JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL

Vasant Kunj, New Delhi-l10070.

(Affiliated to Guru Gobind Singh Indraprastha University, Delhi)

NAAC Accredited and ISO 9001:2008 Quality Certified

Solved Question Paper- BBA SEMESTER-III (December-2013

SUBJECT- Sales Management (CODE-303)

Prepared By: Ms. Anjali Singh

Solved End Term Question Paper- BBA SEMESTER- V (December-2013)

SUBJECT- Sales Management (CODE-303)

Do any 5 questions. All questions carry equal marks. (5 x 15)

Q1. Do any 5 of the following from Q.1 (5 x 3)

a. Emerging trends in sales management b. Importance of motivation in sales management c. Steps of selection process d. Transactional v/s relationship selling e. Steps of evaluation of sales Personnel f. Behavioral equation theory

2. Define Sales management. Explain nature, scope and importance of sales management

3. Discuss the key decision areas in sales management which are particularly relevant to strategy formulation.

4. Discuss the situations conducive for personal selling. Explain using multiple examples.

Also discuss the qualities of a good sales person

5.a. Describe the methods of identifying the training needs of the sales force

5.b. Discuss the factors influencing the design of compensation scheme of a sales person

6.a. how will the sales process differ in the following situations

i) Private bank representative selling services to a senior manager of an MNC

ii) Sales executive selling water purifiers to working women

6b.What are the attributes of a good sales quota plan?

7a. Discuss the legal and ethical issues involved in sales management

7b. Describe the role and importance of information technology in successful sales management

8. Write short notes on any 3.

Determinants of size of sales force

AIDAS theory

Motivation

Sales Audit

1a. Emerging Trends in Sales Management

1. Global Perspective: Global competition is intensifying. Domestic companies who never thought about foreign competitors are suddenly finding them in their backyard. This is a challenge which sales managers and salesperson must take on, they have to improve their personal selling efforts not only in their countries but also in foreign countries. Selling goods and services in global markets presents a challenge due to differences in culture, language, needs and requirements.

2. Technological Revolution: Digital revolution and management information system have greatly increased the capabilities of consumers and marketing organizations. Consumer today can get information about products, compare it with other brand, place an order and place an order instantly over the internet. This has led to a different kind of sales force who collects information about internet users, markets and prospects of internet buyers. It is mandatory for all companies to have their website now.To compete effectively, sales person and managers will have to adopt the latest technology.

3. Customer Relationship Management [CRM]: Combining information technology with relationship marketing has resulted in customer relationship management. Interestingly, the concept of relationship marketing came about earlier by bringing quality, customer service and marketing together.Relationship marketing aims in building long term satisfying relations with key customers distributors and suppliers in order to earn and retain their long term preference and business. CRM enable companies to provide excellent real-time service by focusing on meeting the individual needs of each valued customer, through the use of CRM software packages.

4. Sales Force Diversity: The demographic characteristics of sales force is changing and becoming more varied. For example, more and more women are taking up careers in sales management and selling. Also the education level of sales people is going up most of them holding a college degree or a post graduate degree. Sales managers now have to handle a sales force of these varied demographic, expectations of each and every individual is different and sales manager needs to use different motivational tools against each one of them.

5. Team Selling Approach: The practice of team selling is more widely followed by most companies in recent years. Team selling approach is used when company wants to build a long term mutually beneficial relationship with major customers, who have high sales and profitable potential. It is used for selling a technically complex product or a service to a potential customer. The composition of team may vary depending upon the customer from top management, technical specialist, customer service, etc…

6. Managing Multi-Channels :Multi-channel marketing system occurs when organization uses two or more marketing channels to target one or more customer segments. Major benefits of multi-channel marketing system are:1. Lower channel cost

2. Increased market coverage

3. Customized selling

Multi-channel may also lead to conflicts and control problems, as two or more channels may compete for same customer. A successful sales manager will have to effectively manage conflict between the channels.

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1.b- Motivation : There was a time when employees were not given enough consideration and more emphasis was laid down in the production process. But it was later recognized that companies who retained talented employees have a greater survival rate in the industry and the market place. Employees are not treated as just another component in conducting business, but are considered as the prime resource for every business activity and as an important asset of the organization.

Various studies have been done on the fact that success of organization depends upon the satisfaction levels of the employees. In an organization, sales representatives may vary across the spectrum of which satisfy them to keep up the motivational levels. So, in this section let us analyze various motivational factors which are used by the organizations to sustain enough enthusiastic levels among their sales representatives.

One of the most attractive and encouraging factor for motivation among most of the sales representatives would be the compensation scheme or package there are entitled to receive at the start of the job. Organizations tend to pull in the best talent by offering effective compensation packages. The sales manager has to understand that often compensation is seen as a level of loftiness among the representative within the same hierarchy level. Hence enough care has to be taken in designing the compensation package for the sales representatives.

Incentives play an important role in keeping up the motivation levels of the employees. Incentives may include yearly bonuses, commission rates based on the individual sales figures and commission rates based on the group or team sales figures, stock options etc. Zoltners (2006) describes that the sales force incentive plans effective the sales people and in turn on the sales force activities followed by customer results and finally the company results.

