With Personal Selling and Salesmanship

344 Pages·2017·1.63 MB·English

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(With Personal Selling and Salesmanship)
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B.Com., (Hons.), D. Pharma, MBA (Marketing),
Communication Consultant,
Benzer, Borivali (W)
Mumbai - 400 103.
[email protected]
Sixth Revised Edition : 2011
MUMBAI (cid:122) NEW DELHI (cid:122) NAGPUR (cid:122) BENGALURU (cid:122) HYDERABAD (cid:122) CHENNAI (cid:122) PUNE (cid:122) LUCKNOW (cid:122) AHMEDABAD
(cid:122) ERNAKULAM (cid:122) BHUBANESWAR (cid:122) INDORE (cid:122) KOLKATA
© Author, 2011
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the author
and the publisher.
First Edition : 1999
Second Edition : 2000
Third Edition : 2001
Fourth Revised Edition : 2002
Reprint : 2003, 2004, 2005, 2006, 2007, 2008
Fifth Revised Edition : 2007
Reprint : 2009
Sixth Revised Edition : 2011
Published by : Mrs. Meena Pandey
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In this new millennium, most of the employment opportunities will be in the sales
function. Salespeople are no longer considered the poor cousins of the glamorous
branding boys. So far, sales was a neglected component of the marketing function. Woe
betide those who, rejoice ‘The Death of a Salesman’. Business schools will have to
restore the sales syllabus to its rightful position to avoid ‘What they don’t teach you at
IIM-type’ criticism.
This revised edition of the book treats the selling process, commonly known as
salesmanship, in detail. In addition, the managerial aspects of the job such as planning,
organising, staffing, directing and controlling of the selling functions are also treated
in detail. A salesperson is developing relationship with the customers, and as such
partnership, strategic and relationship aspects of his job are considered. Most of the
chapters have been revised and recast. Additional materials on Sales Planning, Closing
the Sales and subliminal selling been added.
This book recognises selling as the cutting edge of business. There is emphasis on
proactive selling, need-oriented selling and solution-oriented selling. From Dhirubhai
Ambani to Karsanbhai Patel, some of the greatest tycoons of our time built their
empires on their ability to sell.
Advertising, marketing and brand building — all these came later on.
A few case studies have been appended at the end of the book to enhance its
overall utility.
The book has already completed ten years of its existence in the markets. All these
years it has proved its usefulness for the readers. It has been constantly revised to keep
pace with the changing times.
The author will feel amply rewarded if the book satisfies the readers. Suggestions,
if any, should be sent either to the publisher or author to improve the text further.
—
Author
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1. Nature and Scope of Sales Management 01-10
2. Personal Selling and Salesmanship 11-19
3. Selling Function 20-42
4. Relationship Strategy 43-46
5. Developing Product Solutions 47-51
6. Product Positioning 52-54
7. Consumer Behaviour 55-64
8. Prospecting 65-70
9. Approaching the Customer 71-78
10. Sales Presentation 79-85
11. Sales Demonstration 86-90
12. Negotiating Buyer Concerns 91-95
13. Closing the Sale 96-104
14. Servicing the Sale 105-108
15. Self-management 109-114
16. Personal Selling Objectives 115-131
17. Sales-related Marketing Policies 132-164
18. Personal Selling Strategy 165-175
19. The Job of a Sales Manager 176-181
20. Sales Organisation 182-189
21. Personnel Management in the Selling Field 190-196
22. Recruiting Sales Personnel 197-201
23. Selecting Sales Personnel 202-226
24. Sales Training 227-235
25. Execution and Evaluation of Sales Training Programmes 236-240
26. Motivation and Moral of Salespersons 241-254
27. Compensating Salespersons 255-278
28. Management of Sales Expenses 279-284
29. Sales Meeting and Sales Contests 285-294
30. Controlling Salespeople — Evaluation and Supervision 295-303
31. Sales Budget 304-307
32. Sales Quotas 308-311
33. Sales Territories 312-318
34. Sales Control and Cost Analysis 319-322
35. Case Studies 323-335
Index 337-338
Nature and Scope of Sales Management 1
Chapter
Nature and Scope of Sales
11111
Management
Gone are the days when selling was considered as down-the-line function, and was just taken for
granted. Selling is becoming increasingly professionalised. Organisations recognise the need for sales
planning and control. Sales objectives are set, and sales strategies are designed to achieve them. To
realise the sales objectives, it is necessary to create a suitable organisational mechanism. Sales management
is a respectable function today, and its professional status is as high as any other business function.
Sales executives have to achieve a particular level or volume of sales so as to contribute to profits
to ensure planned business growth. These executives have responsibilities to their organisation and to
their customers. But beyond these, they also owe a responsibility to the society as a whole. Who are the
customers? They are the intermediaries like the wholesalers and the retailers. In industrial marketing,
they are the industrial users. These customers need the right products supported by the right services
like credit extension, training to trade’s sales representatives, assistance in retail advertising. Society
expects these executives to be socially responsible and expects to receive the right products at the right
prices. Sales executives have to balance the interests of the organisation and those of the society.
