SALES MANAGEMENT

SEMESTER 3
MBA (2018-20)

1
 SALES MANAGEMENT
MBA REGULATIONS I CURRICULUM MATRIX I SYLLABUS
Course Name: SALES MANAGEMENT Course Code: 18JBS313
Number of credits: 3 Number of Hours: 35
Learning Outcomes:
a) Develop conceptual clarity in sales management.
b) Explain the key concepts and use frameworks in sales management.
c) Analyse the process of sales force management.
d) Discuss the strategic tools used by brands to measure the impact of sales management efforts.
Module 1: Introduction to Sales Management 6 Hours
Learning Outcomes:
1a) Explain the concept of selling and types of selling
1b) Analyse the nature, role and functions of sales management and personal selling
The nature and role of sales management; types of selling; types of personal selling; rewards and responsibilities
and problems of sales management; social, ethical and legal responsibilities of sales personnel. Sales Management
Module 2: Planning the Sales Team Efforts 7 Hours
Learning Outcomes:
2a) Explain the process of planning in sales management.
2b) Discuss the sales organisation and formulate the design of sales territories.
Market-driven sales organisations; forecasting market demand and sales budgets; Sales Force Management.
Module 3: Management of Sales Territory and Quotas 7 Hours
Learning Outcomes:
3a) Discuss the process of territory management
3b) Explain the process Quotas and methods of setting Sales quotas
Sales territory, Allocation of sales territories, Design and Size of Sales Territories; Sales objectives and methods of
quotas
Module 4: Staffing and Training 8 Hours
Learning Outcomes:
3a) Explain sales force staffing and training.
3b) Discuss recruitment, selection and placement of the sales force.
3c) Explain the process of sales training and development.
Recruitment; selection and placement; management of sales training and development; contents of the sales
training program: sales and the selling process Staffing and Training*
Module 5: Directing and Controlling 7 Hours
Learning Outcomes:
4a) Explain sales force motivation and direction.
4b) Describe sales force analysis and control.
4c) Evaluate salespersons’ performance.
4d) Discuss
Motivating sales people and manage High Performance, incentive for High Performance; leading the team;
evaluation of salespeople’s performance, Analysis of Sales and Marketing Costs; Sales Force Evaluation*
(* These topics are categorised as ‘Self-learning’ topics and are subjected to testing)
Basic Text: Tapan K. Panda, Sunil Sahadev (2012). Sales and Distribution Management. Oxford University Press New
Delhi, India:
Reference Books:
1. Richard R. Still, Edward W. Cundiff, Norman A.P. Govani (2013). Sales Management Decision, Strategy and Cases,
Pearson Education, New Delhi, India
2. Mallik P. (2012). Sales Management, Oxford University Press. New Delhi, India:
3. S.L. Gupta (2010) Sales and Distribution Management, Excel Books, New Delhi, India
4. Krishna Havaldar and Vasant M Cavale (2018) Sales and Distribution Management Text and Cases, McGraw-Hill
Education, Chennai, India
Reading materials:
 Cron, W. L., DeCarlo, T. E., & Dalrymple, D. J. (2010). Sales management: Concepts and cases. Wiley.
 Stanton, W. J., Buskirk, R. H., Spiro, R. L., & Stanton, W. J. (1995). Management of the sales force. Chicago:
Irwin.
 Dubinsky, A. J., Yammarino, F. J., Jolson, M. A., & Spangler, W. D. (1995). Transformational leadership: An initial
investigation in sales management. Journal of Personal Selling & Sales Management, 15(2), 17-31.
 Anderson, R. E. (1996). Personal selling and sales management in the new millennium. Journal of Personal
Selling & Sales Management, 16(4), 17-32. Batt, R. (2002). Managing customer services: Human resource
practices, quit rates, and sales growth. Academy of management Journal, 45(3), 587-597.
 Baldauf, A., Cravens, D. W., & Piercy, N. F. (2001). Examining business strategy, sales management, and
salesperson antecedents of sales organization effectiveness. Journal of Personal Selling & Sales Management,
21(2), 109-122.
 Evans, K. R., Schlacter, J. L., Schultz, R. J., Gremler, D. D., Pass, M., & Wolfe, W. G. (2002). Salesperson and sales
manager perceptions of salesperson job characteristics and job outcomes: A perceptual congruence approach.
Journal of Marketing Theory and Practice, 10(4), 30-44.
 Verhoef, P. C., Reinhardt, W. J., & Krafft, M. (2010). Customer engagement as a new perspective in customer
management. Journal of service research, 13(3), 247-252.

Evaluation Pattern:
Continuous End –term Attendance Total
Evaluation Examination
45%** 50% 5% 100%

** Details of the components are given in Course Session plan

 CONTENT
1.1 Nature and Role of Sales Management
1.2 Types of Selling
1.3 Types of Personal Selling
1.4 Rewards and responsibilities and Problems of Sales Management
1.5 Social, ethical and legal responsibilities of Sales personnel
1.6 Sales Management Cycle
1.7 Summary
1.8 Keywords
1.9 Review Questions
1.10 Further Readings
Module 2: Planning the Sales Team Efforts
CONTENTS
Objectives
Introduction
2.1Definition
2.2 Market Driven Sales Organisations
2.3 Forecasting Market Demand and Sales Budget
2.4 Sales Force Management
2.5 Summary
2.6 Keywords
2.7 Review Questions
2.8 Further Readings
Module 3: Management of Sales Territory and Quotas
CONTENTS
Objectives
Introduction
3.1 Sales Territory.
3.2 Allocation of Sales Territories
3.3 Design and Size of Sales Territories
3.4 Sales Objectives
3.5 Sales Quota
3.6 Methods of Sales Quotas
3.7 Summary
3.8 Keywords
3.9 Review Questions
3.10 Further Readings
Module 4: Staffing and Training

CONTENTS
Objectives
Introduction
4.1 Recruitment Process
4.2 Selection Process
4.3 Motivation
4.4 Training Programme
4.5 Aim of Training
4.6 Content of Training
4.7 Methods of Training
4.8 Execution of Sales Training
4.9 Evaluation of Training Programmes
4.10 Summary
4.11 Keywords
4.12 Review Questions
4.13 Review Questions
4.14 Further Readings

Module 5: Directing and Controlling

CONTENTs
Objectives
Introduction
5.1Motivating sales people
5.2 Manage High performance Sale team
5.3 Incentive for High performance
5.4 Leading the team
5.5 Evaluation of Sales people’s performance
5.6 Analysis of Sales and Marketing costs
5.7 Sales Force evaluation
5.8 Summary
5.9 Keywords
5.10 Review Questions
5.11 Further Readings
Module 1: Introduction to Sales Management

CONTENTS
Objectives
Introduction
1.1 Nature and Role of Sales Management
1.2 Types of Selling
1.3 Types of Personal Selling
1.4 Rewards and responsibilities and Problems of Sales Management
1.5 Social, ethical and legal responsibilities of Sales personnel
1.6 Sales Management Cycle
1.8 Summary
1.9 Keywords
1.10 Review Questions
1.11 Further Readings

Objectives

After studying this unit, you will be able to:

 Define exchange process;

 Discuss about decision areas in sales management;

 State the difference between marketing and sales management; Introduction

Every business firm has certain objectives to achieve. These objectives may be very explicit and definitive, or they may
be implicit or general. Although, firms have different mixes of objectives, and they do place differing emphasis, on
individual ones, the typical objectives include (i) profitability, (ii) sales-volume, (iii) market share, (iv) growth, and (v)
corporate-image. While all these objectives are important to a business firm, the objectives, relating to sales-volume,
market share and profitability, are greatly affected by the effectiveness and efficiency, with which the sales-function
is managed.

Business firms, have, in fact, found that it is the most effective management objective of the firm; that must emanate
out of its overall business or corporate objectives. The sales-management objectives of a business firm, generally
relate to the areas of (i) achieving sufficient sales-volume, (ii) providing sufficient profit, and (iii) experiencing
continuing growth. As the business activity became more complex and dynamic, the term “sales management”
changed due to the changes in business operations. Earlier the sales management was solely concerned with the
direction of the sales force personnel. However, at present the term “sales management” has a broader significance
and includes all such marketing activities as advertising, sales promotion, marketing research, physical distribution,
pricing and product merchandising.

Sales Management as defined by American Marketing Association — is Planning, direction and control of Personal
selling including recruiting, selecting, equipping assigning, routing, Supervising, paying and motivating as these task
apply to personal Salesforce. Sales Managers are responsible for organizing the sales effort, both within and outside
their Companies. Within the Company the Sales Manager builds formal and informal organizational structures that
ensure effective communication not only inside the sales department but in its relations with other organizational
units. Outside the Company, Sales Manager serves as a key contact with customers and other external publics and is
responsible for building and maintaining an effective distribution network. Sales Managers have still other
responsibilities. They are responsible for participating in preparation of information critical to the making of key
marketing decisions, such as those on budgeting quotas and territories. Sales Management helps to respond
proactively and effectively to customers, the key to winning business and processing orders during the pre-sales, order
management and post shipment phases.

1.1 Nature and Role of Sales Management

Marketing, sales management and marketing management are closely related to each other. Generally marketing
denotes the process through which the goods/services are transferred to customers for monetary consideration. It is
the performance of business activities that directs the flow of goods from the producer to the consumer and so it is
viewed from the customer’s point of view. Every attempt far as the contribution to profits is concerned, generally
these two basic formulas are followed:
Sales – Cost of Sales = Gross margin
Gross Margin – Expense = Net Profit
Sales management ensures the success of this formula. Reduction in cost or expense and increase in sales or gross
margin, both depend upon how efficient the sales department is. Unless its performance is satisfactory on grounds of
efficiency and skills, the company cannot maximize its profits.
The third objective is experiencing continuing growth. This is very important from the viewpoint of top management
because it formulates plans and strategies. As the sales management remains directly connected with consumers and
markets, it keeps a hand on the market pulse. It can experience the pace of growth and informs the top management,
so that top management can take corrective actions if necessary.

Example: Volvo has traditionally positioned its products in the automobile market in North America in order to
be perceived as the leader in “safety”, whereas BMW has traditionally positioned its brand to be perceived as the
leader in “performance.”

Caselet :

Examine the courses of action available to the trader under the above circumstances. What are your
recommendations?

Irregular Supplies
It was the early 1930s, when a physician-turned textile trader in rural Karnataka found his business getting interrupted
for want of regular supplies of cloth from the weavers. When he enquired with the weavers about the reason for their
irregularity, he was told that there was no working capital available to them. There were no banks in the area. The one
located in the town was not interested in lending to small operators particularly in the rural area. Local moneylenders
used to charge very high rates of interest; borrowing at those rates had ruined some weavers in the past. The weavers
therefore have developed a habit of working intermittently as and when their own money from sales came in.
The trader, therefore, had to find a way to ensure uninterrupted supply of goods in his shop, without which his own
business was not viable. He thought of bringing the goods from Bombay, but found that the process would be very
expensive and time-consuming, as the area did not have any direct road/rail links with Bombay. Besides, the
transporters were not at all reliable.
Quantitative Objectives (Short-term)
1. To retain and capture market share.
2. To determine sales volume in ways that contributes to profitability.
3. To obtain new accounts of given types.
4. To keep personal expenses within specified limits.
5. To secure targeted percentage of certain accounts of business.

Qualitative Objectives (Long-term)

1. To do the entire selling job.
2. To service existing accounts, (customers).
3. To search and maintain customer cooperation.
4. To assist the dealer in selling the product line.
5. To provide technical advice wherever necessary.
6. To assist in training of middleman’s sales personnel.
7. To provide advice and assist the middlemen.
8. To collect and report market information of interest and use to the company management.

Self- Assessment

Fill in the blanks:

1. Marketing, ..................... management and marketing management are closely related to each other.
2. ..................... are found in both profit and non-profit making organisations.
3. Marketing management is a ..................... concept and sales management is a part of marketing management.
4. The ..................... structure for sales management varies depending on the firm’s size and strategy.
5. Lower-level managers spend the majority of their time on staffing, ..................... and monitoring salespeople.
6. Sales management jobs are found in both consumer and ..................... industries.

1.3 Exchange Process

“Customer is the boss—yesterday, today and tomorrow”.

“Customer is profit—everyone else is overhead”.
These thoughts reflect the marketing concept of today.
Sales and distribution management is the most important part of marketing management. Exchange is the core aspect
of marketing and sales and distribution management facilitates it. Sales management is defined as the management
of the firm’s personal selling functions while distribution management is the indirect selling effort or selling through
extra corporate organisations. Sales management tasks include analysis, planning, organising, directing and controlling
of a company’s sales efforts.
Ways by which Exchange can take Place

 Directly (through its own sales force)

 Indirectly (through middlemen, retailers, wholesalers)
 Jointly.
The nature of the exchange process will depend upon the nature of the product, target market, consumer density
and dispersion and competition practices of the other companies. For example, if the consumer density is less in a
particular area, we can’t use personal selling. Mail order companies like Reader’s Digest work on this principle only.
However, companies dealing in industrial equipment, computers, machine tools (like lathes, presses) use personal
selling as the goods they are dealing in are of high value.
In personal selling there is a two-way communication. We also try to tell the customer how to use the product and
remove his doubts. We see that there is a feedback from the customer. In selling we are only exchanging.
1. Contacting: To find and communicate with the prospective buyers.
2. Prospecting: To bring together the offering of the market and of the customer.
3. Negotiating and Transaction: There can be certain negotiations in prices. For example, lump-sum, installments,
etc. Transactions also mean ownership transfer.
4. Promotion: This is to make the customer aware of the product. The promotion must show that the product can
provide customer satisfaction, i.e., he should get good value for his money. Proper promotion should have
customer generating potential.
5. Physical Distribution and Collection: Physical distribution means actual transfer of possession. It includes
transportation, warehousing and inventory control. It also includes installation. For example, the food must reach
the destination timely and safely. Exchange is never complete without the collection of money, i.e., revenue.
Money is the backbone of any organisation and timely collection of money is also a very important criterion.
Delayed payments lead to shortage of funds which affects the organisation adversely. In going through this
exercise a lot of information is also imparted to the customer.

Most organisations perform exchanges through a combination of their own sales force and distribution network. Tasks
are allocated between sales force and channel members. The factors considered for using the distribution network or
the company’s sales force are:
 Competitive practices;
 Product and market requirements;
 Preference of the customer and;
 Management philosophy towards control.

Task : Discuss about the different structures in Sales Management.

1.2 Interdependence of Sales and Distribution

Sales and distribution are interdependent on each other. Although sales can be realised by direct marketing or through
the channel members, both go hand in hand. The following points must be understood:
1. Both sales management and distribution are the responsibility of the sales manager. Most organisations use their
own sales force to reach the customers. The practice is to use the sales force to reach the retailers through
 wholesalers. Brooke Bond is one company which reaches up to retail level. Activities of sales organisations are
coordinated with channel operations to realise sales goals effectively.
2. The type of training to be given will depend upon the responsibility given to the sales force and to channel
members.
3.The choice before an organisation to have direct, indirect or joint distribution depends upon the degree of
control, flexibility and cost and financial requirements. For example, in indirect distribution, there is less of
control but it is more economical. In this sort of distribution lesser funds are tied up and there is low fixed and
variable cost of managing the channel. On the other hand, in personal selling, there is better control but it is
more expensive.

4. To implement the overall marketing strategy, the manufacturers need the cooperation of distribution outlets,
store displays, local advertising and purchase promotions.
Sales management has the responsibility of structuring, maintaining and coordinating an organisational relationship
within their own departments and with interacting organisational entities so that sales task can be performed and
coordinated with the overall marketing goals.
Sales managers are entrusted with organising, planning and implementing the sales effort to achieve the corporate
goals related to market share, sales volume and R.O.I.

Self- Assessment

State whether True or False:

7. Most organisations use their own sales force to reach the customers.
8. The functional structure for sales management varies depending on the firm’s size and strategy.
9. A Unit manager looks after and manages a firm’s personal selling functions.
10. The unit manager is often referred to as the manager-in-training with interaction taking place at the customer
level.
11. Tasks are allocated depending upon the capabilities and capacities of the sales personnel.

1.3 Key Decision Areas in Sales Management

Important decision areas in sales management are deciding upon:

1. The type and quality of sales personnel: By this we mean that whether the sales person is a product specialist or
a market specialist or both. A product specialist is needed for technical or for pharmaceutical products. A market
specialist must be aware of market characteristics and various markets.
2. The size of sales force: It is important because if we have more sales personnel, then we are incurring more
expenditure. Therefore, the number of sales person should be optimal. To find the optimal size there are three
methods:
(a) Work Load Method
(b) Incremental Method
(c) Sales Potential Method.
3. The organisation and design of sales department: There are three types of organisations:
(a) Functional Organisation
 (b) Management Organisation (c) Territorial Organisation.

Which type of organisation to follow will depend on our choice.

4. The territory design: There are a number of ways to design a territory.
(a) Clover Leaf design of territory: Here the territory is designed in the form of a clover leaf.
(b) Hop Scotch Method: Here the territory is designed in the form of spokes which radiate form the hub
(residence).
5. The recruitment and training procedure: This deals with recruitment and training of the people. The recruitment
could be within or outside the organisation. Similarly, training could be on the job training, off the job training
and classroom training.
6. The task allocation: Tasks are allocated depending upon the capabilities and capacities of the sales personnel.
7. The compensation of sales force: Compensation includes salary benefits, profits and perks. Demographic
characteristics are taken into account for this. Then there are fringe benefits also.
8. The performance appraisal and control system: It is important to know how much work is being done by the
sales personnel. To facilitate this, appraisal systems are devised.
9. The feedback mechanism to be adopted: Feedback is taken from sales personnel, dealers and consumers about
product and sales. On the basis of this feedback, planning is done.
10. Managing channel relationship: We not only decide on selection of channels but also decide how it is going to
be managed.
11. Coordinating with other marketing departments: Some sales personnel can’t work alone. He has to take help
from all the other departments.

Task Design a sales and distribution program to promote a Fruit Juice.

Notes Point of sale (POS) also sometimes referred to as Point of purchase (POP) or checkout is the location where a
transaction occurs. A “checkout” refers to a POS terminal or more generally to the hardware and software used for
checkouts, the equivalent of an electronic cash register.

1.4 Sales Management Cycle

A sales manager looks after and manages a firm’s personal selling functions. Sales management deals with analysis,
planning, organising, direction and control of the company’s selling activities. This constitutes a cycle shown below.
 Figure 1.1: Sales Management Cycle

Analysis

Control Organisation Planning

Direction

Analysis

This involves probing into the sales records of the company, analysing the reports of sales people, investigation of
marketing trends and other environmental factors.

Planning

It involves setting objectives of the firm’s sales efforts, formulation of sales strategies and policies in order to
achieve those objectives.

Organisation

It involves determination of the structure of the sales force and delegation of authority which is supposed to be
necessary to achieve the organisation’s objectives.

Direction

It involves proper supervision and implementation of the plans with the help of proper communication, motivation
and leadership.

Control

It involves comparison of the actual with the desired results, finding out reasons for deviation and taking corrective
actions accordingly.

Task Using Internet search tools contact 50 customers of two sales organisations with different sales organisations
and record how organisations provide different services to customers.
Caution Sales training may not provide lots of benefits in my industry.
Sales training can boost sales results in most industries provided the program is tailored to that industry and the
client company. In particular, if you are experiencing any of the following, sales training can usually provide
substantial benefits.
Self-Assessment

Multiple Choice Questions:

12. This involves probing into the sales records of the company, analysing the reports of sales people, investigation
of marketing trends and other environmental factors.
(a) Analysis (b) Dialysis
(c) Audit (d) Benefits
13. It involves determination of the structure of the sales force and delegation of authority which is supposed to be
necessary to achieve the organisation’s objectives.
(a) Sales Management (b) Organization
(c) Marketing (d) Personnel Selling
14. To bring together the offering of the market and of the customer
(a) Suspecting (b) Offers
(c) Collaborate (d) Prospecting
15. This is to make the customer aware of the product
(a) Word of mouth (b) Promotion (c) Production (d) Awareness

1.7 Responsibilities of a Sales Manager

Sales management involves a number of responsibilities. It is the income producing division of a business. The sales
manager is responsible for:
1. Providing profit contribution
2. Creating a proper image for the company and its products/services
3. Achieving the sales targets of the organisation
4. Satisfying the customers and participating in marketing activities
5. He is responsible to the customer and society for continuing growth of the organisation.
He has multifarious activities, including setting goals and achieving them, building sales organisations and managing
them.
These multifarious activities can be listed exhaustively as below:
1. Identification of sales strategy.
2. Defining the personal selling objectives of the firm.
3. Formulating the sales policies.
4. Deciding the type of the sales force.
5. Deciding the size of the sales force.
6. Designing the sales territories for effective coverage of the area.
7. Developing a sales organisation.
8. Fixing sales quotas and targets.
9. Creating the sales force – i.e., recruitment, selection and orientation of the sales force
10. Managing the sales force:
(a) Compensation
(b) Motivation
(c) Supervision
(d) Monitoring and performance evaluation
(e) Training
(f) Development
11. Sales budgeting and reporting.
12. Organising sales displays.
13. Coordination and Control:
(a) Coordinating external and internal activities
(b) Coordinating with distribution network
(c) Coordinating and implementing overall marketing strategy.

Caselet : Distribution

A was a partnership firm which started with humble beginnings. The firm sold its goods in a restricted market which
was situated about a thousand miles away from the manufacturing plant. The firm had a turnover of 2 crores and
increased its sales through product development, proper distribution and greater market coverage. The company was
operating in a niche.
The methodology of the firm was to send salesmen to the market and get orders from wholesalers of repute. Gradually
the product gained partial monopoly in those areas the consumers accepted and demanded the product. The system
of getting orders from dealers of any districts was paying off well.
However, sometimes there was a shortage of goods. It took more than 20 days for goods to reach their destination.
The bill was sent through the bank and the entire transaction took more than a month to materialise. The dealers were
keen to place orders and the number of dealers, the company dealt with directly was reaching enormous proportions
because the dealers placed small orders which lasted for a small time. All this put a great load on the working of the
head office of keeping records of individual dealers and sending reminders to them for payment and reorder. The firm
proposed one of the dealers to take the entire agency of the area as an exclusive distributor. These exclusive
distributors were appointed by the firm at a distance of 200 kms away from each other.
The system worked well, the burden of the firm was reduced and it could maintain greater control with lesser staff.
Only a few salesmen were required for supervising and registering complaints and suggestions. Distribution cost also
went down, but higher commission was given to dealers. The sales went up by about 30%. The exclusive dealers
employed their own sales team to get a greater volume of business. These salesmen were local residents of the area
and operated from their own cities where they resided.
1.8 Summary

 The importance of marketing problems was realised only after the industrial revolution which started in England
in 1760 and immediately thereafter in United States.
 Marketing management is a broader concept and sales management is a part of marketing management.
 Sales Force are found in both profit and non-profit making organisations.
 The organizational structure for sales management varies depending on the firm’s size and strategy.
 Sales managers typically start out as salespeople, working their way to the top with strong leadership and
organizational abilities.
 Sales and distribution management is the most important part of marketing management.
 Feedback is taken from sales personnel, dealers and consumers about product and sales.
 Sales Management is the income producing division of a business.
 A sales manager looks after and manages a firm’s personal selling functions.

1.9 Keywords

Contacting: To find and communicate with the prospective buyers.

Negotiating and Transaction: There can be certain negotiations in prices. For example, lump-sum, installments, etc.
Transactions also mean ownership transfer.
Physical Distribution and Collection: Physical distribution means actual transfer of possession. It includes
transportation, warehousing and inventory control. It also includes installation. For example, the food must reach the
destination timely and safely.
Promotion: This is to make the customer aware of the product. The promotion must show that the product can provide
customer satisfaction, i.e., he should get good value for his money. Proper promotion should have customer
generating potential.
Prospecting: To bring together the offering of the market and of the customer.
Task Allocation: Tasks are allocated depending upon the capabilities and capacities of the sales personnel.

1.10 Review Questions

1. Why did the firm not succeed by dealing with individual dealers instead of exclusive ones?
2. The firm feels that by appointing exclusive distributors it is losing control over the market and foresees trouble
in the future regarding the firm being forced to play in the hands of these exclusive dealers. Comment.
3. What are the objectives of Sales Management?
4. Describe about Exchange Process in Sales Management.
5. Explain about Interdependence of Sales and Distribution.
6. Describe about Sales Management Cycle.
7. Discuss about the ways by which Exchange can take place.
8. What do you mean by Marketing Sales Management?
9. What are the Key Decision areas in Sales Management?
10. Define Planning and Organization.
Answers: Self -Assessment
1. Sales 2. Sales Force
3. Broader 4. Organizational
5. Directing 6. Commercial
7. True 8. False
9. False 10. True
11. True 12. (a)
13. (b) 14. (d)
15. (b)

1.11 Personal Selling:

Personal selling is a part of communication mix (other elements of which are advertising, sales promotion, public
relations, direct mail and exhibitions). It is concerned with persuasive communication. A sales person in personal
selling tries to persuade the prospect so that he can take a decision to acquire the product/service which the sales
person is talking about. It is a major factor in creating sales volume. It brings human element into marketing
transactions and increases the customer's confidence in the supplier.
“The oral presentation of a company's products, or services to one or more prospective purchasers for the purpose of
making a sale". It is the art of successfully persuading prospects or customers to buy products or services from which
they can derive suitable benefit thereby increasing their total satisfaction, i.e., delight.
The terms personal selling and salesmanship have different meanings. Salesmanship is a seller initiated effort that
provides prospective buyers with information and motivates them to make favourable decisions concerning the
seller's product or services. Personal selling on the other hand is a two-way communication involving individual and
social behaviour. It aims at bringing the right product to the right customer. It is used for creating product awareness,
stimulating interest, developing brand preference, negotiating price, etc.
Personal selling is used extensively in complex and highly technical products like computers, electronic typewriters,
digital phones, microwaves, aquaguard, remote controlled appliances, etc. It is used for selling to industrial consumers
who may be
having technical queries and want to purchase in bulk. The increase in competition from foreign and domestic sources
has increased the importance of personal selling.
The salesman acts as a catalyst and consultant to the customer by providing information and benefits of the products.
He also works out the details, manner and timing of giving physical possession to the customer. Personal selling is
basically used during the product launching stage when a firm cannot afford a large expenditure for advertising. Thus,
personal selling is an integral part of communication mix. It becomes important because it educates the consumer
and makes him understand the special functions and attributes of the product.
Personal selling is a tool for building up buyer's preference, conviction and action. The reason is that personal selling
when compared with advertising, has three distinct benefits.

Did you know? The main objectives of personal selling would be in any organisation to increase the sales volumes,
increase of sales revenue, reduce the cost of sales, and increase the number of distribution channels to gain
corporate clients, increase sales per person and number of sales points.
Self- Assessment

Fill in the blanks:

1. Personal selling involves persuading .................. to buy the goods.
2. The ultimate objective of personal selling is ...................
3. The most important element of personal selling is .................. interaction.
4. Supply of information to customers makes personal selling an .................. process.

1.12 Personal Confrontation

Personal selling involves an alive, immediate and interactive relationship building between two or more persons. Each
party is able to observe the other's needs and characteristics at close hand and make immediate adjustment.
Cultivation

Personal selling permits plenty of relationships to spring up, ranging from a matter-of-fact selling relationship to deep
personal friendship. Effective sales representatives will normally keep their customers best interest at heart if they
want to maintain long term relationship.

Response

Personal selling puts the buyer under some obligation for having listened to the sales talk. The buyer has the greater
need to attend and respond, even if the response is a polite "thank you".
These distinctive qualities come at a cost. A sales force represents a greater long term cost commitment than
advertising. Advertising can be turned on and off, but the size of sales force is much difficult to alter.

Advantages

Following are the advantages of personal selling because of which it is the most commonly used promotion tool:
1. Ability to close sales.
2. Ability to hold customer attention.
3. Immediate feedback and two-way communication.
4. Presentation is tailored to individual needs.
5. Ability to target customer precisely.
6. Ability to cultivate relationship.
7. Ability to get immediate action. Disadvantages

Despite all these advantages of personal selling, it is not without disadvantages because of which sometimes
companies may hesitate to adopt personal selling as a promotion tool.
1. High cost per contact.
2. Inability to reach some customers effectively.

