SDM Unit I

INTRODUCTION TO SALES MANAGEMENT

Definition, Nature and Scope

“Sales management” originally referred exclusively to the direction of sales force personnel. Later, the
term took on broader significance – in addition to the management of personal selling, “sales
management” meant management of marketing activities, including advertising, sales promotion,
marketing research, physical distribution, pricing and product merchandising. In time, businesses,
adopting academic practice, came to use the term “marketing management” rather than “sales
management” to describe the broader concept. Then, the Definitions Committee of the American
Marketing Association defined “sales management” as follows:

“Sales management is defined as the planning, direction and control of personal selling, including
recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks
apply to the personal salesforce.” – American Marketing Association.

Evolution of Sales Department

Prior to the Industrial Revolution, small scale enterprises dominated the economic scene, and selling
was no problem. The chief problem was to produce enough goods for nearby customers. Orders,
obtained with minimum effort, were on hand before goods were produced. In most firms a single
individual supervised all phases of the business, including both manufacturing and selling.

With the Industrial Revolution (1760), it became necessary to find and sell to new markets. Newly built
factories were turning out huge quantities of goods of every description and adjacent markets could not
absorb the increased quantities being manufactured. But, even under these circumstances, other
business problems – hiring large number of workers, acquiring land, buildings and machinery, and
raising large amounts of capital – took precedence over selling. More and more businesses adopted the
corporate form of organization. The day of large-scale manufacturing enterprises had arrived. Separate
functional departments were established, but sales departments were set up only after the activation of
manufacturing and financial departments.

Little by little, manufacturers shifted portions of the marketing function to middlemen. As the number
of intermediaries increased and the distribution channels became longer, the manufacturer’s sales
department was becoming more remote from consumers and final buyers.

Meanwhile, marketing activities conducted by the manufacturer’s sales department grew in importance.
Tasks such as advertising and sales promotion became increasingly complex. One solution was to split
the marketing function and new departments were organized for the performance of specialized
marketing tasks. Marketing activities today are carried on not only by the sales department, but by such
departments as advertising, marketing research, export, sales promotion, merchandising, traffic and
shipping, and credits and collections.

In spite of this growing fragmentation of marketing operations, the sales department still occupies a
strategically important position. The underlying responsibility for the making of sales has not shifted
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elsewhere. Businesses continue to rely upon their sales departments for the inward flow of income. The
sales department is the income-producing division of business.

Roles and Functions of a Sales Manager

Though the American Marketing Association’s definition made sales management synonymous with
the management of the sales force, but modern sales managers have considerably broader
responsibilities. True, the sales managers are in charge of personal selling activities and their primary
assignment is management of the personal sales force. However, personnel-related tasks do not
comprise their total responsibility. So it is better to call their personnel-related responsibilities as “sales
force management”. Sales managers perform the sales force management function. They execute the
entire human resource management function in an organisation. They recruit, select, train, motivate,
lead, control and compensate the sales staff for achieving the desired goals of the organisation.

Sales managers are responsible for organising the sales effort, both within and outside their companies.
Within the company, the sales manager builds formal and informal organisational structures that ensure
effective communication not only inside the sales department but in its relations with other
organisational units. Outside the company, the 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 the preparation
of information critical to the making of key marketing decisions, such as those on budgeting, quotas
and territories. They participate in decisions on products, marketing channels and distribution policies,
advertising and other promotions, and pricing. Thus, the sales manager is both an administrator in
charge of personalselling activities and a member of the executive group that makes marketing
decisions of all types.

From the company viewpoint, there are, basically, three general objectives of sales management: sales
volume, contribution to profits, and continuing growth. Top management has the final responsibility,
because it is accountable for the success or failure of the entire enterprise. Ultimately, too, top
management is accountable for supplying an ever-increasing volume of ‘socially responsible’ products
that final buyers want at satisfactory prices.

Top management delegates to marketing management, which then delegates to sales management,
sufficient authority to achieve the three general objectives. In the process, objectives are translated into
more specific goals – they are broken down and restated as definite goals that the company has a
reasonable chance of reaching. During the planning that precedes goal setting, sales executives provide
estimates on market and sales potentials, the capabilities of the sales force and the middlemen, and the
like. Once these goals are finalised, it is up to the sales executives to guide and lead the sales personnel
and middlemen in implementing the selling plans.