Hence planning a right incentive system is an important task for the sales manager. Bernardin (2008) explains various incentive pay for performance level of the employees. Let us examine them in detail:-

a) Bonuses: These are one time payments provided as a reward for the level of work done or objective achieved. This type of incentive system is often used to encourage the sales representative to work much better and harder in future. The sales manager has to understand certain issues when dealing with bonuses such as:-

* The type of impact created by the bonuses is considered to be positive most of the times

* The impact depends upon the bonus amount

* Normally it is considered that one month salary pay to be the ideal bonus amount

* The timing of giving the bonus amount also matters a lot

* Usually the bonus should be given when the sales representative is in need i.e. during the festival season

b) Commission plans: Commission is the percentage of total sales amount given to the sales representative for successfully making the sale. Often sales representative participate to push the products/ service for sale which offers them more commission rates. Some of the issues which the sales manager or the organization has to understand before deciding on the commission plans are:-

* Commission rates should neither be too high or too low when compared with the other similar products

* Commission pay entirely depends upon the sales volume and in turn may be seasonal for most of the sales

* Sales representatives depend a lot on the commission rates for their living expenses

* During off season sales manager or the organization has to take care of the employees need by providing them with increased commission rates which can later be cut out during the sales season

* If the commission is dependent upon the team, then the sales manager has to take care that every member in the team works with similar efficiency and effectiveness

* Make sure that the group incentive pay is not too high in the salary component as employees tend to think that why they are penalized for other mistakes

c) Profit or gain share: Companies may share their increased profits or gains for the year or quarter among the employees of the organization. Depending upon the basic pay of the employee the gains can be distributed. Such incentive gives a sense of feeling that the employee is working in a growing organization and he/she has a bright future in the organization.

Non-monetary reward systems

Whenever a monetary reward fails, non-monetary reward system may achieve success in sustaining motivation and dedication of the employees towards the work place. Let us understand some of the non monetary rewards as stated below:-

a) Stock options: The employee stock option is usually a call option which is given as a non cash reward or incentive system. A lot of employee would like to have the stocks instead of the cash

rewards like bonuses. There are a lot of advantages in giving the stock options to the employees. Some of the advantages include getting a feel of his/her own company once the stock options are given. Employees tend to work better to generate more sales and in turn increase the value of their company and the stocks. Care should be taken such that all the deserving employees in the group should be given the choice of choosing the cash reward or the stock options.

b) Better working conditions: The sales representatives who work well and achieve the targets might be given options to work from home and visit the workplace once or twice in a week to report. Other examples of better working conditions include providing the necessary logistics like better variety of food, increased cabin space, free telephone and internet services at home to a certain limit of usage, free insurance policy, better training facilities etc

c) Recognition and awards: Recognition and awards help the sales representatives to gain respect and help in creating a unique identity in the work place. This type of reward works effective for the managerial level employees who don’t depend upon the monetary rewards for survival. This system also highlights the mile stones achieved by an individual in his/her career and also encourage fellow employees to achieve it and hence they work much enthusiastically.

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1.C. Steps of Selection process : A typical selection process consists of

Application form – preliminary interview – testing – interview – reference checks – physical examination – Employment offer

Application form should be designed in such a way that it captures the necessary information which is required to evaluate the candidate across the skill set required by the job description. For sales representatives, attitude, communication skills and analytical skills are very important; hence the testing phase should be prepared so that it captures these skills. The preliminary interview eliminates all those who don’t fit the bill. The testing phase can be just an interview or can have a written test and a group discussion. After the test has been completed, the candidates will be short-listed according to their performance for an interview round. During the interview much emphasis should be given in the attitude of the candidate rather than the skills. Two basic ways in which the interview can take place are:-

a) In a comfortable mode, where the recruiter would bring the atmosphere to the comfort level of the candidate and then start observing the behaviour of the candidate.

b) In a stressed mode, where the recruiter would put the candidate under a lot of stress by asking a lot of questions and then observe the candidates reactions.

Doing an interview in these two ways is important in order to judge the candidate for sales job as the sales representative would have to encounter both the serene and pressure environment while making the sale. Previous work experiences and references should be cross checked before

selecting the candidate for the job. Physical examination is important to ensure the candidate is in good state of health as he/she requires traveling during the sales job. Finally after all the selection process and the candidate qualifies for it he/she will be given the employment offer which describes the nature of work, job title, salary, any contract period etc.

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1. d. Transactional v/s Relational Selling

Transaction Selling Relational Selling

Objective Get the order or sale Become sole or preferred supplier

Focus Present, overcome objections and close Build trust and superior

customer service Customer Type Many customers with low potential Few high profit potential

customers Length of relationship

Short period – few days Long period – years

Sales team 1 or 2 junior level sales people Team selling with a mix of junior and senior people

Selling efforts Low to medium, involving few functions High involving many functions Pricing Strategy Competitive or lowest price Mutually acceptable price for

profits or mutual benefits

Transactional selling are mostly one time only exchanges with an objective of getting sales /orders from customers whose profit potential are low. The selling efforts are minimum with low or competitive prices, there is little interest by either side to extend the relationship

The objective of Relationship selling is to become the sole supplier or preferred supplier which is achieved by building strong, social economic and technical ties over a long period of time.