EVOLUTION OF SALES FUNCTION
Prior to the Industrial Revolution, organisations were small, and the production was limited, and
meant for local market. Selling was thus not a complex activity. It was the owner who sold off what he
produced. He was more concerned with manufacturing rather than selling.
(01)
2 Sales Management
During the Post-Industrial Revolution, when factory system developed, we got products made on
a massive scale, which could not be sold just in the neighbouring markets. Though initially the problems
of mass production engaged business people, they soon realised that this also meant mass distribution,
and selling. To achieve the organisational objectives, it was felt necessary to divorce ownership from
management, giving birth to corporate form of organisation. Authority was delegated to others, and
specialised functional departments emerged. The first to emerge were the separate manufacturing and
finance departments, followed by selling. Though selling as a separate department did help in mass
selling in expanded markets, it still remained a problem as to how to communicate with these huge
markets.
Distribution channels of wholesalers and retailers appeared on the scene. Export and import also
gave a boost to the emergence of wholesalers. The manufacturer’s sales department was thus far
removed from the actual consumers. This made the scene complicated.
In the meantime, manufacturer’s sales function added several other important activities such as
promotion, marketing research, transportation, sales administration in the form of credit and collections.
Sales function became an income-generating department for the organisation.
Salespeople are the only ones in the company that bring in money. Everyone else spends it.
SALES MANAGEMENT
Many believed that marketing would make sales superfluous ultimately. But this belief proved
wrong. The sunrise sectors like insurance, financial products, information technology – are all sales-
driven. In this age of commodity brands and mass retailing even traditionally marketing-driven industries
like FMCG and white goods have rediscovered sales.
Initially, sales management was equated with salesforce management. As time rolled on, sales
management became broader. Apart from the management of personal selling, it encompassed other
marketing activities like advertising, sales promotion, marketing research, physical distribution, pricing,
merchandising and so on. However, the comprehensive broad function later got labelled as marketing
management. Sales management came to be defined by AMA (American Marketing Association) 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.’
Sales management, according to the above definition, is the management of the salesforce. This is
a personnel-type function.
Sales management also organises the selling effort. To do so, it creates a suitable organisational
structure, with appropriate communication system.
Sales management interfaces with the distribution channels, and external publics.
Sales management provide critical inputs for the key marketing decisions like budgeting, quotas
and territory management.
Nature and Scope of Sales Management 3
Sales management interfaces with other marketing functions while policies of these functions are
being formulated.
According to Zoltners, Sinha and Lorimer (Building a Winning Saleforce), the sales process is the
most dynamic corporate undertaking. Market conditions constantly change, as do customers’ wants,
needs and expectations. A company’s salesforce must be equally dynamic to stay competitive. Therefore,
business now invest enormous sums to develop their sales departments.
Sales manager according to the above definition, has four major functions:
(1) Selection of the salesforce; (2) Training the salesforce; (3) Motivating the salesforce, and
(4) Controlling the salesforce.
Different organisations have different type of needs for selling. Thus, a service organisation like an
insurance company needs sales management as much as a manufacturing organisation does. However,
both of them handle selling in different contexts. Similarly, a retailer also needs selling. Even organisations
not employing salesforce of their own and depending on ‘outside salespeople’ have sales problems
unique to themselves.
1. Selection of salesforce
Sales
4. Controlling of salesforce 2. Training of salesforce
Manager
3. Motivating of salesforce
Fig. 1.1 Sales Management Functions
OBJECTIVES OF SALES MANAGEMENT
Sales volume, contribution to profits and growth are the three major objectives the sales function
is expected to achieve. Though these are broad corporate functions to be achieved by the top management,
sales contribute a great deal in achieving them. Corporate objectives are communicated to the marketing
department who in turn passes on the responsibility to the sales department.
4 Sales Management
CorporateObjectives
SalesVolume Profitability Growth
MarketingManagement
SalesManagement
Fig. 1.2 Hierarchy of Objectives
Sales provides invaluable feedback to the higher management while achieving these objectives.
SALES MANAGEMENT AND FINANCIAL RESULTS
The trading account records the sales and cost of goods sold to arrive at gross profit.
Trading Account
To Purchases – By Sales –
To Carriage Inwards –
To Gross Profit –
Transferred to P&L Account
Profit and Loss Account
To All Expresses – By Gross Profit –
To Net Profit Transferred to Capital Account – By Other Income –
Gross profit minus expenses gives the net income.
Sales provides thus critical figures in overall financial performance of the organisation. Sales
management by being effective is in a position to affect sales, gross margin and expenses; and thereby
net income. Sales must exceed cost of goods sold to keep manufacturing and distribution in a healthy
state. The finalized accounts are used by the board and outsiders to judge a business. Sales growth while
profits decline is no good.
RETURN ON INVESTMENT
Return on investment is a ratio that examines the relationship between the size of earnings (gross profit)
and the capital employed. It gives a fair indication of the profitability of the organisation. The ratio is the
product of the earnings as percentage of sales and the turnover of capital employed that produce these
sales. The following Du-Pont chart illustrates this: