragement occurs when the sales get rejected. Companies try tomotive their employees by both the intrinsic and extrinsic motivation methodswhenever required.b) Fast learner: A sales representative should have the ability to grasp andunderstand the new concepts quickly. In a sales job the nature of tasks handledmay keep varying according to the type of sale and the customer. You may notbehave in a funny manner with a serious customer and hence you need toalternate your presentation style accordingly. Also the sales representativeshould be able to quickly grasp and remember the details of the new products/services.c) Good communication skills: A sales representative should have a decent levelof communication skills as required by the company. Communication skillsinvolves not only speaking ability but also includes writing skills and listeningskills. Listening skills are very important as the sales representative listen to thecustomer problem. Improper listening might end up in wrong product deliverywhich the customer does not expect. Writing skills are also important which helpsthe sales representative to write down the customer requirements accurately andas fast as possible. Customer time is precious and so in the available time thesales representatives may have to use acronyms, eliminate repetitions andrecord accurate information in writing. Verbal skills include ability to speak outclearly with proper voice modulation and convey what is supposed to. It is alwaysconsidered better to speak in a neutral language which doesn’t have theinfluence of your mother tongue.d) Positive attitude and behaviour: It is said that attitude is one such skill setwhich unfortunately cannot be inculcated in the employees through training.Hence one has to develop positive attitude all by overself. Sales job requires theemployees to have a positive attitude and behaviour towards the customers.There might be many instances during the sales presentation that the customerwould frustrate the sales representative by asking a lot of questions. It isimportant that sales representative doesn’t lose his/her positive attitude and coolduring the presentation.e) Multi-tasking: sales job involves not only just selling but also involves being intouch with the customers regularly, knowing about various products/ serviceslaunched by the company and searching for more number of sales opportunities.Performing all these tasks in a single day throughout your career requires somelevel of multi-tasking capabilities. Hence this is an important skill set in presentday in most of the sales job. Some of the companies believe that to achievemaximum results from a sales representative the level of multi-tasking should bedecreased so that hence they can concentrate just on selling. But employeeslook forward for multi-tasking which makes their work a little vibrant rather thanmonotonous.Having discussed about the skill set, let us now look at the job design activities.SAQ21) Explain the nature of sales job

2) Explain the importance of having high motivation levels in a sales job9.4 Job Design ActivitiesJob design activity serves the purpose of creating a set of tasks or processes which theemployee has to perform and also deals with aligning the right work to the employees toachieve the desired level of productivity from them. Aswathappa (2005) defines jobdesign as “the effort to integrate the work content (tasks, functions, relationships), therewards (extrinsic and intrinsic), and the qualifications required (skills, knowledge,abilities) for each job in a way that meets the needs of employees and theorganizations”.9.4.1 Steps for job designAswathappa (2005) defined three steps that involves in job design. They are:-1) The specification of individual tasks2) The specification of method(s) of performing each task3) The combination of tasks into specific jobs to be assigned to individualsLet us understand the performance of these steps for a sales representative job design.The first step “specification of individual tasks” refers to individual tasks the salesrepresentative will perform. Some of the individual tasks for a sales representative canbe preparing the customer list, gathering necessary material like presentations,brochures and other material, preparing presentations for the customer and so on.The second step “specification of methods of performing each task” involves describinghow the individual tasks are to be performed. For example, if we take the task ofpreparing presentation, the method of preparing presentation varies depending uponthe sale. For personal sales you will be already having companies printed material orslides or PowerPoint slides. In an industrial sale you need to prepare the presentationaccording to the customer requirement. Here, you have to work accordingly to themethod provided in the job design and complete the presentation task. In case of atechnical product like software, the job design may recommend you to take approval ofvarious other stakeholders’ i.e. technical departments and their financial heads for theapproval of the cost parameter mentioned in the presentation.The third step, “combination of tasks into specific jobs to be assigned to individuals”deals with describing job title and the nature of work to be handled. For example inmany firms which handle industrial sales, it’s important that some of the salesrepresentatives concentrate only on the development of good relationship with thecustomers while others help in assisting the sales representative in preparing thepresentation, solution for customer and arranging the technical meetings with customer.The former falls under the “Sales Manager” and the latter falls under the “Pre-salesManager” job titles. So the combination of tasks like preparing presentations, identifyingsolutions within the budgets, integrating the objectives of the internal team members of

the company and the customer would be the work of pre-sales team. In this manner, aset of activities are combined to create the job titles for the employees.Let us now look at various methods in which the jobs can be designed that are bestsuited for both the company and the employees in meeting their objectives and needs.9.4.2 Job designing techniquesJobs which aim at meeting the expectations of both the company and the employee canbe designed in mainly four ways as shown below:-a) Job SimplificationJob simplification aims at decreasing the complexity nature of job by breaking down itinto various tasks. Each task is assigned to employees to master it and gain experiencein that task. Hence each task acts as a specialization for the employees. This methodaims at increasing the productivity for the company by decreasing the level of mentaland physical effort and executing the tasks appropriately. For example, in telesales thesales representative will get the list of the customers most of the times and hencehis/her task is reduced in identifying new customers. The only task will be to just dial thecustomer and try to make the sale.Job simplification has its own advantages and disadvantages. Some of the advantagesinclude:-increased productivityminimal training requirementsJob DesigningTechniquesJobSimplificationJobRotationJobEnlargementJobEnrichmentless qualified workforce can be used as the job is simplifieddecreased salary costs for the organizationJob simplification may not always work for the company as it has some disadvantageswhich include:-Employees might get bored of repetitive workLow satisfaction and motivational levels in the long runIncreased attrition ratesIn order to overcome these advantages and create enough motivational level anotherjob design technique “Job Rotation” is being employed.

b) Job RotationJob rotation aims at shifting the jobs for an employee in required intervals in order toremove the boredom and create enough motivational levels to work for the organization.Job rotation also aims at helping the employees in gaining more insight about thecompany processes. The employee might be put into an altogether new job in case heneeds to improve his skill set. For example, a sales representative who is in telesalesmight be shifted into personal sales to improve his skill set and learn the job. Some ofthe advantages of job rotation include:-Decreasing the level of boredom or monotony in the jobIncreasing the motivational levelsImproving the skill set of the employeesHelping the employees in their career growth and hence more satisfaction levelsDecreased attrition ratesJob rotation provides more number of benefits but it is not void of some of thedisadvantages such as:-Job rotation might leave the employee many challenges in performing andsometimes may de-motivate them if not performed wellTraining costs go up as new training is required for the new jobc) Job EnlargementJob enlargement is the reverse of Job simplification which aims at decreasing thecomplexity of a job. Job enlargement deals with assigning additional tasks andresponsibilities for the employee and expects them to work better. It is found that jobenlargement would increase the power of an employee which motivates him/her to takeup challenging tasks in the organization. For example, the sales representative who ishandling the personal sales of only technical products might be given the consumercare products too. Another example would be the sales representative who is handlingthe pre-sales of software projects might be given the pre-sales of hardware productstoo. The advantages and disadvantage of job enlargement are similar to that of the jobrotation. Another disadvantage which is seen in job enlargement is increased workloadfor the employee in future which he/she might not be able to handle.d) Job EnrichmentJob enrichment is different from enlargement. In Job enlargement additional duties areassigned which enables different natures of job to be performed. Often Job enlargementis done to downsize the work force, where as job enrichment deals with improving thequality of job by assigning new responsibilities and increasing the autonomy. Here theemphasis is on the quality of work rather than the quantity. For example, the sales

representative who is in presales would be given the duty of sales manager for a certainperiod of time providing him/her to meet the customer personally by travelling to thecustomer site which would usually be in other countries. Another example includesgiving the employees the flexibility to work from home, allowing the employees to carryout the work the way they want to, informing the employees about the contributionshe/she made to the organization, providing better working conditions with recreationfacilities etc. Any part of activity which enriches the work place and the job is thought asjob enrichment process. Advantages includes:-Increased satisfaction and motivation levelsIncreased autonomy to decide about the execution of workIncreased confidence levelsSome of the disadvantages include:-Increased cost in training for new jobsDifficulty in monitoring the performance regularlyAfter the job design activity, it is time to start the recruitment and selection process.SAQ31) Explain three steps of the job design process with suitable illustrations2) Explain the advantages of job enlargement over job simplification3) Explain the significance of job enrichment in improving the motivation levels ofthe employees9.5 Recruitment and SelectionThe objective of recruitment and selection process is to select the right candidate for therequired job description. There are many ways in performing the recruitment processdepending upon the nature of job description. In this section we shall understand aboutthe key parameters the recruiter should be looking at in the recruitment and selectionprocess.9.5.1 The recruitment processOne of the activities of recruitment process is to select the candidates and short listthem for the interview. The list of candidates can come from many sources. In broad thesources are referred to:-a) Internal Sources: Identifying employees within the company who can take careof job. Here the employees from various departments may shift into thedepartment where the vacancies are available or a promotion will be given withinthe same department and fill the vacancy.b) External Sources: Here the candidates will be selected from outside thecompany i.e. who are not currently working with the organization. Companiesmight advertise in newspapers, job portals, magazines etc to attract the talentavailable. Most of the times companies go to well known reputed educationalinstitutes to get the list of candidates who are eligible for the section process.A successful recruitment process enables the highly talented list of candidates whocould be employees of the organization. Recruitment process should be done carefullyin short-listing the candidates for the selection process. Selection process should be

done in such a way that the candidates skill set is matching with the required skill set asmentioned by the job description activity. There can be various parameters which therecruitment process would look at before short-listing the candidates such as the familybackground, employment history, educational qualifications, hobbies and interests. Allthese factors play important role in judging the candidate for the suitability for the job.9.5.2 The Selection processKujnish (2006) describes a typical selection process which is explained by the followingdiagram:-PreliminaryInterviewApplicationformTesting InterviewReferencechecksPhysicalexaminationEmploymentofferThe preliminary interview is done as a process to filter out the candidates who do not fitthe job description. Application form should be designed in such a way that it capturesthe necessary information which is required to evaluate the candidate across the skillset required by the job description. For sales representatives, attitude, communicationskills and analytical skills are very important; hence the testing phase should beprepared so that it captures these skills. The testing phase can be just an interview orcan have a written test and a group discussion. After the test has been completed, thecandidates will be short-listed according to their performance for an interview round.During the interview much emphasis should be given in the attitude of the candidaterather than the skills. Two basic ways in which the interview can take place are:-a) In a comfortable mode, where the recruiter would bring the atmosphere to thecomfort level of the candidate and then start observing the behaviour of thecandidate.b) In a stressed mode, where the recruiter would put the candidate under a lot ofstress by asking a lot of questions and then observe the candidates reactions.Doing an interview in these two ways is important in order to judge the candidate forsales job as the sales representative would have to encounter both the serene andpressure environment while making the sale. Previous work experiences and referencesshould be cross checked before selecting the candidate for the job. Physicalexamination is important to ensure the candidate is in good state of health as he/sherequires traveling during the sales job. Finally after all the selection process and the

candidate qualifies for it he/she will be given the employment offer which describes thenature of work, job title, salary, any contract period etc.SAQ 41) Describe the ways in which the candidates can be obtained during therecruitment process for selection.2) Explain the important characteristics you would like to test the candidates in theinterview for a sales representative job.3) Explain the importance of reference checks and physical examination in theselection process.9.6 SummaryIn this unit we have understood the job characteristic model which describes any job interms of different dimensions which measure the nature and requirements of the job.We have also understood the job analysis by describing the nature of the sales job andthe identifying the skills required. We understood that sales job is a challenging workand requires good communication skills, fast learning capabilities, positive attitude andbehaviour, multi-tasking abilities and the ability to self motivate. We have laterdiscussed about the steps that involve in creating a job design and understood thesesteps in the context for sales representatives. Later we have studied various job designtechniques such as job simplification, rotation, enlargement and enrichment in creatingthe job which are beneficial for both the company and the sales representativeeconomically and in career growth. In the last section of the unit, we have examined thecritical nature of the recruitment process in identifying the right candidates for theselection process. We have understood the basic model of selection process andlooked into various ways in which the selection process will be handled for a salesrepresentative job. We have also examined the skill set that needs to be evaluated inthe interview phase of the selection process.9.7 Keywords1) Extrinsic motivation It is the motivation that is driven by externalfactors apart from the nature of work like themoney, awards, recognition etc2) Intrinsic motivation It is the motivation that is driven by the natureof the task assigned in the work place.9.8 References1. K. Aswathappa (2005), “Human resource and personal management: text andcases”, Tata Mc-Graw Hill, India.2. Kujnish Vashisht (2006), “A practical approach to sales management”, AtlanticPublishers and Distributors, India.3. Ram Nath Sharma, Rachana Sharma (2004), “Guidance and counselling inIndia”, Atlantic Publishers and Distributers, India.4. Stephan P. Robbins (1999), “Organizational behaviour: concepts, controversiesand applications”, Prentice Hall, India.9.9 Suggested Readings

1. Darin E. Hartley (1999), “Job analysis at the speed of reality”, HRD Press, USA.2. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysisand decision making”, The Dryden Press, New York, USA.

UNIT 10 TRAINING THE SALES FORCEStructure10.1 IntroductionObjectives10.2 Training process and objectives10.2.1 Sales Training Process10.2.2 Training program objectives10.2.2.1 Imparting attitude skills10.2.2.2 Notifying organization policies10.2.2.3 Bestowing organization culture and values10.2.2.4 Understanding the goals and objectives10.2.2.5 Developing the team working skills10.2.2.6 Developing the product/ service knowledge10.3 Training process and analysis10.3.1 Source and type of training program10.3.2 Program Design10.3.3 Action Planning10.3.4 Feedback and Follow up10.4 Summary10.5 Keywords10.6 References10.7 Suggested Readings10.1 IntroductionIn the previous module we have understood about the characteristics and the skill setrequired for a sales job. We have understood the significance of carrying out a welldefined job analysis and design in creating the jobs that best suits the profile of thecandidates. We have also understood the importance of recruitment and selectionprocess in identifying and selecting the right candidates for the job. In this unit we shallunderstand the importance of training program in shaping up the employees to performtheir job effectively. In this unit candidate means the employee who is undergoing thetraining program.Before the initiation of training program, it is very important to understand the objectiveof it. The main objective of the training program is to inculcate the required knowledge,skills and attitude and make employees more productive to the organization. In this unit,we shall understand the objectives of the training program and the benefit it provides tothe sales representatives and the company. Identifying the sources for training is animportant task which decides the quality and impact of the training program. We shall

understand also understand the program design for the sales representatives in termsof contents, logistics and the feedback process. Once the training source and the needsare analyzed, the next step is about action planning i.e. the actual implementation of thetraining program.For a sales representative training, there might be a considerable difference of what isbeing taught in the training and what is being done in the market place. Hence, actionplanning has to deal with such problems using various teaching methodologies,technical tools etc and impart training program that is closely related to the marketplace. No training program would end without a feedback process. Feedback processshould not end with just taking the trainees comments but has to include the follow upprocess as well. In this unit we shall understand about the importance of the follow-upactivity for a sales representative training program.ObjectivesAfter studying this unit you will be able to:-1) Understand the steps in sales training process2) Define the objectives of sales training program3) Identify the importance of attitude skills for the sales representative4) Identify the type of training program required5) Explain the design of the training program6) Understand the importance proper action planning7) Highlight the need of feedback and follow up10.2 Training Process and objectivesAfter the successful recruitment process you will have the best talent your organizationrequires. It is now the duty of the organization to conduct the necessary trainingprogram and make use of the talent in increasing the revenue for the organization.10.2.1 Sales Training ProcessLet us understand the typical sales training process as explained by Ingram (2009):-Fig: Sales Training ProcessAssesSalesTrainingNeedsSetTrainingObjectivesEvaluateTrainingAlternativesDesignSalesTrainingProgramPerformSales