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1. e. Steps in Evaluation of Sales Personnel

It is clearly understood that the sales force performance evaluation plays a key role in the organization. It is the role of the sales manager to identify the performance of the team in a correct way. Spiro (2003) explains a procedure for evaluating the sales people which is depicted by the following diagram:-

Establish Basic Policy

Select Evaluation Basis

Set Performance Standards

Compare Performance Standards

Discuss Results with Sales people

Procedure for evaluating sales people

The procedure states that establishing basic policies will help in identifying the people who will monitor the entire process. The next step is to select an evaluation bases and then set the performance standards. Once the standards are set then compare the results in the evaluation process with the standards and then discuss them with the sales people. Identifying the objectives and guidelines play an important role in the procedure for evaluating the sales people.

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1.F.

Behavioral Equation Theory: J.A Howard Explains buying behavior in terms of the purchasing decision process viewed as the phases of the learning process. Four essential elements included in the stimulus – response model are drive, cue, response, and reinforcement.

Drives: are strong internal stimuli that impel buyer’s response. There are two kinds: a) Innate: drives stem from the physiological needs such as hunger, thirst, pain, cold etc. b) Learned Drive: striving for status /social approval.

Cues: are weak stimuli which will determine when buyer will respond.

Triggering cues: activate the decision making process for any given purchase

Non-triggering cues: influence the decision process but do not activate it. There are two kinds: product cue – external stimuli received from the product directly – color of the product, weight, price etc. Informational cues: external stimuli that provide information of a symbolic nature bout the product. This may come from advertising, conversation with other people including sales personnel. Specific product and information cue:

Response: is what the buyer does.

Reinforcement is any event that strengthens the buyer’s tendency to make a particular response.

B = P x D x K x V

Where B = response /internal response tendency i.e act of purchasing a brand/ patronizing a supplier

P = predisposition, could be force of habit

D = present drive level (motivation)

K = incentive potential, value of product or potential satisfaction to the buyer.

V = intensity of all cues – triggering, product or informational

The relationship between these variables is multiplicative, if any independent variable has a zero value, B = 0.

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2. Define Sales Management.

Sales Management means selling activities of an organization. According to AMA Sales management is 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 sales force.

According to Albert, Johnson and David, sales force management refers to the planning, implementation and control of selling efforts. It may be said that sales management is essentially the personnel management as applied to personal selling activities. Sales management is a wider term than sales force management.

The main characteristics of sales management are as follows:

Pervasive function: sales function is required in each and every business enterprise irrespective of its nature and size.

Continuous function: selling is an ongoing process, sales management is a continuous activity. There are several changes like addition of new sales people, retirement or resignation of some sales people, changes in the product etc. all of which requires ongoing efforts.

Part of Marketing Management: Sales management is a part of marketing management and sales is integrated with marketing planning.

Exchange relationships: Selling involves exchange of desired products/ services in return for money or money worth. These exchanges create some relationship between customer and sales team, which can lead to customer loyalty.

Variety of Jobs: Selling includes a variety of sales jobs which are different from one another for example, order taking, delivery, sales support etc.

Scope of Sales management

Sales Management consists of the following elements as functions:

Sales planning: sales planninginvolves setting sales objectives and deciding the sales strategies to achieve them.

Sales organizing: organizing different selling activities into departments and sections has a direct impact on the performance of sales force. Without a good organization structure there would be chaos and confusion and selling efforts are likely to be wasted.

Sales directing: sales staff are recruited, selected and placed. Their compensation and supervision as well as motivation are important parts of directing of sales.

Sales co-ordinating: all the people working in sales must work as a team. Timing their operations, balancing conflicting interest and integrating their efforts are necessary for sales co-ordination.

Sales controlling: it is necessary to check that sales activities are moving in the desired direction. Controlling ensures that the discrepancy if it occurs is corrected.

Importance of Sales Management

The main benefits of sales management is as follows:

Revenue Generation:Sales is the only function which generates revenue. All other departments/ functions spend money or incur expenses. The financial result of the business firm depends on the performance of the sales department.

Employment Generation: sales management generates employment both directly and indirectly. Selling offers a large variety of jobs and as sales increase, the number of people employed in sales also increases. When sales increase, it also results in a larger number of people being employed with manufacturing and services.

Rewarding Career: The number of positions available in sales is more as compared to other professions. Sales people are one of the best paid professions and can also rise to the top management.

Higher Standard of Living: Sales people attempt to improve customer satisfaction by addressing their needs and matching the products and services with their requirement. They also educate and inform people about the new products, their benefits and uses.

Intelligence Agency: sales people are the ones to have firsthand information about the customers, their preferences, tastes and attitudes. This information enables the companies to design and manufacture products and services to suit the customers.

