Sales Mgt ch.5

Information/ Data Roles for Managers

Sales forecasts

Territory estimates

Quotas determination or assignment to units, salespeople, divisions, territories,

etc.

Sales force size determination

Sales territory design

Market Opportunity Analysis

Market Potential

Sales Potential

Sales Forecast

Sales Quota

Subjective Forecasting Methods

User expectations

Sales force composite

Jury of executive decision

Delphi technique

Market Potential

Estimate of possible sales for an entire industry in a market during a stated period under ideal conditions

Sales Potential

Portion of market potential the firm can expect to reasonably achieve

Sales forecast

Estimate of dollar or unit sales for a specified future period

Sales Quotas

Sales goals assigned to a marketing unit to manage sales efforts

2 Sales Forecast Methods

Subjective

Objective

Subjective Methods

User expectations – relies on buyers’ expressed intention

Sales force composite – relies on sales force opinions

Jury of executive opinion – relies on key experts’ opinions

Delphi technique – relies on various participants who prepare estimates which are compared anonymously and iteratively to reach consensus

Objective Methods- Sales forecasting

Market Test – places product in select areas

Time Series Analysis – relies on historical data to develop predictions

Statistical Demand Analysis – attempts to determine the relationship between sales and factors that influence sales

Time Series Analysis Methods

Moving Average – averages sales results over previous time periods to forecast

Exponential Smoothing – type of moving average where most recent years given more weight

Decomposition Method – applied to monthly or quarterly data where seasonal pattern is evident

Develop Territory Estimates

The Design of sales territories

Determination of Procedures for identifying potential customers

Establishment of sales quotas

Compensation and subcomponents

Evaluation of salesperson performance

North American Industry Classification System (NAICS)

Developed by US Bureau of the Census,

Estimates sales per industry

Countries involved – US, Canada, Mexico

Organizes the reporting of business information

Each U.S. industry is assigned a two-digit number

Buying Power Index (BPI)

Published by Sales Marketing Management Magazine

Considers income, population and retail sales

Most useful with low-priced convenience goods

Sales Quotas

Goals assigned to salespeople, units, divisions, territories, subsidiaries, etc.

Apply to specific periods

Are Tools used for planning and controlling field selling activities and results

Benchmark for evaluating sales effectiveness

Motivate sales people

Quotas

Provide incentives for sales representatives

Provide measures to evaluate salespeople’s performance

Characteristics of Good Quota

Attainable

Easy to understand

Complete

Timely

Types of Quotas

Sales volume Quota

Activity Quota

Financial Quota

Sales Volume Quota

Emphasize sales or some aspect of sales

Activity Quota

Focus on certain sales activities

Financial Quota

Examine financial criteria such as gross margin or contribution to overhead

Set the quota level

Territory available potential

Quota’s impact on motivation

Long-term company objectives

Short-term profitability impact

Sales Force Size Determination

Breakdown method

Workload method

Incremental method

Breakdown method

(N)umber of sales needed

(N)umber of sales personnel needed = -------------------------------------------------

Estimated (P)roductivity of each salesperson

Workload Method

Total # hours required to service market

Total # salespeople required = ---------------------------------------------------

# Hours available to each salesperson

Incremental Method

Adding salespeople until incremental profit produced equals incremental cost

Decreasing returns associated with addition of salespeople

Sales Analysis for Leadership/Managerial Decision Making

Gather, classify, compare, and study company sales data

Highlight sales concentration of products, customers, orders, territories

Use the 80:20 principle

Make Decisions

Evaluation system to be used for decision making

Sources of information

Information aggregation type

Stages of Territory Design

1) Select basic control unit

2) Estimate market potential in each control unit

3) Combine control units into tentative territories

4) Perform workload analysis

5) Adjust tentative territories to allow for sales potential and coverage difficulty differences

6) Assign salespeople to territories