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Sales management, then, is influential in charting the course of future operations of an organisation. It
provides higher management with informed estimates and facts for making marketing decisions and for
setting sales and profit goals. Based on sales management’s appraisal of market opportunities, targets
are set for sales volume, gross margin, and net profit both in units of product and money. Whether or
not these targets are reached depends upon the performance of sales and other marketing personnel.

Sales management and financial results are closely related. Financial results are stated in terms from
two basic accounting formulae:
1. Sales – Cost of Sales = Gross Margin
2. Gross Margin – Expenses = Net Profit.
Sales, gross margin and expenses are affected by the calibre and performance of sales management, and
these are major determinants of net profit.

Sales executives have responsibilities to their organisations, the customers and the society. Top
management holds them responsible for obtaining sales volume, providing profit contributions and
continuing business growth. The customers (most often, wholesalers, retailers or industrial users)
expect them to supply easily resalable products backed up by supporting activities (like training
dealer’s sales personnel, help in preparing local advertising, and the provision of credit) and assurance
that the products are wise investments in the competitive marketplace. Society looks to them to assure
the delivery of goods and services that final buyers want at prices that final buyers are willing to pay
and to develop and market products whose potentials for damaging the environment are minimal. If the
goods and services made and sold are needed and accepted by the buying public, and if these products
are socially responsible, then it is likely that managements objectives will have been achieved.

Salesmanship, Personal Selling & Sales Management

Sales Management, Personal selling and Salesmanship are all related. Sales management directs the
personal selling effort, which, in turn, is implemented largely through salesmanship.
Salesmanship: is the art of successfully persuading prospects or customers to buy products or services
from which they can derive suitable benefits, thereby increasing their total satisfactions. Salesmanship
is seller initiated effort that provides prospective buyers with information and other benefits, motivating
or persuading them to decide in favour of the sellers’ product or service.
Personal selling is a broader concept than salesmanship.
Personal selling: is a personal (face-to-face, telephone, or Internet chat) presentation for the purpose of
making sales and building relationships.
Peter Drucker explains marketing this way: “The aim of marketing is to make selling superfluous. The
aim is to know and understand the customer so well that the product or service fits him or her and sells
itself.” This is not to say that selling is unimportant. It is the most important part of a larger "integrated
marketing communications" that must be orchestrated for maximum impact on the marketplace. The
promotional mix (or marketing communications mix) includes personal selling and non-personal
selling (advertising, sales promotion, public relations, and direct marketing).
Selling is a vital function of business. The purpose of all marketing activities is to sell the products of
the business enterprise. Selling enables the business to achieve its objectives by satisfying the needs of

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the customers. Advertising, personal selling and other sales promotion activities are widely used to
create demand and increase sales.
Personal selling, along with other marketing elements such as pricing, advertising, product
development and research, marketing channels, and physical distribution, is a means of implementing
marketing programs. Salesmanship is one aspect of personal selling – it is only a part and never all of
it. Salesmanship is one of the skills used in personal selling. At one time, the emphasis on salesmanship
was almost wholly on persuasion; today while recognizing the significance of persuasion, the emphasis
is on the benefits attractive to prospects and customers.
Sales personnel interact in diverse ways with different customers. Apart from knowing the product and
its applications thoroughly, sales personnel have to be psychologists with some individuals, advisors
with others, and personal friends with still others. Effective sales personnel adjust their personalities on
every call, making sure that what they say and do is compatible with each prospect’s personality.

Both personal selling and advertising make use of salesmanship techniques. Both are means for
motivating or persuading prospective buyers to buy. Advertising, often described as “salesmanship in
print”, utilizes nonpersonal presentations, which generally are less flexible than the personal
presentations made by sales personnel. A unique attribute of personal selling is that sales personnel
identify differences among buyers and pattern presentations according to individual peculiarities.
B.R. Canfield define Sales Management involves the direction and control of salesmen, sales
planning, budgeting, policymaking, coordination of marketing research, advertising, sales promotion
and merchandising and the integration in the marketing programme of all business activities that
contribute to the increased sales and profits.”

Sales Management Process

Sales management programme is formulated to respond effectively to an organization’s environmental
circumstances, and these must be consistent with the businesses competitive and marketing strategies.
Sales management process have three stages:
1. Formulation of a Strategic Sales Programme
2. Implementation of the Sales Programme
3. Evaluation and Control

Formulation of a Strategic Sales Programme

Sales
Management Implementation of the Sales Programme
Process
Evaluation and Control

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Formulation of a Strategic Sales Programme
The strategic sales programme should consider the environmental factors faced by the firm. It should
organize and plan the company’s overall personal-selling efforts and integrate these with the other
elements of the firm’s marketing strategy.
Implementation of the Sales Programme
The implementation phase involves selecting appropriate sales personnel as well as designing and
implementing policies and procedures that will direct their efforts towards the desired objectives.

Evaluation and Control

The evaluation phase involves developing methods for monitoring and evaluating the performance of
the sales force.

Objectives of Sales Management

Sales management objectives are categorized into two types:
1. Quantitative Objectives (Short-term)
2. Qualitative Objectives (Long-term)
Quantitative Objectives (Short-term)
1. To retain and capture market share.
2. To determine sales volume in ways that contribute to profitability.
3. To obtain new accounts of given types.
4. To keep personal expenses within specified limits.
5. To secure a targeted percentage of certain accounts of a 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.

Sales Management Functions

Sales management is viewed as having a systematic relationship with each other. All functions and
activities are considered as a dynamic process, composed of numerous interrelated parts, aiming to
achieve the organizational sales objectives.

Different sales management functions are:

1. Managerial functions
2. Staff functions
3. Advisory functions
4. Liaison Functions
Managerial functions
Planning
 Forecasting demand
 Sales territory planning
 Personal selling
 Promotional efforts.
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Organizing
 Structure
 Resource allocation
 Responsibility assignment
 Delegation of authority
Direction
 Leadership
 Motivation
 Communication
 Promotional steps including personal selling
Control
 Delegation
 Quota fixing
 Performance evaluation
 Incentives
 Budgets
Co-ordination
 Liaison
 Integration of various elements internally
 Public Relations
 Creating goodwill
Staff functions
1. Recruitment and selection.
2. Deployment and evaluation of performance
3. Training and development.
4. Career development.
5. Compensation and incentives.
6. Motivation and empowerment.
Advisory functions
1. Product attributes/quality aspects.
2. Pricing policies.
3. Promotional steps
4. Personal selling aspects.
5. Distribution policies and channel selection criteria.
6. Advertisement policies such as media selection and target audience.
7. Transportation and warehousing aspects.
Liaison Functions
1. Production department.
2. Finance department.
3. Marketing department.
4. R & D department
5. Distribution network
6. After Sales Service department

Sales Management Cycle

A sales manager looks after and manages a firm’s personal selling function

Sales Management Cycle is shown below:

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1. Analysis
2. Planning
3. Organisation
4. Direction
5. Control
Analysis
This involves probing into the sales records of the company, analysing the reports of salespeople,
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 the 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 a comparison of the actual with the desired results, finding out reasons for the deviation and
taking corrective actions accordingly.

Importance of Sales Management

1. Society
2. Consumers
3. Business Firms
Importance of Sales Management
Importance to Society
To the Society: If jobs are to be made available for all those, who want and expect them, the economy
must continuously expand its production of goods and services.
Equally important here is the fact, that an economy needs individuals, to sell what is produced.
Through their persistent efforts to create and stimulate demand, salespeople could be said to be the life
and blood of a productive economic system.
Importance to Consumers
To the Consumers: Professional people know their product or service, its major uses, limitations and
benefits; which helps them to serve their customers, quite effectively.
For example, an insurance agent can analyze the hazards and risks that confront a client’s business or
home-situation, examine existing coverage and offer helpful advice, in order to eliminate the gaps or
overlaps in coverage, in addition to saving the client’s money.
The sales-engineers are qualified to analyze technical-problems, which may be confronting a particular
organization and they can give the right recommendations for developing efficient operations.
Importance to Business Firms
To Business Firms: A business firm can be profitable only if its revenues exceed its costs. The
prime responsibility of the salespersons is to sell the goods, produced by the organization, at a profit.
Companies, salespeople and customers are different levels in the marketing chain; and these stand to
benefit by sales activities.
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The salesperson becomes an important source of field-intelligence by providing important (and
sometimes very crucial) information, about the nature of competitive-activities, and also about the
changing needs of customers.

Difference Between Sales and Marketing

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 customers and participating in marketing activities.
5. He is responsible to the customer and society for the continuing growth of the organisation.