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Discuss the key decision areas in sales management which are particularly relevant to strategy formulation.

Strategic Planning

Creating, providing, and communicating value requires many different marketing activities. To ensure that the proper activities are selected and executed, strategic planning is paramount. Strategic planning calls for action in three key areas: The first is managing a company's businesses as an investment portfolio. The second involves assessing each business's strength by considering the market's growth rate and the company's position and fit in that market. The third is establishing a strategy. For each business, the company must develop a game plan for achieving its long-run objectives.

To understand marketing management, we must understand strategic planning. Most large companies have 4 organizational levels.

Corporate level

Division level

Business level

Product level

At the Corporate level, the strategic plan is to guide the whole enterprise, it is about the resources allocated to each division, which business to start or eliminate.

At the division level the allocation is made for each business unit within the division. Each business unit develops a strategic plan to carry the business unit into a profitable future. Finally each product/product line will develop a marketing plan for achieving its goals.

The marketing plan operates at two levels – strategic and tactical. The strategic plan lays out the target markets and the value proposition that will be offered based on the analysis of the best marketing opportunities. The tactical plan specifies the marketing tactics and includes product features,

promotion, merchandising, pricing, sales channel and service. The Marketing plan is the central instrument for directing and co-ordinating the marketing effort.

The key decision areas which will help in strategy formulation would be

Sales Channel: Deciding how many and what sales channel to use. This would in turn be determined by the nature of the product and the objective of the company

Target Market: The target market which can serviced by the sales force – both direct and indirect will determine the selection of the target market.

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4. Discuss the situations conducive for personal selling. Explain using multiple examples.

Also discuss the qualities of a good sales person

The situations conducive for personal Selling can be the ones where the following conditions are met :

a) Flexibility in delivering the message: A sales representative interacts with one potential customer at a time the messages can be tailored and delivered as per the customer needs. This flexibility is not available in advertising which happens through the television, newspapers, magazines, window displays etc.

b) Efficient way of communication Personal sales is a two way communication process which allows for the efficient dialogue between the customer and the sales representative. It would be easy to know whether the customer has really understood the communicated message about the product/ service. The feedback would be immediate by the customer in personal selling, which would helps the sales representative to know whether the sales approach is working or not change the approach accordingly. In other promotional tools like advertising which rely on one way communication, would not guarantee that the customers have understood the communicated message.

c) Building long term relationships Being a two-way & one-to-one communication, personal selling certainly has an added advantage over other communication tools in building long lasting relationships of customer.

d) Better access to various target segments Not all the target groups can be reached with advertising, sales promotions, and public relations. In such cases personal selling would help to reach out to the customer and inform about the product/ service. For instance if the company deals with B2B markets or with the CEO of a company, personal selling would be a better communication tool than advertising or sales promotion. In B2B markets, the sales process involves a lot of communication time and hence a high level of two way interaction is required making the personal sales a practical communication tool.

e) Complex information delivery

In personal selling, greater amount of complex information like technical features of the product can be conveyed easily in comparison to other communication tools. Since numerous meetings can happen between the customer and the sales representative, there is ample time available to explaining all the features of the product.

Qualities of a Good Sales Person

Sales Professionals are the face of an organization. They have the responsibility of making the brand popular and promoting the products amongst the end users.

They help in the successful running of organization by generating revenues and earning profits.

Some qualities which a sales professional must have:

1. Patience A sales manager needs to be extremely patient. He cannot afford to be rude to his

customers. Clients do need time to believe in him and trust the company’s products. Give the

client time to think and decide.

2. People Oriented It is essential for a sales manager to be customer centric. Understand customer’s needs

and expectations. Don’t simply impose things on him. Individuals representing the sales vertical need to be caring and kind towards

customers. One should never misguide the customers. Be honest with them. Avoid telling lies and

creating fake stories just to achieve your targets3. Aggressive

A sales professional needs to be aggressive and energetic. Lazy individuals don’t make great sales professionals.

4. Go-Getter Attitude It pays to be optimistic in sales. Sales professionals need to have a go-getter attitude for

the best results. It is really not necessary that all customers would like or need your product. Don’t

expect results every time. Remember failures are the stepping stones to success. One must learn from his previous mistakes and move on. Don’t take failures to heart.

5. Value Time People in sales must value time. Being late for meetings create a wrong impression in

the minds of customers. It is a sin to make customers waiting unless and until there is an emergency. Start a little

early and make sure you reach meetings on time.6. Sense of Commitment

A sales representative who is committed towards his work manages to do well and make his mark as compared to others. Commitment in fact is essential in all areas of work.

If you have promised someone to meet at 5pm, make sure you are there at the desired venue at 4.45 pm sharp. Don’t make silly excuses. Trust is lost when commitments are taken back. There should be no turning back.

7. Reliable The customers must be able to depend on the sales professionals. A sense of trust is

important.8. Flexible

A sales professional must know how to change his sales pitch as per the client. Don’t just stick to one plan or one idea.