TrainingConductFollow upandEvaluationThe 1st step sales training need assessment deals with identifying the necessary skills,attitudes, perceptions and behaviours of the sales representatives. The 2nd step dealswith setting up the training objectives i.e. the necessary measurable outcome of thetraining program. The 3rd step deals with identifying various alternatives to conduct thetraining. The 4th step deals with the design part of the training program which involvesidentifying the training program period and modules and the necessary skills to beimparted, logistics arrangements etc. The 5th step performing the sales training is theactual implementation of the sales training program which deals with the way how thetraining is conducted and the methodologies adopted by the trainer in imparting thenecessary skill set. Once the entire training process is completed, follow-up andevaluation dealing with analyzing the quality of training program held and the benefitreceived by the candidates and the organization need to be conducted.We shall learn more about the individual steps in the training process in subsequentsections in this unit.10.2.2 Training Program ObjectivesTraining is a continuous process in the employer’s career. Training might be requiredwhenever a new designation is given in the appraisal system. So having the set ofobjectives in place for any training program is an important task. Let us now look atsome of the common objectives which most of the training programs would try toachieve:-10.2.2.1 Imparting Attitude SkillsWe have already studied in the earlier units about the importance of positive attitude fora sales representative. Sales job is a challenging one which requires positive attitudeand continuous self motivation. For a candidate who has passed out from college,imparting attitude skills is a significant task. Apart from positive attitude, there will be anecessity to impart professional behaviour skills as well. Sales representatives maynotice other employees advance in their career by shortcuts. It is therefore veryimportant that the training program highlights the importance of hard work. Hence, inbrief some of the objectives in imparting the right attitude skills would include:-Imparting positive behavioural attitudeEncourage the candidates to depend on hard work rather than shortcutsInculcate the willingness to work even in difficult timesRecognizing the importance of self motivationUnderstand the importance of value systemImproving the leadership qualities i.e. ability to take challenges10.2.2.2 Notifying organization policiesClear understanding about the organization policies will decimate any futuremisunderstandings between the employees and the organization. Every training

program should make it clear about the organization policies to the employees. In brief,Organization policies may include the following:-Dress code of the employeesWork schedules and facilities when working overtimeLogistics provided like internet, telephone connections, faxes etc.Rules and regulations as per the government laws for proper behaviour withemployees, smoking regulations etc.Salary structure, designation, employment type i.e. regular or contract and otherbenefits like Insurance, LTA etc.10.2.2.3 Bestowing organization culture and valuesIt is important that the employees/ candidates who have joined the organization areimparted with the organization culture and values. This is done as an attempt toincrease the loyalty towards the organization. During the training programs a lot ofimportance is given in this activity. The main objective in doing so is to create a sense offeeling that the company is for the employees and the employees are an importantasset for the company. The candidate unless is a fresher, might have worked withseveral companies and will have a mixed feeling of self belonging with the presentorganization. The previous company might be the competitor of the present organizationand he/she might have to compete with their friends to make the sale. So, for a salesrepresentative it is very important that he/she shows a lot of dedication towards thework in the present organization and would overcome any personal relationships inmaking the sale. Hence, imparting the organization culture and values is very importantfor the sales representatives.Another important reason for inculcating the organization culture and beliefs is toconvey that:-Employees are working in a positive organization which cares for the employeesall the timeThe group in which the employee work will be a positive group10.2.2.4 Understanding the goals and objectivesBefore getting into any work it’s is important to understand the goals and objectives ofthe work. In any training program the goals and objectives should be clearly stated sothat the employees can be mentally prepared to face the challenges in the work. Forexample, if you are the pre-sales representative and if you have been promoted as thesales representative for the Asia Pacific Region, then you should clearly know theobjectives of the work and the goal that is to be achieved every quarter. Objective mightbe to gain some customers in the countries of Asia Pacific region where the presence ofcompany is null. The goal may be to increase the revenue or sales by at least 15% ofwhat it is in the previous quarter. Hence the employees must be given realistic goalsand objectives for each training program. For the newly joined candidates, he/she must

be explained about the expected objectives from the work and the goals to be achieved.10.2.2.5 Developing the team working skillsThe nature of work will vary upon the type of sale you make. In personal selling, thesales representative will be alone most of the times, hence there would be the needs ofa team work. But when you come to the industrial/ institutional sales, team work plays asignificant role. For example industrial sale can be selling a network platform to thetelecommunication company or installing the technical product like servers in thecustomer company. In such cases, the selling process may involve the sales team, presalesteam, technical team, finance team, testing team and many more depending uponthe sale. Hence the sales representative should know how to perform in the team andperform and effective sales process. Some of the team working skills include:-Identifying the coordinator for the teamCaring for the opinions of the entire team membersEffectively managing the time available among team membersMonitoring the performance of the team members and checking for any lag in theaction planClearly assigning the duties among team membersEnsuring a proper and timely feedback mechanism among the team membersIt is very important that the coordinator for the team has the leadership qualities toensure proper functioning of the team in making the sale.10.2.2.6 Developing the product/ service knowledgeThe basic requirement to sell a product/ service is to know completely about them. Thetraining program must take care that the entire description and features of the product/service is conveyed to candidates. The basic thing which the sales representative mustknow before going for a sale includes:-About the company of the product/ serviceThe list of competitors and their similar products/ servicesThe complete set of features of the product/ serviceThe benefits the product/ service provides to the customerThe key competitive advantages of the product/ service over the competitorsThe price and the maximum allowable discount for the product/ serviceThe installation time and after sales service available with the product/ serviceIn this section we have understood the training objectives and the necessary skill setrequired by the sales representatives. The following diagram helps in understandingSAQ 11) Explain the sales training process with a neat diagram2) Narrate the importance of notifying the organization policies to the employees3) Explain the need of developing organization culture and values in the trainingprogram4) Identify the necessary product/ service knowledge required by the salesrepresentative before going for a sale10.3 Training program implementation and analysis

The training objective might be excellent, but the outcome mainly depends upon theway the training process is implemented. The success of many training programsdepends upon the trainer i.e. the source for training. Selecting the best trainer is achallenging task. Let us now examine the various sources available to train thecandidates.10.3.1 Source and type of trainingThe sources for training can be internal and also the external to the firm. It dependsupon the availability of the right trainer for the program. If there is no availability of thewell qualified internal trainer within the organization, then the HR department mayconsult an external company who specializes in the training programs. The type oftraining program for the newly joined candidates depends upon the recruitment processas stated below:-If the recruitment process selected already well qualified candidates with workexperience relevant to the job description, then only an induction program whichis common to all the applicants would be enoughIf the recruitment process selected the fresher who doesn’t have any experienceabout the job, then a detailed training program would be required explainingabout the job the candidate needs to performIf the recruitment process selected the candidate within the company as a part ofthe appraisal system, then the induction program may not be required and thetraining has to take care of the additional duties that have been assigned to thecandidateMost of the times if the candidates have no time for training or the nature of jobdemands gaining expertise in the field rather than like a classroom setting, thenthe best way to train is by “on the job training”. On the job training involvestraining the candidate by assigning the actual work in the workplace with the realresources he/she would be using in the job.On the job training has many advantages and disadvantages too. Let us look at some ofthe advantages as stated below:-Economical Way: On the job training may not require external training classesand may not incur the expenses for a good trainer and the logistics. Right fromthe day1, candidate will be presented with the job to do under the guidance of asupervisor who may be his/her higher authority at the work placeBetter test environment: This training process gives the opportunity to test thecandidate’s performance in the real test environment throughout the trainingprogram. This might be very helpful for the supervisor to known the candidateskey strengths and weakness and will be able to provide proper feedback forimprovementProper Feedback: Since the trainer is the real candidate who has experiencedthe nature of work and faced challenges in the past, you as the candidate wouldget the right feedback that might help you to face the challenging tasksSome of the disadvantages of the on the job training program includes:-Time consuming: Unlike in the regular training programs where the trainer willbe available all the time, in on the job training program you may have little timespent per day with the supervisor as he/she may not be available all the day totrain you since they have to perform their regular daily work.Lack of theoretical knowledge: A regular training program will provide the

necessary theoretical knowledge which might be helpful for the candidate inhis/her job when faced with unexpected challenges which he has notexperienced in the pastMonotonous way of cognitive development: The candidate may start thinkinglike the supervisor all the time when facing with the challenges in the job. It isimportant to know that the supervisor view point in handling a challengingsituation may not be true all the time, hence the candidates have to use their owncognitive abilities to judge the problem and arrive at a solutionSuited for a small group: This type of training might not suitable if thecandidates are in larger numbers. A separate training program would be best insuch a scenario10.3.2 Program DesignProgram design deals with designing the program with necessary content, logistics andfeedback mechanisms. Fortunately or unfortunately in most of the training programs thetrainees are not involved in the design process. Some of the guidelines while designingthe training program includes:-Training program must be designed according to the time availableFeedback of previous participants must be taken into account to improve thecurrent training programDesist the desire to pack in everything in a single program i.e. not more than acouple of skill set must be imparted in a training programHave multiple training programs at regular intervals to add on the required skillset, for example have the separate training programs for presales, sales and postsales activities for the sales processDesign should be done in such a way that the candidate is not over burdenedTraining program should have a mechanism for obtaining the feedback from thecandidates after their field work10.3.3 Action PlanningAction planning the training program deals with the actual implementation process.Action plan should deal with the program design in a manner to make it interesting andencouraging the participant to learn more from the training program. Some of theguidelines include the following:-Training program should be a combination of lecturers, exercises, cases,simulations, role plays/ mock sessions etc., whichever is necessary to enhancethe training programThe training program shouldn’t be monotonousMake use of anthropological approach in handling the training program i.e.understanding the training needs of the candidates from the candidatesperspective rather than your own judgmentsTreat the candidates as adults i.e. they have the necessary level of trainingrequirements and only a proper direction in implementation is requiredDon’t wish away the candidates objections in the training program i.e. theobjections of the candidates are mostly real as they are from the field and havefaced it in the pastTraining process should encourage a two way learning process between both thetrainee and the trainer

Don’t be penny bound while conducting the training program i.e. provide the besttrainer even if it cost a little high for the companyIdentify a trainer who can go off the topic have discussions, bring in the mode ofthe candidates and then start the topic again. This is very useful in long trainingprograms which may run into weeks or months.Provide decent logistics to the candidates as studies reveal that candidates learnfaster in a better environmentTraining program should aim at developing the candidates to take responsibilityand challenges, as in good organizations the sales employees take the target ascompared to weak organizations where the targets are givenNecessary training technologies should be used for example, if the salesrepresentative uses CRM softwares then training program must use the actualapplication and handling techniquesAvoid the classroom setting i.e. make use of a circular setting which favoursgroup discussionsMake use of outdoor training whenever required i.e. making the teams with theexperienced employees and going on for actual sale process i.e. if you are in atraining program for a personal sale then you and the experienced employee cango together and make a sale10.3.4 Feedback and Follow upTraining program should have a proper feedback process to know about howinformative the training process is? The feedback mechanism also provides about thenecessary changes that are required to be done in order to enhance the trainingprograms in the future. Feedback process may also include the feedback given to thecandidates by the trainee. Follow up activities are very important in the training processbecause of the following reasons:-Training programs might be effective only for a limited periodEmployees might fall back to their own work styleEmployees might face new problems in the field and a follow up is required toremove such problemsSAQ 21) Explain various types of training provided to the employee in an organization2) List the advantages and disadvantages of on the job training method3) Illustrate various guidelines to be followed while designing a training program4) Identify various issues to be dealt with during the action planning stage5) Explain the importance of feedback and follow up in an effective sales trainingprogram10.5 SummaryIn this unit we have learned the various steps in performing the sales training process.Sales needs should be identified and the candidates for training are selected. Once thecandidates are selected the training objectives should be set. We have understoodvarious objectives of the training program like imparting positive attitude, self motivationcapability, leadership qualities and many more which are essential for the sale

representative to keep mentally fit in the challenging sales career. We learned that it isimportant for the candidate to know about the organization policies, culture and values,goals and objectives, product/ service knowledge etc. before working in the job. Hencethe sales training has to acknowledge all these and make the candidate aware of hisduties and responsibilities. We have examined that the industrial sales need a lot ofteam work and hence sales training have to take care of imparting the team workingcapabilities among the candidates. In the latter half of the unit, we have want about thesource and type of training required for candidates. We have understood the merits andde-merits of on the job training for the candidates. We have also examined variousguidelines in the program design and the action plan to ensure an effective and efficientsales training program. We have observed the importance of selecting the best trainerand the facilitation of two way learning process on the candidates performance. Wehave seen that every objection from the candidates have to be acknowledged andcleared in the training program. Finally, we have understood the importance of thefeedback and follow up to ensure that the candidates are applying the knowledgegained in the training period in their field.10.6 Keywords1) Anthropological Approach Understanding the training needs of thecandidates from the candidates perspectiverather than your own judgments2) Simulations The act of stimulating the behaviour of asituation or a process in a suitable way i.e.performing the field situation in a training hall ina suitable manner10.7 References1. Thomas N. Ingram, Raymond W. LaForge, Ramon A. Avila, Charles H.Schwepker Jr., Michael R. Williams (2009), “Sales management: analysis anddecision making”, M.E. Sharpe Inc., New York, USA.10.8 Suggested Readings1. Mark W Johnston, Greg W Marshall (2009), “Sales Force Management (9th Ed.)”,Tata McGraw Hill, New Delhi, India.2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,Prentice Hall, New Jersey, USA.

UNIT 11 COMPENSATION AND MOTIVATION OF THESALES FORCEStructure11.1 IntroductionObjectives11.2 Role of the sales manager11.3 Motivational factors

11.3.1 Compensation scheme/ package11.3.2 Role of Incentive systems11.3.3 Non-monetary reward systems11.4 De-motivational factors11.5 Summary11.6 Keywords11.7 References11.8 Suggested Readings11.1 IntroductionIn the previous unit we have understood the importance of a well planned trainingprogram in incurring the benefits both for the sales representatives and the company.We have understood that the performance of the candidate is a result of the type oftraining program employed. Once the training is finished, the candidate will be assignedthe duties and responsibilities in the company. We have learnt already that the sales jobis a challenging one and requires constant self motivation. Motivation can depend onseveral factors. In this unit we shall understand the relationship of motivation andvarious factors which facilitate the candidate to be motivated all the time.Motivation is mostly seen as the direct outcome of the relationships between the salesmanager and the representatives. In this unit we shall understand the role of a salesmanager in keeping his/her representatives motivated all the time. We shall understandthat compensation is only one of the factors which motivate the sales representatives towork.In the unit we shall understand that the sales representatives who newly join in theorganization have enough motivational levels, but during their course of work variousde-motivating factors results in low enthusiastic levels to work. Hence, the role of asales manager includes identifying such de-motivating factors and eradicating them. Inthis unit we shall learn about various de-motivating factors and means to eradicate themfrom the work place.Various systems can be used such as monetary and non-monetary to develop theenthusiasm to work better. In this unit we shall discuss various monetary rewards likebonuses, commissions, profit or gain sharing etc. and various non monetary rewardssuch as stock options, better working facilities, recognition and awards.ObjectivesAfter studying this unit you will be able to:-1) Understand the role of a sales manager in developing the motivation levels of theemployees in the organization2) Understand the guidelines to be followed in developing a better compensationpackage3) Examine the role of incentive systems for keeping up the motivational levels inthe employees4) Explain the benefits of non-monetary reward system in sustaining the motivation

levels in the employees5) Identifying the de-motivational factors and steps to eradicate them from the workplace11.2 Role of a sales managerThe sales for a product or service are carried out by different sales representatives.Hence, a sales manager is required to monitor the growth of sales, achievement targetin time, coordinate various sales activities and controlling the staff to perform asexpected by the company. Yet another important duty or responsibility of the salesmanager is to take care of his employees at all times.Sales monthly involve field work i.e. going to the market place or to the customers andmaking the sale. Sales job involves less work at the office and more work in the field.Hence the level of interaction between various employees is quite less while compare toother job like software, testing etc. To keep up the team spirit within the company, it’simportant that the sales manager interacts with all the employees socially after the officehours at regular intervals.He should be a boss in office, and a mentor/ philosopher outside office. Most of thesales people run into problems like family or health. A good sales manager should beable to understand the problems which the employees are facing and help in solvingthem.In most of the good organizations the sales manager would behave like one of the teammembers and help in leading the team to reach the targets and demonstrate leadershipskills whenever required. Sales manager should also help in facilitating a properfeedback mechanism among employees and keep updating about the situation in theirdepartment. Sales manager has to find any training requirements required for the teamand help to be provided with the same.The challenging task for the sales manager is to keep up the motivation levels of hisemployees. As we have already understood sales job is mostly a lonely and challengingjob; it requires a lot of self motivation to sustain. Sales manager has to indentify themotivational factors for the employees. Since these factors can be different for differentemployees identifying the right factor is an important task. In next section we shall learnabout various motivational factors such as incentives, awards, recognition etc. and theway they alleviate the motivational levels of sales representatives.Another important task of the sales manager apart from finding out the right motivationalfactor for the representatives is to find out the various de-motivating factors which are

