Module 8 - Sales Management and the Business Enterprises

Module 8: SALES MANAGEMENT AND THE BUSINESS ENTERPRISE

Importance of Sales Management

  • Responsibilities:

    • To Organizations: Top management relies on sales executives for:

      1. Obtaining sales volume

      2. Providing profit contributions

      3. Ensuring business growth

    • To Customers: Sales executives must supply resalable products and services, supported by relevant activities.

Evolution of the Sales Department

Pre-Industrial Revolution

  • Dominance of small-scale enterprises.

  • Selling handled part-time by individuals overseeing both manufacturing and sales.

  • Manufacturing issues took precedence over marketing.

Industrial Revolution Impact (Post-1760)

  • Need for sales expansion due to increased production capacities in factories.

  • Shift towards specialized sales departments after fixing manufacturing and finance issues.

  • Emergence of intermediaries in distribution channels creating new marketing complexities.

  • Functions of Sales Departments:

    • Increasing importance of marketing activities like advertising and promotions.

    • Sales maintain their strategic position as income-producing units.

Sales Management Definition

  • Initially focused on managing sales force personnel.

  • Now includes overall management of marketing activities (advertising, promotions, etc.).

  • Adopted the broader term "marketing management" in businesses.

  • American Marketing Association Definition:

    • Encompasses planning, direction, and control of personal selling including all personnel tasks.

Responsibilities of Sales Managers

Internal Responsibilities

  • Organizing sales efforts within the company for effective communication.

  • Building and maintaining distribution networks and key customer contacts.

Marketing Decisions

  • Participating in budgeting, establishing sales quotas and territories.

  • Deciding on product distribution, advertising strategies, and pricing policies.

Sales Management and Financial Results

Financial Performance Metrics

  • Fundamental Formulas:

    • Sales - Cost of Sales = Gross Margin

    • Gross Margin - Expenses = Net Profit

  • Sales management affects these variables for determining profitability.

  • Caution against focusing solely on sales volume at the expense of gross margin and expenses.

Role of Sales Executives as Coordinators

Coordination Aspects

  1. Organization: Ensure harmonious functioning across sales and marketing efforts.

  2. Planning: Active in drafting and implementing marketing plans.

  3. Execution: Ensure synchronized efforts between personal selling and other promotional channels.

Effective Coordination Principles

  • Consultative approach within sales departments to foster teamwork.

  • Marketing programs require input from various departments for effective execution.

Coordinating with the Distributive Network

Responsibilities with Distributors

  1. Product Distribution: Gaining and maintaining distribution channels.

  2. Dealer Identification: Ensuring customer awareness of product availability.

  3. Shared Promotional Risks: Collaborating with intermediaries on cooperative advertising efforts.

Control in Sales Management

Key Phases of Control

  1. Review Objectives: Assess current positioning and historical performance.

  2. Setting Standards: Establish quantitative measures for performance evaluation with tolerance limits.

  3. Performance Data: Evaluate actual results against the standards set.

  4. Adjusting Standards: Modify sales plans based on uncontrollable variations impacting performance.

Summary of Sales Management Functions

  • Sales executives must effectively build and motivate their teams while aligning with broader organizational goals.

  • Coordination between marketing efforts and the sales force is crucial to achieving overall marketing success.

  • The role of a sales manager is multifaceted, requiring skills in planning, controlling, and strategizing across all sales divisions.