Learn to take quick decisions as per the situation. Be adaptable to changes. People in sales should not be too rigid and demanding.

9. Be Transparent Don’t hide things from the customers. Transparency is essential to avoid problems later

on. Convey only what your product offers.

10. Diligent Mere sitting at office does not help in sales. One needs to go out, meet people and make

prospective clients. Don’t complain if it is too hot or cold outside. A sales professional ideally should spend his maximum time in field to achieve targets in

the best possible way.11. Good Communicator

A sales professional must be a good communicator for the desired impact. Take care of your pitch and tone.

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5.a. Methods of identifying training needs of the sales force

Before the initiation of training program, it is very important to understand the objective of it. The main objective of the training program is to inculcate the required knowledge, skills and attitude and make employees more productive to the organization. It is important to understand the objectives of the training program and the benefit it provides to the sales representatives and the company. Identifying the sources for training is an important task which decides the quality and impact of the training program.Once the training source and the needs are analyzed, the next step is about action planning i.e. the actual implementation of the training program.

For a sales representative training, there might be a considerable difference of what is being taught in the training and what is being done in the market place. Hence, action planning has to deal with such problems using various teaching methodologies, technical tools etc and impart training program that is closely related to the market place. No training program would end without a feedback process. Feedback process should not end with just taking the trainees comments but has to include the follow up process as well.

Sales Training Process: The typical sales training process is as follows :

Asses Sales Training Needs

Set Training Objectives

Evaluate Training Alternatives

Design Sales Training Program

Perform Sales Training

Conduct Follow up and Evaluation

The 1st step sales training need assessment deals with identifying the necessary skills, attitudes, perceptions and behaviours of the sales representatives. The 2nd step deals with setting up the training objectives i.e. the necessary measurable outcome of the training program. The 3rd step deals with identifying various alternatives to conduct the training. The 4th step deals with the design part of the training program which involves identifying the training program period and modules and the necessary skills to be imparted, logistics arrangements etc. The 5th step performing the sales training is the actual implementation of the sales training program which deals with the way how the training is conducted and the methodologies adopted by the trainer in imparting the necessary skill set. Once the entire training process is completed, follow-up and evaluation dealing with analyzing the quality of training program held and the benefit received by the candidates and the organization need to be conducted.

5.b. Discuss the factors influencing the design of compensation scheme of a sales person

Sales managers should consider carefully the type of compensation plan they wish to use. This is because there are a number of objectives which can be achieved through a compensation scheme. First, compensation can be used to motivate a salesforce by linking achievement to monetary reward. Second, it can be used to attract and hold successful salespeople by providing a good standard of living for them, by rewarding outstanding performance and providing regularity of income. Third, it is possible to design compensation schemes, which allow selling costs to fluctuate in line with changes in sales revenue. Thus, in poor years lower sales are offset to some extent by lower commission payments, and in good years increased sales costs are financed by higher sales revenue. Fourth, compensation plans can be formulated to direct the attention of sales personnel to specific company sales objectives. Higher commission can be paid on product lines the company particularly wants to move. Special commission can be paid to salespeople who generate new ac- tive accounts if this is believed to be important to the company. Thus, compensation plans can be used to control activities.

Sales people can be of the following different types:

Creatures of habit: These salespeople try to maintain their standard of living by earning a predetermined amount of money.

Satisfiers: These people perform at a level just sufficient to keep their jobs.

Trade-offers: These people allocate their time based upon a personally determined ratio between work and leisure that is not influenced by the prospect of higher earnings.

Goal orientated: These salespeople prefer recognition as achievers by their peers and superiors and tend to be sales quota orientated with money mainly serving as recognition of achievement.

Money orientated: These people aim to maximise their earnings. Family relation- ships, leisure and even health may be sacrificed in the pursuit of money.

There are three broad compensation plans

Fixed

Variable

Combination of fixed and Variable

Industrial selling where technical service is an important element in the selling task and the time necessary to conclude a sale may be long. It is particularly appropriate when the salesperson sells very high value products at very low volumes. Under these conditions a commission- based compensation scheme would lead to widely varying monthly income levels de- pending on when orders were placed. Therefore a fixed plan for compensation may work better.

Variable plan is most often used in situations where there are a large number of potential customers, the buying process is relatively short and technical assistance and service is not required. Insurance selling is an example where commission-only payments are often used.

Combination plan attempts to combine the benefits of both the previous methods in order to provide financial incentives with a level of security. Since income is not solely dependent upon commission, management gains a greater degree of control over the salesperson’s time than under the commission-only system, and sales costs are to some extent related to revenue generated. The method is attractive to ambitious salespeople who wish to combine security with the capability of earning more by greater effort and ability. For these reasons it is the most commonly used method of compensating sales- people, although the method of calculating commission may vary. Extra payment may be linked to profits or sales generated, at a constant rate for all sales or only after a certain level of sales has been generated. Payment may be based upon a fixed percentage for all products and customers or at a variable rate. Alternatively, a bonus (a given monetary sum) may be paid on the accomplishment of a particular task (e.g. achieving a sales target, opening a certain number of new accounts)

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6.a. how will the sales process differ in the following situations

i) Private bank representative selling services to a senior manager of an MNC

ii) Sales executive selling water purifiers to working women

For selling banking services to a senior manager of an MNC, the sales person should employ references or letter of introduction from users of the same services. The sales appointment should be taken prior to the sales call, cold calling should be avoided. The sales presentation should be brief and should focus on the convenience and flexibility offered. It would help if the sales person can approach his office for information regarding his preferences and tailor his sales pitch accordingly.