prevailing at the work place. The ultimate objective of the using the motivational factorlike incentives, recognitions, awards etc. is to ensure that the sales representativeswork with enthusiasm all the times.It is observed that the employees are having enough motivation levels when they jointhe organization and as the time progresses, due to various de-motivating factors theylose out their enthusiasm to work irrespective of the decent salary structure andincentives. Hence, identifying the de-motivating factors and eradicating them from thework place is an important task of the sales manager. In the subsequent sections weshall understand various de-motivating factors which can lower the enthusiastic levels ofthe sales representatives.Hence, in brief the role of a sales manager would include the following:-Leading the team from the front on every challenge faced by the salesrepresentativesFacilitating proper communication channels either in the work place or off thework place to ensure that at least minimum level of interaction taken placebetween the sales representativesUnderstanding the problems and needs of the employees and help in resolvingthemKeep up the motivational levels of sales representative all the timeIndentifying the de-motivating factorsIdentifying training needs and areas of improvement for the sales representatives11.3 Motivational factorsThere was a time when employees were not given enough consideration and moreemphasis was laid down in the production process. But it was later recognized thatcompanies who retained talented employees have a greater survival rate in the industryand the market place. Employees are not treated as just another component inconducting business, but are considered as the prime resource for every businessactivity and as an important asset of the organization.Various studies have been done on the fact that success of organization depends uponthe satisfaction levels of the employees. In an organization, sales representatives mayvary across the spectrum of which satisfy them to keep up the motivational levels. So, inthis section let us analyze various motivational factors which are used by theorganizations to sustain enough enthusiastic levels among their sales representatives.11.3.1 Compensation scheme/ packageOne of the most attractive and encouraging factor for motivation among most of thesales representatives would be the compensation scheme or package there are entitledto receive at the start of the job. Organizations tend to pull in the best talent by offeringeffective compensation packages. The sales manager has to understand that often

compensation is seen as a level of loftiness among the representative within the samehierarchy level. Hence enough care has to be taken in designing the compensationpackage for the sales representatives.Jackson (1996) described a five step approach in designing a sales compensationpackage as mentioned below:-a) Prepare job descriptionsb) Establishing sales and other objectivesc) Determine appropriate general categories of compensationd) Develop and pretest the compensation plane) Implement and evaluate the planThe 1st step “preparing job descriptions” states that an elaborate job description shouldbe prepared to take care of all the job responsibilities that the sales representative willperform. Some of the sales representatives may actively involved in selling like theonsite sales manager in the industrial sale and some of the sales representative involvemore in a support role like the presales function. After preparing the job descriptionsthey to be analyzed in terms of difficulty level and the compensations should be plannedaccordingly.The 2nd step “establishing sales and other objectives” highlights the importance ofmeasuring the sales targets achieved and also other objective in determining thecompensation package. This step clearly states that compensation package should notbe prepared based on only the volume of sales made. In fact other objectives like thenumber of new customers increased the difficulty levels in the sale, the efficiencyparameters like the conversion rates etc have to be taken into account. This stephighlights the fact that not only the volume but also the effort that has been put ingenerating the leads have to be taken into account while awarding the compensationpackage.The 3rd step “determine appropriate general categories of compensation” states that thecompensation packages have to be categorically prepared depending upon severalfactors like education, experience, skill set required, nature of work etc. This processwill help to align the people of similar abilities or skill set receive the samecompensation packages thereby eliminating certain level of bias.The 4th step “develop and pretest the compensation plan” highlights the importance ofdeveloping the structure of the compensation package and pretesting it before actualimplementation in the organization. Developing the compensation package should takecare of the basic package which meets the living expenses of the sales representativesand the variable component should be reasonable enough i.e. at neither too high or toolow percentage of the entire compensation. Developing the compensation plan has totake care of the commissions too.

The 5th step “implement and evaluate the compensation package” deals with the actualimplementation of the compensation package for the sales representative andmonitoring the effect of the compensation package in maintaining the requiredmotivation level and attracting the talented pool to the organization11.3.2 Role of IncentivesIncentives play an important role in keeping up the motivation levels of the employees.Incentives may include yearly bonuses, commission rates based on the individual salesfigures and commission rates based on the group or team sales figures, stock optionsetc. Zoltners (2006) describes that the sales force incentive plans effective the salespeople and in turn on the sales force activities followed by customer results and finallythe company results. The same can be depicted by the following diagram:-Fig: Effects of sales incentive planHence planning a right incentive system is an important task for the sales manager.Bernardin (2008) explains various incentive pay for performance level of the employees.Let us examine them in detail:-a) Bonuses: These are one time payments provided as a reward for the level of workdone or objective achieved. This type of incentive system is often used to encouragethe sales representative to work much better and harder in future. The sales managerhas to understand certain issues when dealing with bonuses such as:-The type of impact created by the bonuses is considered to be positive most ofthe timesThe impact depends upon the bonus amountNormally it is considered that one month salary pay to be the ideal bonus amountThe timing of giving the bonus amount also matters a lotUsually the bonus should be given when the sales representative is in need i.e.during the festival seasonb) Commission plans: Commission is the percentage of total sales amount given tothe sales representative for successfully making the sale. Often sales representativeparticipate to push the products/ service for sale which offers them more commissionrates. Some of the issues which the sales manager or the organization has tounderstand before deciding on the commission plans are:-Commission rates should neither be too high or too low when compared with theother similar productsCommission pay entirely depends upon the sales volume and in turn may beseasonal for most of the salesSales representatives depend a lot on the commission rates for their livingexpensesDuring off season sales manager or the organization has to take care of theemployees need by providing them with increased commission rates which canlater be cut out during the sales seasonIf the commission is dependent upon the team, then the sales manager has totake care that every member in the team works with similar efficiency and

effectivenessMake sure that the group incentive pay is not too high in the salary component asemployees tend to think that why they are penalized for other mistakesc) Profit or gain share: Companies may share their increased profits or gains for theyear or quarter among the employees of the organization. Depending upon the basicpay of the employee the gains can be distributed. Such incentive gives a sense offeeling that the employee is working in a growing organization and he/she has a brightfuture in the organization.11.3.3 Non-monetary reward systemsWhenever a monetary reward fails, non-monetary reward system may achieve successin sustaining motivation and dedication of the employees towards the work place. Let usunderstand some of the non monetary rewards as stated below:-a) Stock options: The employee stock option is usually a call option which is given asa non cash reward or incentive system. A lot of employee would like to have the stocksinstead of the cash rewards like bonuses. There are a lot of advantages in giving thestock options to the employees. Some of the advantages include getting a feel of his/herown company once the stock options are given. Employees tend to work better togenerate more sales and in turn increase the value of their company and the stocks.Care should be taken such that all the deserving employees in the group should begiven the choice of choosing the cash reward or the stock options.b) Better working conditions: The sales representatives who work well and achievethe targets might be given options to work from home and visit the workplace once ortwice in a week to report. Other examples of better working conditions include providingthe necessary logistics like better variety of food, increased cabin space, free telephoneand internet services at home to a certain limit of usage, free insurance policy, bettertraining facilities etcc) Recognition and awards: Recognition and awards help the sales representatives togain respect and help in creating a unique identity in the work place. This type of rewardworks effective for the managerial level employees who don’t depend upon themonetary rewards for survival. This system also highlights the mile stones achieved byan individual in his/her career and also encourage fellow employees to achieve it andhence they work much enthusiastically.SAQ 11) Explain the role of the sales manager in maintaining the motivation level of theemployees2) List out the advantages of bonuses in maintain the motivation level of theemployees

3) If you are the CEO of the organization and have to select a reward system for thestate level heads of the organization. List out the type of reward systems youwould employ to motivate the employees.4) Explain the advantages of stock options over monetary reward systems inimproving the motivation level of the employees5) Explain in brief the five step process of creating a well planned compensationpackage11.4 De-motivating factorsAfter learning about the various motivating factors, it is necessary to identify various demotivatingfactors at the workplace too. However good the motivating factors be, demotivatingfactors can cause damage to the employee motivation. Some of the demotivatingfactors include:-a) Assigning two employees the same role and tasks when their pay scale varyenormouslyThis is one of the main reasons for reduced productivity of the employees. Theemployees with less salary might do less work leaving the rest of the task to the onedrawing higher salary. This can increase the time of completion or produceunsatisfactory results and also leads to extension of deadlines.It is good practice to place the employees with same salary structure under the samejob description. This trend is highly followed in the call centers. No matter whatever youreducation background and skill set are, you will be always placed within the group ofsame salary structure for a particular job. Whenever your performance improves yoursalary would be increased and you might be assigned various other tasks.This trend is seen quite less when it comes to IT companies who try to get the besttalent by awarding varying salary according to the skill set or the educationalbackground.b) Appraisal system failuresWhenever the appraisal system fails to perform as per the employee expectations, itleads to the lower satisfaction levels. For example, if the company policies states that aminimum of 10% per year, then the appraisal system has to stick to the policies. If thecompany profits are decreased due to low demand in the market, this should not bereflected in the appraisal system by decreasing the salary hikes unless there is asituation that company won’t be able to survive if the hike percentage is not decreased.The appraisal systems shouldn’t be affected just to make the balance sheets to lookbetter.c) Improper or poor facilitiesWhenever the working conditions are not good the employee may not be motivatedenough to work. Working conditions may include the following:-Poor infrastructure at workplace like old computers, desks, lack of airconditioning, no proper power backup facilities, lack of hygiene conditions etcLack of better supervisors who can take care of their employees needs at thework placePoor planning and facilities for working at odd timings i.e. if you work for an extratime you are supposed to get the transport facilitates. If there is no transport

facilities available after the regular working hours this might discourage theemployee to work overtime and complete the work before deadlines.11.5 SummaryIn this unit we have understood that the sales manager hast to take care of the salesrepresentative needs and lead them in facing the challenges effectively. Sales managerhas to understand various motivational and de-motivational factors of the salesrepresentatives. We have learnt that it the duty of the sales manager to keep up themotivation level of their employees by identifying the right compensation packages. Wehave understood that a good compensation package can be designed in a five stepprocess which takes care of preparing job descriptions, establishing sales and theirobjectives, identifying categories of compensation, developing and pre-testing thecompensation plan and finally implementing and evaluating the compensation plan.In the later part of the unit, we have discussed various incentive plans which includethe monetary benefits like bonuses, commissions and profit sharing to keep up themotivation levels and give a sense of feeling that company would always take care oftheir employees. We have understood the benefits of non-monetary benefits inimproving the motivation levels. We have also discussed various guidelines to befollowed while given monetary or non-monetary benefits among the salesrepresentatives. Finally in this unit we have looked into various de-motivating factorsand steps to avoid or eradicate them from the work place.11.6 Keywords1) Call Option The stock options where the buyer has theright to buy the option but not an obligation tobuy at a expiry date of the option at a certainprice as stated in the agreement11.7 References1. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,Prentice Hall, New Jersey, USA.2. John H. Bernardin (2008), “Human Resource management”, Tata McGraw Hill,New York, USA.3. Andris A. Zoltners, Prabhakant Sinha, Sally E. Lorimer (2006), “The completeguide to sales force incentive compensation”, Amacom, New York, USA.11.8 Suggested Readings1. Terence Jackson (1989), “Evaluation: relating training to business performance”,Kogan Page Ltd, London2. Earl D. Honeycutt, John B. Ford, Antonis C. Simintiras (2003), “Salesmanagement: a global perspective”, Routledge, New York, USA

UNIT 12 MONITORING AND PERFROMANCEEVALUATIONStructure12.1 IntroductionObjectives12.2 Role of a job description in objective settings12.2.1 Direct sales force12.2.2 Indirect sales force12.3 Role of sales manager in monitoring and performance evaluation

12.3.1 Sales force monitoring guidelines and objectives12.3.2 Quantitative and qualitative factors of monitoring12.4 Building better team working skills12.4.1 Advantages of team work12.4.2 Ten step process in building better team working skills12.5 Summary12.6 Keywords12.7 References12.8 Suggested Readings12.1 IntroductionIn the previous unit we have understood the importance of motivation in performing thesales job and the role of a sales manager in identifying the motivating and de-motivatingfactors of the sales representatives. In this unit we shall understand about theimportance of monitoring and performance evaluation of the sales force performance inboth the direct and indirect sales.The main objective of monitoring the sales force is not about finding faults in theperformance of the sales team but the process of monitoring and evaluation should beused as a mechanism to identify the problems and areas of improvement. Once theareas of improvement are identified they have to be inculcated into the sales forcethrough the proper training methodologies.The ideal question which comes to every sales manager while monitoring andperformance evaluation is “what factors need to be measured to identify the truepotential of his/her sales force?” In this unit we shall identify the two ways of measuringthe sales force efforts in terms of quantitative and qualitative factors. We shall alsounderstand the advantages and disadvantages of measuring only quantitative factors.Ultimately at the end of the day it is the sales target which matters to most of the salesmanagers. We shall understand the relationship between the efforts and the salestarget achieved in this unit.It is ideal that the sales force is well informed about the monitoring factors and the timeperiods of evaluation well in advance. It would be much better if they are mentioned inthe job description so that the employees would perform well to meet the performanceparameters. In this unit we shall understand the job description of the sales force andthe ways of improving the job performance activities.Finally in this unit we shall understand about the importance of a good team work. Weshall discuss about various advantages for the organization by helping the sales force towork in teams. We shall also understand various steps that help in facilitating a betterteam work in the organization.

ObjectivesAfter studying this unit you will be able to :-1) Identify the role of job description in objective settings2) List the factors that affect the performance of sales force in direct sales3) List the factors that affect the performance of sales force in indirect sales4) Explain the importance of identifying the true performance of sales force for theorganization5) Explain the procedure for evaluating the sales force6) Understand the objectives and guidelines in sales force monitoring process7) Explain the list of Qualitative and quantitative factors in monitoring andperformance evaluation8) List the advantages of good team working skills and explain the steps in creatingbetter team working skills12.2 Role of job description in objective settingsJob description as discussed earlier units informs the employees about their duties andresponsibilities at the work place. One must identify the set of tasks he/she needs toperform according to the job description. Objectives have to be set and employees haveto work towards achieving them. In most of the job descriptions the nature of work andvarious accountability factors will be mentioned. In some of the job descriptions youmay find the working conditions also such as extensive travelling, working on the net allthe time, taking continuous phone calls etc.In this section let us understand about the job description which helps in setting theobjectives for the employees. Company makes a practice that monitoring andperformance evaluation would be on the objectives set according to the job description.Let us now look at the direct and indirect sales force job description or activities theyneed to perform.12.2.1 Direct sales forceDirect sales force involves mainly a one to one selling scenario. Several tasks need tobe performed in order to effectively handle the sales such as:-a) Contacting the prospectb) Communicating with the prospectc) Ensuring logistics during the sales processd) Performing after sales service activitiese) Building rapport and keep in touchIt can be observed that no where the objectives indicated to generate revenues to theorganization. It is intrinsically implied that when all the objectives are performed well, itleads to the maximum revenue generation. Hence the main objective of evaluationprocess should be to identify the efforts rather than the revenues. The main objective isto create demand for the products/ services by performing all the tasks in an efficientand effective way possible.

Whenever the sales force doesn’t perform well, various factors needs to be analyzed.Less revenue generated need not be exactly due to the inefficiency of the sales force.Various internal and external factors might be responsible for the low revenuegeneration. Some of the internal and external factors that can be responsible are:-Poor performance by the marketing departmentChange in market dynamicsChange in the customer preferencesInefficiency of the MIS divisionMarketing division plays with the tools of marketing mix in creating a demand for theproduct by identifying the right product, place, place and promotion strategies for thetarget segment. If the marketing department couldn’t perform well in identifying andexecuting the right strategies, then it can be a difficult time for the sales force ingenerating leads for the product/ service. Hence marketing department can influencethe sales figure considerably. This factor should be analyzed before determining theperformance of a sales force.The next factor is change in market dynamics. Market dynamics as discussed bybusinessdictionary.com states that it is “interaction between forces of demand andsupply and the pricing signals they generate. In most free or open markets anysignificant part of market dynamics is beyond the control of any firm or group”. Hence itshould be understood that the change in market dynamics such as the supply-demandchanges may sometimes lead to a decreased sales revenue and the sales forcecouldn’t have fore-fended it by any means.The third factor “changes in customer preferences” might affect sales revenue. Thereason might be due to the presence of many alternatives to the customer. Whenever aproduct/ service are launched for the first time by your company, it may result in goodsales revenue. But in today’s world the competitors copy your strategy and introducesimilar products/ service leading to the presence of many alternatives. This can happenboth in direct and indirect sales. Another reason might be that the customer is offeredprefers much better services. For example, if you are the sales representative who sellsan ozone purifier and if the customer prefers the “RO+ UV+ ozone” purifier, then youmay not have much to do to convince the customer rather than getting the similarproduct from your company.The final factor is about the “Inefficiency of MIS division” within the company. MISstands for Management Information System which helps the company employees intaking strategic decisions before the start of any product/ service. MIS helps informulation of marketing strategies. When effective MIS systems are not in place thendue to insufficient information generated by such systems might lead to the improperstrategy implementations and finally in lesser lead generation by the sales force.Hence we have understood that the sales revenue shouldn’t be the only factor for

evaluating the sales force performance and external factors have to be analyzed too inorder to know the true performance of the sales force. Now let us look at some of thefactors that need our attention in indirect sales force monitoring and evaluation process.12.2.2. Indirect sales forceIn direct sales, the sales force are not directly employed by your organization but areentitled by a contract to sell your product/ services. Indirect sales force can be resellers,whole sellers, retailers etc. to whom your company sales force sells the product. Let’sus now understand some of the factors which needs to be analyzed in making up theconclusion on performance evolution of the sales force who sell the products/ servicesto the indirect sales force. Some of the factors are:-Availability of stockVisibility of stockStock piling in the pipelineThe first factor to be analyzed is the availability of stock. There can be many situationswhere the demand for the product is high and the availability of the product is less.Nothing can be done by the sales force if the manufacturing department doesn’t supplywith necessary product stock. In such cases the competitor may gain the customer.Hence comparing your sales figures with the competitor doesn’t help in correctevaluation of the performance of the sales force.The second factor visibility of stock refers to the efforts made the sales force in shelvesmaking the product/ service visible to the customer. In retailing the products end up inshelf’s where the customer will be looking for them. If the product is placed in such away that it is not at all visible to the customer, it may result in decreased sales figure.Most of the times, the sales force wouldn’t be having any control on the way the retailerplaces your products. Hence such scenarios have to be identified and the sales forcemust negotiate with the retailer to get better placement of the product in the retail store.Hence this factor should also be analyzed before analyzing the performance evaluationof the sales force.The third factor stock piling in the pipeline is an important factor which the salesmanager has to take into account for proper evaluation of the sales force. Let us look ata typical scenario how the goods move in the indirect sales before reaching the finalcustomer by the help of following diagram:-Fig 1: Indirect sales force pipelineIn the above diagram it can be understood that in indirect sales the company producedgoods will reach the distributor through the company sales force. The distributor is

known as the primary customer, the retailer as the secondary customer and finally thecustomer who consumes the product/ service is known as the tertiary customer. Thedistributor distributes the goods among various retailers who in turn sell the goods to thefinal customer. In such cases the sales figures are determined by the number ofproducts sold to the distributor. In the start the sales might be less but as time progressthe sales figure might improve drastically showing almost double or triple figures insales volume. This increase might be due to the efficient work done by the sales forceand can be used to determine the performance of the sales force.But sometimes the increase in sales might be just due to the piling of the stock. Whenthe products are sold to the distributor they might get piled up at that level and may notmove to the retailer due to various reasons. Sometimes the good might get piled up atthe retailer in his/her store due to low sales. Hence it is important to analyze thesesituations before arriving at a conclusion about the sales force performance. SalesCompany Distributor RetailerCustomerPrimary SecondaryTertiarymanager has to look at how many products/ services have be sold to the tertiaryconsumer rather than just looking at the sales to the primary consumer.In some other models of the indirect sales, you might also have the whole-seller withinthe pipeline. Irrespective of the number of intermediaries in the sales process, the salesfigure should be arrived by looking at the sales done to the final customer whoconsumes the product/ services.SAQ 11) Explain various factors that affect the performance of direct sales force.2) Explain various factors that affect the performance of indirect sales force.12.3 Role of a sales manager in monitoring and performanceevaluationOne of the main objectives of the recruitment process is to hire a sales team whichperforms well as per the organization expectations. Once the recruitment process isfinished it is the role of the sales manager to duties to various sales representativeswithin the team. Once the jobs are assigned, they need to be monitored and evaluatedto identify the true performance of the sales representatives. Identifying the trueperformance of the sales force is an important task because of the following factors:-Identifying the performance helps in identifying the areas of strengths andweakness in the sales forceProper training can be provided to improve the performance of the sales forceWhen performance evaluation identifies the true potential of the sales force, itwould be easy to identify the ideal goal settingUnrealistic goal setting can be avoided and the motivation levels can be kept

highThe attrition rate of the organization can also be decreased if realistic goals areset and the sales force could achieve them with their effortsHence it is clearly understood that the sales force performance evaluation plays a keyrole in the organization. It is the role of the sales manager to identify the performance ofthe team in a correct way. Spiro (2003) explains a procedure for evaluating the salespeople which is depicted by the following diagram:-Figure 2: Procedure for evaluating sales peopleThe procedure states that establishing basic policies will help in identifying the peoplewho will monitor the entire process. The next step is to select an evaluation bases andthen set the performance standards. Once the standards are set then compare theresults in the evaluation process with the standards and then discuss them with thesales people. Identifying the objectives and guidelines play an important role in theprocedure for evaluating the sales people.Let’s us now understand certain guidelines and objectives the sales manager should belooking at in the monitoring and performance evaluation process.12.3.1. Sales force monitoring guidelines and objectivesSales manager has to be clear about the objectives he/she wants to achieve throughthe monitoring process. Monitoring process may vary from company to company, but allthe monitoring processes have some common guidelines and objectives. Let us look atsome of them in the following:-EstablishbasicPoliciesSelectEvaluationbasesSetperformancestandardsCompareperformanceto standardsDiscussresults withsales peoplea) Don’t monitor too closely and frequentlyMonitoring would be done at regular time intervals by the sales manager. The timeinterval depends upon the product/ service, the frequency of sales and organizationpolicies. Most of the companies make a habit of reviewing the performance at leastonce in every quarter. Quarterly reviews would be done and performance sheets will beprepared for every department. We have discussed in earlier units the salary

component includes a variable component whose amount is determined by theindividual/ team/ department performance. In many companies the quarterly linked payperformance is determined and given once in every quarter.Apart from quarterly reviews, many companies adopt even monthly, weekly or dailyreviews. The sales manager might adopt one of the intervals for monitoring andperformance evaluation. The guideline for the sales manager here includes notmonitoring too closely and frequently. Frequently may be everyday or every week orevery month depending upon the business. For example, the sales force for insuranceproduct will be given mostly monthly target such as 20-30 customers per month for eachsales representative. In such cases daily monitoring is considered as frequent.Whereas, if the sales representative who sells the mobile connections may be involvedwith higher targets and hence more sales figures. It would be ideal to monitor the salesdaily. Sometimes the sales manager would monitor two times in a day, once in theafternoon and verify the sales figure and might push for better performance by eveningif the sales are low.Too close monitoring might result in a decreased motivation levels when the target arenot achieved by the sales representatives. Such cases of decreased motivation levelsare seen frequent in telephone sales at the call center. Mostly the sales representativesat the call center will be monitored at the end of the day and their performance chart willbe prepared and reviewed in the morning next day. Any representative who misses thetarget by small margin shouldn’t be treated as a low performer. Hence too closemonitoring should be mostly avoided and the sales manager has to work with the salesforce for improvement in the sales process.b) Identifying the gap in skill setAfter identifying the low performers in the sales force by monitoring and performanceevaluation, the next is to identify the real problem for low performance. One of the mainreasons could be lack of skill set required to perform well. In such cases a propertraining process should be identified to improve the individual skill set.For example, the sales force in a call center would be evaluated daily for theirperformance. If the sales representative cannot perform well and the reason for his lowperformance is poor communication skills, then the sales manager has to work on it andprovide proper training. Many a times the communication skills are poor due to theinfluence of one’s mother tongue, hence it has to be worked out and develop a neutralaccent which is acceptable by the company need to be developed.

If the reason for low performance is lack of attitude and behavioural skills, then thesales manager has to remove him/her from the work force and put into a trainingprogram and evaluate his/her performance in the training process. Once the trainer issatisfied about his/her improvement then the sales manager might induct him back intothe workforce.Hence, identifying the gaps in skill sets is a very important objective of the monitoringand performance evaluation process. Converting the process to mentoring or trainingshould be the primary objective in such cases.c) Identifying other problems at the work place like poor working conditions,trade conflicts etc.The reason for low performance might be due to several de-motivating factors asdiscussed in the earlier unit. The sales manager should have to work in identifying suchfactors and try to remove them.One of the important factors for low performance in direct or indirect sales is “tradeconflicts”. This is a major problem in many companies and the sales manager has toclearly identify them and resolve. The entire region such as city of a country would bedivided into different regions for easy monitoring. Every region will be assigned a salesforce for selling in that region. As per the company policies, most of the times the salesforce are not allowed to get into another region and promote sales activities. Wheneversuch cases arise where the sales representative of one region entering into anotherregion and sells, it might lead to the higher sales figure for that representative and alsothe conflicts between the sales representatives who are authorized to sell in that region.This result in the following problems such as:-Improper performance evaluation of the sales forceUnethical practicesTrade conflictsHence the sales manager has to identify such reasons in the monitoring process and tryto resolve them to identify the true performance of the sales force of different regions.The sales manager should identify the points of sale and look for any violation infollowing the terrestrial jurisdiction by the sales force.12.3.2 Quantitative and qualitative factors of monitoringTo determine the performance of the sales force, sales managers make use both thequalitative and quantitative factors. Most of the time quantitative factors play a majorrole in deciding the performance of the sales force. There are many reasons why thesales manager prefers the numbers. One of the reasons is that the quantitative factorslead to an unbiased way of performance evaluation process. It should be understoodthat the evaluation process shouldn’t just rely on the quantitative factors and we also

need to analyze certain qualitative factors as well in determining the true performance ofthe sales force.a) Qualitative factorsSome of the quantitative factors monitoring and performance evaluation include thefollowing:-Number of salesRevenue generatedExpenses incurredPercentage growth in sales compared to last week, month, quarter, year etc.Net profit generatedb) Qualitative factorsSome of the qualitative factors monitoring and performance evaluation include thefollowing:-Improved customer satisfaction levelsImproved team management skills like taking responsibilities, being accountableetc.Improved behavioural skills within the teamDecreased conversion rate i.e. improved success rate in gaining the customerImproved time management skillsIt is important that both the qualitative and quantitative factors must be analyzed beforemaking a conclusion about the performance of the sales force. It is observed that theteam management skills and better team work would have a direct affect on theperformance of the sales force. Hence, let us understand in the final section of the unitabout the steps in developing a better team work in the organization.SAQ 21) Explain the procedure for evaluation sales people.2) Explain the importance of identifying true performance of sales force for theorganization3) List various quantitative and qualitative factors and explain their significance inunderstanding true performance of sales force12.2 Building better team working skillsOne of the main success factors in sales is the ability to work in teams. This is a veryimportant skill set especially in industrial and institutional sales. The team workingcapability posses a lot of advantages which help in improving the performance of thesales force. In brief, let us understand some of the benefits of team work.12.4.1 Advantages of team workFollowing are the list of some advantages of a team work for the organization:-Improvement in the speed of operations due to collective effortsDecrease in the error rates due to collective decision makingImprovement in the problem solving capabilities in the sales processBetter way to learn the process for the fresherDevelopment of team managing capabilitiesGenerating enough enthusiasm in the work placeLeads to an increase in motivation levelsAbility to handle bigger sales in terms of revenue since the workload would bedistributed12.4.2 Ten step process in building better team working skills

Now let us take a look at the steps which will ensure better team working skills amongthe sales force. They are:-a) Clear goals and objectives within the teamb) Meaningful appropriate leadership for the teamc) Motivation and empowermentd) Facilitating effective communication process within the teame) Monitoring the team performance on a regular basisf) Taking care of individual development within the teamg) Developing the support and trust among team membersh) Giving fair rewards and incentives to individuals within the teami) Establishing a sense of belonging and pride of association among the teammembersj) Regularly identifying problems within the team and resolving them in timeThis ten step process will help in improving the team working skills and every salesmanager should help in developing excellent teams within the organization.SAQ 31) Explain the advantages of working in a team for the individual and theorganization.2) List the ten step process in creating a better team working skill set12.5 SummaryIn this unit we have understood the importance of job description in objective setting ofthe sales force. We analyzed various internal and external factors that affect theperformance of the sales force. We understood the role of the sales manager inhandling the performance evaluation process and discussed a standard procedure forevaluating sales people. Later we have looked at various guidelines and objectives ofthe sales force monitoring and evaluation process. We have learnt that identifying thegaps in skill set and other problems like trade conflict and resolving them is veryimportant to improve the performance. We also looked at various qualitative andquantitative factors in determining the true performance of the sales force. We finallyagreed that the better team working capabilities will facilitate in better performance andexamined various advantages of working in a team. Finally in this unit we looked at theten step process in building better team working skill set.12.6 Keywords1) MIS MIS stand for “Management InformationSystems” which provide the information whichis needed to run the business effectively. Ithelps to provide information to respectivedepartments for strategic decision making.12.7 References1. Spiro Stanton Rich (2003), “Management of a sales force”, Tata Mc-Graw Hill,New York, USA12.8 Suggested Readings

1. Andris A. Zoltners, Prabhakant Sinha, Sally E. Lorimer (2006), “The completeguide to sales force incentive compensation”, Amacom, New York, USA.2. Mark W Johnston, Greg W Marshall (2009), “Sales Force Management (9th Ed.)”,Tata McGraw Hill, New Delhi, India.

UNIT 13 SALES PLANNINGStructure13.1 IntroductionObjectives13.2 Sales planning process13.2.1 Elements of sales planning13.2.2 Types of sales planning13.3 Role of sales plan for B2B and B2C markets13.3.1 B2B markets13.3.2 B2C markets13.4 Summary13.5 Keywords13.6 References13.7 Suggested Readings13.1 IntroductionIn the previous unit, we have understood about the sales force monitoring andperformance evaluation. We have also looked at the advantages of team work andsteps in creating better team working skills. In this unit we shall understand aboutplanning the sales and the sales team. The objective of planning the sales and the teamis to carry out the sales process in an easy, accurate and profitable manner for theorganization. Sales planning should ensure that the resources are used to the maximumcapacity such as the sales representatives, CRM systems like office automation tools,IVR, analytics etc. for the benefit of the organization. Sales planning activity should beable to take care of all the present customers needs and also work for generating leadsfrom them in future.In this unit we shall understand about various elements of sales planning. Sales planstarts with sales objectives which are to be attained at the end of sales planningprocess. Forecasting plays an important role in laying down the objectives for the salesteam that are attainable within the given time period. Sales policies, procedure andrules help the sales representatives to handle day to day situations in sales. Salesprogramme provides the necessary training needs to develop the required skill set tomake the sales. We shall also learn about the various types of sales plans dependingupon market, selling functions, customers, products and time period.Sales planning process varies for B2B and B2C markets and hence in this unit we shallunderstand various activities that the sales plan has to perform to manage the sales inthese markets. Handling distribution channels, warehouse, retail stores and price

changes are very important to ensure sales in a profitable manner. We shall discussabout various issues that needs to be planned and executed properly and monitored atregular intervals in B2B and B2C markets.ObjectivesAfter studying this unit you will be able to :-1) Explain the objectives of the sales planning process2) Understand the importance of forecasting in objective setting in the salesplanning process3) Explain the role of policies, programme, rules and procedure in the salesplanning process.4) Identify the role of a sales plan for B2B and B2C markets and explain the needfor handling warehouse, retail, distribution channels, and price changes to makesales in a profitable manner.5) Explain the importance of sales strategy in winning the market place in all times6) Explain the various types of sales plans13.2 Sales planningSales planning process includes a set of activities that needs to be performed toachieve the goals or objectives of the sales force. It is the duty of the sales manager tocreate a plan that is well documented and which ensures proper management oflogistics, finance, manpower, inventories and purchases. Sales planning document isthe single most important document which ensures a proper direction on how to handlethe sales functions. Let us now understand the various elements and types of salesplanning as described by Mukesh (2006) in the following section.13.2.1 Elements of sales planningThe main elements of sales planning include the following:-Elements ofSalesPlanningSelling ObjectivesSales PoliciesSales ProgrammeSales ProceduresSales RulesSales ForecastSales BudgetSales Strategya) Selling objectivesThis includes the list of objectives that need to be attained after the completion of thesales planning process. The objectives should be realistic and attainable. For example,if the sales representative is selling insurance products to the customer, a target of 20 to30 insurance product sales per month is mostly an achievable or realistic target. If thesales planning document sets the objective as 100 insurance products, then it might not

be achievable most of the times by many sales representatives. Hence the objectivesmust be achievable and be completed in time.The objectives may be short term or long term in nature. Short term objection includethose that have to be achieved in a quarter or a year and long term may include severalyears. Some examples of short term objectives include improve the sales figure by 15%as compared to the previous year. Long-term objectives may be to establish thecompany presence in new countries or continents in the next 2-3 years.Another important objective is to maintain a contact with all the key customers on aweekly or monthly or quarterly basis. Since we have already discussed that attaining anew customer would be costlier than trying to retain the existing customer, it is veryimportant to contact the customer and take his/her feedback or problems on a regularbasis. The time period of contact may vary from company to company and from sale tosale.Once the objectives are created it‟s time to look at the overall sales policy.b) Sales PoliciesSales policies provide the guidelines to the sales staff to help them in performing thesales activities. Policies help the sales representatives in achieving their targets. Forexample, when a sale gets returned by the customer, the refund policy will guide thesales representatives how to deal with the situation effectively, so that the customer willbe handled with care rather than getting into an argument. The sales policies also helpin clearly identifying the right pricing for the customer depending upon the relationshipthe customer shares with the company. For example, if the customer is loyal to thecompany and is doing sales from several years, the policy would inform the salesrepresentative about the maximum discounts that can be given to such customers.We encounter may such cases where the sales representative look at the previoustransaction and gives discount to make customers stay loyal to the company in future.For instance, when you renew the existing software like educational software or antivirusfor another year, then the sales representative would give you a discounted pricemost of the times.Hence the policies would help in achieving the targets easily and help the salesrepresentative in handling the day to day sales tasks effectively. After the sales policieslet‟s now look at the next element namely sales programme.c) Sales ProgrammeSales programme are essential to ensure the sales representative can handle any salessituation which they are entitle to perform. Sales planning should clearly mention therequired skill set in handling the sales and the programme appropriate to incur thoseskills in the sales representative.

Sales programme may be necessary whenever the a new product/ service is introducedby the company. Sales programme is also necessary when the sales representativeshandle sales from new territories which they haven‟t sold any product/ service in thepast. Cross-cultural training would be given most of the times, when the sales includethe customers other than the native country.Sales programmes help to develop the necessary skill set in achieving the salesobjectives effectively and in given time period. Let us now look at the next element ofsales planning namely “sales procedures”.d) Sales ProceduresSales procedure is the sequence of various activities that need to be performed fordifferent sales functions. The sales procedures vary from sales to sale and from marketto market. Sales procedure for a business to consumer sales varies greatly frombusiness to business sales. The sales procedure may include meeting the customer,explaining the product / service through slides, use closing techniques, take the orderand following up. The procedure for B2B sales may indicate to take a complete teamfrom various departments who are the stakeholders in the project to carry out theexplanation of the product/ service. The procedure for the B2C sales may indicate that asingle representative is enough to handle the task. Even the time intervals for follow-upactivities are mentioned which vary for B2B and B2C sales.Let us now look at the next element “sales rules”.e) Sales RulesSales rules indicate the set of actions that need to be performed and not performeddepending upon the situation. For example, in credit card payments, if the customer isasking for the refund of the late payment fee, then the rule says clearly not to refund ifthe amount is received after the due date. Hence, the sales staff is not permitted torefund the amount no matter how loyal the customer is with the company. In somecases, refund could be done. For example, when there is some genuine reason for thelate payment, such as the due date is on a non-working day for the bank due to festival,curfews or any other natural disasters etc. In such cases the sales staff would refundthe amount if the rule mentions to refund the amount.Even in personal sales, the sales representative would be given rules that the maximumdiscount to be given on the product and the maximum amount of credit that the salesstaff can give to the customer to pay the dues. Hence, it‟s the duty of the sales staff tocontact the customer within the stipulated timeframe and collect the dues.Let us now look at the next element “Sales Forecast”.f) Sales ForecastSales forecast lays the foundation of sales planning and objective setting. Based on the

sales forecast the sales manager would know the sales that could be attainable for thecoming period (next quarter or year). Various time series analysis tools such as trendestimation, moving average, weighted moving average, exponential smoothing etc maybe used to forecast. Forecast can be also done based on the predictions done by theindustry experts. Methods can be many but the aim of forecasting is to identify clearlythe demand and plan the sales activities to generate more leads to the business.Sales forecast also help in identifying the strategies to gain the market share. If theforecast turns out to be negative i.e. the industry sales are going to dip, then thecompany may execute their operations effectively to retain the existing customers andattract the new customers. Hence, forecast is a very important element in salesplanning and we shall discuss more about this in the coming units.Now, let us look at the next element “Sales Budget”.g) Sales BudgetSales budget identifies the necessary expenditure that is occurred in making the sales.The sales budget estimates the revenue based on sales that would be generated andidentifies the profit for the organization after subtracting the operation costs of the salesstaff. The sales budget would clearly set the standards for the sales team in terms of theexpenditure that is permitted to incur upon the sale. For example, when the sales staffgoes for selling the product, the maximum expenses that can be incurred would bementioned and the sales representative has to maintain his travel expenditure and othercosts within that limit.Maintaining the operations within the budget becomes a complex task in B2B saleswhere the sales team had to travel to the customer site many times before the salehappens. Hence the sales manager has to see that the operation costs are undercontrol and provide some mechanisms like video conferencing to reduce the travellingcosts. Once the operational costs are under control, attaining the profitable level insales would be a little easier to achieve.Let‟s us now discuss the next element “sales strategy”.h) Sales StrategySales strategy involves how the company is going to act in the market place with theproducts/ services. The market is dynamic and competitive in nature which makes thecompanies alert all the times with their pricing and position strategies. Positioning theproduct is very important since in the past many excellent products have failed due toimproper positioning. The product/ service which need to be sold have to be properlypriced when compared to the competitors. The strategies have to be in place to justifythe price if it‟s higher than the other similar products in the market.

The sales staffs have to be given proper training before employing any strategy in themarket place. If the product/ service price is not changed even when the rivals havedropped their prices, then the sales staff have to make sure that they can explain to thecustomer clearly about the reason for high price stating any competitive advantages ofthe product/ service over the rivals.Acting smart and ensuring that the sale is generated is the part of the sales strategy.The company, who can handle the sales strategies in the market place, is likely to bethe winner.Hence the sales planning process contains the above discussed elements and helps inattaining the sales objectives in the required time period. Let us now discuss the varioustypes of sales plans that can be created to ensure the sales staff works effectively forthe organization at all times.13.2.2 Types of sales planningLet us look at various types of sales plans in an organization:-a) Sales plan on the basis of market areaWhenever the sales are done in the entire country, then the entire region would bedivided into several areas depending upon certain characteristics. A simple segregationwould be dividing the entire country sales into different states and assigning a head foreach state. For example, the in the telecommunication business, the telecom plansvaries from state to state and within the state it remains the same. There are someservices which are applicable for the entire country too. Even the promotional offersvary from state to state depending upon the nature of the business in these states.Some products in FMCG sector are very strong in south and have a little presence inNorth and hence the companies may introduce special promotional campaigns whichare available only to the northern states to improve leads. Hence the sales plan wouldvary from region to region.b) Sales plan on the basis of selling functionsSales team performs several functions such as promotions, follow up activities, presalesand sales activities etc. Hence the company lays out various sales plans for eachactivity if necessary.c) Sales plan based on type of customersMost of the companies believe that 80 percent of the business comes from 20 percentof the key customers. Although each and every customer is important to the company,the survival of the company depends on those 20 percent in difficult times. Hencefollowing the same sales plan for all the customers wouldn‟t be practical since the keycustomer have to be handled more effectively. Hence the companies may have differentsales plan for the key customers. Also the company may have different sales plan for

customer depending upon the markets like B2B or B2C.d) Sales plan based on the type of productsEvery product/ service may not have the same selling activities. Hence having differentsales plan is essential to handle the sales effectively. For example, if the companyproduces technical products, services, FMCG goods etc. it needs to have separatesales plan for the FMCG goods and the technical products and services.e) Sales plan based on the time periodThere are different sales plan for long term and short term objectives of the company.For example, increasing the sales in the already existing territory and getting sales innew territories can‟t have the same sales plan. Acquiring the new territory would be along term objective where as increasing the sales in existing territory would be a shortterm objective which would be a 1 year time period. For the both, strategies would bedifferent and the operation costs would be different. Hence having a separate sales planwould be good for both the short term and the long term objectives.SAQ 11) Explain the importance of setting the objectives in the sales planning process2) Illustrate the importance of sales policies, program and rules in the salesplanning process3) Identify the problems with wrong forecasting in the sales planning process4) Explain the various types of sales planning.13.3 Role of sales plan for B2B and B2C marketsSales planning process would be different for B2B and B2C markets most of the times.Hence let us understand the essential activities that need to be performed andmonitored in these markets to make the sales profitable to the company.13.3.1 B2B marketsB2B markets deals with the business to business deals where the time management isa critical factor for the customer satisfaction. Since the sales process takes place formonths, maintaining the progress in sales is very important. The sales staff has to stickwith the timings given by the customer and ensure that all the team members arepresent at the right time. The sales plan would deal with customers and plan theactivities. There is no standardization of activities which can be applied to severalcustomers. Since the requirements differ from customer to customer, the B2B sale planhas to deal with a flexible plan and plan the resources accordingly.Forecasting plays a very important role in preparing a sales plan for B2B customers.The customer health in financial terms is very important and hence the customerbusiness trend is observed time to time. Most of the times the sales are on credit basiswith timely payments in regular intervals. Monitoring the forecast of the customerbusiness will give a clear picture of the company future sales. For example, if thecompany is selling product „X‟ to the customer who in turn sells it to the customers as an

accessory in his product, and if the customer business in future sees a down trend forthe product „X‟ then it clearly indicates that the leads in future will take a downturn. Insuch case the company has to use appropriate sales strategies to sustain in the marketplace.Let us now look at B2C markets and some of the sales planning activities.13.3.2 B2C marketsB2C markets deals with business to the customer who uses the product/ service for his/her own benefit. Sales plan in B2C market has to deal with several issues related to thewarehousing, distribution channels and retail. Let us look at each one of them in detail:-a) Handling warehouse effectivelyThe sales plan has to take care that the stock of goods are ensured at all the times tohandle the demand. Hence the sales plan deals with the right forecasting of the demandand give it to the manufacturing department at regular intervals so that they have theclear picture of how much and when to product the products.Problems may occur when the goods are produced more or less than the requiredquantities by the market. In case of over production, goods lie in inventories there byadding up the inventory costs. In case of low production, companies may lose thecustomer to their competitors if the goods are not available. Hence the sales plan has toensure that the correct information is being supplied to the manufacturing departmentwhich meets the demand and supply effectively for the organization.Another important activity which the sales plan has to take care is to plan thewarehouse according to the tax structure. For example, in India if the product in a stateis not selling well and the stock has been lying idle in the warehouse, then taking theidle stock and selling in adjacent states may incur the tax of that state. Hence doubletaxation may take place and the profit on the product may go down to such a levelwhere it incur loses to the company. Hence knowing the taxation structure is veryimportant to plan the warehouse accordingly. Having the knowledge about the no taxzones also helps in decreasing the costs.b) Handling distribution channelsThe sales plan has to ensure that the regular checks are done so that the products maynot end up lying in the distribution channel i.e. with the distributors due to less demand.Sales plan has to take care that the goods are distributed in necessary quantities onlyand are not pushed excessively into the market when the demand is less. Excessivedistribution of good may damage the relationship between the distributors and thecompany.

This process is very critical in case of perishable goods like fruits, vegetables etc. If theylie more time in the distribution channels then the chance of them getting sold to the endcustomer gets decreased. It is the task of the sales plan to ensure that proper checksare done to remove excessive stock of perishable goods from the distribution channeland store them appropriately in inventories and sell them when the demand rises.c) Handling retail storesThe sales plan has to ensure that the sales staff visits retail outlet on monthly basis andcheck for the stock of goods. Products that are lying for more time means that morecosts have to be incurred for the shelf space. In organized retail, the shelf space comesat a cost and in case of unorganized retail, excessive stock means the company mightenter into credit situation with the retailer as he/she will not be able to pay. More creditin retail may lead to untimely payments and bad relationships.Hence the sales plan has to deal with such situations and ensure that the stock is soldproperly and any excessive stock has to be removed from the retailer place. Sales planalso has to ensure that the stocks are made available all the times incase when thedemand rises. Retailer interests have to be taken care of and ensuring required supplywill improve the relationships.d) Handling the price changesSince the tax rate may go up in developing countries in small time periods and alsoissue of inflation, the cost of the product needs to be increased to meet the operatingcosts and profit margins of the company. Hence the sales plan has to handle any suchsituations where the price needs to be increased. As on date the government allows 10-15 days time to sell the old stock above the MRP. Hence necessary sales activitieshave to be performed to deal with the price changes in the market place.SAQ 21) Explain the role of sales plan in B2B markets2) Explain the role of sales plan in handling the warehouse, distribution channel andthe retailer to make sales in profitable manner.13.4 SummaryIn this unit we understood that the sales planning process helps in achieving the salesin a profitable manner. We saw that the sales planning process consists of severalelements. The selling objective deals with setting realistic and attainable objectiveswhich the sales team would work for. We learned that forecasting plays a very importantrole in predicting the future sales and setting the realistic objectives. We understood that

the sales procedures, rules and policies provide guidelines to the sales representative inhandling the sales task effectively. We have understood that sales plan includes theprogramme which ensures that the necessary skill set is inculcated to the sales staff tohandle the sales. We have also understood the importance of sales strategy to win themarket place in all times. Later in this unit we learnt about the various types of salesplan depending upon the market, selling functions, customers, products and timeperiod. Finally in this unit we have discussed the role of sales plan in managing thesales in B2B and B2C market. We have also understood that the sales plan has toeffectively manage the warehouse, distribution channels, price changes and retailer inmaking the sales in a profitable manner to the company.13.5 Keywords1) IVR Interactive Voice Response, is a technologythat allows computer technology to interactwith humans2) Logistics Management of the supplies and transportrequired for an operation13.6 References1. Mukesh Trehan, Ranju Trehan (2006), “Advertising and sales management”,V.K. Enterprises, New Delhi, India13.7 Suggested Readings1. Matthew Schwartz (2006), “Fundamental of sales management for the newlyappointed sales manager”, Amacom, New York, USA.

UNIT 14 SALES ORGANIZATIONStructure14.1 IntroductionObjectives14.2 Introduction to Sales organization14.2.1 Need for sales organizations14.2.2 Sales organizations challenges14.3 Sales organization structures14.3.1 Different sales organization structures14.3.2 Principles of a sales organization14.4 Summary14.5 Keywords14.6 References14.7 Suggested Readings14.1 IntroductionIn the previous unit we have understood the role of sales planning process. We haveseen a sales plan for B2B and B2C markets and looked at various sales plan. In thisunit, we shall understand about the sales organization and its structure.Sales organization is important for the organization to ensure that the sales plan isexecuted in a profitable manner within the organization. Sales organization defines thespan of control within the organization. It also defines the hierarchy levels among theemployees and decision making system within the organization. We shall understand

the need for a sales organization structure within the organization to improve theproductivity of the sales department.Sales function is a job that requires to be monitored at regular intervals. The monitoringprocess would be done by the sales manager who has the span of control over thesales representatives. Sales job requires continuous motivation as discussed in earlierunits. We shall understand the role of sales organization structure in improving themotivational levels of the employees and making them more productive for theorganization.Every sales organization has some challenges to face internal and external to theorganization that it needs to face. Hence it is important to understand some of thechallenges which the sales organization structure would have to deal with in this unit.We shall understand that a sales organization is a function of product and sellingmethod. Depending upon these two factors the sales organization structure would bedifferent for the organizations. There are mainly two different types of sales organizationstructures namely flat and tall sales organizations. We shall understand about these andexamine the advantages and disadvantages. Every sales organization structure lies oncertain principles which results the structure to be more profitable to the organization.We shall look finally at some of the principles of sales organizations.ObjectivesAfter studying this unit you will be able to:-1) Explain the needs of a sales organization structure2) Explain various sales organization challenges3) Explain different sales organization structures4) Explain the various principles of sales organization14.2 Need for sales organizationExecution of the sales plan largely depends upon the nature of the sales organization. Asales organization is essential to plan sales functions. Sales organization provides aframework to carry out the sales plan in an effective manner. The development of asales organization is a continuous process which depends upon changing marketenvironment and also on the company’s interests.14.2.1 Need for sales organizationSales organization is essential for many reasons. Some of them include the following:-a) Determining span of controlFrom day to day the organization size grows with respect to growing market size anddemand. In a small organization there could be a single sales manager who takes careof the entire organization sales and the representatives. But when an organizationgrows it would be practical for a single sales manager to monitor the entire sales andthe representative, hence the sales would be divided based on some segments.Segments can be formed on the basis of area, product or even customers profile. Highvalue customer may be handled by a separate team of sales representatives or the

country would be divided into north, south, east and west territories and handledseparately by separate sales managers. Hence there is a need for determining the spanof control for the employees in the organization and define which employee is under thecontrol of which manager.Another importance of having a well laid out span of control is to build strongrelationships within the organization and establishing proper communication channels.b) Defining the decision making processSales organization also helps in identifying who can take the decisions related to thesales and the customer accounts. There are two main ways of assigning the power tomake decisions regarding the sales and the customer accounts. They are centralizeddecision making and de-centralized decision making.In a centralized decision making organization, the right to make a decision lies with thetop management of the organization. The top management may or may not consult therespective sales team and the managers before taking the decision. For example, for anorganization that has twenty branches in the country, but any decision related to thesales and customer accounts in these twenty branches will be taken by the topexecutives who sit in the head office. This type of centralized decision makingorganization works well when the size of the company is less.In a decentralized decision making organization, the right to make decision lies with themanager of the individual branch and the manager may or may not take the advice ofthe top management before making the decision. However any important decision suchas setting up a new sales territory will be informed to the executives in the head office,but most of the decisions which need to be taken on a regular basis will solely taken bythe manager itself.c) Assigning specialtiesSales organization structure determines the tasks and roles for the sales people. A setof activities will be put under a role which the sales representative is expected tospecialize. For an entry level, middle level and the top level the set of activities andspecialties are defined by the sales organization. For an example, in sales organizationthe pre-sales executive is responsible for RFP handling, coordinating the team orstakeholders within the company, monitoring the time, checking for the deadlines forsubmission of proposal and establishing proper communication channels amongseveral team members to carry out the RFP handling process effectively and efficiently.The role of the sales team will be defined by set of activities such as travelling to theclient side, interacting with client face-to-face, getting the RFP, submitting the RFP,

knowing any issues with the proposal, arranging video/ audio session between the clientand organization employees to better understand the client’s requirement and finallymanaging to get the lead for the organization.Hence the set of activities is known to the employees who join the organization as theywill be assigned some specialty.d) Making a career pathAfter the employee or the sales executive is assigned with a set of tasks under thespecialization, he/she is expected to master the execution of duties in an effective andefficient manner. Once the employee has excelled in the given specialization, he/shewill be promoted to the next level according to the sales organization structure.For example, in many companies when the employee has performed well in the presalesrole which is mostly done in off-site i.e. in the country where the company isestablished will be promoted to a sales role where the employee would get the chanceto travel to the client location if the client is in another country. All the expenses wouldbe taken care by the organization.e) Motivating the employeesSince the career path is well known to all the employees, they try to work hard and withdedication to reach higher levels according to the organization structure. Also in thedecentralized organization, due to the increased authority the employees would bemotivated enough to work harder and generate leads that match up to companyexpectations.14.2.2 Sales organization challengesSales organization aims at improving the sales operations by defining the span ofcontrol and assigning duties and tasks to the employees of the organization. However,each and every sales organization structure may not be appropriate to the organizationand may also result in lower productivity in the organization. Hence, there are somechallenges for the organization which have to be taken care before selecting a salesorganization structure which aims at improving the productivity of the organization. Letus discuss some of the challenges in detail.a) Selecting the appropriate sales organization structureIn an organization, the sales organization is a function of mainly two attributes namely:-i) Productii) Selling method : Direct or In-direct sellingSame sales organization structure may not be effective for each product or sellingmethod. Hence identifying the right sales organization structure which is effective for thetype of product and selling method is a challenging task.For example, if the product involves an indirect sales method, let us say through retail

outlets, having a centralized decision making process may not work effectively inmaking day to day decisions in sales. Hence the organization structure may require adecentralized system. Also for the non-durable goods which are also called as softgoods, the decisions for sales have to be taken quickly and most of the time the salesrepresentatives or manager at the small division level would take the decisions and theninform to the higher authorities. Here also some level of decentralized organizationstructure is required.Some organization like IT companies that create services for their clients follow mostlya centralized decision making process. Here the clients would be companies who willinvest heavily in acquiring the proprietary softwares and hence any decision regardingthe client account would require higher authority permission. For example, if you aregoing to increase the cost for the software, then the permission would be required fromthe higher authorities or executives at the head office to implement your decision. Sincethese sales fall under industrial sales, it would be appropriate to have a decentralizedsystem of decision making where the highly qualified and experienced employees makethe decision.For consumer sales, as discussed earlier a decentralized decision making processwould be beneficial as the real problems would be faced by the lower level employeesat the branch offices and giving the decision making authority to those managers wouldsolve the problems effectively.Sales organization also deals with the reporting structure between the employees of theorganization. The same reporting structure may not be applicable for the direct salesand the indirect sales all the time, hence the sales organization structure needs to bedifferent for direct and indirect sales.b) Accommodating the sales management trendsThe way how the sales are done differ from time to time. As discussed in previous units,the sales of the organization initially focused on the product rather than the customer.Nowadays, the customer has become more important than the product itself. Product isseen just a single factor in making the sales effectively. Most of the sales functionsinvolve in managing the customer relationships with the organization. You can refer tothe CRM module to recognize the importance of customer relationships for anorganization.Thomas (2009) mentions some of the sales management trends that have occurred in

the changing world of sales management. Let us discuss few of them and the way thesales organization structure have to accommodate those trends in the organization.Some of the sales management trends include:-i) Individuals Teams:In the changing world of sales management, the productivity for most of the industrialand to some extent in consumer sales depends on more than one sales representative.Hence there is a team which is responsible to handle the sales function. In such a case,the decisions would be appropriate if the entire team advice is not taken into account. Inindustrial sales, centralized decision making process exists most of the time, but thedecision making executive has to take the feedback of the team who are involved in thesales function. Hence, the sales organization structure should be flexible enough toaccommodate that change in its structure.Another important issue which the sales organization structure has to address is thespan of control. This factor becomes very important and may lead to problems when theteam members are from different departments. Since the team members are fromdifferent departments, their reporting would be to their respective managers in theirdepartments. For example, an industrial sale may involve the team members fromdifferent departments like sales, technical, testing, finance, marketing etc. In such ateam the sales manager who is looking after the sale cannot force the technical team orthe finance team to do their work within given time frame as he may not have theauthority. Hence the sales organization structure has to clearly mention the span ofcontrol in such situations.Another important issue is to identity the team manager who can clearly take the entireresponsibility. Lack of leadership may result in many fights between several teams whodon’t want to take the responsibility when the sale fails. The sales team may blame thetechnical team for giving a solution which the client was not impressed and the technicalteam may blame the finance team for being the project costs too high and so on.Hence, such situations have to be avoided by creating a proper sales organizationstructure.ii) Local Global:The same sales organization structure may not work effectively when the companymoves from being a local player to a global player. For example, let us assume that acompany manufactures consumer goods both durable and non-durable. It also dealswith the industrial and Institutional sales with several products and services in its kitty tooffer. Such a company may follow an organization structure where the local market may

be divided into regions and for each region a sales manager would be appointed. Thissales manager might be given the responsibility to handle all the products that thecompany offers to the customers i.e. let us say, the sales manager of the Southern Indiais responsible for the sales figure for all the products and services of the company.Now the company plans to move into markets other than the local country where itmight be the strong player. During globalization the company may not introduce all theproducts in the global market and might only introduce only few products/ serviceswhich have been a huge success in the local market and hence the organizationstructure may not be the same. A better sales organization structure would be to dividethe products or services and appoint a sales manager responsible to take of only aparticular product or service rather than all the products. Since the company is sellingthe products or services for the first time in global market, it is appropriate to have thesales managers depending upon the product rather than the regions. This leads to thechanges in the sales organization structure.SAQ 11) Explain the needs of sales organization structure for motivating employees in anorganization2) Explain span of control and various decision making systems3) Identify the outcomes of selecting an inappropriate sales organization structure tothe organization.4) Describe some of the management trends that the sales organization structurehas to accommodate.14.3 Sales organization structuresDepending upon the type of product and selling method the company may adopt thesales organization structure. Many a times, the market situation also results in changingthe sales organization structure. Let us understand some of the sales organizationstructures in the following section.14.3.1 Different sales organization structuresSales organization structure differs depending upon the span of control and the numberof management levels. Thomas (2009) defined two types of sales organizationstructures as shown below:-Let us understand them in detail:-SalesOrganizationStructuresFlat salesOrganizationTall salesOrganizationa) Flat sales organization

In a flat sales organization structure the number of management levels tend to be lesswhile compared to the tall sales organization structure. The organization structure isexplained by the following diagram:-Fig 14.1: Flat sales organizationIn such a structure the span of control is large for each sales manager thereby creatinga de-centralized system. Since the management levels are less, the reporting structureis also less complicated. Lot of companies try to have a flat sales organization structurewhere they can decentralize the system and give more authority to the employees at thelowest level to take most of the decisions without the influence of the higher authoritiesat the head office. There are several advantages and disadvantages of this salesorganizational structure. Some of the advantages include:-Increased speed of operations: since most of the decisions can be taken at thebranch level and doesn’t require the higher authority permission, the day to dayactivities can be done efficiently.Better communication channels: Since the number of levels between the topmanagement and the middle management are less, this leads to a better andfaster way of communicating the information in the organizationDecreased costs: Since the number of levels is reduced, the number ofemployees to manage the organization also decreases. This leads to the lowerwages to be paid and fewer resources like office space, computers etc. would berequired.Some of the disadvantages include:-Lesser control over employees: Due to decentralization, lesser control wouldbe there on the decision making process which may affect the entireorganization.Lesser promotion levels: Due to the decreased number of levels, theemployees at the bottom level have to work hard to earn a promotion. Severalemployees work hard and stay in their current positions are there are novacancies in the higher posts. This might become a de-motivating factor for theemployees at work place.b) Tall sales organizationIn a tall sales organization structure, the number of management levels tends to bemore while compared to the flat sales organization structure. The organization structureis explained by the following diagram:-Fig 14.2 Tall sales organizationA tall sales organization, levels it has a centralized control of decision making andcarrying out daily operations due to more hierarchy. Some of the advantages of the tallsales organization are:-More promotion levels: Due to more management levels the employees canhave a clear idea of to which level they will be promoted next. This leads togreater satisfaction levels and motivates the employees to work effectively andefficiently.

Increased responsibility and control: Due to lower span of control eachemployee knows clearly their managers and the manager knows clearly whichemployees or sales representatives they have to take care of and control. Thetasks are defined clearly to the employees who will be responsible for theoutcomes.Some of the disadvantages include:-Increased costs: Due to the more management levels, more employees need tobe hired and hence more costs would be incurred to the organization.Decreased speed of operations: since the decisions have to approved by thehigher authority due to centralized decision making process, the operation mighttake place slowly when compared to the flat organizational structuresMore supervision for employees: This might be a good from the organizationpoint of view to improve the productivity, but from the employee point of viewmore supervision may become a de-motivating factor.14.3.2 Principles of a sales organizationMukesh (2006) defines several principles of a sales organization. Let us look them indetail:-a) Principle of unity of objectives: This principle states that within an organizationthere needs to be a unity of objectives. An organization may have several sales suborganizationsdepending upon the product and the selling method. Every sales suborganizationhas a set of objectives that it wants to achieve for the organization. Hencethere would be several sales objectives within an organization. The principle states thatall the objectives of the sales sub-organization must have the objectives linked to themain objective of the organization. If the main objective of the organization is to grow atleast by 15% every year, then all the objectives of different sales sub-organization hasto work to attain the main objective.b) Principle of Specialization: This principle aims at matching the employees skill setto the right set of tasks and in turn the right specialization. If the employees in theorganization are given different set of tasks or specialization in which they have no skillset to perform the duties may result in low productivity for the organization. Organizationmay have to spend more money, resources and staff to train the employees to developthe skill set. In order to avoid such problems it is the duty of the sales manager and HRto clearly identify the skill set of the employees and assign those tasks which match theskill set. This results in more productivity and employee satisfaction.c) Principle of coordination: In an organization, the sales organization structureshould provide a framework where it can easily integrate itself to various otherdepartments within the organization. This can ensure that the products/ services arereached in time to the customer. After the sale, if the technical team were not able toprocess the customer requirement, then the technical product may not reach thecustomer within the required time period. Hence there should be some sort of

integration between the sales department and the technical department so that theproblem can be identified and the technical team may be reminded to speed up theoperations. CRM systems can be implemented within the organization to seamlesslyintegrate the entire department within the organization and ensure the timely informationbetween various departments.d) Principle of parity of authority and responsibility: This principle states that if anemployee is given a set of tasks to perform, he/she must be given the required level ofauthority to perform those tasks. For example, if a pre-sales executive is asked toprepare the company competitive advantages presentation for the client to present inthe sales meetings, and then he/she should be given the access to the knowledgemanagement system of the company. Every company has the KM systems which actslike a repository of the information about the previous projects executed successfully bythe company. Hence the authority has to be given that is required for the task tocomplete.e) Principle of flexibility: This principle states that there can be many external andinternal factors which might affect the organization operations. Hence the salesorganization structure should be flexible enough to accommodate any required changesin future.For more principles, you may refer to the book mentioned in the reference section.SAQ 21) Explain various sales organization structures2) Explain the principle of coordination and identify the problem due to lack ofcoordination to the sales department14.4 SummaryIn this unit we understood about the need of sales organization in improving theproductivity of the organization. We learnt that determining span of control is animportant task which the sales organization structure would determine. The salesorganization would also define whether the organization would follow the decentralizedor centralized system of decision making process. We have understood that the salesorganization helps in assigning the specialties to the employees so that they can masterthe set of tasks given under the specialty. Once the employee excels in the given jobhe/she will be promoted to the next level. We have looked at how the sales organizationmakes a career path for the employees and motivate them to improve the productivitylevels for the organization. We have also looked at various challenges of the salesorganization structure. We have understood that sales organization is a function ofproduct and the selling method. We have recognized the importance of salesorganization to be flexible to accommodate any required management trends. Later in

this unit we have understood the various types of sales organization structure namelythe flat and the tall sales organizations and looked at various advantages anddisadvantages of the same. Finally in this unit we have looked at various principles asales organization must possess to ensure better productivity levels for theorganization.14.5 Keywords1) RFP A document which invites the vendor to submitthe bid for the projects including the solutiondocuments2) CRM Customer relationship management system isan information system which integrates thevarious sales departments with otherdepartments within the organization forinformation sharing about the customer.14.6 References1. Mukesh Trehan, Ranju Trehan (2006), “Advertising and sales management”,V.K. Enterprises, New Delhi, India2. Thomas N. Ingram, Raymond W. LaForge, Ramon A. Avila (2009), “Salesmanagement: analysis and decision making”, M.E. Sharp Inc., New York, USA.14.7 Suggested Readings1. Darlene M. Coker, Edward R. Del Gaizo, Kathleen A. Murray, Sandra L. Edwards(2000), “High performance sales organizations: creating competitive advantagein the global market place”, Tata McGraw Hill, USA.

UNIT 15 SALES FORECAST AND SALES QUOTASStructure15.1 IntroductionObjectives15.2 Introduction to Sales forecast15.2.1 Importance of sales forecast15.2.2 Preparing for a sales forecasting process15.3 Sales forecasting methods15.3.1 Non-qualitative forecasting methods15.3.2 Quantitative forecasting methods15.4 Planning the sales quotas15.4.1 Factors in setting sales quotas15.5 Summary15.6 Keywords15.7 References15.8 Suggested Readings15.1 IntroductionIn the previous unit we understood about the sales organization structure its challenges.In this unit we shall discuss about the sales forecast and quotas. Sales forecast is oftenseen as an important function in an organization which provides valuable informationabout the market potential in future.We shall discuss the importance of sales forecast for the organization and the benefits it

provides. Planning the sales forecasting process is very important as the outcome of theentire forecast depends upon how well the planning has undergone. During the planningstage, the data sources have to be determined and the right forecasting techniques areto be used. Based on the quality and quantity of the data and the method of forecastingemployed, the accurate information about the market potential and various othermanagement trends would be determined.There are mainly two broad categories of forecasting namely non-quantitative/qualitative methods and quantitative methods. We shall several qualitative methods likejury of executive opinion, Delphi and scenario methods of forecasting. We shall alsolook at various quantitative methods like time series, regression and correlationmethods.Planning the sales quotas is an important function of the sales manager whichdetermines the level of achievement of the organization objectives. Several factorsgovern the way the sales manager assigns quotas to the employees. We shallunderstand that market size, competition levels, organization objectives, skills of thesales people and several other factors play a very important role in planning the rightsales quota by the sales manager.ObjectivesAfter studying this unit you will be able to:-1) Identify the importance of sales forecast2) Explain various issues that have to be analysed in the sales forecasting process3) Understand various non-quantitative/ qualitative methods of forecasting4) Understand various qualitative methods of forecasting5) Discuss the importance of a sales quota planning for the organization6) Explains various factors to be analysed in setting the sales quotas.15.2 Introduction to sales forecastingSales forecasting plays a very important role in setting the objectives of the salesdepartment. The accuracy in forecasting becomes the backbone for planning thecompany operations and business plans. Sales forecast provides the organization theinformation about the future sales which can help to plan the marketing mix andgenerate required leads. Let us look at the need of sales forecasting and the benefits itprovides to the organization.15.2.1 Importance of sales forecastIn the earlier times the demand was more and the supply was less. Hence there wasnot much need of a sales forecast in the organizations. As the time progressed, due tothe industrial revolution the companies were able to manufacture the goods in aneconomic way for the customers. Due to the decreased costs of operations more andmore players have entered into the market to serve the customer needs and wants.During the present times the number of players for almost every business is more and

the customers are increasing day by day, creating better opportunities for the industry toexpand. More and more companies are increasing their territories through expandingtheir business operations and business acquisitions. Hence, planning the operations ofthe company and identifying the right sales and marketing strategies have become animportant task for the managers in the organization. Sales forecast would help in betterplanning for the organizations in future. The following are some of the advantages of asales forecast for an organization:-Sales forecast helps in getting information about sales figures for theorganization in futureSales forecast help in understanding the business trends from time to time. Forexample the Health service industry is increasing adopting the CRM system andmany hospitals and medical institutions are planning to adopt in future to servicethe customers in a better way. The increase in sales for the CRM systems wouldclearly help the CRM software vendors to understand the trend and plan theiroperation accordingly.Sales forecast helps us in understanding the customer preferences. Forexample, the DVD and CD player sales are increasing but the forecast providesthe information that percentage increase in DVD player market is much morethan the CD player. This provides the information that most of the customers aregoing to prefer the DVD player over the CD player and based on this, companiescan align their manufacturing department to produce more DVD and less CDplayers.Sales forecast helps us to know the health of the industry as a whole. Thepercentage increase in sales clearly provides whether the industry is going tomaintain their balance sheets in a profitable manner and according to thecompany objectives.Sales forecast helps in planning the manpower in the organizations. If the salesforecast shows that the market for the net books are increasing and the marketfor the desktops are decreasing, then the organization can plan to train moresales representatives to sell the net books rather than the desktops.Sales forecast helps in hiring the right number of employees in the organization.If the sales forecast informs that the industry is going to witness a high growthrate in next year, then the organization can plan to hire more staff to serve thedemand in future. If the sales forecast predicts bad times for the organizations,then the organizations may plan to manage the expenses and the balancesheets.Sales forecast helps in planning budgets. Once the organization identifies thepromising businesses in future, it may invest the right amount for advertising andcreating more brand awareness.Hence we have understood that sales forecast helps the organization in many ways. Aright sales forecast is very important and the sales forecasting errors may prove fatal forthe organization. Let us look at the necessary preparation required to start a bettersales forecast and the way to utilize the information provided by it.

15.2.2 Preparing for a sales forecasting processSales forecast helps the organization in many ways as discussed earlier. In this sectionwe shall understand several issues that have to be analyzed before, during and afterthe sales forecasting process. Some of the issues are:-a) Identifying the data sources: Identifying the data that would be used in forecastingtechniques is a challenging task. The data sources can be primary and secondary.Primary data can be collected through the market surveys and the focus groups. Thismight involve more expenditure as the data collection process is started from scratch.On the other hand, secondary data can be the data other than the organization sources.Economic indicators of the region like population figures, GDP growth rates, stockprices, unemployment rates, growth rate of other related industries who producessupplement products etc can be used as a secondary data for forecasting. The saleshistory within the organization is often considered as the important data source which isused for forecasting.b) Deciding the frequency of forecasting: It is good to have the right market potentialin future. Hence so forecasting every month wouldn’t be practical for manyorganizations due to high costs that are incurred and the manpower spent. Hence theorganization has to decide the time period of forecasting and planning accordinglybased on the information of the forecast. An ideal time to forecast would be everyquarter or half-yearly or yearly. If the market dynamics and the customer base changesvery fast then having the quarterly forecast would sound good. If the market is having aconstant increase for many years, then a yearly forecast would be better.c) Choosing the forecasting technique: This is a serious question which everyorganization would debate before adopting one. John (2005) describes that there aretoo many forecasting techniques available and there are more than 70 different types oftime series techniques for forecasting. However before selecting a forecastingtechnique the organization has to look at the advantages and purpose of the technique.The company may check whether the forecasting technique served the purpose in thepast or else take the recommendations of an industry expert before selecting one.Choosing forecasting techniques by an organization depends upon the variables ofinterest that they would like to monitor in the forecast i.e. whether the organizationwants to know the customer preferences or the sales trends or the market competitionand so on.d) Planning your efforts after forecasting: After the forecasting process you wouldget the information about the regions where the market potential is increasing anddecreasing. You will be able to know your strengths and weaknesses and will plan to

improve the way the business is conducted. The employees have to match the forecastto the regions of profitability and objectives of the organization. All the regions in thecountry may not be equally profitable for the organization. The regions which you pickup to invest the efforts of the employees would depend upon the following factors:-Highly profitable regionsEasier to gain the competitive advantageAbility to monitor the regions easilyOptimal transportation and management costsSAQ 11) Explain the need of sales forecast for an organization in improving theproductivity levels.2) Explain various data sources that are utilized for a sales forecast3) Discuss various factors which help the organization in planning the efforts afterforecasting.15.3 Sales forecasting methodsAs discussed earlier there are a huge number of forecasting methods and so discussingall of them wouldn’t be possible. Hence let us see at some of the commonly usedforecasting techniques described by Jackson (2000) who categorized under nonqualitativeand qualitative forecasting methods.15.3.1 Non quantitative forecasting methodsNon-quantitative or qualitative methods of forecast are used when the organizationsdoesn’t have sufficient amount of primary or secondary data to measure to conduct theforecast of the variables in interest. Some of the non-quantitative forecasting methodsinclude:-Let us discuss these methods in detail.a) Jury of executive opinionIn this method the organization would ask the senior executive to forecast the salesfigures. After getting the figures from several senior executive the average of thoseQualitativeForecastingMethodsJury of ExecutiveOpinionScenarioMethodDelphiMethodfigures are determined. This will remove any errors to an extent. The average figure isconsidered as the forecast information and the strategies are adopted accordingly.b) Delphi methodThis method has been extensively used by companies for forecasting in the past and isstill used in the present. In this method a group of knowledgeable people is formed

where each group member doesn’t have any contact or know the other group member.From such a group the forecast is requested from each member of the group. Themoderator of the group is responsible to collect the entire replies and collaborate to forma single document mentioning the group estimations of the forecast and themanagement trends. This document is circulated to all the group members and they arerequested for comments. Again the moderator collects those comments and analyzesthem and prepares a document with necessary changes and circulates back to thegroup members for comments. This process repeats until the moderator feels that themajority of the group has reached some consensus. It should be noted that the outputmay not have a single forecast figure but can have a set of figures which most of themembers agree upon.c) Scenario methodIn this method the assumptions are made for the possible scenarios that would prevailin the industry in future. For each possible scenario the indicators or factors areselected. The behaviour of those indicators or factors in the past is analysed. Basedupon the analysis the future business environment is predicted and sales are estimated.For example, for the computer industry the sales of newly launched tablet PC’s are tobe forecasted. For this the possible future scenarios are predicted such as increase inthe speed of the tablet PC making them at par to the laptops or net books, decreasedcost of the products, increasing number of players in this business, better technologiesto provide all the features which a laptop posses, improved screen resolutions andgraphics etc. The effect of these indicators upon the sales is understood and the futuresales are predicted under each scenario.15.3.2 Quantitative forecasting methodsLet us now discuss some of the quantitative forecasting methods. These forecastingmethods make use of the data and perform certain mathematic calculations and providethe sales forecast. The credibility of the forecast depends upon the quality and quantityof data that is being provided to the method. Some of the methods include:-Let us discuss them in detail.a) Time series analysis methodTime series analysis involves examining the organization’s past or historic data andmaking the forecast about the future sales. The pattern may be divided among fourbasic components such as trend, seasonal variation, cyclical effects and erraticchanges. Trend analysis aims at observing the past trend in sales figures and predicting

the future sales figure. It is assumed that the trend would continue in future. There arebasically three methods to do trend analysis namely percentage change, movingaverage and curve fitting. The next component, seasonal variation, deals with thechanges in sales figures during a particular season in the past. Hence, if the sameseason runs in future the expected sales figures can be calculated. For example, thesale of Air conditioners is high in summer as compared to winter season. The nextcomponent is cyclical effects, which deal with any changes in the sales figures otherthan the seasonal variation. If a behavior which a repeating every year is observed inthe historic data, such changes can be observed in future too. Finally the erraticQuantitativeMethods ofForecastingTime seriesanalysisRegression andcorrelation analysischanges are those which are observed in the sales figure without any pattern or regulartime intervals in the historic data. The changes may occur due to market situation likeinflation or less raw materials or poor staff etc.b) Regression and correlation analysisRegression analysis is used to find the value of one variable with respect to thechanges in another variable. In sales forecasting, the sales forecast can depend uponseveral variables and regression analysis aims at finding out the degree to which thesales depends upon the other variables. In this context, sales potential is the dependentvariable and the other variables are the independent variables.During the regression techniques, we would do a correlation analysis to find out thenature of relationship between the dependent and the independent variables. The rangeof correlation co-efficient ranges from -1 to +1 where -1 denotes negative relationshipand +1 denotes a positive relationship. For example, the improvement in literacy rateindicates that the demand for computer product also increases. Hence the literacy ratewhich is an independent factor is having a positive correlation with the dependent factorsales potential. For many products or services, the price would show a negativecorrelation with the sales i.e. increase in price lower the sales figure.If we know the list of independent factors then using a correlation analysis we canidentify the nature of relationship and using a suitable regression technique we canidentify the sales potential in future. The simplest regression technique is the “LinearRegression Analysis”. For more information about various forecasting techniques youmay refer to the books mentioned in the reference and suggested reading sections.SAQ 21) Explain the differences between the qualitative and qualitative method of

forecasting and identify situations when you would use them.2) Explain Delphi method of forecasting3) Discuss the various components of the time series analysis method15.4 Planning the sales quotaSetting the sales quotas to the sales representatives is an importance task for the salesmanager. Setting the right quota motivates the employees to achieve them and havethe bonuses. On the other hand, setting the quotas that are too small or too large toachieve may de-motivate the sales representatives. Hence planning the quotas andassigning them involves several factors. Let us understand such factors in detail.15.4.1 Factors in setting sales quotasPlanning the sales quotas involves identifying the right quota depending upon severalfactors and assigning them to the sales representatives. We know that salesrepresentatives of each region or territory may not be assigned the same sales quota.Let us understand the list of factors which help in setting the sales quotas to salesrepresentatives. Some of the factors include:-a) Market size and potentialFor each territory or region the market size and potential must be analysed. The marketpotential can be known by the forecasting techniques which were discussed earlier. TheOnce the existing market size is determined, quotas have to be planned accordingly sothat the market potential is fully utilized to achieve the maximum productivity levels. Itmust be remembered most of the times that the sales quotas would be proportional tothe size and potential of the market. The quotas would not only depend upon the sizeand potential because various other factors have to analysed which will be discussed inthis section.b) Level of competitionEven if the market size and potential is huge, the sales quotas may not be high due tothe level of competition. For example, if the potential for the mobile connections in aparticular region is 1 million, then you cannot assign quotas to grab that 1 million.Quotas must be realistic in nature taking the account of competition. If there are 5-6mobile operators then assigning the quotas to generate 30 – 40 percent of the potentialis practical. Again the quotas depend upon another factor current position of theorganization in that region.c) Current position of the organizationIn the previous example, gaining a 30-35 percent market potential is a practical task ifthe organization is one of the top players in that region. But if the organization is a lowlevel player or an entrant, then getting 10 percent of the potential also would be a huge

task. Hence the sales quotas have to be planned accordingly based upon the currentposition of the organization.d) Skills of the sales personAll the employees within the organization may not be able to generate huge number ofleads. Hence, setting same quotas for all the employees may not be achievable andmay become a de-motivating factor. The sales manager has to plan the quotasaccording to the skill of the sales manager and may increase it in future. The newemployee may need to have a different sales quota while compared to the alreadyexisting employee. If the quotas are not achievable, some time should be given by thesales manager to improve the selling skills and help in achieving the sales quota by thesales representative. If required necessary training should also be provided.e) Organization/ market objectivesWhen an organization expands to new territories or launches new products, it needs to,plan the sales quotas very carefully. When it enters a new territory, the organizationobjective may be to test the market or to become a leading player. Hence sales quotashave to be planned accordingly with the objectives. If the organization objective is tohold in the market in difficult times, the sales quotas may not be necessary to increasefrom year to year as the objective of the organization is to generate the same saleseach year. Hence, the organization objectives have to be kept in mind by the salesmanager before planning the sales quotas to the representatives.SAQ 31) Explain the role of quotas in managing the sales force2) How would you plan the sales quotas based on the market size and potential?3) Discuss the planning of sales quotas based on competitive level and skills of thesales representative.15.5 SummaryIn this unit we understood the importance of sales forecast for the organization inimproving the productivity. We observed that sales forecast determines the organizationstrategies to win the market place and manage the internal resources like man power,budgets etc effectively. Sales forecasts also help in identifying the customer buyingbehaviour and the health of the industry. We later identified that various factors such asselecting the data source and right forecasting techniques play an important role toforecast correctly about the market potential. We discussed about importance ofplanning the efforts in a right manner after the forecast. Later in this unit we havediscussed the sales forecasting methods. We also discussed several qualitativemethods like jury of executive opinion, Delphi method and scenario method offorecasting. In the qualitative methods we learned about the time series, regression andcorrelation analysis methods of forecasting. We also examined the four components of

time series analysis. In the final section we understood the need of planning the salesquotas. We studied various factors such as market size and potential, level ofcompetition, current position of the organization in the market place, skills of the salesperson and organization/ market objectives in planning the sales quota in an effectivemanner for the organization and the sales force.15.6 Keywords1) GDP It is the indicator of the economy of the countryand is equal to the amount of goods orservices produced by a country over a periodof time, usually 1 year.15.7 References1. John T. Mentzer, Mark A. Moon (2005), “Sales forecasting management: ademand management approach”, Sage Publications, California, USA.2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,Prentice Hall, New Jersey, USA.15.8 Suggested Readings1. Spiro, Stanton, Rich (2003), “Management of a sales force”, Tata McGraw Hill,New Delhi, India.

UNIT 16 SALES BUDGETING AND CONTROLStructure16.1 IntroductionObjectives16.2 Sales Budgeting Concepts16.2.1 Financial concepts in budgeting16.2.2 Issues in sales budgeting16.3 Monitoring and controlling the sales budgeting16.3.1 Need for a sales budgeting control system16.3.2 The need of variance analysis and control in sales budgets16.4 Summary16.5 Keywords16.6 References16.7 Suggested Readings16.1 IntroductionIn the previous unit, we have understood sales forecast and sales quotas. In this unitwe shall understand about sales budgeting and control. After the successful salesforecast by the organization we arrive at the sales figures for the next time interval.Depending upon the sales figure, budgets are created for various departments withinthe organization. The marketing department would get more budgets for advertising andsales promotions if the sales forecast predicts higher sales in the next year. Similarlythe budget allocation for the sales department also depends upon the sales forecast.Once the sales figures are known, the expected revenue and net profit are estimated.This gives a fair idea of the growth rate of the organization for the next year. Dependingupon the increase of decrease in net profits, the budgets would be increased or

controlled respectively in all departments. In this unit, we shall look at various financialconcepts of budgeting and the manner in which net profit is generated. All theexpenses within the sales department and other departments should be taken intoaccount to arrive at the net profit. We shall understand that expenses are of two typesdirect and indirect expenses. We shall just look at the basic financial concepts and indepthunderstanding is outside the preview of this unit.Sales budgeting have to deal with several issues like identifying the right budgetallocation according to region wise, dealing with NPA accounts, developing newterritories, identifying and analyzing the variances, creating new revised budgets etc.Hence understanding these issues is an important task and the analysis should be doneat regular intervals.In the next half of the unit we shall understand about controlling the budget by setting upthe control systems. These systems not only take care that the expenses doesn’t overshoot the budget allocations but also help in analyzing the competitor’s activities andbudget allocation mechanisms. Control system should be able to monitor the customerpreferences and help in providing valuable information for the sales department.ObjectivesAfter studying this unit you will be able to:-1) Explain various financial concepts in budgeting2) Identify various issues in sales budgeting3) Recognize the importance of a control system for the sales budgeting4) Explain the need of various control in sales budgeting for the sales department16.2 Sales budgeting conceptsSales budgeting would be an important task after the sales forecast. Once the salesfigure for the next time period are known, the revenue for the organization would becalculated.16.2.1 Financial concepts in budgetingVarious expenses would be taken into account before arriving at the operating profit andthe net profit for the next time period. Expenses for an organization would be of twotypes :-Direct expenses would include those expenses which are directly involved in thecreation of the product or service. Some of the direct expenses would include theType ofExpensesDirectExpensesIndirectExpensesmaterial required for the product or resources used by the service, wages of the directlabour i.e. labour involved in creating the product or service, travelling costs of the direct

labour etc. On the other hand, indirect expenses include those expenses which are notdirectly related to the production of goods or services. For example, sales activities,marketing activities, wages of sales representatives etc. fall under the indirectexpenses. The revenue can be identified by multiplying the number of units with its cost.After identifying the expenses and revenue and removing the taxes we get the net profitfor the organization. One of the primary objectives of sales budgeting is to see that thenet profit doesn’t go below the organization objectives. For most of the organizations theobjective for net profit margin would be at least 10-20 percent.16.2.2 Issues in sales budgetingThere are several issues in budgeting and allocation which needs to be analysed. Salesbudgeting are mainly done at the macro level but the actions takes place at the microlevel. The top management allocates the budgets and may take the feedback from thelocal sales managers which again depend upon whether the organization follows acentralized or decentralized decision making process. There can be many other issueswhich the sales budgeting process has to look at. Some of them are:-a) Establishing the need for budgetThe budget would be established for different regions depending upon the need. Hencethe sales manager should be able to establish the need for budgets. The real activitiesof the sales process happens at the micro level i.e. at the branch level and theexpenses in incurring the sales would be best known by the sales managers at a branchlevel. The exact need of budget should be established by taking into account for all theexpenses such as travel expenses, office rents and bills for electricity, phone lines etc.The budgets should be allocated at the local level by taking the feedback from the salesmanagers.b) Having multiple views of the sales budgetThe sales budget created should clearly identify the sales from multiple views such as:-Sales by the region/ territorySales by the product or serviceSales by the sales representativeHaving multiple views will help in answering some of the questions about why the salesbudgeting is not as per the expectations of the sales forecast.c) Identifying NPA’s and planning the eventsHaving created the sales budgeting from multiples views enables the sales manager to

identify the NPAs in his region/ territory. In sales we refer Non-performing assets asNPT which stand for Non-performing territories. For example, the overall sales figure forthe city is increasing but due to multiple views the sales manager can easily see thatone of the territories in his region is showing a down trend in sales figures. Hencenecessary action can be taken to improve the sales figure. It is understood in businessworld that a market leader will work to develop new territories and may leave theterritories which are under performing whereas a market follower would safe guardexisting underperforming territories and strive for development. The NPA can be thesales representative too if they are not able to attain their sales quotas. Hence salesmanager can identify such representative and give necessary training to improve theirproductive levels.d) Monitoring the forecasted figures to the actual salesMost of the companies divide the yearly forecast figures into monthly sales which couldbe attained by the sales representatives if they achieve their assigned quotas. But therewould be chances that the forecast may go wrong and the quotas set were not realistic.In such cases it is always important to monitor the actual sales figures with theforecasted sales figures at regular intervals. Sales manager may use the varianceanalysis technique like ANOVA to check the variance.e) Time interval for monitoring sales budgetsThe time interval to check for variance and sales budgeting depends upon the salesmanager and may be done daily or weekly or monthly or quarterly or half yearly oryearly. However one must understand that too frequent monitoring may result inwastage of time and money on trivial or uncontrollable factors. On the other hand, tooloose monitoring process may result in lower performance levels as it’s the humannature to adopt slackness when the control system is weakLet us now discuss about the control system and its functionality for the sales budgetingprocess.SAQ 11) Explain the direct and indirect expenses for an organization2) Explain the advantages of having multiple views of the sales budgets3) Identify the importance of timely monitoring of a sales budget16.3 Monitoring and controlling the sales budgetingMonitoring and controlling the sales budget is an important task to maintain a healthybalance sheets in an organization and meeting the organization objectives. Having anappropriate timeframe for monitoring is very important for the organization. Too frequentmonitoring implies wasting time and money on trivial or uncontrollable factors. Whereastoo loose monitoring with large time gaps means not taking sufficient care in reviewing

the sales budget. This may also lead to poor performance by the sales representatives.In fact, no one likes a job which is not monitored as everyone expects some sort ofappreciation after their job done. Recognizing the work of the sales representatives bymonitoring their performance will also help in framing the appraisal system. Let us nowunderstand the need of a control system for monitoring and controlling the sales budget.16.3.1 The need for a sales budgeting control systemSales budget control system is required by the organization for many reasons. Let usnow understand them in detail:-a) To monitor the performanceMonitoring sales budgets implies monitoring the sales figures generated by theemployees and checking whether the sales quotas have been achieved. The controlsystem should be able to monitor in regular intervals as it is the natural tendency forhumans to adopt slackness. The biggest question is what to monitor? Is it the salesfigures or efforts or expenses or direction and so on? In many times the organizationwould go by the sales figures and revenue generated. Efforts and direction would be leftout but to get a holistic picture of the performance of a sales representative every factormust be taken into account. Hence, control system should be able to get a holisticpicture of the performance evaluation for the sales representatives.b) Identifying areas of improvement for sales representativesControl system should identifying the areas of improvement by monitoring theperformance of the sales representatives. Once the performance is monitored thecontrol system should be able to find out the necessary skills to be improved and thenproper training should be provided to improve those skills set.c) Identifying areas of weaknessControl system should be aiming at identifying goals of the organization and improvingthe organization performance to achieve them. In doing so, many functions within anorganization have to be integrated. Control system should be able to identify the cost ingenerating the required sales figures. If the cost of operations is high then the net profitwould be low even if the sales figures are decent. Control system should identifyweaknesses in the organization and develop the system where the resources are put tomaximum use. For example, if the control system finds out the reason for increasedcosts for generating a lead is due to the improper communication channels between themarketing and sales department, then making use of CRM in the organization would bethe solution to the problem.d) Identifying trends and monitoring competitor activitiesControl system is required by the organization to identify the market trends. In thiscompetitive world, the preference of the customer changes too frequently and the

competitors would be ready to grab the opportunities. Hence it is necessary to have asystem to monitor the competitor movements closely and then identify the necessarychanges that needs to be done in the strategies of various departments to sustain thecompetition and achieve required sales.e) Analyzing deviationsMany times there would be deviations from the sales objectives. Monitoring andanalyzing the deviations would be an important task. For example, the organization mayput the sales objective for the branch office 10000 units/ month. The branch office maystart with nice figures over 10000 for the first two months but later on from the thirdmonth the sales figures take a dip and fall below 10000. The reasons for such deviationshould be analysed. There can be many reasons such as:-the increased market competition,decreased sales especially if the sales are seasonal, for example the sales for airconditioners and refrigerators are high in summer when compared to winterseasonChanging customer preferences or consumption patternHigh attrition rate i.e. due to the high attrition rate the required number of salesrepresentatives are not available to generate the expected sales figures.Such reasons have to be identified. Therefore, a control system may be required by theorganization.f) Input for organization strategiesControl system helps in provide valuable information in setting the strategies in the rightdirection to achieve the organization objectives. By identifying the right strengths andweaknesses of the organization, its strategies can be set. For example, if the controlsystem identifies that the organization has good products, but low sales due to highcosts over the competitors then necessary marketing activities have to be planned tojustify the price and the benefits or else the prices have to be reduced to boost thesales.g) Identifying the losing market shareThe forecast would be done at the start of the year or required time interval and targetsor quotas would be set. Achieving the required quotas may not necessarily meanachieving the organization objectives at all the times. Control system is necessary tomonitor the situations not only where the organization has improved its sales but alsolost market share too. The objective of the organization may be to serve the maximumnumber of customers at all times and be the industry leader. Whenever the market isgrowing too fast, the sales figures should also be increasing. Just performing by thesales quotas would be helpful in being the leader in the market place. Hence, controlsystem is necessary to identify the growth in the industry and adjust the sales quotasaccordingly so that the organization can maintain its position in the market place.16.3.2 The need of variance analysis and control in sales budgets

The sales variance according to Ghosh (2005) is the operating profit variance due tosales. It is the difference between the budgeted operating profit and the margin betweenthe actual sales and the standard cost of those sales. Variance analysis acts as a costcontrolling mechanism for the organizations. The deviations or irregularities in theoperating profits can be analysed by the variance analysis and control systems. Thesales variance is of two types namely:-Operating profit due to sales volume: This deals with the variance in theoperating profit which may be more or less than the forecasted operating profit.The reason may be due to the changes in the volume of sales generated by thesales department. The operating profit would be less when the sales figures areless than the forecasted figures and vice-versa. Here, the price of the unit is keptconstant for the forecasted sales and the actual sales.Operating profit variance due to selling price: This deals with the variance inoperating profit due to the decrease or increase in selling price. Even though thesales quotas are achieved, the sales department may not be able to generatethe required operating profit due to the changes done in the selling price whenthe actual sales have taken place.Usually in many situations the variance would be due to both the reasons mentionedabove. This type of variance is known as mixed variance.The sales budgets have to be controlled in such a manner that the organizationobjective is achieved with the right variances in place. It is not always practical for theorganization to stick to a constant selling price. The price keeps on changing due to thechanging environment at the market place. The selling price would be loweredwhenever the demand is less or the competitors lower their prices. The varianceanalysis and control would involve the following points:-Improving the sales figures to decrease the variance : Whenever the salesvariance is increasing due to the low sales, then organization have to revise theirstrategies to make sure that the sales figures are improved and thereby creatinga lesser varianceIdentifying the right selling price: In an attempt to grab the sales opportunitythe organizations or the sales departments tend to decrease their selling price.Before any such attempt, the variance should be analysed and the affect on theoverall balance sheets and profit figures should be estimated. It should be notedthat for each penny decrease in selling price the operating profits would bedecreased. Hence identifying the right selling price is a challenging task for theorganizations. The decrease in selling price should justify the increase in salesfigures so that the overall operating profit doesn’t decrease for the organization.Variance control with proper strategies: As discussed earlier in this unit, rightstrategies help the organization to achieve more sales and lesser variances.Variance control by improving the organization efficiency: By improving theorganization efficiency by making use of CRM products and the right organizationstructure, the operating costs can be reduced thereby decreasing the variance inthe operating profits. This is very important at present times where the prices arekept low due to the competition and the operating profits are to be maintainedunaffected. The only way this can be achieved is by decreasing the cost ofoperations in various departments like marketing, IT, sales etc.

SAQ 21) Explain the need for sales budget and control system2) Explain the two types of sales variance3) Identify the measure for controlling variance for an organization16.4 SummaryIn this unit we understood about the sales budgeting concepts. We have understood thedifferences between the direct and indirect expenses for an organization. We also sawthe issue in sales budgeting. We examined the need for the sales budget for anorganization and identified the importance of having multiple views of the sales budgetby region/ territory, product/ service and by the sales representative. We learned theimportance of timely monitoring of the forecasted and the actual sales and identifyingthe NPA and plan for their improvement. We saw that sales budget control system isrequired by the organization for many reasons such as to monitor the performance ofthe sales staff, identifying areas of improvement, identifying areas of weakness,identifying trends and competitor activities, analyzing deviations and the reasons forlosing the market share. We have analyzed the importance of budget control system asan input for organization strategy planning. We finally examined the need of varianceanalysis and control for the sales budgets. We understood the reason for variance insales budgets due to the volume of sales of the selling price. We also understood howto control the variance by improving the sales and identifying the right selling pricewhich can improve the sales figures and decrease the variance. Finally, we looked atthe variance control by proper strategies and improving the organization efficiency.16.5 Keywords1) Operating profit Profit figure attained after subtracting the directand indirect costs from the revenue generated.2) Net profit Profit figure attained after subtracting theorganization total expenses including the taxfrom the total revenue generated.3) NPT Non-performing territories are those territorieswhich are not able to achieve their salesquotas assigned by the organization.16.6 References1. N Ghosh (2005), “Management control systems”, Prentice-Hall, New Delhi, India16.7 Suggested Readings1. Robert N Anthony, Vijay Govindarajan (2008), “Management control system”,Tata McGraw-Hill, New Delhi, India.