Example: A good example of personal selling is found in department stores on the perfume and cosmetic counters. A
customer can get advice on how to apply the product and can try different products. Products with relatively high
prices, or with complex features, are often sold using personal selling. Great examples include cars, office equipment
(e.g. photocopiers) and many products that are sold by businesses to other industrial customers. 2.5 SELLING PROCESS

All selling process contain the same basic steps, though the detail of each step and time required to complete it will
vary according to the product that is being sold. For example: a door to door sales representative may go through all
the steps from prospecting to closing of sale in a matter of ten to fifteen minutes in contrast, the selling process for
computer or electronic typewriter may take several visits, even years, for getting an order.

 Prospecting

The selling process begins with prospecting or finding qualified potential customers. Except in retail selling, it is
unlikely that customers will come to the sales person. In order to sell the product, the sales person must seek out
potential customers, prospecting involves two major activities-

(a) identifying potential customers also known as prospects; and

(b) qualifying them in order to determine if they are valid prospects.

(a) Identifying prospects

The identification of potential customers is not an easy job, especially for a new sales person. Rejection rate is quite
high and immediate payoffs are usually minimal. In some consumer goods businesses, identification of prospects
usually come from friends and acquaintances, other sales people, former customers, present customers etc. Few of
the best sources and techniques for finding prospects are discussed below.

Present customers: The best source of prospects is usually the sales person’s existing satisfied customers. It is much
easier to sell additional goods and services to existing customers than to attract new customers. Indian companies are
using this method of selling successfully. For example, person or an organization who has purchased a portable
typewriter from an office automation product company and is pleased with it is usually more receptive to purchase a
bigger typewriter and similar product from the same company than someone else. This is the main reason, present
customers should get first priority by the company when new products and services are introduced.

Endless chain: This is also an effective prospecting tactics. In this method companies use satisfied customers as source
of referrals. Sales representatives ask current customers for names of friends or business associates who might need
similar products or services. Then, as the sales person contacts and sells to these prospects, more referrals are
solicited. In this way the process continues further.

Centre of Influence: Another effective prospecting technique based on referrals is the center of influence approach.
A center of influence is a person with information about other people or influence

over them that can help a sales person identify good prospects. Some frequently used centers of influences are
housewives, bankers, local politicians etc.

Spotters: Some companies use spotters as a source for prospecting potential customers. Spotters are usually ‘sales
trainees’ who help sales person identifying prospects, thus saving time and qualifying sales lead.

Cold call: Cold call is also known as unsolicited sales calls. This prospecting techniques involves knocking on doors. The
sales person makes contact with a potential customer, introduces himself or herself, and asks if there is a use for the
product or service. This technique is utilized by the sales person when they have time available between scheduled
appointments.

Directories: A wide variety of directories are full of prospect. The classified telephone directory is the most obvious
one. A sales person may also find that membership directories of trade associations, professional societies, and civic
and social organizations are good sources for prospects.

Mailing lists: In India, specialized companies compile lists of individuals and organizations for direct mail advertisers.
These lists may also be used to identify sales prospects. The major advantages of mailing list are that they are often
more current and more selective than directories.

Trade shows and exhibitions: A cost effective way to make personal contacts and locate prospective buyer is to
participate in trade shows and exhibitions. Now a day more and more companies are

increasing their participation in these shows and exhibitions to company’s booth by mailing invitations or promising a
gift. Advance announcements sent to trade publications may also help to attract prospects. In view of the rising costs
of personal selling trade shows have become an increasingly important source of prospecting. India International
Trade Fair organized by Trade Fair Authority of India every year provides a good example of usage of trade shows for
prospecting.

 Qualifying prospects

Once the sales person has identified potential customers, he or she must qualify them to determine, if they are valid
prospects. Unless this is done, time and energy is wasted in trying to sell to people who cannot or will not purchase
the product or service.

There are several factors to consider while qualifying a prospect. One approach to qualifying often called MAN
(Money, Authority and Need) approach is given below:

Money: Does the prospect have the money or resources to purchase a product or service? Ability to pay is very critical
factor in qualifying a prospect. The sales people must be familiar with financial resources of a prospect.

Authority: Does the prospect have the authority to make commitment? This is a particular concern when dealing with
corporation, government agencies or other large organizations. Even while selling to a married couple, it may be
difficult to identify who actually makes the purchase decision. A sales person must identify the key decision maker
early to economise on selling time more effectively.

Need: Does the prospect need the product or service? If a sales person cannot establish that the customer will benefit
from purchasing a product or service, there is no reason to waste a sales call. The prospect either will refuse the offer
or will end up dissatisfied with the purchase. Before proceeding further, the sales person should first appraise whether
money, authority and need exist with the prospect.

 Preparation

After a prospect has been identified and qualified, the sales person prepares for the sale of product or service. The
preparation stage involves the two key activities i.e. Pre-approach and Call Planning.
The pre-approach step includes all the information gathering activities necessary to learn relevant facts about the
prospect and his or her needs and situations.

Four necessary steps of pre-approach are:

1. It should disclose the party need and ability to buy.

2. It should provide information that will enable the seller to tailor the presentation to the prospect.

3. It should provide information that may keep the sales person from making serious tactical errors during the
presentation.

4. Finally, a good pre-approached increases the sales person confidence and makes him confident to handle
whatever may arise during the sales. (b) Call planning

Call planning involves a specific planning sequence. The sales person defines the objective of the call, devise a selling
strategy to achieve this objective, and makes the appointments. The primary objective of any sales effort is to get an
order. For some sales call intermediate objectives may be needed. Some examples of intermediate objectives are: •
To obtain more information about the prospect. • To relate the prospects needs and concerns to features and benefits
of the product or service. • To obtain permission for demonstration of the product. • To introduce a new distributor.

The sales person must develop a strategy, or course of action to achieve his or her objective. Careful consideration of
the prospect’s background and needs is required in order to able to formulate a tailor made strategy appropriate for
the prospect. Since sales calls are costly, they should be arranged in advance. Cold calls i.e. call without specific
appointment may be appropriate for introducing the sales person or dropping off information. This method is
generally inefficient for selling most products and services and is not consistent with modern professional selling.

 Presentation

After establishing rapport with the prospects through calls, the sales person proceeds to the formal sales presentation.
The objective of the presentation is to explain how the product meets the special needs of the consumer. The job of
the sales person is to inform the prospect about

the characteristics, capabilities and availability of goods and services that are for sale. In order to ensure that the
presentation is understood by the prospect, the sales person should be clear in his/her communication. Presentation
should also be interesting enough to keep the attention of the prospect focused on the proposal.

Sales presentations are classified into the different categories: Fully automated, Semi-automated, Memorized,
Organized, and Unstructured.

Fully automated: The fully automated presentation is the most highly structured approach, based on film or slide
presentations. The sales person simply answers questions or clear up doubts. e.g. selling life insurance to the rural or
semi-urban prospects.

Semi-automated: In this approach, the sales person reads from brochures or literatures, adding comments to the
prepared materials when necessary. A common example is selling of pharmaceutical products by medical
representatives.
Memorized: In memorized presentation, company message is presented, with few changes initiated by the sales
person.

Organised presentation: The most popular and often the most effective sales presentation method is the organized
presentation. With this method the sales person has complete flexibility in oral communication but follows a company
prepared outline or checklist. The organized approach best exemplifies the selling process in which customers are
moved through four stages to a purchase decision; i.e. attention, interest, desire and action (AIDA).

Unstructured presentations: (Also referred to as problem solving) In this approach, the buyer and seller together
explore the problems that are the real sources of the company’s needs. Although unstructured presentations are often
effective and widely used, they have a number of limitations. Such presentations tend to be not too well-focused. As
a result, points are often missed and time is wasted. Further, sales person does not usually anticipate objections but
may have to face surprise complaint from the prospects. Because it is difficult to teach sales person how to use the
unstructured method, the problem solving presentation seems best suited to experienced, sales person who are
selling to established customers.

Sales presentation comprises of two distinct activities, approach and demonstration.

 Approach

When the sales person has the name of the prospect and adequate pre-approach information, the next step is the
actual approach. It frequently makes or breaks the entire presentation. If the approach fails, the sales person often
does not get a chance to give a presentation or demonstration. It gets the prospect attention, it immediately inspires
interest in hearing more about the proposition, and it makes easy transition into the demonstration phase.

Four basic approaches are in common use:

1. The introductory approach, the sales person introduces himself to the prospect and states what company he
represents.
2. The product consists of handling the product to prospect with little conversation. It can be most effective when
the product is unique and creates interest on sight.
3. The sales person starts the sale in a consumer-benefit approach by informing the prospect of what the firm can
provide in benefits. In other words, directs the prospects attention toward the benefits the firm has to deliver.
4. Lastly, referral approach successful in getting an audience with prospect who is difficult to see directly. It consists
of obtaining the permission of a past or present customer to use his or her name as a reference in meeting a new
prospect.

 Demonstration

The demonstration is the core of the selling process. The sales person actually transmits the information and attempts
to persuade the prospect through product demonstration to make a customer.

Two factors should be taken into consideration in preparing an effective product demonstration:

i) The demonstration should be carefully rehearsed to reduce the possibility of even a minor malfunction.
ii) The demonstration should be designed to give customers ‘hand on’ experience with the product wherever possible.
For example an industrial sales representative might arrange a demonstration before the purchaser’s technical
personnel.

 Handling objections

All sales person confronts sales resistance i.e. actions or statements by a prospects that postpone, hinder or prevent
the completion of the sale. Normally sales resistance takes the form of an objection which can be classified as stated
or hidden. Prospects may state their objections to a proposition openly and give the sales person a chance to answer
them. This is an ideal situation because everything is out in the open and the sales person does not need to read the
prospect’s mind. Unfortunately, in many instances prospects hide their real reasons for not buying. Besides having
hidden objections, their stated objection may be phoney. Unless one can determine the real barrier to the sale one
shall not be able to overcome it. There are two major techniques for discovering hidden objections. One is to keep the
prospect talking by asking probing questions. The other is to use insights gained through experience in selling the
product, combined with a knowledge of the prospects situation, to perceive the hidden objection. Often objection to
price and product are also faced by sales person either in a form of unaffordable or too high price. Product objections
can be answered best when sales people have extensive product knowledge of both their own products and
competitors. Many times prospects may be misinformed or may not understand some of the technical aspects of the
proposition. In this case, the sales person should provide additional information. Even the prospects objections can
be met simply and effectively by altering the product to suit the customer.

 Closing

After having answered and overcome objections, it is the stage for sales person to ask for the order from the prospects.
The entire effort is wasted unless the sales person can get the prospect to agree to buy the product. There are several
closing techniques which are being used by sales person in India. Sales person should select among these technique
one that fits the specific prospect and selling situation. Now we would discuss few effective closing techniques. In
action close technique the sales person takes an action that will complete the sale e.g. in case of high priced products
like Motorcar, photocopier or industrial product the sales person may negotiate with the financial institution for
financial assistance for the prospects.

The gift close technique provides the prospect with an added incentive for taking immediate buying action. In one
more yes close techniques, the sales persons restate the benefits of the products in a series of questions that will
result in positive responses by the prospects. The process may result in an order.

The direct close is clear and simple technique, many sales persons feel that this is the best approach for closing,
especially if there are strong positive buying motives, the sales person will summarise the major points that were
made during presentation to the prospects prior to asking for the sale.

Experienced sales people always try to close early. If they are not successful, they continue the presentation and then
try a different closing technique. Good sales person knows that if they have successfully

completed all of the earlier steps, then the prospect is worth an extra effort at closing. In most cases this simply means
switching to a different type of close. Closing is the most important aspect of the sales process. Unless the sales person
can close the sale, the other steps in the sales process are meaningless.
  Follow-up

The selling process is not completed by merely making the sale, as generally assumed by many sales person. After
sales activities are important part of the whole selling process. Effective sales-follow-up reduces the buyer’s doubt
about the product or services and improves the chance that the person will buy again in the future. In addition to post-
sale activities, sales person is also required to maintain good customer relations.

Now-a-days many companies are evolving specific policies and practices to ensure that customer’s needs are not
neglected. No matter how efficient a company is, there are always some customer complaints. The complaint should
be taken seriously and handled with concern. The customer must know that the company cares about maintaining
good customer relations. Reasonably frequent contacts with the present customers are, an expected part of the sales
person’s job. For important customers, personal visit is appropriate. Letters, notes, phone calls, greetings are also
good ways to keep in touch with customers. Many good business house also offer customer newsletter.

Successful sales person never stops serving customers. In addition to handling complaints, they keep customer
informed about the latest

products or services, fulfil reasonable request, and provide other forms of assistance. The sales people should also
appreciate the customer by thanking customers for their business. Small gifts can be given after the sale and at
appropriate times during the year. Sales person should try to make self-analysis for evaluating their own selling
performance and methods. A Sales person should analyse every call to determine what factors influenced its eventual
outcome. Self-analysis is a very useful tool in improving overall sales effectiveness.

SUMMARY

Today personal selling has become a challenging profession. There has been a significant change in its role from being
a simple order taker to that of an order maker or consultant to the buyers. Modern sales persons understand that
they are the major link in the total marketing strategy for the company. If a company wants to maximize the
effectiveness of its marketing programme, the personal selling effort must be effectively integrated with the other
elements of the marketing mix.

With the growing complexity of products, importance of personal selling has increased. They now act as introducers,
intelligent communicator as well as demand pushers and also add unique utility to product. Their role has changed
drastically from being a simple communicator to business manager. In order to be successful a sales person must
possess a set of personal, product related and functional qualities, as variety of analytical and administrative duties
are important component of the job. Before approaching a prospect every sales person is advised to do bit of
homework regarding company’s name, size, authority concern and general requirement. While meeting the prospect,

sales person should introduce himself, his company and the product under promotion. Product presentation and
overcoming of customer objections, leads to convincing the customer and result in the closing of mutually satisfying
sale.

Caselet: Suzuki may use Idle MUL Line for Scooters

Suzuki is considering using Maruti Udyog's Gurgaon facility for its proposed two-wheeler venture in India by converting
one of the idle car lines into a two-wheeler line. MUL may then lease out the facility or sell it to Suzuki Motor. MUL
has a total of three car manufacturing lines at its Gurgaon facility. However, a recent reorganisation resulted in one of
the lines becoming idle. According to sources, Suzuki has already started the trial run for the production of scooters
on this idle line.
However, when contacted, the Maruti spokesperson denied any such move by its Japanese parent, though he
added, "there is now no difference between Suzuki and MUL as far as major strategic decisions are concerned."
According to industry observers, though, Suzuki has the option to invest in a brand new facility to manufacture two-
wheelers, it makes commercial sense for the Japanese major to leverage its majority holding in MUL.
"It would save Suzuki a lot of money and time if it piggybacks its two-wheelers venture on Maruti's extensive
infrastructure," says a senior officer of a domestic two-wheeler company. The two-wheelers which are to be sold
under Suzuki brand would be launched in the domestic market only after March 2004 as specified in its separation
agreement with the TVS group. Suzuki has been permitted to re-enter the two-and three-wheeler market.
Questions
1. Do you think it will be possible to sell Suzuki two-wheelers when there is stiff competition from other
established brands?
Justify the action of the leading car unit to go for diversification.
Consultative Sales

This occurs at higher levels of organisation e.g., computer consultancy, etc., high capital is involving. The salesman
adopts a low key, low pressure approach. He has strong knowledge of the product. Patience to discuss the product
with several people in the organisation is required along with creative effort in slack times without appearing to exert
pressure on the prospect.
Technical Sales

The technical sales compulsorily require a good knowledge of the product by the sales person. It requires the approval
of TECHNICAL people in the organisation. In the end it is one or two people with technical knowledge in the
organisation who influence the decision. The sales persons have to identify and satisfy them with product
characteristics, application, installation processes, etc. The sales person is trained to use traditional approach and
know the utility and features of the product.

Commercial Sales

It includes non-technical sales to business industry, government and non-profit organisations, e.g., office equipment,
wholesale goods, building products, etc. Commercial sales person makes the sales on first or second call.

Direct Sales

Sales of product to ultimate consumer, e.g., restaurants, door to door sales, insurance, encyclopedia, magazines, etc.
There is emotional appeal in such type of selling. The sales persons must have persuasive ability. They are trained to
close the sale on first visit. If given time they may buy from competitors or cool off and postpone buying.

Advertising and channels of distribution because then the role of the sales person is passive as he acts as an order
taker and only incidentally as an order getter. On the other hand, if advertising is used mainly to back up personal
selling there are a minimum number of channels and the sales person's main job is to get orders and he has to be very
active.
In industrial goods marketing, the "sales engineer" plays two major roles:
1. Advisor to middlemen and customers on technical product features and applications.
2. Design consultant to middlemen and industrial users on installations or processes incorporating the
manufacturer's products.
Differences in marketing factors cause each company to have individualised requirements as to the kind of sales
person it employs. However, sales job roles can be grouped into four basic styles that cut, to a large degree, across
industry and company boundaries: trade selling, missionary selling, technical selling and new-business selling.

 Types of Selling

Trade Selling

The trade sales person develops and maintains long term relations with a stable group of customers. For the most
part, this is low-key selling, with little or no pressure, and the job is dull and routine. This selling style applies primarily
to products that have well established markets. Advertising and other forms of promotion are vital to overall
marketing strategy than is personal selling.

Missionary Selling

The missionary sales person's main job objective is to increase the company's sales volume by assisting customers
with their selling efforts. The missionary sales person is concerned only incidentally with securing orders, since orders
result from his primary public relations and promotional efforts with customers of the customers (indirect customers).
Missionary selling, like trade selling, is low-key and does not require high level technical training or ability.

Technical Selling

The technical sales person deals primarily with the company's established accounts and the main objective is to
increase their volume of purchase by providing technical advice and assistance. The technical sales person performs
advisory functions similar to those of the missionary sales person but, in addition, sells directly to industrial users and
other buyers. In this selling style, the ability to identify, analyse and solve customers' problems is important.

New Business Selling

The new business salesman's job is to find and obtain new customers, i.e., to convert prospects into customers. These
sales persons should be unusually creative and ingenious and possess a high degree of resourcefulness.
The acid test of the appropriateness of the personal selling strategy comes when particular sales people interact with
particular customers. Management makes its first key decision on personal selling strategy when it determines the
kind of sales person needed. It makes its second key decision when it determines the size of the company sales force.
But after these decisions are implemented-after the desired number of the desired kind of sales personnel have been
recruited, trained and assigned to the field - each sales person must individualise his own dealings with each customer.
Regardless of the fact that the sales person is an order getter or order taker and regardless of the basic selling style,
the extent of the sales person's success depends on the outcome of interactions with the customers. Each time a
particular sales person comes into contact with a customer, he says certain things, does certain things and behaves
and reacts in certain ways to what the customer says and does. All this generally does vary from one sales call to the
next.
The nature of variation in the sales person's approach to each customer is a matter of selling skill. This skill is a function
of both how good the sales person's pre-planning of each sales call
has been and performance on the call itself. In doing the pre-planning, the skilled sales person analyses a great deal
of information about the customer and the nature of the business. What are the customer's key objectives and
problems? Who in the customer's organisation makes and influences buying decisions and what are their aspirations,
needs, motives, fears, anxieties, drives and the like?
After these and similar items of information, the skilled sales person sets definite goals to accomplish on each call.
Next he plots the selling strategy to use on each successive call in an effort to achieve these definite goals, i.e. what
the sales person plans to do and when. Then the sales person makes the scheduled sales calls. If all goes according to
the plan, the sales person achieves the goals set for each call, and thus he contributes to the achievement of the
company's overall personal selling objectives.

1.13 New Approaches in Selling

Changes are taking place rapidly in selling and sales management. In order to bring down the cost of personal
selling, companies are tying to tele marketing and other direct selling methods.
Buyers are becoming more sophisticated, knowledgeable and demanding. They want to deal with those people who
have product knowledge and experience.
The intermediaries want help in determining inventory levels' preparing trade advertising and planning, displays and
layouts. Customers want presentations based on facts, products and services that help them to solve their problem.
The Sales person just doing the talking and smiling is out of date. Therefore, the emphasis is on developmental roles,
team selling, selling through computer and Market Information System (MIS) as well as on tele marketing. Today the
demand is for those sales persons who are qualified, trained, capable to sell and can make long

term problem solving relationship with the prospects. It requires the recognition of their service and rewarding them
adequately for their efforts.

Team Selling

It is done for large customers and in multinational firms because the intricacies involved in selling are so extensive
that no individual sales person can satisfy them. To serve these customers known as national a/c or key accounts,
companies train a team of service personnel, each of them has special experience and skills needed for specific
account. The team is coordinated and supervised by a senior person known as national account manager. This is
practiced by AT & T, Xerox and a number of the MNCs. Other changes are brought by the application of computers in
selling. Computers are used to qualify prospects, to maintain customer records and place their sales call. Sales targets
are fixed and performance is measured against these targets.

1.14 Market Information System

The field sales force is a valuable source of information. Sales people acquire data regarding the likes and dislikes of
customers and their inventory levels. They also give advice on promotional activities, future purchasing plans of
customers and company's image. The information is also sought regarding the competitors and their plans. This is also
done by maintaining good relations with competitors' sales force. And in this context the sales manager becomes an
essential link in a chain of communication that passes to and from the top management.

1.15 Direct Marketing

Direct marketing is an emerging form of distribution and promotion that combines elements of personal selling and
advertising. It is an interactive communication. It is done by mail, telephone or by electronic media to establish direct
relationship with customers. It can be done for specific and immediate action when desired. Currently communication
and computer technology have come together to give birth to telemarketing – a very powerful cost effective tool for
business to reach target customers and business markets. The rapid growth of telemarketing is the result of its cost
advantage. It delivers individual selling message to specific prospects at an affordable cost.
Direct marketing is targeted marketing. There is a measurable response and a feedback is built into every direct
marketing activity.

Direct Mail

The direct mail is used extensively through catalogues, magazines and newspapers. The organisations using this
method are insurance companies, credit cards, charitable agencies, book publishers, etc. Recently traditional
department store chains have turned to direct mail to stimulate sales.

Telemarketing

Marketers encourage consumers to use toll free telephone numbers to purchase products in the comfort of their
homes. Catalogue marketers, departmental and specialist stores, airlines, hotels, rental car companies and other
travel agencies urged the consumers to call toll free numbers. These applications are known as inbound telemarketing.
Outbound telemarketing is the second approach in telemarketing. This involves contacting buyers directly on phone
for selling merchandise. Many banks use this approach to sell retirement accounts and financial products. Other major
users of outbound tele marketing are colleges, medical research organisations and other non-profit groups for
soliciting contributions.

Case Study : Personal Selling

Arun Lal, a sales representative of a progressive company was doing brisk business by cold calling. He would randomly
pick any building and start chatting with secretaries collecting information which provided him with valuable names
and designations which made his calls less cold.
Arun Lal would make around 30 calls per day which includes about 4 presentations. He has been a salesman for over
15 years and has made about 15000 calls in his career. His secret of success in cold calling was alertness and fast
thinking. He would assure that every prospect was a decision maker and could give him business.
In contrast to this, Madan Mohan working for a telemarketing company would make unsolicited telephone calls with
potential customers. He would use various marketing tactics to persuade these customers to buy or at least be
interested in the product. If calls seemed interested they were transferred to another section of employees as
qualifiers.
These qualifiers evaluated the prospect's investment objectives, willingness to accept following calls and financial
ability.
A set of 20 telemarketers made about 9000 initial contacts and opened about 35 accounts in a 4 days period.
The Government has passed a regulation and put restrictions on unsolicited telephone calls to customers. This was
done on the instance of many complaints received from customers who did not want to receive telemarketing calls
and are critical about this procedure.
Auto dialing by computers to hospitals and other institutions were a great distraction as these organisations needed
open lines. Some rule makers are also of the opinion that unsolicited sales calls be banned where the caller has to sort
the bill in case of phones, others want to ban calls at homes.
Cold calling is often unpopular but it can be effective if there is some benefit to the customer in case of information
about some schemes or discounts.
Arun Lal is trying to get sales by dynamic personal selling which requires positive bent of mind. In case of Madan
Mohan, the focus is organised modern technology. Both sales persons are for the time being engaged in cold calling,
showing that cold calling is very much alive at the moment.
Questions
1. Compare and contrast cold calling between the 2 salesmen.
2. Which of the two companies is going to be affected by new rules?
Which of the patterns of cold calling would you prefer?

1.16 Summary

 Personal selling is a part of communication mix.

 Personal selling involves an alive, immediate and interactive relationship building between two or more persons.
 Personal selling is a tool for building up buyer's preference, conviction and action.
 Territory representative along with sales manager and accounts manager develop business strategies to meet
the objectives of the organisation.
 The primary job of a delivery sales person is to deliver the goods to the customers.
 The seller of consumable products calling on the retailer is an outside order taker.
 Buyers are becoming more sophisticated, knowledgeable and demanding.
 Personal selling permits plenty of relationships to spring up, ranging from a matter-of fact selling relationship to
deep personal friendship.
 The sales person and the prospect interacting with each other constitute a buyer-seller dyad.
 Direct marketing is an emerging form of distribution and promotion that combines elements of personal selling
and advertising.

1.17 Keywords

Delivery Sales Person: The primary job of a delivery sales person is to deliver the goods to the customers. The selling
responsibilities are secondary. Good service, pleasant personality and good behaviour adds to the service, e.g.,
Milkman, paper vendor.
Direct Marketing: Direct marketing is an emerging form of distribution and promotion that combines elements of
personal selling and advertising. It is an interactive communication. It is done by mail, telephone or by electronic media
to establish direct relationship with customers.
Inside Order Taker: The person behind the counter is the inside order taker. The customer comes to him and is taken
care of, e.g., the sales clerk behind the neckwear counter in a men's store.
Missionary Selling: The missionary sales person's main job objective is to increase the company's sales volume by
assisting customers with their selling efforts. The missionary sales person is concerned only incidentally with securing
orders, since orders result from his primary public relations and promotional efforts with customers of the customers.
Team Selling: It is done for large customers and in multinational firms because the intricacies involved in selling are
so extensive that no individual sales person can satisfy them. To serve these customers known as national a/c or key
accounts, companies train a team of service personnel, each of them has special experience and skills needed for
specific account.
Technical Selling: The technical sales person deals primarily with the company's established accounts and the main
objective is to increase their volume of purchase by providing technical advice and assistance.
Trade Selling: The trade sales person develops and maintains long term relations with a stable group of customers.
For the most part, this is low-key selling, with little or no pressure, and the job is dull and routine. This selling style
applies primarily to products that have well established markets.

1.18 Review Questions

1. What is meant by personal selling?

2. State the essential elements of personal selling.
3. Describe the situations conducive to personal selling.
4. Describe the different qualities of sales person engaged in personal selling.
5. What are the occupational Qualities of Sales person engaged in personal selling?
6. Explain the importance of personal selling from the point of view of manufacturers.
7. Describe the importance of personal selling from the view of customers.
8. Discuss the diversity of selling situations.
9. ‘A salesman need not possess any quality if the product is good’. Do you agree with the statement? Give
reason.
10. State the physical and mental qualities of sales persons engaged in personal selling.
11. Do you think that to be a successful salesperson only personal and mental qualities are sufficient? Give reasons
in support of your answer.

Answers: Self=Assessment
1. Customers 2. To promote sell of
products.
3. Face to face 4. Educative
5. True 6. False
7. False 8. False
9. False 10. False
11. True 12. False
13. False 14. False

1.19 Further Readings

 Books Caballero, M.J., Dickinson, R.A., Town Send D, (1984), ‘Aristotle and Personal Selling’, Journal of
Personal Selling and Sales Management, 4, 13-27.
 Ingram T.N., LaForge, R.W., Avila, R.A., (2006), Sales Management, 6th Edition, USA; Thomson South-
Western.
 Johnston and Marshall, Sales Force Management, Tata McGraw Hill, 2007.
 Matin Khan, Sales and Distribution Management, Excel Books, New Delhi.
1.20 Further Readings

 Dr. C. R. Sridhar, Telemarketing: A Brand Killer, USP Age, March 2005.

 Edward L. Nash, “Direct Marketing: Strategy, Planning, Execution”, Third Edition, McGraw-Hill, 1995.
 Ginger Conlon, “Cornering the Market, Sales and Marketing Management”, March 1997.
 Homer B. Smith, “The First Three Minutes of a Successful Sales Approach, Personal Selling Power”, 10, 1990.
 Jack Neff, Clara Dipasquale, and Jean Halliday, "Ries Thesis: Ads don't build brands, PR does," Advertising
Age, July 15, 2002.
 James E. Lukaszewski and Paul Ridgeway, "To Put Your Best Foot Forward, start by Taking These 21 Simple
Steps," Sales & Marketing Management, June 1990.
 John Goodman, CEO, Ogilvy & Mather, India and South Asia, USP Age, September 2004.
 Joseph S. Mair, "The Big Event and Sales Campaign," in Handbook of Sales Promotion, ed. Stanley M.
Ulanoff, (McGraw-Hill 1985)
 Raymond Simon, Public Relations, Concept and Practices, Second Ed. 1980.
 Scott M. Cutlip, Allen H. Center, and Glenn M. Broom, Effective Public Relations, 8th Ed. Prentice-Hall, 2000.
 SHH Kazmi and Satish K Batra, Advertising and Sales Promotion, Excel Books, New Delhi.
 Walter K. Lindenmann, "An Effectiveness Yardstick to Measure Public Relations Success," Public Relations
Quarterly, 38 (1993).

Online links

 ezinearticles.com/? Successful-Sales-
Promotionswww.workoninternet.com/article_27484.html www.direct-
marketing-association-india.org/ www.direct-marketing.net/
www.publicity.com/ www.aboutpublicrelations.net
 www.ogilvypr.com www.marketingteacher.com/.../lesson_personal_selling.htm
www.oapindia.com/ www.emarketer.com/Article.aspx?R=1007251
www.admedia.org
Module 2: Planning the Sales Team Efforts
CONTENTS
Objectives
Introduction
2.1 Definition
2.2 Market Driven Sales Organisations
2.3 Forecasting Market Demand and Sales Budget
2.4 Sales Force Management
2.5 Summary
2.6 Keywords
2.7 Review Questions
2.8 Further Readings
Objectives

After studying this unit, you will be able to:

 Explain the process of planning in Sales Management
 Discuss the Sales organisation
 Formulate the design of Sales Territories
Introduction

Once a plan has been formulated, the next logical step is to organise a sales force to achieve the objectives of the
enterprise. Decisions must be made as to the type of sales tasks required to be performed and how the sales people
are to be grouped together to exercise efficiency and effectiveness. The scope of their sales responsibility, line
authority and accountability also should be defined so that their activities can be well coordinated.

2.1 Definition

Sales organisation is a group of people working together to achieve the objective of sales-which is to capture a certain
share of market while satisfying the customers. It undertakes the effective marketing of products produced by the
undertaking or even products purchased for resale. It ensures timely distribution of products to the customers in an
economical and efficient manner. It establishes restructuring between the customers and the organisation on terms
that are both acceptable to the buyer and the seller.
A sales organisation is both an orienting point for cooperative endeavour and a structure of human relationships. It is
a group of individuals striving jointly to reach qualitative and quantitative objectives and bearing formal and informal
relations to one another. Implicit in the concept of a sales organisation is the notion that individual members
cooperate to attain ends.

The sales organisation is not an end in itself but rather the vehicle by which individuals achieve given ends. Existence
of a sales organisation implies the existence of patterns of relationships among subgroups and individuals established
for purposes of facilitating accomplishment of the group's aim.
2.2 Need

A sales organisation bridges the gap between the market and the productive capacity of the firm. If market changes
by size, also trends, competition or other environmental factors, sales functions have to be adjusted. The role of an
organisation can be compared to the skeleton of the human body. It provides a framework within which functions
take place. Whereas the skeletal function is the same for all human beings it varies between firms. This is because all
enterprises have their own objectives, resources and corporate plans to achieve those objectives.

Different Structures for Sales Management

The organizational structure for sales management varies depending on the firm’s size and strategy. In field sales
management, the structure consists of the unit manager, district manager, regional manager, general manager and
vice president of sales. The unit manager is often referred to as the manager-in-training with interaction taking place
at the customer level. Key responsibilities for the unit manager include training new salespeople, recruiting, selling to
small accounts, and running district meetings. District managers, a step up from unit managers, have five to ten years
of management experience and generally manage eight to ten salespeople. District managers typically report to the
regional manager, who is responsible for managing multiple districts in a given geographic area. The general manager
is sometimes referred to as the vice president of sales and marketing. This position is traditionally at the top of the
sales organizational chart, with the VP of Marketing and Sales driving the sales strategy of the firm.
There are distinct differences in bottom-and top-level managers. The main difference is the amount of time they spend
on each of their tasks. Lower-level managers spend the majority of their time on staffing, directing and monitoring
salespeople. Top-level managers generally focus on planning, organizing and coordinating their sales strategy with
overall corporate objectives. They also forecast sales, set objectives, develop strategies and policies, and establish
budgets.
Sales management jobs are found in both consumer and commercial industries, in positions ranging from district
manager, to vice president of marketing and sales, to top sales management of the firm. Competition for sales
management jobs can be intense. Sales managers typically start out as salespeople, working their way to the top with
strong leadership and organizational abilities. The progression of salespeople into management positions is gradual,
with representatives moving into more executive positions by taking on more responsibility with larger, national
accounts. It is likely that a sales representative will spend a portion of their career as a district or regional sales trainer
before moving into a senior sales management role.
The progression of salespeople into management positions varies based on the size and organizational structure of
the organization.

Did you know? The organizational structure for sales management varies depending on the firm’s size and strategy.
In field sales management, the structure consists of the unit manager, district manager, regional manager, general
manager and vice president of sales.

Self- Assessment

Fill in the blanks:

1. A sales organisation is both an orienting point for cooperative ...................... and a structure of human
relationships.
2. A sales organisation bridges the gap between the market and the ...................... capacity of the firm.
3. ...................... is the power to suggest to those holding line authority the method for implementation of an order.
4. The objectives of the sales organisation need to be defined in the light of ...................... objectives both in the
long-term and short-term.
5. Control and ...................... in a sales organisation can be done both formally and informally.
6. The ...................... department's structure evolves from the needs of the business.
7. ...................... division of line of authority is suitable when almost similar products are sold in the market and are
marketed to different types of customers.

2.3 Purpose

2.3.1 Defines Lines of Authority

A sound sales organisation defines people in the organisation in terms of authority, responsibility and accountability
and identifies flow of authority. It enables the sales person to identify whether their authority is line, staff, or
functional.
Line authority carries the power to require execution of orders by those lower in the organisational hierarchy and
make decisions on the need, place and time of action over a wide range of matters.
Staff authority is the power to suggest to those holding line authority the method for implementation of an order.
They advise line executives about methods but have no formal power to require or enforce the execution of their
recommendations.
Functional authority enables specialists in particular areas such as in technical product service to enforce their
directives within a specific and limited field. They assist executives holding general line authority.
All executives should understand the nature of their authority with respect to each aspect of the operation, otherwise,
friction develops. When, for instance, staff executives attempt to exercise line authority, they are heading for trouble
with the line executives whose authority is usurped.

2.3.2 Ensures that all Necessary Activities are Assigned and Performed

The process of organising presupposes the identification of all necessary activities which have to be performed for the
achievement of objectives. As organisation grows, tasks also multiply. It must be ensured that all necessary activities
are specifically assigned.
The sales executives are in close contact with the users in small companies but as the company grows, the top
executives get farther and farther removed from the customers. At this point of time an individual should be assigned
responsibility for maintaining such relationships.

2.3.3 Establishes Basis of Communication

Earlier because of simplicity of organisations, lines of communication were synonymous with lines of authority. Today,
business has become a very complex phenomenon due to information overload. The flow of information is both
horizontal and vertical. The organisation structure identifies the sources of information, recipient of data and may also
tell us who is responsible for generation of information.

2.3.4 Provides for Coordination and Balance

Good organisation achieves coordination and balance. Individuals vary in competence, potential and effectiveness. By
coordination we achieve Synergistic effect (when the sum of a combination effort exceeds the efforts of the same
individuals working alone). Motivation also plays an important part and is achieved by training programmes,
indoctrination (teaching), group meetings and two-way communications.
2.3.5 Provides Insight into Avenues of Advancement

The personnel look upon sales organisation as something that will advance and improve their future career. Possible
avenues of advancement may be evident from the organisational chart which depicts the normal promotion route of
the personnel.

2.3.6 Economises on Executive Time

As an organisation grows, the sales department increases in number and complexity. Delegation of authority becomes
imperative. This allows the executives to spend more time on planning and less in operation. For effective
coordination, the span has to be limited but this depends on various factors like superior's ability of coordination,
qualities of the subordinate, etc. One of the main purpose of coordination is to achieve economies on executive time.

Did u know? Staff authority is the power to suggest to those holding line authority the method for implementation
of an order.

2.4 Developing the Sales Organisation

Sales organisation develops in response to the market and company requirements. The setting up of an organisation
or the sales organisation development takes place in a series of steps. These steps are as follows:
1. Defining the sales organisation's objectives.
2. Defining the various activities that need to be performed to achieve these objectives and estimating the cost
and volume of each of these.
3. Grouping of the activities and positions.
4. Assignment of personnel to positions.
5. Control and coordination by formal and informal means.
Step I
Defining the sales objective includes the setting of qualitative objectives. This can be done by asking what the
company wants to achieve in terms of:
1. Growth/survival
2. Market share
3. Market leadership
4. Customer relations.
The objectives of the sales organisation need to be defined in the light of corporate objectives both in the long-term
(qualitative) and short-term (quantitative). Sales management determines the qualitative and quantitative personal
selling objectives. Quantitative personal selling objectives are set with an eye on qualitative flow of sales revenue.
 Figure 2.1: Developing the Sales Organisation

Source: http://train-srv.manipalu.com/wpress/wp-content/uploads/2010/08/clip-image004thumb10.jpg

Steps in Sales Organisation Development

Helps in setting the quantitative objectives. Survival also requires profit, hence another quantitative objective is
earning profits by making miracle sales and also by reducing the costs and the expenses of various departments.
Another important qualitative objective is to realise long term growth in sales and profits.
This means that sales, profit and growth are the three general objectives. Qualitative personal selling objectives are
translated with quantitative objectives, e.g., increasing the market share by 20%. If the goals are clear and defined,
then time and effort are better utilised and progress is more smooth.
Step II
The analysis of the type and volume of activities needed to be performed will lead to assessment of how many
executive and operating positions are required and how these positions would relate to each other. This also helps in
assessing the duties and responsibilities of the concerned persons who are employed on these positions. The activities
involved in modern sales organisation are similar. Difference among the departments are those of details, of relative
emphasis placed upon individual activity and performance. These differences are more apparent than real.
Step III
This consists of the following tasks;
1. Identifying positions to whom these activities may be assigned.
2. Classify and group closely related activities and assign them to same positions.
3. Decide on hierarchy of activities by defining the level at which each activity will be performed. This will depend
upon the importance of the activity, e.g., in an organisation trying to sell a new product through middlemen,
dealer relations become a crucial activity and has to be assigned a higher position in the sales organisation.
Step IV
Assignment of personnel to positions consists of deciding on two things. First of all, to hire, select or recruit specialists
to take up the positions so that the organisation gets the best personnel in its armour who will perform the jobs in a
resplendent manner and, secondly, modifying the positions so as to take the services of existing personnel after
training and developing them so that they fit in the requisite positions. An organisation may take either of the two
ways. When there is no talent in the organisation consummate with the requirements of the jobs then the organisation
may hire or recruit personnel from outside. This may also be done if the management requires young blood in the
organisational lines. Further, if the individual possesses the skills and capabilities then the job may also be modified
or changed to fit these individuals. Generally, planners prefer, whenever the situation permits, to have individuals
grow into particular jobs rather than to have jobs grow up around individuals.
Assignment of personnel to positions involves the following activities:
1. Defining relation between positions – how many individuals report to a particular superior– and the span of
control.
2. Defining the nature of authority in respect of each position (delegation of authority, lines of authority, lines and
staff).
3. Assigning personnel to positions.
Step V
Control and coordination in a sales organisation can be done both formally and informally. Formally, it can be done
by written job description, rules, regulations and procedures. Written job description is an important formal
instrument for coordination and control. It gives details about the various attributes of each job like reporting
relationships, job objectives, performance measurements and duties and responsibilities. Informally, it can be done
by sheer force of personality coupled with ability to attract and hold the loyalty of followers.
One of the methods of coordination is the chain of command. We also try to have provision for growth, flexibility and
control. Another instrument of control is an organisational chart because many things are specifically stated in it. An
organisational chart shows the formal relationships between different positions. It helps in understanding the nature
of authority and responsibility of each personnel with respect to each aspect of operation. This helps in avoiding
friction which would exist if it had not been there.
A supplement to organisational chart is an organisational manual which incorporates the company as well as
departmental chart. The organisational manual is an extension of the

organisational chart. The organisational manual typically contains write-ups of job descriptions and specifications and
summaries of major company and departmental objectives and policies. The organisational manual also contains a lot
of information which helps the users to learn and understand the nature of their responsibilities, authorities and
relations with others.

Tasks :

1. Discuss about the steps involved in developing the organization.

2. Discuss the statement "Is sales compensation driving the right behaviors”.

2.5 Centralisation vs Decentralization in Sales Organisation

In centralised system, recruitment, training, compensation and evaluation are all managed from the central head
quarter while in decentralised system the field sales managers take up most of these functions. It also depends on size
of operation, cost effectiveness and competitive necessities. When firms are small and have only a few sales people,
corporate office may be more efficient and effective. When size of operation increases, branch offices gradually
emerge. Decentralisation in this case provides more freedom to sales manager to allow him to display greater initiative
and managerial skills.
Most medium and large size firms combine the advantages of both centralised and decentralised operations.
Decentralised sales offices are utilised to ensure better customer service while training and recruitment may be
centralised.
With growth, advantages of decentralised sales force management increasingly outweigh the higher costs. Among
these advantages are:
1. The sales volume increases to cover the fixed costs.
2. There is intensive cultivation of the market.
3. Due to effective control of sales personnel there is a comparatively better provision for improvement of
customer services.
4. Travelling expenses and allowances given get reduced considerably.
5. A well-managed channel structure offers a good training ground as the shortcomings are well known to the
executives.
6. The motivation and morale of the sales force increases.
7. It provides effective control, improves supervision and increases sales productivity.
Managerial philosophy towards delegation and control also affects the extent of centralisation and decentralisation.
Increased use of computers has also influenced this philosophy. It has led to more centralised decision making as
data can be processed much faster.

Caselet : Arthur Andersen Finally Dies at 89

After 89 years in business, Arthur Andersen LLP has ended its role as auditor of public companies.

The Chicago-based company was convicted in June of obstruction of justice for shredding and doctoring documents
related to Enron audits. Afterward, Andersen told the Securities and Exchange Commission that it would cease
auditing public companies. It already had given up its license to practice in several states.
"As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to revocation of its firm's permits in
all states where it was licensed to practice public accountancy with state regulators," the company announced in a
statement.
The company now has fewer than 3,000 of the roughly 28,000 employees it had before the Enron scandal. Of its more
than 1,200 public-company audit clients, none will remain.
The firm's startling decline has come in less than nine months. "It's like a family member who has terminal cancer,"
said Gary Brentlinger, human resources director for Andersen's offices in Houston, Austin, San Antonio and New
Orleans. "We're watching the firm die."
As people have left and files have gone into storage, Brentlinger said Andersen staff members have removed papers
from office in a downtown Houston skyscraper and turned off the lights, leaving only furniture and artwork.

Questions
1. The most established and successful companies are prone to abrupt end – why?
 2. Analyse how business stability can be achieved for longer periods.

Self- Assessment

State whether True or False:

1. Lines organisation is extensively used in smaller firms or those dealing in a narrow product line, or selling in a
limited geographical area.
2. Customer division of line of authority is suitable when almost similar products are sold in the market and are
marketed to different types of products.
3. A supplement to organisational chart is an organisational manual which incorporates the company as well as
departmental chart.
4. The sales organisation structure can also exist in two other forms which are vertical sales organisation and
horizontal sales organisation.
5. Line division of line of authority is suitable when almost similar products are sold in the market and are
marketed to different types of customers.
6. A sales organisation can exist in numerous forms
7. Organisation is headed by Managing Director who has line managers called Regional Managers and Staff
Managers
8. Formal job description is an important formal instrument for coordination and control

2.6 Basic Types of Organisational Structures

The sales department's structure evolves from the needs of the business. Different companies have different
organisational structure depending upon their needs. The organisational structure is affected by company size,
practices of competitors, marketing channels, customers and the personalities and abilities of personnel.

2.6.1 Lines Sale Organisation

It is the most basic form of the sales organisation characterised by a chain of command, running from top sales
executive down to salesman level.
Since line of authority has vertical structure, executives at each level are generally independent of all others at the
same level. Responsibilities are usually delineated through assignment of quotas or sales targets. An example of lines
sales organisation is the liquor division of Jagatjit Industries. Each level is connected to the subordinate level by scalar
lines of command.
Lines organisation is extensively used in smaller firms or those dealing in a narrow product line, or selling in a limited
geographical area. It places great demand on time and abilities of the top sales executives as all field reporting's finally
come to him. Operational details of managing the sales department takes up a large part of line executives time. He
is at times forced to take decisions without benefit of adequate planning.
Line organisation becomes inappropriate in case of a rapidly growing organisation or those with large sales staff as
growing department necessitates additional layers of executives to be added.
 Fig: 2.2

2.7 Customer Channel Division of Line Authority

When the line authority becomes a burden because of increasing number of people to supervise, there are many
options available for the organisation. One of the options is to add a general line assistant. Another option is to divide
the line authority on the basis of customer or marketing channel.
Customer division of line of authority is suitable when almost similar products are sold in the market and are marketed
to different types of customers. It is also done when selling problems to each type are different. When the same, or
identical, products are sold to a number of industries they often find different applications in
each industry. Customers not only have different needs, they are influenced by different buying motives. Thus, special
sales forces sell to each major type of customer.
 Figure 2.3: Sales Department with Line Authority Subdivided by type of Customer

General Sales Manager

Director Manager Director Manager, Director

Manager, Director
product lumber mining sales
of sales construction of sales
research & industry industry promotion &
planning industry training
development sales sales advertising

Branch Branch Branch

Sales Sales Sales
Managers Managers Managers

Sales Sales Sales

Personnel Personnel Personnel

Fig 2.4 Line & Staff Sales Organisation

Line and staff sales organisational structure results as the size of the operation grows. It is characteristically found in
medium and large firms with sizeable sales staff selling diversified product lines. Staff are specialists in their own field
which can be sales training, service, sales analysis, planning dealer relations, sales promotion, sales personnel
development, etc. A pool of experts become available for providing assistance in specialised fields.
Organisation is headed by President who has line managers called V.P. Marketing, GM Sales, Assistant General
Manager Sales, District Manager, Branch Sales Manager and Sales Personnel and Staff Managers, who look after the
staff functions Manager reporting to him.
Advertising Manager is in charge of Advertising, and Manager Market Research is responsible for research. These two
functions are advisory in nature and are staff functions.
Sales Promotion Manager performs the advisory function with respect to sales promotion, Director training and Sales
Personnel Director are in charge of training and hiring sales personnel respectively. These are also called staff
functions. Problems with line and staff is basically one of coordination reports. Moreover, recommendations take time
to compile and there is time lag which hinders active coordination. Various problems of interpersonal relationships
also arise. Staff sometimes assumes the authority to issue orders and direction. This leads to dual subordination and
can be overcome if authority and responsibility are specifically written down.
2.9 Functional Sales Organisation

Functional sales organisation was designed by F W Taylor and takes into account, that, all the executives and
employees should have different types of activities, as far as possible. Functional sales organisation is aimed at utilising
the benefits of specialisation to the fullest extent. All sales personnel receive direction and are accountable to different
executives on different aspects of their work in contravention to the principle of unity of command.
Most of the firms use this type of organisational structure as it not only provides a platform for improved performance
through specialisation, but also, improves coordination among the functional executives.
Functional organisation is not feasible in all types of organisations. It is cumbersome and ineffective in its present
form. Small and medium sized firms find it neither practical to implement nor are financially strong enough to employ
high degree of specialisation. Large organisations, however, find it suitable for stable operations as there are no
constraints with regard to finance, labour and specialised executives. Large companies with stable selling operations
are exceptions rather than the rule.

Fig 2.5: Functional Organisation

Other committees found in sales organization include customer relations, operation, personnel, merchandising, and
new products. The use of committees in the sales department has advantages.

5.10 Vertical and Horizontal Sales Organisation

This type of organisation has several levels of management. All the employees report in the upward direction to
their next level (i.e., all report vertically upwards).
 Figure 2.6: Vertical Sales Organisation

Chief of Sales Executives

Sales Supervisor

Horizontal Sales Organisation

In this type of sales organisation the number of management levels are small and the number of managers at a
particular level is large.
Figure 2.7: Horizontal Sales Organisation

In vertical sales organisation we see a narrow space of control and in horizontal sales organisation a wide span of
control. Span of control is the number of subordinates that can be handled effectively by a superior.
Field Sales organisation is the group of sales force that work in the field periodically with retailers and customers in
person. They send reports to the company and they are some kind of specialist. They can be important specialist,
product specialists, or a coordinator of these are these force have organised based a product, market or customer,
we can also have a combined based organization.

Figure 2.8: Product based Sales Organisation

This is practiced in very big companies where the area to be covered is very large and a large and a larger no. of
product lines are to be marketed.
As Salespersons are dealing only in one product they get in a depth knowledge and specialisation. In this type of
organisation the activities are duplicated.
Customer based Sales Organisation

The organisation can also be customer based i.e. salesman catering to different type of customers. A company making
computers can have salesman catering to Govt. offices, commercial, houses, individuals (Businessman, doctors,
students etc.)
Figure 2.9

The salesman in such organisations gets to know more about the customers, their problems and methods of purchase.
Builds relationship which a long way and give fruits when the customer

is satisfied with the product and the service. The disadvantage is the duplication of facilities & resources. Extra
expenditure is involved in maintaining a large sales force.

Caution: One of the disadvantages of this structure is that a particular sales person can handle only a limited number
of uncomplicated products or product lines.

Combined Base Organisation

In this type of organization two or more bases are combined to form an organisation structure. It may overcome the
problem of individual sales organization.
Sales organisation is the framework of relations of different people in the enterprise. Its function is to provide an
efficient, economical and flexible administrative set up to ensure timely movement of products from the warehouses
to consumers.
Importance of sales organisation can be judged from the following points:
1. To plan the purchase.
2. To create demand pattern for the products.
3. To handle the orders received.
4. To collect the dues.
5. To reconcile the complaints.
6. To handle the tasks of personnel management.
A sales organisation can exist in numerous forms. It can be a line organisation or a line-staff organisation or functional
organisation. The sales organisation structure can also exist in two other forms which are vertical sales organisation
and horizontal sales organisation. Depending on the needs and requirements various organisations choose their
organisational structure.

Case Study: Physical Distribution

Kanpur Tiles were making several qualities of tiles for floors and walls. They were also doing business in decorative
plumbing hardware. The main markets comprised buildings and individual buyers. The company was selling to about
1000 retail, regional and wholesale outlets. The company had 20 regional warehouses scattered over the entire
market. The 80% customers could get their requirements in 2 days. The inventory planning of the company
permitted 85% of the inventory to be dispatched to warehouses immediately. Rapid delivery and adequate
inventory levels was the reason of success of Kanpur Tiles.
1. Recently the cost of distribution has increased and the company is facing a credit squeeze. This prevented the
company to maintain high level of inventory in warehouse, which also delayed the delivery time.
2. The downward trend was felt in the housing industry which lowered the demand. The buyers were very
selective in choice of individual items therefore the company had to maintain its quality standards and its
reputation.
Floor and wall tiles and other connected materials do not come in the category of impulse buying. The customers
spent a lot of time and were cautious of many aspects of flooring which lasted for many years. Some executives of
the company felt that the two-day delivery time is not essential and it could be changed to more days for the sake
of economy. The total inventories cost of regional distribution centres were almost 30% of the capital value of the
inventory. Another category of orders was rush orders, in which immediate delivery was required and they
constituted about 50% of the volume.
A survey of the rush order customers showed that customers would not complain if the delivery period was
extended from two to five days but would be unhappy
for longer periods of delivery as they were in the process of constructing their houses and wanted the supplies
immediately. Rest of the customers would accept delivery ranging from 15 to 25 days.
The management had different choices to make.
(a) They could eliminate all branch warehouses and maintain a central warehouse at the factory. This could reach
95% of the customers within 23 days. Rush orders would be dealt separately by air shipment, which would
increase the cost of transportation 3 times.
(b) If the company maintains three warehouses it could reach 30% of the consumers in ten days and rest in 18 days.
The inventory cost would be 11% in this scenario.
(c) If the company maintains 10 warehouses it could reach 45% of the consumers in 7 days and the rest in 17 days.
The inventory cost would be 25% of the capital value inventory.
(d) If the company maintains a central warehouse, it could make a gross profit of 40%. Current gross margin was
20-25%.
All the competitors of the company had limited number of warehouses and their delivery time was 15-20 days.

Questions

1. In your opinion what alternative should be adopted by the company and why?
2. What should be the policy for rush orders?
Physical distribution cost consists of freight rates, labour cost, storage, insurance, transport, storage, inventory
control, order processing, material handling, etc.
The balance between customer service and cost distribution is devisable.

2.11 Summary

 Sales organisation is a group of people working together to achieve the objective of sales.
 A sound sales organisation defines people in the organisation in terms of authority, responsibility and
accountability and identifies flow of authority.
 A sales organisation bridges the gap between the market and the productive capacity of the firm.
 Functional authority enables specialists in particular areas such as in technical product service to enforce their
directives within a specific and limited field.
 The personnel look upon sales organisation as something that will advance and improve their future career.
 Regional Managers are the line managers responsible for operating results in their own territories and control
their own field staff.
 Sales organisation is the framework of relations of different people in the enterprise.
 A supplement to organisational chart is an organisational manual which incorporates the company as well as
departmental chart.
 Control and coordination in a sales organisation can be done both formally and informally. The organisational
manual is an extension of the organisational chart.
 A well-managed channel structure offers a good training ground as the shortcomings are well known to the
executives.
 Operational details of managing the sales department takes up a large part of line executives time.
 The organisation can also be customer based i.e. salesman catering to different type of customers.

2.12 Keywords

Combined Base Organisation: In this type of organization two or more bases are combined to form an organisation
structure. It may overcome the problem of individual sales organization.
Customer Based Sales Organisation: The organisation can also be customer based i.e. salesman catering to different
type of customers. A company making computers can have salesman catering to Govt. offices, commercial. Houses,
individuals.
Field Sales Organisation: Field Sales organisation is the group of sales force that work in the field periodically with
retailers and customers in person. They send reports to the company and they are some kind of specialist.
Horizontal Sales Organisation: In this type of sales organisation the number of management levels are small and the
number of managers at a particular level is large.
Line Organisation: Lines organisation is extensively used in smaller firms or those dealing in a narrow product line, or
selling in a limited geographical area. It places great demand on time and abilities of the top sales executives as all
field reporting's finally come to him.
Regional Managers: Regional Managers are the line managers responsible for operating results in their own territories
and control their own field staff.
Sales Organisation: Sales organisation is a group of people working together to achieve the objective of sales-which is
to capture a certain share of market while satisfying the customers.
Staff Authority: Staff authority is the power to suggest to those holding line authority the method for implementation
of an order.

Answers: Self-Assessment
1. Endeavour 2. Productive
3. Staff Authority 4. Corporate
5. Coordination 6. Sales
7. Customer 8. True
9. False 10. True
11. True 12. False
13. True 14. True
15. False

2.13 Review Questions

1. What is the meaning and purpose of a sales organisation?
2. What are the steps involved in developing a sales organisation?
3. What are the basic types of organisation structures?
4. Distinguish between line-staff and functional organisation with respect to sales.
5. Explain the functional types of sales organisation.
6. Describe the vertical and horizontal sales organization.
7. Describe the line and staff sales organization structure.
8. Explain the centralization vs decentralization in sales organization structure.
9. Describe the customer channel division offline authority.
10. Explain the combined based organization.
Sales Strategy

Sales strategy is the game plan adopted to achieve the desired objectives. It helps a company to reach a desired
position from the existing position.
Sales strategies are adopted to achieve the desired objectives in sales. The objectives may be many in number and
these require elaborate and careful consideration of the strategies and
game plans of other competitive organisations. Sales strategy is different from marketing strategy in that marketing
strategy involves identifying the target segment and directing the marketing mix on the target segment to achieve the
objectives and fight competition while sales strategy is involved with pushing the sales of products. It basically involves
three steps:
1. Market Analysis
2. Setting Objectives
3. Designing Sales Strategy.