The sales executive selling water purifiers to working women should focus on the ease and convenience of the product. Time saving without compromising the health benefits should be emphasized. Word of Mouth would work well here.

6b.What is the attributes of a good sales quota plan?

Planning the sales quotas involves identifying the right quota depending upon several factors and assigning them to the sales representatives. Some of the factors that will result in a good quota plan will include:-

a) Market size and potential

For each territory or region the market size and potential must be analysed. The market potential can be known by the forecasting techniques. Once the existing market size is determined, quotas have to be planned accordingly so that the market potential is fully utilized to achieve the maximum productivity levels. Most of the times the sales quotas would be proportionate to the size and potential of the market.

b) Level of competition

Even if the market size and potential is huge, the sales quotas may not be high due to the level of competition. Quotas must be realistic in nature taking the account of competition. Again the quotas depend upon another factor current position of the organization in that region.

c) Current position of the organization

Hence the sales quotas have to be planned accordingly based upon the current position of the organization.

d) Skills of the sales person

All the employees within the organization may not be able to generate huge number of leads. Hence, setting same quotas for all the employees may not be achievable and may become a de-motivating factor. The sales manager has to plan the quotas according to the skill of the sales manager and may increase it in future. The new employee may need to have a different sales quota while compared to the already existing employee. If the quotas are not achievable, some time should be given by the sales manager to improve the selling skills and help in achieving the sales quota by the sales representative. If required necessary training should also be provided.

e) Organization/ market objectives

When an organization expands to new territories or launches new products, it needs to, plan the sales quotas very carefully. When it enters a new territory, the organization objective may be to test the market or to become a leading player. Hence sales quotas have to be planned accordingly with the objectives. If the organization objective is to hold in the market in difficult times, the sales quotas may not be necessary to increase from year to year as the objective of the organization is to generate the same sales each year. Hence, the organization objectives have to be kept in mind by the sales manager before planning the sales quotas to the representatives

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7a. Discuss the legal and ethical issues involved in sales management

Consumer protection by the law is very much a twentieth-century phenomenon. Before that the prevailing attitude can be described by the phrase caveat emptor – let the buyer beware. Much of the legislation has been drawn up since the 1980s, when it was recognized that sellers may have an unfair advantage compared with consumers when entering into a contract of sale. The major laws regarding selling activities include

• Consumer protection Act , 1986

• Weights and Measures Act

• Sales of goods act

• Hire Purchase Act

Most sales activity is centered upon the contract entered into when a seller agrees to part with a good or provide a service in exchange for monetary payment. Acontract is made when a deal is agreed. This can be accomplished verbally or in writing. Once an offer has been accepted a contract is formed and is legally binding. Important in written contracts are the terms and conditions which apply.

Terms and Conditions

As the name suggests, terms and conditions state the circumstances under which the buyer is prepared to purchase and the seller is prepared to sell. They define the limit of responsibility for both buyer and seller. Thus both buyer and seller are at liberty to state their terms and conditions. Usually the buyer will state them on the back of the order form and the seller will do so on the reverse of the quotation form. Often a note is typed on the front of the form in red ink: ‘Your attention is drawn to our standard terms and conditions on the reverse of this order.’ Typical clauses incorporated into the conditions of a purchase order include the following:

*Only orders issued on the company’s printed order form and signed on behalf of the company will be respected.

*Alterations to orders must be confirmed by official amendment and signed.

* Delivery must be within the specified time period. The right to cancel is reserved for late delivery.

* Faulty goods will be returned and expenses charged to the supplier.

*All insurance of goods in transit shall be paid for by the supplier.

*This order is subject to a cash discount of 2.5 per cent, unless otherwise arranged, for payment within 28 days of receipt. Any payment made is without prejudice to our rights if the goods supplied prove to be unsatisfactory or not in accordance with our agreed specification or sample.

* Tools supplied by us for the execution of this order must not be used in the service of any other firm without permission.

Careful drawing up of terms and conditions is essential in business since they provide protection against claims made by the other party should problems arise in fulfillment of the contract.

Some if the legal issues could be with regards to :

1. False Descriptions

– About the product

– Incorrect Place of Manufacturing

– Misleading Price indications

2. Faulty Goods

– Merchantability ( i.e. fitness for the purpose that goods of this kind are normally bought)

– Fitness for purpose (i.e. fitness for the purpose that a particular product was specifically bought – for example, a car that was bought in Delhi but meant for use in North-East.)