2.14 Market Analysis (Step I)

Market analysis here means macro environmental analysis. This includes the analysis of social, political, cultural,
economic and technological factors which have a significant bearing on the SWOT analysis of the firm.
The sales objectives are directly affected by corporate missions or goals. The macro environmental analysis and the
competitive situation helps in market analysis which helps in setting the objectives of the firm.
Market analysis is a prerequisite to objective setting: The company would need to know:
1. The current size and growth rate of the market.
2. Consumer needs, attitudes and trends in purchasing behaviour.
3. Competitor analysis. It covers a whole lot of things and includes:
(a) Current strategy adopted by other firms. Some firms distinguish their product by variations in product
attributes, packaging and effective promotional technologies.
(b) Current performance including market share analysis.
(c) Their strengths and weaknesses.
4. Expectations to their future actions: The role and scope of functions are related to the competitive situations
facing its products in each of the markets it participates in. While analysing the market it is necessary to see what
type of competition exists. There can be different types of competitions.
(a) Pure Competition: In this each seller is too small to effect the prevailing market price. This competition
exists in identical undifferentiated products. Sales effort is limited to maintaining adequate supplies. All
sellers’ products are identical so buyers are indifferent as to which sellers they buy from. There are no
artificial restraints on price like government, trade associations, etc. All buyers are always informed about
all seller's prices.
(b) Monopolistic Competition: In this type of competition, there are large number of sellers of a generic kind
of product but each seller's brand is differentiated from every other brand. Nearly every seller's brand of
product, e.g., nail polish remover, pet food, can be differentiated. Here sellers differentiate through unique
packaging, unusual distribution methods or pricing gimmicks and through promotional strategy and
through a blend of advertising and personal selling.
(c) Oligopolistic Competition: This type of competition has the following characteristics:
(i) Number of competitors are small but are individually identified and known to each other.

(ii) Each competitor is large so that any change in his marketing strategy affects the other competitors.
(iii) All the competitors are known to each other. In USA, oligopoly exists in automobiles, computers,
machinery, shoes, textiles, etc.
(iv) Successful companies keep flourishing and keep coming up and vice versa.
(v) It produces the most aggressive competition and a close watch is to be kept on all the Four P's.
(vi) Personals selling plays an important part.

Did you know? Satisfaction strategies, which include ways to maintain or improve customer satisfaction levels
such as reducing delivery time from three days to 24 hours.

2.15 Setting Sales Objectives (Step II)

Objectives are standards against which performance is measured. These are of two types – qualitative objectives and
quantitative objectives. Qualitative objectives are long term whereas quantitative objectives are short term. The
objectives are set keeping in mind the competitive situation of the company.
A company selling high value technical household products expects its salesmen to carry out entire sales functions
and practical aspects also. The quality of sales force in this case will be different to those who only coordinate.
Qualitative objectives are long term and are derived from the marketing and sales policies of the company.
Quantitative objectives on the other hand relate to operating results. These are also dependent on the competitive
situation and the corporate goals and vary over time. Goals are set in terms of:
1. Sales volume
2. Sales cost
3. Accounts receivable
4. Inventory levels
5. Dealer support
6. Feedback input.

2.16 Designing Sales Strategy (Step III)

After the market analysis has been carried out which involves the study of environmental factors, the SWOT analysis
is done. The objectives are set and then the sales strategy is formulated by considering:
1. The type of sales force required.
2. The size of the sales force required.
3. Territory design.
4. Channel support and coordination.
5. Transaction cost analysis.
All the above topics are being dealt with separately.

Caselet: Size of the Sales Force

A company has 1,000 (one thousand) accounts in all the following types:

(a) 200
(b) 300
(c) 500
The salesman is required to call the A accounts 40 times a year for 60 minutes each B accounts 20 times a year for 30
minutes and C accounts for 15 times a year for 10 minutes each, in a year.
The salesman would be involved in selling task for 50% of the time, non-selling task 20% of his time and travelling
task for 30% of the time.
Question
If the salesman works for 42 weeks in a year, 8 hrs.. a day. Find out the total no. of salesmen required.

2.17 Types of Sales Force Needed

It depends on the role the sales force has to play. The quality of sales force is defined as the quality of contribution
required from the sales force and the work load on them. If pre-selling has been done by advertisements, then selling
becomes easy. Some companies expect their salesmen to do the entire job, e.g. Instrumentation
Ltd, at Kota takes care from commissioning and installation of equipment to after sales service.
There are two types of specialists – product specialists and market specialists.
Product Specialists are for highly technical products, e.g., marketing of banking services, service packages like
agriculture financing, short and long term financial services. Complicated products like computers, cardiograms, etc.
Market Specialists know the different markets and can also adopt different sales approaches for different markets.
They need to know more than one line of products.
There can be a combination of both product specialists and a market specialist in the sales force of a firm.

2.18 Channel Support and Coordination

This is also an important consideration for the formulation of sales strategy. If indirect distribution is adopted it is
imperative that sales organisation indicates dealer cooperation programmes. Support is to be given for maintenance
of adequate stocks, local promotion in the form of P.O.P. (point of purchase) displays and for local advertising.
Feedback from the dealer is an important area of support and can't be ignored. In the dealer management
programmes, for the success of channel support and coordination:
1. Adequate incentives for the dealers are a must;
2. Proper feedback and communication is important;
3. Measures have to be taken to promote dealer loyalty.
The degree of coverage and the support you want from the channel depends on how intensively or extensively you
want to distribute the product.

Intensive Distribution

In this the distribution is made to all the outlets which are many in number and spread in a big area. Maximum
exposure to the product is given. Such distribution is done by Hindustan Lever and Asian Paints Limited.

Extensive Distribution

It is the distribution in which we cover a great area but do not concentrate on all customers in the area. Extensive
distribution covers a large area and distribution of goods is extensively done.

Selective Distribution

Here goods are distributed to selected outlets. These may be speciality stores or prominent stores in one area. The
distribution is done through more than one outlet but less than all, e.g., designer shirts, cosmetics, TV, electrical
equipment, etc.
Exclusive Distribution

This is done exclusively by one dealer who provides after sales service like in automobiles. This is done for the
cultivation of an exclusive image. This requires greater motivation, greater coordination and efficiency in operation.
The selection of these exclusive agents is done with great care.

Vertical Integration

It is the process of requiring management membership rights at various levels of distribution channel. It is a costly
affair for absolute channel control. Business balance has to be maintained between desire for market control,
coordination and distribution costs and specialisation. A balance should be maintained between channel control and
the cost incurred in it.

Task Discuss the steps involved in designing sales Strategy.

2.20 Transaction Cost Analysis

Transaction cost is the cost of transacting business. Here the rough channels are compared with costs through firms
own distribution systems'. It includes cost of prospecting, bargaining and maintaining the distribution system.
Services expected from middlemen are definable as we move towards exclusive distribution.
1. Delineation of territory (exclusive domains) of the middleman and freedom in letting him cultivate the
territory.
2. Inventory holding (to prevent stock-out): Agreements can be made for holding inventory. Price guarantee is
given in case of fluctuating prices.
3. Installation and after sales service: After sales service is important and for after sales service training is also
required.
4. Price maintenance in selling to ultimate consumer: Dealers must maintain price.
5. Promotional services: Sales displays, local advertising, catalogues and sales promotion. This can be provided
more effectively by exclusive distribution.
6. Exclusive dealing (not carrying competitive brands): In case of competitive products dealers should not carry
competitive brands.

2.21 Determining the Size of the Sales Force

There are three methods to determine the size of the sales force:
1. Incremental Method
2. Sales Potential Method
3. Work Load Method.

2.21.1 Incremental Method

It says that we can increase the size of the sales force till the incremental revenue exceeds incremental costs.
Assumptions: Profits will increase when additional sales person are employed.
Example: If we have 10 salesmen already, then on adding one extra salesman the sales volume, cost of goods (60%
of sales) and gross margin (40% of sales) vary as depicted in the following table.
 No. of salesmen Sales volume in Rupees Cost of goods Sold 60% Gross margin 40%
11 250,000 150,000 100,000
12 200,000 120,000 80,000
13 150,000 90,000 60,000
14 100,000 60,000 40,000

Suppose all salesmen receive a salary and travelling expense of 20,000 + 15,000 and 6% commission on sales. The
net profit will vary according to the following table.
No. of salesmen Gross margin Salary +T.A.+ Net profit
Commission
11 100,000 35,000 + 15,000 50,000
12 80,000 35,000 + 12,000 33,000
13 60,000 35,000 + 9,000 16,000
14 40,000 35,000 + 6,000 –1,000
Thus we see that the 14th salesman is not feasible as there is a loss of 1000 if he is included in the sales force.

Limitations of Incremental Method

It fails to account for competitive reaction and long term investment of personal selling effort.

2.21.2 Sales Potential Method

Here the management considers what an average sales person with an average performance will accomplish. Thus
the amount of sales that will be made by the salesman. We then find out the forecasted sales volume(s). We divide
the total sales volumes by the work which one sales person can do. Then S/P will give the number of sales person
required. In this method we also make allowances for the rate of turnover of sales person.
This is the easiest of all the methods. The formula for this method is N = S/P
Where,
N = Number of sales persons
S = Forecasted sales volume
P = Estimated sales productivity of one person
If S = 100,000 and P = 10,000 then N = S / P = 10

Modified Formula

If rate of turnover is 10%, then there is a modified formula for the number of sales persons.
N = S / P + T (S / P) = (S / P) (1+T)
For the above set of values
N = (100,000/10,000) (1 + 10/100) = 10 + 1 = 11 sales persons.
2.21.3 Work Load Method

This is the most complex method. According to this method, the assumption is that all sales personnel will shoulder
equal responsibilities. First the total work load is estimated and then it is divided equally among all the sales people.
There are six steps involved in applying the Work load method.
Step 1
Customers should be classified into sales volume potential category A, B, C, etc. For example, suppose there are 800
A/c's of the following type
A (Large Accounts) 100 in
number
B (Medium Accounts) 200 in
number
C (Small Accounts) 500 in
number
Total Accounts = 800 in
number
The breakup of the accounts is done to facilitate planning, directing and control of the sales force.
Step 2
Decide on the length of time per sales call and desired call frequency on each class of customers. For example,
Class A = 60 min. × 52 calls/year = 52 hrs..
Class B = 30 min. × 24 calls/year = 12 hrs..
Class C = 15 min. × 12 calls/year = 3 hrs..

Calling on A class customer would require one hour per customer and the call is to be made every week. Therefore,
for one A class customer 52 weeks will be required. Similarly, each B class and C class customers would require 12
hrs. and 3 hrs. respectively per year.
Step 3
Calculate the total work load by multiplying the time taken by one customer into the no. of customers
52 hrs. × 100 = 5200 hrs.
12 hrs. × 200 = 2400 hrs.
3 hrs. × 500 = 1500 hrs.
Total = 9100 hrs.
Total work load as shown would be 9100 hrs. for 800 A/c's of different types.

Step 4
Determine total work time available per person by task. Let the work time available as per the task be
Selling task 50%
Non-selling task 30%
Travelling task 20%
Total 100%
Step 5
Determine total time available per sales person.
If the management decides 40 hrs./week + work for 48 hrs. in a year, then total hrs. available in

a year = 40 × 48 = 1920 hrs.

Step 6
Calculate total number of sales people needed.
N = Total Workload/Work one salesman can do
Or N = 9100/960 = 10 salesmen (more than nine salesman)
Advantages of Work Load Method
1. This method is easy to understand and apply.
2. It is attractive to practising managers
Disadvantages of Work Load Method
1. It does not take profit into consideration.
2. It assumes that sales personnel have same work load and they work with same efficiency.
3. Some sales people accomplish more in a short period of time than others. Time given to each call is as
important as the quality of time given per call.

Harvard research shows that, across a range of industries, there is a direct and consistent correlation between the
calibre of the sales force and organisational growth.

2.22 Determining the Kind of Sales Personnel

Making this decision requires consideration of qualitative personal selling objectives-what contributions toward the
company's long term overall objectives should be expected from those performing selling jobs? What should be the
duties and responsibilities of these individuals?
How should their job performance be measured? Management must face up these questions when it decides the kind
of sales personnel it requires.
Each company deals with a unique set of marketing factors, such as the strengths and weaknesses of its products
(what it sells), the motivations and buying practices of its customers and prospects (whom to sell to), its pricing
strategy and the competitive setting - the relative strengths and weaknesses of competitors. Also, different selling
jobs require different levels of selling and non-selling abilities, training, technical and other knowledge.
Therefore, in determining the kind of sales personnel, we must understand what is expected of them: the job
objectives, the duties and responsibilities and the performance measures. Knowing the sales person's job means
knowing the particular job for the particular sales person. Knowing the particular job helps management to avoid
"putting square pegs into round holes". It helps in fitting the job to the person and the person to the job.

Self-Assessment

State whether True or False:

1. Sales Potential Basis is splitting the company's customer base according to dispersion of its sales potential.
2. Vertical Integration is the process of requiring management membership rights at various levels of distribution
channel.
3. Manufacturing cost is the cost of transacting business.
4. Work Load Method assumes that sales personnel have same work load and they work with same efficiency.
5. Deduction Method says that we can increase the size of the sales force till the incremental revenue exceeds
incremental costs.
6. Contracts can be made for holding inventory.

Caselet: Sales Forecast

A US Company comes out with a novel idea of introducing disposable cameras into the market. It was thought that
their cameras have a great potential. A film was already loaded in the camera and after the whole film was used
the camera was to be thrown away, as it cannot be further loaded or unloaded. In the introduction stage the
cameras did not do very well and the sales remained low. This was due to the objection from a section of a society
who was environmentally conscious and objected to the disposable cameras adding to pollution. Another reason
was that the photography enthusiast did not believe that these cameras could produce good pictures. The
management was disturbed and formulated the following strategy to face these problems.

1. It introduced recycling programme to do away the objection of the environment conscious consumers.
2. It increased its promotion and advertising programme and emphasized that its cameras were capable of
taking quality pictures.
3. It also stressed upon the factors that these throwaway cameras were available at all stores at a minimum
price of about eight dollars ($ 8). Also
4. promoting that these were ideal for people who forget to bring their cameras to important occasions.
5. It also initiated another idea. The cameras can be given free to guests at weddings who love taking
pictures. They can have fun with these cameras and leave them behind for the bride and the groom.
6. It tried to tap other niche like the students, the senior citizens, sports, fans and other sports enthusiasts.
These strategies paid off and the company started making booming sales.

Questions
1. At what stage of PLC (Product life Cycle) is the disposable camera in? and What strategies should be adopted
in this stage of PLC?
2. Comment on the strategies adopted by the company. What other methods

3. would be maintain the sales of the camera?

Sales Potential and Sales Forecasting Sales potentials, are defined earlier, are quantitative estimates of the maximum
possible sales opportunities present in particular market segments open to a specified company selling a good or
service during a stated future period. They are derived from market potentials after analyses of historical market share
relationships and adjustments for changes in companies’ and competitors’ selling strategies and practices. A firm’s
sales potential and its sales forecast are not usually identical – in most instances, the sales potential is larger than the
sales forecast. There are several reasons for this: “Some companies do not have sufficient production capacity to
capitalize on the full sales potential; “Other firms have not yet developed distributive networks capable of reaching
every potential customer; “Others do not attempt to realize their total sales potentials because of limited financial
resources; and “Still others, being more profit oriented than sales oriented, seek to maximize profitable sales and not
possible sales. The estimate for sales potential indicates how much a company could sell if it had all the necessary
resources and desired to use them. The sales forecast is a related but different estimate – it indicates how much a
company with a given amount of resources can sell if it implements a particular marketing program. Sales Forecasting
Methods A sales forecasting method is a procedure for estimating how much of a given product (or product line) can
be sold if a given marketing program is implemented. No sales forecasting method is foolproof – each is subject to
some error. Some methods are unsophisticated, such as the jury of executive opinion or the poll of sales force opinion.
Others involve the application of sophisticated statistical techniques, such as regression analysis or econometric model
building and simulation. Two sales forecasting methods may be either sophisticated or unsophisticated, depending
upon how they are used – the projection of past sales and the survey of customers’ buying plans. Well-managed
companies do not rely upon a single sales forecasting method but use several. If different methods produce roughly
the same sales forecasts, then more confidence is placed in the results. But if different methods produce greatly
different sales forecasts, then the sales situation merits further study.

The forecasting methods can be broadly classified as qualitative and quantitative.

Qualitative methods are:

• Jury of Executive opinion

• The Delphi Technique

• Poll of Sales force opinion

• Projection of Past Sales

• Time series Analysis – Moving Average Method

• Exponential smoothening

• Regression Analysis

• Econometric model building and simulation

Forecasting Methods

 Qualitative Methods
 Quantitative Methods
 Jury of Executive opinion
 The Delphi Technique
 Poll of Sales force opinion
 Survey of customers buying plan
 Projection of Past Sales
 Time series Analysis – Moving Average Method
 Exponential smoothening
 Regression Analysis
 Econometric model building

Let us study Qualitative Methods in this lesson. Quantitative Methods are discussed in Next Lesson Qualitative
Forecasting Methods Jury of Executive Opinion There are two steps in this method: 1. high-ranking executives estimate
probable sales, and 2. an average estimate is calculated. The assumption is that the executives are well informed about
the industry outlook and the company’s market position, capabilities, and marketing program. All should support their
estimates with factual material and explain their rationales. Companies using the jury of executive opinion method do
so for one or more of four reasons: 1. This is a quick and easy way to turn out a forecast. 2. This is a way to pool the
experience and judgment of well-informed people. 3. This may be the only feasible approach if the company is so
young that it has not yet accumulated the experience to use other forecasting methods. 4. This method may be used
when adequate sales and market statistics are missing, or when these figures have not yet been put into the form
required for more sophisticated forecasting methods. The jury of executive opinion method has weakness. • Its
findings are based primarily on opinion, and factual evidence to support the forecast is often sketchy. • This approach
adds to the work load of key executives, requiring them to spend time that they would otherwise devote to their areas
of main responsibility. • And a forecast made by this method is difficult to break down into estimates of probable sales
by products, by time intervals, by markets, by customers, and so on.

2.23 Summary

 Sales strategy is the game plan adopted to achieve the desired objectives.
 Sales strategies are adopted to achieve the desired objectives in sales.
 The macro environmental analysis and the competitive situation helps in market analysis which helps in setting
the objectives of the firm.
 Market analysis here means macro environmental analysis.
 A company selling high value technical household products expects its salesmen to carry out entire sales
functions and practical aspects also.
 Transaction cost is the cost of transacting business.
 Market Specialists know the different markets and can also adopt different sales approaches for different
markets.
 A company selling high value technical household products expects its salesmen to carry out entire sales
functions and practical aspects also.
 It is the process of requiring management membership rights at various levels of distribution channel.
 Management must face up these questions when it decides the kind of sales personnel it requires.

2.24 Keywords

Extensive Distribution: It is the distribution in which we cover a great area but do not concentrate on all customers in
the area.
Market Specialists: Market Specialists know the different markets and can also adopt different sales approaches for
different markets. They need to know more than one line of products.
Monopolistic Competition: In this type of competition, there are large number of sellers of a generic kind of product
but each seller's brand is differentiated from every other brand. Nearly every seller's brand of product, e.g., nail polish
remover, pet food, can be differentiated.
Oligopolistic Competition: Each competitor is large so that any change in his marketing strategy affects the other
competitors.
Product Specialists: These are for highly technical products, e.g., marketing of banking services, service packages like
agriculture financing, short and long term financial services.
Pure Competition: In this each seller is too small to effect the prevailing market price. This competition exists in
identical undifferentiated products. Sales effort is limited to maintaining adequate supplies. All seller’s products are
identical so buyers are indifferent as to which sellers they buy from.
Servicing Requirement Basis: A company splits its total market according to servicing requirement of its present and
prospective customers. Service means the maintaining and developing of account.
Vertical Integration: It is the process of requiring management membership rights at various levels of distribution
channel. It is a costly affair for absolute channel control.
Work Load Basis: This approach considers both account potential and servicing plus extra work load created by
topographical locations and competitive forces.

2.25 Review Questions

1. What are the steps in formulating sales strategy?

2. Why is market analysis important for formulating the sales strategy?
3. What is the relevance of size of sales force and territory design in strategy formulation?
4. Describe, with example, the incremental method, the sales potential method and the work load method of
determining the size of sales force.
5. Explain the transaction cost analysis.
6. What are the advantages of workload method?
7. Discuss the sales potential method.
8. Explain the determination of the sales force needed.
9. Describe the Incremental Method.

Answers: Self-Assessment
1. Sales 2. Corporate
3. Quality 4. Goals
5. Market 6. True
7. True 8. False
9. True 10. False
11. False

2.26 Further Readings

Books:
 American Marketing Association, A Glossary of Marketing Terms, Chicago,1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
  Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April
1963.
 American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.

Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management, Business
Publications Inc., Dollas, 1976.
Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi, 1977.
Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co., 1984.
Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New Delhi.
Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing, New
Delhi, 1971.
Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April 1963.

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Module 3: Management of Sales Territory and Quotas
CONTENTS
Objectives
Introduction
3.1 Sales Territory.
3.2 Allocation of Sales Territories
3.3 Design and Size of Sales Territories
3.4 Sales Objectives
3.5 Sales Quota
3.6 Methods of Sales Quotas
3.7 Summary
3.8 Keywords
3.9 Review Questions
3.10 Further Readings
Objectives

After studying this unit, you will be able to:

 Discuss the Process of Territory Management
 Explain the Process of Quotas and methods of Quotas

INTRODUCTION

No sales manager can afford to ignore the planning and organisation of the territorial coverage. Although much has
been done to improve the efficiency of individual salesman, there is still much room left for the improvement in
territorial management. There are still some sales organisations that believe that planning and organisation of sales
territories would be too difficult to attempt, and there is nothing wrong if salesmen just go out and make calls”.
However, the sensible thing to do is to guide the salesman’s field activities properly, control them, and plan them so
as to achieve the sales objectives. No doubt, the establishment and maintenance of the sales territories involves a
substantial expenditure of time and effort; but wherever sales manager have paid attention to its organisation and
planning, they have reaped substantial rewards by way of decreased selling cost and increased sales. In this way, they
have also helped individual salesman to achieve greater earnings for himself and greater profits for the company.

3.1 SALES TERRITORY

A sales territory comprises a group of customers or a geographical area assigned to a salesperson. The territory may
or may not have geographical boundaries. Typically, however, a salesperson is assigned to a geographical area
containing present and potential customers. Assigning sales territories helps the sales manager achieve a match
between sales efforts and sales opportunities. The total market of most companies is usually too large to manage
efficiently, so territories are established to facilitate the sales manager’s task of directing, evaluating, and controlling
the sales force.
The emphasis in sales territory concept is upon customers and prospects rather than only upon the area in which an
individual salesperson works. Customers and prospects are grouped in such a way that the salesperson serving these
accounts can call on them as conveniently and economically as possible.

Operationally defined, a sales territory is a grouping of customers and prospects assigned to an individual salesperson.
Many sales executives refer to sales territories as geographical areas. But, in contrast, in some companies particularly
in which technical selling style is predominant, geographical considerations are ignored and sales personnel are
assigned entire classes of customers, regardless of their locations. When sales personnel sell mainly to personal
acquaintances, as in selling property, insurance, and investment securities; little logical base exists for dividing the
market geographically.

Small companies, and companies introducing new products requiring the use of different marketing channels, often
do not use geographically defined territories at all, or if they do, use rough divisions such as entire states or census
regions: In these instances, there is no reason to assign territories, since existing sales coverage capabilities are
inadequate relative to sales potentials.

3.2 REASONS FOR ESTABLISHING TERRITORIES

The primary reason for establishing sales territories is to facilitate the planning and controlling of the selling function.
Well-designed sales

territories, however, may result in increased motivation, morale, and interest of the sales force, improving the total
sales performance. But sales managers typically have more specific reasons for establishing territories.

(i) To obtain thorough coverage of the market: Sales territories help in proper market coverage. A salesperson’s calling
time is planned as efficiently as possible in order to ensure proper coverage of present as well as potential customers.
Coverage is likely to be more thorough when each sales person is assigned to a properly designed sales territory rather
than when all sales personnel are allowed to sell anywhere. With proper coverage of the territories, the company can
more closely reach the sales potential of its markets.

(ii) To Establish Salesperson’s Job and Responsibilities: Sales territories help in setting the tasks and responsibilities
for the sales force. Salespeople have to act as business managers for their territories. They have the responsibility of
maintaining and generating sales volume in their territories. Once all call frequencies are calculated and assigned, it is
easier to determine the total wor1doad and then to break it down into equal assignments among salesmen. When an
equitable workload is assigned on the basis of call frequencies, better results are obtained. An equitable workload
assignment creates greater interest and enthusiasm among the salesmen.

(iii) To evaluate sales performance: Sales territories help in the evaluation of sales performance of a company. Actual
performance data can be collected, analyzed, and compared with expected performance goals. Even present sales
figures can be compared with past figures to judge the performance over the years. Individual territory performance
can also be compared to district performance, district performance compared to regional performance; and regional
performance compared to the performance of the entire sales force.

(iv) To Improve Customer Relations: Properly designed sales territories allow sales people to spend more time with
present and potential customers and less time on the road. Customer goodwill and increased sales can be expected
when customers receive regular calls. Since the salesman’s visits are decided under a call frequency schedule
programme, he comes in contract with his customers on the basis of a regular schedule. Such regular contacts enable
both the salesman and the customer to understand each other well and get their difficulties solved in respect of the
supply of, and demand for, goods, and also raises the general reputation of the company which the salesman
represent.
(v) To Reduce Sales Expenses: Sales territories are designed to avoid duplication of effort so that two or more
salespersons are not travelling in the same geographical area. This lowers selling cost and increases company profits.
Sales territories also result in such benefits as fewer travel miles and fewer overnight trips.

(vi) To Improve control of the sales forces: When customer calls frequencies, routes and schedules are determined,
the performance of salesmen can be measured. It, then, becomes difficult for a salesman to neglect a “hard” territory
and only go ahead with the easiest-to- sell accounts. Over and above this, no salesman can devote more time and get
himself “lost” in one territory when he is supposed to follow a pre-established schedules and route. When all
frequencies, routes and schedules are predetermined, the work habits of salesmen, in general, are improved, resulting
in better control of the sales force.

(vii) To co-ordinate selling with other marketing, functions: A well-designed sales territory can aid management in
performing other marketing functions. Sales and cost analyses can be done more easily on a territory basis than for
the entire market. Marketing research on a territory basis can be used more effectively for setting quotas and
establishing sales and expense budgets. If salespeople are to aid customers in launching advertising campaigns,
distributing point of purchase displays, or performing work related to sales promotions, the results are usually more
satisfactory when the work is assigned and managed on a territory-by-territory basis rather than for the market as a
whole.

3.3 BASES FOR TERRITORY DEVELOPMENT

The objectives & criteria for sales territory formation are directly related to the bases used in creating the territories.
The actual division of a firm’s customer base into individual territory can be achieved by means of several methods,
depending on which of the three alternative types of bases used. The three important bases are- geography, potential
and servicing requirements, & work load.

(a) Geography: For the establishment of territories, geographical considerations are the most frequently used base.
This base is simple, as it tends to adopt existing geopolitical boundaries such as states, countries, or cities. The major
advantage of the geographic approach is the ready availability of secondary data from different sources.

(b) Potential and servicing requirements: The potential approach refers to splitting up a firm’s customer base
according to sales potential. It would seem to provide equality of opportunity and thus bring out the best in sales
people. The procedure is relatively simple. First management has to estimate the sales potential for the entire
company and then try to divide this potential equally among salespersons. Assume that a firm has estimated its total
sales potential at Rs.10 million for a given year. Sales manager has further determined that each sales person can
handle a personal sales potential of Rs. 500,000. This would mean that twenty territories would be formed, all of which
would have identical sales potential of Rs. 500,000 each.

(c) Workload: The third sales territory base, workload, goes one step further. It not only considers individual account
potential & servicing requirements in creating territories, but also reflects differences in coverage difficulty caused by
topographical features, account locations, competitive activity & so forth. Some companies try to attain equity by
assigning finite number of accounts and establishing average call frequencies. For instance, a firm may give every
territory manager two hundred accounts to service and prescribe an average frequency often calls per day; This would
mean that all accounts visited once during a month’s twenty working days.

3.4 APPROACHES OF DESIGNING TERRITORIES

Three approaches may be used to design the sales territories.

The building up approach of designing territories involves combining enough pieces of a company’s overall market to
create units presenting sufficient sales challenges. To use this approach, actual & potential customers have to be
identified and their individual sales volumes assessed. After classifying them according to desirable call frequencies &
determining how many calls a salesperson can reasonably be expected to make, account mixes can be created to
satisfy the dual goals of adequate consumer coverage. This method is favored by many consumer goods manufacturers
looking for intensive distribution.

The breakdown approach proceeds in the opposite direction. It starts with the overall sales forecast for the entire
company, which is in turn derived from a projection of the total market potential and an estimate of the company’s
likely share of it. The method then sets an average sales figure per salesperson to reach at the number of territories
to be formed using this as divisor to total market potential. Such an approach may prove satisfactory for industrial
goods producer that desire selective distribution. The method, however, suffers from a severe conceptual paradox:
Instead of viewing sales as a result of sales force effort and then forecasting sales accordingly, the number of members
in the sales organization is determined by the expected overall sales. This can lead to a self-fulfilling prophecy.

The incremental approach is conceptually the most appealing. With this approach, additional territories are created
as long as the marginal profit generated exceeds the cost of servicing them. Administrative difficulties, however,
hamper the method’s applicability since it requires a cost accounting system capable of determining sales, costs, and
profits associated with various levels of input. If a company can determine this kind of information, profits can be
maximized by increasing the number of territories up to the point of negative returns.

3.5 PROCEDURE FOR SETTING UP SALES TERRITORIES

A sales territory should not be so large that the sales person either spends an extreme amount of time travelling or
has time to call on only a few of the scattered customers. On the other hand, a sales territory should not be so small
that a sales person is calling on customers too often. The sales territory should be big enough to represent a reasonable
workload for the ales force but small enough to ensure that all potential customers can be visited as often as needed.

Whether a company is setting up sales territories for the first time or revising ones that are already in existence, the
same general procedure applies: (1) select a geographic control unit, (2) make an account analysis, (3) develop a
salesperson workload analysis, (4) combine geographic control units in to territories, and (5) assign sales personnel to
territories.

1. Selecting a basic geographical control unit

The starting point in territorial planning is the selection of a basic geographical control unit. The most commonly used
control units are districts, pin code numbers, trading areas, cities, and states. Sales territories are put together as
consolidations of basic geographical control units.

Management should strive for as small a control unit as possible. There are two reasons for selecting a small control
unit. One reason is to realize an important benefit of using territories, precise geographical identification of sales
potential. If the control unit is too large, areas with low sales potential are hidden by inclusion with areas having high
sales potentials, and areas with high sales potentials are obscured by inclusion with those having low sales potentials.
The second reason is that these units remain relatively stable and unchanging, making it possible to redraw territorial
boundaries easily by redistributing control units among territories. If, for example, a company wants to add to Ram ‘s
territory and reduce Sham’s territory, it is easier to transfer city-sized rather than state- sized control units.

Political units (state, district, or city) are presently used quite often as geographic control units. These are commonly
used because they are the basis of a great deal of government census data and other market information.

Counties: In the United States and U.K., the county is the most widely used geographical control unit. County, in these
countries, typically is the smallest unit for which government sources report statistical data. Districts may be used on:
similar lines in India.
Zip code areas: It is also used in USA. Typical Zip code area is smaller than the typical county. In India Pin code areas
may be used on similar lines.

Cities: When a company’s sales potential is located entirely or almost entirely, in urbanized areas, the city is used as
the control unit. The city rarely is fully satisfactory as a control unit, suburbs adjacent to cities possess sales potentials
at least as great as those in the cities them-selves and, in addition, they can often be covered by the same sales
personnel at little additional cost.

Trading areas: Another control unit used for establishing sales territories is the trading area. The trading area is perhaps
the most logic’ al control unit, since it is based mainly on the natural flow of goods and services rather thin on political
or economic boundaries. Firms that sell through Wholesalers or retailers often use the trading area as a control unit.
The trading area is a geographical region that consists of a city and the surrounding areas that serve as the dominant
retail or wholesale center for the region. Usually, customers in one trading area will not go outside its boundaries to
buy merchandise; nor Will a customer from outside enter the trading area to purchase a product. The trading area as
a geographic control unit has several advantages. Since trading areas are based on economic considerations, they are
representative of customer buying habits and patterns of trade. Also, the use of trading areas aids management in
planning and control.

States: Many companies have used state boundaries in establishing territory boundaries. A state may be an adequate
control unit if used by a company with a small sales force that is covering the market selectively rather than intensively.
The use of states as territory boundaries may also work well for a company that is seeking nationwide distribution for
the first time. In fact, in these situations salespeople may be assigned to territories that consist of more than one state.
This may be done on a temporary basis until the market develops, at which time a change can be made to a smaller
control unit. State sales territories are simple, convenient, and fairly inexpensive.

2. Making an Account Analysis

After a company selects the geographic control unit, the next step is to conduct an audit of each geographic unit. The
purpose of this audit is to identify customers and prospects and determine how much sales potential exists for each
account.

First, accounts must be identified by name. Many sources containing this information are available. For example, the
yellow Pages have become computerized, and they represent one of the most effective sources for identifying
customers quickly. Other sources include company records of past sales; trade directories; professional association
membership lists; directories of corporations; publishers of mailing lists; trade books and periodicals; chambers of
commerce; central, state, and local governments; and personal observation by the salesperson.

After potential accounts are identified, the next step is to estimate the total sales potential for all accounts in each
geographic control unit. The sales manager estimates the total market potential and then determine how much of this
total the company can expect to get. The estimated sales potential for a company in a particular territory is often a
judgmental decision. It is based on the company’s existing sales in that territory, the level of competition, any
differential advantages enjoyed by the company and the relationships with the existing accounts. The Personal
Computer has become a tremendous management aid in analyzing the sales potential in a territory. The PC can also
calculate the estimated sales potential based on the pre-determined criteria much faster than the sales manager can.

Once the sales potential estimates have been made, the PC can classify each account according to it’ s annual buying
potential. One commonly used approach is to employ an ABC classification. The computer identifies all those accounts
whose sales potential is greater than a predetermined amount, and classifies them as an account. Next, the accounts
that are considered to be of average potential are classify as C accounts. Finally, accounts whose potential is less than
a certain amount is classified as C accounts.
3. Developing a Salesperson Workload Analysis

A salesperson workload analysis is an estimate of the time and effort required to cover each geographic control unit.
This estimate is based on an analysis of the number of accounts to be called on, the frequency of the calls, the length
of each call, the travel time required, and the non-setting time. The result of the workload analysis estimate is the
establishment of a sales call pattern for each geographic control unit.

Several factors affect the number of accounts that can be called on in each geographic control unit. The most basic
factor is the length of time required to call on each account. This is influenced by the number of people to be seen
during each call, the amount of account servicing needed, and the length of the waiting time. Information about these
factors can be determined by examining company records or by talking with sales people.

One factor that affects the number of accounts that can be called on is the travel time between accounts. Travel time
will vary considerably from one region to another, depending on factors such as available transportation, conditions
of highways, and the weather. The sales manager seeks ways to minimize travel time and thereby to increase the
number of accounts that can be called on.

The frequency of sales calls is influenced by a number of factors. Accounts are generally grouped into several
categories according to sales potential. Group A accounts are called on most frequently, group B accounts less
frequently, and group C accounts the least of all. Other factors that influence the call frequency are the nature of the
product and the level of competition. The level of non-selling activities influences the time and effort required to cover
a geographic control unit.

4. Combining Geographical Control Units into Sales Territories

Up to this point the sales manager has been working with the geographic control unit selected in the first phase of the
procedure for setting up sales territories. The unit may be a state, county, city or some other geographical area. The
sales manager is now ready to group adjacent control units into territories of roughly equal sales potential.

In the past the sales manager used to develop a list of tentative territories by manually combining adjacent control
units. However, this was a long procedure that, in most cases, resulted in split control units and territories with uneven
sales potential. Today, computers are handling this task in a much shorter time period.

Territories with unequal sales potential are not necessarily bad. Salespeople vary in ability and experience as well as
initiative, and some can be assigned heavier workloads than others. The sales manager should assign the best
salespeople to territories with a high sales potential and newer less effective salespeople to the second and third-rate
territories, Of course, some adjustment in sales quotas and commission levels may be necessary; depending on the
relative sales potential of a specific area and the types of selling or non-selling tasks assigned to the sales
representatives.

Territory Shape

The planner now considers territory shape. The shape of a territory affects both selling expenses and ease of sales
coverage. In addition, if the shape of a territory permits the salesperson to minimize time on the road, shape
contributes to sales force morale. Three shapes are in wide use; the wedge, the circle, hopscotch, and the cloverleaf.

The wedge is appropriate for territories containing both urban and non-urban areas. It radiates out from densely
populated urban centre. Wedges, of course, can be in many sizes. Travel time among adjoining wedges can be
equalized by balancing urban and non-urban calls.

The circle is appropriate when accounts and prospects are evenly distributed throughout the area. Circular territory
involves starting at the office and moving in a circle of stops until the salesperson ends up back at the office. The
salesperson assigned to the circular M shaped territory is based at some point near the center, making for greater
uniformity in frequency of calls on customers and prospects. This also makes the salesperson nearer to more of the
customers than is possible with a wedge- shaped territory.

The cloverleaf is desirable when accounts are located randomly through a territory. Careful planning of call schedules
results in each cloverleaf being a week’s work, making it possible for the salesperson to be home weekends. Home
base for the salesperson assigned to the territory is near the centre. Cloverleaf territories are more common among
industrial marketers than they are among consumer marketers and among companies cultivating the market
extensively rather than intensively. In the case of hopscotch territory, the salesperson starts at the farthest point from
the office and makes calls on the way back to the 0ffice.

The salesperson would typically go non-stop to the farthest point in one direction and on the way back stops at many
places. On the next trip the salesperson will go in the next direction.

5. Assigning Sales Personnel to Territories

When an optimal territory alignment has been devised the sales manager is ready to assign salespeople to territories.
Salespeople vary in physical condition, as well as ability, initiative and effectiveness. A reasonable and desirable
workload for one salesperson may overload another and cause frustration.

In assigning sales personnel to territories, the sales manager must first rank the salespeople according to relative
ability. When assessing a salesperson relative ability, the sales manager should look at such factors as product and
industry knowledge, persuasiveness and verbal ability. In order to judge a salesperson’s effectiveness within a
territory, the sales manager must look at the salesperson’s physical, social and cultural characteristics and compare
them to those of the territory. For instance, the salesperson born and brought up in a village is likely to be more
effective with rural clients than with urban customers because he or she speaks the same language and shares the
same value as the rural clients. The goal of the sales manager in matching salespeople to territories in this manner is
to maximize the territory’s sales potential by making the salesperson comfortable with the territory and the customer
comfortable with the salesperson.

3.6 REVISING SALES TERRITORIES

Two major factors may cause a firm to consider revising established territories. First, a firm just starting in business
usually does not design territories very carefully. Often, it is unaware of the problems inherent in covering a certain
territory, and sometimes it overestimates or under-estimates the territory’s sales potential and required workload.
But as the company grows and gains in experience, the sales manager recognizes that some territory revision is
needed. In other situations, a well- designed territory structure may become outdated because of changing market
conditions or other factors beyond the control of management.

With the aid of a PC, the sales manager can produce several revised territory alignments in minutes. Without a
computer this task would consume days. Before embarking on the revision, the sales manager should determine
whether the problems with the original alignment are due to poor territory design, market changes, or faulty
management in other areas. For example, it would be a serious mistake for management to revise sales territories if
the problems are really due to a poor compensation plan.

Signs that justify territory revision

As a company grows, it usually needs a larger sales force to cover the market adequately. If the company does not hire
additional sales personnel, the sales force will probably only skim the territory instead of covering it intensely. If sales
potential
have been estimated in an inadequate manner, the performance of the sales force may be very misleading.

Territories may also need revision because of an overestimation of sales potential. For instance, a territory may be too
small for a good salesperson to earn an adequate income. Certain environment changes could also warrant the
revision of a sales territory.

Overlapping territories are another reason for revision. This problem usually occurs when territories are split, and it
can cause a tremendous amount of friction in the salesforce. Sales people are very reluctant to have their territories
divided because that means handing over accounts they have built up and nurtured. The mere thought that another
salesperson is reaping the benefits of their hard work can lead to much bitterness. The organization should
immediately correct this problem in a way that will benefit the existing representatives, the new representatives, and
the company.

Territory revisions may be necessary when one salesperson jump into another salesperson’s territory in search of
business. This is an unethical practice, and it will cause problems with in the sales force. If territories have been
designed properly, there should be no need for jumping. Territory jumping is usually a sign that a salesperson is not
developing his or her territory satisfactorily. However, it can also indicate that the sales potential due territory is
greater than that in another. If a salesperson is doing a good job covering his or her market but the contiguous market
has more potential, the representative may be forced to enter the adjacent market.

The effects of territory revision

Salespersons, like most others, dislike change. Management, therefore, must make, a decision either to avoid territory
revisions for fear of damaging sales force morale or to revise the territories in order to eliminate problems. When a
territory is reduced, a salesperson might face a reduction in potential income and the loss of key accounts that he or
she has developed over years. Both of these can result in low morale.

Therefore, before revisions are made, sales manager should ask the sales force for ideas and suggestions that might
alleviate such problems. Compensation adjustments sometimes must be made to avoid low morale. The salesperson
whose territory is being reduced should be taken into confidence and told that a smaller territory can be covered more
intensively, thereby Offering a higher volume for the same travel time. One approach to compensating the salesperson
is to guarantee the previous level of income.

3.7 WHY SALES TERRITORIES MAY NOT BE DEVELOPED

In spite of the stated advantages, there are disadvantages to developing sales territories: • Sales people may be more
motivated if they are not restricted by a particular territory and can develop customers wherever and whenever they
find them. For example, in the case of industrial products, organisations/customers are scattered geographically and
not concentrated at one place, sales people, therefore, may be allowed to sell to any potential customer. • The
company may be too small to be concerned with segmenting the market into sales areas. • Management may not
want to take the time, or may not have the know-how for territory development. • Personal friendship may be the
basis for attracting customers. For Example, Life insurance salespeople may first sell policies to their family and friends
and then use their contacts.

Territory Management problems & Remedies

The table given below summarises some of the problems of territory management and also the remedial actions that
may be taken to overcome these problems:
Problems Remedies

Inadequate Coverage:

Split territories Inadequate size. Enlarge territories Revision Prepare Salespeople Shifting accounts Revise territories
Inadequate support Assist sales persons Territory jumping Eliminate practice Overlapping territories Minimize
crossovers Selling cost variations Review cost figures

Problems Remedies

High turnover

Rectify casual factor

3.8 SUMMARY

The establishing cost of making a personal sales visit has caused sales managers to seek more efficient and less
expensive means of reaching customers. This is done through effective time and territory management with the aid
of innovative ideas and new technology. Setting up sales territories facilitates the planning and control of sales
operations. Well-designed territory assists in attempts to improve market coverage and customer service, reduce
selling expense ratio, secure coordination of personal- selling and advertising efforts, and improve the evaluation of
personnel performance.

Territory management implies responsibility. Sales representatives in charge of their own territories are responsible
for making things happen. A territory can be thought of as a scaled-down version of a firm’s total market, and so a
sales representative in charge of a territory has many sales management duties.

Managing sales territories includes establishing the territories, analyzing accounts, analyzing each salesperson’s
workload, assigning personnel to territories and, if necessary, revising territories. Effective territory management is
needed to provide salespeople with evenly divided sales territories, estimate a territory’s potential correctly,
formulate a strategy for achieving that potential, and properly consider each individual salesperson’s strengths and
weaknesses.

3.9 KEYWORDS

Sales Territory: It comprises a group of customers or a geographical area assigned to a sales person.

Building up approach: To use this approach of designing territory, actual and potential customers have to be identified
and their sales volumes assessed.

Break Down Approach: This approach sits an average sales figure per salesperson to reach at the number of territories
to be formed.

Incremental approach: In this approach additional territories are created as long as the marginal profit generated
exceeds the cost of servicing them.

3.10 SELF- ASSESSMENT QUESTIONS

1. What do you understand by sales territory? Discuss the procedure of setting sales territories.

2. Clarify the concept of sales territory and discuss its advantages and significance.

3. Discuss the types of sales territories highlighting their utility and importance.

4. Why is it necessary to establish sales territories that are equal?

3.11 REFERENCES/SUGGESTED READINGS

1. Still, Cundiff, and Govoni, ‘Sales Management’, PHI.

2. Stanton and Spiro, ‘Management of a Sales Force’, McGraw Hill.

3. Anderson, Joseph, and Bush, ‘Professional Sales Management’, McGraw Hill.

4. Roburt J. Calvin, ‘Sales Management’, Tata McGraw Hill.

5. Dalrymple, Cron, and Decarlo, ‘Sales Management’, John Wiley and Sons.

6. Manning and Reece, ‘Selling Today’, Pearson Education.

Self-Assessment

Fill in the blanks:

1. .......................... strategy is the game plan adopted to achieve the desired objectives.
2. The sales objectives are directly affected by .......................... missions or goals.
3. The .......................... of sales force in this case will be different to those who only coordinate.
4. .......................... are set in terms of Sales volume.
5. .......................... Specialists know the different markets and can also adopt different sales approaches for
different markets.

3.12 Further Reading

 Books American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April
1963.
 American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
  Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April
1963.

Online link ezinearticles.com/? Successful-Sales-Promotions-

 www.workoninternet.com/article_27484.html www.direct-marketing-association-india.org/
www.direct-marketing.net/ www.publicity.com/ www.aboutpublicrelations.net
www.ogilvypr.com www.marketingteacher.com/.../lesson_personal_selling.htm
www.oapindia.com/ www.emarketer.com/Article.aspx?R=1007251 www.admedia.org
Module 4: Staffing and Training
CONTENTS
Objectives
Introduction
4.1 Recruitment Process.
4.2 Selection Process
4.3 Motivation
4.4 Training Programme
4.5 Aim of Training
4.6 Content of Training
4.7 Methods of Training
4.8 Execution of Sales Training
4.9 Evaluation of Training Programmes
4.10 Summary
4.11 Keywords
4.12 Review Questions
4.13 Review Questions
4.14 Further Readings

Objectives

After studying this unit, you will be able to:

 Describe the recruitment of sales personnel;
 Discuss the Employment agencies;
 Explain the sequence of recruitment process.

 Discuss Motivating Sales people

 Explain Different types of Training programmes

Introduction

Recruitment is a positive process in which a company attract a pool of talented people, whereas selection is a negative
process through which they screen people and finally select desired number of personnel who are offered
appointment. Attracting and selecting new sales personnel is an important aspect of the sales manager's job.
Recruitment is the procedure to obtain a good number of people with the potential capability of becoming good sales
personnel. After attracting a large number of people, it becomes feasible to select the individuals, which fit the needs
of the organization. Appropriate recruiting and selection policies and procedures, and their skillful execution result in
greater overall efficiency of sales department. Good selection fits the right person to the right job, thereby increasing
job satisfaction and reducing the cost of personnel turnover. In addition, training costs are reduced, either because
those hired are more capable of absorbing training or because they require less formal training.
4.1 RECRUITMENT PROCESS
To ensure the new recruits have the aptitude necessary to be successful in a particular type of sales job, certain
procedures should be followed in the recruitment process. The steps in this process are:
(a) Conducting a job analysis
Before a company can search for a particular type of salesperson, it must know something about the sales job to be
filled. To aid in the process, a job analysis should be conducted to identify the duties, requirements, responsibilities,
and conditions involved in the job. A proper job analysis involves following steps:
1. Analyze the environment in which the salesperson is to work. For example: (a) what is the nature of the competition
faced by the salesperson in this job? (b) what is the nature of the customers to be contacted, and what kinds of
problems do
they have? (c) what degree of knowledge, skill, and potential is needed for this particular position?
2. Determine the duties and responsibilities that are expected from the sales-person. In so doing, information should
be obtained from (a) salespeople; (b) customers; (c) the sales manager; and (d) other marketing executives, including
the advertising manager, marketing services manager, distribution manager, marketing research director, and credit
manager.
3. Spend time making calls with several salespeople, observing and recording the various tasks of the job as they are
actually performed. This should be done for a variety of different types of customers and over a representative period
of time.
(b) Preparing a job description
The result of a formal job analysis is a job description. Since a job description is used in recruiting, selecting, training,
compensating and evaluating the sales force, the description should be in writing so that it can be referred to
frequently. The written job description lets prospective job applicants, as well as current sales personnel, know exactly
what the duties and responsibilities of the sales position are and on what basis the new employee will be evaluated.
The job description is probably the most important single tool used in managing the sales force. It is used not only in
hiring but also in managing and sometimes as a basis for firing salespeople. It provides the
sales trainer with a description of the salespeople's duties and enables him or her to develop training programmes
that will help salespeople perform their duties better. Job descriptions are also used in developing compensation
plans. Often, the type of job determines the type of compensation plan that will be used. Job descriptions aid
managers in supervision and motivation, and they are used as an official document that is part of the contract between
management and a salesperson's union. Finally, a job description puts management in a position to determine
whether each salesperson has a reasonable workload.
(c) Developing a set of job qualifications
The duties and responsibilities set forth in the job description should be converted into a set of qualifications that a
recruit should have in order to perform the sales job satisfactorily. Determining these qualifications is probably the
most difficult aspect of the entire recruitment process. One reason is that the manager is dealing with human beings;
therefore, a multitude of subjective and very complex characteristics are involved. Specific qualifications such as
education and experience should be included in the job qualification, thus making good candidates easier to identify.
But most firms also try to identify personality traits that presumably make better salespersons, such as self-confidence,
aggressiveness, etc.
(d) Attracting a pool of applicants
The next major step in the recruitment process is attracting a pool of applicants for the sales position to be filled. All
large companies with a sales force have a continuous need to identify, locate, and attract
potentially effective salespeople. The candidates recruited become the reserve pool of sales staff from which new
salespeople will be chosen. The quality of this group will predict the future successes or problems of the sales
organization. 3.3 SOURCES OF RECRUITMENT
There are many places a sales manager can go to find recruits. Sales managers should analyze each potential source
to determine which ones will produce the best recruits for the sales position to be filled. Once good sources are
identified, sales managers should maintain a continuing relationship with them, even during periods when no hiring
is being done. Good sources are hard to find, and goodwill must be established between the firm and the source to
ensure good recruits in the future.
Some firms will use only one source; others will use several. The most frequently used sources are persons within the
company, competitors, non-competing companies, educational institutions, advertisements, and employment
agencies.
(a) Persons within the company
Companies often recruit salespeople from other departments, such as production or engineering, and from the non-
selling section of the sales department. The people are already familiar with company policies as well as the technical
aspects of the product itself. The chance of finding good salespeople within the company should be excellent because
sales managers know the people and are aware of their sales potential. In fact, most firms turn to non-sale personnel
within the company as their first source of new sales recruits.
Hiring people from within the company can lift morale because a transfer to sales is often viewed as a promotion. But
transferring outstanding workers from the plant or office into the sales department does not guarantee success. In
some of the cases hostility can arise among plant and office supervisors, who feel their personnel are being taken by
the sales department.
Recommendations from the present sales force and sales executive usually yield better prospects than those of other
employees because the people in sales understand the needed qualifications.
(b) Competitors
Salespeople recruited from a competitor are trained, have experience of selling similar products to similar markets,
and should be ready to sell almost immediately. But usually a premium must be paid in order to attract them from
their present jobs.
Some sales managers are reluctant to hire competitors' salespeople because the practice is sometimes viewed as
unethical. But is it? Is it really any different than attempting to take a competitor's customers or market share? No.
But it is unethical if the salesperson uses valuable confidential information in competing against the former employer.
Recruiting competitors' salespeople may bring other problems. Although these people are highly trained and know
the market and the product very well. It is often hard for them to unlearn old practices. They may not be compatible
with the new organization and management. Also, recruits from a competitor usually are expected to switch their
customers to the new business; if they are unable to do so, their new employer may be disappointed.
The potential for these problems to arise may be evaluated with one question: why is this person leaving the present
employer? A satisfactory answer to this question frequently clears up many doubts and usually leads to a valuable
employee. The difficulty arises, however, in determining the real answer. Often, it is almost impossible to assess
accurately why someone is looking for another job. Good sales managers must be able to evaluate effectively the
information they get.
(c) Non-competing companies
Non-competing firms can provide a good source of trained and experienced salespeople, especially if they are selling
similar products or selling to the same market. Even though some recruits may be unfamiliar with the recruiting firm's
product line, they do have selling experience and require less training.
Companies that are either vendors or customers of the recruiting firm can also be an excellent source of candidates.
Recruits from these sources already have some knowledge of the company from having sold to or purchased from it;
their familiarity reduces the time it will take to make them productive employees. Another advantage of recruits from
the sources is that they are already familiar with the industry.
(d) Educational institutions
High schools, adult evening classes, business colleges, vocational schools, junior colleges, and universities are all
excellent sources of sales
recruits. Large firms usually are successful in recruiting from universities, but small firms tend to be more successful
in recruiting from small educational institutions or from other sources.
While most college graduates lack specific sales experience, they have the education and perspective that most
employers seek in potential sales managers. College graduates tend to adapt more easily than experienced personnel.
They have not yet developed any loyalties to a firm or an industry.
A major problem in recruiting from college campuses used to be the unfavourable image of sales. Selling typically was
associated with job insecurity, low status, and lack of creativity, but this situation has been changing in recent years.
Colleges graduates are beginning to realize that selling provides challenge and a sense of accomplishment, that it is
complex and exciting, that it allows them to be creative, that it rewards them well and in direct proportion to their
level of achievement, and that it provides opportunity for rapid advancement. In short, many students today know
that a sales career is a good use of a college education.
Small firms are less likely to recruit on college campuses because many graduates prefer large, well-known
corporations with training programs and company benefits. College students tend to avoid small companies because
these companies usually employ few college graduates, and students are afraid that people without college degrees
will not understand or appreciate their needs and expectations.
(e) Advertisements
Classified advertisements in newspapers and trade journals are another source of recruits. National newspapers and
various trade journals are used in recruiting for high-caliber sales and sales management positions. However, most
firms that use advertising, especially in local newspapers, are recruiting for low-level sales positions. Many businesses
use advertising only as a last resort.
While advertisements reach a large audience, the caliber of the average applicant is often second-rate. This places a
burden on those doing the initial screening. The quality of applicants recruited by advertisements can be increased by
carefully selecting the type of media and describing the job qualifications specifically in the ad. To be effective, a
recruiting ad must attract attention and have credibility. The following elements should be included to ensure an ad's
effectiveness: company name; product; territory; hiring qualifications; compensation plan, expense plan, and fringe
benefits; and the way to contact the employer.
(f) Employment agencies
Employment agencies are among the best and the worst sources. Most of the time it depends on the relationship
between the agency and the sales manager. The agency should be carefully selected, and a good working relationship
must be developed. Sales managers should make sure that the agency clearly understands both the job description
and the job qualifications for the position to be filled.
In recent years, agencies have steadily improved and expanded their services. They can provide a highly useful service
to sales managers by
screening candidates so that recruiters may spend more time with those prospects who are most highly qualified for
the job.
4.2 SELECTION PROCESS
The recruiting process furnishes the sales manager with a pool of applicants from which to choose Selecting Sales
Personnel Selection systems for sales personnel range from simple one step systems consisting of nothing more than
an informal personal interview, to complex multiple-step systems incorporating diverse mechanisms designed to
gather information about applicants for sales jobs. A selection system is a set of successive “screens,” at any of which
an applicant may be dropped from further consideration. Figure 12.1 is an example at anyone of the seven steps in
this tern, a decision to drop the applicant may be made. Employment offers are extended to applicants surviving all
seven steps. The order of use of the different screening mechanisms is related more to their helpfulness in terms of
the information they secure than to the relative expense in using them.
. The selection process involves choosing the candidates who best meet the qualifications and have the greatest
aptitude for the job. There are numerous tools, techniques, and procedures that can be used in the selection process.
Companies typically use initial screening interviews, application forms, in-depth interviews, reference checks, physical
examinations, and tests as selection tools.
None of these should be used alone. Each is designed to collect different information. While successful selection of
sales applicants does not necessitate the use of all the tools and techniques, the more that are used, the higher the
probability of selecting successful sales personnel.
Fig: 4.1 Recruitment & Selection
Selection tools and techniques are only aids to sound executive judgement. They can eliminate the obviously
unqualified candidates and generally spot the more competent individuals. However, in regard to the majority or
recruits who normally fall between these extremes, the current tools can only suggest which ones will be successful
in sales. As a result, executive judgement is heavily relied on in selecting salespeople.
(a) Initial screening interviews
The steps in the selection process vary from company to company, depending on the size of the company, the number
of salespeople needed,
and the importance of the position to be filled. The purpose of the initial screening interview is to eliminate, as soon
as possible, the undesirable recruits. Initial screening may start with an application form, an interview, or some type
of test. But no matter which tool is initially used, it should be brief. The shorter it is; the ore it will cut down on costs.
But it must not be so brief that it screens out good candidates.

(b) Application forms

Application forms are one of the two most widely used selection tools (the other is the personal interview). An
application form is an easy means of collecting information necessary for determining an applicant's qualifications.
Information requested on forms usually includes name, address, position applied for, physical condition, educational
background, work experience, participation in social organizations, outside interests and activities, and personal
references. Other important questions on an application form relate directly to the sales position for which the
application is made.
For example: • Why do you want this job? • Why do you want to change jobs? • What minimum income do you
require? • Are you willing to travel? • Are you willing to be transferred? • Are you willing to use your car for business?
• What do you want to be doing five years from now? Ten years from now?
Application forms will differ from company to company. On all forms, however, it is illegal to include questions that
are not related to the job.
Some companies use a weighted application form that has been developed from the regular application form by
analyzing the various items that help distinguish between good and poor salespeople. If companies can show that
items such as educational level, and years of selling experience tend to be more related to success than are other
items, then more weight (importance) can be placed on them in making hiring decisions. Thus, applicants who rate
higher than an established minimum number of points on these items are considered, and those who fail to reach the
cutoff point are usually rejected.
An important function of application forms is to help sales managers prepare for personal interviews with candidates
for sales positions. By looking over the application form before the interview, the sales manager can get an initial
impression of the applicant and can prepare a list of questions to ask during the interview. An application blank is a
traditional, widely accepted device for getting information from a prospective applicant which will enable the
management to make a proper selection.
The blank provides preliminary information and helps in interview by indicating the areas of interest and discussion.
It is a useful device for collecting historical data from the candidate as well as storing information for later reference.
Ideally each company should prepare its own formal application form as per its information requirements. But to save
the time and cost of preparing its own application form it can follow a standard application form.
Categories of information used in standard application forms on usual terms are:
1. Personal
(a) name

(b) address

(c) sex
(d) date of birth and age

(e) marital status

(f) children/dependents.
2. Education
(a) schooling: primary/secondary

(b) higher education: institutions

(c) qualifications
(d) specified training, e.g., apprenticeships, sales (e) membership of professional bodies.

3. Employment History
(a) number of jobs held

(b) name of companies worked for

(c) duration and dates of employment

(d) positions, duties and responsibility.

4. Other Interests
(a) sports

(b) hobbies

(c) membership of societies/clubs.

(c) In-depth interviews

The interview is the most used of the various tools for selecting employees. A salesperson is seldom hired without a
personal interview. In fact, as many as three or four interviews are usually conducted with the most desirable
candidates. No other selection tool can take the place of getting to know the applicants personally.
The personal interview is used to help determine if a person is right for the job. It can bring out personal characteristics
that no other
selection tool is capable of revealing. The interview also serves as a two-way channel of communication, which means
both the company and the applicant can ask questions and learn about each other.
The questions asked during an interview should be aimed at finding out certain things: Is the candidate qualified for
the job? Does the candidate really want the job? Will this sales job help the candidate fulfill personal goals? Will the
candidate find this sales position challenging enough? These questions, like those on the application form, are directed
at examining the applicant's past behaviour, experiences, and motivation.
Every sales manager will use a different approach in attempting to elicit useful information. The approach used will
depend on the sales manager's personality, training, and work experience.
Interviews differ, depending on the number of questions that are prepared in advance and the extent to which the
interviewer guides the conversation. At one end is the totally structured, or guided, interview; at the other end is the
informal, unstructured type. In the structured interview, the recruiter asks each candidate the same set of questions.
These are standardized questions that have been designed to help determine the applicant's fitness for the sales
position, structured interviews can be used for initial screening but are not useful in probing for in-depth information.
A structured approach is particularly useful for inexperienced interviewers. Since it helps and guide the interviewer
and ensures that all factors relevant to the candidate's qualifications are covered.
At the other end of the continuum is the unstructured interview, which is informal and non-directed. The goal of the
unstructured
interviewing approach is to get the candidate to talk freely on a variety of topics. Frequently, the recruiter begins the
interview by saying to the candidate. Tell me about yourself", or by asking questions such as "Why did you decide to
interview without company?"
Several problems are associated with unstructured interviews. One is that they do not provide answers to standard
questions that can be compared with other candidates' reponses or with the company's past experiences. Also,
considerable time may be spent on relatively unimportant topics. However, personnel experts say this technique is
the best for probing an individual's personality and for gaining insight into the candidate's attitudes and opinions. To
administer and interpret unstructured interviews, interviewers must be well trained.
Therefore, many firms use a combination of structured and unstructured approaches, usually referred to as a semi-
structured interview. In semi-structured interviews the interviewer has a preplanned list of major questions but allows
time for interaction and discussion. This approach is flexible and can be tailored to meet the needs of different
candidates as well as different interviewers.
(d) Reference checks
A company cannot be sure it has all the information on an applicant until references have been thoroughly checked.
Reference checks allows a company to secure information not available from other sources. References usually are
checked while the application form is processed and before the final interview takes place.
In general, the quality of reference checks as a selection tool is questionable. Checking on the names supplied by a
candidate is often seen as a waste of time because it is unlikely that serious problems will be uncovered. Therefore,
many firms try to talk with people who know the applicant but were not listed on the application form. For reference
checking to be a useful selection tool, the sales manager must be resourceful and pursue leads that are not directly
given. If only one significant fact is uncovered, it usually makes the effort worthwhile.
References from teachers and former employers are generally more helpful than other types of references. Teachers
can usually give an indication of intelligence, work habits, and personality traits. Former employers can be used to find
out why the person left the job and how well he or she got along with others. Reference checks can uncover
information about an applicant that may alter a sales manager's perceptions of the person's sales ability.
(e) Physical examinations
Many sales jobs require a degree of physical activity and stamina. Poor physical condition can only hinder a
salesperson's job performance; therefore, a company should insist on a thorough medical examination for all its sales
recruits. The results from the examination should be interpreted by a doctor who is familiar with the demands of the
sales job, and the sales manager should be notified of the results. Because of their expense, physical examinations
usually are not given until a recruit has passed most of the steps in the selection process.
(f) Tests
Tests are the most controversial tools used in the selection process. The need for application forms, reference checks,
and personal interviews is seldom disputed, but there are differences of opinion about whether tests are necessary in
the hiring of salespeople. Questions regarding the legality of testing have increased the complexity and the
controversy surrounding the use of tests as a screening tool. But research has shown that test profile data can be
useful to management in the process of selecting and classifying sales applicants who are likely to be high performers.
There are some basic tests used in the selection process of sales personnel.
Intelligence tests: These tests measure raw intelligence and trainability. Recent research has indicated that a
salesperson's cognitive ability or intelligence is the best indicator of future job performance. Thus, although once
looked down upon, the intelligence test is slowly regaining status as the most effective tool for selecting salespeople.
Knowledge tests: These tests are designed to measure what the applicant knows about a certain product, service,
market, and the like.
Sales aptitude test: These tests measure a person's innate or acquired social skills and selling know-how as well as tact
and diplomacy.
Vocational interest tests: These tests measure the applicant's vocational interest, the assumption being that a person
is going to be more effective and stable if he or she has a strong interest in selling.
Personality tests- these tests attempt to measure the behavioural traits believed necessary for success in selling, such
as assertiveness, initiative, and extroversion.
Recruiting applicants in today's business environment is a very important and challenging task for the sales manager.
Companies use several sources to find qualified applicants. The search can begin within the company by seeking
individuals from other departments such as production, marketing etc., some of the external sources include
competitive and non-competitive firms, educational institutions, advertisements, and employment agencies.
Recruiters must recognize the top rated candidates can come from any source. However, with the increasing costs of
recruiting, sales managers must be careful to devote their time to the most productive sources.
Selecting good applicants is an extremely important and challenging task for the sales manager. It is critical that the
sales manager select the candidate who best meet the qualification established by the company. Some of the tools
companies use during the selection process include screening interviews, application forms, in-depth interviews,
reference checks, physical examinations, and tests. Once the process of recruiting and selection is complete, the new
salesperson must be integrated into the sales force.
4.3 Motivation

Under this specification it has to be determined what things interest or motivate the sales persons towards the job. Is
money the driving force, or progress, recognition, achievement are also important?

Specific Attainments

Does the job really require technical/professional knowledge or qualification? Is there a genuine need for some
specific previous experience?

People Skills

It is essential in selling to be able to deal with people. Whether the sales person, to be recruited, has communication
and leadership skills?
What impact can he bring in customers’ mind through his communication skills?
Caselet: A Martin Inc
Martin Inc, based at Chicago in the state of Illinois, was distributing an extensive line of business office products,
such as office stationery, which included various grades of paper, envelopes, ribbons, staplers and other
accessories. The company was distributing this in a wide area with adequate no. of salesmen to look after the
territory. The Company felt that to make the training effective, it was essential to emphasize on, A-C-M-E-E (Aim,
Content, Methods, Execution & Evaluation).
The various types of training imparted by the Company was in the form of lectures, personal conferences,
demonstrations, case discussions, role playing, impromptu discussions, on the job training, programme learning
etc. To train the salesmen for the company, the chairman proposed the method of centralized training through the
district manager of the company. This was to provide better quality training by giving uniform and identical training.
Centralized training will also hold higher prestige in the minds of the salesmen. By centralized training at
headquarters, better facilities can be provided to the trainees. Before the programme was implemented,
suggestions came from other executives who maintained and suggested decentralized training in various territories.
They argued that the decentralized training would be more realistic as it will be given in the territory itself keeping
in mind the problem faced in the territory. Secondly, since the salesmen were accountable to the district sales
manager, his method of training and guidance should be followed. It was also thought that the decentralised
training would be less expensive.

Question
Which of the two suggestions for training would you approve?

4.4 Working Conditions

Finally, it is important to remember whether there are any specific conditions relating to mobility, hours of work, etc.,
which could affect the recruitment or selection of sales person.
Thus, the person specification form is used as the base for the selection process. A figure representing a person
specification form is shown here. The first column is headed ‘Characteristics to be assessed’ the second and third
column categories the ‘Essential’ and ‘Desirable’ characteristics.

Person Specification Form

Characteristics to be assessed/measured Essential Desirable

1. Intellectual abilities
(a) Creativity
(b) Judgement
(c) General Intelligence
2. Motivation
(a) Interests
(b) Drive
3. Specific Attainments
(a) Technical/Professional knowledge or qualification
(b) Specific experience
 4. People Skills
(a) Impact
(b) Communication
(c) Leadership
5. Working Conditions
(a) Location
(b) Hours

Self- Assessment

Fill in the blanks:

1. ................... involves seeking and attracting a pool of people from which qualified candidates for job vacancies
can be chosen.
2. The effectiveness of the ................... is dependent to a great extent on the effectiveness of the team supporting
him.
3. The person specification can help in looking at employees in other areas who may have no previous sales
experience but whole profile in terms of their skills, their ....................
4. The ................... policy is concerned with quality and qualifications of manpower.
5. Specific job details vary with the ................... and its situations and these should be in the ad if it is to attract
good applicants.
6. Employees desiring transfers are already familiar with company policies and the ...................
department has considerable detailed information about them.

4.5 Where will this Person be Found?

Now, we know what the job is and what kind of person is required for the job—only we need to find this person.
The person specification can help in looking at employees in other areas who may have no previous sales experience
but whole profile in terms of their skills, their motivation, etc. could well make them excellent sales people. The various
recruitment sources like advertisements, employment agencies, educational institutions, internal transfers, etc., will
also help in this context.
The choice will depend on the nature of the job and on how many potential candidates there are. If a highly specialised
salesman in a narrow market segment is required and there are only a few dozen likely contenders, then the choice
maker has to go spear fishing. A ‘search’ is undertaken either by the company or a reputable consultant. This individual
approach to identifying potential candidates is likely to be fulfilled from the following resources:

Sales personnel recruitment and selection is generally done in the sales department. Furthermore, this article will
outline how exactly can sales personnel be recruited along with sources of recruiting sales personnel.

4.6 What Recruitment Sources can be Employed?

Employment Agencies: Agencies often administer batteries of tests, check references and perform task otherwise
done by the employer. Whenever an agency is used, it should receive a clear statement of the job’s objective and a
complete run-down of job specifications. Agencies need time to learn about an employing firm and its unique
requirements of the interest to sales executive is the growing no. of agencies that take the initiative in searching but
promising job candidates, employed or not, instead of confining themselves to “volunteer” applicants.
Advertising: Newspapers carry numerous advertisements publicising openings for sales personnel such
advertisements appear both in classified sections and as display advertising so great is the number of prospective job
candidates reached by a single advertisement that companies often try to reduce the volume of applications. If the
employer publishes details about the company and job, fewer obviously unqualified persons will reply. Specific job
details vary with the company and its situations and these should be in the ad if it is to attract good applicants. Some
ads give the compensation range of successful company sales personnel. Others explain that the person selected is to
replace a regular sales person in an established territory with active accounts. Still others specify that only highly
qualified professional sales people need apply. Information of this sort helps to convince promising applicants that
the opening is legitimate.
Internal transfers: Two additional internal sources are other departments and the non-selling section of the sales
department. Employees desiring transfers are already familiar with company policies and the personnel department
has considerable detailed information about them. While little is known about their aptitude for selling, they often
possess excellent product knowledge. Aptitude for selling of course, can be tested formally or by trial assignment to
the field. Transfers are good prospects for sales positions whenever product knowledge makes up a substantial portion
of sales training, since it may be possible to accelerate field assignments.
Educational Institutions: This source includes colleges, universities, technical and vocational institutes. They are
supposed to have developed their ability to think, to reason logically and to express themselves reasonably well.
Ordinarily, they do a good job of budgeting their time and managing their daily activities. Their main limitation is lack
of selling experience and hence they need to be trained.
Salesmen of other Companies: These are individuals currently employed as salesman for other companies. They are
an attractive source of recruitment as they know the product, customers and competitors. They are also experienced
sellers and therefore no money is required to be spent for their training. But their limitations are that they are a costly
source as generally higher pay must be offered to them and they also do not possess the required degree of loyalty.

Caution: A strong sales force is the key to business profitability. Experienced sales personnel with proven records
of accomplishment are difficult to recruit through simple Internet postings. Hiring managers must actively pursue
candidates with the greatest sales experience and earning potential, and establish recruiting guidelines for
human resource personnel.

Self -Assessment

State Whether True or False:

1. Agencies often administer batteries of tests, check references and perform task otherwise done by the employer.
2. Two additional internal sources are other departments and the non-selling section of the sales department.
3. Employees desiring transfers are already familiar with company policies and the personnel department has
considerable detailed information about them.
4. Product of this sort helps to convince promising applicants that the opening is legitimate.
5. Transfers are good prospects for sales positions whenever product knowledge makes up a substantial portion of
recruitment training
4.7 Which Person is to be Recruited out of the Selected Applications?

The simple answer to this is that the one who best fits the specification and who has the essential characteristics as
defined should be recruited.
This implies a structured approach of three steps. These are:
First, compare application form or C.V. with the person specification and remove all those who do not meet the
essential criteria.
Secondly, move on to those areas where the ‘Measuring Instruments’ and an assessment at interview are needed.
For instance,
1. Education
2. Work history
3. Family background
4. Domestic and social situation
5. Present financial situation
6. Health
7. Leisure interests
8. Ambitions and future plans.
Thirdly, it involves the identification of the pattern of behaviour which will help in forming judgements. The terms
patterns should be stressed — the company should look for a consistent picture at school, at work, in social life which
shows, for example, tenacity, perseverance, commitment or lack of these.
After all the three steps have been followed and care has been taken to see that the candidate fits into the specific
job requirements one can be sure of choosing the right candidate for the right job.
1. “Picking winners is not easy - but a systematic approach using the assistance available and commitments can
pay real dividends.” maintained so that the question of company's responsibilities would be settled in the
event of a workman's compensation claim.
Polygraph tests are seldom used to screen applicants for outside sales jobs for national companies and primarily are
used by smaller companies.

Rating of Interviewee

Having studied all the factors related to selection process, these should now be rated on the placement summary. The
various facts should be compared with the requirements of the main profile and a score noted in the appropriate box.
He should be rated 1 for a perfect match, 2 for an average match, 3 for below average and 4 for totally unsatisfactory.
Comments should be made in the appropriate column to explain apparent discrepancies. Overall comments can be
made in the space provided.
The scores should not be totaled or averaged in arriving at the final recommendation, as the weighing of the various
factors will vary. What the manager must do is to consider each candidate as a mixture of factors and by identifying
strong and weak points, come to a recommendation and score the man on the four-category scale. Category 1 men
will normally be offered jobs immediately. Category 2 are not qualified in all respects and failing the appearance of
anyone better, are worth employing. Only in dire circumstances, when it is imperative that someone be employed,
should category 3 men be taken on. Category 4 staff should never be employed however desperate the manager might
feel, for they can only create worse problems rather than solving them.
Two further considerations that the manager must take into account in arriving at his decision are the compatibility
of the man with his future colleagues and superiors and the future management needs of the company.
How well a man fits into a team can often determine his success. It is usually fatal to put a dynamic, aggressive,
ambitious twenty-six-year-old into a sales force consisting of security minded senior citizens hanging on for their
pensions. It is likewise dangerous to have a man who is over-compatible with his superior. This often comes about by
"mirror-image" selection, a common fault of many inexperienced managers. Because a candidate happens to have a
similar background to the manager, that is, comes from the same part of the country, went to the same school, shares
an interest in water-polo and the like, it may be tempting to assume that he possesses similar business abilities but if
a manager is prone to such temptations, it is better for him to ask a colleague to take over the interviewing.

4.7.1 Employment Offer

An employment offer is extended to the candidate who successfully passes through all the preceding steps.

Placement of Sales Personnel

Once, an offer of employment has been extended and accepted the final stage in procurement function is concluded,
and the process of placement of the individual on the new job and orienting him to the organisation.
Placement may be defined as "the determination of the job to which an accepted candidate is to be assigned and his
assignment to the job. It is a matching of what the supervisor has reason to think he can do with the job demands (job
requirements), it is a matching of what he imposes (in strained working conditions) and what he offers in the form of
payroll, companionship with others, promotional possibilities, etc."

Probation

After selection, the employee is generally put on a probation period, ranging from one to two years, after which his
employment may be regularised, provided that during this period, his work has been found to be satisfactory. Only in
very rare cases is the employee, once placed, asked to quit and even then, it is only when there is something very
serious against him or he is found guilty of continued negligence in the performance of his duties. The new employee
is placed as a probationer until the trial period is over.

4.7.2 Future

Every company must look at its future management requirements as well as its need for career salesman. Usually,
these two demands will have to be met by different types of staff. Therefore, two different man profiles may be
necessary when looking to fill similar sales positions. Those men with management potential should certainly score
higher in leadership, self-reliance and ability to accept responsibility categories than the career sales staff. Unless
different standards are adopted, too many men of high potential may be employed who will quickly become frustrated
and leave. If men who can be only career salesman are taken on, there will be no potential management pool for the
future. The relationship between the two categories will depend upon the spans of control, the number of
management levels and the life span of management in each job. Training of the sales person will never become
obsolete. As long as technology changes, new people enter the work force, businesses strive to improve, organisations
will need training. The term "training" may change (e.g., it is currently referred to as learning, coaching, facilitating,
etc.) but the concept remains the same-people continually need help in mastering new skills, applying new knowledge
and/or adjusting their attitudes.
What many people fail to realise is that training is itself a skill that needs to be learned. Expert trainers are aware of
the hours involved in learning how to train. Novice trainers also realise that training isn't an easy endeavour. And non-
trainers often don't know where to begin.

4.8 TRAINING PROGRAMME

Building a sales training programme requires five major decisions – aim, content, method, execution and evaluation.
These are referred to as the A-C-M-E-E decisions. The specific training aims must be defined, content decided, training
methods selected, arrangements made for execution and procedures set up to evaluate the results.
Training of salesmen is essential to make them skilled. Just as a gifted athlete needs coaching and practice to perform
at his best, similarly a sales person also requires proper training and development. After selection, personnel should
be given formal training which includes planned programmes complete with schedules, lesson plans, visual aids, other
teaching devices and systematic reviews and evaluation.
Informal training involves the continuous development of sales people. It is a prime responsibility of the supervisor
and includes working with sales people, finding their activities and advising them on improvements that should be
made. It is also known as field coaching.
Training varies with the sales person's career cycle. Sales persons have varied backgrounds, experience levels, learning
abilities, etc. and therefore have their own training needs. Another factor deciding the type of training is the stage of
the career of the sales person.
Sales person's career cycle is a conceptual framework which describes the stages through which a sales person passes
in his career cycle. There are four basic stages of this cycle.
1. Preparation
2. Development
3. Maturity
4. Decline
Figure 4.1 shows the four stages

Figure 8.1: Sales Person’s Career Cycle

Maturity

Development
Decline
Preparation

Time units

4.8.1 Preparation

For the sales person the emphasis should be on orientation and training. He should know about the environment in
which he has to function and given information about the company and the products he has to sell. Selling instructions
and basic selling techniques are all important at this stage. Sometimes experienced sales persons new to the company
must also be acquainted with the policies and practices of the company.

4.8.2 Development

This is the second stage when the salesman becomes productive. He should be supervised and provided field coaching.
He should be able to identify the problems and be kept away from acquiring bad habits.

4.8.3 Maturity

In maturity stage, the productivity of the sales person levels off. He works "smarter than harder". Sometimes refresher
training is required to be given to him to retrain and acquaint him with new concepts and techniques. They can also
be given new challenges and transferred to new areas, new territories or can be promoted to more responsible
positions. Sometimes due to inadequate training career plateauing takes place. Lack of relevant training hampers
growth and development.
4.8.4 Decline

In this stage the sales person is a problem for the management. A lot of motivational retraining is required. The
productivity of the salesman decreases considerably and is difficult to avert.
Training imparted at proper time develops right working habits and offsets the effect of detraining.

Did u know? Selling is done by the salesforce either directly to customers, such as in case of industrial salesmen or
to retailers, as in case of salesmen merely supplying shopkeepers and inducing them to stock the goods.

Self- Assessment

Fill in the blanks:

1. Training of the sales person will never become ........................
2. ....................... training involves the continuous development of sales people.
3. Sales person's career cycle is a conceptual framework which describes the stages through which a sales person
passes in his ....................... cycle.
4. The ....................... between the qualifications in the job specifications and those a trainee already has
represented the nature and amount of training needed.
5. The analysis of sales related marketing policies is also necessary to determine initial sales training ........................
6. The ....................... of training is not the same for all the sales training programmes.
7. The ................................ of appropriate training method for a training programme depends on the content of
training.
8. Responsibility for continuing sales ....................................... resides with the top sales executive.

4.9 Aim of Training

Defining the specific and general aims of a training programme is the first step in training. General aims are translated
into specific aims phrased in operational terms. These can be defined in two ways:
1. Identify initial training needs.
2. Continuing sales training programmes.

Identifying Initial Training Needs

The initial training needs of sales training programme can be identified by the analysis of three main factors.

Job Specification

The qualifications needed to perform the job are detailed in job specification. The set of job specifications needs
scrutinising for clues to the points on which new personnel are most likely to need training.

Trainee's Background and Experience

The gap between the qualifications in the job specifications and those a trainee already has represented the nature
and amount of training needed. But it is not always practical to adjust training precisely to individual differences and
time and money are saved by putting all recruits through identical programmes.
In all organisation's determination of the recruits real training needs is essential to developing initial training
programmes of optimum benefit to company and trainee alike.

Sales-related Marketing Policies

The analysis of sales related marketing policies is also necessary to determine initial sales training needs because the
differences in products, markets and their selling practices and policies determines the differences in training
programmes.
For example, selling of highly technical goods involves training with lot of product information while selling of non-
technical goods involves only initial sales training programmes.

Task Examine the salesman recruitment and selection process in a large and a small company. Compare how the
selection processes differ from each other. Examine the reasons for such difference.

Identifying Continuing Sales Training Programmes

The identification of continuing sales training needs means to identify training needs of experienced sales personnel
which are felt due to changes in market, product, marketing policies, procedures, organisation and even in the sales
personnel itself.

4.10 Content of Training

The content of training is not the same for all the sales training programmes. It varies from company to company
because of differences in products, markets, company policies, trainees' ability and experience and organisational size.
Every initial sales training programme comprises mainly four areas: product data, sales technique, markets and
company information.

Product Data

Product training depends on the nature of the product – if the product is highly technical then they will devote more
than half of their programme to product training, if the product is nontechnical, then minimal amount of product
training is required. But in all the cases the sales person should know about the products, their uses and applications
to serve customers' information needs.

Sales Technique

There are two views in this context. Some sales managers believe that if an individual has an attractive personality,
good appearance, voice and reasonable intelligence and knows the product, he will sell it easily. But the predominant
view is that new sales personnel need basic instruction in how to sell. This view is reflected in most of the companies.

Markets

The sales person needs to know who the customers are, their particular locations and particular products in which
they are interested. Not only this, the sales person should also know about their buying habits, motives and their
financial condition. But the training in this context should not be stagnant, it should be continuous because markets
are always changing.
Company Information

The company should essentially inform the sales person about the company's pricing policy, product services, spare
parts and repairs, credit extension and customer relations.

To boost the employee morale and job effectiveness, the company should also provide information to the sales
personnel about their selection procedure, training programmes, compensation, incentive systems, advancement
requirements and opportunities, savings and retirement plans, medical and insurance plans.

4.11 Methods of Training

The selection of appropriate training method for a training programme depends on the content of training. Few of the
important and appropriate methods of sales training are: lecture, conference, demonstration, replaying, case-
discussion, impromptu discussion, gaming, on-the-job training, programmed learning, correspondence courses.
4.11.1 The Lecture

Lecture is the method of learning through instructions from trainer to trainee. Trainees mainly watch and listen,
although some versions of lecturing permit questions.

Advantages

1. It is more economical as compared to other methods.

2. It is the only method to cover the desired training content if initial sales training is brief.
3. It is the only practical way to handle instructions when the training group is too large but it can also provide
training appropriately to smaller training groups through summary of major topics.

Disadvantages

1. Teaching is emphasised more than learning.

2. Only one-way communication between trainer and trainee prevails.

4.11.2 Personal Conference

The personal conference is an unstructured and informal method. It varies with the personalities of the trainer and
the trainee and the topics discussed. The trainer and trainee jointly analyse problems such as effective use of selling
time, route planning and call scheduling and also handling unusual selling problems.

4.11.3 Demonstration

The demonstration method of training is where sales managers plan and carry out a real selling call on a customer or
prospect with the salesmen they are training present as silent observers.
The method is most appropriately used for training new salesmen.

4.11.4 Role Playing

In this method first the trainer describes the situations and different personalities involved. Then the trainee is asked
to play the role of those personalities in different situations. In the end both the trainer and trainee appraise each
player's effectiveness and suggest how performance of each has been improved.
Thus, role playing can be defined as "a method of human interaction which involves realistic behaviour in an imaginary
situation".
The merits of the role-playing method are:
1. Learning by doing is emphasised.
2. Human sensitivity and interactions are stressed.
3. The knowledge of results is immediate.
4. Trainee interest and involvement tend to be high.
5. Trainees learn to accept criticism from others and the group soon recognises that sound suggestions benefit
everyone.
6 Role player's practice introspection through participating in the appraisal of their own performances.
7.Role playing provides chance to learn valuable tricks and gain acting experience.

4.11.5 Case Discussion (Learning by Doing)

The case is a set of data (real or fictional, written or oral). Miniature description and summary of such data presents
issues and problems calling for solutions or action on the part of trainee.
When the trainees are given cases to analyse, they are asked to identify the problem and to recommend tentative
solutions through group discussions.

Caution The salesman must be one who can be trusted, as he has to handle even money, besides merchandise. He
must be prompt and on the job every day. He must be one who can be relied on not only by you but also by his
customers and his fellow employees.

4.11.6 Gaming Simulation

This method is somewhat similar to role playing with a unique feature that it uses highly structured and contrived
situations based on reality and players receive information feedback. Advantages

1. Participants learn easily because they involve themselves in game play.

2. Players develop skills in identifying key factors influencing decisions.
3. Games have built-in information feedback features.

Limitations

1. Some minimum amount of time is required for playing, usually, three to four hours, which is not sufficient to
provide desired learning experience.
2. Since the game designs are based on ordinary decision making process their rules often prevent play on unusual
or novel approaches.
3. Poorly designed games may actually hinder instead of helping.

4.11.7 On-the-Job Training (Coach-and-pupil Method)

In this the salesmen are coached and instructed by skilled co-workers or by supervisors or by the special training
instructor. They learn the job by personal observation and practice as well as occasionally handling it.
This method involves three steps. First, the coach who is an experienced sales person begins by describing particular
selling situations, explaining various techniques and approaches. Next, accompanied by pupil, the coach makes actual
sales call, discussing each with the trainee afterward.
Then, under coach supervision trainee makes sales calls, each one being followed by discussion and appraisal.
4.11.8 Programmed Learning (Teaching by Machine Method)

Programmed instruction involves a sequence of steps which are often set up through the central panel of an electronic
computer as a guide in the performance of a desired operation or service of operation. It involves breaking down
information into meaningful units and then arranging these in a proper way to form a logical and sequential learning
programme or package for use with the machine.
But programmed instructions have not been widely adopted for sales training due to their high cost of operation and
other constraints.

4.11.9 Correspondence Courses

Companies with highly technical products and small but widely deployed sales forces use correspondence courses to
acquaint experienced sales people with new product development and applications.
It is most appropriate as an interim training method when trainees are scattered geographically but are assembled
periodically for lectures, seminars, role playing and other instructions.

4.12 Execution of Sales Training

Execution is the fourth step of the A-C-M-E-E approach of sales training. It involves the following four key decisions:
1. Who will be the trainees?
2. Who will be the trainers?
3. When will the training take place?
4. Where will the training site be?

Who Will be the Trainees?

The general criteria to identify trainees are:

1. Reward for good performance.
2. Punishment for poor performance.
3. Convenience of trainee and trainer.
4. Seniority: The greater the seniority, the greater opportunity for added training.

Self- Assessment

State Whether True or False:

9. The personal conference is an unstructured and informal method. It varies with the personalities of the trainer
and the trainee and the topics discussed.
10. Role player's practice introspection through participating in the appraisal of their own performances.
11. Role playing provides chance to learn valuable tricks and gain acting experience.
12. The top sales executive is in the best position to recognise the need and design and execute the sales training
programme.
13. The principle of an effective sales training programme is that learning must be parallel.
14. Training programmes are held either at centralised or corner points.
15. Induction is the method of learning through instructions from trainer to trainee.

Who Will be the Trainers?

The trainers who impart training during different training phases are:
Initial Sales Training: If the initial sales training is a line function then training is assigned to top sales executive but if
it is a staff function then the responsibility of initial sales training is given to personnel director.
Continuing Sales Training: Responsibility for continuing sales training resides with the top sales executive. The top
sales executive is in the best position to recognise the need and design and execute the sales training programme.
Sales Training Staff: In large organisations the sales training director reports to the top sale executive. The director
conducts some training by himself and the rest is given on decentralised basis by district sales managers.
In small organisations top sale executives have assistant sales managers or district managers to impart the training.
Outside Experts: Sometimes outside experts are also hired to conduct portions of sales training programmes relating
to sales techniques like selling by telephone, prospecting, etc.

When Will the Training Take Place?

1. Never stop Listening.

2. Never stop Learning.
3. Never stop Training.
Generally, the training programmes are held on adhoc basis. But a number of factors should be kept in mind while
organising a training programme.
Initial Sales Training Programmes: Timing for initial sales training programmes depends upon the number of new
personnel trained each year and this in turn depends upon the size of the sales force, sales personnel, turnover and
management plans for changing sales force size.
For instance, if a large number of sales persons are recruited, training programmes are scheduled several times a year
whereas if a small number of sales persons are recruited, training programmes are infrequent.
Continuing Sales Training Programme: The principle of an effective sales training programme is that learning must be
continuous-new information must be assimilated and other concepts modified in the light of new developments. This
requires that each sales person's training should continue as long as he is on the job.
Retraining helps in:
1. New refinements of selling techniques.
2. New product applications.
3. New customer problem.
4. New selling aids.
5. Overcoming the forgetting tendency of human brain.
Training programmes are held either at centralised or decentralised points. The centralised programme generally
provides better product training but higher costs are incurred in bringing trainees to the central point. But
decentralised training has even more serious defects. It cannot be executed properly unless supervised by top
management. Hence, an adhoc basis for centralised and decentralised training should be adopted by top
management.

4.13 Evaluation of Training Programmes

This is the last but not the least step of the training programme. Evaluation involves comparing the training
programme's aim with the results and measuring its impact on the sales person.
There is no direct method of measuring the impact of training but certain methods could provide indications whether
the results are positive or not. These are:
1. Market share percentages
2. Written Tests
3. Observers which work with sales personnel.
It is true that the training programme's effectiveness is widely dependent on trainers. Hence, management reminds
that "If the trainee hasn't learned, the trainer hasn't taught".

Caselet: Recruitment, Selection and Training

A well-established steel and silver cutlery making company which was selling to upper, upper medium class segment
of the society is to diversify and they want to use plastic segment and throw away cutlery segments. This is being done
due to the present market scenario of mushrooming fast food centres all over the places, where all the cutlery is
thrown away after use. This also requires lesser manpower as the counting, keeping records and washing of the cutlery
is eliminated.
The CEO of the Co. wants to recruit about 10 salesmen who are skillful and knowledgeable in selling to these markets.
He wants them to have good knowledge of plastic as well as steel goods.
But the Regional Manager of the Co. wants to recruit a person who has the knowledge of plastic products selling
industry knows about the distribution, marketing environment and the competitive nature of the Mkt.
Questions
1. What factors should be considered for recruitment of salesman?
2. What should be the Selection Procedure?
3. What kind of training to be imparted to the salesman?

4.14 Summary

 The recruitment policy is concerned with quality and qualifications of manpower.

 Agencies often administer batteries of tests, check references and perform task otherwise done by the
employer.
 Finally, it is important to remember whether there are any specific conditions relating to mobility, hours of
work, etc.
 Specific job details vary with the company and its situations and these should be in the ad if it is to attract good
applicants.
 Two additional internal sources are other departments and the non-selling section of the sales department.
Employees desiring transfers are already familiar with company policies and the personnel department has
considerable detailed information about them.
 Agencies need time to learn about an employing firm and its unique requirements of the interest to sales
executive is the growing no. of agencies.
 Transfers are good prospects for sales positions whenever product knowledge makes up a substantial portion of
sales training, since it may be possible to accelerate field assignments.
 The effectiveness of the sales manager is dependent to a great extent on the effectiveness of the team
supporting him.
 The success of sales organisation and sales force depends on proper staffing.

6.9 Keywords

Advertising: Newspapers carry numerous advertisements publicising openings for sales personnel such
advertisements appear both in classified sections and as display advertising so great is the number of prospective job
candidates reached by a single advertisement that companies often try to reduce the volume of applications.
Educational Institutions: This source includes colleges, universities, technical and vocational institutes. They are
supposed to have developed their ability to think, to reason logically and to express themselves reasonably well.
Employment Agencies: Agencies often administer batteries of tests, check references and perform task otherwise
done by the employer. Whenever an agency is used, it should receive a clear statement of the job's objective and a
complete run-down of job specifications.
Internal transfers: Two additional internal sources are other departments and the non-selling section of the sales
department. Employees desiring transfers are already familiar with company policies and the personnel department
has considerable detailed information about them.
Recruitment: Recruitment is a process to discover the source of manpower to meet the requirements of the staffing
schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective
selection of an efficient working force.

6.10 Review Questions

1. The recruitment policy is concerned with the quantity and qualifications of manpower. Comment.
2. What are the desirable characteristics for recruiting the sales persons?
3. “Picking winners is not easy – but a systematic approach using the assistance available and commitments can
pay real dividends”. Explain and elaborate the statement.
4. What information does a hiring organisation seek when evaluating recruited candidates?
5. What are the different forms of interviewing?
6. What are the primary sources of recruits?
7. Discuss the role of psychological testing in the selection process for sales people.
8. What tools does a hiring organisation have at its disposal when attempting to select a new salesperson?
9. Suggest criteria for selecting salesmen for the consumer products division of a company.
10. Design a sales training programme for two newly recruited salesmen of the consumer products division of a
company.

Answers: Self-Assessment
1. Recruitment 2. Sales
Manager
3. Motivation 4. Recruitment
5. Company 6. Personnel
7. True 8. True
9. True 10. False
11. False 12. (b)
13. (e) 14. (d)
15. (d)

Summary:

 A selection system is a set of successive 'screens' at any of which an applicant may be dropped from further
consideration.
 An interview can be defined as an attempt at gathering information from the candidate concerning his suitability
for the job under consideration.
 Achievement tests seek to determine how much the individual knows about a subject.
 McMurray explains why the patterned interview is likely to improve the judgement of the interviewers.
 A psychological test can be defined both in a broad as well as narrow manner.
 The initial screening is usually undertaken by the receptionist in the employment office.
 After selection, the employee is generally put on a probation period, ranging from one to two years, after which
his employment may be regularized.
 It is assumed in the use of interest tests that a relationship exists between test and motivation.
 Every company must look at its future management requirements as well as its need for career salesman.
 The presence or absence of these qualities in the candidate is revealed by physical examination.

 Training of the sales person will never become obsolete.

 Informal training involves the continuous development of sales people.
 The initial training needs of sales training programme can be identified by the analysis of three main factors.
 The content of training is not the same for all the sales training programmes.
 The company should essentially inform the sales person about the company's pricing policy, product services,
spare parts and repairs, credit extension and customer relations.
 Lecture is the method of learning through instructions from trainer to trainee.
 Programmed instruction involves a sequence of steps which are often set up through the central panel of an
electronic computer as a guide in the performance of a desired operation or service of operation.
 Sales Training Staff: In large organisations the sales training director reports to the top sale executive.
Self- Assessment

Multiple Choice Questions:

11. If a multinational company adopts a geocentric approach to recruitment and selection which of the following
will occur?
(a) All key posts will be filled by people of the same nationality as the parent company
(b) The 'best' people will be recruited regardless of nationality
(c) All key positions will be filled by host country nationals
12. Currently, the most popular recruitment method in the UK is which of the following?
(a) Speculative application/Word of mouth
(b) Company website
(c) Recruitment agencies
(d) Local newspaper advertisements
13. Behavioural interviews can most accurately be described as which of the following?
(a) An interview that relies as much on the candidate's body language as the content of their answers.
(b) A structured interview based on a series of questions relating to past behaviour, i.e. 'give an example of a
time when you had to make an unpopular decision - how did you handle it?'
(c) A structured interview based on a series of hypothetical questions, i.e. 'what would you do if?'
14. An Assessment Centre can most accurately be described as which of the following?
(a) A place where people undertake a series of selection tasks.
(b) A process involving a small group of participants who undertake a series of tests and exercises whilst
being observed by a number of assessors.
(c) A combination of selection interview and psychometric tests.

SELF- ASSESSMENT QUESTIONS

1. Define recruitment and discuss in brief the process of recruitment.
2. Elaborate the important sources of recruitment.
3. Write in brief the important steps involved in selection process.
4. "Appropriate selection policies and procedures result in greater efficiency and reduce the training costs as well".
Comment.

4.17 Keywords

Recruitment: It is a positive process in which a company attract a pool of talented people, who can be future sales
force.
Selection: It is termed as negative process through which pool of talented manpower is screened and finally desired
number of people are offered employment.
Job Analysis: It is done to identify the duties, responsibilities, requirements, and conditions involved in the job.
Reference Checks: It allows a company to secure information not available from other sources.
Achievement Tests (Proficiency Tests): Achievement tests seek to determine how much the individual knows about a
subject. They determine the admission feasibility of the candidate and measure what he is capable of doing.
Aptitude or Ability Test: These are used to measure the talent/ability of a candidate to learn the job or skill. They
detect peculiarities or defects in a person's sensory or intellectual capacity. They focus attention on a particular type
of talent, e.g., learning, reasoning or a mechanical bend of mind.
Mechanical Aptitude Test: These measure the capacity of a person to learn a particular type of mechanical work as
they measure a person's visual-motor coordination or integration.
Mental or Intelligence Test: They measure the overall intellectual activity or the intelligence quotient (IQ) of the
candidate. They also determine the candidate's word fluency, memory, inductive reasoning, speed of perception and
spatial visualisation.
Non-Directed/Non-Structured Interview: This kind of interview does not follow a standard format of questions,
instead it involves a relaxed discussion. Some personnel experts say that a non-directive technique yields maximum
insight into an individual's attitude and interests.
Objective Test: They measure neurotic tendencies, self-sufficiency, dominance-submission and self-confidence. These
are scored objectively.
Patterned/Structured Interview: In this method the interviewers are given a prepared list of questions or a specific
outline of questions designed to elicit a basic core of information.
Personality Tests: These tests try to find out an individual's value system, his emotional reactions and maturity and his
characteristic mood. Their major motive is to measure the basic make up or characteristics of individuals which are
non-intellectual in nature.
Situation Test: This reveals the ability of a candidate to undergo stress and his demonstration of ingenuity under
pressure. In short, we can say that it is a measure of applicant's reaction when he is placed in a particular situation.

Continuing Sales Training Programme: The principle of an effective sales training programme is that learning must be
continuous new information must be assimilated and other concepts modified in the light of new developments.
Continuing Sales Training: Responsibility for continuing sales training resides with the top sales executive. The top
sales executive is in the best position to recognise the need and design and execute the sales training programme.
Gaming Simulation: This method is somewhat similar to role playing with a unique feature that it uses highly structured
and contrived situations based on reality and players receive information feedback.
Initial Sales Training Programmes: Timing for initial sales training programmes depends upon the number of new
personnel trained each year and this in turn depends upon the size of the sales force, sales personnel, turnover and
management plans for changing sales force size.
Initial Sales Training: If the initial sales training is a line function then training is assigned to top sales executive but if
it is a staff function then the responsibility of initial sales training is given to personnel director.
Outside Experts: Sometimes outside experts are also hired to conduct portions of sales training programmes relating
to sales techniques like selling by telephone, prospecting, etc.
Sales Training Staff: In large organisations the sales training director reports to the top sale executive. The director
conducts some training by himself and the rest is given on decentralised basis by district sales managers.
4.18 Review Questions

1. The selection of salesman varies from company to company, from product to product and from market to
market. Explain with the help of example.
2. What are the steps involved in selection system?
3. What are the various types of interviewing techniques? Describe them briefly.
4. How does psychological testing help in choosing right candidate for the right job?
5. Are females suited to sales job, keeping in view the physical fitness and the touring?
6. What do you understand by placement and where does it fit into the selection system?
7. Explain the different types of Psychological Tests.
8. Describe the Placement of sales Personnel.
9. What do you know about Employment Offer?
10. Explain the Preliminary Interview.

Answers: Self- Assessment

1. Selection 2. Sales
3. Initial 4. Preliminary
5. Psychological 6. True
7. True 8. False
9. False 10. True
11. (b) 12. (d)
13. (b) 14. (b)

4.19 Review Questions

1. The aim of training is to make the sales person more competent to the assigned job. How will you identify the
training needs of a salesman?
2. What are the various methods of training a salesman?
3. How should a proper training programme be executed and evaluated?
4. Discuss the content of training.
5. Explain the methods of training.
6. Discuss the on-the-job training.
7. Explain the execution of sales training.
8. Describe the evaluation of training programmes.
9. Explain the programmed learning.

Answers: Self- Assessment

1. obsolete 2. Informal
3. career 4. gap
5. needs 6. content
7. selection 8. training
9. True 10. True
11. True 12. True
13. False 14. False
15. False

4.19 Further Reading

 Books American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April
1963.
 American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
  Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
 Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April
1963.

Online link ezinearticles.com/? Successful-Sales-Promotions-

 www.workoninternet.com/article_27484.html www.direct-marketing-association-india.org/
www.direct-marketing.net/ www.publicity.com/ www.aboutpublicrelations.net
www.ogilvypr.com www.marketingteacher.com/.../lesson_personal_selling.htm
Module 5: Directing and Controlling

CONTENTs
Objectives
Introduction
5.1 Motivating sales people
5.2 Manage High performance Sale team
5.3 Incentive for High performance
5.4 Leading the team
5.5 Evaluation of Sales people’s performance
5.6 Analysis of Sales and Marketing costs
5.7 Sales Force evaluation
5.8 Summary
5.9Keywords
5.10 Review Questions
5.11 Further Readings

Objectives
After studying this unit, you will be able to:
 Discuss the need of motivation;
 Describe the theories of motivation;
 Discuss the non- financial incentives;
 Describe the compensating Sales Personal.
Introduction

It has a monotonous job to perform and he gets fed up very soon and wants a change. Through motivation the
salesman is stimulated to action, so that he gets interested in the job and performs his duties to the best of his
capability. "The primary purpose of motivation is to aid salesmen to satisfy their goals by stimulating them to improve
the efficiency of their work." Motivation can be defined in many ways, it is a psychological aspect and helps the
salesman to a goal directed behaviour. Through motivation the needs of the salesmen may be fulfilled. Motivation
can be carried out through financial and non-financial incentives. It is a continuous process that carries on as the
expectation of the sales person keep changing from time to time.
The main objectives of motivation are:
1. To stimulate the salesmen to improve their efficiency.
2. To establish cordial relationship between the managers and salesmen.
3. To maintain high morale among the salesmen.
4. To seek cooperation of the salesmen in achieving the sales
5.1 Motivating Sales People

Motivation is specially required in sales management as the nature of job is different from the usual work that the
other members of the organisation are engaged in:
1. The job has a lot of obstacles for the salesman, as most of the customers visited don't entertain the salesmen by
giving orders.
2. The salesman has no family life as he is always enveloped in the market and the traders.
3. He has to face acute competition from competitive products. There is no fixed hour of working for a salesman.
4. The activities of a salesman are repetitive and he gets dissatisfied from repeating his work which becomes highly
monotonous.
5. He is under pressure both from the customer (wholesaler, retailers and consumers) and his supervisor, as both
want to get the best from the deal. The salesman is sandwiched between the two parties.
6. Too much of travelling and keeping away from home leads to health problems which affects the salesman in the
long run.
7. By working in fields the salesman does not have contacts with his fellowmen or the members of the organisation
and is posted at very distant places most of the year. Thus, he does not have any group relationship and feels
alone most of the time.
8. He does not work to full capacity and does an average job to remain in the job. This can be overcome through
proper motivation.
9. Most salesmen have a variety of needs including physiological and social needs and thus feel that they can't
satisfy their needs by remaining in the sales job which gives them lesser opportunities to socialise with their kith
and kin.
10. Motivation helps to build the morale of the salesman; it is a driving force for the salesman. Motivation can
overcome the lethargy and inactiveness of the salesman so that he can perform to the best of his ability.

Did you know? In sales work, motivation begins with the selection process. The sales manager should not hire people
for jobs in which they cannot achieve success. If a salesperson begins to think that he is not coming closer to his ideals
by serving the company, his behaviour will digress from the management goals.

5.2 Manage High performance Sale team

The salesmen can be motivated through logical steps which should be followed in a sequence.

Objectives

The objectives of motivation must be determined by the salesmen, the objectives could be different for different
salesmen and for the different areas. However, the main aim of motivation is to encourage the salesman to give off
his best which has been discussed earlier in the unit.

Needs

The needs of the salesman must be satisfied and this can be done by joining into the depth of the expectation of
salesmen, the position held by them, their mental attitude and differences between various salesmen.

Motivation of Salesmen
Salesmen can be motivated through financial or non-financial incentives or both; while deciding the same, financial
condition of the organisation has to be taken into consideration. Salesmen can also be motivated by changing their
territory or area of work. For no-financial incentives the salesmen can be given other prerequisites, like sending them
for training along with their families, for a holiday trip in attractive locales.

Communication

It is necessary that the communication be already understood, it should be simple and should give special instructions
to the salesmen. The interest of the company as well as that of the salesman must always be kept in mind so that both
are mutually benefited.

Feedback

The result achieved from the motivation programme must be evaluated so that the effectiveness of the motivational
programme can be assessed. The other points to be kept in mind is the development of the team spirit and
development of satisfaction from the work, which is necessary for the success of the programme.

Tasks
1. Given below are certain types of selling jobs. Suggest a compensation plan
which will be the most appropriate in each case.
Job Compensation Plan
(a) Salesperson employed with a bank
.......................................................... and selling credit cards.
(b) Salesperson selling air conditioners
.......................................................... to company dealers.
(c) Salesperson selling generators to
.......................................................... industrial houses.
(d) Salesperson employed by a hotel,
..........................................................
selling hotel services.
2. Critically evaluate the compensation scheme adopted by (a) M/s Shriram
Honda Generators (b) BPL and (c) American Express Credit Cards.

5.2.1 Motivational Theories

Motivation has been researched by psychologists and others for many years. A number of theories have been evolved
which are pertinent to the motivation of salespeople. These are the theories of Maslow (1943), Herzberg et al (1959),
Vroom (1964) and Likert (1961).

Maslow's Hierarchy of Needs

Maslow's classic hierarchy of needs model proposed that there are five fundamental needs which are arranged in a
hierarchy as shown below.
 Fig: 5.1: Maslow’s Hierarchy of Needs
Maslow argued that needs form a hierarchy in the sense that, when no needs are fulfilled, a person concentrates upon
his or her physiological needs. When these needs are fulfilled, safety needs become preponderant and become
important determinants of behaviour. When these are satisfied, belongingness becomes important - and so on up the
hierarchy.
Although Maslow's belief, that one set of needs only becomes important after lower order needs have been
completely satisfied, has been criticised, the theory does have relevance to sales force motivation. First, it highlights
the perhaps obvious point that a satisfied need is not a motivator of behaviour. Thus, for sales person who already
receives a more than adequate level of remuneration, additional payments may have no effect on motivation. Second,
the theory implies that what may act as a motivator for one sales person may not be effective with another. This
follows from the likelihood that different salespeople will have different combinations of needs.
Effective motivation results from an accurate assessment of the needs of the individual salespeople under the
manager's supervision. The overriding need of one sales person may be reassurance and the building of confidence;
this may act to motivate him or her. For another who has great need for esteem but a problem regarding work rate,
the sales manager may try to motivate by displaying to colleagues at a sales meeting his or her relatively poor sales
performance.

Self -Assessment

Fill in the blanks:

1. ......................... can be carried out through financial and non-financial incentives.
2. The ......................... has no family life as he is always enveloped in the market and the traders.
3. Effective motivation results from an accurate assessment of the needs of the individual salespeople under the
......................... supervision.
4. One of the common and recommended forms for inducing high levels of motivation is through .........................
5. The ......................... is an important tool to motivate sales persons.
6. A......................... is an amount paid for accomplishing a specific sales task.

Herzberg Two Factor Theory

Herzberg's two factor theory distinguished factors which can cause dissatisfaction but cannot motivate (hygiene
factors). Hygiene factors include working conditions, security, salary and interpersonal relationships.
Herzberg's theory has been well received, in general, by practitioners, although academics have criticised it in terms
of methodology and oversimplification. The theory has made a substantial contribution to the understanding of
motivation at work, particularly in extending Maslow's theory to the work situation and highlighting the importance
of job content factors which had hither to been badly neglected.

Fig 5.2: Herzberg’s Two Factor Theory

Vroom's Expectancy Theory

Basically this theory assumes that a person's motivation to exert effort is dependent upon his expectations for success.
Vroom based his theory on three concepts - expectancy, instrumentality and valence.
Expectancy: This refers to a person's perceived relationship between effort and performance, i.e., to the extent to
which a person believes that increased effort will lead to higher performance.
Instrumentality: This reflects the person's perception of the relationship between performance and reward, for e.g.,
it reflects the extent to which a person believes that higher performance will lead to promotion.
Valence: This represents the value placed upon a particular reward by a person. For some individuals promotion may
be highly valued, for others it may have little value. Thus, according to the theory, if a sales person believes that by
working harder he or she will achieve increased sales (high expectancy), and that higher sales will lead to greater
commission (high instrumentality) and higher commission is very important (high valence), a high level of motivation
should result. The nature of the Clearly, different salespeople will have different valences (values) for the same reward.
Some might value increased pay very highly, while for others higher pay may have less value; for some the sense of
accomplishment and recognition may be very important, for others much less so. Also, different salespeople may view
the relationship between performance and reward, and between effort and performance, in quite different ways.
Further this theory supports the notion that performance targets, e.g., sales quotas, to be effective motivators, should
be regarded as attainable (high expectancy) by each sales person, otherwise the first link in the expectancy model will
be severed. Finally, this model provides a diagnostic framework for analysing motivational problems with individual
salespeople and provides an explanation of why certain managerial activities can improve motivation. Training in sales
skills, for e.g., can improve motivation by raising expectancy levels.

Fig 5.3: Vroom’s Expectancy Theory

Self -Assessment

State Whether True or False:

1. Clarity of job and what is expected from the sales person is a great motivator.
2. The negative effect method is also an important technique for motivating the salesforce to their best.
3. Leadership style of the manager plays an important role in training the sales person.
4. Inspirational leadership refers to influence through referent power.
5. Persuasion has the advantage of getting people to conclude that their actions were performed out of their own
free will.

5.3 Incentives for High Performance

5.3.1 Financial Motivational Techniques

Most salesmen prefer the financial benefit because the need at the lower level of organisation is more of physiological
and safety needs, rather than those of esteem and self actualisation. Social needs are also necessary at all levels. The
financial incentives include:
1. Higher salary
2. More commission
3. Other monetary incentives
4. Profit sharing
5. Travelling allowance
6. Bonus, etc.
The financial incentives become less affective after some time and thereafter the salesman is looking to non-financial
incentives which have been discussed at length.

Caution : People with high need levels are self-starters. They require certain external incentives to succeed on their
jobs and constantly challenge themselves to improve their own performances. Such people do not require
motivation by the management other than that of providing the right kind of job environment.

Financial incentives are definitely a motivating factor, but they vary at the hierarchical level of the sales person. The
need is great at lower end of the hierarchy. Financial incentives not only keep sales person on the company roles but
also motivates them to contribute to the growth of the company and thereby get grown individually. It is also an
important managerial tool to control and direct sales force to attain the sales objectives.
A poorly developed or administered financial plan may invite unions to organise sales force as happened in some of
the pharmaceutical companies in India. Therefore, in the management and motivation of sales force, a fairly
reasonable financial incentive plan plays a very important role. A sales force cannot be considered soundly managed
unless there is a well- developed and well administered company plan.
It is difficult to devise a sound compensation plan. It comes with experience and varies from company to company. It
is designed keeping in view the company's goals, capabilities and requirements. The company wants to increase sales
and profits at a minimum cost whereas the sales person is interested in maximising his earnings. An effective
compensation plan takes care of both the parties. Therefore, a compensation plan must attract, retain and motivate
capable sales personnel and also work within the company's budget.
According to the motivation theories, money has limited potential as a motivator. Nevertheless, sales force needs to
be compensated to keep its morale high and to contribute its maximum. A sales compensation plan, properly
designed, has three motivational roles:
1. Provide a living wage.
2. Adjust pay levels to performance.
3. Provide a mechanism for demonstrating the congruency between attaining company's goal and individual goals.
A properly designed sales compensation plan fits a company's special needs and problems. Direct salary is similar for
all companies but indirect incentives and prerequisites differ.
A sales force is representative of a company's philosophy and business principles. It builds company's perception
among its clients. Building of the sales force and its maintenance is therefore important and this is done by
compensation schemes and motivation.
Sales compensation plans are aids to, rather than substitutes for, effective motivation. The basic appropriateness of
a compensation plan is important and so is the way it is implemented and administered.
Major changes in the compensation plan are rare. Like most people sales personnel resist sweeping changes,
particularly when this requires them to alter accustomed ways of doing things.

There are two situations where total overhauling of compensation plans are in order.
The company whose sales force already has low morale, perhaps because of the current compensation plan.
1. When a company is anticipating the cultivation of new and different markets.
In both the cases, management must consider many factors, viz., the type of customers, marketing channels,
characteristics, intensity of competition, extent of market and complexity of selling task.
Requirements of a Good Sales Compensation Plan

A good sales compensation plan fulfils seven requirements:

1. It provides a living wage in the form of a secured income.
2. The plan fits with the rest of the motivational programme.
3. The plan is fair-it does not penalise sales personnel because of factors beyond their control. Within the limits of
security and other special circumstances, sales personnel receive equal pay for equal performance.
4. It is easy for sales personnel to understand-they are able to calculate their own earnings.
5. The plan adjusts pay to changes in performance.
6. It is economical to administer.
7. It helps in attaining the objectives of the sales organisation.

5.3.2 Non-financial Motivational Technique

The simple motivational tools of early years such as only financial benefits prove to be a poor method of motivation
beyond physiological and safety needs satisfaction on account of the unique aspects of a sales person's job.
The non-financial incentives, thus, become an important component of the motivation mix of a company. These are
especially relevant as Dawson has pointed, "Business is on the threshold of a new era of human and social concern,
which will inevitably result in greater attention to total human resource development by sales management".
Some of the unconventional factors that make a special rank on sales force motivation are discussed below.

Meeting between Manager and Sales Force

These are highly regarded by sales managers in the motivation of their sales teams as this provides opportunity to
managers to meet their sales force in the field, at head office and at the sales meetings/conventions.
These meetings allow the sales manager to understand the personality, needs and problems of each sales person. The
manager can then better understand the causes of demotion/frustration in individual sales person and respond in a
manner which takes into account the needs, problems and personality of the sales person. Sales techniques can thus
be improved and confidence boosted. According to Likert, when the sales manager encourages an "open" style of
management, salesmen are encouraged to discuss their problems and opportunities so that the entire sales team
benefits from the experience of each salesman.
This results in a greater sense of group loyalty and improved performance. The success of the marketing team can be
easily attributed to the open door policy adopted by companies in India. As one manager put it, "I know all my team
of 166 sales representatives personally, by name and make it a point to keep in touch with all of them. They can walk
in any time with their problems and they have got the confidence that most of their problems will be handled to their
satisfaction". Clarity of Job

Clarity of job and what is expected from the sales person is a great motivator. The objectives when duly quantified
and well defined, properly connected and linked with the reward and recognition serve as a source of motivation to
the sales person.
Sales Targets or Quotas

If a sales target or quota is to be effective in motivating a sales person, it must be regarded as fair and attainable and
yet offer a challenge to him. Because the sales person should regard the quota as fair, it is usually sensible to allow
him to participate in the setting of the quota. However, the establishment of the quotas is ultimately the sales
manager's responsibility and he will inevitably be constrained by overall company objectives. If sales are planned to
increase by 10 per cent, then salesmen's quotas must be altered in a manner consistent with this objective. Variations
around this average figure will arise through the sales managers’ knowledge of individual sales person and changes in
commercial activity within each territory; for e.g., the liquidation of a key customer in a territory may be reflected in
a reduced quota. Quotas can be set on rupee sales, unit volume, margin, selling effort or activity and product type.
The attainment of a sales target or quota usually results in some form of financial benefit to the sales person.

Sales Contest

The sales contest is an important tool to motivate sales persons. The purpose of sales contest varies widely.

It may encourage a high level of sales in general to increase the sales of a slow-moving product or to reward the
generation of new customers. It provides an incentive to show better performance and secure more satisfactory
results.

However, sales contest has a few disadvantages. One such disadvantage is that it can encourage cheating. For e.g., in
one company which used a sales contest to promote sales at a series of promotional events around the country with
its dealers, sales persons "stored up" orders achieved prior to the event in order to increase the apparent number of
orders taken at the event. Also, contests, by pitching sales person against sales person, militate against the spirit of
mutual help and cooperation which can improve sales force performance.

Sales Conventions and Conferences

These are the devices of group motivation. They provide opportunities for sales persons to participate, gain social
satisfaction and express their views on matters directly affecting their work. They promote team work, dissolve social
barriers, inspire and raise sales person's morale. Most of the companies in India are now a days adopting this method
to motivate their sales force.

Positive Effect

The positive effect method is also an important technique for motivating the salesforce to their best.
The proper application of praise, positive feedback, and human warmth and understanding can impel others to
perform up to their capabilities. This must be done in a genuine way and not be perceived as overtly self- serving.
Another form of motivation through positive effect occurs via a small group and peer relations. Friendship, support
and comradeship frequently serve as vehicles for creating positive feelings towards company and job.

Leadership Style of the Manager

Leadership style of the manager plays an important role in motivating the sales person.
Inspirational leadership refers to influence through referent power. Identification of charismatic charm is an important
tool in the motivational strategy of the management. It infuses the images and expectations for extremes of effort,
sacrifice achievement and in general "the right stuff". It is practiced through the use of professional speakers' special
audio tapes and video tapes designed to arouse and stimulate sales persons. It also tries to create and perpetuate
certain corporate myths and success stories, which indirectly motivates sales person to perform at their best.

Freedom to Work

In order to perform his onerous duties and responsibilities, the sales person must be given a reasonable amount of
freedom and discretion in performing his job. Likert, in his studies, has mentioned that lack of discretion has a negative
impact on employees’ job satisfaction. Discretion and freedom may be accomplished by allowing sales person to
develop their own call patterns, more control over the types of promotional packages that they offer to their
customers, etc.
Freedom or autonomy satisfies the psychological needs and is like power pay (which is a reward), making the job of
sales person more important in the organisation.

Reward and Recognition

Although the sales quotas, sales contests, convention and conferences have positive carry over effects, these are short
lived techniques of motivating salesmen. On the other hand, reward and recognition of sales persons
accomplishments are more enduring and relatively economic methods of motivation. Some of the ways to extend
recognition and honour to sales person include conferring the title of "salesman of the month/year" congratulation
telegrams from members of top management, sales trophies, offering memberships of social clubs, mention in
company's newsletter, certificate etc. Recognition and honour satisfy sales persons need for self-esteem and self-
respect. These are like status pay – a public acknowledgment of the value that management places upon an individual.

Persuasion

One of the common and recommended forms for inducing high levels of motivation is through persuasion. In this
situation, managers use rational arguments to convince sales persons that it is in their own best interest to act in a
preferred way. Persuasion has the advantage of getting people to conclude that their actions were performed out of
their own free will. This leads to higher levels of self direction than reward or coercive modes of influence where one
perceives he or she acts more out of external compulsion than internal volition.

Designing a Compensation Package

A good compensation plan is built on solid foundation and therefore it requires a systematic approach to assure that
no essential step is overlooked.

Different compensation packages are preferred by different sales persons depending

upon their demographic characteristics,
i.e., age and family life cycle. A bachelor can take high risks, is more enterprising and with high risks high awards are
also promised. He can work on a straight commission or incentive scheme only. As one gets married he prefers stability
with high basic component. When one gets older one wants more stability and preferably a direct salary.

Role of Selling in Marketing Strategy of the Company

By this we mean how much importance is being given to the sales in marketing mix of the company and what pattern
is being followed.

Competitor's Practices

A lot depends on the competition that is existing in the market. The competition may be pure, monopolistic,
oligopolistic or no competition. Accordingly, these factors are also considered and compensation plan may be
designed to suit these factors.

5.5.4 Use of Bonus

A bonus is an amount paid for accomplishing a specific sales task. Bonuses are paid for reaching a sales quota,
performing promotion activities, obtaining new accounts, following up leads, setting up displays or carrying out other
assigned tasks.
Bonuses are never used alone – they always appear with one of the main sales compensation methods. If used with
the straight salary, the plan resembles the combination plan. If used with the straight commission plan, the result is a
commission plan to which an element of managerial control and direction has been added. If used with the
combination salary that is calculated from the commission.
5.5.5 Fringe Benefits

Fringe benefits, which do not bear direct relationships to job performance, range from 25-40 per cent of the total
sales compensation package. Fringe benefits, like monetary compensation, are not motivating factors.
In this approach, the company offers a core of basic benefits – the benefits required by law plus other traditional
benefits, including paid vacations, medical, disability, and death benefits and a retirement programme Also, because
of changing needs employees are given opportunity to change their choice.

Defining a Sales Job

1. Re-examine the nature of the sales job and revise it if it is outdated.

2. Analyse sales department objectives for their effect on the sales person's job.
3. Check out for sales volume objectives, for instance, whether in rupees, units of products, or number of dealers
and distributors and translate them into what is expected of the sales personnel, as group and individually.
4. The impact of sales related marketing policies are determined (like, credit policies, price policies, etc.)
5. Consider the current and proposed advertising and sales promotional programmes as they assist in clarifying the
nature of the sales person's goals, duties and activities.

Consider the Company's General Compensation Structure

Most companies use job evaluation systems to determine the relative value of individual jobs. Its purpose is to arrive
at fair compensation relationships among jobs. There are four job evaluation methods. Two are non-quantitative –
simple ranking and classification or grading. Other two are quantitative – the point system and the factor comparison
method.

Simple Ranking

This is an inexpensive job evaluation method. No attempt is made to determine the critical factors inherent in the job,
only overall appraisal of the relative worth of different jobs is made.
Classification or Grading

In this method jobs are graded in terms of job responsibility, skills required, supervision given and received, exposure
to unfavourable and hazardous working conditions and similar characteristics. All jobs within a grade are treated alike
for compensation.

Point System

It involves defining factors common to most jobs. The specific factors generally include mental and physical skills,
responsibility, supervision received and given, personality requirements and minimum education required. Each factor
is assigned a minimum and maximum number of points, different ranges being associated in line with the relative
importance of the factors.
Factor Comparison Method

This method resembles the point system but is more complex. It utilises a scheme of ranking and cross comparisons
to minimise error from faulty judgement.

A selected number of key jobs typical of similar jobs throughout the company are evaluated.

This is done by arranging them in rank order, from highest to lowest for each factor. As a check against this judgmental
evaluation, the compensation money actually paid for each job are allocated to the factors, which automatically
establishes the relationship among jobs for each factor. The judgmental ranking and the ranking by allocation of
compensation are compared and differences are reconciled, or else the jobs are removed from the key list. On this
basis, money amounts assigned to the several factors making up key jobs and additional jobs are evaluated and their
monetary values for each factor interpolated into the scale. This procedure is repeated until all jobs are evaluated.

5.4 Consider the Compensation Patterns in Community and Industry

Because compensation levels for sales personnel are related to external supply and demand factors, it is important
to consider the prevailing compensation patterns in the community and the industries. Management needs answers
to four questions.
1. What compensation systems are being used?
2. What is the average compensation for similar positions?
3. How are other companies doing with their plans?
4. What are the pros and cons of departing from industries or community patterns?
5. What calibre of salespersons are required to be effective as well as cost-efficient.

Determining Compensation Level

Management must determine the amount of compensation a sales person should receive on the average. The
compensation level might be set through individual bargaining or on an arbitrary judgement basis. Management
should ascertain whether the calibre of the present sales force measures up to what the company would like to have.
If it is too low, or if the company should have lower-grade people than those currently employed, management should
determine the market value of the sales personnel of the desired grade.
Management weighs the worth of the individual person by estimating the sales and profit money that would be lost
if particular sales people resigned. Another consideration is the compensation amount the company can afford to pay.
Provide for the Various Compensation Elements

A sales compensation plan has as many as four basic elements:

1. A fixed element, either a salary or a drawing account to provide some stability of income.
2. A variable element (for example, a commission, bonus, or profit sharing arrangement) to serve as an incentive.
3. An element covering the fringe or plus factor such as paid vacations, sickness and accident benefits, life
insurance, pension
4. An element providing for reimbursement of expenses or payment of expense allowances.
Management selects the combination of elements that best fits the selling situation. The proportions that different
elements bear to each other vary. However, most companies split the fixed and variable elements on a 60:40 or to
80:20 bases.

Special Company Needs and Problems

A sales compensation plan is no panacea for marketing ills, but it is often possible to construct a plan that increases
marketing effectiveness. If a company's earnings are reduced due to sales personnel giving more importance to low
margin items and neglecting high margin products, variable commission rates might be set on different products with
higher commission for neglected product.
Consult the Present Sales Force

Management should consult the present sales personnel, in as much as many grievances have roots in the
compensation plan. Management should encourage sales personnel to articulate their likes and dislikes about the
current plan and to suggest changes in it. Criticism and suggestions are appraised relative to the plan or plans under
consideration.

Reduce Tentative Plan to Writing and Pre-test it

For clarification and to eliminate inconsistencies the tentative plan is put in writing. Then it is pre-tested. The amount
of testing required depends upon how much the new plan differs from the one in use. The greater the difference, the
more thorough is the testing. Pre-tests of compensation plans are almost always mathematical and usually
computerised. If the sales pattern has shown considerable fluctuations, speculations are made for periods
representative of average, good and poor business.
Then a look is taken into the future. Utilising sales forecast data, new and old plans are applied to future periods.
The plan is tested for the sales force as a group and for individuals faced with unique selling conditions. Analysis reveals
whether the plan permits earnings in line with the desired compensation level. If deficiencies show up the plan may
not be at fault; made or to inaccuracies in sales forecasts, budgets, or quotas.
To conduct a pilot test, several territories representative of different sets of selling conditions are selected. The
proposed plan is applied in each one long enough to detect how it works under current conditions.
Revise the Plan

The plan is then revised to eliminate trouble spots or deficiencies. If alterations are extensive, the revised plan goes
through further pre-test and perhaps another pilot test. But if changes have been only minor, further testing is not
necessary.

Implement the Plan and Provide for Follow up

At the time the new plan is implemented, it is explained to the sales personnel. Management should convince them
of its basic fairness and logic. Details of changes from the old plan and their significance require explanation. All sales
personnel should receive copies of the new plan, together with written examples of the method used for calculating
earnings. If the plan is at all complex, special training sessions are held and aimed at teaching sales personnel how to
compute their own earnings.
Provisions for follow up are made. From periodic checkups need for further adjustments is detected. Periodic checks
provide evidence of the plans' accomplishment and they uncover weaknesses needing correction.
5.5 Types of Compensation Plans

There are only three basic type of compensation plans-straight salary, straight commission and a combination of
salary and variable elements.

Caselet: Motivation

Martin Corporation the manufacturers of calculating machines had offices located in Delhi, Mumbai, Calcutta and
Chennai, Its sales were quite substantial. Martin Corporation was a small company as compared to other giants in the
calculating machine industry. The calculating machines were sold from ten thousand to thirty thousand rupees. The
higher cost machines were very sophisticated and were used by banks and other governmental institutions. They
offered storage, memory, separate keyboards for calculation and automatic balancing of rows and columns of large
tables. This company also had a sales force of its own and was selling to industrial distributors, wholesaler of electronic
machines and also directly to customers. It had four sales managers, covering all the four metropolitan cities as given
above. The machines were also popular in Bangladesh and the agency was managed by Abdul Rahman Enterprises,
who were booking orders from Bangladesh as well as asking the company (Martin Corporation) to ship the goods to
Bangladesh. The commission earned by Abdul Rahman Enterprises was 50% on the sales made by them. However,
when the order was placed to Corporation and the company had to ship the goods the commission given was only
10%. The marketing manager of the company was not satisfied with the sales made by the agency. Their salesmen
were busy in domestic territories and could not give marketing support to the agency. He however felt that the agents
had very big territory to themselves and very good sale potential. He therefore tried to make an in-depth study of the
causes of the low sales. He came to know that the agents also had a subsidiary plan for repairing machines. The old
machines were repaired at a low cost ranging from 5000-10,000 rupees and these repaired machines performed very
well and were in great demand. The agents wanted the company to share advertising expenses in Bangladesh and also
wanted a long term agreement with the company rather than a contract on two-year renewals which was existing at
the moment.
Questions

1. What should Martin Corporation do to motivate the agents?

2. What do you see as the main problem and how would you solve it?

5.5.1 Straight Salary Plan

This is the simplest compensation plan. Under it, sales persons receive fixed sums at regular intervals (companies
than consumers' goods companies. Firms that previously used the straight salary plan have switched over to
combined basic salary with a variable element.

Advantages

1. There is control and direction over the sales personnel.

2. There is flexibility in adjusting the work.

3. Sales persons cooperate more if paid straight salary rather than commissions.
4. It is simple and economical to administer.
5. More stability of income.
6. Sales persons are relieved of much burden of planning their own activities.
Disadvantages

1. Since there is no direct monetary incentive many sales persons do only an average rather than an outstanding
job.
2. There is tendency to under compensate productive sales persons and to over compensate poor performers.
3. If this exists for long, the turnover rate rises.
4. The morale of the sales persons is affected.
5. It is difficult to adjust to changing circumstances.

Self -Assessment

Multiple Choice Questions:

12. To maximize the performance of their field sales forces, companies
(a) Review expense accounts
(b) Retrain in sales techniques
(c) Develop a strong marketing plan
(d) Develop a strong advertising plan
13. Which of the following is an advantage of using a commission form of sales compensation?
(a) The salesperson will be highly motivated.
(b) Marketing information will be regularly collected by the salesperson.
(c) The account will be serviced on a regular basis.
(d) All of the above
14. Which of the following areas of training for sales managers is most frequently neglected?
(a) Forecasting and budgeting techniques
(b) Accounting principles
(c) Marketing principles
(d) Management principles
15. Which of the following communication strategies does NOT involve direct communication between sales
managers and salespeople?
(a) Manipulation
(b) Threats
(c) Persuasion
(d) Promises
5.5.2 Straight Commission Plan

In this, sales persons are paid according to productivity. This method provides for progressive or regressive changes
in commission rates as sales volume rises to different levels. Others provide for different commission rates for sale
of different products, to different categories of customers, or during given seasons.
Straight commission plans fall into one of the two broad classifications:
1. Straight commission with sales persons paying their own expense. Advances may or may not be made against
earned commissions.
2. Straight commission with the company paying expenses, with or without advances against earned
commissions.
For this method non-selling duties are unimportant, rather getting order is the main objective.

Advantages

1. It provides maximum direct monetary incentives.

2. It provides means of cost control.
3. The straight commission plan is also characterised by great flexibility for revising commission rates for different
products.

Weaknesses

1. Only customer orders are set by sales persons and they are careless about transmitting reports.
2. Sales persons’ neglect to follow up leads. They resist reduction in size of sales territories.
3. Sales persons push the easier to sell low margin items and neglect harder-to-sell high margin items.

Determine Commission Base

Important aspect of designing a straight commission system is to select the base on which to pay the commission.
1. If obtaining volume is the main concern then total sales is the base.
2. If sales personnel make collections on sales, then commissions are based on collections.
3. If a firm has excessive order cancellations, commissions can be based upon shipments, billings or payments.
4. To control price cutting by sales personnel, some companies base commissions on gross margin.
5. Some companies use net profits base, seeking simultaneously to control price cutting, selling expenses and net
profits.

Salary Plus Commission

Most sales compensation plans are a combination of salary and commission plan. They develop as attempts to capture
the advantages and offset the disadvantages of both the salary and commission systems.
In commission plan, executive has weak control on non-selling activities while in salary method it is not so.
Advantages

1. Security of stable income and financial incentive.

2. Management has greater control and apparatus to motivate sales force.
3. A cooperative spirit develops between salesmen and the company.

Disadvantages

1. Clerical costs are high.

2. The split between fixed and variable component is 60:40 to 80:20.
5.5.3 Factors Influencing Design of Compensation Scheme

Irrespective of the basic structure of compensation, some factors cannot be overlooked while designing a
compensation plan for companies.

Relation with Product Life Cycle (PLC)

All products undergo various stages of introduction growth, maturity and decline. The selling effort is related to this
(PLC) stage.
When the product is in the introductory stage it is difficult to sell the product. Therefore, the sales force must be
dynamic, enterprising, willing to travel, to be able to establish the product in the market. It should have good
knowledge of the product, good communication skills and tremendous willingness and endurance to pursue the goals
that are to be achieved. Therefore, in the introductory stage direct salary will be on the higher side and indirect
benefits may not be introduced.
Growth Stage

In this stage the motivation of the sales force has to be maintained. Indirect incentive schemes have to be introduced.
Incentives can be linked with achieving targeted quarters. This will help in the growth of the product.

Maturity

When the product firmly establishes itself the sales force needs a break. The indirect benefits like training programmes
in good environmental locales foreign trips, promotions, basic increase in salary are given. This increases their
knowledge and motivates them and gives them a new direction to do the job.

Decline Stage

When the sales of the product starts declining then added incentives may be given to generate fresh interest in the
product. Efficient product managers who may be concentrating on different products are given added incentive to
service the sales of the declining product.

Compensation Related with Demographic Characteristics

Different compensation packages are preferred by different sales persons depending upon their demographic characteristics,
i.e., age and family life cycle.
A bachelor can take high risks, is more enterprising and with high risks high awards are also promised. He can work on
a straight commission or incentive scheme only. As one gets married he prefers stability with high basic component.
When one gets older one wants more stability and preferably a direct salary.

Role of Selling in Marketing Strategy of the Company

By this we mean how much importance is being given to the sales in marketing mix of the company and what pattern
is being followed.

Competitor's Practices

A lot depends on the competition that is existing in the market. The competition may be pure, monopolistic,
oligopolistic or no competition. Accordingly, these factors are also considered and compensation plan may be
designed to suit these factors.

5.5.4 Use of Bonus

A bonus is an amount paid for accomplishing a specific sales task. Bonuses are paid for reaching a sales quota,
performing promotion activities, obtaining new accounts, following up leads, setting up displays or carrying out other
assigned tasks.
Bonuses are never used alone – they always appear with one of the main sales compensation methods. If used with
the straight salary, the plan resembles the combination plan. If used with the straight commission plan, the result is a
commission plan to which an element of managerial control and direction has been added. If used with the
combination salary that is calculated from the commission.
5.5.5 Fringe Benefits

Fringe benefits, which do not bear direct relationships to job performance, range from 25-40 per cent of the total
sales compensation package. Fringe benefits, like monetary compensation, are not motivating factors.
In this approach, the company offers a core of basic benefits – the benefits required by law plus other traditional
benefits, including paid vacations, medical, disability, and death benefits and a retirement programme Also, because
of changing needs employees are given opportunity to change their choice.
1. Fringe benefits are now an important part of every sales person’s income. These are dealt as under:
2. Company Benefits: These constitute 25 to 40 % of the basic pay. Fringe benefits differ from company to
company. Insurance, paid vacation, paid leaves, retirement plans and educational assistance are a part of
company benefits.
3. Insurance: Life insurance, health insurance, accident and disability insurance are provided by most companies.
Sometimes a part of insurance is paid by the salesman.
4. Paid Vacations: These are provided to sales persons with a long standing, who have served the company for a
long period of time.
5. Paid Leaves: Includes, sick leave, maternity leave and are enjoyed by confirmed salesman who have worked
for a considerable period of time.
6. Retirement Plans: Many companies contribute to pension plan for its employees. The sales person also
contributes a part of their income through payroll deductions.
7. Educational assistance: Many sales persons take advantage of company sponsored educational programmes.
They sponsor candidates to courses useful to the company.
8. Sales Force Benefits: Personal use of a company car and membership to clubs/ associations is also provided
to sales people. This helps them to get in touch with a lot of people connected with business so that the sales
could be increased.
Besides these fringe benefits there can be other types of incentives.
(a) Profit Sharing: If the company's profit rises then a cash bonus can be given
(b) Stock Purchase Plan: Employees can buy shares of the company at a discounted price. They can become
shareholders of the company. This increases the loyalty of the sales people towards the company.
(c) Credit Union: A company supported credit union to save and borrow as and when desired.
(d) Employee Services: These include subsidised meals, recreational facilities, discount on company's products,
etc.
(e) Cafeteria Approach: In this the employees choose the desired benefits. This is a new approach in which there
is a basket of benefits and the employee opts for some of these which are more beneficial to him.
5.6 Summary

 The sales job is very monotonous and full of disappointments.

 A proper motivation programme is to be followed.
 The sales personnel need to be given proper incentives to reduce the labour turnover.
 It is important that the manager is skilled and knows the technicalities of the job and is able to lead the
personnel in an effective manner.
 The financial and non- financial incentives both need to be taken care of.
 Fringe benefits, which do not bear direct relationships to job performance, range from 25-40 per cent of the
total sales compensation package.
 A bonus is an amount paid for accomplishing a specific sales task.
 Life insurance, health insurance, accident and disability insurance are provided by most companies.
 Many sales persons take advantage of company sponsored educational programmes.
 The financial incentives become less affective after some time and thereafter the salesman is looking to non-
financial incentives which have been discussed at length.
 Many sales persons take advantage of company sponsored educational programmes.

5.7 Keywords

Credit Union: A company supported credit union to save and borrow as and when desired.
Educational Assistance: Many sales persons take advantage of company sponsored educational programmes. They
sponsor candidates to courses useful to the company. Employers also grant release time to employees to attend
courses.
Employee Services: These include subsidised meals, recreational facilities, discount on company’s products, etc.
Expectancy: This refers to a person’s perceived relationship between effort and performance, i.e., to the extent to
which a person believes that increased effort will lead to higher performance.
Factor Comparison Method: This method resembles the point system but is more complex. It utilises a scheme of
ranking and cross comparisons to minimise error from faulty judgement.
Instrumentality: This reflects the person’s perception of the relationship between performance and reward, for e.g.,
it reflects the extent to which a person believes that higher performance will lead to promotion.
Paid Leaves: Includes, sick leave, maternity leave and are enjoyed by confirmed salesman who have worked for a
considerable period of time.
Paid Vacations: These are provided to sales persons with a long standing, who have served the company for a long
period of time.
Point System: It involves defining factors common to most jobs. The specific factors generally include mental and
physical skills, responsibility, supervision received and given, personality requirements and minimum education
required.
Retirement Plans: Many companies contribute to pension plan for its employees. The sales person also contribute a
part of their income through payroll deductions.

5.8 Review Questions

1. Why is motivation of sales force more important than employees in any other sphere of activity?
2. What is the importance of non-financial incentives in motivating the sales person?
3. How does Maslow's hierarchy helps in motivating the sales force?
4. What are the main elements of a compensation programme?
5. Describe the requirements of a good compensation plan.
6. What are the various types of compensation plans and their advantages and disadvantages?
7. What is the importance of fringe benefits?
8. Describe the importance of fringe benefits elements with reference to any organisation.
Answers: Self- Assessment
1. Motivation 2. Salesman 13. (a), 14 (d), 15 (a)
3. Manager's 4. Persuasion
5. Sales 6. Bonus
Contest
7. True 8. False
9. False 10.True

9 Further Readings

Books:
 American Marketing Association, A Glossary of Marketing Terms, Chicago, 1960.
 Autvin, William, H, Advertising, Mc Graw-Hill Book company, New York.
 Bartels, Robert, The History of Marketing Thought, (2nd ed.) GRIDINC, Columbus, Ohio, 1976.
 Borden, Neil, H, 'The concept of marketing mix' Journal of Advertising Research, 1964.
 Boyd, Harper W Jr., and Newman, Joseph, W., (ed.) Advertising Management D B Taraporevala sons and Co.,
Bombay, 1965.
 Boyd, Harper W, Marketing Management, Harcourt Brace Jovanovich, New York, 1972.
 Codbury, N D, ' When, Where & How to Test Market', Harvard Business Review (May-June 1975).
 Constantin, James, A, Evans, Rodney, E and Morris, Malcolm, L, Marketing Strategy and Management,
Business Publications Inc., Dollas, 1976.
  Cundiff, E W, et al, Fundamentals of Modern Marketing, (2nd ed.), Prentice-Hall of India Pvt. Ltd, New Delhi,
1977.
 Dean, Joel, Pricing Policies for New Products, Harvard Business Reviews, vol. 54, (Nov-Dec, 1976).
 Dholakia, Nikhilesh, et al., Marketing Management – Cases & Concepts, Macmillan, New Delhi, 1978.
 Drucker, Peter, F, Management: Tasks, Responsibilities, Practices, Harper and Row, New York, 1973.
 Drucker, Peter, F, 'The Economy' Dark Continent, Fortune, (April, 1962).
 Glueck, W F and Jauch, L R, Business Policy and Strategic Management, McGraw-Hill International Book Co.,
1984.
 Hass, Kenneth, B, How to Develop Successful Salesmen, Tata McGraw-Hill Publishing Co. Ltd, Bombay/New
Delhi.
 Howard, J A, Marketing Management Analysis and Decision, Homewood, I ll: Richard D Irvin, 1957.
 Howard, J A, Marketing Management, Analysis and Planning. Homewood, I ll: Richard D Irvin, 1963.
 Institute of Marketing and Management, New Delhi (ed.) Forecasting, Planning and Budgeting for Marketing,
New Delhi, 1971.
 Irans, Fravblin B, Selling as a Dyadic relationship – A New Approach. American Behavioural Scientist, April
1963.

Online links
 ezinearticles.com/? Successful-Sales-Promotionswww.workoninternet.com/article_27484.html
 www.direct-marketing-association-india.org/ www.direct-marketing.net/ www.publicity.com/
 www.aboutpublicrelations.net www.ogilvypr.com
www.marketingteacher.com/.../lesson_personal_selling.htm
 www.oapindia.com/ www.emarketer.com/Article.aspx?R=1007251 www.admedia.org