3. Inertia Selling – Sending samples to people who may feel obliged to buy the product even if they don’t want to.

4. Exclusion Clause: Exclude certain practices/parts of products in order to limit their liability. Not valid for injury or

5. Collusion between Sellers : Sellers may collude to restrict supply or fix prices.

Ethical Issues

• Bribery : The act of giving gifts or inducement in order to obtain a sale

• Hard Sell : Persistent calling to sell the product

• Deception : Misleading the customer

• Reciprocal Selling: Buying from the supplier only if they buy the customer’s products too. Is unfair to those who cannot into such reciprocal selling.

• Promotional Inducements to Trade : Offer inducements to the distributors/ retailers to push certain products.

• Slotting Allowances: Pay money to retailers to display their products. Possible only by big retailers.

7b. Describe the role and importance of information technology in successful sales management

Due to continuously expanding nature of business, it is very important to keep track of customers, an activity which used to be performed with pen and paper. With increasing size of business and the competitors, it is advantageous to speed up the activities in the sales process, so that more leads can be generated to the company. This is where computer technology comes in, to make the processes effective and also to help in increasing the efficiency of sales representatives in generating leads. It is identified in many companies that sales representatives spend only 20-30 percent of their time in selling activities. Most of the time ends up in performing administrative functions like coordinating the day to day meetings, checking the status of product that needs to be delivered, travelling, training etc. So it is very important for the companies to use the computer applications in reducing wastage of the resources in non- productive functions. Another major problem which companies face in today’s world is attrition. Computer applications can help in resolving of the problems which arise when a sales representative leaves the company.

Advantages

Improved sales planning and management

Automating the lead system

Managing sales opportunities effectively

Streamlining account management

Boosting sales productivity Improved account handling

Managing or resolving customer cases efficiently

Simplifying contract management

Knowledge management to store the staff experiences as a repository

Streamlining the schedules

Automating workflows

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8. Write short notes on any 3.

Determinants of size of sales force

Attaching Photocopies as has calculations

AIDAS theory

A: Attention

I: Interest

D: Desrie

A: Action

S: Satisfaction

According to this theory the prospect’s mind passes through 5 successive phases – attention, interest, desire, action and satisfaction. The sales person should lead the prospect through them in the right sequence if sales has to result.

Securing Attention:The first few minutes are crucial, as the prospect has to be in a receptive stage of mind. The sales person should establish a good rapport at the start itself. Proper attire, neatness and friendliness can help create favourable first impressions. A good

conversation opener has to set the stage for the rest of the presentation and should tie up with the remainder of the presentation.

Gaining interest : Intensify the prospect’s attention so that it evolves into a strong interest. The hope in this stage is to search out the selling appeal which will be most effective. This would require considerable probing before the appeal is identified.

Kindling Desire : Kindle the prospect’s desire to ready to buy point. The sales person should keep the conversation running towards the sale. Obstacles must be faced and ways found to get around them.

Inducing Action : When the presentation is perfect, the prospect is ready to act – that isbuy. Buying is however not automatic but has to be induced. The time has to be right for the close to ask for the close

Building satisfaction: Salesperson has to assure customer that the decision was correct, building satisfaction means thanking the customer, making sure that order forms are filled and following up on promises made.

Motivation

There was a time when employees were not given enough consideration and more emphasis was laid down in the production process. But it was later recognized that companies who retained talented employees have a greater survival rate in the industry and the market place. Employees are not treated as just another component in conducting business, but are considered as the prime resource for every business activity and as an important asset of the organization.

Various studies have been done on the fact that success of organization depends upon the satisfaction levels of the employees. In an organization, sales representatives may vary across the spectrum of which satisfy them to keep up the motivational levels. So, in this section let us analyze various motivational factors which are used by the organizations to sustain enough enthusiastic levels among their sales representatives.

One of the most attractive and encouraging factor for motivation among most of the sales representatives would be the compensation scheme or package there are entitled to receive at the start of the job. Organizations tend to pull in the best talent by offering effective compensation packages. The sales manager has to understand that often compensation is seen as a level of loftiness among the representative within the same hierarchy level. Hence enough care has to be taken in designing the compensation package for the sales representatives.

Incentives play an important role in keeping up the motivation levels of the employees. Incentives may include yearly bonuses, commission rates based on the individual sales figures and commission rates based on the group or team sales figures, stock options etc. Zoltners (2006) describes that the sales force incentive plans effective the sales people and in turn on the sales force activities followed by customer results and finally the company results.

Hence planning a right incentive system is an important task for the sales manager. Bernardin (2008) explains various incentive pay for performance level of the employees. Let us examine them in detail:-

a) Bonuses: These are one time payments provided as a reward for the level of work done or objective achieved. This type of incentive system is often used to encourage the sales representative to work much better and harder in future. The sales manager has to understand certain issues when dealing with bonuses such as:-

* The type of impact created by the bonuses is considered to be positive most of the times

* The impact depends upon the bonus amount

* Normally it is considered that one month salary pay to be the ideal bonus amount

* The timing of giving the bonus amount also matters a lot

* Usually the bonus should be given when the sales representative is in need i.e. during the festival season

b) Commission plans: Commission is the percentage of total sales amount given to the sales representative for successfully making the sale. Often sales representative participate to push the products/ service for sale which offers them more commission rates. Some of the issues which the sales manager or the organization has to understand before deciding on the commission plans are:-

* Commission rates should neither be too high or too low when compared with the other similar products

* Commission pay entirely depends upon the sales volume and in turn may be seasonal for most of the sales

* Sales representatives depend a lot on the commission rates for their living expenses

* During off season sales manager or the organization has to take care of the employees need by providing them with increased commission rates which can later be cut out during the sales season

* If the commission is dependent upon the team, then the sales manager has to take care that every member in the team works with similar efficiency and effectiveness

* Make sure that the group incentive pay is not too high in the salary component as employees tend to think that why they are penalized for other mistakes

c) Profit or gain share: Companies may share their increased profits or gains for the year or quarter among the employees of the organization. Depending upon the basic pay of the employee the gains can be distributed. Such incentive gives a sense of feeling that the employee is working in a growing organization and he/she has a bright future in the organization.

Non-monetary reward systems

Whenever a monetary reward fails, non-monetary reward system may achieve success in sustaining motivation and dedication of the employees towards the work place. Let us understand some of the non monetary rewards as stated below:-

a) Stock options: The employee stock option is usually a call option which is given as a non cash reward or incentive system. A lot of employee would like to have the stocks instead of the cash rewards like bonuses. There are a lot of advantages in giving the stock options to the employees. Some of the advantages include getting a feel of his/her own company once the stock options are given. Employees tend to work better to generate more sales and in turn increase the value of their company and the stocks. Care should be taken such that all the deserving employees in the group should be given the choice of choosing the cash reward or the stock options.

b) Better working conditions: The sales representatives who work well and achieve the targets might be given options to work from home and visit the workplace once or twice in a week to report. Other examples of better working conditions include providing the necessary logistics like better variety of food, increased cabin space, free telephone and internet services at home to a certain limit of usage, free insurance policy, better training facilities etc

c) Recognition and awards: Recognition and awards help the sales representatives to gain respect and help in creating a unique identity in the work place. This type of reward works effective for the managerial level employees who don’t depend upon the monetary rewards for survival. This system also highlights the mile stones achieved by an individual in his/her career and also encourage fellow employees to achieve it and hence they work much enthusiastically

Sales Audit

A sales audit is a review of a company's entire sales process, from the use of particular types of software, to the staff, to management strategies. This type of audit is different from a financial audit in which a company evaluates their operating costs against their sales revenues. A sales audit evaluates the effectiveness of every aspect of the sales process and helps companies

determine whether or not their methods are cost effective and beneficial in generating revenue. Some businesses choose to perform this process themselves, often with the aid of specialized audit software, and others prefer to have an outside consultant objectively carry out the evaluation.

Sales auditors may begin by analyzing the atmosphere in which a company works, both externally and internally. The external environment refers to the market size in which a company markets their product, the market demand for that product, and the growth trends in that area. The internal environment refers to the culture of the company itself, including the ways in which the sales team interacts with one another and the nature of their relationships with their managers. This typically provides a basis for the sales auditor to evaluate the sales performance a company desires versus what they are actually achieving.

Auditors may next consider a company’s specific goals and the sales tactics used to achieve those goals, including long-term and short-term goals. The audit can evaluate how effectively management communicates its sales goals to the sales team, for example. It also can be used to analyze whether the sales strategies used during the time frame of the audit reflect those goals. These strategies may include setting numerical goals for sales teams, offering rewards in the form of contests and commissions to encourage the team to achieve those goals, and monitoring the achievement of those goals in a timely manner.

A company’s sales structure and hiring process may also play an important role in the sales process, as it relates to the structuring of various departments that work together to assist the sales team. A company can request that their auditor review the inner workings of their support staff, such as accounting or billing departments and marketing departments. The sales auditor may seek to learn how these departments work together with the sales department and whether they effectively communicate with one another regarding interdepartmental needs. Some audits may use this facet of the process to help a company evaluate future and potential employees by constructing hiring guidelines to enable the company to hire personalities that fit well within their specific sales structure and company culture.

At the end of a sales audit, a company typically receives a report delineating their strengths and weaknesses and suggested ways in which they might improve their overall sales tactics. The general goal of a sales audit is the improvement of overall sales performance in regards to management expectations and the increase in the predictability of results. Repeated, predictable results in regards to sales productivity typically guarantee the sales process is functioning with a high degree of reliability and efficiency.

A formal sales audit process can make the difference betweensuccess and failure for the following reasons.

1.Sales and marketing are the core drivers of growth and profits. Improvements in sales and marketing dramatically impact a company’s financial picture.2. A sales audit provides an external, objective review of the process. Subsequentimprovements have proven more effective than periodic internal changes to salesprograms.3. Sales and marketing costs represent significant expenditures in most organizations.

Reviewing the efficiency and effectiveness is a prudent part of management andfinancial discipline.